Leonardo S p A : Results at 30 June 2021 (Relazione finanziaria)

Half-Year Financial Report

at 30 June 2021

Disclaimer

This Half-Year Financial Report for 2021 has been translated into English solely for the convenience of the international reader. In the event of conflict or inconsistency between the terms used in the Italian version of the report and the English version, the Italian version shall prevail, as the Italian version constitutes the sole official document.

Half-year financial report at 30 June 2021

CONTENTS
BOARDS AND COMMITTEES ......................................................................................................	4
REPORT ON OPERATIONS AT 30 JUNE 2021 ...............................................................................	5
∙ Group results and financial position .......................................................................................................	5
∙ Key performance indicators by sector ..................................................................................................	11
	1.	HELICOPTERS............................................................................................................................	11
	2.	DEFENSE ELECTRONICS & SECURITY ..............................................................................................	12
	3.	AERONAUTICS...........................................................................................................................	13
	4.	SPACE .....................................................................................................................................	14
∙	Guidance 2021 ......................................................................................................................................	15
∙ Industrial and financial transactions .....................................................................................................	16
∙	Related parties transactions..................................................................................................................	19
∙	"Non-GAAP"performance indicators...................................................................................................	19
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2021 .................................	23
∙ Condensed consolidated separate income statement..........................................................................	24
∙ Consolidated statement of comprehensive income .............................................................................	25
∙ Condensed consolidated statement of financial position.....................................................................	26
∙ Consolidated statement of cash flows ..................................................................................................	27
∙ Consolidated statement of changes in equity.......................................................................................	28
∙	Explanatory Notes .................................................................................................................................	29
	1.	General information ..............................................................................................................................	29
	2.	Form, content and applicable accounting standards .............................................................................	29
	3.	Significant issues and critical estimates by management .................	Errore. Il segnalibro non è definito.
	4.	Business seasonality...............................................................................................................................	30
	5.	Effects of changes in accounting policies adopted ................................................................................	30
	6.	significant events occurred after the period-end ..................................................................................	30
	7.	Segment reporting .................................................................................................................................	30
	8.	Intangible assets ....................................................................................................................................	33
	9.	Property, plant and equipment and investment properties ..................................................................	34
	10.	Right of use ............................................................................................................................................	34
	11.	Other non-current assets.......................................................................................................................	34

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Half-year financial report at 30 June 2021

	12.	Business combination ............................................................................................................................	35
	13.	Trade receivables, including contract assets..........................................................................................	36
	14.	Other current assets ..............................................................................................................................	36
	15.	Equity .....................................................................................................................................................	37
	16.	Loans and Borrowings............................................................................................................................	38
	17.	Provisions for risks and contingent liabilities .........................................................................................	39
	18.	Employee benefits .................................................................................................................................	43
	19.	Other current and non-current liabilities...............................................................................................	44
	20.	Trade payables, including contract liabilities and provision for onerous contracts ...............................	44
	21.	Revenue .................................................................................................................................................	44
	22.	Other operating income (expenses) ......................................................................................................	45
	23.	Purchases and personnel expenses .......................................................................................................	45
	24.	Amortisation, depreciation and financial assets value adjustments......................................................	46
	25.	Financial income and expenses..............................................................................................................	46
	26.	Share of profits (losses) of equity-accounted investees ........................................................................	47
	27.	Income taxes..........................................................................................................................................	47
	28.	Assets held for sale and discontinued operations .................................................................................	47
	29.	Earnings per share .................................................................................................................................	48
	30.	Cash flow from operating activities and change in working capital.......................................................	49
	31.	Related parties transactions ..................................................................................................................	49
∙	Annex: scope of consolidation ..............................................................................................................	56

• Statement on the condensed consolidated half-year financial statements at 30 June 2021

pursuant to Art. 154 bis, paragraph 5, of Legislative Decree no. 58/98 as amended and
supplemented .......................................................................................................................................	62

• Independent auditors' report on the review of the condensed consolidated half-year financial

statements at 30 June 2021 ..................................................................................................................

63

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Half-year financial report at 30 June 2021

BOARDS AND COMMITTEES

BOARD OF DIRECTORS	BOARD OF STATUTORY AUDITORS *
(for the three-year period 2020 - 2022)	(for the three-year period 2021 - 2023)
LUCIANO CARTA
Chairman	Regular Statutory Auditors
ALESSANDRO PROFUMO	LUCA ROSSI
Chief Executive Officer	Chairman
CARMINE AMERICA	SARA FORNASIERO
Director (c, d)
PIERFRANCESCO BARLETTA	ANNA RITA DE MAURO
Director (a, c)
ELENA COMPARATO	LEONARDO QUAGLIATA
Director (b, c)
DARIO FRIGERIO	AMEDEO SACRESTANO
Director (a, c)
PATRIZIA MICHELA GIANGUALANO
Director (b, d)
PAOLA GIANNETAKIS	Alternate Statutory Auditors
Director (a, d)	EUGENIO PINTO
FEDERICA GUIDI
Director (b, c)	GIUSEPPE CERATI
MAURIZIO PINNARO'
Director (a, c)
FERRUCCIO RESTA	_______________________________________
Director (b, d)
	INDEPENDENT LEGAL AUDITORS
MARINA RUBINI	EY S.p.A.
Director (a, b)	(for the period 2021 - 2029)
***************************************
LUCIANO ACCIARI
Secretary of the Board of Directors
________________________________________

• The Board of Directors that previously held office and the term of which expired at the Shareholders' Meeting held on
  19 May 2021, was composed as follows: Luca Rossi (Chairman), Sara Fornasiero, Leonardo Quagliata, Francesco Perrini, Daniela Savi (Regular Statutory Auditors), Giuseppe Cerati and Marina Monassi (Alternate Statutory Auditors).
  ________________________________________
  a. Member of the Control and Risks Committee b. Member of the Remuneration Committee
  c. Member of the Nomination and Governance Committee d. Member of the Sustainability and Innovation Committee

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Half-year financial report at 30 June 2021

REPORT ON OPERATIONS AT 30 JUNE 2021

The results recorded in the first half of 2021 confirm the forecasts of recovery in growth and an increase in profitability reported in the Financial Statements at 31 December 2020, showing a marked improvement in the Group's industrial performance; in the first half of 2020 this indicator was in fact affected by the outbreak of the COVID-19 pandemic, which then gradually stabilised over the subsequent months, including as a result of the measures put in place in order to ensure that the business could continue in full operation. The volume of new orders is at excellent levels, confirming the good competitive positioning of the Group's products and solutions, with revenues growing in all the main business areas and a Book to Bill higher than 1.

The difficulties that have been reported in the civil sector in recent months have been confirmed in a scenario that is still characterised by the pandemic: in particular, the Aerostructures Division was affected by the fall in volumes and the consequent failure of the industrial assets to operate at full capacity, which led to a further decline in results compared to the first half of 2020.

The cash flows, although affected by the usual interim performance characterised by significant outflows in the first part of the year, are clearly improving.

GROUP RESULTS AND FINANCIAL POSITION

Key Performance Indicators ("KPIs")

		June 2020			June 2021			Change				2020
New orders	6,104			6,682		9.5%			13,754
Order backlog	35,920			35,883		(0.1%)			35,516
Revenue	5,878			6,345		7.9%			13,410
EBITDA	543			607		11.8%			1,458
EBITA	292			400		37.0%			938
ROS	5.0%			6.3%			1.3 p.p.		7.0%
EBIT	227			347		52.9%			517
EBIT Margin	3.9%			5.5%			1.6 p.p.		3.9%
Net Result before extraordinary transactions	59		177		200.0%			241
Net result	60		177		195.0%			243
Group Net Debt	5,074			4,613		(9.1%)			3,318
FOCF	(1,889)			(1,380)		26.9%			40
ROI	6.5%			8.4%			1.9 p.p.		11.3%
Workforce	49,733			49,980		0.5%			49,882

Please refer to the paragraph "Non-GAAP performance indicators" for definitions.

The primary changes that marked the Group's performance compared to the previous year are described below. A more thorough analysis can be found in the section covering the trends in each business segment.

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