Avio : HY 2019 RESULTS

H1 2019 RESULTS

AVIO: REVENUES, MARGINS AND NET PROFIT KEEP GROWING

VEGA RETURN TO FLIGHT IN Q1 2020

Highlights

• VV15 Independent inquiry commission: in place the action plan for Vega to return to fly in Q1 2020
• Development activities of Vega C on schedule: qualification flight expected by H1 2020
• Success of 1 Vega and 3 Ariane 5 missions in 2019
• First launch contracts for Ariane 6 Operating results
• Revenues1: Euro 189 million (+6% on H1 2018)
• Reported EBITDA2: Euro 16.1 million (+11%)
• Reported EBIT2: Euro 8.1 million (+5%)
• Net Profit2: Euro 7.1 million (+14%)
• Backlog of Euro 745 million
• Distribution of dividends of Euro 11.6 million (+16% on 2018)
• Net Financial Position2: cash position of Euro 20.4 million

Milan, September the 12th, 2019 - The Board of Directors of Avio S.p.A., aerospace leader listed on the STAR segment of the Italian Stock Exchange, today reviewed and approved the H1 2019 results.

The Chief Executive Officer Giulio Ranzo, opening the meeting, outlined the results of the inquiry of the Independent Investigatory Commission led by ESA and Arianespace with the support of Avio in relation to the anomaly which caused the premature conclusion of the VV15 mission in July (for the first time in the history of the Vega launcher, after 14 consecutive successful launches), highlighting that:

• Among the possible causes, the anomaly was most likely due to a thermo-structural failure in the dome of the Zefiro23 second stage engine;
• The Commission launched a verification plan of its findings and a corrective actions plan to fix the issue faced;
• Vega return to flight, following a check on the implementation of the corrective measures, is expected in the first quarter of 2020;
• Avio has started the assessment process of the short-term economic and financial effects

The CEO then outlined: the on-schedule development operations and tests ahead of the maiden Vega

1. Net of "pass-through" revenues.
2. Includes the effects of IFRS 16.

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C flight, expected by H1 2020; the commercial success of the new Ariane 6 launcher, equipped with the P120 boosters produced by Avio, with the signing of several launch contracts (Arianespace has currently 8 Ariane 6 flights in its schedule).

In terms of the operating results, the Group reports H1 2019 revenues of Euro 189 million, up 6% on the same period of the previous year. The increase is primarily due to Vega launcher operations and the greater focus on development of the new P120C motor, for the next generation launchers Ariane 6 and Vega C.

Reported EBITDA of Euro 16.1 million, up 11% on H1 2018, while reported EBIT of Euro 8.1 million2 grew 5% on the previous year, in line with the Reported EBITDA performance.

The Net Profit of Euro 7.1 million grew 14% on H1 2018, also thanks to reduced taxes.

The Net Financial Position at June 30 was a cash position of Euro 20.4 million (Euro 49.1 million at December 31, 2018), in line with the expected cash flows pattern, greater investments (Capex of Euro

16.1 million, +Euro 9.9 million on H1 2018) and the payment of dividends in May of Euro 11.6 million (+16% on the 2018 dividend).

The backlog declined to Euro 745 million (-15%,-Euro 132 million compared to December 2018) which, ahead of the ESA's 2019 ministerial conference and the signing of the initial batches for the Vega C and Ariane 6 launchers. In 3Q 2019 it is expected the signature of new orders mainly for the P120 engine, for a total value of approx. Euro 80 million.

"Our growth trend continued in the first half of 2019, building on the Group's 2018 results - stated Giulio Ranzo, Chief Executive Officer of Avio".

"In the first half of the year - added Ranzo - we have successfully completed the qualification tests of the new P120C and Zefiro40 motors (the Vega C and Ariane 6 common first stage and the second stage of the Vega C, respectively). These tests are a key step for the new Vega C, whose test flight is scheduled for H1 2020. At the same time, we have successfully performed the firing test of reduced-scale of the M10 Oxygen-Methane combustion chamber for the upper stage of the upcoming Vega E (soon there will be a full-scale firing test).

In relation to the anomaly on the VV15 and the relative corrective actions: "We are working with ESA and Arianespace to solve the problem and return to fly by Q1 2020 in compliance with the safety and reliability requirements - added Ranzo".

"The Vega anomaly does not impact our medium-long term growth plan - concluded Giulio Ranzo. We continue to work on developing new technologies and are launching the SPTF project in Sardinia, for the testing of cryogenic motors. In the meantime, we have completed the configuration of the new SSMS, the dispenser able to put into orbit many small satellites simultaneously to satisfy the increasingly sophisticated demand of Customers. We therefore keep focusing and confident on the opportunities to create value in the long-term for our shareholders".

The Half-Year Report Key Financial Highlights will be available in the Investor Relations section of www.avio.com to assist the call with financial analysts and investors scheduled for Thursday, September 12 at 6.30 PM. The Half-Year Financial Report will be made available in Italian and in English in accordance with Law.

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2

The Executive Officer for Financial Reporting, Alessandro Agosti, declares in accordance with paragraph 2, Article 154-bis of the Consolidated Finance Act that the accounting information in the present press release corresponds to the underlying accounting documents, records and entries.

* * *

Avio is a leading international group engaged in the construction and development of space launchers and solid and liquid propulsion systems for space travel. The experience and know-how built up over more than 50 years puts Avio at the cutting-edge of the space launcher sector, solid, liquid and cryogenic propulsion and tactical propulsion. Avio operates in Italy, France and French Guyana with 5 facilities, employing approx. 1,000 highly-qualified personnel, of which approx. 30% involved in research and development. Avio is a prime contractor for the Vega programme and a sub-contractor for the Ariane programme, both financed by the European Space Agency ("ESA"), placing Italy among the limited number of countries capable of producing a complete spacecraft.

For further information

Investor Relations Contacts

[e-mail]

Media Contacts - Avio Communications Department [e-mail]; [e-mail]

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CONSOLIDATED BALANCE SHEET

June 30, 2019 December 31, 2018

(in Euro)

ASSETS

Non-current assets Property, plant & equipment Rights of use

Investment property Goodwill

Intangible assets with definite life Investments

Non-current financial assets Deferred tax assets Other non-current assets

Total non-current assets

Current assets

Inventories and advances to suppliers Contract work-in-progress

Trade receivables

Cash and cash equivalents Current tax receivables Other current assets

Total current assets

89,616,543 89,314,581

6,481,105

3,062,594 2,945,216

61,005,397 61,005,397

118,312,895 116,953,729

5,879,056 8,137,948

6,031,500 5,812,000

76,529,332 76,150,361

78,377,171 66,520,882

445,295,593 426,840,114

136,064,820 116,079,957

42,402,436 103,151,448

3,495,218 7,017,095

93,833,304 108,434,880

64,126,147 62,775,066

13,655,544 7,607,803

353,577,469 405,066,249

TOTAL ASSETS	798,873,061	831,906,363

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CONSOLIDATED BALANCE SHEET	June 30, 2019 December 31, 2018
(in Euro)
EQUITY
Share capital	90,964,212	90,964,212
Share premium reserve	144,255,918	144,255,918
Other reserves	14,150,164	14,580,499
Retained earnings	23,177,929	10,442,902
Group net profit for the period	6,786,515	24,337,954
Total Group Equity	279,334,738	284,581,484
Equity attributable to non-controlling interests	7,241,117	11,404,835
TOTAL SHAREHOLDERS' EQUITY	286,575,855	295,986,319

LIABILITIES

Non-current liabilities

Non-current financial liabilities

Employee benefit provisions

Provisions for risks and charges

Other non-current liabilities

Total non-current liabilities

Current liabilities Current financial liabilities

Current portion of non-current financial payables

Provisions for risks and charges Trade payables

Advances from clients for contract work-in- progress

Current income tax liabilities Other current liabilities

Total current liabilities

55,421,494 40,000,000

11,227,853 10,706,213

23,495,364 7,841,101

122,271,727 122,452,889

212,416,438 181,000,203

17,920,805 19,249,221

75,00060,000

6,260,276 8,022,416

120,119,702 131,407,118

130,225,109 177,072,126

3,344,242 2,308,320

21,935,635 16,800,639

299,880,768 354,919,841

TOTAL LIABILITIES	512,297,206	535,920,044
TOTAL LIABILITIES AND EQUITY	798,873,061	831,906,363

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