Board of Directors approves the 2015 Financial Statements

Board of Directors approves the 2015 Financial Statements

2015 Results materially improved and above expectations

EBITDA at EUR 1.9 billion, +19% compared to 2014, EBITA at EUR 1,208 million, +23% compared to 2014, and EBIT at EUR 884 million, +48% compared to previous year

Net Result positive for EUR 527 million, 26 times the EUR 20 million recorded in 2014. Net Result before extraordinary transactions positive for EUR 253 million, 17 times the EUR 15 million recorded in 2014

FOCF at EUR 307 million, +372% compared to EUR 65 million in 2014

Group Net Debt at EUR 3,278 million, 17% lower than the EUR 3,962 million of 2014. Equity at EUR 4,302 million, 12% higher than the EUR 3,854 of 2014 and debt-to-equity ratio down at 0.76 from the 1.03 in 2014

In 2016 expected further improvements in profitability and cash generation, with the target of reducing Net Debt at ca. EUR 3 billion, to be achieved one year ahead of plan

Proposed to the Shareholders' Meeting the change of the Company’s name in Leonardo

Rome, 16 March 2016 – The Board of Directors of Finmeccanica, convened under the chairmanship of Gianni De Gennaro, examined and unanimously approved the draft of Group consolidated and Finmeccanica S.p.A. financial statements at 31 December 2015.

2015 was a turning point for Finmeccanica in terms of strategy and organisation, operating performance and cash flow. The first challenging objectives set in the January 2015 industrial plan were fully achieved, including the disposals in Transportation (Ansaldo Breda and the stake in Ansaldo STS), the adoption of the new operational and organisational model with the launching of the “One Company”, and the achievement of distinctly better results which were higher than expectations.

The initiatives undertaken are aimed at reassessing the Group’s positioning in terms of business areas and product portfolios, on defining and implementing a new organisational and operating model, and on achieving targeted efficiency improvements, reorganisation and development. At the same time, a different commercial approach to the market has led to a greater attention in selecting new contracts; together with improved industrial performances, this ensures an increasing stability and quality of the order backlog. This all is in line with the strategy of the Group having an Aerospace, Defence and Security business perimeter that is both more defined and able to achieve adequate levels of profitability and cash generation.

2015 results confirmed the material improvement in both business and financial performance as compared with 2014, in line with the results achieved in the previous quarters. In particular, Finmeccanica recorded a considerable growth in its profitability in 2015, with increased EBITDA of 19% compared to 2014, increased EBITA of 23%, an EBIT 48% higher. The net result before extraordinary transactions, which doesn’t include the capital gain from the disposals in the Transportation sector, is 17 times higher than last year (€mil. 253 compared to €mil. 15 in 2014).
The improvement is even more material at net result level (which includes the aforementioned capital gain) which is 26 times the net profit of 2014, having risen to €mil. 527 from €mil. 20. Similarly, free operating cash flow reached €mil. 307 compared with €mil. 65 in 2014 (372% growth) which contributed to bringing the Group’s debt to €bil. 3.278 (17% reduction compared to December 2014), also thanks to the successful disposals in Transportation, generating total net proceeds of Eur 790 millions, of which Eur 761 million for the sale of Ansaldo STS shares and Eur 68 million for the facilities sold by FGS, whereas the value of the Ansaldo Breda going concern was negative by Eur 38 million. Consequently, debt-to-equity ratio was down to 0.76.

The 2015 results no longer include the contribution of the operations in the Transportation sector which was sold to Hitachi and is separately classified among discontinued operations.
2015 results highlights are as follows:

• New Orders: amounted to EUR 12,371 million, slightly lower than 2014. The level of New Orders is also impacted by the more rigorous selection of commercial opportunities, aimed at increasing the backlog profitability (margins). Moreover, a indecline in Helicopters (also for Oil&Gas) and Aeronautics (postponements of some contracts by the Italian military customer), offset by improvement in Defence Electronics and Security and a positive foreign exchange effect, was recorded.

• Order backlog: amounting to EUR 28,793 million and characterized by a more rigorous selection of the orders based on stricter profitability criteria and ensuring about two and a half years of equivalent production.

• Revenues: amounted to EUR 12,995 million, +1.8% compared to 2014 due to favorable foreign exchange rates.

• EBITDA: positive EUR 1,866 million, 18.9% higher than the EUR 1,569 million in 2014. Also the EBITDA margin, at 14.4%, increased by 210bp compared to 12.3% in 2014.

• EBITA: positive EUR 1,208 million, significantly improved (+23.3%) compared to positive 980 in 2014, that had included expenses for about $mil. 100 relating to a specific DRS programme. Nonetheless, even excluding this effect, there is still a significant improvement as a result of the efficiency-enhancement and cost reduction actions. ROS was at 9.3%, 160 bps higher than last year.

• EBIT: positive EUR 884 million, +48.1% compared to positive 597 million of 2014.

• Net result before extraordinary transactions: positive EUR 253 million, 17 times higher than the positive 15 million in 2014.

• Net result: positive EUR 527 million, 26 times higher than the positive 20 million in 2014.

• Group Net Debt amounted to EUR 3,278 million, improved by 684 million (-17.3%) compared to 3,962 million at 31 December 2014 due to the closing of the sales of the activities in the Transportation Sector and notwithstanding the negative foreign exchange differences on debts denominated in sterling and US dollar.

• Equity: amounted to EUR 4,302 million, improved by 448 million (+11.6%) compared to 3,854 million at 2014 year-end. Consequently the debt-to-equity ratio was 0.76, lower than the 1.03 in 2014.

• Free Operating Cash Flow (FOCF): positive EUR 307 million, improved by 242 million (+372.3%) compared to positive 65 million in 2014.

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Rome 16/03/2016 18:20