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CLARA MOSCHINI

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Leonardo: assembly approves the 2017 financial statements

Several points on agenda -ATTACHMENT

The Shareholders’ Meeting of Leonardo SpA, which convened today in Rome, has resolved on the followings:

Company Financial Statements for 2017 approved 

Distribution of a € 14 cent. dividend approved 

New Board of Statutory Auditors appointed

Remuneration Report and Long Term Incentive Plan approved 

Sustainability and Innovation Report 2017, which represents the Consolidated NonFinancial Statement for 2017, presented 

Relevant attendance by institutional shareholders, mostly international, representing approx 33% of the share capital.

Financial Statements for 2017 

The Shareholders’ Meeting approved the Company’s Financial Statements for 2017 and examined the Consolidated Financial Statements.

Key economic and financial data 

2017 full year results are in line with the Guidance revised and, as expected, were affected by some non-structural issues in Helicopters. This sector represents an outstanding business with leading product ranges in reference markets, increasing market shares in the most attractive segments and relevant growth opportunities, as highlighted in the 2018-2022 Industrial Plan. The Plan is based on solid and sustainable long-term growth of all the Group's key businesses; Leonardo will be able to exploit its favorable market positioning, the solid order portfolio (over € 33.6 bn as at 31 December 2017) and the «One Company» model through the application of a new commercial strategy combined with a rigorous cost control and selection of investments and a disciplined financial strategy focused on cash generation, all aimed at achieving long-term and sustainable growth. The critical issues in 2017 were clearly understood and faced promptly, taking corrective actions in terms of changes in the organisation, processes and governance. 

2017 results highlights are as follows: 

New Orders: amounted to EUR 11,595 million (-3% vs 2016 after adjusting for the effecting of the major EFA Kuwait contract of € 7.95 bn. in 2016). The overall slight decrease was mainly attributable to the abovementioned difficulties that affected Helicopters and to the decline recorded in Electronics, the results of which were also affected by the negative exchange rate effect, in particular on the pound sterling.

Order Backlog: amounted to EUR 33,578 million (-3.5% vs. 2016). The order backlog ensures coverage of production of just under 3 years (based on 2017 revenues). 

Revenues: amounted to EUR 11,527 million, a slight decrease (-4%) compared to 2016, also due to the effect of an unfavourable exchange rate arising from the conversion of revenues into GBP and, to a lesser extent, into USD (about € 160 mln.). Electronics and Aeronautics (the latter began to benefit from revenues arising from the EFA Kuwait programme) posted revenues in line with 2016. Helicopters revenues felt because of delayed production on some product lines, as well as by the abovementioned exchange rate effect. The book-to-bill ratio was equal to 1, in line (excluding the effect of the EFA Kuwait contract) with 2016. 

EBITA: amounted to EUR 1,066 million, showed a decrease of 14.9% compared to 2016, with a decline of 1.2% in ROS, affected by lower volumes and profits in Helicopters, as well as, to a lesser extent, by the results achieved in Aeronautics and Electronics, against a lower loss recorded in the segment of other activities compared to 2016. 

EBIT: amounted to EUR 833 million; the decline in EBITA was partly absorbed by a reduction in non-recurring costs and restructuring costs (- € 47 mln.), thus entailing a decrease of € 149 mln. in EBIT compared to 2016. 

Net Result before extraordinary transactions: amounted to EUR 274 million, showed a decline compared to 2016, which was due to the performance of EBIT, as well as to higher financial costs. The increase in financial costs of € 157 mln. compared to 2016 was attributable to costs (€ 97 mln.) arising from the buy-back transactions on a portion of the Group’s bond issues; 2016 financial year also benefitted from positive exchange differences which were also reflected in the fair values of the derivatives, with a delta of + € 75 mln. compared to 2017. The Group’s tax position was affected by the US taxation system reform launched by Trump’s government, as a result of which deferred tax assets recorded in the United States of America were redetermined on the basis of the new federal tax rate (decreased from 35% to 21%), with a charge of about € 50 mln. accrued in the 2017 financial year. While excluding this effect, the tax rate showed an improvement in 2017, which was attributable to a reduction in the IRES (Corporate Income) tax rate from 27.5% to 24% in Italy. 

Net Result: amounted to EUR 274 million, equal to the net result before extraordinary transactions, in the absence of extraordinary transactions (on the contrary, the 2016 financial year was affected the transfer of operations carried out with Sukhoi on the Superjet programme in the Aeronautics sector and from the disposal of the Environmental business of DRS, net of the capital gain from the disposal of FATA). 

Free Operating Cash Flow (FOCF): amounted to EUR 537 million, showing a deterioration compared to 2016 (€ 706 mln.), which had benefitted from a lower level of investment spending. 

Group Net Debt: amounted to EUR 2,579 million, an improvement of 9% compared to 2016, despite the outlays arising from the acquisition of Daylight Solutions and of the additional stakes of Avio (for a total of € 168 mln.), as well as of the payment of dividends (€ 81 mln.). The negative change in loans and borrowings was attributable to the repayment of the debenture loan due December and to the repurchases of bonds made in 2017, net of the placement of new bonds of € 600 mln.

Below, the integral version of the report (five pages). 

Attachments
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