HALF - YEAR FINANCIAL REPORT AT 30 JUNE 2012 FINMECCANICA Disclaimer This Half-Year Financial Report at 30 June 2012 has been translated into English solely for the convenience of the international reader. In the event of conflict or inconsistency between the terms used in the Italian version of the report and the English version, the Italian version shall prevail, as the Italian version constitutes the sole official document. WorldReginfo - 1357a9df-3804-4875-a477-05f6cc1f0735 CONTENTS BOARDS AND COMMITTEES ................................................................................................ 5 DIRECTORS’ REPORT AT 30 JUNE 2012 ............................................................................ 6 Financial performance and financial position ....................................................................................... 6 Related party transactions ................................................................................................................... 20 Non-IFRS alternative performance indicators .................................................................................... 22 Performance by division ..................................................................................................................... 25 HELICOPTERS .............................................................................................................................. 25 DEFENCE ELECTRONICS AND SECURITY ................................................................................ 27 AERONAUTICS .............................................................................................................................. 32 SPACE ............................................................................................................................................ 35 DEFENCE SYSTEMS ..................................................................................................................... 38 ENERGY ......................................................................................................................................... 40 TRANSPORTATION ....................................................................................................................... 43 OTHER ACTIVITIES ...................................................................................................................... 46 Key events of and after the reporting period ....................................................................................... 48 Corporate Governance ........................................................................................................................ 54 Outlook ............................................................................................................................................... 57 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS AT AND FOR THE SIX MONTH ENDED 30 JUNE 2012 ......................................................... 59 Condensed consolidated income statement ......................................................................................... 60 Statement of condensed consolidated comprehensive income............................................................ 61 Condensed consolidated statement of financial position .................................................................... 62 Condensed consolidated statement of cash flows ............................................................................... 63 Condensed statement of changes in consolidated shareholders’ equity .............................................. 64 Explanatory notes ............................................................................................................................... 65 1. General ........................................................................................................................... 65 2 WorldReginfo - 1357a9df-3804-4875-a477-05f6cc1f0735 2. Basis of preparation ....................................................................................................... 65 3. Treatment of income taxes in the preparation of interim reports and business seasonality ........................................................................................................................................ 66 4. Effect of changes to the IFRS ......................................................................................... 66 5. Significant non-recurring events and transactions ........................................................ 67 6. Scope of consolidation ................................................................................................... 68 7. Material changes in exchange rates adopted ................................................................. 76 8. Segment reporting .......................................................................................................... 77 9. Intangible assets ............................................................................................................. 79 10. Property, plant and equipment ....................................................................................... 81 11. Business combinations ................................................................................................... 82 12. Loans and receivables and other non-current assets ..................................................... 83 13. Trade receivables, including net contract work in progress .......................................... 84 14. Derivatives ..................................................................................................................... 85 15. Other current assets ....................................................................................................... 86 16. Equity ............................................................................................................................. 87 17. Loans and borrowings .................................................................................................... 88 18. Provisions for risks and charges .................................................................................... 90 19. Employee benefit obligations ......................................................................................... 99 20. Other liabilities ............................................................................................................ 100 21. Trade payables, including progress payments and advances from customers, net ...... 101 22. Related party transactions............................................................................................ 102 23. Revenue ........................................................................................................................ 110 24. Other operating income (expenses) .............................................................................. 110 25. Purchases and personnel expense ................................................................................ 111 26. Amortisation, depreciation and impairment losses ...................................................... 112 27. Financial income and expense ..................................................................................... 113 28. Share of profits (losses) of equity-accounted investees ................................................ 115 3 WorldReginfo - 1357a9df-3804-4875-a477-05f6cc1f0735 29. Income taxes ................................................................................................................. 115 30. Cash flows from operating activities ............................................................................ 116 31. Earnings per Share ....................................................................................................... 117 Statement on the condensed consolidated interim financial statements at 30 June 2012 pursuant to article 154-bis paragraph 5 of Legislative decree no. 58/98 and subsequent amendments and integrations ....................................................................................................................................... 118 REPORT OF THE INDEPENDENT AUDITORS ON THEIR REVIEW OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT 30 JUNE 2012 ............................................................................................................................... 119 4 WorldReginfo - 1357a9df-3804-4875-a477-05f6cc1f0735 Boards and Committees BOARD OF DIRECTORS BOARD OF STATUTORY AUDITORS (i) (for the period 2011- 2013) (for the period 2012 - 2014) GIUSEPPE ORSI (1) Regular Statutory Auditors Chairman and Chief Executive Officer ALESSANDRO PANSA RICCARDO RAUL BAUER Director - Chief Operating Officer Chairman CARLO BALDOCCI (1) NICCOLO’ ABRIANI Director (*) MAURILIO FRATINO FRANCO BONFERRONI (3) Director SILVANO MONTALDO PAOLO CANTARELLA (1) (2) EUGENIO PINTO Director GIOVANNI CATANZARO (2) Alternate Statutory Auditors Director STEFANO FIORINI DARIO GALLI (1) (3) Director VINCENZO LIMONE IVANHOE LO BELLO Director (**) SILVIA MERLO (2) Director ______________________________________________ FRANCESCO PARLATO (1) (3) INDIPENDENT LEGAL AUDITORS Director KPMG S.p.A. (ii) (for the period 2012 - 2020) CHRISTIAN STREIFF (3) Director GUIDO VENTURONI (2) Director ________________________________________________ LUCIANO ACCIARI Segretary of the Board of Directors ________________________________________________________________________________________________ MARCO IANSITI Director and