HALF-YEAR FINANCIAL REPORT

AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT at 30 June 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

S UMMARY

PARENT COMPANY DIRECTORS NOTES TO THE CONDENSED Note 18 - Equity 94 AND OFFICERS 5 CONSOLIDATED INTERIM Note 19 - Provisions for risks FINANCIAL STATEMENTS 73 and charges 97 THE FINCANTIERI GROUP 9 Note 1 - Form, contents Note 20 - Employee benefi ts 98 and other general information 74 Note 21 - Non-current fi nancial Our vision 10 Note 2 - Scope and basis liabilities 99 Our mission 11 of consolidation 77 Note 22 - Other non-current liabilities 99 Who we are 12 Note 3 - Accounting standards 78 Note 23 - Trade payables and other Group overview 14 Note 4 - Critical accounting estimates current liabilities 100 and assumptions 81 Note 24 - Current fi nancial liabilities 101 INTERIM REPORT Note 5 - Intangible assets 81 Note 25 - Revenue and income 102 ON OPERATIONS Note 6 - Rights of use 83 Note 26 - Operating costs 103 AT 30 JUNE 2019 21 Note 7 - Property, plant Note 27 - Finance income and costs 105 and equipment 84 Highlights 22 Note 28 - Income taxes 105 Note 8 - Investments accounted Half-year overview 23 Note 29 - Other information 106 for using the equity method Note 30 - Cash fl ows from operating Key fi nancials 27 and other investments 85 activities 117 Group performance 28 Note 9 - Non-current fi nancial assets 86 Note 31 - Segment information 117 Operational review by segment 38 Note 10 – Other non-current assets 86 Note 32 - Events after 30 june 2019 121 Other information 44 Note 11 - Deferred tax assets Companies included in the scope and liabilities 88 Enterprise risk management 50 of consolidation 122 Note 12 - Inventories and advances 89 Alternative performance measures 62 Note 13 - Construction contracts - Reconciliation of the reclassifi ed MANAGEMENT REPRESENTATION net assets and liabilities 90 fi nancial statements used ON THE CONSOLIDATED FINANCIAL Note 14 - Trade receivables in the report on operations with STATEMENTS 128 and other current assets 91 the mandatory IFRS statements 64 Note 15 - Income tax assets 92 REPORT BY THE INDIPENDENT CONDENSED CONSOLIDATED Note 16 - Current fi nancial assets 93 AUDITORS 130 INTERIM FINANCIAL STATEMENTS Note 17 - Cash and cash equivalents 93 AS AT AND FOR THE SIX MONTHS ENDED 30 JUNE 2019 67

Consolidated statement of fi nancial position 68 Consolidated statement of comprehensive income 69 Consolidated statement of changes in equity 70 Consolidated statement of cash fl ows 71

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P ARENT COMPANY DIRECTORS AND OFFICERS

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PARENT COMPANY DIRECTORS AND OFFICERS

Board of Directors Manager responsible for (2019-2021) preparing fi nancial reports

Chairman Felice Bonavolontà Giampiero Massolo

Chief Executive Of cer Supervisory Body Giuseppe Bono Leg. Decree 231/01 (2018-2020) Councilors Barbara Alemanni Chairman Massimiliano Cesare Guido Zanardi Luca Errico Paola Muratorio Members Elisabetta Oliveri Stefano Dentilli Fabrizio Palermo Giorgio Pani Federica Santini Federica Seganti Independent auditors Secretary (2013-2021 ) Giuseppe Cannizzaro PricewaterhouseCoopers S.p.A.

Board of statutory auditors (2017-2019)

Chairman Gianluca Ferrero

Standing Auditors Fioranna Vittoria Negri Roberto Spada

Alternate Auditors Alberto De Nigro Flavia Daunia Minutillo Massimiliano Nova

Information regarding the composition and functions of the Board Committees (the Internal Control and Risk Committee, which is also serving on an interim basis as the committee responsible for related party transactions, the Remuneration Committee, the Nomination Committee and the Sustainability Committee) is provided in the Governance section of the Fincantieri website at www.fi ncantieri.com.

Disclaimer refer to the information available at the date of their publication; FINCANTIERI S.p.A undertakes no obligation Forecast data and information must be regarded as to revise, update or correct its forward-looking statements forward-looking statements and therefore, not being after such date, other than in the circumstances strictly based on simple historical facts, contain, by their nature, an required by applicable regulations. The forward-looking element of risk and uncertainty because they also depend statements provided do not constitute and shall not be on the occurrence of future events and developments considered by users of the fi nancial statements as advice outside the Company's control. Actual results could for legal, accounting, tax or investment purposes nor is therefore be materially dif erent from those expressed in it the intention for such statements to create any type of forward-looking statements. Forward-looking statements reliance and/or induce such users to invest in the Company.

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T HE FINCANTIERI GROUP

OUR VISION

OUR MISSION

WHO WE ARE

GROUP OVERVIEW

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OUR VISION The Sea Ahead: all those who work at Fincantieri Group steer for this course: We aspire to become world leaders in talented men and women working all areas of shipbuilding requiring the responsibly to help develop our idea System Technological most advanced solutions, and to stand of a future increasingly characterized integrator leadership out even more for our diversification and by innovation, performance and capabilities innovation. sustainability.

OUR

STRENGTHS Business Tailor made diversification products

Wide portfolio of Flexible & global clients & products production network

OUR MISSION guidelines that are implemented across the Group: strict observance of the law, Development and continuous labour protection and protection of the improvement are the goals that we have environment, safeguarding the interests set for ourselves, and we are determined of our shareholders, employees, clients, to pursue them. commercial and financial partners, the Our every action, project, initiative or general and local communities, creating decision is based on principles and value for every stakeholder.

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WHO WE ARE repairs and conversions, production of 50,000 people in Italy alone, Fincantieri has operators and the Italian and the US Navy as systems and mechanical and electrical enhanced a fragmented production capacity well as numerous foreign navies. Fincantieri is Fincantieri is one of the world’s largest component equipment and after-sales over several shipyards into a strength, also a partner of some of the main European shipbuilding groups and number one for services. acquiring the widest portfolio of clients defence companies within supranational diversifi cation and innovation. It is leader in With over 230 years of history and more and products in the cruise business. To programs. cruise ship design and construction and a than 7,000 vessels built, Fincantieri has hold its own in relation to competition and Fincantieri's business is widely diversifi ed by reference player in all high-tech shipbuilding always kept its management of ces, as assert itself at global level, Fincantieri has end markets, geographical exposure and by industry sectors, from naval to Of shore and well as all the engineering and production broadened its product portfolio becoming client base, with revenue mainly generated Specialized Vessels, from high-complexity skills, in Italy. With over 8,900 employees world leader in the sectors in which it from cruise ship, naval vessel and Of shore and ferries to mega yachts, as well as in ship and a supplier network that employs nearly operates. Specialized Vessel construction. Compared The Group now has 20 shipyards in four with less diversifi ed players, such diversifi cation continents, more than 19,000 employees, allows it to mitigate the ef ects of any FACTS AND FIGURES and is the leading Western shipbuilder; its fl uctuations in demand on the end markets clients include the world's biggest cruise served.

20 Shipyards

PRINCIPALWestern shipbuilder Over 19,000 Employees at 30.06.2019 55% other countries +230 45% Italy Years of history +7,000 Ships designed and built € 5,474 million Revenues 2018 98 € 33.1 billion Vessels Total backlog in order book + 5,000 1st player Suppliers in Italy in diversification alone and innovation ~9,000 4 Employees in Italy at Continents 30.06.2019

Data refer to 30 June 2019

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GROUP OVERVIEW well as innovative products in the fi eld of the VARD Group was defi ned, with a focus Project management for the contruction drillships and semi-submersible drilling rigs; on two business units, the Of shore and of of shore vessels, specialized ships and The Group operates through the following • Equipment, Systems and Services: Specialized Vessels business unit and the vessels for the Norwegian Coast Guard have three segments: encompassing the design and manufacture Cruise business unit, and full organizational been merged into the VARD Of shore and of high-tech equipment and systems, such integration with FINCANTIERI S.p.A.. Specialized Vessels business unit, whose • Shipbuilding: encompassing the business as stabilization, propulsion, positioning and The VARD Cruise business unit and the economic results continue to be shown in areas cruise ships and expedition cruise power generation systems, ship automation parent company Fincantieri have defi ned the Of shore and Specialized Vessels. vessels, naval vessels and other products and systems, steam turbines, integrated systems a specifi c coordination policy based on The structure of the Fincantieri Group and services (ferries and mega yachts); and ship accommodation, and the provision which the head of Fincantieri's Merchant overview of the companies included in its • Of shore and Specialized Vessels: of repair and conversion services, logistical Ships Department directs and controls the consolidation will now be presented. encompassing the design and construction support and after-sales services. activities of the VARD Cruise business unit. of high-end of shore support vessels, In line with the above, the economic results specialized ships, and vessels for of shore In December 2018, following the delisting of this business unit have been reallocated wind farms and open ocean aquaculture, as of VARD, a new organizational structure for to the Shipbuilding operating segment.

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SHIPBUILDING OFFSHORE AND EQUIPMENT, SYSTEMS AND SERVICES OTHER ACTIVITIES SPECIALIZED VESSELS BUSINESS AREAS

Cruise Ships Ferries Naval Vessels Mega Yacht Offshore and Systems Service Contemporay Cruise ferry Aircraft carriers Mega yacht > 70 m Specialized Vessels and Components Ship repairs Premium Ro-Pax Destroyers Drilling units Cabins Refitting Upper Premium Dual fuel ferries Frigates Offshore support vessels Public areas Refurbishment Luxury Corvettes (AHTS-PSV-OSCV) Electrical, electronic Conversions Exploration/Niche Patrol vessels Specialized vessels and electromechanical Product lifecycle management Expedition cruise vessels Amphibious ships Fisheries/Aquaculture integrated systems • Integrated logistic support Logistic support ships Offshore Wind Automation systems • In-service support Multirole and research vessels Entertainment systems • Refitting Special vessels Stabilization, propulsion, • Conversions Submarines positioning and power Training and assistance generation systems Steam turbines Steel structures for large scale projects

FINCANTIERI S.p.A. Fincantieri Marine Group Holdings Inc. FINCANTIERI S.p.A. FINCANTIERI S.p.A. FINCANTIERI S.p.A. FINCANTIERI S.p.A. • Monfalcone FMG LLC Fincantieri Oil&Gas S.p.A. • Riva Trigoso • Arsenale Triestino San Marco • Marghera • Sturgeon Bay VARD Group AS Seastema S.p.A. • Bacino di Genova • Sestri Ponente Marinette Marine Corporation LLC • Aukra Seaf S.p.A. • Cantiere Integrato Navale Riva Trigoso and Muggiano • Marinette • Brattvaag Isotta Fraschini Motori S.p.A. Issel Nord S.r.l. • Ancona ACE Marine LLC • Brevik • Bari FMSNA Inc. • Castellammare di Stabia • Green Bay Vard Promar SA Fincantieri SI S.p.A. Fincantieri Services Middle East LLC • Palermo Fincantieri India Pte Ltd. • Suape Marine Interiors S.p.A. Fincantieri Services USA LLC VARD Group AS Fincantieri do Brasil Partecipacões SA Vard Vung Tau Ltd. Seanergy a Marine Interiors • Langsten Fincantieri USA Inc. • Vung Tau company S.r.l. • Søviknes Fincantieri Australia PTY Ltd. Vard Electro AS Fincantieri Infrastructure S.p.A. Vard Tulcea SA Fincantieri (Shanghai) Trading Co. Ltd. Vard Design AS Fincantieri Sweden AB • Tulcea Etihad Ship Building LLC. Vard Piping AS Unifer Navale S.r.l. Vard Braila SA Orizzonte Sistemi Navali S.p.A. Vard Marine Inc. Genova Industrie Navali S.p.A.

MAIN SUBSIDIARIES / ASSOCIATES / JOINT VENTURESMAIN SUBSIDIARIES / ASSOCIATES • Braila PRODUCT PORTFOLIOCSSC - Fincantieri SEGMENTS Cruise Industry Development Ltd. Seaonics AS Pergenova S.c.p.a. Vard Accommodations AS Cetena S.p.A.

Other activities primarily refer to the costs incurred by corporate headquarters for directing, controlling and coordinating the business that are not allocated to other operating segments.

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THE FINCANTIERI PLANET

SHIPYARDS AND DOCKS MAIN SUBSIDIARIES EUROPE EUROPE ASIA ITALY ITALY CHINA Trieste FINCANTIERI S.p.A. Fincantieri (Shanghai) Trading Monfalcone Orizzonte Sistemi Navali CSSC - Fincantieri Marghera Cetena Cruise Industry Development Sestri Ponente Seastema INDIA Genova Isotta Fraschini Motori Fincantieri India Riva Trigoso - Muggiano Fincantieri Oil & Gas Vard Electrical Installation Ancona Seaf and Engineering (India) Castellammare di Stabia Marine Interiors Palermo Seanergy a Marine Interiors company UAE Fincantieri SI Etihad Ship Building NORWAY Fincantieri Infrastructure Aukra QATAR Brattvaag Issel Nord Fincantieri Services Middle East Brevik NORWAY Langsten Vard Group SINGAPORE Søviknes Vard Design Vard Holdings Vard Piping Vard Shipholdings Singapore ROMANIA Braila Vard Electro Vard Accomodation Tulcea JAPAN Seaonics FMSNA YK

ASIA SWEDEN Fincantieri Sweden AMERICAS VIETNAM USA Vung Tau POLOND Fincantieri Marine Group Seaonics Polska Fincantieri Marine AMERICAS Systems North America Fincantieri Services USA USA Marinette Fincantieri USA Sturgeon Bay Vard Marine US Green Bay CANADA Vard Marine BRAZIL Suape BRAZIL Fincantieri do Brasil Participações

OCEANIA AUSTRALIA Fincantieri Australia

more than 19,000 20 4 EMPLOYEES SHIPYARDS CONTINENTS

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I NTERIM REPORT ON OPERATIONS AT 30 JUNE 2019

HIGHLIGHTS

HALF-YEAR OVERVIEW

KEY FINANCIALS

GROUP PERFORMANCE

OPERATIONAL REVIEW BY SEGMENT

OTHER INFORMATION

ENTERPRISE RISK MANAGEMENT

ALTERNATIVE PERFORMANCE MEASURES

RECONCILIATION OF THE RECLASSIFIED FINANCIAL STATEMENTS USED IN THE REPORT ON OPERATIONS WITH THE MANDATORY IFRS STATEMENTS

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HIGHLIGHTS HALF-YEAR OVERVIEW (the third vessel of the Explorer class). MSC Crociere has signed contracts for the FROM DIFFERENT SHIPYARDS, GROUP RESULTS IN LINE WITH THE 2019 15 SHIPS DELIVERED 11 With revenues growing for the seventh construction of four luxury cruise ships, thus ECONOMIC AND FINANCIAL FORECAST TWO VESSELS LAUNCHED FOR THE ITALIAN NAVY’S FLEET AND WITH THE 2018-2022 BUSINESS PLAN RENEWAL PROGRAM semester in a row, Fincantieri’s results for entering a new segment that is showing the fi rst half of 2019 confi rm once again the signifi cant growth potential, while the client FOR THE SEVENTH ALLIANCE COOPERATION AGREEMENT SIGNED WITH REVENUES GROWING NAVAL positive growth trend from a commercial, Viking has confi rmed the order for two of SEMESTER IN A ROW GROUP, DEFINING THE OPERATING TERMS FOR THE EQUAL productive and economic standpoint and are JOINT VENTURE the six vessels provided for in the March RECORD ORDER INTAKE (EURO 6.6 BILLION) in line with the 2018-2022 Business Plan. 2018 agreement, which will bring its fl eet to IN A SINGLE SEMESTER ONGOING INTERACTIONS WITH THE ANTITRUST The fi rst half of 2019 closed with revenues of 12 vessels built by Fincantieri - the largest AUTHORITIES ON THE ACQUISITION OF CHANTIERS DE over 2.8 billion (+12%), an EBITDA of euro 215 number of vessels in the same class for a 15 VESSELS, OF WHICH 11 CRUISE L’ATLANTIQUE SHIPS FOR FIVE DIFFERENT BRANDS million (+17%) with a margin of 7.6% (7.3% at single shipowner. Furthermore, Princess PRODUCTION STARTED FOR THE BRIDGE OVER THE 30 June 2018), an Adjusted profi t/(loss) for Cruises, a brand of the Carnival group, has TOTAL BACKLOG1 FOR 108 SHIPS AND EURO 33.1 POLCEVERA RIVER BILLION EQUIVALENT TO 6 TIMES 2018 REVENUES the period of euro 34 million and a positive formalized contracts for the construction of CONTINUED FOCUS ON SUSTAINABILITY Net Result of euro 12 million that refl ects the two next-generation dual fuel cruise ships, BACKLOG AT EURO 29.5 BILLION (+34%) costs of the asbestos exposure lawsuits of i.e. also powered by Liquefi ed Natural Gas. WITH 98 VESSELS TO DELIVERY UP TO 2027 IMPORTANT SOCIAL AND ENVIRONMENTAL euro 18 million and tax expenses of euro 40 Over the six months, fi ve cruise ships were AGREEMENTS SIGNED SOFT BACKLOG OF AROUND EURO million. delivered: one for Viking, one for Costa 3.6 BILLION ACTIVITIES STARTED IN ORDER TO ACHIEVE THE Net debt is euro 724 million and the Group’s Crociere (a Carnival group brand), two SET OUT IN THE SUSTAINABILITY PLAN GOALS fi nancial structure is consistent with the for Ponant and one for Hapag Lloyd. With increased volume and value of Cruise units in reference to the Costa Crociere brand, “Costa REVENUE AND INCOME: EURO 2,837 MILLION (+12%) PROFIT FOR THE PERIOD OF EURO 12 MILLION, production and with the delivery shedule. Venezia”, the fi rst ship of the Italian company AFTER EXTRAORDINARY COSTS FOR ASBESTOS- With a total backlog of euro 33.1 billion, around designed specifi cally for the Chinese market RELATED LAWSUITS FOR EURO 18 MILLION AND 6.1 times the revenues for 2018, made up of and which is enjoying great commercial EBITDA OF EURO 215 MILLION (+17%) WITH A NET OF TAX EXPENSES OF EURO 40 MILLION approximately euro 29.5 billion of backlog success, was delivered in February. CONSOLIDATED EBITDA MARGIN OF 7.6% (VS. 7.3% IN THE FIRST HALF OF 2018) 3 (with 98 vessels to be delivered by 2027) and With reference to the naval vessel business NET DEBT OF EURO 724 MILLION (VS. EURO 494 MILLION AT 31 DECEMBER 2018) INCLUDING euro 3.6 billion of soft backlog, Fincantieri has unit and, in particular, within the context of THE IMPACT OF IFRS 16 (EURO 88 MILLION) AND 2 further strengthened its leadership position the Littoral Combat Ship (LCS) program, ADJUSTED PROFIT FOR THE PERIOD OF EURO A FINANCIAL STRUCTURE CONSISTENT WITH THE 34 MILLION INCREASED VOLUME AND VALUE OF CRUISE UNITS on a global level and can ensure long-term the Group, through the Marinette Marine IN PRODUCTION AND WITH THE DELIVERY SCHEDULE visibility for the Group and supply chain, Corporation subsidiary, was awarded the confi rming its ability to transform the soft contract for the construction of an additional (1) Sum of backlog and soft backlog. backlog into fi rm orders. vessel, the sixteenth of the LCS program (2) Profi t/(loss) for the period before extraordinary and non-recurring income and expenses. (3) This fi gure does not include construction loans. Within the Cruise ship business area, the “Freedom” class (LCS 31). In just ten years, Group has acquired a record volume of new the Group’s US shipyards have successfully orders in just six months (around euro 6 delivered eight of the program’s ships and are billion for 11 vessels), strengthening the client building a further eight vessels. Over the six- relationships and order backlog with projects month period, two vessels of the Italian Navy for new generation vessels, which also require fl eet renewal programme were launched: the the use of new state-of-the-art technologies. “Trieste” Landing Helicopter Dock and the fi rst In the fi rst six months of 2019, the American PPA (Multipurpose Of shore Patrol Vessel) group Norwegian Cruise Line Holdings Ltd. “Paolo Thaon di Revel”. confi rmed its order for two new-concept In the Of shore and Specialized Vessels cruise ships for the Oceania Cruises brand operating segment, the Group, through the and signed a contract for the construction Vard subsidiary, signed a contract with the of a new ultra luxury cruise ship for Australian shipowner Coral Expeditions for the Regent Seven Seas Cruises brand the design and construction of a second

22 23 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

small-scale luxury cruise ship (expedition operating segment refl ects the development This increase is mainly due to the adjustment In the fi rst half of 2019, the Group's cruise vessel), sister ship of the “Coral of the current portfolio of new special units, of the workforce to the current order backlog commitment to combining business growth Adventurer” which entered the shipowner’s which is particularly challenging due to the relating to the Cruise business. Considering the with the principles of social and environmental fl eet in April and a product of the Vard Vung diversity of the projects and type of vessels Group’s production structure, an increase in the sustainability continued. In particular, within the Tau shipyard (Vietnam). undergoing construction at the same time, headcount corresponds to a signifi cant increase area of research and development, Fincantieri Finally, in the Equipment, Systems and which goes alongside a sub-optimal use of in the involvement of the supplier network. signed two important agreements: the fi rst Services operating segment, in the fi rst half of some yards. The segment is also af ected by The Group’s strategic line in the area of industrial with Cassa Depositi e Prestiti and Snam for the year the Group started the construction of a continuing deteriorated market situation, alliances has led to the signing of an agreement, the development of sustainable technologies the bridge over the Polcevera river in Genoa where occasional projects with high potential the “Alliance Cooperation Agreement”, between applied to maritime transportation and the with the related orders for the supply and go side by side with other orders with lower Fincantieri and Naval Group, defi ning the second with Cassa Depositi e Prestiti, Terna and installation of the metal deck. This contract margins. In this context, it should be noted operating terms for the establishment of a Eni for the development and implementation of also provides for cooperation with the Group's that a restructuring plan is currently being 50/50 joint venture. The agreement realizes the wave power generation plants on an industrial companies involved in the integrated bridge developed which aims to recover margins content of the “Poseidon” project and paves scale. monitoring, control and inspection system, in the medium term, also drawing on the the way to strengthening naval cooperation With regards to training, Fincantieri signed confi rming the Group’s ability to capitalize on experience of developing innovative products between the two groups to create a more an agreement with the University of its experience in order to seize opportunities and cutting-edge technologies in sectors ef cient and competitive European marine Calabria establishing new relationships in in new operating segments. Included in the not closely linked to the Oil&Gas operating engineering industry. Thanks to this agreement, operating segments relating to the Group’s orders acquired in the operating segment segment. the two groups will be able to submit bids for operations (civil, industrial and information is one for Meyer Turku for the supply of Revenues are growing in the Equipment, binational programs and for export, as well as engineering), together with the agreements stabilization systems and turbogenerator Systems and Services operating segment, generating synergies in the areas of procurement that aim to of er students in technical systems for heat recovery which will be confi rming the trend which started in 2017 and research and development, permitting colleges (ITS) new training opportunities in installed on the new class of cruise ships under thanks to the development of a signifi cant Fincantieri and Naval Group to bring into play shipbuilding, thus meeting the employment construction at the Finnish yard. order backlog, maintaining a good common structures, testing instruments and skills requirements of the shipbuilding industry. With regard to the fi nancial results for the fi rst profi tability level. The segment features a networks. Fincantieri is also continuing its commitment half of 2019, the excellent performance of the higher contribution from conversions and It should be remembered that also in the to the “Towards Zero Accidents” project, Group’s Italian shipyards continues, registering refurbishment projects, characterized by a context of cooperation between Italy and in particular with the signing of a a signifi cant increase in revenues for the lower profi tability profi le than other businesses France, February 2018 saw the signing of the memorandum of understanding with Shipbuilding operating segment (+13.2%) and in the same segment, but strategically share purchase agreement with the French INAIL for the development of the safety a margin of 10.2%, confi rming the solidity of important in that they enable the development government for the acquisition of 50% of culture at work through targeted activities the drivers identifi ed in the Business Plan for and maintenance of client relationships and the capital of STX France (now Chantiers de and projects. Moreover, in the fi rst half of the operating segment. In fact, the Group’s order backlog and contribute to the increase l’Atlantique). The operation, whose closing the fi nancial year, activities were initiated main growth factors as set out in the 2018- in headcount levels at some of the Group’s is subject to certain conditions, including aimed at reaching the targets defi ned in 2022 Business Plan include the derisking Italian yards. The Grimaldi Lines project is authorization by the Antitrust Authorities, also the Sustainability Plan, in particular with of the Cruise portfolio in combination with one such project. It involves the installation provides for the loan to Fincantieri of 1% of the regard to stakeholder engagement, the commercial competitiveness, the market’s of cutting-edge solutions aimed at reducing share capital of STX France. integration of sustainability topics within in- positive momentum and the ef ectiveness environmental impact and saving energy, such Within the context of the growth strategy house training and in the relationships with of the strategic choices adopted. The as energy storage systems that enable vessels and the strengthening of its activities in the suppliers, as well as the work-life balance. optimization actions aimed at increasing not to use diesel engines during stops in ports, operating segments with high technology Notwithstanding the challenging context Italian production capacity, undertaken to in line with the objective promoted by the content, Fincantieri purchased a majority with specifi c reference to the Of shore and develop the considerable backlog that has Grimaldi group of zero emissions in port. share of the capital of Insis S.p.A, a company Specialized Vessels sector performance, resulted in a 10% annual growth in revenues, The headcount in Italy has grown by over 3% operating in the information technology and the good results within the Shipbuilding will allow Fincantieri to achieve higher levels compared to 31 December 2018, and on an cybersecurity sectors. This reinforces the work segment allow the forecasts for the 2019 of operational ef ciency and therefore overall level the workforce has increased from that has been carried out over recent years fi nancial year on a Group level to be profi tability. 19,274 units at 31 December 2018 to 19,725 in the development of new technologies and maintained. Specifi cally, the targets of The Of shore and Specialized Vessels units at 30 June 2019 (+2%). applications, including defense electronics. revenue growth and the maintenance of

24 25 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

EBITDA margins in line with 2018 are continue, with ongoing focus on execution KEY FINANCIALS confi rmed, consistently with the economic aimed at margin recovery. It should be and fi nancial forecasts presented within noted that a restructuring plan is currently (euro/million) 31.12.2018 Economic data 30.06.2019 30.06.2018 the 2018-2022 Business Plan. Net debt being developed, including initiatives to is expected to rise temporarily due to recover margins in the medium term, also 5,474 Revenue and income 2,837 2,527 working capital fi nancing needs. leveraging on the experience of developing 414 EBITDA 215 183 In the Shipbuilding segment, in the next innovative products and cutting-edge 7.6% EBITDA margin (*) 7.6% 7.3% EBIT half of 2019, the Group expects to deliver technologies in sectors not closely linked 277 137 118 5.1% EBIT margin (**) 4.8% 4.7% four ships, including three cruise units to the Oil&Gas sector. 108 Adjusted profi t/(loss) for the period1 34 39 and one naval vessel. Also with reference The Equipment, Systems and Services Extraordinary and non-recurring income (51) (27) (32) to the naval business area, the program segment is expected to confi rm its revenue and (expenses) for the Qatari Ministry of Defense coming growth trend, thanks to the development of 69 Profi t/(loss) for the period 12 15 into full swing, with three vessels under the backlog relating to military programs, 72 Group share of profi t/(loss) for the period 16 21 construction and the fi rst delivery to greater volumes for the production scheduled for 2021. of cabins and public areas for the cruise 31.12.2018 Financial data 30.06.2019 30.06.2018 In the Of shore and Specialized Vessels business activity, and to the development 1,747 Net invested capital 1,962 1,523 segment, the construction activity related of activities within the infrastructure area 1,253 Equity 1,238 1,259 to the backlog acquired as a result of the which have seen the start of construction (494) Net fi nancial position (724) (264) diversifi cation strategy adopted following work on the bridge over the Polcevera River 31.12.2018 Other indicators 30.06.2019 30.06.2018 the Oil&Gas sector crisis is expected to in the fi rst half of the year. 8,617 Order intake (***) 6,627 2,388 32,743 Order book (***) 36,979 27,665 33,824 Total backlog (***)(****) 33,127 29,787 25,524 - of which backlog (***) 29,527 21,987 161 Capital expenditure 102 44 402 Net cash fl ows for the period 5 342 122 Research and Development costs 65 61 19,274 Employees at the end of the period number 19,725 19,375 35 Vessels delivered number 15 20 27 Vessels ordered number 15 13 98 Vessels in order book number 98 99

31.12.2018 Ratios 30.06.2019 30.06.2018

16.5% ROI 17.0% 14.8% 5.4% ROE 5.3% 4.6% 1.0 Total debt/Total equity number 1.2 0.8 1.2 Net fi nancial position/EBITDA number 1.6 1.1 0.4 Net fi nancial position/Total equity number 0.6 0.2

(*) Ratio between EBITDA and Revenue and income. (**) Ratio between EBIT and Revenue and income. (***) Net of eliminations and consolidation adjustments. (****) Sum of backlog and soft backlog. n.s. not signifi cant. (1) Profi t/(loss) for the period before extraordinary and non-recurring income and expenses. The percentages contained in this report have been calculated with reference to amounts expressed in thousands of euros.

26 27 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

GROUP PERFORMANCE ORDER INTAKE (%) BY OPERATING of the year, with the related orders for the turbogenerator systems for heat recovery SEGMENT IN 1ST HALF 2019 supply and installation of the metal deck. which will be installed on the new class of Furthermore, the order for Meyer Turku cruise ships under construction at the Finnish Group operational performance 96% for the supply of stabilization systems and yard. Order intake During the fi rst six months of 2019, the Group (euro/million) 31.12.2018 Order intake analysis 30.06.2019 30.06.2018(*) reported a record level in new orders of euro 6,627 million compared to euro 2,388 million Amounts % Amounts % Amounts % for the same period in 2018, with a book- 6,288 73 FINCANTIERI S.p.A. 6,060 91 1,224 51 to-bill ratio (order intake/revenues) of 2.3 2,329 27 Rest of Group 567 9 1,164 49 (0.9 at 30 June 2018). Before intersegment 8,617 100 Total 6,627 100 2,388 100 consolidation adjustments, the Shipbuilding 7,129 82 Shipbuilding 6,364 96 1,350 57 segment accounted for 96% of the period’s 913 11 Of shore and Specialized Vessels 57 1 824 35 total order intake (57% in the fi rst half of 5% 1,006 12 Equipment, Systems and Services 349 5 376 16 2018), the Of shore and Specialized Vessels 1% -2% (431) (5) Consolidation adjustments (143) (2) (162) (8) segment for 1% (35% in the fi rst half of 2018) 8,617 100 Total 6,627 100 2,388 100 and the Equipment, Systems and Services SHIPBUILDING OFFSHORE AND EQUIPMENT, SYSTEMS CONSOLIDATION (*) The comparative fi gures have been restated following redefi nition of the operating segments. SPECIALIZED AND SERVICES ADJUSTMENTS segment for 5% (16% in the fi rst half of 2018). VESSELS With reference to the Cruise ship business Backlog and Soft backlog ORDER BACKLOG (%) BY OPERATING area in the fi rst six months of 2019, Fincantieri SEGMENT AT JUNE 2019 The Group’s total backlog reached euro registered signifi cant commercial successes: the Littoral Combat Ship (LCS) program, 33.1 billion at 30 June 2019, comprising the American group Norwegian Cruise Line the Group, through the Marinette Marine euro 29.5 billion of backlog (euro 22 billion 94% Holdings Ltd. confi rmed its order for two Corporation subsidiary, was awarded the at 30 June 2018) and euro 3.6 billion of soft new-concept cruise ships for the Oceania contract for the construction of an additional backlog (euro 7.8 billion at 30 June 2018) Cruises brand and signed a contract for the vessel, the sixteenth of the LCS program with development of the contracts in the construction of a new ultra luxury cruise “Freedom” class (LCS 31). In just ten years, portfolio up to 2027. The Group has once ship for the Regent Seven Seas Cruises the Group’s US shipyards have successfully again shown its ability to convert the soft brand (the third vessel of the Explorer delivered eight of the program’s ships and are backlog into fi rm orders in a short period class). MSC Crociere has signed contracts building a further eight vessels. of time, ensuring long-term visibility for for the construction of four luxury cruise In the Of shore and Specialized Vessels the Group and the supplier network. The ships, thus entering a new segment that is operating segment, the Group, through the backlog and total backlog guarantee about 3% 5% showing signifi cant growth potential, while Vard subsidiary, signed a contract with the -2% 5.4 years and 6.1 years of work respectively the client Viking has confi rmed the order Australian shipowner Coral Expeditions for in relation to the 2018 level of revenues. for two of the six vessels provided for in the the design and construction of a second SHIPBUILDING OFFSHORE AND EQUIPMENT, SYSTEMS CONSOLIDATION Before intersegment consolidation March 2018 agreement, which will bring its small-scale luxury cruise ship (expedition SPECIALIZED AND SERVICES ADJUSTMENTS adjustments, the Shipbuilding operating VESSELS fl eet to 12 vessels built by Fincantieri - the cruise vessel), sister ship of the “Coral segment accounts for 94% of the Group largest number of vessels in the same class Adventurer” which entered the shipowner’s order backlog (92% in the fi rst half of for a single shipowner. Furthermore, Princess fl eet in April. The vessel will be produced 2018), the Of shore and Specialized Vessels the central role played by Fincantieri Cruises, a brand of the Carnival group, has and delivered by the Vard Vung Tau shipyard operating segment for 3% (5% in the fi rst as innovation leader in the reference formalized contracts for the construction of (Vietnam). half of 2018) and the Equipment, Systems operating segments. In fact, the Fincantieri two next-generation dual fuel cruise ships, i.e. Finally, in the Equipment, Systems and and Services operating segment for 5% backlog includes projects for new-concept also powered by Liquefi ed Natural Gas. Services operating segment, the Group (6% in the fi rst half of 2018). vessels with a high level of innovation, With reference to the naval vessels business started the construction of the bridge over The order intake in the six months and which will enrich the fl eets of the Group’s area and, in particular, within the context of the Polcevera river in Genoa in the fi rst half the current order backlog also highlight clients.

28 29 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Specifi cally, the two vessels for Princess Cruises will launches Fincantieri into a future where emission Capital expenditure on property, plant CAPITAL EXPENDITURE (%) BY OPERATING not only be the largest ever built in Italian shipyards, standards will guide renewal programs for our and equipment made in the fi rst half of SEGMENT IN 1ST HALF 2019 but will also be the fi rst in the shipowner’s fl eet to clients’ fl eets. 2019 mainly related to i) continued work be powered primarily by Liquefi ed Natural Gas, The composition of the backlog by operating to upgrade the operational areas and 75% an ambitious and cutting edge project which segment is shown in the following table. infrastructure at some Italian shipyards to meet new production scenarios, which (euro/million) involve the construction of increasingly 31.12.2018 Backlog analysis 30.06.2019 30.06.2018(*) large cruise ships and which have seen an Amounts % Amounts % Amounts % increasing order backlog; ii) an increase in 22,462 88 FINCANTIERI S.p.A. 26,530 90 19,391 88 the safety standards of the plant, equipment 3,062 12 Rest of Group 2,997 10 2,596 12 and buildings; iii) the continuation of work 25,524 100 Total 29,527 100 21,987 100 to increase production capacity at the Vard 12% 11% 23,714 93 Shipbuilding 27,793 94 20,258 92 Tulcea and Braila shipyards in preparation Of shore and Specialized Vessels 987 4 885 3 1,132 5 for both the construction of hulls and 2% 1,638 6 Equipment, Systems and Services 1,604 5 1,289 6 the multi-year program to construct pre- (815) (3) Consolidation adjustments (755) (2) (692) (3) SHIPBUILDING OFFSHORE AND EQUIPMENT, SYSTEMS CONSOLIDATION fi tted sections of cruise ships in support of SPECIALIZED AND SERVICES ADJUSTMENTS 25,524 100 Total 29,527 100 21,987 100 VESSELS Fincantieri’s production network. (*) The comparative fi gures have been restated following redefi nition of the operating segments.

The soft backlog, representing the value of The following table shows the deliveries (euro/million) existing contract options and letters of intent scheduled each year for the 98 vessels currently 31.12.2018 Capital expenditure analysis 30.06.2019 30.06.2018(*) as well as of contracts at an advanced stage of in the order book, analysed by the main business Amounts % Amounts % Amounts %

negotiation, none of which are yet refl ected in units. With reference to the current year, the 109 68 FINCANTIERI S.p.A. 80 78 30 68 the order backlog, amounted to approximately table presents deliveries completed as at 30 52 32 Rest of Group 22 22 14 32 euro 3.6 billion at 30 June 2019, compared to 7.8 June 2019 in addition to the total number of 161 100 Total 102 100 44 100 billion at 30 June 2018, in line with the signifi cant deliveries scheduled for the full 2019 fi nancial 124 77 Shipbuilding 77 75 33 74 increase in orders registered compared to the year. 64Of shore and Specialized Vessels 22 36 same period in 2018. 18 11 Equipment, Systems and Services 12 12 4 10 13 8 Other activities 11 11 4 10 161 100 Total 102 100 44 100 (number) Deliveries 37 23 Intangible assets 22 22 6 13 completed as at 30.06.19 Total 2019 2020 2021 2022 2023 Beyond 2023 124 77 Property, plant and equipment 80 78 38 87

Cruise ships 58897713 161 100 Total 102 100 44 100 Naval 2376735 (*) The comparative fi gures have been restated following redefi nition of the operating segments. Of shore and Specialized 82061111 Vessels Group fi nancial results net fi nancial position and the principal economic and fi nancial indicators used by It should be noted that, compared to what Capital expenditure Presented below are the reclassifi ed management to monitor business performance. was reported at 31 December 2018, the Capital expenditure amounted to euro 102 consolidated versions of the income statement, A reconciliation of these reclassifi ed statements deliveries initially planned for 2019 of one million in the fi rst six months of 2019, of statement of fi nancial position and statement to the IFRS statements can be found later on in vessel dedicated to aquaculture activities which euro 22 million for intangible assets of cash fl ows, the breakdown of consolidated this report. for the shipowner Remøybuen and a (including euro 14 million for development research expedition vessel for the Norwegian projects) and euro 80 million for property, shipowner Rosellinis Four-10 have been plant and equipment. Capital expenditure delayed by one year. represented 3.5% of the Group's revenues in the fi rst six months of 2019, compared with 1.7% in the fi rst six months of 2018.

30 31 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

RECLASSIFIED CONSOLIDATED INCOME STATEMENT REVENUE ANALYSIS EBITDA ANALYSIS

€ MM 2,837 € MM (euro/million) 7.3% 7.6% 31.12.2018 30.06.2019 30.06.2018 2,527 12.0% 371 5,474 Revenue and income 2,837 2,527 11.5% 321 215 10.1% 314 10 Materials, services and other costs (4,089) (2,100) (1,855) 183 10.5% 12.0% 333 39 (946) Personnel costs (508) (482) 10 (25) Provisions (14) (7) 723 414 EBITDA 215 183 592 10.7% 34 7.6% EBITDA margin 7.6% 7.3% Depreciation, amortization and impairment (137) (78) (65) 10.2% 246 77.9% 2,410 277 EBIT 137 118 8.1% 76.5% 173 5.1% EBIT margin 4.8% 4.7% 2,129

1,677 SHIPBUILDING (104) Finance income/(costs) (60) (52) 1,527 SHIPBUILDING (1) Income/(expense) from investments (3) 1 -1.7% (6) (64) Income taxes (40) (28) -16.6% (18) (52) 108 Adjusted profi t/(loss) for the period1 34 39 (18) 111 of which attributable to Group 38 45 (256) (258) (51) Extraordinary and non-recurring income and (expenses) (27) (32) 30.06.2018(*) 30.06.2019 30.06.2018(*) 30.06.2019 12 Ta x e f ect of extraordinary and non-recurring income and expenses 5 8 SHIPBUILDING OFFSHORE AND EQUIPMENT, SYSTEMS CONSOLIDATION SHIPBUILDING OFFSHORE AND EQUIPMENT, SYSTEMS OTHER PRODUCTS SPECIALIZED AND SERVICES ADJUSTMENTS SPECIALIZED AND SERVICES AND SERVICES 69 Profi t/(loss) for the period 12 15 VESSELS VESSELS CRUISE SHIPSNAVAL OTHER PRODUCTS %TOTAL %TOTAL 72 Group share of profi t/(loss) for the period 16 21 VESSELS AND SERVICES REVENUES REVENUES

(1) Profi t/(loss) for the period before extraordinary and non-recurring income and expenses. (*) The comparative fi gures have been restated following redefi nition of the operating segments.

Revenue and income (euro 2,837 million) accounts for 81% of the total in the period in reference to the Group’s EBITDA and The adjusted profi t/(loss) for the period has increased by euro 310 million compared ended 30 June 2019, compared to 82% for is af ected by the higher amortization shows a net profi t of euro 34 million at 30 to the same period in the previous year the corresponding period in 2018. following the registration of the rights of June 2019 (euro 39 million at 30 June 2018). (+12%), with a positive net ef ect (euro 8 use for the application of IFRS 16. million) from the conversion into euro of EBITDA is equal to euro 215 million at 30 Extraordinary and non-recurring income revenues in USD and Norwegian Krone June 2019 (euro 183 million in the fi rst half Finance income/(costs) and income/ and expenses report euro 27 million in net generated by the foreign subsidiaries. The of 2018), with an EBITDA margin of 7.6% (expense) from investments report a net expenses (euro 32 million at 30 June 2018) Shipbuilding segment recorded an overall (percentage of Revenue and income), expense of euro 63 million (net expense of and mainly include the expenses of euro increase in revenues of 13.2%, with the an improvement on the 7.3% at 30 June euro 51 million at 30 June 2018). The main 18 million relating to asbestos exposure revenues from cruise ships which increased 2018. This margin mainly refl ects the changes are due to the fi nance costs on lawsuits and expenses of euro 7 million by 9.8% and the revenues from naval vessels positive performance of the Shipbuilding hedging derivatives for orders in foreign connected to the reorganization plans for which increased by 22.1%. At 30 June 2019, and Equipment, Systems and Services currency (increased by euro 22 million the VARD subsidiary. revenues from the cruise ship business operating segments on the one hand, and compared to the same period in 2018), lower area accounted for 54% of the Group’s the negative margins of the Of shore and unrealized exchange rate losses associated The tax ef ect linked to the extraordinary and revenues (55% at 30 June 2018), while the Specialized Vessels operating segment on with the conversion of the loan granted to non-recurring income and expenses item was naval vessel business area accounted for the other. Vard Promar into US dollars (a change of a net positive euro 5 million at 30 June 2019. 23% (21% at 30 June 2018). The Equipment, euro 8 million compared to the same period Systems and Services segment also The EBIT achieved in the fi rst half of 2019 in 2018) and lower fi nance costs related to Profi t/(loss) for the period, refl ecting the recorded an increase in volumes of about is euro 137 million compared to euro 118 debt (decrease of euro 6 million). factors described above, is a net profi t of 16%, while revenue from the Of shore million for the same period of the previous euro 12 million (euro 15 million at 30 June and Specialized Vessels segment slowed year, with an EBIT margin (percentage Income taxes have a negative balance of 2018). The Group share of this result is a down compared to the same period in the of Revenue and income) of 4.8% (4.7% in euro 40 million for the fi rst half of 2019 net profi t of euro 16 million, compared with previous year. the fi rst half of 2018). The increase in EBIT (negative balance of euro 28 million for the a net profi t of euro 21 million in the same Revenue generated by foreign clients is due to the reasons explained above same period in 2018). period of the previous year.

32 33 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

RECLASSIFIED CONSOLIDATED STATEMENT OF FINANCIAL POSITION decrease in inventories (euro 74 million), It is recalled that, in view of the mainly related to the delivery of a vessel operational nature of construction loans (euro/million) classifi ed among the inventories following and particularly the fact that these types 30.06.2018 30.06.2019 31.12.2018 the cancellation of the order, and which of loan are obtained and can be used 625 Intangible assets 621 618 was subsequently resold; ii) the increase in exclusively to fi nance the contracts to - Rights of use 85 - construction contracts and client advances which they refer, management treats them 1,031 Property, plant and equipment 1,152 1,074 (euro 33 million), due to the volumes in the same way as client advances and 51 Investments 74 60 realized in the fi rst half of the year net so classifi es them as part of Net working 72 Other non-current assets and liabilities (14) 8 of deliveries during the period and the capital. (58) Employee benefi ts (59) (57) reclassifi cation described above; iii) the • Equity is euro 1,238 million, with a net 1,721 Net fi xed capital 1,859 1,703 852 Inventories and advances 807 881 decrease in Trade receivables (euro 102 profi t generated in the period (euro 12 584 Construction contracts and client advances 969 936 million) due to the collection of the fi nal million) and an increase in the currency (488) Construction loans (492) (632) instalment of the delivered vessels; iv) translation reserve (euro 10 million), of set 601 Trade receivables 647 749 the reduction of Trade payables (euro 25 by the distribution of dividends (euro 17 (1,595) Trade payables (1,824) (1,849) million); and v) the reduction of Provisions million) and by the reduction of the reserve (155) Provisions for risks and charges (80) (135) for risks and charges (euro 55 million), related to cash fl ow hedging instruments 3 Other current assets and liabilities 76 94 mainly due to the use of the fund relating (euro 20 million). (198) Net working capital 103 44 to the “Serene” litigation following the 1,523 Net invested capital 1,962 1,747 settlement agreement on closure of all the Note that the shareholding in VARD at outstanding proceedings. 30 June 2019 is 97.44% (97.22% at 31 863 Share capital 863 863 Construction loans at 30 June 2019 December 2018). 338 Reserves and retained earnings attributable to the Group 353 364 amounted to euro 492 million overall, with Non-controlling interests in equity 58 22 26 a reduction of euro 140 million compared 1,259 Equity 1,238 1,253 to 31 December 2018, with euro 232 million 264 Net fi nancial position 724 494 related to the VARD subsidiary and euro 1,523 Sources of funding 1,962 1,747 260 million to the Parent Company.

The reclassifi ed consolidated statement of registration of two vessels as fi xed assets fi nancial position shows a positive variation which were previously registered as Work in in Net invested capital at 30 June 2019 of Progress following the decision to manage euro 214 million compared to the end of the them in-house (euro 37 million), and the previous fi nancial year, mainly due to the positive ef ect of the foreign currency following factors: translation of the fi nancial statements (euro 12 million), all partially of set by • Net fi xed capital: with an overall increase the amortization for the period (euro 70 of euro 156 million. The main ef ects include, million); and iii) the reduction of Other in particular: i) registration of the right non-current assets and liabilities (euro 22 to use leased assets following the initial million) resulting from the fl uctuation of application of IFRS 16 after the related the fair value of derivatives on negotiated amortization (euro 85 million); ii) the exchange rates for contracts in currencies increase in the value of Intangible assets other than the euro. and Property, plant and equipment of euro • Net working capital: euro 103 million 81 million due to the capital expenditure (euro 44 million at 31 December 2018). for the period (euro 102 million), to the The main variation related to: i) the

34 35 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

CONSOLIDATED NET FINANCIAL POSITION the construction loans absorbed operating main profi tability ratios and the strength cash fl ows of euro 145 million (at 30 June and ef ciency of the capital structure in (euro/million) 2018 they absorbed cash fl ows of euro 165 terms of the relative importance of sources 30.06.2018 30.06.2019 31.12.2018 million). of funding between net debt and equity for 618 Cash and cash equivalents 683 677 the periods ended 30 June 2019 and 2018. 30 Current fi nancial receivables 12 17 Economic and fi nancial indicators The ratios presented in the table have (150) Current bank debt (322) (197) been calculated on the basis of economic (525) Bonds issued and commercial papers - current portion (219) (231) The following table presents additional parameters referring to a 12-month period, (56) Current portion of bank loans and credit facilities (109) (54) economic and fi nancial measures used namely from 1 July 2018 to 30 June 2019 (2) Other current fi nancial liabilities (20) (3) by the Group's management to monitor and from 1 July 2017 to 30 June 2018. (733) Current debt (670) (485) (85) Net current cash/(debt) 25 209 the performance of its main business 130 Non-current fi nancial receivables 72 63 indicators in the periods considered. (307) Non-current bank debt (744) (760) The following table shows the trend in the - Bonds - non-current portion - - (2) Other non-current fi nancial liabilities (77) (6) (309) Non-current debt (821) (766) 31.12.2018 30.06.2019 30.06.2018 (264) Net fi nancial position (724) (494) 16.5% ROI 17.0% 14.8% 5.4% ROE 5.3% 4.6% 1.0 To t a l d e b t / To t a l e q u i t y 1.2 0.8 1.2 Net fi nancial position/EBITDA 1.6 1.1 The Consolidated net fi nancial position, with volumes expected to grow in the 0.4 Net fi nancial position/Total equity 0.6 0.2 which excludes construction loans, reports coming months. The Net fi nancial position at a net debt balance of euro 724 million (euro 30 June 2019 also includes the recognition 494 million in net debt at 31 December 2018). of the fi nancial liabilities deriving from the ROI and ROE in the fi rst half of 2019 were the increase in the Group’s debt despite the The change is mainly due to the investments application of IFRS 16 (euro 88 million). substantially in line with 31 December 2018, improvement in the economic performance. made during the period and the fi nancial and slightly better than at 30 June 2018, It should be noted that the net fi nancial dynamics typical of the cruise ship business, mainly due to the improved economic position at 30 June 2019 also includes the performance. recognition of the fi nancial liabilities deriving RECLASSIFIED CONSOLIDATED STATEMENT OF CASH FLOWS The indicators of strength and ef ciency of from the application of IFRS 16 (euro 88 the capital structure at 30 June 2019 refl ect million). (euro/million) 31.12.2018 30.06.2019 30.06.2018

30 Net cash fl ows from operating activities (14) 99 (163) Net cash fl ows from investing activities (118) (35) 535 Net cash fl ows from fi nancing activities 137 278 402 Net cash fl ows for the period 5 342

274 Cash and cash equivalents at beginning of period 677 274 1 Ef ects of currency translation dif erence on opening cash and cash equivalents 2 2 677 Cash and cash equivalents at end of period 684 618

The Reclassifi ed consolidated statement of The fi nancing activities generated resources cash fl ows shows a positive net cash fl ows to substantially cover the investments for for the period of euro 5 million (positive the period and the operating cash fl ow. for euro 342 million in the fi rst half of 2018). It should be noted that at 30 June 2019,

36 37 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

OPERATIONAL REVIEW BY SEGMENT It should be noted that, following the ships due to the increase in size and value Norwegian Cruise Line Holdings Ltd. operational reorganization of the VARD of the vessels under construction, and to intended for the Oceania Cruises brand, Shipbuilding Group initiated at the end of 2018, the the progress, in the naval fi eld, of both the which will launch the new “Allura class”; Cruise business unit, mainly comprising the construction activities relating to contracts • an ultra luxury cruise ship (the third vessel The Shipbuilding operating segment is construction of expedition cruise vessels, for the Qatari Ministry of Defense and of the Explorer class) for Norwegian Cruise engaged in the design and construction of previously included in the Of shore operating activities relating to the Italian Navy fl eet Line Holdings Ltd. destined for the Regent cruise ships, ferries, naval vessels and mega segment of the Group, was reclassifi ed in renewal program. In this context, in the Seven Seas Cruises brand; yachts. Production is carried out at the the Shipbuilding operating segment. For second quarter, two vessels were launched: • four luxury cruise ships for MSC Crociere; Group's shipyards in Italy, Europe and the consistency, the comparison data at 30 June the “Trieste” Landing Helicopter Dock and • two vessels for the client Viking as part of United States. 2018 reported below refer to the restated the fi rst in the PPA (Multipurpose Of shore the agreement of March 2018 for six vessels; values. Patrol Vessel) class, “Paolo Thaon di Revel”, • two next-generation cruise ships for with the fi rst vessel of the program to be Princess Cruises, a brand of the Carnival (euro/million) delivered in 2020. group; 31.12.2018 30.06.2019 30.06.2018 restated (***) 30.06.2018 published • a further vessel as part of the Littoral 4,678 Revenue and income (*) 2,410 2,129 1,892 EBITDA Combat Ship (LCS 31); 395 EBITDA (*) 246 173 160 The EBITDA of the operating segment • an interlake bulk carrier vessel for the 8.5% EBITDA margin (*) (**) 10.2% 8.1% 8.5% at 30 June 2019 is euro 246 million (euro client Interlake Steamship co.; 7,129 Order intake (*) 6,364 1,350 1,132 173 million at 30 June 2018), with an • a ferry for Washington Island Ferry Line. 29,620 Order book (*) 34,305 24,709 23,686 EBITDA margin of 10.2% (8.1% at 30 June 23,714 Order backlog (*) 27,793 20,258 19,496 2018). The growth trend continues, with Capital expenditure 124 Capital expenditure 77 33 27 a further increase driven by production Capital expenditure in Property, plant and 13 Vessels delivered (number) 786 and the prompt delivery of repeated equipment by the Parent Company during

(*) Before adjustments between operating segments. cruise ships with elevated margins as the fi rst half of 2019 mostly involved: (**) Ratio between operating segment EBITDA and Revenue and income. (***)The comparative fi gures have been restated following redefi nition of the operating segments. well as the progress of activities relating to military programs. The improvement • the continuation of work to update the The results achieved by the Shipbuilding segment at 30 June 2019 are euro 2,410 in EBITDA, with particular reference to working areas and infrastructure at some segment in the fi rst half of 2019 confi rm million, up by 13.2% compared to the fi rst Cruise activities performed by Italian shipyards, in particular Monfalcone and the solidity of the drivers identifi ed in the half of 2018. Euro 1,677 million of these shipyards, is evidence of the ef ectiveness Marghera, to meet the new production Business Plan. In fact, the Group’s main revenues refer to the cruise ship business of the drivers identifi ed in the 2018-2022 scenarios, which involve the construction growth factors as set out in the 2018-2022 (euro 1,527 million at 30 June 2018) with Business Plan. Within the context of the of increasingly large vessels, and the Business Plan include the derisking of an increase of 9.9%, despite the negative growth in margins in the Cruise business, upgrading and improvement of the the Cruise portfolio in combination with ef ect of the variation in the Euro/Norwegian the derisking of the order book and the safety standards of plant, equipment and commercial competitiveness, the market’s Krone exchange rate (around euro 5 million) upward trend of prices of the vessels in buildings; positive momentum and the ef ectiveness generated by the conversion of the fi nancial production are of particular relevance. The • the continuation of activities to of the strategic choices adopted. The statements of the Norwegian subsidiaries. segment is therefore evolving along the introduce new technologies, in particular optimization actions aimed at increasing Euro 723 million refer to the naval vessel path identifi ed in the Business Plan, despite at the Monfalcone shipyard, as part Italian production capacity, undertaken to business area (euro 592 million at 30 June the low profi tability of certain projects in of the requirements of the Integrated develop the considerable backlog that has 2018) with an increase of 22.0% which the VARD Cruise business unit Environmental Authorization (IEA). resulted in a 10% annual growth in revenues, benefi ted from the positive variation of the will allow Fincantieri to achieve higher levels Euro/USD exchange rate (around euro 15 Order intake Capital expenditure by the subsidiary VARD of operational ef ciency and therefore million) resulting from the conversion of the The new order intake of euro 6,364 million in the fi rst half of 2019 mainly related to profi tability. fi nancial statements of the US subsidiaries. in the fi rst six months of 2019 refer to the the continuation of activities to increase The growth in revenues compared to the construction of: production capacity and the ef ciency Revenue and income fi rst half of 2018 can be attributed mainly to of production processes at the Tulcea The revenues of the Shipbuilding operating the greater volumes generated by cruise • two new-concept cruise ships for shipyard, in order to guarantee adequate

38 39 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

support both for the construction of Of shore and Specialized Vessels (euro/million) the hulls and the long-term program to 31.12.2018 30.06.2019 30.06.2018 restated (***) 30.06.2018 published construct pre-fi tted sections of cruise ships The Of shore and Specialized Vessels 681 Revenue and income (*) 314 333 564 for the Group's Italian shipyards. segment includes the design and (20) EBITDA (*) (52) (6) 7 Capital expenditure in the US shipyards construction of high-end of shore -2.9% EBITDA margin (*) (**) -16.6% -1.7% 1.2% mainly concerned maintenance of support vessels, specialized vessels and 913 Order intake (*) 57 824 1,106 infrastructure and upgrading of production vessels for of shore wind farms and open 1,860 Order book (*) 1,346 1,854 3,018 systems. ocean aquaculture, as well as innovative 987 Order backlog (*) 885 1,132 1,990 products in the fi eld of drillships and semi- 6 Capital expenditure 239 22 Vessels delivered (number) 8 12 14 Production submersible drilling rigs. Fincantieri operates The number of vessels delivered in the in this market through the VARD Group, (*) Before adjustments between operating segments. first six months of 2019 is analysed as FINCANTIERI S.p.A. and Fincantieri Oil & (**) Ratio between operating segment EBITDA and Revenue and income. follows: Gas S.p.A.. (***)The comparative fi gures have been restated following redefi nition of the operating segments. (number) The VARD Group also provides its clients Deliveries with turnkey electrical systems, inclusive Revenue and income well as highly innovative content. These are Cruise ships 5 of engineering, manufacturing, installation, Revenues for the Of shore and Specialized prototype projects that require a greater use Cruise ferries integration testing and commissioning. Vessels operating segment at 30 June 2019 of resources in the implementation phase, Naval vessels 2 It should be noted that, following the amount to euro 314 million, a decrease of however they do allow development of the Mega yachts operational reorganization of the VARD 5.7% compared to the fi rst half of 2018 (euro know-how necessary for future development. Group initiated at the end of 2018, its 333 million), and refl ecting the negative Following the delisting of VARD in the Cruise business unit, which mainly includes impact deriving from the change in the Euro/ last quarter of 2018, an initial phase of The vessels delivered were: the construction of expedition cruise Norwegian Krone exchange rate (euro 5 reorganization was initiated with the aim of vessels, previously included in the Group’s million) due to the conversion of the VARD achieving full organizational integration with • “Costa Venezia”, the first vessel of Of shore segment, has been reclassifi ed in fi nancial statements. The slowdown in the Parent Company for both projects for the Italian Costa Crociere designed the Shipbuilding operating segment. For production volumes is related to a reduced the construction of expedition cruise vessels specifically for the Chinese market at the consistency, the comparison data at 30 June use of production capacity. and projects for of shore and specialized Monfalcone shipyard; 2018 reported below refer to the restated vessels. In continuity with the integration • “Viking Jupiter”, the sixth cruise ship for values. EBITDA project, a restructuring plan is currently Viking, delivered at the Ancona shipyard; The EBITDA of the operating segment at being developed, which involves initiatives • LCS 15 “Billings”, for the US Navy, 30 June 2019 has a negative value of euro to recover margins in the medium term, also as part of the LCS program at the US 52 million (negative value of euro 6 million drawing on the experience of developing Marinette shipyard (Wisconsin); at 30 June 2018), with an EBITDA margin of innovative products and cutting-edge • “Antonio Marceglia”, the eighth of a -16.6% (-1.7% at 30 June 2018). The gradual technologies in sectors not closely linked to series of ten multi-role frigates (FREMM) decrease in the use of production capacity, the Oil&Gas operating segment. for the Italian Navy, delivered at the brought on by the persistence of a total Muggiano shipyard in La Spezia; absence of orders related to the Oil & Gas Order intake • two vessels for the French shipowner operating segment, led to the acquisition of In the fi rst half of 2019, the order intake by Compagnie du Ponant (“Le Bougainville” orders for new specialized ships belonging the VARD Group amounted to euro 57 million and “Le Dumont-d’Urville”) at the to dif erent operating segments (e.g. fi shery and related mainly to a small-scale luxury Norwegian Søviknes shipyard; & aquaculture, ferries), where occasional expedition cruise vessel for the Australian • “Hanseatic Nature”, the first vessel for projects with high potential go side by side shipowner Coral Expeditions, which will the client Hapag-Lloyd, at the Norwegian with other orders with lower margins. These be made at the Vietnamese yard Vung Langsten shipyard. elements have also led to a high level of Tau. For reasons related to organizational complexity within the production process, responsibilities, this yard is part of the linked to the development of a particularly Of shore and Specialized Vessels operating challenging product portfolio in terms of the segment. The vessel will be called “Coral diversity of the projects and types of vessels Geographer” and will be the twin ship of under construction at the same time, as “Coral Adventurer”.

40 41 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Capital expenditure In detail: Revenue and income • the supply and installation of the metal deck Capital expenditure in the fi rst half of 2019 Revenue from the Equipment, Systems for the bridge in Genoa; mainly relates to measures to maintain • three OSCVs (Of shore Subsea and Services segment amounts to euro 371 • seven stabilization plants for various clients; production ef ciency in European and non- Construction Vessel), two of which were million (+15.3% compared to the fi rst half • two THR steam turbines for the client Meyer European shipyards. delivered to Topaz Energy and Marine of 2018). This increase confi rms the growth Turku and one THR steam turbine for the Limited at the Brattvåg shipyard (Norway), trend started in the fi rst half of 2017, due client SWS China; Production and one to Dofcon Navegação Ltda at the to the development of the signifi cant order • one model 36 steam turbine, Waste to The following vessels were delivered during Promar shipyard (Brazil); backlog for services provided in the context Energy segment, for a Moroccan client; the period: • one expedition cruise vessel delivered to of contracts for the Italian Navy and the • supply of the automation package for the Australian shipowner Coral Expedition at Qatari Ministry of Defense, to an increase four vessels of the Korean Navy’s FFX-II the Vung Tau shipyard (Vietnam); in the volumes of repair and conversion program for the Korean Navy’s ASR (Auxiliary (number) Deliveries • one Fishery vessel delivered to Aker activities, and to the contribution resulting Submarine Rescue) vessel, and for the OPV BioMarine Antarctis AS at the Brattvåg from the start of Fincantieri Infrastructure vessel of the Qatari Navy; Ferries 2 shipyard (Norway); activities. • upgrading of the automation system of the Coral Expedition 1 • one Aqua vessel delivered to Solstrand by Fiorillo vessel of the Italian Coast Guard; OSCV 3 the Aukra shipyard (Norway); EBITDA • continuation of the Cavour upgrading Fishery&Aqua 2 • two Ferries delivered to Torghatten Nord AS. The EBITDA of the operating segment at program; 30 June 2019 is euro 39 million (euro 34 • installation of the valve remote control million at 30 June 2018), with an EBITDA system for the Italian Navy LHD contract; Equipment, systems and services margin of 10.5%, essentially in line with the • supply of the navigation system and fi rst half of 2018. The segment features console for a 45 m yacht; The Equipment, Systems and Services out by FINCANTIERI S.p.A. and by some of a higher contribution from conversions • four emergency generator units for operating segment is engaged in the design its subsidiaries, including Isotta Fraschini and refurbishment projects, characterized four cruise contracts and four 1708 HPCR and production of systems, equipment and Motori S.p.A., Issel Nord S.r.l., Seastema by a lower profi tability profi le than other generator units intended for an LCS vessel of accommodation, repair and conversion S.p.A., Marine Interiors S.p.A., Fincantieri SI businesses in the same segment, but the US Navy; services and after-sales support for the S.p.A., Fincantieri Infrastructure S.p.A. strategically important in that they enable • four EPF engines for the US Navy; vessels produced. These activities are carried and FMSNA Inc. the development and maintenance of • supply of In Service Support (ISS) to the client relationships and order backlog and Italian Navy on the Submarine and FREMM contribute to the increase in headcount program; (euro/million) levels at some of the Group’s Italian • after-sales services and supply of spare 31.12.2018 30.06.2019 30.06.2018 yards. The Grimaldi Lines project is one parts for programs of the Italian Navy and 651 Revenue and income (*) 371 321 such project. It involves the installation of US Coast Guard, for cruise clients and other 73 EBITDA (*) 39 34 cutting-edge solutions aimed at reducing smaller clients; 11.2% EBITDA margin (*) (**) 10.5% 10.7% environmental impact and saving energy, • after-sales services and supply of cabins, 1,006 Order intake (*) 349 376 such as energy storage systems that enable wet units, public areas, kitchens and 2,519 Order book (*) 2,530 2,140 vessels not to use diesel engines during "complete accommodation" packages for 1,638 Order backlog (*) 1,604 1,289 stops in ports, in line with the objective ship platforms. 18 Capital expenditure 11 4 18 Engines produced in workshops (number) 6 8 promoted by the Grimaldi group of zero emissions in port. Capital expenditure (*) Before adjustments between operating segments. (**) Ratio between operating segment EBITDA and Revenue and income. Capital expenditure in the fi rst half of Order intake 2019 relates mainly to the upgrading of New order intake for Equipment, Systems the operating areas and infrastructure of and Services operating segment amounted the new Fincantieri Infrastructure plant in to euro 349 million in the fi rst half of 2019, Valeggio sul Mincio following the award of mostly comprising: major contracts for steel structures.

42 43 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Other activities Price (euro/share)

Other activities primarily refer to the costs controlling and coordinating the business that incurred by corporate headquarters for directing, are not allocated to other operating segments.

(euro/million) 31.12.2018 30.06.2019 30.06.2018

- Revenue and income 1 - (34) EBITDA (18) (18) n.a. EBITDA margin n.a. n.a. 13 Capital expenditure 12 4

n.a. not applicable.

Capital expenditure to support the Group's growing activities The main initiatives relate to capital and optimise process management, with expenditure on: particular reference to the upgrading of management systems and the exporting Dec 2018 Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 Jun 2019 • ongoing work to implement an of these systems to the main subsidiaries Fincantieri FTSE MIB FTSE MID Cap integrated system for ship design (CAD) of the Group. and project lifecycle management (PLM), aimed at improving the efficiency and As in previous years, investment effectiveness of the engineering process; in renewing the Group’s network • the development of information systems infrastructure and hardware continued.

OTHER INFORMATION stock liquidity, around 754 million shares were traded from the start of the year to 30 June Market capitalization 2019, with a daily average trading volume in the period of around 6.0 million shares, a The market capitalization of Fincantieri, decrease from the 968 million shares traded at the closing price on 30 June 2019, was in the fi rst half of 2018 (with a daily average approximately euro 1,667 million. In terms of trading volume of 7.7 million).

(euro) 31.12.2018 30.06.2019 30.06.2018

1.28 Average share price in the period 1.03 1.33 0.92 Share price at period end 0.99 1.17 1,692 Number of shares issued million 1,692 1,692 1,687 Number of shares outstanding at period end million 1,687 1,687 1,560 Market capitalization (*) euro/million 1,667 1,976

(*) Number of shares issued multiplied by reference share price at period end.

44 45 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Other signifi cant events in the period 14 30

On 14 January 2019, Cassa Depositi e Prestiti (CDP), Fincantieri and Snam signed a preliminary On 30 April 2019, the Chairman of INAIL – the Italian National Institute for Insurance against cooperation agreement aimed at identifying, defining and implementing strategic medium-term Accidents at Work - Massimo De Felice, and the Chief Executive Officer of Fincantieri, Giuseppe JANUARY projects in some key segments for innovation and the development of the Italian ports, as well APRIL Bono, signed a memorandum of understanding aimed at developing a safety culture in the as for the development of sustainable technologies for sea transport, in line with the Proposals workplace and the implementation of activities and projects for the systematic reduction of of the National Integrated Plan for Energy and the Climate (PNIEC). 04 occupational accidents and diseases. 20

On the Chief Executive Officer of Fincantieri, Giuseppe Bono, and the Rector On 4 February 2019 the Autorità di sistema portuale del Mare di Sicilia Occidentale (AdSP - 20 May 2019 Western Sicilian Sea Port Authority) and Fincantieri signed a memorandum of understanding for of the University of Calabria, Prof Gino Mirocle Crisci, signed, at the university campus, an the launch of a shipbuilding hub in the port of Palermo, with the shared goal of enabling the FEBRUARY agreement aimed at establishing new collaborative relationships in the civil, industrial and MAY Sicilian site to assert itself as one of the most important shipyards in the Mediterranean. IT engineering sectors. 21 07 On , Fincantieri signed a joint working agreement for charitable purposes with On 21 February 2019 during the International Defence Exhibition & Conference (IDEX) 2019 in 7 June 2019 Abu Dhabi, Fincantieri and Abu Dhabi Shipbuilding (ADSB), leading group in the United Arab Banco Alimentare Marche, a not-for-profit association involved in the recovery of surplus food, FEBRUARY Emirates specializing in the construction, repair and refitting of merchant and navy ships, JUNE and Gemeaz Elior, a company that provides catering services at the Ancona yard canteen. announced the reaching of an outline agreement to explore forms of industrial and commercial cooperation in the future in the marine engineering segment in the UAE. 06 11 On , at its Bari site, the subsidiary Isotta Fraschini Motori celebrated the “1000-hour On 6 March 2019, Fincantieri signed a joint working agreement for charitable purposes with Banco 11 June 2019 Alimentare della Liguria, a not-for-profit association involved in the recovery of surplus food, and certification” of the 16V170C2ME diesel generator of the Multipurpose Offshore Patrol Vessel (PPA) I.F.M., a company that provides catering services at the Muggiano (La Spezia) yard canteen. MARCH class for the Italian Navy, an innovative product for naval applications. JUNE 07 14

On 7 March 2019, Genova Industrie Navali (GIN) – holding, established in 2008 by the merger On 14 June 2019, Fincantieri and Naval Group signed the Alliance Cooperation Agreement, of two historic Genoa shipyards, T. Mariotti and San Giorgio del Porto – and Fincantieri reached which defines the operating terms for the establishment of an equal joint venture (50/50). MARCH a joint working agreement covering various areas, from new constructions, to repairs and JUNE conversions, to ship fittings. This agreement involves the acquisition by Fincantieri of a minority shareholding in the group holding and the option for a minority share in T. Mariotti. 18 11 On 18 June 2019, Fincantieri and the National Research Council of Italy (CNR) presented the results of six multidisciplinary projects, within the context of the funding relating to innovation The inauguration ceremony for the Fincantieri Infrastructure site was held on 11 March 2019 in the marine division of the Ministry of Infrastructure and Transport. JUNE in Valeggio sul Mincio (Verona). During the event, the cutting of the first metal sheet for the MARCH construction of the new Polcevera viaduct was celebrated. 26 19 On 26 June 2019, as part of the agreement signed between Fincantieri, Regione Liguria and the trade union organizations CGIL, CISL and UIL last year and aimed at implementing a series of initiatives On 19 April 2019, the Chief Executive Officer of Cassa Depositi e Prestiti, Fabrizio Palermo, the Chief Executive Officer of Fincantieri, Giuseppe Bono, the Chief Executive Officer of Terna, JUNE to facilitate work placement processes, the offer of ITS courses was extended to the autumn: a new APRIL Luigi Ferraris, and the Chief Executive Officer of Eni, Claudio Descalzi, signed a non-binding course will begin in Liguria at the Merchant Marine Academy in order to meet the employment needs agreement for the development and implementation of wave power generation plants on an of the shipbuilding industry. industrial scale. 23 27 On 27 June 2019, the Fincantieri Board of Directors, in execution of the authorization granted On 23 April 2019, within the context of the strengthening of its activities in the operating segments by the Extraordinary Shareholders’ Meeting on 19 May 2017, approved the issue of 7,532,290 with high technology content, Fincantieri purchased a majority share of the capital of Insis S.p.A., a ordinary shares, without nominal value, having the same characteristics as the ordinary shares JUNE company based in Follo (La Spezia), operating in the IT and electronic sectors. APRIL in circulation, for the “Performance Share Plan 2016-2018”, to be allocated free of charge to the beneficiaries of the plan, without an increase in share capital pursuant to art. 2349 of the Italian Civil Code according to the terms and conditions set out therein.

46 47 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Key events after the reporting period In the Of shore and Specialized Vessels Information about related party transactions, required by Consob Communication no. ended 30.06.2019 segment, the construction activity related including the disclosures required by the DEM/6064293 dated 28 July 2006, it is to the backlog acquired as a result of the Consob Communication dated 28 July 2006, reported that no atypical and/or unusual On 1 July 2019, the Municipality of Genoa diversifi cation strategy adopted following is presented in Note 29 of the Notes to the transactions took place during 2018. and Fincantieri inaugurated a summer the Oil&Gas sector crisis is expected to Half-Year Financial Report. camp for children of Group employees aged continue, with ongoing focus on execution Information regarding corporate between 4 and 11. Fincantieri has delivered aimed at margin recovery. It should be Purchase of own shares governance this project with the aim of improving noted that a restructuring plan is currently the well-being of its employees and their being developed which involves initiatives The Shareholders’ Meeting held on 19 May The “Report on Corporate Governance families. The initiative, the result of a public- to recover margins in the medium term, also 2017 authorized the Board of Directors to and Ownership Structure” (the “Report”) private partnership, is a fi rst demonstration drawing on the experience of developing purchase its own ordinary shares on the required by art. 123-bis of the Consolidated of collaboration with local companies, which innovative products and cutting-edge market in order to implement the fi rst cycle Law on Finance is a stand-alone document is part of the plan to implement “Genoa in technologies in sectors not closely linked to of the medium/long-term share-based approved by the Board of Directors on 27 Family”. the Oil&Gas operating segment. incentive plan for management, called March 2018, and published in the “Ethics On 4 July 2019, Fincantieri concluded the The Equipment, Systems and Services the Performance Share Plan 2016-2018. and Governance - Corporate Governance acquisition of the majority share of the Insis segment is expected to confi rm its revenue Therefore, on 30 June 2019, 4,706,890 System” section of the Company's website S.p.A., solution provider in the integrated growth trend, thanks to the development of Fincantieri own shares were purchased at www.fi ncantieri.it. physical logical security sector, operating the backlog relating to military programs, to (0.28% of the Share Capital) for euro The Report contains a general and in national and international markets both greater volumes for the production of cabins 5,277 thousand and held by FINCANTIERI complete overview of the corporate directly and as a technology partner of large and public areas for the cruise business S.p.A. No further purchases of the Parent governance system adopted by industrial groups. activity, and to the development of activities Company’s own shares were made during FINCANTIERI S.p.A. It presents the within the infrastructure area which have the fi rst half of 2019. Company's profi le and the principles Business outlook seen the start of construction work on the underlying the way it conducts its bridge over the Polcevera River in the fi rst Italian stockmarket regulations business; it provides information about Notwithstanding the challenging context half of the year. the ownership structure and adoption of with specifi c reference to the Of shore and Art. 15 (formerly art. 36) of the Consob the Corporate Governance Code, including Specialized Vessels sector performance, Transactions with the controlling company Market Regulations (adopted by Consob the main governance practices applied the good results within the Shipbuilding and other group companies Resolution no. 16191/2007 and updated and the main characteristics of the system segment allow the forecasts for the with Consob Resolution no. 20249 of of internal control and risk management; 2019 fi nancial year on a Group level to In compliance with the provisions of the 28 December 2017) sets out the listing it contains a description of the operation be maintained. Specifi cally, the targets Regulations concerning related party conditions for companies that control and composition of the governing and of revenue growth and the maintenance transactions adopted under Consob companies incorporated in and governed by supervisory bodies and their committees, of EBITDA margins in line with 2018 are Resolution no. 17221 of 12 March 2010 and the laws of non-EU countries. With reference roles, duties and responsibilities. confi rmed, consistently with the economic subsequent amendments and additions, to these regulatory requirements concerning The criteria for determining the and fi nancial forecasts presented within FINCANTIERI S.p.A. has adopted a the listing conditions for companies that compensation of the Directors are set out the 2018-2022 Business Plan. Net debt is "Procedure for Related Party Transactions" control companies, incorporated in and in the “Remuneration Report”, prepared expected to rise temporarily due to working with ef ect from 3 July 2014. governed by the laws of non-EU countries, in compliance with the requirements of capital fi nancing needs. As far as related party transactions carried that are material to the consolidated art. 123-ter of the Consolidated Law on In the Shipbuilding segment, in the next half out in the six-month period are concerned, fi nancial statements, it is reported that as Finance and art. 84-quater of the Consob of 2019, the Group expects to deliver four these do not qualify as either atypical at 30 June 2019, the Fincantieri subsidiaries Issuer Regulations, and published in the ships, including three cruise units and one or unusual, since they fall within the falling under the scope of the above article “Governance - Remuneration” section of naval vessel. Also with reference to the naval normal course of business by the Group's are the VARD Group and the FMG Group. the Company's website.# business area, the program for the Qatari companies. Such transactions are conducted Suitable procedures have already been Ministry of Defense coming into full swing, under market terms and conditions, taking adopted to ensure that these groups comply with three vessels under construction and into account the characteristics of the goods with these regulations (art. 15). the fi rst delivery scheduled for 2021. and services involved. In accordance with the disclosures

48 49 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

ENTERPRISE RISK MANAGEMENT operations and fi nancial condition of the 2 Risks related to nature of the market Group. Based on operating performance DESCRIPTION OF RISK IMPACT MITIGATION The Fincantieri Group is exposed in the in the fi rst six months of the year and the normal course of its business activities macroeconomic context, the risk factors The shipbuilding market in general is Postponement of fl eet renewal In order to mitigate the impact of historically characterized by cycles, programs or other events af ecting the shipbuilding market cycle, the to various fi nancial and non-fi nancial risk foreseeable for the next six months of 2019 sensitive to trends in the industries the order backlog with the Group has pursued a diversifi cation factors, which, if they should materialize, are described below according to their served. The Group's of shore and Fincantieri Group's principal cruise strategy in recent years, expanding could have an impact on the results of nature. cruise clients base their investment ship client could impact capacity its business both in terms of plans on demand by their own utilization and business profi tability; products and geographical coverage. clientele; in the case of of shore, the similarly a downturn in the of shore Since 2005 the Group has expanded 1 Risks related to operational complexity main infl uence is energy demand market could lead, as has already into the businesses of of shore, and oil price forecasts, which in happened, to a reduction in the level mega yachts, marine systems and DESCRIPTION OF RISK IMPACT MITIGATION turn drive investment in exploration of orders, in this segment, for the equipment, repairs, refi tting and and production, while the main subsidiary VARD, as well as the risk after-sales service. In parallel, the Given the operational complexity If the Group was unable to To manage processes of such infl uences on the cruise industry of cancellation or postponement Group has expanded its business stemming not only from the implement adequate project complexity, the Group implements are trends in the leisure market. In of existing orders. Equally, the nationally and internationally, through inherent nature of shipbuilding but management activities, with procedures and work plans the naval business, the demand for availability of resources earmarked acquisitions or the incorporation of also from the Group's geographical suf cient or ef ective procedures designed to manage and monitor new ships is heavily dependent on by the State for defence spending new companies dedicated to specifi c and product diversifi cation and and actions to ensure control the implementation of each project governments’ defense spending on fl eet modernization programs is businesses, such as the manufacture acquisition-led growth, the Group of the proper completion and throughout its duration. Constant policies. a variable that could infl uence the of steel products. is exposed to the risk of: ef ciency of its shipbuilding dialogue channels are established Group's results of operations and Given the current downturn in the processes and the proper between the Group entities in fi nancial condition. of shore market, the subsidiary • not guaranteeing adequate representation of these in its order to safeguard the integration VARD has successfully pursued control of project management reporting, or if it was unable processes; occasionally Parent a strategy of diversifying into activities; to adequately manage the Company resources are included. new market segments, such as • not adequately managing Group synergies, alliances, joint In addition, the Group has adopted the expedition cruise, market and the operational, logistical and ventures or other relationships a fl exible production structure specialized vessels for fi shing and organizational complexity that with counterparties and the in order to respond ef ciently to aquaculture, with the intent of characterizes the Group; complexity arising from its product fl uctuations in vessel demand in reducing its exposure to the cyclical • not correctly representing the diversifi cation or if it failed to the various business areas. This nature of the Oil&Gas segment. operational management events ef ciently distribute workloads fl exible approach allows the Group and phenomena in the fi nancial according to production capacity to overcome capacity constraints reports; (plant and labour) available on at individual shipyards and to • overestimating the synergies each occasion at the dif erent work on more than one contract arising from acquisition operations production facilities, revenues and at the same time while ensuring or suf ering the ef ects of slow profi tability might decline, with that delivery dates are met. The and/or weak integration; possible negative ef ects on its Group is implementing actions • forming alliances, joint results of operations and fi nancial aimed at improving the production ventures or other relationships condition. and design processes in order to with counterparties that could strengthen competitiveness and negatively af ect the ability to increase productivity. compete; • not adequately managing the complexity arising from its product diversifi cation; • failing to ef ciently distribute workloads according to production capacity (plant and labour) or that excess capacity might impede the achievement of competitive margins; • not meeting market demand due to its own or its suppliers’ insuf cient production capacity.

50 51 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

3 Risks related to maintenance of competitiveness in core markets 4 Risks related to contract management

DESCRIPTION OF RISK IMPACT MITIGATION DESCRIPTION OF RISK IMPACT MITIGATION

The production of standard Inattentive monitoring of the The Group endeavours to The shipbuilding contracts Cost overruns not envisaged at The Group takes into consideration merchant vessels is now Group's markets and slow maintain competitive position in managed by the Group are mostly the pre-contractual stage and expected increases in the dominated by Asian shipyards, responses to the challenges its business areas by ensuring a multi-year contracts for a fi xed not covered by a parallel increase components of contract costs meaning that competitiveness can posed by competitors and client high quality, innovative product, consideration, any change in which in price can lead to a reduction when determining the of er price. only be maintained by specializing needs may lead to a reduction and by seeking optimal costing must be agreed with the client. in margins on the contracts In addition, at the time of signing in high value-added markets. in competitiveness, with an as well as fl exible technical and Contract pricing must necessarily concerned. the contract, fi xed-price purchase As far as civilian vessels are associated impact on production fi nancial solutions in order to be involve careful evaluation of the options will already have been concerned, the Parent Company volumes, and/or less remunerative able to propose more attractive costs of raw materials, machinery, defi ned for some of the vessel's has been focusing for several years pricing, resulting in a drop in profi t of ers than the competition. In components, sub-contracts and principal components. on the cruise ship and cruise ferry margins. parallel with the commercial all other construction-related segments, where it has a long track initiatives to penetrate new market costs (including personnel and record; following the acquisition of segments, the subsidiary VARD overheads); this process is more VARD, it has extended this focus to has developed a series of new complicated in the case of the production of of shore support ship projects, exploiting not only prototype or particularly complex vessels and specifi c segments its own engineering and design ships. such as fi shing and aquaculture. expertise acquired in the of shore Additional factors that may af ect sector but also the know-how of DESCRIPTION OF RISK IMPACT MITIGATION competitiveness are the risk that the Fincantieri Group. Many factors can infl uence When the causes of late delivery The Group manages its contracts due attention is not given to production schedules, as well as are not recognized by contract, through dedicated structures client needs, or that standards capacity utilization, and so impact shipbuilding contracts provide that control all aspects during of quality and product safety are agreed vessel delivery dates with for the payment of penalties that the contract life cycle (design, not in line with market demands possible penalties payable by generally increase the longer the procurement, construction, and new regulations. Moreover, the Group. These factors include, delay. outfi tting). Contracts with aggressive commercial policies, inter alia, strikes, poor industrial suppliers include the possibility development of new products and productivity, inadequate logistics of applying penalties for delays new technologies, or increases and warehouse management, or hold-ups attributable to such in production capacity by unexpected problems during suppliers. competitors may lead to increased design, engineering and price competition, consequently production, events linked to impacting the required level of adverse weather conditions, design competitiveness. changes or problems in procuring DESCRIPTION OF RISK IMPACT MITIGATION key supplies.

The dif cult political and economic Situations involving country risk In pursuing business opportunities context and worsening regulatory may have negative ef ects on the in emerging markets, the Group environment of countries in which Group's results of operations and safeguards itself by favouring the Group operates may adversely fi nancial condition, with the loss commercial prospects that are impact operations and future cash of clients, profi ts and competitive supported by inter-governmental fl ows. In addition, the pursuit of advantage and, in the case of agreements or other forms of business opportunities in emerging lawsuits and sanctions, on its cooperation between States, as markets, particularly in the reputation. well as by establishing, within its defense sector, leads to increased own organization, appropriate exposure to country risk and/or safeguards to monitor the risk of international bribery and processes at risk. corruption.

52 53 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

DESCRIPTION OF RISK IMPACT MITIGATION DESCRIPTION OF RISK IMPACT MITIGATION

The operational management Bankruptcy by one or more When acquiring orders, and The Group's clients often make The lack of available fi nance for Fincantieri supports overseas of contracts carries a risk that counterparties, whether clients or where deemed necessary, the use of fi nancing to fi nalize the the Group's clients or the low clients during the process of one or more counterparties with suppliers, can have serious ef ects Group can perform checks on placement of orders. competitiveness of their conditions fi nalizing export fi nance and whom the Group has contracts are on the Group's production and the fi nancial strength of its Overseas clients may be eligible could have a highly negative particularly in managing relations unable to meet its commitments, cash fl ows, given the high unit counterparties, including by for export fi nance schemes impact on the Group's ability to with the agencies and companies more specifi cally involving one value of shipbuilding orders and obtaining information from leading structured in accordance with obtain new orders as well as on the involved in structuring such fi nance or more clients that do not meet the strategic nature of certain credit rating agencies. Suppliers OECD rules. ability of clients to comply with the (for example, SACE, Simest and the contractual obligations, or supplies for the production are subject to a qualifi cation Under such schemes, overseas contractual terms of payment. the banks). In addition, the process one or more suppliers that fail to process. In particular, client process, including evaluation of buyers of ships can obtain of structuring fi nance is managed discharge their obligations for cancellation of orders during the potential risks associated bank credit against receipt of a in parallel with the process of operational or fi nancial reasons, vessel construction exposes the with the counterparty concerned. guarantee by a national export fi nalizing the commercial contract, with potentially serious ef ects Group to the risk of having to As regards the fi nancial aspect, credit agency, which in the case of the enforceability of which is often on the performance of operating sell the vessel in adverse market the Group of ers its suppliers the Italy is SACE S.p.A. and GIEK in the subject to the shipowner's receipt activities and a potential increase conditions or, potentially, at prices opportunity to use instruments case of Norway. of the commitment by SACE and in costs, including legal, in the that do not allow its construction that facilitate their access to The availability of export fi nancing the banks to provide an export case of a failure to comply with costs to be recovered. Moreover, credit. To address the dif cult is therefore a key condition for credit guarantee. The subsidiary contractual commitments. The the postponement of delivery situation in the of shore market, allowing overseas clients to award VARD also actively works with Of shore industry is in the midst dates can signifi cantly increase the subsidiary VARD is now contracts to the Group, especially GIEK, the Norwegian export credit of a profound global market working capital fi nancing needs, working with clients and fi nancial where cruise ship construction is agency, particularly in a new sector deterioration af ecting all its with a consequent growth in debt institutions to ensure delivery the concerned. for the Norwegian market like that players with a signifi cant number and higher borrowing costs. majority of the of shore vessels of expedition cruise vessels. of shipowners undertaking in the current order book and is As an additional safeguard for restructuring, in turn giving rise pursuing the initiatives launched the Group, in the event of a to increased counterparty risk. to ensure a commercial solution client default on its contractual With particular reference to VARD, to the few of shore projects obligations, Fincantieri has the deterioration in the fi nancial that have remained in the order right to terminate the contract. In situation of clients in the Of shore book to date. The subsidiary is such a case, it is entitled to keep sector has led to the cancellation also considering, where possible, the payments received and the or redefi nition of the delivery dates all technical and commercial ship under construction. The client of some orders in the order book. opportunities to reconvert and may also be held liable for paying reposition on the new markets any costs prepaid by the Group. served those vessels already built but whose orders have been cancelled. DESCRIPTION OF RISK IMPACT MITIGATION

A signifi cant number of the If the Group were unable to of er The Group adopts a fi nancing Group's shipbuilding contracts (in its clients suf cient fi nancial strategy aimed at diversifying as general, for merchant vessels like guarantees against the advances much as possible the technical cruise ships and of shore support received or to meet the working forms of fi nancing and the vessels) establish that clients pay capital needs of ships during fi nancing counterparties with the only a part of the contract price construction, it might not be able ultimate objective of maintaining during ship construction; the to complete contracts or win new a more than suf cient credit balance of the price is paid upon ones, with negative ef ects on its capacity to guarantee coverage delivery. results of operations and fi nancial of the working capital needs As a result, the Group incurs condition. generated by its operations. signifi cant upfront costs, assuming Moreover, the cancellation and the risk of incurring such costs postponement of orders by clients before receiving full payment of in dif culty could have a signifi cant the price from its clients and thus impact on the Group's fi nancial having to fi nance the working structure and margins, with the capital absorbed by ships during risk that banks limit access to construction. credit, thereby depriving it of the necessary funding for its working capital, such as construction loans, or that banks will only be willing to grant credit at more costly conditions.

54 55 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

5 Risks related to production outsourcing and relations with suppliers and local 6 Risks related to business sustainability communities DESCRIPTION OF RISK IMPACT MITIGATION DESCRIPTION OF RISK IMPACT MITIGATION The shipbuilding industry, due The aim of the Company is The Company has developed The Fincantieri Group's decision A negative performance by The Group has specifi c personnel to its specifi c characteristics, to combine business growth a sustainability governance to outsource some of its business suppliers in terms of quality, timing in charge of coordinating the requires consideration of certain and fi nancial soundness in line system which defi nes the roles activities is dictated by strategic or costs causes production costs assembly of on-board systems issues relating to the social and with social and environmental and responsibilities of these considerations based on two to rise, and the client's perception and managing specifi c areas environmental sustainability of sustainability principles, and failure processes in order to ensure factors: a) outsource activities of the quality of the Fincantieri of outsourced production. In the business. The Company is to achieve this goal could, in the adequate monitoring and control. for which it has the skills but product to deteriorate. As for addition, the Fincantieri Group committed to disseminating its long term, compromise growth The risks related to sustainability insuf cient in-house resources; b) other partners at the local level, carefully selects its "strategic Governance Model within the Group; of the Company’s value, which are identifi ed, assessed and outsource activities for which there non-optimal relations may impact suppliers", which must meet the however, any shortcomings in the benefi ts stakeholders. managed within the context of are no in-house skilled resources the Group's ability to compete on highest standards of performance. communication of its commitment the Enterprise Risk Management and which would be too expensive the market. The Parent Company has to the Group could put at risk the process, and the Company has and inef cient to develop. developed a precise program of achievement of the goals defi ned adopted a Sustainability Plan Dependence on suppliers for supplier performance evaluation and communicated to stakeholders. and monitors its application. The certain business activities may in this regard, ranging from Furthermore, the Company has initiatives launched are accurately result in the inability to ensure high measurement of the services identifi ed specifi c risks related reported in the Sustainability standards of quality, failure to meet rendered, both in terms of to shipbuilding products and Report. delivery dates, the acquisition quality of service of ered and processes, including: of excessive supplier bargaining punctuality of delivery, to the strict power, and a lack of access to new observation of safety regulations, • the risk of failing to pay attention technologies. in line with the Group's "Towards to the development of new In addition, the signifi cant Zero Accidents" objective. In technologies and environmentally presence of suppliers in the addition, particular attention friendly products; production process has an impact is paid in general to relations • the risk of poor management of on local communities, possibly with the local communities environmental issues, such as those requiring the Group to address that interact with the Group's related to climate change (impact social, political and legality issues. shipyards, involving appropriate of natural events, increase in the institutional relationships, at price of materials due to factors the time supplemented by the connected to climate); conclusion of suitable legality • the risk that the supply chain and/or transparency protocols does not mirror the sustainability with the local authorities, which principles communicated by the in turn enabled the defi nition of Company; the National Legality Framework • the risk of failing to optimize the Protocol signed in 2017. The Group’s human capital. subsidiary VARD has paid special attention to the process of evaluating and managing contracts with suppliers operating in new sectors that the Group entered as a result of its diversifi cation strategy.

56 57 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

7 Risks related to knowledge management 8 Risks related to legal and regulatory environment

DESCRIPTION OF RISK IMPACT MITIGATION DESCRIPTION OF RISK IMPACT MITIGATION

The Fincantieri Group has a vast The inadequacy of the domestic The Human Resources Department The Fincantieri Group must abide Any breaches of tax, safety or The Group promotes compliance accumulation of experience, know- labour market to meet the Group's constantly monitors the labour by the regulations in force in environmental standards, any with all rules, regulations and laws how and business knowledge. As needs, the inability to acquire the market and maintains frequent the countries where it operates, changes in the local legal and that apply to it and implements and far as the workforce is concerned, necessary skills and the failure to contact with universities, including those to safeguard regulatory framework, as well as updates suitable prevention control the domestic labour market is not transfer specifi c knowledge to the vocational schools and training the environment and health and the occurrence of exceptional or systems for mitigating the risks always able to satisfy the needs Group's resources, particularly institutes. The Group also makes a safety at work, tax regulations unforeseen events, could cause associated with breach of such rules, of production, either in terms of in the technical sphere, could signifi cant investment in training and the personal data protection the Fincantieri Group to incur regulations and laws. Accordingly, numbers or skills. The ef ective have negative ef ects on product its staf , not only in technical- regulation. Any breaches of extraordinary costs relating to tax, in order to prevent and manage the management of the Group's quality. specialist and managerial-relational such rules and regulations could the environment or safety at work. risk of occurrence of unlawful acts, business is also linked to the ability skills, but also regarding safety result in civil, tax, administrative Any breaches of personal data the Parent Company has adopted to attract highly professional and quality. Lastly, specifi c or criminal sanctions, along with protection regulations would result an organizational, management resources for key roles, and the training activities are organized an obligation to do all that is in the application of the sanctions and control model under Legislative ability to retain such talents to ensure that key management necessary to comply with such introduced by EU Regulation Decree 231 of 8 June 2001, which within the Group; this involves positions are covered in the event regulations, the costs and liability 2016/679 regarding the protection is also binding for suppliers and, in suitable talent and resource of staf turnover. With regard to for which could have a negative of personal data. general, for third parties working management with a view to the subsidiary VARD, an internal impact on the Group's business with Fincantieri. In particular, the continuous improvement, achieved reorganization has been carried and results. Parent Company has applied the by investing in staf training and out to assist the process of provisions of Legislative Decree performance evaluation. diversifying into new markets, 81/2008 - “Implementation of art. with particular attention to the 1 of Law no. 123 dated 3 August development of new concepts and 2007, concerning health and safety alteration of production processes. at work” (known as the “Health and At the same time, actions to Safety at Work Act”). Fincantieri recruit qualifi ed labour have has adopted suitable organizational been launched in the Romanian models for preventing breach of shipyards to increase the technical these regulations, and sees that such and qualitative level of the models are reviewed and updated on workforce and achieve production an ongoing basis. The commitment ef ciency in order to both support to pursue and promote principles the parent company’s production of environmental sustainability plan and guarantee better has been reaf rmed in the Parent management of the other projects Company's Environmental Policy in the order book. document, which binds the Group to uphold regulatory compliance and to monitor working practices so as to ensure ef ective observance of the rules and regulations. The subsidiary VARD is also committed to minimizing the impact of its activities on the environment, involving actions in terms of resources, policies and procedures to improve its environmental performance. Fincantieri and VARD have implemented an Environmental Management System at their sites with a view to obtaining certifi cation under UNI EN ISO 14001:2004 and has started updating to the 2015 standard. As regards the mitigation of tax risks, the Group constantly monitors changes to the law force. Compliance with the personal data protection regulation is ensured by a system of internal rules adopted in order to ensure that the personal data collected and processed within the company’s business processes.

58 59 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

DESCRIPTION OF RISK IMPACT MITIGATION 10 Risks related to exchange rates

Working in the defense and security Possible limitations on the The Group is monitoring the DESCRIPTION OF RISK IMPACT MITIGATION sector, the Group is exposed to direct award of business could possible evolution of national the risk that the evolving tendency prevent the Group from being and Community legislation that The Group is exposed to exchange The absence of adequate currency Fincantieri has a policy for in this sector could lead in the awarded work through negotiated could open up the possibility of rate risk on transactions of a risk management could increase managing economic and near future to restrictions on the procedures, without any prior competing in the defense and commercial and fi nancial nature the volatility of the Group's transaction fi nancial risks that currently permitted exceptions to publication of a public tender security sector including in other denominated in a currency economic results. In particular, if defi nes instruments, responsibilities competition law, with consequent notice. countries. other than the functional one currencies in which shipbuilding and reporting procedures, with limitations on the direct award of (economic risk and transaction contracts are denominated were which it mitigates currency business in order to ensure greater risk). In addition, translation risk to depreciate, this could have an market risks. With regard to competition in this particular can arise when preparing the adverse impact on company profi t currency translation risk, the Group market. Group’s fi nancial statements, margins and the Group’s cash fl ow. constantly monitors its main through translation of the income exposures which are normally not statements and balance sheets subject to coverage. of consolidated subsidiaries that In the same way, the subsidiary 9 Risks related to information access and operation of the computer system operate in a currency other than VARD prepared a management DESCRIPTION OF RISK IMPACT MITIGATION the Euro (mainly NOK, USD and policy that is based on the BRL). fundamental principles defi ned The Group's business could be Computer system failures, loss The Group considers it has taken by the Parent Company, though adversely af ected by: or corruption of data, including all necessary steps to minimize with some dif erences due to the as a result of external attacks, these risks, by drawing on best company’s particular needs. • inadequate management of the inappropriate IT solutions for the practice for its governance Group's sensitive data, due to needs of the business, or updates systems and continuously inef ective protective measures, to IT solutions not in line with user monitoring the management of its with unauthorized persons outside needs, could af ect the Group's IT infrastructure and applications. 11 Risks related to fi nancial debt the Group able to access and use operations by causing errors Authority to access and operate on confi dential information; in the execution of operations, the computer system is managed DESCRIPTION OF RISK IMPACT MITIGATION • improper access to information, inef ciencies and procedural and maintained to ensure proper Some of the loan agreements In the event of having limited To ensure access to adequate involving the risk of accidental delays and other disruptions, segregation of duties, as enhanced entered into by the Group require access to credit, including because types of fi nance in terms of or intentional alterations or af ecting the Group's ability to with the adoption of a new access it or some of its companies of its fi nancial performance, or in amount and conditions, the Group cancellations by unauthorized compete on the market. management procedure using to comply with conditions, the event of a rise in interest rates constantly monitors the results persons; special software, allowing prior commitments and constraints of or of early repayment of debt, the of its operations and fi nancial • IT infrastructure (hardware, identifi cation and treatment of a fi nancial and legal nature (such Group could be forced to delay condition and its current and future networks, software) whose the risks of segregation of duties as the occurrence of events of raising capital or to seek fi nancial capital and fi nancial structure as security and reliability are not (SoD) resulting from inappropriate default, even potential ones, cross- resources under more onerous well as any circumstances that guaranteed, resulting in possible attribution of access credentials. default clauses and covenants), terms and conditions, with negative could adversely af ect them. In disruption of the computer system non-observance of which could ef ects on its results of operations particular, to mitigate liquidity or network or in illegal attempts lead to immediate repayment and fi nancial condition. risk and maintain a suf cient level to gain unauthorized access or of the loans. In addition, future of fi nancial fl exibility, the Group breaches of its data security increases in interest rates diversifi es its sources of funding system, including coordinated could lead to higher costs and in terms of duration, counterparty attacks by groups of hackers. payments depending on the level and technical form. Moreover, the of indebtedness outstanding at Company can negotiate derivative the time. The Group might not be contracts, usually in the form of able to access suf cient credit to interest rate swaps, in order to properly fi nance its activities (such contain the impact of fl uctuations as in the case of particularly poor of interest rates on the Group’s fi nancial performance) or it might medium/long-term profi tability. be able to access it only under particularly onerous terms and conditions. As for the Of shore industry, the worsening fi nancial situation resulting in restructuring by many industry players is causing banks to reduce their credit exposure to them, with the risk of consequent repercussions for VARD's ability to access construction loans, needed not only for of shore projects but also for those in new markets.

60 61 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

ALTERNATIVE PERFORMANCE MEASURES exclude the following items: Investments and Other non-current assets • ROE (Return on equity) is calculated - costs relating to reorganization plans (including the fair value of derivatives as the ratio between Profi t/(loss) for the Fincantieri's management reviews the and non-recurring other personnel costs; classifi ed in non-current Financial assets period (calculated on a 12-month basis for performance of the Group and its business - provisions for costs and legal expenses and non-current Financial liabilities) net of 1 July - 30 June) and the arithmetic mean segments also using certain measures not associated with lawsuits brought by Employee benefi ts. of Total Equity at the beginning and end of envisaged by IFRS. In particular, EBITDA is employees for asbestos-related damages; • Net working capital: this is equal to the reporting period. used as the main earnings indicator, as it - other expenses or income outside capital employed in ordinary operations • Total debt/Total equity: this is calculated enables the Group's underlying profi tability the ordinary course of business due to which includes Inventories and advances, as the ratio between Total debt and Total to be assessed without the impact of particularly signifi cant non-recurring Construction contracts and client equity. volatility associated with non-recurring events. advances, Construction loans, Trade • Net fi nancial position/EBITDA: this is items or extraordinary items outside the • EBIT: this is equal to EBITDA after receivables, Trade payables, Provisions for calculated as the ratio between the Net ordinary course of business. deducting depreciation, amortization risks and charges, and Other current assets fi nancial position, as monitored by the As required by Consob Communication and impairment of a recurring nature and liabilities (including Income tax assets, Group, and EBITDA (on 12-month basis, 1 no. 0092543 of 3 December 2015 which (this excludes impairment of goodwill, Income tax liabilities, Deferred tax assets July - 30 June). implements the ESMA Guidelines on Intangible assets and Property, plant and Deferred tax liabilities, as well as the • Net fi nancial position/Total equity: this Alternative Performance Measures and equipment recognized as a result of fair value of derivatives classifi ed in current is calculated as the ratio between the Net (document no. ESMA/2015/1415), the impairment tests). Financial assets and current Financial fi nancial position, as monitored by the components of each of these measures are • Adjusted profi t/(loss) is equal to profi t liabilities). Group, and Total equity. described below: (loss) for the period before adjustments • Net invested capital: this is equal to the • Provisions: these refer to increases in for non-recurring items or those outside total of Net fi xed capital and Net working the Provisions for risks and charges, and • EBITDA: this is equal to earnings the ordinary course of business, which are capital. impairment of Trade receivables and Other before taxes, before fi nance income and reported before the related tax ef ect. • ROI (Return on investment) is calculated non-current and current assets. costs, before income and expenses from • Net fi xed capital: this reports the as the ratio between EBIT (calculated on a investments and before depreciation, fi xed assets used in the business and 12-month basis for 1 July - 30 June) and the amortization and impairment, as reported includes the following items: Intangible arithmetic mean of Net invested capital at the in the fi nancial statements, adjusted to assets, Property, plant and equipment, beginning and end of the reporting period.

62 63 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

RECONCILIATION OF THE RECLASSIFIED FINANCIAL CONSOLIDATED STATEMENT OF FINANCIAL POSITION STATEMENTS USED IN THE REPORT ON OPERATIONS WITH THE MANDATORY IFRS STATEMENTS (euro/million) 30.06.2019 31.12.2018 CONSOLIDATED INCOME STATEMENT Amounts Amounts in Amounts Amounts in in IFRS reclassified in IFRS reclassified statement statement statement statement (euro/million) 30.06.2019 30.06.2018 A – Intangible assets 621 618 Amounts Amounts in Amounts Amounts in Intangible assets 621 618 in IFRS reclassified in IFRS reclassified B – Rights of use 85 - statement statement statement statement Rights of use 85 - A – Revenue 2,837 2,527 C – Property, plant and equipment 1,152 1,074 Operating revenue 2,804 2,473 Property, plant and equipment 1,152 1,074 Other revenue and income 33 54 D – Investments 74 60 B - Materials, services and other costs (2,100) (1,855) Investments 74 60 Materials, services and other costs (2,108) (1,857) E – Other non-current assets and liabilities (14) 8 Recl. to I - Extraordinary and non-recurring income 8 2 Derivative assets 1 30 and expenses Other non-current assets 30 31 C - Personnel costs (508) (482) Other liabilities (30) (32) Personnel costs (511) (485) Derivative liabilities (15) (21) Recl. to I - Extraordinary and non-recurring income 3 3 F – Employee benefi ts (59) (57) and expenses Employee benefi ts (59) (57) D - Provisions (14) (7) G – Inventories and advances 807 881 Provisions (30) (38) Inventories and advances 807 881 Recl. to I - Extraordinary and non-recurring income 16 31 H – Construction contracts and client advances 969 936 and expenses Construction contracts - assets 2,301 2,531 E – Depreciation, amortization and impairment (78) (65) Construction contracts - liabilities and client advances (1,332) (1,595) Depreciation, amortization and impairment (78) (65) I - Construction loans (492) (632) F – Finance income/(costs) (60) (52) Construction loans (492) (632) Finance income/(costs) (60) (52) L - Trade receivables 647 749 G - Income/(expense) from investments (3) 1 Trade receivables and other current assets 979 1,062 Income/(expense) from investments (3) 5 Recl. to O) Other assets (332) (313) Recl. to I - Extraordinary and non-recurring income - (4) M - Trade payables (1,824) (1,849) and expenses Trade payables and other current liabilities (2,150) (2,116) H - Income taxes (40) (28) Recl. to O) Other liabilities 326 267 Income taxes (35) (20) N - Provisions for risks and charges (80) (135) Recl. to L - Tax ef ect of extraordinary and non- (5) (8) recurring income and expenses Provisions for risks and charges (80) (135) I - Extraordinary and non-recurring income and O – Other current assets and liabilities 76 94 (27) (32) expenses Deferred tax assets 139 123 Recl. from B - Materials, services and other costs (8) (2) Income tax assets 22 21 Recl. from C - Personnel costs (3) (3) Derivative assets 8 23 Recl. from D - Provisions (16) (31) Recl. from L) Other current assets 332 313 Recl. from G - Income/(expense) from investments - 4 Deferred tax liabilities (57) (58) Income tax liabilities (12) (4) L- Tax ef ect of extraordinary and non-recurring 5 8 Derivative liabilities and option fair value income and expenses (30) (57) Recl. from M) Other current liabilities (326) (267) Recl. from H – Income taxes 5 8 NET INVESTED CAPITAL 1,962 1,747 Profi t/(loss) for the period 12 15 P – Equity 1,238 1,253 Q – Net fi nancial position 724 494 SOURCES OF FUNDING 1,962 1,747

64 65 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

C ONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS AT AND FOR THE SIX MONTHS ENDED 30 JUNE 2019

66 67 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(euro/000) (euro/000) Note 30.06.2019 of which related 31.12.2018 of which related Note 30.06.2019 of which related 30.06.2018 of which related parties - Note 29 parties - Note 29 parties - Note 29 parties - Note 29

ASSETS Operating revenue 25 2,803,704 116,335 2,472,610 108,295 NON-CURRENT ASSETS Other revenue and income 25 33,164 9,130 54,331 614 26 Intangible assets 5 621,207 617,668 Materials, services and other costs (2,107,774) (73,825) (1,857,000) (29,466) 29 Rights of use 6 85,034 - of which non-recurring 26 Property, plant and equipment 7 1,152,296 1,074,026 Personnel costs (510,953) (484,356) - of which non-recurring 29 Investments accounted for using the (707) 8 54,134 55,651 26 equity method Depreciation, amortization and impairment (77,552) (65,719) 26 Other investments 8 19,582 4,556 Provisions (30,110) (37,880) 27 Financial assets 9 73,191 17,755 97,901 13,449 Finance income 20,284 130 26,901 445 27 Other assets 10 31,156 790 31,811 673 Finance costs (80,533) (1,887) (78,826) (2,113) Deferred tax assets 11 139,412 123,964 Income/(expense) from investments (18) 6,452 Share of profi t/(loss) of investments accounted for Total non-current assets 2,176,012 2,005,577 (2,584) (1,503) using the equity method CURRENT ASSETS Ta xe s 28 (35,600) (20,016) Inventories and advances 12 806,976 197,564 881,095 201,738 PROFIT / (LOSS) FOR THE PERIOD (A) 12,028 14,994 Construction contracts - assets 13 2,300,721 2,531,272 Attributable to owners of the parent 15,856 20,978 Trade receivables and other current assets 14 981,034 197,845 1,062,377 145,310 Attributable to non-controlling interests (3,828) (5,984) Income tax assets 15 21,473 20,602 Basic earnings/(loss) per share (euro) 0.00940 0.01243 Financial assets 16 27,674 500 48,688 86 Diluted earnings/(loss) per share (euro) 0.00932 0.01237 Cash and cash equivalents 17 683,509 676,487 Total current assets 4,821,387 5,220,521 Other comprehensive income/(losses), net of tax (OCI) TOTAL ASSETS 6,997,399 7,226,098 Gains/(losses) from remeasurement of employee 18 (2,238) 535 defi ned benefi t plans 20 EQUITY AND LIABILITIES Total gains/(losses) that will not be reclassifi ed to 18 EQUITY 18 (2,238) 535 profi t or loss, net of tax Attributable to owners of the parent - attributable to non-controlling interests Share Capital 862,981 862,981 Ef ective portion of gains/(losses) on cash fl ow 18 (19,870) (38,984) Reserves and retained earnings 352,604 364,299 hedging instruments Total Equity attributable to owners of the Gains/(losses) arising from changes in OCI of 1,215,585 1,227,280 18 parent investments accounted for using the equity method Attributable to non-controlling interests 21,927 25,690 Gains/(losses) arising from fair value measurement Total Equity 1,237,512 1,252,970 of securities and bonds at fair value through comprehensive income NON-CURRENT LIABILITIES Exchange gains/(losses) arising on translation of 18 Provisions for risks and charges 19 9,211 15,987 70,860 126,523 foreign subsidiaries' fi nancial statements Employee benefi ts 20 59,416 56,806 Total gains/(losses) that may be subsequently 18 21 (10,659) (22,997) Financial liabilities 837,276 35,160 792,728 40,487 reclassifi ed to profi t or loss, net of tax Other liabilities 22 30,576 32,137 - attributable to non-controlling interests 238 887 11 Total other comprehensive income/(losses), net Deferred tax liabilities 56,848 58,012 18 (12,897) (22,462) of tax (B) Total non-current liabilities 1,054,976 1,066,206 - attributable to non-controlling interests 238 887 CURRENT LIABILITIES TOTAL COMPREHENSIVE INCOME/(LOSS) FOR 19 (869) (7,468) Provisions for risks and charges 8,916 8,693 THE PERIOD (A) + (B) 13 Construction contracts - liabilities 1,331,596 1,594,793 Attributable to owners of the parent 2,721 (2,371) 23 Trade payables and other current liabilities 2,151,423 113,305 2,116,290 66,642 Attributable to non-controlling interests (3,590) (5,097) Income tax liabilities 12,152 4,300 Financial liabilities 24 1,200,824 35,115 1,182,846 12,324 Total current liabilities 4,704,911 4,906,922 TOTAL EQUITY AND LIABILITIES 6,997,399 7,226,098

68 69 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS

(euro/000) (euro/000) Note Share Capital Reserves and Equity Equity Total Note 30.06.2019 30.06.2018 retained earnings attributable to attributable to 30 owners of the non-controlling NET CASH FLOWS FROM OPERATING ACTIVITIES 130,136 262,450 parent interests - of which related parties (1,815) (5,409) - 01.01.2018 862,981 353,430 1,216,411 72,088 1,288,499 Investments in: Business combinations - intangible assets (21,912) (5,934) Share Capital increase - property, plant and equipment (80,070) (38,370) Acquisition of non-controlling 2,047 2,047 (8,955) (6,908) - equity investments (15,500) (7,169) interests - receivables and other fi nancial assets Dividend distribution (16,874) (16,874) (16,874) - cash out for business combinations, net of cash acquired (246) (85) Reserve for long-term incentive 2,068 2,068 2,068 plan Disposals of: Other changes/roundings (60) (60) 8 (52) - intangible assets 85 Total transactions with owners - (12,819) (12,819) (8,947) (21,766) - property, plant and equipment 53 334 Profi t/(loss) for the period 20,978 20,978 (5,984) 14,994 - equity investments 16,600 Other components - receivables and other non-current fi nancial assets OCI for the period (23,349) (23,349) 887 (22,462) CASH FLOWS FROM INVESTING ACTIVITIES (117,590) (34,624) Total comprehensive income for - (2,371) (2,371) (5,097) (7,468) the period Change in non-current loans: 30.06.2018 - 862,981 338,240 1,201,221 58,044 1,259,265 - disbursements 60,000 65,888 - repayments (14,279) (25,382) 18 01.01.2019 862,981 364,299 1,227,280 25,690 1,252,970 Change in non-current fi nancial receivables: Business combinations - disbursements (15,013) (5,057) Share Capital increase - repayments 322 205 Acquisition of non-controlling (302) (302) (173) (475) interests Change in current bank loans and credit facilities Dividend distribution (16,874) (16,874) (16,874) - disbursements 1,057,208 512,561 Reserve for long-term incentive - repayments (1,108,768) (651,127) 2,760 2,760 2,760 plan Change in current bonds/commercial papers Other changes/roundings - disbursements 489,200 225,000 Total transactions with owners (14,416) (14,416) (173) (14,589) - repayments (501,000) Net profi t/(loss) for the period 15,856 15,856 (3,828) 12,028 Change in other current fi nancial liabilities/receivables 24,374 (2,517) Other components Change in receivables for held-for-trading fi nancial 767 949 OCI for the period (13,135) (13,135) 238 (12,897) instruments

Total comprehensive income for Change in payables for held-for-trading fi nancial instruments 2 2,721 2,721 (3,590) (869) the period Net capital contributions by non-controlling interests 18 30.06.2019 862,981 352,604 1,215,585 21,927 1,237,512 Increase in Share Capital Acquisition of non-controlling interests in subsidiaries (474) (6,908) CASH FLOWS FROM FINANCING ACTIVITIES (7,661) 113,612 - of which related parties 12,744 (22,229) NET CASH FLOWS FOR THE PERIOD 4,885 341,438

CASH AND CASH EQUIVALENTS AT BEGINNING OF 676,487 274,411 PERIOD Ef ect of exchange rate changes on cash and cash equivalents 2,137 1,732 CASH AND CASH EQUIVALENTS AT END OF PERIOD 683,509 617,581

70 71 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

N OTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

72 73 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 1 - FORM, CONTENTS AND OTHER Consolidated Interim Financial Statements”) for more details. The following table shows measured at fair value at 30 June 2019 and 31 GENERAL INFORMATION were approved by the Company’s Board of the fi nancial assets and liabilities that are December 2018: Directors on 24 July 2019. The Parent Company PricewaterhouseCoopers S.p.A., the fi rm (euro/000) appointed to perform the statutory audit 30.06.2019 31.12.2018 FINCANTIERI S.p.A. (hereinafter “Fincantieri” of the separate fi nancial statements of the Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 or the “Company” or the “Parent Company” Parent Company and its main subsidiaries, has Assets and, together with its subsidiaries, the “Group” performed a limited audit of the Condensed Financial assets at fair value through or the “Fincantieri Group”) is a public limited Consolidated Interim Financial Statements. profi t or loss company with its registered of ce in Via Genova Equity instruments 165 4,125 178 4,111 no. 1, Trieste (Italy), and is listed on the Mercato Basis of preparation Debt instruments Telematico Azionario (Italy’s electronic stock Convertible loans 11,000 market) organized and managed by Borsa The Half-Year Financial Report of the Fincantieri Financial assets at fair value through comprehensive income Italiana S.p.A. Group as at 30 June 2019 has been prepared Equity instruments 15,292 267 As at 30 June 2019, 71.64% of the Company’s in accordance with the provisions of art. 154-ter Debt instruments Share Capital of euro 862,980,725.70 was held par. 2 of Legislative Decree no. 58/98 (known Hedging derivatives 8,143 52,147 by Fintecna S.p.A.; the remainder of Share as the “Consolidated Law on Finance”) and Held-for-trading derivatives 44 811 Capital was distributed between a number of subsequent amendments and additions. Total assets 165 8,187 30,417 178 52,958 4,378 private investors (none of whom held signifi cant The Condensed Consolidated Interim Financial interests of 3% or above) and own shares (of Statements have been prepared in accordance Liabilities around 0.28% of shares representing the Parent with IAS 34 - Interim Financial Reporting. Financial liabilities at fair value through 19,508 19,389 Company’s Share Capital). It should be noted IAS 34 allows the preparation of fi nancial profi t or loss that 100% of the Share Capital of Fintecna S.p.A. statements in a “condensed” format, in which Hedging derivatives 26,062 59,264 is owned by Cassa Depositi e Prestiti S.p.A. the minimum level of disclosure is less than Held-for-trading derivatives 32 30 (hereinafter also referred to as “CDP”), 82.8% of that required by the IFRSs, as long as the Total liabilities 26,094 19,508 59,294 19,389 whose Share Capital is in turn owned by Italy’s reporting entity has previously published a Ministry of Economy and Finance. complete set of fi nancial statements prepared in accordance with IFRS. Since the contents of Financial assets and liabilities measured • Level 3: fi nancial assets and fi nancial Ifrs Condensed Consolidated Interim the Condensed Consolidated Interim Financial at fair value are classifi ed in the three liabilities whose fair value is determined Financial Statements Statements are presented in a condensed hierarchical levels given above, in order of using inputs not based on observable format, they must be read in conjunction with the priority attributed to the inputs used to market data. The consolidated fi nancial statements of the Group’s consolidated fi nancial statements determine fair value. the Fincantieri Group have been prepared for the year ended 31 December 2018, prepared In particular: Financial assets at fair value through in compliance with IFRS, meaning all the in accordance with IFRS (the “Consolidated comprehensive income classifi ed as Level International Financial Reporting Standards, all Financial Statements”). • Level 1: fi nancial assets and fi nancial 3 relate to equity investments carried at the International Accounting Standards (“IAS”), With regard to the main fi nancial risks to liabilities whose fair value is determined using fair value. Level 3 also includes the fi nancial and all the interpretations of the International which the Group is exposed - credit risk, quoted prices (unadjusted) in active markets liabilities relating to the fair value of options Financial Reporting Interpretations Committee liquidity risk and market risk (in particular for identical assets or liabilities; on equity investments calculated using (“IFRIC”) previously known as the Standing currency, interest rate and commodity price • Level 2: fi nancial assets and fi nancial valuation techniques whose inputs are not Interpretations Committee (“SIC”), which, risk) - the management of these fi nancial risks liabilities whose fair value is determined using observable on the market. During the fi rst as at the reporting date of the consolidated is the responsibility of the Parent Company inputs other than quoted prices included half of 2019, the following were classifi ed fi nancial statements, have been endorsed by which decides, in close collaboration with its within Level 1 that are observable for the as level 3 fi nancial assets at fair value: i) the European Union in accordance with the operating units, whether and how to hedge asset or liability, either directly or indirectly the new investment in Genova Industrie procedure laid down in Regulation (EC) no. these risks. There have been no signifi cant (primarily: market exchange rates at the Navali (see note 8), ii) the new convertible 1606/2002 of the European Parliament and changes in the major fi nancial risks faced reporting date, expected rate dif erentials loan granted to T. Mariotti S.p.A. (see note European Council dated 19 July 2002. compared with those described in the between the currencies concerned and 9). The remaining movements in fi nancial The condensed consolidated interim fi nancial Consolidated Financial Statements at 31 volatility of the relevant markets, interest assets and liabilities classifi ed as Level 3 are statements at 30 June 2019 (the “Condensed December 2018, which should be consulted rates and commodity prices); basically due to exchange rate dif erences.

74 75 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Presentation of Financial Statements based on the nature of expenses, and its NOTE 2 - SCOPE AND BASIS OF CONSOLIDATION • On 19 March 2019 the subsidiary Marine Interiors statement of cash fl ows using the indirect S.p.A. acquired the entire shareholding of Luxury The Group presents its statement of method. It is also noted that the Group has As previously stated, the scope and basis of Interiors Factory S.r.l.; fi nancial position using a “non-current/ applied the provisions of Consob Resolution consolidation adopted for the preparation of • In the fi rst half of 2019, Fincantieri increased its current” distinction, its statement of no. 15519 of 27 July 2006 concerning the Condensed Consolidated Interim Financial shareholding in the VARD Group, through the comprehensive income using a classifi cation fi nancial statement formats. Statements are in line with those used to prepare subsidiary Fincantieri Oil & Gas, from 97.22% at 31 the Consolidated Financial Statements, except December 2018 to 97.44% at 30 June 2019. as reported in Note 3. The following transactions were performed On 4 July 2019, FINCANTIERI S.p.A. completed during the fi rst half of 2019: the acquisition of a 60% stake in the INSIS Group, a solution provider in the fi eld of physically • On 1 January 2019, the deed of reverse and logically integrated security, operating in merger by incorporation of Delfi S.r.l. into the domestic and foreign markets both directly subsidiary Issel Nord S.r.l. took ef ect, whereby and as a technology partner of large industrial all the shares making up the capital of Delfi S.r.l. groups. The purchase price of the investment were cancelled, while those of Issel Nord S.r.l. is euro 23 million. The agreement also provides were assigned to Fincantieri S.p.A.; that Fincantieri may exercise a call option on • On 8 January 2019 the company SIA ICD the remaining 40%, and the minority third party Industries Latvia, 100% owned by the company shareholder may exercise a put option on the Seaonics AS, was liquidated; same share. • On 19 February 2019, the Parent Company No signifi cant transactions or unusual events and the subsidiary Fincantieri SI S.p.A. have taken place during the fi rst half of 2019 incorporated the company BOP6 S.c.a.r.l., or during 2018, except as reported in the in which they hold 5% and 95% of the Share Condensed Consolidated Interim Financial Capital respectively. The NewCo, based in Statements as at 30 June 2019. It is also noted Trieste, will install transformers, converters, that the Group’s business is not subject to power factor correction units and harmonic seasonal trends. fi lters at the ITER site in Saint-Paul Lez Durance (France); Translation of the Financial Statements • On 11 March 2019 the company Vard Ship of foreign operations Repair Braila SA, 100% owned by the company Vard Braila SA, was liquidated; The exchange rates used to translate the • On 19 March 2019, the Parent Company fi nancial statements of Group companies with a became a shareholder of Genova Industrie “functional currency” other than the Euro are as Navali S.c.p.a. with a 15% interest; follows:

30.06.2019 31.12.2018 30.06.2018 Average rate Closing rate Average rate Closing rate Average rate Closing rate

US Dollar (USD) 1.1298 1.1380 1.1810 1.1450 1.2104 1.1658 Australian Dollar (AUD) 1.6003 1.6244 1.5797 1.6220 1.5688 1.5787 UAE Dirham (AED) 4.1491 4.1793 4.3371 4.2050 4.4450 4.2814 Brazilian Real (BRL) 4.3417 4.3511 4.3085 4.4440 4.1415 4.4876 Norwegian Krone (NOK) 9.7304 9.6938 9.5975 9.9483 9.5929 9.5115 Indian Rupee (INR) 79.124 78.524 80.7332 79.7298 79.4903 79.8130 Romanian Leu (RON) 4.7418 4.7343 4.6540 4.6635 4.6543 4.6631 Chinese Yuan (CNY) 7.6678 7.8185 7.8081 7.8751 7.7086 7.7170 Swedish Krona (SEK) 10.5181 10.5633 10.2583 10.2548 10.1508 10.4530

76 77 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 3 - ACCOUNTING STANDARDS (euro/000) for fi rst-time application, the Group has used 01.01.2019 the option not to make any adjustments for Commitments for operating leases IAS 17 not discounted to 31 December 2018 (+) 81,188 It should be noted that the recording and operating leases which have underlying assets Exceptions to IFRS 16 recognition (-) measurement criteria adopted in preparing the of a low value and for operating leases with a (8,698) - For short-term leases (-) Half-Year Financial Report at 30 June 2019 are term ending within 12 months of the date of (8,436) - For leases of moderate value (-) the same as those adopted in preparing the initial application, for which the payments due (261) Consolidated Financial Statements at 31 December will continue to be recognised, as previously Other changes: 34,914 2018, to which reference is made, except for done, under operating charges. - adjustments due to dif erent consideration of options for early renewal or termination of contracts 34,914 those listed under the accounting standards, In summary, accounting for leasing contracts Financial liabilities for IFRS 16 non-discounted leases at 1 January 2019 107,404 amendments and interpretations applicable with pursuant to IFRS 16 requires: Discount ef ect on operating leases (-) (19,083) ef ect from 1 January 2019, since they have become Financial liabilities for IFRS 16 discounted operating leases at 1 January 2019 88,322 compulsory following completion of the relevant • in the balance sheet, the recognition of an Financial liabilities for fi nancial leases pursuant to IAS 17 at 01/01/2019 (+) 210 endorsement procedures by the competent asset, representing the right of use of the good Total IFRS 16 fi nancial liabilities at 1 January 2019 88,531 authorities. The list excludes those accounting (right of use asset), and a liability (lease liability), standards, amendments and interpretations representing the obligation to make payments New Rights of Use recognised for transition purposes IFRS 16 (+) concerning matters not applicable to the Group. under the contract; as permitted by the principle, Assets for operational use: 88,322 the right of use asset and the lease liability are a) buildings 62,028 Accounting Standards, amendments and recorded in separate items with respect to the b) state concessions 21,603 interpretations applicable with ef ect from 1 other components of the balance sheet; c) vehicles and passenger cars 4,146 january 2019 • in the income statement, under operating c) other 545 costs, the recognition of amortisation of right Assets under fi nancial lease as per IAS 17 at 01/01/2019 (+) 210 First time adoption IFRS 16 of use assets and, in the fi nancial section, the Financial liabilities for IFRS 16 discounted operating leases at 1 January 2019 88,531 With ef ect from 1 January 2019, the new recognition of interest payable accrued on Equity (Retained earnings) at 1 January 2019 - accounting standard IFRS 16 "Leases" came the lease liability, if not capitalised, instead into force, which defi nes a standard form for of operating lease instalments recorded Other accounting standards, amendments On 12 October 2017, the IASB published recognising leasing contracts, eliminating the under operating costs in accordance with and interpretations applicable with ef ect amendments to IFRS 9 – Prepayment distinction between operating and fi nancial the provisions of the accounting standard from 1 January 2019 Features with Negative Compensation, aimed leases, and providing for the recognition of an in force up to the 2018 fi nancial year. The at enabling measurement at amortised cost asset for the right to use the good and a liability income statement also includes: (i) instalments On 12 December 2017, the IASB issued the or at fair value through other comprehensive for the lease. relating to short-term leases of modest value, “Annual Improvements to IFRSs: 2015-2017 income (OCI) of fi nancial assets with an For fi rst-time application, for the purposes of as allowed by IFRS 16 in a simplifi ed manner; Cycle” as part of the program of annual early repayment option with negative displaying the impact in the fi nancial statements and (ii) variable lease instalments, not included improvements to the standards; most of compensation. from the fi rst adoption of IFRS 16, the Group in the determination of the liability lease (e.g. the changes are clarifi cations or corrections On 12 June 2017, the IASB published has decided to use the option provided for instalments based on the use of the leased of existing IFRSs or amendments as a amendments to IAS 28 – Long-term Interests by IFRS 16, paragraph C5, subsection b) and asset); consequence of previous changes to IFRSs. in Associates and Joint Ventures, to clarify paragraph C8, on the basis of which the Group • in the statement of cash fl ows, the recognition On 7 February 2018, the IASB published that IFRS 9 applies to long-term interests recognised at 1 January 2019 a fi nancial liability of the repayments of the principal portion of the amendments to IAS 19 – Plan Amendment, in an associate company or joint venture (euro 88 million) corresponding to the actual lease liability under net cash fl ow from fi nancing Curtailment or Settlement, specifying the that form part of the net investment in the value of outstanding payments due for leases in activities. Interest payable is recognised under methods for determining, in the case of a associate company or joint venture. place on the date of fi rst application, discounted net cash fl ow from operating activities, where it defi ned benefi t plan, the costs relating to The application of these standards, using the marginal lending rate on the date of is recognised in the profi t and loss account. pensions for the remainder of the reporting amendments and interpretations had no initial application, against a fi xed asset of the period. signifi cant ef ect on the consolidated interim same amount refl ecting the right to use the The following table shows the reconciliation On 7 June 2017, the IASB issued fi nancial statements as at 30 June 2019. leased goods, without restating the values between the commitments for operating leases interpretation IFRIC 23 – Uncertainty over for the previous fi nancial years presented for reported in the 2018 fi nancial statements and the Income Tax Treatments, which provides comparison. The weighted average marginal value of the fi nancial liability and related rights of indications on how to refl ect the ef ects lending rate used to determine the fi nancial use recorded at the time of the fi rst application of uncertainties in tax treatment in the liability at 1 January 2019 was 3.1%. In addition, of IFRS 16: accounts.

78 79 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 4 - CRITICAL ACCOUNTING ESTIMATES fi nancial statements when all the necessary AND ASSUMPTIONS information is available, unless there are indicators of impairment that require the A full description of the use of accounting immediate assessment of any impairment estimates can be found in the Consolidated losses. Financial Statements at 31 December 2018. Certain valuation processes, particularly the more complex ones, such as the NOTE 5 - INTANGIBLE ASSETS determination of any impairment of non- current assets, are generally carried out in full only at the time of preparing the annual Movements in this line item are as follows:

(euro/000) Goodwill Client Development Industrial Concessions, Other Intangibles Total relationships costs patents and licenses, intangibles in progress and order intellectual trademarks and backlog property and similar advances rights rights

- cost 254,830 188,420 179,898 123,349 24,938 63,048 55,259 889,742 - accumulated amortization and (80,469) (70,471) (98,339) (7,354) (15,441) (272,074) impairment losses Net carrying amount 254,830 107,951 109,427 25,010 17,584 47,607 55,259 617,668 at 01.01.2019 Movements - business combinations - additions 394 1,424 3 136 20,349 22,306 - net disposals (48) (48) - reclassifi cations/other (1) 636 674 1 (1,347) (37) - amortization (4,133) (14,115) (3,164) (873) (4,058) (26,343) - impairment losses (394) (367) (761) - exchange rate 5,308 2,541 229 116 107 112 9 8,422 dif erences Closing net carrying 260,138 106,358 96,598 22,598 17,495 43,750 74,270 621,207 amount - cost 260,532 192,735 181,622 124,017 25,836 63,210 74,270 922,222 - accumulated

amortization and (394) (86,377) (85,024) (101,419) (8,341) (19,460) (301,015) impairment losses Net carrying amount at 260,138 106,358 96,598 22,598 17,495 43,750 74,270 621,207 30.06.2019

Goodwill totals euro 260,138 thousand at 30 Following impairment indicators for the June 2019 and was allocated as follows: VARD Of shore and Specialized Vessels and VARD Cruise CGUs, in line with the provisions of international accounting CGU Goodwill value standard IAS 36, the recoverability of the FMG Group 69,896 value of goodwill allocated to the two VARD Of shore and Specialized Vessels 132,673 CGUs was verifi ed. VARD Cruise 57,569 For the purposes of impairment testing, TOTAL 260,138 the company used cash fl ow projections

80 81 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

based on the best available information discount and growth rates used adopted NOTE 6 - RIGHTS OF USE inferred from the Strategic Plan 2018-2022 for this calculation. For further details on updated at the moment of estimation. the method used by the Group to estimate Movements in this line item are as follows: The following table specifi es for each the recoverable amount of goodwill, of the two CGUs the method used to reference should be made to the 2018 (euro/000) Buildings State Transport and Passenger Computer Other Total determine recoverable amount and the Annual Report. ROU concessions lifting vehicles cars equipment ROU ROU ROU ROU ROU

RECOVERABLE AMOUNT POST TAX WACC G RATE CASH FLOW PERIOD Initial book value as at CGU 62,237 21,603 1,342 2,804 483 62 88,531 01.01.2019 VARD Of shore and Specialized Value in use 5.7% 1.8% 3.5 years Vessels Movements - business combinations VARD Cruise Value in use 5.6% 1.8% 3.5 years - increases 6,555 1,251 997 29 5 8,837 - decreases (241) (1,258) (1,499) VARD Of shore and Specialized value calculation, were to decrease by 100 - reclassifi cations/other (1,397) (1,397) Vessels CGU basis points, recoverable amounts would - amortization (5,951) (692) (228) (666) (101) (10) (7,648) The impairment test has shown that still be signifi cantly higher than carrying - impairment losses - exchange rate the CGU’s recoverable amount exceeds amounts. (1,803) 11 1 1 (1,790) dif erences its carrying amount, meaning that no The item “Concessions, licenses, trademarks Closing net carrying 59,400 20,915 1,114 3,136 412 57 85,034 impairment loss needs to be recognised. and similar rights” includes euro 16,257 amount The results obtained have been thousand for trademarks with indefi nite - cost 65,353 21,607 1,342 3,785 513 66 92,666 subjected to sensitivity analysis for those useful lives, refl ecting the expectation for - accumulated assumptions, changes in which might their use. amortization and (5,953) (692) (228) (649) (101) (9) (7,632) impairment losses reasonably cause the test results to change Capital expenditure in the fi rst half of 2019 Net carrying amount at 59,400 20,915 1,114 3,136 412 57 85,034 materially. This has shown that if WACC has resulted in additions of euro 21,912 30.06.2019 were to increase by 100 basis points or if thousand (euro 5,934 thousand at 30 June growth rates (g rate), used in the terminal 2018), mainly related to: For the value of non-current and current fi nancial liabilities pursuant to IFRS 16, reference should be value calculation, were to decrease by 100 made to notes 21 and 24.$ basis points, recoverable amounts would • the continued implementation of an still be higher than carrying amounts. integrated system for the design of ships (CAD) and project lifecycle management VARD Cruise CGU (PLM), aimed at improving the ef ciency and The impairment test has shown that ef ectiveness of the engineering process, and the CGU’s recoverable amount exceeds the development of IT systems to support its carrying amount, meaning that no the Group’s increased activity and optimise impairment loss needs to be recognised. management of the processes; The results obtained have been • the development of information systems subjected to sensitivity analysis for those to support the Group's growing activities assumptions, changes in which might and optimise process management, with reasonably cause the test results to change particular reference to the upgrading of materially. This has shown that if WACC management systems and the exporting of were to increase by 100 basis points or if these systems to the main subsidiaries of the growth rates (g rate), used in the terminal Group.

82 83 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT NOTE 8 - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD AND OTHER Movements in this line item are as follows: INVESTMENTS

(euro/000) These are analyzed as follows: Land and Leased Industrial Assets under Leasehold Other Assets under Total buildings buildings plant, concession improvements assets construction machinery and and supplier (euro/000) equipment advances Associates Joint Total Other Other Total other Total ventures - cost 646,233 3,624 1,297,782 193,649 29,774 202,782 149,489 2,523,333 investments companies companies investments accounted carried at fair carried at fair - accumulated for using the value through value through depreciation and (241,745) (3,404) (920,529) (135,300) (24,074) (124,255) (1,449,307) equity method comprehensive profit or loss impairment losses income Net carrying amount at 404,488 220 377,253 58,349 5,700 78,527 149,489 1,074,026 01.01.2019 01.01.2019 35,423 20,228 55,651 267 4,289 4,556 60,207 Movements Business combinations - business combinations 15 15 Investments 475 475 15,025 15,025 15,500 Revaluations/(Impairment - additions 709 7,631 91 11 273 71,355 80,070 (4,474) 1,890 (2,584) (18) (18) (2,602) losses) through profi t or loss - net disposals 1(472)(100)(9)(580) Revaluations/(Impairment - reclassifi cations/other 5,315 (223) 10,280 28 81 1,189 21,195 37,865 losses) through equity - depreciation (8,926) (26,926) (2,259) (461) (4,203) (42,775) Disposals - impairment losses (25) (25) Dividends from investments - exchange rate 1,729 3 1,634 63 271 3,700 accounted for using the equity dif erences method Closing net carrying Reclassifi cations/Other 403,291 - 369,415 56,209 5,331 75,749 242,301 1,152,296 amount Exchange rate dif erences 592 592 19 19 611 - cost 655,171 1,317,603 193,768 29,867 204,491 242,301 2,643,201 30.06.2019 31,541 22,593 54,134 15,292 4,290 19,582 73,716 - accumulated depreciation and (251,880) (948,188) (137,559) (24,536) (128,742) (1,490,905) impairment losses Net carrying amount at Investments made in the fi rst half of 2019 profi t or loss and through equity relating to 403,291 - 369,415 56,209 5,331 75,749 242,301 1,152,296 30.06.2019 totalled euro 15,500 thousand and mainly companies accounted for using the equity concerned, for euro 15,000 thousand, the method include the Group’s share of the Capital expenditure in the fi rst half of 2019 • maintenance of infrastructure and upgrading purchase of a 15% stake in Genova Industrie net result and of the associates’ and joint totalled euro 80,070 thousand, mainly related to: of production systems in the US shipyards; Navali - a holding company set up in 2008 ventures’ equity changes during the period. • continuation of activities to expand by the merger of two historic Genoese “Other investments” include investments • updating of the working areas at some production capacity at the Vard Tulcea shipyards, T. Mariotti and San Giorgio del carried at fair value, calculated either on shipyards, in particular Monfalcone, Marghera shipyard to support the construction of hulls Porto - as part of a cooperation agreement the basis of the related prices if quoted in and Sestri, to the new production scenarios and the multi-year program to build pre- that will cover various areas, from new active markets (Level 1), or using valuation and upgrading and improvement of the safety fi tted cruise ship blocks and sections for the constructions, to repairs and conversions, techniques whose inputs are not observable standards of machinery, equipment and Fincantieri production network. up to the fi tting out of ships. This agreement on the market (Level 3). The item entailed buildings; also provides for the granting of a loan the recognition of net impairment losses • upgrading of the operating areas and Euro 37 million of the reclassifi cation item convertible into a minority stake in T. through profi t or loss for euro 18 thousand, infrastructure of the new Fincantieri refers to the reclassifi cation of two vessels Mariotti. following the negative change of the related Infrastructure plant in Valeggio sul Mincio (PSV), which at December 31, 2018 were Revaluations/(Impairment losses) through fair value during the period. following the award of major contracts for classifi ed as contract work in progress, steel structures; following the management's decision to • continuation of activities to introduce new manage these vessels on its own. It should technologies in particular at the Monfalcone be noted that, before proceeding with this shipyard with regard to the Integrated reclassifi cation, the book value of these vessels Environmental Authorization; carried an impairment loss of Euro 12.8 million.

84 85 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 9 - NON-CURRENT FINANCIAL ASSETS

These are analyzed as follows:

(euro/000) 30.06.2019 31.12.2018

Receivables for loans to joint ventures 8,400 8,400 Grants fi nanced by BIIS 777 4,762 Derivative assets 836 30,006 Other non-current fi nancial receivables 53,823 49,684 Non-current fi nancial receivables from investee companies 9,355 5,049 NON-CURRENT FINANCIAL ASSETS 73,191 97,901

“Other non-current fi nancial receivables” by FINCANTIERI with the Genova Industrie report loans to third parties bearing market Navali group in March 2019. rates of interest. At June 30, 2019, this item “Derivative assets” represent the reporting- included a convertible loan of euro 11 million date fair value of derivatives with a maturity granted to T. Mariotti S.p.A., valued at fair of more than 12 months (Level 2). value through profi t or loss (FVTPL), as part of a cooperation agreement signed

NOTE 10 - OTHER NON-CURRENT ASSETS

Other non-current assets are analyzed as follows:

(euro/000) 30.06.2019 31.12.2018

Other receivables from investee companies 790 673 Government grants receivable 5,093 4,407 Firm commitments 7,317 18,427 Other receivables 17,956 8,304 OTHER NON-CURRENT ASSETS 31,156 31,811

Other non-current assets are all stated net (euro/000) Provision for impairment of the related provision for impairment. of other receivables The following table presents the amount 01.01.2019 of and movements in the provision 8,188 for impairment of other non-current Utilizations receivables: Increases/(Releases) First adoption IFRS 30.06.2019 8,188

86 87 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 11 - DEFERRED TAX ASSETS NOTE 12 - INVENTORIES AND ADVANCES AND LIABILITIES These are analyzed as follows: Movements in deferred tax assets are analyzed as follows: (euro/000) 30.06.2019 31.12.2018

Raw materials and consumables 274,009 280,105 (euro/000) Work in progress and semi-fi nished goods 27,028 120,044 Total Finished products 31,744 31,786 01.01.2019 123,964 Merchandise Business combinations Total inventories 332,781 431,935 Through profi t or loss 6,447 Advances to suppliers 474,195 449,160 Impairment losses TOTAL INVENTORIES AND ADVANCES 806,976 881,095 Through other comprehensive income 8,444 Other movements (7) Exchange rate dif erences 564 Inventories and advances are stated net of and movements in such provisions for 30.06.2019 139,412 of relevant provisions for impairment. impairment: The following table presents the amount Deferred tax assets relate to the items recognized on euro 132 million (euro (euro/000) for which the tax is likely to be recovered 102 million at 31 December 2018) in Provision for Provision for Provision for against forecast future taxable income of carryforward losses of subsidiaries which impairment - raw impairment - work impairment - finished materials in progress and products Group companies. The above deferred tax are thought unlikely to be recovered against semi-finished goods assets include euro 23.7 million which can future taxable income. in part be of set against the deferred tax Movements in deferred tax liabilities are 01.01.2019 13,000 16,445 3,060 Increases liabilities shown below. analyzed as follows: 609 Utilizations No deferred tax assets have been (644) (16,813) Releases (648) Exchange rate dif erences 3 369 10

(euro/000) 30.06.2019 12,320 - 3,070 Total

01.01.2019 58,012 The provision for impairment for work in written of in previous years. This sale also Business combinations progress and semi-fi nished goods was used led to a reduction in inventories of work in during the year following the sale by the progress and semi-fi nished products. Through profi t or loss (2,181) Impairment losses subsidiary Vard of an of shore unit partially Through other comprehensive income Other movements (3) Exchange rate dif erences 1,020 30.06.2019 56,848

88 89 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 13 - CONSTRUCTION CONTRACTS - NOTE 14 - TRADE RECEIVABLES AND OTHER NET ASSETS AND LIABILITIES CURRENT ASSETS

Construction contracts - net assets” are These are analyzed as follows: analyzed as follows: (euro/000) 30.06.2019 31.12.2018 (euro/000) 30.06.2019 31.12.2018 Trade receivables 646,873 749,387 Construction Invoices issued Construction Construction Invoices issued Construction Receivables from controlling companies (tax consolidation) 3,212 2,926 contracts - and provision for contracts - net contracts - and provision contracts - net Government grants receivable 4,108 4,414 gross future losses assets gross for future losses assets Other receivables 254,310 208,152 Shipbuilding Indirect tax receivables 24,111 43,033 9,185,253 (6,901,194) 2,284,059 8,134,360 (5,610,562) 2,523,798 contracts Firm commitments 789 5,217 Other contracts 53,460 (36,798) 16,662 48,102 (40,628) 7,474 Accrued income 44,937 49,053 for third parties Prepayments 2,694 195 Total 9,238,713 (6,937,992) 2,300,721 8,182,462 (5,651,190) 2,531,272 TOTAL TRADE RECEIVABLES AND OTHER CURRENT ASSETS 981,034 1,062,377

“Construction contracts – net liabilities” are The above receivables are shown net provision for interest charged on past due analyzed as follows: of provisions for the impairment of trade receivables has been recognized in a receivables. These provisions relate to “Provision for past due interest”.

(euro/000) receivables that are no longer considered The amount of and movements in the 30.06.2019 31.12.2018 fully recoverable, including those involving overall provisions for impairment of Construction Invoices issued Construction Construction Invoices issued Construction legal action and judicial and out-of-court receivables are as follows: contracts - and provision contracts - net contracts - and provision contracts - net proceedings in cases of debtor default. A gross for future losses liabilities gross for future losses liabilities

Shipbuilding 2,268,297 3,553,833 1,285,536 2,505,411 4,062,921 1,557,510 contracts (euro/000) Provision for impairment Provision for past due Provision for impairment Total Other contracts for 10,055 14,195 4,140 of trade receivables interest of other receivables third parties Advances from 01.01.2019 33,128 63 6,809 40,000 41,920 41,920 37,283 37,283 Customers Business combinations Total 2,278,352 3,609,948 1,331,596 2,505,411 4,100,204 1,594,793 Utilizations (540) (540) Increases 545 545 Releases (2,504) (12) (2,516) Exchange rate dif erences 17 17 30.06.2019 30,646 63 6,797 37,506

The decrease of euro 102,514 thousand indemnities and other receivables from in “Trade receivables” is mainly due to social security authorities relating to the receipt of the fi nal instalment for a cruise Parent Company. vessel delivered in the fi rst half of 2019 and “Firm commitments” refl ect the fair value of invoiced at 31 December 2018. hedged items in fair value hedges used by The balance of euro 254,310 thousand the Group to hedge currency risk arising on in “Other receivables” mainly refers to construction contracts in currencies other receivables for shipowner allowances, than the functional currency. receivables for contributions to research and construction, receivables for insurance

90 91 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 15 - INCOME TAX ASSETS NOTE 16 - CURRENT FINANCIAL ASSETS

These are analyzed as follows: These are analyzed as follows:

(euro/000) (euro/000) 30.06.2019 31.12.2018 30.06.2019 31.12.2018

Italian corporate income taxation (IRES) 13,731 13,451 Derivative assets 7,351 22,952 Italian regional tax on productive activities (IRAP) 541 541 Other receivables 11,221 17,329 Foreign tax 7,201 6,610 Government grants fi nanced by BIIS 7,896 7,751 TOTAL INCOME TAX ASSETS 21,473 20,602 Accrued interest income 374 439 Prepaid interest and other fi nancial expense 832 217 TOTAL CURRENT FINANCIAL ASSETS 27,674 48,688 The amount and movements in the provision for impairment of income tax assets are as follows: “Derivative assets” represent the reporting- receivables from clients of the Vard Group. date fair value of derivatives with a maturity “Government grants fi nanced by BIIS” of less than 12 months. The fair value of (Banca Infrastrutture Innovazione e (euro/000) Provision for impairment of income tax assets derivative fi nancial instruments has been Sviluppo) report the current portion of calculated considering market parameters government grants receivable by shipyards Balance at 1.1.2019 2,042 and using widely accepted measurement and by shipowners, assigned to Fincantieri Increases techniques (Level 2). as part of contract price. Releases Other receivables include interest-bearing Other movements Total at 30.06.2019 2,042

NOTE 17 - CASH AND CASH EQUIVALENTS

These are analyzed as follows:

(euro/000) 30.06.2019 31.12.2018

Bank and postal deposits 683,403 676,395 Checks Cash on hand 106 92 TOTAL CASH AND CASH EQUIVALENTS 683,509 676,487

Cash and cash equivalents at the end of the balances of current accounts held with a period include euro 6,238 thousand in term number of banks. bank deposits; the remainder refers to the

92 93 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 18 - EQUITY Reserve of Own Shares thousand (net of tax ef ects) referring to the capital increase have been accounted for as a Equity attributable to owners of the parent The reserve is negative for euro 5,277 deduction from the share premium reserve, in thousand and comprises the value of the compliance with IAS 32. The composition of equity is analyzed in the own shares for the Company’s incentive plan following table: called “Performance Share Plan 2016 - 2018” Cash Flow Hedge Reserve (described in more detail in Note 29) to be carried out in accordance with art. 5 of EU The cash fl ow hedge reserve reports the (euro/000) Regulation No. 596/2014 and as resolved by change in the ef ective portion of derivative 30.06.2019 31.12.2018 the Company’s Shareholders’ Meeting held hedging instruments measured at fair value. Attributable to owners of the parent on 19 May 2017. In 2017, the Parent Company Share Capital 862,981 862,981 purchased 4,706,890 ordinary own shares Currency Translation Reserve Reserve of own shares (5,277) (5,277) (0.28% of the Share Capital) for euro 5,277 Share premium reserve 110,499 110,499 thousand. The currency translation reserve refl ects Legal reserve 51,189 40,289 As mentioned in the commentary on the exchange dif erences arising from the Cash fl ow hedge reserve (4,666) 15,271 Share Capital, following the resolution of the translation into Euro of fi nancial statements Financial asset fair value reserve (395) (394) Board of Directors of 27 June 2019 on the of foreign operations prepared in currencies Currency translation reserve (129,135) (137,916) allocation of shares for the fi rst cycle of the other than the Euro. Other reserves and retained earnings 314,533 269,387 “Performance Share Plan 2016-2018” incentive Profi t/(loss) for the period 15,856 72,440 plan, 2,572,497 shares will be allocated as Other Reserves and Retained Earnings 1,215,585 1,227,280 own shares in portfolio. The shares will be Attributable to non-controlling interests delivered by 31 July 2019. These mainly comprise: i) surplus earnings Capital and reserves 18,821 22,504 The number of shares issued is reconciled after making allocations to the legal reserve Financial asset fair value reserve (10) (11) with the number of outstanding shares in the and distributions in the form of shareholder Currency translation reserve 6,945 6,515 Parent Company at 30 June 2019. dividends; ii) actuarial gains and losses on Profi t/(loss) for the period (3,829) (3,318) employee benefi t plans; iii) the reserve for the 21,927 25,690 N° shares share-based incentive plan for management. TOTAL EQUITY 1,237,512 1,252,970 The Ordinary Shareholders’ Meeting held Ordinary shares issued 1,692,119,070 on 5 April 2019 resolved to allocate the net less: own shares purchased (4,706,890) profi t for the year 2018 as follows: euro 16,874 Ordinary shares outstanding at 31.12.2018 1,687,412,180 thousand for distribution to the shareholders Share Capital The issue and delivery of the shares will be Changes in 2019 - of a dividend of 1 euro cent per share in - Ordinary shares issued completed by 31 July 2019. - circulation at the registration date (15 April The Share Capital of FINCANTIERI S.p.A. Following the above resolution, the shares - less: own shares purchased 2019), excluding own shares in portfolio on amounts to euro 862,980,726, fully paid-in, will be allocated using treasury shares in Ordinary shares issued 1,692,119,070 that date. This dividend was paid by June divided into 1,692,119,070 ordinary shares portfolio for those to be allocated free less: own shares purchased (4,706,890) 2019. with no par value. of charge to non-employees numbering Ordinary shares outstanding The Fincantieri Group’s purchase of shares 1,687,412,180 On 27 June 2019, the Board of Directors 2,572,497 shares and by issuing new shares, at 30.06.2019 from minority shareholders in the subsidiary approved the closure of the fi rst cycle again with no par value, in order to satisfy VARD over the period has led to a change of the "Performance Share Plan 2016- the Plan for shares to be allocated free of of euro 265 thousand in other reserves and 2018" incentive plan, allocating 10,104,787 charge to employees numbering 7,532,290 Share Premium Reserve retained earnings. At 31 December 2018, ordinary Fincantieri shares to benefi ciaries shares. the subsidiary Fincantieri Oil & Gas directly free of charge, following verifi cation of the Following the issue of the new shares, This reserve has been recorded as a result owned 97.22% of the Share Capital of Vard degree to which the specifi c performance the number of shares issued will be of the capital increase accompanying the Holdings Limited and its acquisition of shares objectives originally set (EBITDA of 70% 1,699,651,360. The dilutive ef ect on the Company’s listing on the Mercato Telematico from minority shareholders of the Norwegian and the "Total Shareholder Return") had Share Capital will be 0.44%. Azionario (MTA) of Borsa Italiana S.p.A. Group took place through subsequent been achieved with a weighting of 30%. on 3 July 2014. Listing costs of euro 11,072 purchases of shares on the market until the

94 95 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

stake reached 97.44% by the end of the the fi rst half of 2019 (euro 2,760 thousand). Movements in the Cash Flow Hedge Reserve fi rst half of the year. This transaction has More details about the incentive plan can be not altered the Fincantieri Group’s scope of found in Note 29. The following table presents movements in consolidation since VARD was already fully the cash fl ow hedge reserve and the ef ect of consolidated; the above change in the stake Non-controlling Interests derivative instruments on profi t or loss: must be treated as a “transaction between shareholders” in which the dif erence The change of euro 173 thousand since 31 (euro/000) Equity Profit or loss between the value of the acquisition and December 2018 is due to the purchase of Gross Income taxes Net the carrying amount of the non-controlling additional shares in VARD, as described interest acquired is not recognized in profi t above. 01.01.2018 131,697 (39,061) 92,636

or loss but in the Group’s consolidated Change in fair value 24,968 (9,765) 15,203 equity. Other comprehensive Income/Losses Utilizations (131,697) 39,061 (92,636) 92,636 The change in the Reserve for the management’s share-based incentive plan The amount of other comprehensive income/ Other income/(expenses) for risk hedging (90,215) refers to the share of personnel costs, who losses, presented in the statement of Finance income/(costs) relating to held-for-trading derivatives and time-value component of hedging (18,361) are benefi ciaries of the plan, accrued over comprehensive income, is as follows: derivatives

31.12.2018 24,968 (9,765) 15,203 (15,940)

Change in fair value (27,607) 7,737 (19,870) (euro/000) 30.06.2019 30.06.2018 Utilizations (24,968) 9,765 (15,203) 15,203

Gross Tax Net amount Gross Tax Net amount Other income/(expenses) for risk hedging (13,782) amount (expense)/ amount (expense)/ benefit benefit Finance income/(costs) relating to held-for-trading derivatives and time-value component of hedging (29,758) Ef ective portion of profi ts/(losses) (27,607) 7,737 (19,870) (54,398) 15,414 (38,984) derivatives on cash fl ow hedging instruments 30.06.2019 (27,607) 7,737 (19,870) (28,337) Gains/(losses) from remeasurement (2,945) 707 (2,238) 704 (169) 535 of employee defi ned benefi t plans

Gains/(losses) arising from changes in OCI of investments accounted for NOTE 19 - PROVISIONS FOR RISKS AND CHARGES using the equity method

Gains/(losses) arising on translation These are analyzed as follows: of fi nancial statements of foreign 10,338 (1,127) 9,211 13,228 2,759 15,987 operations (euro/000) Total other comprehensive income/ Litigation Product Agent Business Other risks Total (20,214) 7,317 (12,897) (40,466) 18,004 (22,462) (losses) warranty indemnity reorganization and charges benefit

Non-current portion 73,483 35,919 54 17,067 126,523 Current portion 1,750 4,843 894 1,206 8,693 (euro/000) 30.06.2019 30.06.2018 01.01.2019 75,233 40,762 54 894 18,273 135,216 Business combinations Ef ective portion of profi ts/(losses) arising in period on cash fl ow (2,639) 7,986 Other movements 1 4 1 1 7 hedging instruments Increases 16,253 7,270 1,019 24,542 Ef ective portion of profi ts/(losses) on cash fl ow hedging instruments (24,968) (62,384) Utilizations (57,473) (11,203) (12) (6,225) (74,913) reclassifi ed to profi t or loss Releases (194) (4,460) (730) (5,384) Ef ective portion of profi ts/(losses) on cash fl ow hedging instruments (27,607) (54,398) Exchange rate dif erences 44 88 23 153 308 30.06.2019 33,864 32,461 42 918 12,491 79,776 Tax ef ect of other components of comprehensive income 7,737 15,414 Non-current portion 32,041 26,739 42 12,038 70,860 TOTAL OTHER COMPREHENSIVE INCOME/(LOSSES), NET OF TAX (19,870) (38,984) Current portion 1,823 5,722 918 453 8,916

96 97 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Increases in the provision for litigation This utilization was recorded in profi t and NOTE 21 - NON-CURRENT FINANCIAL LIABILITIES mainly refer to: i) precautionary provisions loss for euro 5.0 million under the item for claims brought by employees, relating to taxes for previous years and These are analyzed as follows: authorities or third parties for damages euro 0.6 million under sundry operating arising from asbestos exposure; ii) other costs. (euro/000) residual provisions for litigation with The “Product warranty” provision relates 30.06.2019 31.12.2018

employees and suppliers and for other to the estimated cost of carrying out work Bank loans and credit facilities - non-current portion 744,851 760,448 legal proceedings. under contractual guarantee after vessel Loans from BIIS - non-current portion 777 4,762 Utilization of the provision for litigation delivery. The warranty period normally Liabilities to other lenders 5,802 6,078 includes euro 31.5 million for the settlement lasts for one or two years after delivery, Financial liabilities for leasing IFRS 16 - non-current portion 70,550 of the "Serene" dispute, which resulted but in some cases it may be longer. Finance lease obligations 24 26 in the termination of all enforcement The provision for “Other risks and Derivative liabilities 15,272 21,414 proceedings in the English courts and charges” includes euro 5,203 thousand TOTAL NON-CURRENT FINANCIAL LIABILITIES 837,276 792,728 other proceedings pending in other for environmental clean-up costs, while jurisdictions. the remainder relates to various kinds of With reference to “Bank loans and credit The item “Financial liabilities for leasing Utilization of provisions for other risks disputes, mostly of a contractual, technical facilities - non-current portion”, during IFRS 16” refers to the non-current portion and charges includes euro 5.6 million for or fi scal nature, which might be settled the first half of 2019, the Parent Company of the financial liability for instalments disbursements following the tax settlement at the Group’s expense either in or out of took out two new medium-long term due relating to leasing contracts falling proposal for the tax audit on 2013. court. unsecured loans: the first for euro 30 within the scope of application of IFRS 16 million, repayable in a single instalment applied as from 1 January 2019. Reference in February 2022; the second for euro 30 should be made to note 6 for analysis of million, repayable in a single instalment in related rights of use. NOTE 20 - EMPLOYEE BENEFITS May 2024. At 30 June 2019, a non-current “Derivative liabilities” represent the portion of euro 68 million of bank loans reporting-date fair value of derivatives Movements in this line item are as follows: maturing in the next 12 months had been with a maturity of more than 12 months reclassified to the current portion. (Level 2).

(euro/000) 30.06.2019 31.12.2018

Opening balance 56,830 58,929 NOTE 22 - OTHER NON-CURRENT LIABILITIES Business combinations Interest cost 618 724 Actuarial (gains)/losses 2,945 (1,694) These are analyzed as follows: Utilizations for benefi ts and advances paid (955) (1,501) Staf transfers and other movements 3 373 (euro/000) 30.06.2019 31.12.2018 Exchange rate dif erences 1 (1) Closing balance 59,441 56,830 Capital grants 25,279 24,242 Plan assets (25) (24) Other liabilities 5,058 6,933 Closing balance 59,416 56,806 Firm commitments 239 962 TOTAL OTHER NON-CURRENT LIABILITIES 30,576 32,137

The amount of Italian employee severance the market yield on bonds with the benefi t recognized in the fi nancial same maturity as that expected for the “Capital grants” mainly comprise deferred which will be released to income in future statements is calculated on an actuarial obligation. The assumptions adopted are income associated with grants for property, years to match the related depreciation/ basis using the projected unit credit in line with those used for the fi nancial plant and equipment and innovation grants amortization of these assets. method; the discount rate used by this statements at 31 December 2018 except for method to calculate the present value the discount rate, changed to 0.94% at the of the defi ned benefi t obligation refl ects end of June 2019.$

98 99 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 23 - TRADE PAYABLES AND OTHER NOTE 24 - CURRENT FINANCIAL LIABILITIES CURRENT LIABILITIES These are analyzed as follows: These are analyzed as follows:

(euro/000) 30.06.2019 31.12.2018 (euro/000) 30.06.2019 31.12.2018 Bonds issued and commercial papers 219,200 231,000 Payables to suppliers 1,405,705 1,471,101 Bank loans and credit facilities - current portion 105,669 51,544 Payables to suppliers for reverse factoring 418,113 377,487 Loans from BIIS - current portion 7,896 7,751 Social security payables 39,942 37,327 Bank loans and credit facilities - Construction loans 492,114 632,482 Other payables to employees for deferred wages and salaries 104,883 76,454 Other short-term bank debt 321,288 195,930 Other payables 78,947 84,335 Liabilities to other lenders - current portion 1,015 906 Other payables to the Parent Company (tax consolidation) 80,482 47,459 Bank credit facilities repayable on demand 468 1,287 Indirect tax payables 19,614 18,007 Payables to joint ventures 1,964 1,716 Firm commitments 250 697 Finance lease obligations - current portion 21 210 Accrued expenses 2,068 2,576 Financial liabilities for leasing IFRS 16 - current portion 17,138 Deferred income 1,419 847 Fair value of options on equity investments 19,508 19,389 TOTAL TRADE PAYABLES AND OTHER CURRENT LIABILITIES 2,151,423 2,116,290 Derivative liabilities 10,822 37,880 Accrued interest expense 3,721 2,751 TOTAL CURRENT FINANCIAL LIABILITIES 1,200,824 1,182,846

“Payables to suppliers for reverse factoring” “Other payables” include employee income report the liabilities to suppliers who have tax withholdings payable to tax authorities, At 30 June 2019, “Bank loans and credit by the banks of the covenants relating to relinquished their creditor position with sundry payables for insurance premiums, facilities - Construction loans” includes the shareholders’ equity and net current assets. Fincantieri to a factoring company. advances received against research use of euro 260 million in construction loans At 30 June 2019, “other short-term bank “Social security payables” include amounts grants, amounts payable to employee by FINCANTIERI S.p.A. and euro 232 million debt” refer to euro 155 million from the due to INPS (the Italian social security supplementary pension funds, security by the VARD Group. The change compared drawing down of committed credit lines, of authorities) for employer and employee deposits received and various liabilities for to 31 December 2018 is mainly due to which euro 140 million related to the Parent contributions on June’s wages and salaries disputes in the process of being settled the repayment of the construction loan Company and not used at 31 December 2018, and contributions on end-of-period wage fi nancially. following the Group’s deliveries of orders of and euro 166 million from uncommitted credit adjustments. The item “Firm commitments” refers to Cruise and Of shore and Specialized Vessels lines, of which euro 30 million was utilized by The item “Other payables to employees” the fair value of hedged items in fair value over the period. the Parent Company. reported at 30 June 2019 includes the ef ects hedges used by the Group to hedge currency It should be noted that during the period the Moreover, euro 219 million of Commercial of allocations made for unused holidays and risk arising on construction contracts in Parent Company took out new construction Papers issued under the Euro-Commercial deferred wages and salaries. currencies other than the functional currency. fi nancing lines for euro 575 million with Paper Step Label, structured at the end leading international credit institutions. As of 2017, for the issue of unsecured short- of June 30, 2019, these lines thus totalled term debt securities, had been used at 30 approximately euro 1,607 million. June 2019. The maximum amount of debt With reference to the loans of Vard Group securities that can be issued under this AS with Innovation Norge and the credit program is euro 500 million. lines for the construction loans with DNB The fair value of derivative fi nancial and Sparebanken 1 SMN which provide for instruments has been calculated considering covenants, it should be noted that at 30 June market parameters and using widely 2019 Vard Group AS had obtained a waiver accepted measurement techniques (Level 2).

100 101 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 25 - REVENUE AND INCOME NOTE 26 - OPERATING COSTS

These are analyzed as follows: Materials, services and other costs

Materials, services and other costs are analyzed (euro/000) 30.06.2019 30.06.2018 as follows:

Sales and service revenue 1,564,255 1,201,124 Change in construction contracts 1,239,449 1,271,486 (euro/000) 30.06.2019 30.06.2018 Operating revenue 2,803,704 2,472,610 Gains on disposal 36 145 Raw materials and consumables (1,345,775) (1,257,259) Sundry revenue and income 29,834 43,135 Services (621,483) (569,769) Government grants 3,294 11,051 Leases and rentals (15,771) (22,180) Total other revenue and income 33,164 54,331 Change in inventories of raw materials and consumables (5,687) 24,231 TOTAL REVENUE AND INCOME 2,836,868 2,526,941 Change in work in progress (107,798) (14,839) Sundry operating costs (18,464) (17,227) More details on segment information can Cost of materials and services capitalized in fi xed assets 7,204 43 be found in Note 31. TOTAL MATERIALS, SERVICES AND OTHER COSTS (2,107,774) (1,857,000)

Sundry operating costs include losses on the thousand (euro 662 thousand at June 30, disposal of non-current assets of euro 560 2018).

PERSONNEL COSTS

(euro/000) 30.06.2019 30.06.2018

Personnel costs: - wages and salaries (384,795) (357,873) - social security (97,699) (96,594) - costs for defi ned contribution plans (17,127) (17,856) - other personnel costs (13,892) (13,793) Personnel costs capitalized in fi xed assets 2,560 1,760 Total personnel costs (510,953) (484,356)

“Personnel costs” represent the total cost contributions payable by the Group, gifts incurred for employees, including wages and travel allowances. and salaries, employer social security

102 103 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Headcount NOTE 27 - FINANCE INCOME AND COSTS

The Fincantieri Group’s headcount at 30 June These are analyzed as follows: 2019 can be broken down as follows:

(euro/000) (number) 30.06.2019 30.06.2018 30.06.2019 30.06.2018 FINANCE INCOME Employees at period end: Interest and other income from fi nancial assets 210 1,182 To t a l a t p e r i o d e n d 19,725 19,375 Income from derivative fi nancial instruments 73 - of whom in Italy 8,941 8,447 Bank interest and fees and other income 7,315 4,102 - of whom in Parent Company 8,091 7,705 Foreign exchange gains 12,759 21,544 - of whom in VARD 8,863 8,984 Total fi nance income 20,284 26,901

FINANCE COSTS Average number of employees 19,350 19,313 Interest and fees charged by joint ventures (29) (3) - of whom in Italy 8,632 8,186 Interest and fees charged by controlling companies (613) (364) - of whom in Parent Company 7,927 7,613 Expenses from derivative fi nancial instruments (28,740) (6,277) - of whom in VARD 8,675 9,007 Interest on employee benefi t plans (395) (342) Interest and fees on bonds issued and commercial papers (288) (6,046) DEPRECIATION, AMORTIZATION AND IMPAIRMENT AND PROVISIONS Interest and fees on construction loans (9,189) (11,684) Bank interest and fees and other expense (22,036) (21,282) (euro/000) Interest and commission payable from related parties (1,345) 30.06.2019 30.06.2018 Interest paid on leases IFRS 16 (1,675)

Depreciation and amortization: Foreign exchange losses (16,223) (32,828) - amortization of intangible assets (26,343) (23,235) Total fi nance costs (80,533) (78,826) - amortization of rights of use (7,648) TOTAL FINANCE INCOME AND COSTS (60,249) (51,925) - depreciation of property, plant and equipment (42,775) (42,460) Impairment: “Finance income” includes euro 162 thousand Banca Infrastrutture Innovazione e Sviluppo - impairment of goodwill (394) (euro 305 thousand in the fi rst half of 2018) (with an equal amount recognised in the - impairment of intangible assets (367) in interest formally paid by the Italian State to fi nance costs), under the structure in place to - impairment of property, plant and equipment (25) (24) the Parent Company, but ef ectively paid to disburse government grants. Total depreciation, amortization and impairment (77,552) (65,719) Provisions: - impairment of receivables (545) (274) - impairment of contractual assets (12,763) NOTE 28 - INCOME TAXES - increases in provisions for risks and charges (24,671) (40,519) - release of provisions and impairment reversals 7,869 2,913 Income taxes have been calculated on the Total provisions (30,110) (37,880) basis of the result for the period. Deferred income taxes are analyzed in Note 11. An analysis of depreciation, amortization The impairment of contractual assets refers and impairment is provided in Notes 5 and 6. to the write-down of construction contracts, An analysis of provisions can be found in reclassifi ed as tangible fi xed assets, Notes 9, 13 and 18. commented on in Note 7.

104 105 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

NOTE 29 - OTHER INFORMATION (euro/000) 30.06.2019 31.12.2018

Net fi nancial position Net fi nancial position (724,197) (494,291) Non-current fi nancial receivables (71,578) (63,133) The consolidated net fi nancial position as Construction loans (492,114) (632,482) monitored by the Group is presented below. Net fi nancial position as per ESMA recommendation (1,287,889) (1,189,906)

Signifi cant Non-recurring Events and DEM/6064293 dated 28 July 2006, it is (euro/000) Transactions reported that no atypical and/or unusual 30.06.2019 31.12.2018 transactions were carried out during the fi rst

A. Cash 106 92 In accordance with CONSOB half of 2019. B. Other cash equivalents 683,403 676,395 Communication no. 0092543 of 3 December C. Held-for-trading securities 2015 with reference to the provisions of Related party Transactions D. Cash and cash equivalents (A)+(B)+(C) 683,509 676,487 CONSOB Resolution no. 15519 of 27 July E. Current fi nancial receivables 12,427 17,985 2006, only items considered to be non- Intragroup transactions, transactions with - of which related parties 500 106 recurring have been presented in the Fintecna and its subsidiaries, with Cassa F. Current bank debt (321,756) (197,217) fi nancial statements, excluding extraordinary Depositi e Prestiti and its subsidiaries, with - of which related parties ones outside of ordinary operations. The companies controlled by Italy’s Ministry G. Bonds issued and commercial paper - current portion (219,200) (231,000) items reported at 30 June 2019 refer to of Economy and Finance, and with other H. Current portion of non-current debt (109,390) (54,292) non-recurring costs relating to restructuring related parties in general, do not qualify as - of which related parties (10,651) (10,622) plans presented gross of euro 707 thousand either atypical or unusual, since they fall I. Other current fi nancial liabilities (20,138) (2,835) in tax ef ects. within the normal course of business of the - of which related parties (1,964) (1,702) Fincantieri Group and are conducted on an J. Current debt (F)+(G)+(H)+(I) (670,484) (485,344) Atypical and/or Unusual Transactions arm’s length basis. K. Net current debt (D)+(E)+(J) 25,452 209,128 The fi gures for related party transactions L. Non-current fi nancial receivables 71,578 63,133 In accordance with the disclosures and balances are reported in the following - of which related parties 17,755 13,449 required by Consob Communication no. tables. M. Non-current bank debt (744,851) (760,448) - of which related parties (35,160) (40,487) N. Bonds - non-current portion O. Other non-current fi nancial liabilities (76,376) (6,104) P. Non-current debt (M)+(N)+(O) (821,227) (766,552) Q. Net non-current debt (L)+(P) (749,649) (703,419) R. Net fi nancial position (K)+(Q) (724,197) (494,291)

For the purposes of complying with Consob net fi nancial position with the disclosure Communication no. DEM/6064293/2006, recommended by the European Securities the following table reconciles the above and Markets Authority (ESMA).

106 107 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(euro/000) (euro/000) 30.06.2019 31.12.2018 Non-current Current Advances* Trade Trade Non-current Current Trade Non- Current Advances* Trade Trade Non-current Current Trade payables financial financial receivables receivables financial financial payables and current financial receivables receivables financial financial and other assets assets and other and other liabilities liabilities other current financial assets and other and other liabilities liabilities current current non-current liabilities assets non-current current assets liabilities assets assets assets

CASSA DEPOSITI E PRESTITI S.p.A. 3,212 (35,160) (33,149) (80,480) CASSA DEPOSITI E PRESTITI S.p.A. 2,926 (40,487) (10,622) (47,459) TOTAL CONTROLLING COMPANIES TOTAL CONTROLLING COMPANIES 3,212 (35,160) (33,149) (80,480) 2,926 (40,487) (10,622) (47,459) ORIZZONTE SISTEMI NAVALI S.p.A. 107,922 (1,949) (619) ORIZZONTE SISTEMI NAVALI S.p.A. 92,326 (1,702) (1,269) UNIFER NAVALE S.r.l. 1,491 (535) UNIFER NAVALE S.r.l. 1,491 (1,042) CSSC - FINCANTIERI CRUISE 8,400 212 40,399 CSSC - FINCANTIERI CRUISE INDUSTRY DEVELOPMENT Ltd. 8,400 86 39,528 INDUSTRY DEVELOPMENT Ltd. ETIHAD SHIP BUILDING LLC 5,848 (983) ETIHAD SHIP BUILDING LLC 7,598 (4,421) CONSORZIO F.S.B. 12 LUXURY INTERIORS FACTORY S.r.l. (33) BUSBAR4F S.c.a.r.l. 149 (466) TOTAL JOINT VENTURES PERGENOVA S.C.p.A. 30,968 (10,574) 8,400 86 1,491 139,452 (1,702) (6,765) ISSEL MIDDLE EAST INFORMATION ARSENAL S.r.l. (34) 4 (17) TECHNOLOGY CONSULTANCY LLC PSC GROUP 656 18 (4,423) TOTAL JOINT VENTURES 8,400 216 1,491 185,298 (1,966) (13,177) CENTRO SERVIZI NAVALI S.p.A. 306 PSC GROUP 1,606 31 (7,262) OLYMPIC CHALLENGER KS 176 CENTRO SERVIZI NAVALI S.p.A. 308 BREVIK TECHNOLOGY AS 182 OLYMPIC CHALLENGER KS 722 48 MØKSTER SUPPLY AS 619 BREVIK TECHNOLOGY AS 190 CSS DESIGN MØKSTER SUPPLY KS 635 673 DOF ICEMAN AS 3,426 ISLAND DILIGENCE AS 4,072 TOTAL ASSOCIATES CSS DESIGN 790 5,049 656 673 324 (4,457) ISLAND DILIGENCE AS 4,382 26 SACE FCT 11 (54) CASTOR DRILLING SOLUTION AS 203 TERNA GROUP 12 OLYMPIC GREEN ENERGY KS 7 VALVITALIA S.p.A. 1,843 17 (1,593) TOTAL ASSOCIATES 9,355 284 1,606 339 790 (7,262) SUPPLEMENTARY PENSION FUND SACE S.p.A. (11) FOR SENIOR MANAGERS OF (1,199) TERNA GROUP 55 FINCANTIERI S.p.A. VALVITALIA S.p.A. 1,725 5 (1,428) COMETA NATIONAL (3,651) SUPPLEMENTARY PENSION FUND SUPPLEMENTARY PENSION FUND FOR SENIOR MANAGERS OF (1,025) SOLIDARIETÀ VENETO - PENSION (93) FINCANTIERI S.p.A. FUND COMETA NATIONAL TOTAL CDP GROUP (4,364) 1,843 28 (6,578) SUPPLEMENTARY PENSION FUND SOLIDARIETÀ VENETO - PENSION LEONARDO GROUP 197,748 1,967 (1,528) (102) FUND ENI GROUP 613 212 TOTAL CDP GROUP 1,725 60 (6,930) ENEL GROUP (1) LEONARDO GROUP 192,742 8,037 (5,396) COMPANIES CONTROLLED BY ENI GROUP 867 (3) MINISTRY OF ECONOMY AND (23) ENEL GROUP FINANCE COMPANIES CONTROLLED BY QUANTA S.p.A. (34) MINISTRY OF ECONOMY AND 32 (27) EXPERIS S.r.l. (9) FINANCE TOTAL RELATED PARTIES QUANTA S.p.A. (30) 13,449 86 201,738 673 145,310 (40,487) (12,324) (66,642) TOTAL CONSOLIDATED EXPERIS S.r.l. TOTAL RELATED PARTIES STATEMENT OF FINANCIAL 97,901 48,688 449,160 31,811 1,062,377 (792,728) (1,182,846) (2,116,290) 17,755 500 197,564 197,845 790 (35,160) (35,115) (113,305) POSITION TOTAL CONSOLIDATED % on consolidated statement of STATEMENT OF FINANCIAL 73,191 27,674 806,976 981,034 31,156 (837,276) (1,200,824) (2,151,423) 14% 0% 45% 2% 14% 5% 1% 3% fi nancial position POSITION % on consolidated statement of 24% 2% 24% 20% 3% 4% 3% 5% (*) “Advances” are classifi ed in “Inventories”, as detailed in Note 12.$ fi nancial position

(*) “Advances” are classifi ed in the item “Inventories”, as detailed in Note 12.

108 109 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(euro/000) (euro/000) 30.06.2019 30.06.2018 Operating Other revenue Materials, Finance income Finance costs Operating Other revenue Materials, Finance income Finance costs revenue and income services and revenue and income services other costs and other costs CASSA DEPOSITI E PRESTITI S.p.A. 74 (45) (513) CASSA DEPOSITI E PRESTITI S.p.A. (43) (565) TOTAL CONTROLLING COMPANIES 74 (45) (513) TOTAL CONTROLLING COMPANIES (43) (565) ORIZZONTE SISTEMI NAVALI S.p.A. 95,262 328 (348) (29) ORIZZONTE SISTEMI NAVALI S.p.A. 108,001 395 (935) (3) UNIFER NAVALE S.r.l. (5,035) UNIFER NAVALE S.r.l. CSSC - FINCANTIERI CRUISE INDUSTRY (3,226) 4,138 1,737 126 DEVELOPMENT Ltd. CSSC - FINCANTIERI CRUISE INDUSTRY DEVELOPMENT Ltd. ETIHAD SHIP BUILDING LLC 18 83 (69) CAMPER & NICHOLSONS INTERNATIONAL SA 8 CONSORZIO F.S.B. 23 84 (103) ETIHAD SHIP BUILDING LLC 92 155 (1,163) BUSBAR4F S.c.a.r.l. 45 (362) LUXURY INTERIORS FACTORY S.r.l. 3 (396) PERGENOVA S.C.p.A. 2,929 69 (7,248) TOTAL JOINT VENTURES 108,093 553 (5,720) 8 (3) FINCANTIERI CLEA BUILDINGS S.c.a.r.l. 2 (1,179) ARSENAL S.r.l. (12) TOTAL JOINT VENTURES 102,415 2,303 (14,344) 126 (29) BREVIK TECHNOLOGY AS 1 PSC GROUP 94 (11,650) 4 OLYMPIC GREEN ENERGY KS 4 CENTRO SERVIZI NAVALI S.p.A. (1,178) DOF ICEMAN AS ARSENAL S.r.l. 432 TOTAL ASSOCIATES BREVIK TECHNOLOGY AS (12) 437 CDP IMMOBILIARE S.r.l. OLYMPIC GREEN ENERGY KS (379) SACE S.p.A. DOF ICEMAN AS (1,545) SACE FCT 15 TOTAL ASSOCIATES 94 (12,828) 4 VALVITALIA CDP IMMOBILIARE S.r.l. 28 (2,962) OTHER 18 SACE S.p.A. (1,243) TOTAL CDP GROUP 61 (3,341) (1,545) SACE FCT 31 (102) LEONARDO GROUP 11 (19,225) TERNA GROUP (54) ENI GROUP 191 (337) VALVITALIA S.p.A. 71 (7,401) ENEL GROUP (8) TOTAL CDP GROUP 102 (7,455) (1,345) COMPANIES CONTROLLED BY MINISTRY OF LEONARDO GROUP 46 6,494 (38,014) (24) ECONOMY AND FINANCE ENI GROUP 13,848 63 (752) QUANTA S.p.A. (691) ENEL GROUP (2) EXPERIS S.r.l. (65) COMPANIES CONTROLLED BY MINISTRY OF 26 (358) TOTAL RELATED PARTIES ECONOMY AND FINANCE 108,295 614 (29,466) 445 (2,113) TOTAL CONSOLIDATED STATEMENT OF QUANTA S.p.A. (15) 2,472,610 54,331 (1,857,000) 26,901 (78,826) COMPREHENSIVE INCOME EXPERIS S.r.l. (12) % on consolidated statement of comprehensive TOTAL RELATED PARTIES 4% 1% 2% 2% 3% 116,335 9,130 (73,825) 130 (1,887) income TOTAL CONSOLIDATED STATEMENT OF 2,803,704 33,164 (2,107,774) 20,284 (80,533) COMPREHENSIVE INCOME % on consolidated statement of comprehensive 4% 28% 4% 1% 2% income

110 111 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Costs for contributions incurred in the fi rst half the framework agreement was fi nalised in 2018 Medium/long-term incentive plan 9,101,544 ordinary shares in FINCANTIERI of 2019 and included in the item Personnel under which studies were launched for new S.p.A. were awarded to the benefi ciaries Costs totalled euro 677 thousand for the technologies related to gas exploitation, some Performance Share Plan 2016-2018 identifi ed by the Board of Directors on 15 Supplementary Pension Fund for Senior of which were completed during the year. The On 19 May 2017, the Shareholders’ December 2016; while, for the second cycle, Managers of FINCANTIERI S.p.A. and euro rest refers chiefl y to the sale of products and Meeting of FINCANTIERI S.p.A. approved 4,170,706 shares in FINCANTIERI S.p.A. 1,023 thousand for the Cometa National services and purchases of fuel with ENI S.p.A.; the medium/long-term share-based were awarded to the benefi ciaries identifi ed Supplementary Pension Fund. • costs and revenue or receivables and payables incentive plan for management, called the by the Board of Directors on 25 July 2017; The main related party relationships refer to: with other related parties at 30 June 2019 refer Performance Share Plan 2016-2018 (the and lastly, for the third and last cycle, chiefl y to the supply of goods or services used “Plan”) for management and related Terms 3,604,691 shares in the Parent Company • Orizzonte Sistemi Navali S.p.A., under the in the production process. and Conditions. It should be noted that were awarded to the benefi ciaries identifi ed agreement signed in 2006 with the Italian Navy the project had been previously approved by the Board of Directors on 22 June 2018. relating to the fi rst phase of the “Renaissance” The following transaction is also reported by the Board of Directors on 10 November The economic and fi nancial performance (or FREMM) program. This program, for which in accordance with art. 13, par. 3(c) of the 2016. targets are comprised of two elements: Orizzonte Sistemi Navali S.p.A. is the prime CONSOB Regulations concerning related party The Plan, structured in 3 three-year contractor, involves the construction of ten transactions: cycles, provides for the free grant, to the a) a “market based” component (with ships for the Italian Navy, with ship design benefi ciaries identifi ed by the Board of a 30% weight on total entitlements and production activities performed by the • the granting to FINCANTIERI S.p.A., in May Directors, of entitlements to receive a awarded) linked to measuring Fincantieri’s Company and its subsidiaries. The fi nancial 2019, expiring in March 2021, by Cassa Depositi maximum of 50,000,000 ordinary shares performance in terms of TSR related to liabilities with Orizzonte Sistemi Navali S.p.A. e Prestiti S.p.A. of a Revolving Credit Facility in FINCANTIERI S.p.A. without nominal the FTSE ITALY ALL SHARE and the peer at 30 June 2019 relate to its corresponding for a maximum amount of euro 100 million value, based on the achievement of specifi c group identifi ed by the Company; current account that Orizzonte Sistemi Navali to cover fi nancial requirements for ordinary performance targets for the three-year b) a “non-market based” component S.p.A. holds with the Company under a activities and to fi nance research, development periods 2016-2018 (fi rst cycle), 2017-2019 (with a 70% weight on total entitlements centralized treasury management arrangement; and innovation programs for the years 2018- (second cycle) and 2018-2020 (third cycle). awarded) linked to the achievement of the • the LEONARDO group, in connection with 2021. As at 30 June 2019, this line of credit had The performance targets for all three cycles Group’s set EBITDA targets. agreements to supply and install combat not been used. have been identifi ed as Total Shareholder systems for naval vessels under construction; Return (“TSR”) and EBITDA, deemed to With reference to the market based • the Group's relations with the PSC Group It is also reported that FINCANTIERI S.p.A. represent objective criteria for measuring component, the Monte Carlo calculation refer mainly to the supply of turnkey models entered into three Exporter Indemnity long-term value creation for the Company. method is used, based on appropriate of air conditioning systems (engineering, Agreements in favour of SIMEST S.p.A., as The Plan provides for a three-year vesting assumptions, which enables a consistent supply of ventilation machines, accessories and standard transactions of lesser importance. period for all benefi ciaries from the date number of alternative scenarios to ducts, their installation on board, start-up and In the context of standard transactions of the entitlements are awarded to the date be defi ned over the time period in commissioning); lesser importance, FINCANTIERI S.p.A. was the shares are allotted to the benefi ciaries. consideration. Unlike the market based • the Group's relations with the newly formed granted a fi ve-year revolving credit line by the Therefore, if the performance targets are performance target, the non-market based company PERGENOVA, a joint venture Mediocredito Centrale in June 2019 to cover achieved and the other conditions of the component (EBITDA) is not relevant for between Salini Impregilo and Fincantieri, fi nancial needs for ordinary activities. Plan’s Terms & Conditions satisfi ed, the the fair value estimation, but is updated are aimed at rebuilding the bridge over the Furthermore, during the period, Directors, shares vesting for the fi rst cycle will be every quarter in order to take into account Polcevera river in Genoa; Statutory Auditors, General Managers and allotted and delivered to benefi ciaries by the expectations relating to the number of • relations with the joint venture CSSC other Key Management Personnel were paid 31 July 2019, while those vesting for the entitlements that could vest, depending on - FINCANTIERI CRUISE INDUSTRY a total remuneration of euro 2,750 thousand second and third cycles will be allotted and the achievement of the set EBITDA targets. DEVELOPMENT Ltd. between Fincantieri and by the Parent Company, of which euro 1,081 delivered by 31 July 2020 and 31 July 2021 To estimate of the number of entitlements CSSC, prime contractors for the construction of thousand is classifi ed in personnel costs and respectively. at 31 December 2017, it is assumed that the new cruise ships at the CSSC group's Chinese euro 1,669 thousand in the cost of services. The Plan also provides for a lock-up period targets are achieved. shipyard, refer to the supply of specialist A detailed description of the medium/ for part of the shares given to members of services and components to support the CSSC long-term share-based incentive plan for the Board of Directors or key management shipyards; management, called the Performance Share personnel of the Company. • with regard to relations with the ENI group, Plan is given below. With reference to the Plan’s fi rst cycle,

112 113 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

The fair value amount determined on the Litigation by Fincantieri, the Florida Court of Appeal grant date for each cycle of the Plan is upheld Fincantieri’s exclusion request, illustrated below. The following is an update on the status of the acknowledging the lack of jurisdiction, and ongoing disputes described in the Notes to then it rejected the appeal brought by the the 2018 Consolidated Financial Statements: counterparty. The time limit for any further Grant date No. shares Fair value appeal to the Supreme Court has expired. awarded Foreign litigation

First cycle of the Plan 19 May 2017 9,101,544 6,866,205 In relation to the “Serene” dispute on 7 May Italian litigation Second cycle of the Plan 25 July 2017 4,170,706 3,672,432 2019, Fincantieri and Serena Equity Limited Third cycle of the Plan 22 June 2018 3,604,691 3,963,754 entered into a settlement agreement, Employment litigation which resulted in the termination of all This refers to cases brought by employees enforcement proceedings in the English and former employees of contractors and With reference to the Performance Share the shares are allotted to the benefi ciaries. courts and other proceedings pending in subcontractors, which involve the Company Plan 2016-2018, it should be noted that Therefore, if the performance targets are other jurisdictions. under the “customer co-liability” principle on 27 June 2019, the Board of Directors achieved and the other conditions of the With reference to the “Papanikolaou” (art. 1676 of the Italian Civil Code and art. 29 approved the closure of the fi rst cycle of Plan’s Terms & Conditions satisfi ed, the dispute, brought before the Court of Patras of Legislative Decree 276/2003). Disputes the “Performance Share Plan 2016-2018” shares vesting for the fi rst cycle will be (Greece) by Mr. Papanikolaou and his wife relating to issues with asbestos continued to incentive plan, allocating free of charge allotted and delivered to benefi ciaries by against the Company, Minoan Lines and be settled both in and out of court in 2019. to the recipients 10,104,787 ordinary 31 July 2022, while those vesting for the others following the accident that occurred Fincantieri shares through the use of second and third cycles will be allotted and to the plaintif in 2007 on board the Europa Criminal prosecutions under Legislative 2,572,497 own shares in portfolio and by delivered by 31 July 2023 and 31 July 2024 Palace, built by Fincantieri: (i) in the case Decree 231/2001 issuing 7,532,290 new shares, without a par respectively. relating to the alleged loss of income until The Group is currently involved in six value. The issue and delivery of the shares The Plan also provides for a lock-up period 2012, the Greek Court of Cassation has criminal prosecutions brought under will be completed by 31 July 2019. for part of the shares given to members of agreed with the main conclusions made in Legislative Decree no. 231/2001 in the Court the Board of Directors or key management the appeal judgment (which had recognised of Gorizia. Performance Share Plan 2019-2021 personnel of the Company. the responsibility of Fincantieri), but referred In January 2014, FINCANTIERI S.p.A. On 11 May 2018, the Shareholders’ Meeting Among the Plan’s targets, in addition to the case back to the Court of Appeal in received notice of a request for extension of FINCANTIERI S.p.A. approved the the EBITDA and TRS already included in relation to a relatively minor point, whilst of the deadline for the preliminary Performance Share Plan 2019-2021 (the the Performance Share Plan 2016-2018, (ii) the case relating to the alleged loss investigations, under art. 406 of the Code of “Plan”) for management, and the related the Group introduced another parameter, of income from 2012 to 2052 is currently Criminal Procedure, into the former manager Terms and Conditions, the structure the sustainability index, to measure suspended. The hearing before the Patras of the Monfalcone shipyard for the alleged of which was defi ned by the Board of achievement of the sustainability targets Court of Appeal of the fi rst case was held on infringement of art. 256, par. 1, subsections a) Directors at the meeting held on 27 March set by the Group in order to align with March 14, 2019 and the sentence is expected and b) of Legislative Decree no. 152/2006, as 2018. European best practices and the fi nancial in the third/fourth quarter of 2019. On 12 well as into the Company, being investigated The Plan, structured in 3 three-year community’s increased expectations for March 2019, a hearing was held before the under art. 25-undecies of Legislative Decree cycles, provides for the free grant, to the sustainable development. Court of Patras in relation to the second no. 231/2001 in relation to its alleged benefi ciaries identifi ed by the Board of The references used to test achievement case, to which Fincantieri objected invoking management of areas for sorting and the Directors, of entitlements to receive a of the sustainability target are market the suspension of the proceedings on the temporary storage of hazardous waste at the maximum of 25,000,000 ordinary shares parameters such as the “CDP” (Carbon grounds that a fi nal ruling had not yet been Monfalcone shipyard without the required in FINCANTIERI S.p.A. without nominal Disclosure Project) and a second rating by reached in the fi rst case. The ruling of the authorisation and the alleged disposal of value, based on the achievement of specifi c another agency which evaluates the entire Court of Patras is expected in the second such waste with documentation that did not performance targets for the three-year basket of sustainability aspects. half of 2019. allow it to be traced. With regarding to this periods 2019-2021 (fi rst cycle), 2020-2022 The free award of a number of rights is With regard to the dispute pending in the case, in October 2017 the former Managers (second cycle) and 2021-2023 (third cycle). left to the Board of Directors, which also District Courts of California and Florida, of the Monfalcone shipyard, the former The Plan provides for a three-year vesting has the power to identify the number and brought by Mr Yuzwa against Fincantieri, General Managers of the Company, the period for all benefi ciaries from the date names of the benefi ciaries. Carnival and others for the loss suf ered Company’s former Head of Safety and the the entitlements are awarded to the date by the claimant following an accident former Head of Personnel were notifi ed of aboard the ship “Oosterdam” in 2011, built the conclusion of the preliminary investigations

114 115 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

for the of ences referred to in art. 256, par. 1, indicted. Gorizia’s public prosecutor has NOTE 30 - CASH FLOWS FROM OPERATING subsections a) and b) of Legislative Decree No. challenged the verdict of no case to answer in ACTIVITIES 152/2006 (“Unauthorized waste management the Court of Cassation which, at the end of the activities”); in April 2018 the Company was also hearing held on 20 January 2016, rejected the These are analyzed as follows: notifi ed of the conclusion of the investigations appeal and upheld the dismissal of the case for the alleged of ence pursuant to art. against members of the Board of Directors and (euro/000) 25-undecies of Legislative Decree 231/2001 the Oversight Board, as well as the two General 30.06.2019 30.06.2018 (“Environmental Crimes”). In September 2018 Managers. The Company was acquitted at the Profi t/(loss) for the period 12,028 14,994 the court summons to trial was notifi ed to all hearing held on 14 July 2017. The decision was Depreciation and amortization 76,766 65,694 of the investigated persons. At the hearing of appealed by the public prosecutor: the fi rst (Gains)/losses from disposal of property, plant and equipment 524 (3,174) 6 March 2019, the judge ruled that no action hearing, originally scheduled for 10 June 2019, (Revaluation)/impairment of property, plant and equipment, intangible assets 3,388 (1,216) should be taken against the former Manager was postponed until 16 September 2019. and equity investments of the Monfalcone plant in of ce until 30 June In June 2018, notices of completion of (Revaluation)/impairment of working capital 12,763 2013, the former General Managers of the preliminary investigations into the management Increases/(releases) of provisions for risks and charges 19,319 37,614 Company, the former Head of Safety and the and disposal of waste were served on a Interest expenses capitalized former Head of Personnel of the Company, or number of parties and companies, including Interest on employee benefi ts 618 388 against the Company, for the facts established the Company's Chief Executive Of cer, the Interest income (7,525) (5,284) in May 2013, under the statute of limitations. former manager and two employees of the Interest expense 34,622 39,340 The trial continues against the former Plant Palermo plant for the of ence provided for in Income taxes 35,600 20,016 Manager in of ce since 1 July 2013 and the art. 452-quaterdecies of the Italian Criminal Long-term share-based incentive plan 2,760 2,068 Company (as regards the facts established in Code (“Organised activities for the illicit Impact of unrealized exchange rate changes 12,649 February 2015). traf cking of waste”) and the Company for Finance income and costs from derivatives Between March and April 2014, notices of the of ence provided for in art. 25-undecies, Gross cash fl ows from operating activities 190,863 183,089 conclusion of preliminary investigations were paragraph 2, subsection f) of Legislative Decree CHANGES IN WORKING CAPITAL served not only on twenty-one individuals 231/2001 (“Environmental Of ences”). By order - inventories and advances 79,563 (8,686) (including members of the Board of Directors of 23 April 2019, the Judge for the Preliminary - construction contracts and client advances (72,540) 3,397 and of the Oversight Board and employees Investigations, in acceptance of the request - trade receivables 103,823 310,653 of the Company at the date of the event, made by the defences of the Company's Chief - other current assets and liabilities (15,621) 16,392 some of whom are still in of ce or employed Executive Of cer, ordered the dismissal of - other non-current assets and liabilities (39) (3,288) by the Company) in the various capacities the proceedings against the Chief Executive - trade payables (28,931) (160,318) being investigated for the of ences of “wilful Of cer. Cash fl ows from working capital 257,118 341,239 removal or omission of precautions against Dividends paid (16,874) (16,875) workplace accidents” and “bodily harm through Tax position Interest income received 6,877 3,991 negligence” under articles 437 and 590 of Interest expense paid (35,557) (18,763) the Italian Criminal Code and of violation of National tax consolidation Income taxes (paid)/collected (5,564) (21,714) certain provisions of Legislative Decree no. FINCANTIERI S.p.A., Fincantieri Oil & Gas S.p.A. Utilization of provisions for risks and charges and for employee benefi ts (75,864) (25,428) 81/2008, as well as against the Company and Isotta Fraschini Motori S.p.A. contribute to NET CASH FLOWS FROM OPERATING ACTIVITIES 130,136 262,450 under art. 25-septies, par. 3, of Legislative the national tax consolidation of Cassa Depositi - of which related parties (1,815) (5,409) Decree no. 231/2001, in connection with an e Prestiti S.p.A. for the three year period from injury to an employee on 13 December 2010 at 2019 to 2021. the Monfalcone shipyard during the lifting of NOTE 31 - SEGMENT INFORMATION two bundles of iron pipes. At the preliminary Audits and assessments hearing on 18 December 2014, the proceedings Management has identifi ed the following Shipbuilding: encompassing the business areas against the members of the Board of Directors Fincantieri operating segments which refl ect the model of cruise ships, expedition cruise vessels, naval and the Oversight Board and the two General The tax audit for 2013 was defi ned by used to manage and control the business sectors vessels and other products and services (ferries Managers were dismissed, while the other means of a tax settlement proposal, with in which the Group operates: Shipbuilding, and mega yachts); employees of the Company at the date of disbursements that had already been Of shore and Specialized Vessels, Systems, Of shore and Specialized Vessels: the incident, as notifi ed above, were formally estimated and set aside in previous years. Components and Services and Other Activities. encompassing the design and construction of

116 117 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

high-end of shore support vessels, specialized fi nancial resources on the basis of revenue (euro/000) 30.06.2019 ships, vessels for of shore wind farms and and EBITDA. The latter is defi ned as Profi t/ open ocean aquaculture, as well as the of er of (loss) for the period adjusted for the following Costs relating to reorganization plans and other non-recurring personnel costs (1) 707 innovative products in the fi eld of drillships and items: (i) Income taxes, (ii) Share of profi t/ Provisions for costs and legal expenses associated with asbestos-related lawsuits (2) 18,295 semi-submersible drilling rigs; (loss) of investments accounted for using the Other non-recurring income and expenses (3) 7,839 The Equipment, Systems and Services equity method, (iii) Income/(expense) from Extraordinary and non-recurring income and expenses 26,841 operating segment is engaged in the design investments, (iv) Finance costs, (v) Finance (1) Balance included in “Personnel costs”. and manufacture of high-tech systems and income, (vi) Depreciation, amortization and (2) Balance included in the item “Materials, services and other costs” for euro 2.3 million and in the item “Provisions” for euro 15.9 million. (3) Balance refers to charges related to the streamlining of the Promar shipyard for euro 6 million. components, such as stabilization, propulsion, impairment, (vii) costs relating to reorganisation positioning and power generation systems, ship plans and other non-recurring personnel costs, automation systems, steam turbines, integrated (viii) provisions for costs and legal expenses systems and ship accommodation, and in the associated with lawsuits brought by employees (euro/000) 30.06.2018* provision of repair and conversion services, for asbestos-related damages, and (ix) other Shipbuilding Offshore and Equipment, Other Activities Group logistical support and after-sales services. costs or income of a non-routine nature Specialized Systems and Other activities primarily refer to the cost arising from non-recurring events of particular Vessels Services

of corporate activities which have not been signifi cance. Segment revenue 2,129,289 333,227 321,450 845 2,784,811 allocated to other operating segments. The results of the operating segments at 30 Intersegment elimination (90,276) (630) (166,218) (746) (257,870) The Group evaluates the performance of its June 2019 and 30 June 2018 are reported in the Revenue (**) 2,039,013 332,597 155,232 99 2,526,941 operating segments and the allocation of following pages. EBITDA 172,754 (5,708) 34,334 (18,054) 183,326 EBITDA margin 8.1% (1.7%) 10.7% 7.3% (euro/000) Depreciation, amortization and (65,719) 30.06.2019 impairment Shipbuilding Offshore and Equipment, Other Activities Group Finance income 26,901 Specialized Systems and Vessels Services Finance costs (78,826) Income/(expense) from investments 2,757 Segment revenue 2,409,689 314,271 370,655 761 3,095,376 Share of profi t of investments (1,503) Intersegment elimination (39,805) (43,103) (174,948) (652) (258,508) accounted for using the equity method Revenue (*) 2,369,884 271,168 195,707 109 2,836,868 Income taxes (27,985) EBITDA 246,190 (52,078) 38,885 (18,125) 214,872 Extraordinary and non-recurring (23,957) income and expenses EBITDA margin 10.2% (16.6%) 10.5% 7.6% Profi t/(loss) for the period 14,994 Depreciation, amortization and (77,552) impairment (*) The comparative fi gures have been restated following redefi nition of the operating segments. (**) Revenue: sum of “Operating revenue” and “Other revenue and income” reported in the consolidated statement of comprehensive income. Finance income 20,284 Finance costs (80,533) Analysis of “Extraordinary and non-recurring (euro 7,969 thousand) are presented in the Income/(expense) from investments (18) income and expenses” gross of the tax ef ect following table. Share of profi t of investments (2,584) accounted for using the equity method Income taxes (40,461) (euro/000) Extraordinary and non-recurring (21,980) 30.06.2018 income and expenses Profi t/(loss) for the period 12,028 Costs relating to reorganization plans and other non-recurring personnel costs (1) (2,582)

(2) (*) Revenue: Sum of “Operating revenue” and “Other revenue and income” reported in the consolidated statement of comprehensive income. Provisions for costs and legal expenses associated with asbestos-related lawsuits (32,134) Other non-recurring income and expenses 2,789 Analysis of “Extraordinary and non-recurring (euro 4,861 thousand) are presented in the Extraordinary and non-recurring income and expenses 31,927 income and expenses” gross of the tax ef ect following table. (1) Balance included in “Personnel costs”. (2) Balance included in the item “Materials, services and other costs” for euro 1.9 million and in the item “Provisions” for euro 30.2 million.

118 119 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

The following table shows a breakdown of NOTE 32 - EVENTS AFTER 30 JUNE 2019 Property, plant and equipment in Italy and other countries: On 1 July 2019, the Municipality of Genoa and to implement “Genoa in Family”. Fincantieri inaugurated a summer camp for On 4 July 2019, Fincantieri concluded the (euro/million) children of Group employees aged between acquisition of the majority share of the Insis 30.06.2019 31.12.2018 4 and 11. Fincantieri has delivered this project S.p.A. solution provider in the integrated Italy 743 704 with the aim of improving the well-being of physical and logical security sector, operating Other countries 409 374 its employees and their families. The initiative, in national and international markets both Total Property, plant and equipment 1,152 1,078 the result of a public-private partnership, is a directly and as a technology partner of large fi rst demonstration of collaboration with local industrial groups. Capital expenditure in the fi rst half of 2019 The following table shows a breakdown companies, which is part of the plan on Intangible assets and Property, plant and of revenue and income between Italy and equipment totalled to euro 102,279 million, other countries, according to client country of which euro 86,754 million relates to Italy of residence: and the remainder to other countries.

(euro/million) 30.06.2019 30.06.2018 Revenue and income % Revenue and income %

Italy 545 19% 453 18% Other countries 2,292 81% 2,074 82% Total Revenue and income 2,837 2,527

The following table shows those clients more than 10% of the Group’s revenue and whose revenue (defi ned as revenue plus income in each reporting period: change in inventories) accounted for

(euro/million) 30.06.2019 30.06.2018 Revenue and income % Revenue and income %

Client 1 747 26% 699 28% Client 2 368 13% 349 14% Total Revenue and income 2,837 2,527

120 121121 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

Appendix 1 COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION

% % COMPANY NAME Registered COMPANY NAME Registered Share Capital (%) interest held consolidated Share Capital (%) interest held consolidated Principal activity office by Group Principal activity office by Group

Subsidiaries consolidated FINCANTIERI MARINE GROUP USA Fincantieri USA Inc. line-by-line HOLDINGS Inc. USD 1,027.97 87.44 87.44 BACINI DI PALERMO S.p.A. Palermo FINCANTIERI S.p.A. Holding company EUR 1,032,000.00 100.00 100.00 Fincantieri Marine Dry-dock management FINCANTIERI MARINE GROUP LLC USA USD 1,000.00 100.00 87.44 Ship building and repair Group Holdings Inc. CENTRO PER GLI STUDI DI FINCANTIERI S.p.A. Genoa 71.10 MARINETTE MARINE TECNICA NAVALE CETENA S.p.A. EUR 1,000,000.00 Seaf S.p.A. 86.10 Fincantieri Marine 15.00 USA Ship research and experimentation CORPORATION USD 146,706.00 100.00 Group LLC 87.44 Ship building and repair FINCANTIERI OIL & GAS S.p.A. Trieste FINCANTIERI S.p.A. EUR 21,000,000.00 100.00 100.00 ACE MARINE LLC Fincantieri Marine Holding company USA USD 1,000.00 100.00 87.44 Building of small aluminium ships Group LLC FINCANTIERI HOLDING B.V. FINCANTIERI DO BRASIL FINCANTIERI S.p.A. Holding company for foreign Netherlands EUR 9,529,384.54 100.00 FINCANTIERI S.p.A. 100.00 80.00 PARTICIPAÇÕES SA Brazil BRL 1,310,000.00 Fincantieri Holding 100.00 investments 20.00 B.V. Holding company FINCANTIERI MARINE SYSTEMS FINCANTIERI INDIA Pte. Ltd. Fincantieri Holding NORTH AMERICA Inc. Fincantieri India 99.00 B.V. USA USD 501,000.00 100.00 100.00 Design, technical support and INR 10,500,000.00 100.00 Sale and after-sale services relating Holding B.V. 1.00 FINCANTIERI S.p.A. marketing to mechanical products MARINE INTERIORS S.p.A. Fincantieri Marine Trieste EUR 5,120,000.00 100.00 Seaf S.p.A. 100.00 FMSNA YK Japan Systems North Ship interiors JPY 3,000,000.00 100.00 100.00 Marine Interiors Servicing and sale of spare parts LUXURY INTERIORS FACTORY S.r.l. America Inc. Italy EUR 50,000.00 100.00 100.00 Ship interiors S.p.A. GESTIONE BACINI LA SPEZIA S.p.A. Muggiano EUR 260,000.00 99.89 FINCANTIERI S.p.A. 99.89 SEAENERGY A MARINE INTERIORS Marine Interiors Dry-dock management (La Spezia) Pordenone COMPANY S.r.l. EUR 50,000.00 85.00 S.p.A. 85.00 ISOTTA FRASCHINI MOTORI S.p.A. Manufacture of furniture Design, construction, sale and Bari EUR 3,300,000.00 100.00 FINCANTIERI S.p.A. 100.00 FINCANTIERI SI S.p.A. aftersale services relating to fast Electric, electronic and Trieste EUR 500,000.00 100.00 Seaf S.p.A. 100.00 medium- duty diesel engines electromechanical industrial solutions SOCIETÀ PER L’ESERCIZIO DI FINCANTIERI INFRASTRUCTURE S.p.A. Trieste EUR 500,000.00 100.00 FINCANTIERI S.p.A. 100.00 ATTIVITÀ FINANZIARIE SEAF S.p.A. Carpentry Trieste EUR 6,562,000.00 100.00 FINCANTIERI S.p.A. 100.00 Financial support for Group FINCANTIERI SWEDEN AB companies Sale, maintenance and after-sales Sweden SEK 5,000,000.00 100.00 FINCANTIERI S.p.A. 100.00 BOP6 S.c.a.r.l. 5.00 service for a series of systems, Trieste EUR 40,000.00 FINCANTIERI S.p.A. 100.00 Electrical installation 95.00 equipment and related activities ISSEL NORD S.r.l. Follo FINCANTIERI (SHANGHAI) EUR 400,000.00 100.00 FINCANTIERI S.p.A. 100.00 Logistics engineering (La Spezia) TRADING Co. Ltd. China RMB 3,500,000.00 100.00 FINCANTIERI S.p.A. 100.00 SEASTEMA S.p.A. Engineering design, consulting Design and development of Genoa EUR 300,000.00 100.00 FINCANTIERI S.p.A. 100.00 and development FINCANTIERI EUROPE S.p.A. integrated automation systems Italy EUR 50,000.00 100.00 FINCANTIERI S.p.A. 100.00 Holding company FINCANTIERI AUSTRALIA Pty Ltd. Australia FINCANTIERI S.p.A. AUD 2,200,100.00 100.00 100.00 VARD HOLDINGS Ltd. Fincantieri Oil & Gas Shipbuilding support activities Singapore SGD 932,200,000.00 97.44 97.44 Holding company S.p.A. FINCANTIERI SERVICES MIDDLE VARD GROUP AS Norway Vard Holdings Ltd. EAST LLC Qàtar EUR 200,000.00 100.00 FINCANTIERI S.p.A. 100.00 NOK 16,295,600.00 100.00 97.44 Shipbuilding Project management services VARD SHIPHOLDING SINGAPORE FINCANTIERI USA Inc. Singapore Vard Holdings Ltd. USA USD 1,029.75 100.00 FINCANTIERI S.p.A. 100.00 Pte. Ltd. USD 1.00 100.00 97.44 Holding company Charter of boats, ships and barges FINCANTIERI SERVICES USA LLC USA Fincantieri USA Inc. VARD ELECTRO AS USD 300,001.00 100.00 100.00 Norway NOK 1,000,000.00 100.00 Vard Group AS 97.44 After-sales services Electrical/automation installation

122 123 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION

% % COMPANY NAME Registered COMPANY NAME Registered Share Capital (%) interest held consolidated Share Capital (%) interest held consolidated Principal activity office by Group Principal activity office by Group

VARD ELECTRO ITALY S.r.l. VARD ENGINEERING CONSTANTA Vard RO Holding S.r.l. Romania 70.00 Installation, production, sale and S.r.l. RON 1,408,000.00 Vard Braila S.A. 97.44 Genoa EUR 200,000.00 100.00 Vard Electro AS 97.44 30.00 assistance for electrical equipment Engineering Vard Singapore and parts VARD VUNG TAU Ltd. Vietnam USD 8,000,000.00 100.00 Pte. Ltd. 97.44 VARD RO HOLDING S.r.l. Shipbuilding Romania RON 82,573,830.00 100.00 VARD Group AS 97.44 Holding company VARD ACCOMMODATION TULCEA Vard Accomodation AS VARD Group AS Romania 99.77 S.r.l. RON 436,000.00 Vard Electro Tulcea S.r.l. 97.44 Vard Electro Brazil 0.23 VARD NITERÓI Ltda. Brazil 99.99 Accommodation installation BRL 354,883,790.00 (Instalaçoes Eletricas) 97.44 Dormant 0.01 Ltda. VARD ENGINEERING BREVIK AS Norway NOK 105,000.00 100.00 VARD Group AS 97.44 Design and engineering VARD PROMAR SA Brazil VARD Group AS BRL 1,109,108,180.00 100.00 97.44 VARD OFFSHORE BREVIK AS Shipbuilding Of shore industrial services and Norway NOK 100,000.00 100.00 VARD Group AS 97.44 ESTALEIRO QUISSAMÃ Ltda. Brazil BRL 400,000.00 50.50 VARD Group AS 49.21 installation Dormant VARD MARINE Inc. VARD SINGAPORE Pte. Ltd. Canada CAD 9,783,700.00 100.00 VARD Group AS 97.44 Singapore USD 6,000,000.00 100.00 VARD Group AS 97.44 Design and engineering Sales and holding company VARD MARINE US Inc. USA Vard Marine Inc. VARD DESIGN AS Norway VARD Group AS USD 1,010,000.00 100.00 97.44 NOK 4,000,000.00 100.00 97.44 Design and engineering Design and engineering VARD ENGINEERING GDANSK VARD ACCOMMODATION AS Norway VARD Group AS NOK 500,000.00 100.00 97.44 Sp. Z.o.o. Vard Engineering Accommodation installation Poland PLN 50,000.00 100.00 97.44 Of shore design and engineering Brevik AS VARD PIPING AS Norway NOK 100,000.00 100.00 VARD Group AS 97.44 activities Pipe installation VBD1 AS SEAONICS AS Norway NOK 500,000.00 100.00 VARD Group AS 97.44 Norway NOK 46,639,721.00 56.40 VARD Group AS 54.96 Dormant Of shore handling systems VARD CONTRACTING AS Norway VARD Group AS VARD SEAONICS HOLDING AS Norway VARD Group AS NOK 30,000.00 100.00 97.44 NOK 30,000.00 100.00 97.44 Dormant Dormant CDP TECHNOLOGIES AS SEAONICS POLSKA SP. Z.O.O. Poland Seaonics AS PLN 400,000.00 100.00 54.96 Research and development of Norway NOK 500,000.00 100.00 Seaonics AS 54.96 Engineering services technology VARD DESIGN LIBURNA Ltd. Croatia Vard Design AS HRK 20,000.00 51.00 42.69 CDP TECHNOLOGIES ESTONIA OÜ Design and engineering Automation and control system Estonia EUR 5,200.00 100.00 CDP Technologies AS 54.96 VARD ELECTRO TULCEA S.r.l. software Romania RON 4,149,525.00 99.96 Vard Electro AS 97.44 Electrical installation VARD ELECTRO CANADA Inc. Canada Vard Electro AS VARD ELECTRO BRAZIL Vard Electro AS Installation and integration of CAD 100,000.00 100.00 97.44 Brazil 99.00 (INSTALAÇÕES ELETRICAS) Ltda. BRL 3,000,000.00 VARD Group AS 97.44 electrical systems 1.00 Electrical installation VARD AQUA SUNNDAL AS Norway VARD Group AS VARD ELECTRO BRAILA S.r.l. Supplier of aquaculture NOK 1,100,000.00 98.21 95.70 Romania RON 45,000.00 100.00 Vard Electro AS 97.44 Electrical installation equipment VARD ELECTRICAL INSTALLATION Vard Electro AS VARD AQUA CHILE SA 99.50 Supplier of aquaculture Chile CLP 95.00 Vard Aqua Sunndal AS 90.91 AND ENGINEERING (INDIA) Pte. Ltd. India INR 14,000,000.00 Vard Electro Tulcea 97.44 106,000,000.00 0.50 S.r.l. equipment Electrical installation Vard RO Holding S.r.l. VARD AQUA SCOTLAND Ltd. VARD TULCEA SA Romania 99.996 UK Vard Aqua Sunndal AS RON 151,606,459.00 VARD Group As 97.44 Supplier of aquaculture GBP 10,000.00 100.00 95.70 Shipbuilding 0.004 equipment Vard RO Holding S.r.l. VARD BRAILA SA Romania 94.12 RON 165,862,177.50 VARD Group AS 97.44 Shipbuilding 5.88

124 125 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION

% % COMPANY NAME Registered COMPANY NAME Registered Share Capital (%) interest held consolidated Share Capital (%) interest held consolidated Principal activity office by Group Principal activity office by Group

Joint ventures consolidated using Associates consolidated using the the equity method equity method ORIZZONTE SISTEMI NAVALI S.p.A. CASTOR DRILLING SOLUTION AS Norway Seaonics AS Italy FINCANTIERI S.p.A. NOK 229,710.00 34.13 18.76 Management of large naval vessel EUR 20,000,000.00 51.00 51.00 Of shore drilling technology contracts OLYMPIC CHALLENGER KS Norway VARD Group AS ETIHAD SHIP BUILDING LLC Arab NOK 84,000,000.00 35.00 34.10 FINCANTIERI S.p.A. Shipowner Design, production and sale of Emirates AED 2,500,000.00 35.00 35.00 civilian and naval ships BREVIK TECHNOLOGY AS Holding of technology licenses and Norway NOK 600,000.00 34.00 VARD Group AS 33.13 CSSC - FINCANTIERI CRUISE patents INDUSTRY DEVELOPMENT Ltd. Hong Kong FINCANTIERI S.p.A. EUR 140,000,000.00 40.00 40.00 MØKSTER SUPPLY AS Design and marketing of cruise Norway NOK 13,296,000.00 40.00 VARD Group AS 38.98 ships Shipowner MØKSTER SUPPLY KS UNIFER NAVALE S.r.l. Modena Seaf S.p.A. Norway NOK 131,950,000.00 36.00 VARD Group AS 35.08 EUR 150,000.00 20.00 20.00 Shipowner Piping REM SUPPLY AS Norway VARD Group AS ISSEL MIDDLE EAST TECHNOLOGY Arab NOK 345,003,000.00 26.66 25.98 Issel Nord S.r.l. Shipowner CONSULTANCY LLC Emirates AED 150,000.00 49.00 49.00 OLYMPIC GREEN ENERGY KS IT Consulting and Oil & Gas Services Norway NOK 4,841,028.00 29.50 VARD Group AS 28.74 CSSC - Shipowner CSSC - FINCANTIERI (SHANGAI) Fincantieri Cruise DOF ICEMAN AS Norway VARD Group AS CRUISE DESIGN LIMITED Hong Kong RMB 1,000,000.00 100.00 40.00 NOK 23,600,000.00 50.00 48.72 Engineering, Project Management Industry Shipowner Development Limited and Supply Chain Management TAKLIFT AS Norway VARD Group AS FINCANTIERI S.p.A. NOK 2,450,000.00 25.47 24.82 BUSBAR4F s.c.a.r.l. Italy 10.00 Floating cranes EUR 40,000.00 FINCANTIERI S.p.A. 60.00 Vard Offshore Brevik Installation of electrical systems 50.00 AS DAMECO Norway NOK 606,000.00 34.00 AS 33.13 FINCANTIERI CLEA BUILDINGS s.c.a.r.l. FINCANTIERI Maintenance services Management and conducting of Italy EUR 10,000.00 51.00 INFRASTRUCTURE 51.00 British Virgin S.p.A. CSS DESIGN LIMITED Vard Marine Inc. tenders GBP 100.00 31.00 30.21 Design and engineering Islands FINCANTIERI PERGENOVA s.c.p.a. Italy INFRASTRUCTURE ARSENAL S.r.l. Fincantieri Oil & Gas EUR 1,000,000.00 50.00 50.00 Trieste EUR 16,421.05 24.00 24.00 Construction of the Genoa viaduct S.p.A. IT consulting S.p.A. CONSORZIO F.S.B. ISLAND DILIGENCE AS Norway Vard Group AS Italy EUR 15,000.00 58.36 FINCANTIERI S.p.A. 58.36 EUR 17,012,500.00 39.38 38.37 Construction of buildings Shipowner CENTRO SERVIZI NAVALI S.p.A. Italy EUR 12,782,000.00 10.93 Fincantieri S.p.A. 10.93 Steel-working GRUPPO PSC S.p.A. Plant engineering and construction Italy EUR 1,431,112.00 10.00 Fincantieri S.p.A. 10.00 activities

126 127 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

MANAGEMENT REPRESENTATION ON THE CONSOLIDATED FINANCIAL STATEMENTS

Management representation on the condensed consolidated half-year fi nancial statements pursuant to art. 81-ter of consob regulation 11971 dated 14 may 1999 and subsequent amendments and additions

1. The undersigned Giuseppe Bono, in his capacity as Chief Executive Of cer, and Felice Bonavolontà, as Manager Responsible for Preparing Financial Reports of FINCANTIERI S.p.A. (“Fincantieri”), with reference to the requirements of art. 154-bis, paragraphs 3 and 4, of Legislative Decree 58 dated 24 February 1998, hereby represent:

• the suitability in relation to the business’s organization and, • the ef ective application

of the administrative and accounting processes for the preparation of the condensed consolidated half-year fi nancial statements at 30 June 2019, during the fi rst half of 2019.

2. The adequacy of the administrative and accounting processes for preparing the condensed consolidated half-year fi nancial statements at 30 June 2019 has been evaluated on the basis of a procedure established by Fincantieri in compliance with the Internal Control - Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, which is the generally accepted standard model internationally.

3. The undersigned also represent that: 3.1 the condensed consolidated half-year fi nancial statements at 30 June 2019: a) have been prepared in accordance with the International Financial Reporting Standards endorsed by the European Union under Regulation (EC) 1606/2002 of the European Parliament and Council dated 19 July 2002; b) correspond to the underlying accounting records and books of account; c) are able to give a true and fair view of the assets, liabilities, fi nancial position and results of operations of the issuer and the group of companies included in the consolidation. 3.2 the report on operating performance includes a fair review of the important events taking place in the fi rst six months of the year and their impact on the condensed consolidated half-year fi nancial statements, together with a description of the principal risks and uncertainties to which the Group is exposed.

24 July 2019

CHIEF EXECUTIVE OFFICER MANAGER RESPONSIBLE FOR PREPARING FINANCIAL Giuseppe Bono REPORTS

Felice Bonavolontà

128 129 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019

REPORT BY THE INDIPENDENT AUDITORS

REVIEW REPORT ON CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

To the shareholders of Fincantieri SpA

Foreword

We have reviewed the accompanying consolidated condensed interim financial statements of Fincantieri SpA and its subsidiaries (the Fincantieri Group) as of 30 June 2019, comprising the consolidated statement of financial position, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and related notes. The directors of Fincantieri SpA are responsible for the preparation of the consolidated condensed interim financial statements in accordance with the International Accounting Standard applicable to interim financial reporting (IAS 34) as adopted by the European Union. Our responsibility is to express a conclusion on these consolidated condensed interim financial statements based on our review.

Scope of review

We conducted our work in accordance with the criteria for a review recommended by Consob in Resolution n°10867 of 31 July 1997. A review of consolidated condensed interim financial statements Parent Company consists of making enquiries, primarily of persons responsible for financial and accounting matters, Registered of ce Via Genova no. 1 - 34121 Trieste – Italy and applying analytical and other review procedures. A review is substantially less in scope than a full- scope audit conducted in accordance with International Standards on Auditing (ISA Italia) and, Tel: +39 040 3193111 Fax: +39 040 3192305 consequently, does not enable us to obtain assurance that we would become aware of all significant fi ncantieri.com matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated condensed interim financial statements. Share Capital Euro 862,980,725.70 Venezia Giulia Company Registry and Tax No. 00397130584 Conclusion VAT No. 00629440322 Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated condensed interim financial statements of the Fincantieri Group as of 30 June 2019 are not prepared, in all material respects, in accordance with the International Accounting Standard applicable to interim financial reporting (IAS 34) as adopted by the European Union.

Trieste, 29 July 2019

PricewaterhouseCoopers SpA Signed by Maria Cristina Landro (Partner)

This report has been translated into English from the Italian original solely for the convenience of international readers

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