Leonardo S.p.A. — Capital/Financing Update 2017

May 31, 2017

Fixed Income Investors Presentation

Gian Piero Cutillo Chief Financial Officer

May 2017

2013-2016: KEY ACHIEVEMENTS

• 2017-2021 INDUSTRIAL PLAN AND OUTLOOK
• KEY FINANCIAL HIGHLIGHTS
• BOND OFFERING
• APPENDIX

Key Messages

• From Finmeccanica to Leonardo
• Great evidence of the good progress we have made on our journey
• We have changed
• We have delivered on promises and targets…..
• We are in a better place ….
• And we are now moving forward
• 2016 was another year of very good performance…
• …And we are committed to continue delivering more progresses in the future: Development and Growth

Delivered on our promises

Key achievements 2013-2016

Moving from Finmeccanica to Leonardo…

More balanced and flexible Capital Structure to support DEVELOPMENT

Delivered on our promises

Key achievements 2013-2016*

Finmeccanica in 2013*

EBITA (€M) - EBITA%

*Space sector consolidated under the Equity Method

Leonardo today* EBITA (€M) - EBITA%

• 2013-2016: KEY ACHIEVEMENTS
• 2017-2021 INDUSTRIAL PLAN AND OUTLOOK
• KEY FINANCIAL HIGHLIGHTS
• BOND OFFERING
• APPENDIX

The new phase: Development and Growth

2017 – 2021 Industrial Plan

Financial flexibility

• Leonardo is now a much different Group…
• More focused
• Better balanced between Sectors
• With improved financial solidity
• …based on solid foundations for Development and Growth

10

FY2017 Guidance

• EBITA: further improvement confirmed also in profitability
• Below the line: further reduction of the non-recurring items
• FOCF: 2016-2017 cumulative net effect of the EFA Kuwait advance payment confirmed at around € 600 mln
• Net Debt: down ca. €300mln, including the acquisition of Daylight Solutions and the payment of dividend for €0.14 p.s.

		FY2016A	FY2017E*
New orders	€ bn	20.0	12.0 – 12.5
Revenues	€ bn	12.0	ca. 12.0
EBITA	€mln	1,252	1,250 – 1,300
FOCF	€mln	706	500 – 600
Group Net Debt	€ bn	2.8	ca. 2.5

Medium-Term Targets

Development & Growth

• Book to bill at ca. 1x
• 2017-2021 Revenues CAGR of 3%-5% driven by
• new orders, despite challenging markets
• strong backlog (i.e. large orders in Aeronautics and Electronics expected to contribute by 2018)
• Continuous improvement in profitability, with RoS at 11% by the mid-point of the Plan driven by
• higher volumes
• continued focus on efficiency
• Solid and flexible financial structure due to improved cash generation and material reduction in debt
• We remain committed to a disciplined financial strategy
• aiming at going back to an "investment grade" credit rating

• pursuing a better balance between reducing leverage, sustaining organic and external investment

• 2013-2016: KEY ACHIEVEMENTS

• 2017-2021 INDUSTRIAL PLAN AND OUTLOOK
• KEY FINANCIAL HIGHLIGHTS
• BOND OFFERING
• APPENDIX

Q1 2017 Key messages

• On track and fully focused on delivering the Industrial Plan
• Good commercial performance
• Expected softer volumes after very strong Q4 (particularly in Helicopters), however …
• Continued improvements in EBITA and profitability, driven by E,D&SS
• FOCF benefitted of Kuwait contract advance payment
• FY Guidance confirmed

1Q2017 results

Group Performance
		1Q		FY
€ Mln	2017	2016	% Change	2016
New Orders	2,647	2,564	3.2%	19,951
Backlog	34,832	27,863	25.0%	34,798
Revenues	2,476	2,536	(2.4%)	12,002
EBITDA	330	326	1.2%	1,907
EBITDA Margin	13.3%	12.9%	0.4 p.p.	15.9%
EBITA	187	164	14.0%	1,252
ROS %	7.6%	6.5%	1.1 p.p.	10.4%
EBIT	155	134	15.7%	982
EBIT Margin	6.3%	5.3%	1.0 p.p.	8.2%
Net result before extraordinary transactions	78	56	39.3%	545
Group Net result	78	64	21.9%	507
EPS (€ cents)	0.136	0.111	22.5%	0.879
FOCF	(427)	(876)	51.3%	706
Group Net Debt	3,254	4,212	(22.7%)	2,845
Headcount	45,407	46,756	(2.9%)	45,631

New Orders

In line or above expectations

Revenues

Soft start expected

Profitability improvement

EBITA continued to improve despite lower Revenues. RoS 110bp higher

Net Result Before Extraordinary Transactions Improvement +39% YoY on higher EBITA and EBIT

Balance Sheet Solidity – Financial Position (as of end of March 2017) and Rating

Liquidity Position (as of end of March 2017)

Stong	In order to cope with possible swings in financing needs, Leonardo can leverage on: – 31 March cash balance of approx. €1.8 Billion – Credit lines worth €2.7 Billion (confirmed and unconfirmed)
Liquidity	 The Revolving Credit Facility was renegotiated on 6 July 2015 lowering the margin from 180bps to 100bps. The renegotiated facility has an amount of €2.0bn and will expire in July 2020
Position	– Bank Bonding lines of approximately €4.0 Billion to support Leonardo's commercial activity

(1) Based on rating as of 31/03/2017

(2) Average. Expected to be renewed at maturity

• 2013-2016: KEY ACHIEVEMENTS
• 2017-2021 INDUSTRIAL PLAN AND OUTLOOK
• KEY FINANCIAL HIGHLIGHTS
• BOND OFFERING
• APPENDIX

Indicative Terms for New Leonardo Eurobond RegS Offering

Issuer	Leonardo S.p.A.
Ratings	Ba1 positive; BB+ stable; BB+ positive
Use of Proceeds	General Corporate Purposes and Refinancing of Existing Debt
Size	Euro benchmark
Tenor	7 years
Format	Senior, Unsecured, Pari Passu, RegS Bearer
Documentation	Euro Medium Term Notes Programme (EMTN)
Denomination	Euro 100k + 1k

APPENDIX

FY2016 Key Data

1Q2017 Sector results Helicopters

			FY
	€ Mln	2017	2016	% Change	2016
Orders		459	384	19.5%	3,737
Revenues		711	810	(12.2%)	3,639
EBITA		73	83	(12.0%)	430
	ROS %	10.3%	10.2%	0.1 p.p.	11.8%

• Higher orders YoY, still in markets that remain challenging and uncertain
• Softer revenues after strong 4Q, due to slower recovery of production in civil and the completion of some programmes on the AW159/Lynx lines
• Double-digit profitability solidly maintained despite lower volumes
• For FY2017, in a still challenging environment, we expect revenues almost in line with 2016, underpinned by a strong backlog and the entry in full operation of the new AW169. Profitability at double digit, in line with 2016

1Q2017 Sector results

Electronics, Defence & Security Systems*

		1Q			FY
	€ Mln	2017	2016	% Change	2016
Orders		1,039	1,217	(14.6%)	6,726
Revenues		1,146	1,134	1.1%	5,468
EBITA		84	56	50.0%	558
	ROS %	7.3%	4.9%	2.4 p.p.	10.2%

Of which DRS:

		1Q			FY
	\$ Mln	2017	2016	% Change	2016
Orders		401	422	(5.0%)	1,923
Revenues		395	364	8.5%	1,753
EBITA		25	17	47.1%	128
	ROS %	6.3%	4.7%	1.6 p.p.	7.3%

• Good commercial performance, with expected decline in Land&Naval Defence Electronics, partially offset by higher orders in Airborne & Space Systems.
• With revenues in line YoY, sharp improvement in profitability due to benefits from Industrial Plan actions and profitability recovery in some areas
• 2017 Revenues and Profitability expected to be substantially in line with 2016, despite a more competitive environment and the winding down of some profitable programmes, supported by benefits coming from industrial processes improvements
• For DRS we continue to expect positive trend in business growth and a further increase in profitability

1Q2017 Sector results

Aeronautics

			FY
	€ Mln	2017	2016	% Change	2016
Orders		1,237	993	24.6%	10,158
Revenues		656	638	2.8%	3,130
EBITA		46	41	12.2%	347
	ROS %	7.0%	6.4%	0.6 p.p.	11.1%

• Significant New Orders in Aircraft (EFA capability maintenance and support engineering services, first batch of new M-345 for AMI) and Aerostructures (B787, ATR)
• Higher EBITA driven by Aircraft (EFA)
• 2017 revenues expected in line with 2016. "Double digit" profitability confirmed, benefitting from efficiency-improvement and cost reduction actions, aimed at offsetting the winding down of some military programmes and lower contribution from ATR

1Q2017 Sector results Space

		1Q			FY
	€ Mln	2017	2016	% Change	2016
EBITA		8	4	100.0%	77

• Better results on higher volumes in Manufacturing and improvements in industrial profitability in Satellite Services
• 2017 Profitability expected in line with 2016, with growing Manufacturing Revenues

Helicopters

Acquisition of Daylight Solutions

• Significant step forward in achieving the objectives of Growth and Development of the Industrial Plan 2017-2021
• Leonardo DRS extends leadership in infrared technology and supply of dual-use integrated solutions for civil and military customers
• Leonardo DRS will pay US\$150 million for 100% of the equity of Daylight Solutions, valuing the company at approximately 9x EV/EBITDA 2017E
• Purchase price includes an earn-out, to be released upon achievement of certain financial and operating targets for the year 2017
• Following the closing of the transaction, Daylight Solutions will be one of eight Leonardo DRS lines of business
• The acquisition is subject to closing conditions, including
• approval of the stockholders of Daylight Solutions
• receipt of regulatory approvals (U.S. antitrust authorities, Committee on Foreign Investment in the Unites States)

SAFE HARBOR STATEMENT

NOTE: Some of the statements included in this document are not historical facts but rather statements of future expectations, also related to future economic and financial performance, to be considered forward-looking statements. These forward-looking statements are based on Company's views and assumptions as of the date of the statements and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Given these uncertainties, you should not rely on forward-looking statements.

The following factors could affect our forward-looking statements: the ability to obtain or the timing of obtaining future government awards; the availability of government funding and customer requirements both domestically and internationally; changes in government or customer priorities due to programme reviews or revisions to strategic objectives (including changes in priorities to respond to terrorist threats or to improve homeland security); difficulties in developing and producing operationally advanced technology systems; the competitive environment; economic business and political conditions domestically and internationally; programme performance and the timing of contract payments; the timing and customer acceptance of product deliveries and launches; our ability to achieve or realise savings for our customers or ourselves through our global cost-cutting programme and other financial management programmes; and the outcome of contingencies (including completion of any acquisitions and divestitures, litigation and environmental remediation efforts).

These are only some of the numerous factors that may affect the forward-looking statements contained in this document.

The Company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely.

DISCLAIMER

This presentation has been prepared by Leonardo S.p.A. (the "Company", which expression shall, where the context requires, include its subsidiary undertakings), is the sole responsibility of the Company and is solely for your information and for use in connection with the proposed offering of debt securities to be issued by the Company (the "Offering"). For the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed following the distribution of this document.

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The presentation has not been independently verified, approved or endorsed by any of the managers, bookrunners or underwriters retained by the Company in connection with the Offering, and no representation or warranty, express or implied, is made or given by or on behalf of them or by or on behalf of the Company or any of its subsidiary undertakings, or any of such person's respective directors, officers, employees, agents, affiliates or advisers, as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information or opinions contained in this presentation and no responsibility or liability is assumed by any such persons for any such information or opinions or for any errors or omissions. All information presented or contained in this presentation is subject to verification, correction, completion and change without notice. In providing this presentation, none of the Company or any of its subsidiary undertakings, or any of such person's respective directors, officers, employees, agents, affiliates or advisers, undertakes any obligation to amend, correct or update this presentation or to provide the recipient with access to any additional information that may arise in connection with it.

This presentation is for information purposes only and does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for any securities in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other jurisdiction, and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter into, any investment activity. This presentation does not purport to contain all of the information that may be required to evaluate any investment in the Company or any of its securities and should not be relied upon to form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation is intended to present background information on the Company, its business and the industry in which it operates and is not intended to provide complete disclosure upon which an investment decision could be made. Any investment decision should be made solely on the basis of an approved prospectus (together with any supplementary prospectus, if relevant) to be issued by the Company in relation to the proposed Offering. The merit and suitability of an investment in the Company and its securities should be independently evaluated and any person considering such an investment in the Company and its securities is advised to obtain independent advice as to the legal, tax, accounting, financial, credit and other related advice prior to making an investment.

To the extent available, the industry, market and competitive position data contained in this presentation has come from official or third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable source, the Company has not independently verified the data contained therein. In addition, certain of the industry, market and competitive position data contained in this presentation come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the market in which the Company operates. While the Company believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry, market or competitive position data contained in this presentation.

This presentation is, and the Offering when made will be, only addressed to and directed at persons in member states of the European Economic Area ("EEA") who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC as amended, including by Directive 2010/73/EC) ("Qualified Investors") as implemented in the relevant jurisdiction. In addition, in the United Kingdom, this presentation is addressed to and directed only at, Qualified Investors who (i) are persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), (ii) are persons who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, or (iii) are other persons to whom this presentation may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons").

This presentation must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the EEA other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this presentation relates is available only to relevant persons in the United Kingdom and Qualified Investors in any member state of the EEA other than the United Kingdom, and will be engaged in only with such persons.

This presentation and the information contained herein is not intended for publication or distribution in, and does not constitute an offer of securities in, the United States or to any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1933 (the "Securities Act"), as amended), Canada, Australia, Japan or any other jurisdiction where such distribution or offer is unlawful. The Company has not registered and does not intend to register the Offering in the United States or to conduct a public offering of any securities in the United States. Securities may not be offered or sold within the United States without registration, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain limited exceptions, neither this presentation nor any copy of it may be taken, transmitted or distributed, directly or indirectly, into the United States, its territories or possessions. Any failure to comply with the foregoing restrictions may constitute a violation of U.S. securities laws.

Investor Relations & Sustainable Responsible Investors (SRI)

ir@leonardocompany.com www.leonardocompany.com/investors

Contacts

Raffaella Luglini

Head of Investor Relations & SRI +39 06 32473.066 raffaella.luglini@leonardocompany.com

Valeria Ricciotti

Equity Analysts & Investors +39 06 32473.697 valeria.ricciotti@leonardocompany.com

Alessio Crosa

Fixed Income Analysts & Investors and relationship with Credit Rating Agencies +39 06 32473.337 alessio.crosa@leonardocompany.com

Manuel Liotta

Group Sustainability & ESG +39 06 32473.666 manuel.liotta@leonardocompany.com

2016 Annual Results

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34 We do business in a sustainable manner, with a continued commitment to economic and social development and the protection of public health and the environment.