Slide 1: ESG Driving Industrial Plan Execution, Growth and Long-Term Returns
ESG DRIVING INDUSTRIAL PLAN EXECUTION, GROWTH AND LONG-TERM RETURNS ITALIAN SUSTAINABILITY WEEK 2022 September 2022
Slide 2: Content
Content SOUND AND Strong governance supporting long-term sustainable growth INTEGRATED GOVERNANCE Sustainability and innovation at the core of the business Integrating ESG into the Group risk management OUR COMMITMENT Our ESG vision and journey towards long-term value creation EXECUTING OUR
Slide 3: Our ESG Vision and Journey Towards Long-Term Value Creation
OUR ESG VISION AND JOURNEY TOWARDS LONG-TERM VALUE CREATION 3 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 4: We have a clear and important purpose
We have a clear and important purpose We provide essential Security and Protection, security for people and nations.… … Contributing to the world’s progress and safety through our innovative technological solutions 4 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 5: An industrial and technological leader
An industrial and technological leader With a strong presence in domestic markets and worldwide 2021 REVENUES 2021 BY €14.1bln €14.3bln €35.5bln €1.8bln GEOGRAPHICAL AREA REVENUES NEW ORDERS BACKLOG R&D SPEND 83% 17% Italy OF REVENUES 27% FROM EXPORT, UK outside Italy Domestic 9% US markets Rest of
Slide 6: Deeply committed to ESG
Deeply committed to ESG ESG driving industrial plan execution, growth and long-term returns BUSINESS FUNDAMENTALS SUSTAINABILITY ENABLERS • We have successfully navigated the Group through • ESG integrated into all aspects of business, 2021 and 1H22, resilient performance decisions and projects to c
Slide 7: Important progress towards ESG milestones in 2021
Important progress towards ESG milestones in 2021 -19% GHG Scope 1 & 2 emissions compared to 2019 Progress on environment -6% intensity of energy consumption vs 2019 and climate change -24% intensity of waste produced compared to 2019 80% of sourced electricity from renewable sources 3,753
Slide 8: Clear targets set throughout the value chain
Clear targets set throughout the value chain Main targets ENVIRONMENT SOCIAL GOVERNANCE 10% reduction in consumption of Hiring at least 40% of under 30 by Release of Trade Compliance electricity withdrawn from external grid 2022 and 32% of women by 2025 Guidelines including Human Rights by 202
Slide 9: ESG key priorities in executing our Plan for long-term growth
ESG … our key priorities in executing our Plan for the long-term growth Driving execution and value creation SUPPORTING OUR KEY COMMERCIAL AND INDUSTRIAL GOALS ENABLING SUSTAINABLE GROWTH BY TECHNOLOGY AND INNOVATION E S MEETING AND ANTICIPATING CUSTOMER PRIORITIES PARTNERING WITH OUR SUPPLIERS ENHA
Slide 10: Addressing Opportunities and Industrial Goals
ADDRESSING OPPORTUNITIES AND INDUSTRIAL GOALS 10 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 11: Our commercial and industrial future is driven by innovation
Our commercial and industrial future is driven by innovation… … and in turn this critical innovation is driven by sustainability • Our ESG credentials: key enablers to reach over €80bn in new order intake over the next 5 years • Our focus on R&D, innovation and technology support is key for growth •
Slide 12: The commercial context of what we are aiming to achieve
The commercial context of what we are aiming to achieve Positive outlook supported by our commercial model and commitment to ESG and technologies OUR ORDER INTAKE TARGET Strong positioning in key domestic markets Competitive position in key strategic countries Commercial strengths Ca. €80 Inte
Slide 13: Transforming our R&D efforts towards digitalisation
Transforming our R&D efforts towards digitalisation and leading-edge world- class capabilities Innovation enables us to achieve significant results in decarbonization Deep and wide-ranging digitalisation HPC, Artificial Intelligence Leading-edge world-class capabilities and technologies Value
Slide 14: Technology and Innovation Enabling Sustainable Growth
TECHNOLOGY AND INNOVATION ENABLING SUSTAINABLE GROWTH 14 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 15: Our future is driven by innovation
Our future is driven by innovation … … In turn driven by sustainability, digitalisation and cyber-resilience • Our meaningful technological innovation enables continuous improvements in our decarbonization • …and provides our full value chain with the opportunity and tools to reduce their emissions
Slide 16: Significant progress in meeting our decarbonisation targets
Significant progress in meeting our decarbonisation targets Innovative solutions helping us to make great progress in reducing Scope 1 & 2 emissions CO2 EMISSIONS SCOPE 1 & 2* SF6 replacement Over 100,000 tons of CO2 avoided in 2021 thanks to -19% the partial replacement of SF6 404 423 Energy Self P
Slide 17: We enable our value chain to reduce emissions
We enable our value chain to reduce emissions Leveraging on digital twin and focused research to address scope 3 NEW NEW PROPULSION VIRTUALIZATION MATERIALS SYSTEMS AND SAF 33,700 training hours delivered in -20% of CO2 emissions with the use of Studying electric or hybrid platforms 2021 throu
Slide 18: Leonardo Labs at the core of our R&D efforts
Leonardo Labs at the core of our R&D efforts Our internal capabilities and external collaborations drive long-term R&D of the most innovative technologies LEONARDO LABS 11 Leonardo Labs (in 6 regions in Italy and 1 in the USA) 4 joint external laboratories 200 research fellows by 2023 DAVINCI-1 HPC
Slide 19: Unique assets at the heart of our R&D
Unique assets at the heart of our R&D DAVINCI-1 HPC gives a unique edge in reducing time to market, risks and costs MATERIALS Innovative materials APPLIED QUANTUM DIGITAL TWIN AND TECHNOLOGIES Communications and ADVANCED SIMULATION crypto random number Certification by Simulation UNMANNED ELECTRIFIC
Slide 20: The UK Example: Aligning ESG Customer Priorities with Our Commercial Goals
THE UK EXAMPLE: ALIGNING ESG CUSTOMER PRIORITIES WITH OUR COMMERCIAL GOALS 20 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 21: Aligning ESG customer priorities with our commercial goals
Aligning ESG customer priorities with our commercial goals • Sustainability has become a significant part of our customer requirements • ESG criteria are now a cornerstone of the MoD bidding process • Leonardo is positioned as we have strong alignment with our own ESG targets and those of our custom
Slide 22: How sustainability embeds itself as cornerstone of customers' requirements
How sustainability embeds itself as cornerstone of our customers’ requirements Targeting climate neutrality by 2030 for Scope 1 & 2, and across the value chain by 2050 UK Government is Defence sector Failure to have We are committed to the first country to accounts for c.50% viable plan for Net Net
Slide 23: Our commitment to social values in line with MoD expectations
Our commitment to social values in line with MoD expectations How we invest in our people and supply chain to add social value in the UK SOCIAL VALUE WHAT WE DO AT LEONARDO UK Supporting 9,700 jobs Ofsted rated our apprenticeship Tackling economic inequality indirectly along the supply program
Slide 24: Partnering with Our Suppliers
PARTNERING WITH OUR SUPPLIERS 24 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 25: Overview of our supply chain
Overview of our supply chain Our supply chain in 2021 PURCHASES BY COUNTRY LOCAL SUPPLY CHAINS * INCIDENCE OF NATIONAL SMES IN DOMESTIC COUNTRIES 9.2 billion of purchases of goods and service 65% of revenues 11,000 suppliers worldwide 81% of purchases related to domestic markets PURCHASES BY TYPE 6,
Slide 26: Growing with our partners
Growing with our partners Partnerships and supplier development programmes MAIN INITIATIVES LEAP partnership Improvement and development projects Supplier management model aimed at creating the best conditions launched for over 120 suppliers to enhance capabilities and technological excellence of
Slide 27: Responsible procurement management for long-term partnerships
Responsible procurement management for long-term partnerships Main phases of supplier selection and management Acceptance of the Code of Ethics, REGISTRATION ON THE Anti-corruption Code, Supplier Code of Conduct, PROCUREMENT PORTAL Organization Management and Control Model Self-assessment questionna
Slide 28: Human Capital and Skill Enhancement Supporting Our Future
HUMAN CAPITAL AND SKILL ENHANCEMENT SUPPORTING OUR FUTURE 28 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 29: Human capital and skill enhancement supporting our future
Human capital and skill enhancement supporting our future • People drive our business forward: human capital is at the heart of our business model and our plan for sustainable growth • Upskilling and reskilling for the future are key enablers to reach over €80bn in new order intake over the next 5 y
Slide 30: A top major employer in Italy
A top 5 major employer in Italy … and one of the largest globally in the Aerospace and Defence sector OUR PEOPLE WORLDWIDE IN 2021 WE WANT TO ACHIEVE +8.5% Hiring at least 40% of under 50,413 30 by 2022 out of total hires WORKFORCE GROWTH vs 2018 Hiring 32% of women by UK 19% 2025 out of total h
Slide 31: Continuously investing in our people and their development
Continuously investing in our people and their development Focusing on attracting new skills and planning ahead for future needs • Delivered 1.6 million hours of training Upskilling / Reskilling Managing skills crucial for the • 750+ training course activities using a specific educational system f
Slide 32: Connecting ESG progress and remuneration
Connecting ESG progress and remuneration Confirming alignment between Industrial plan and management performance 10% of short-term variable CEO & General Manager •CEO & General Manager remuneration linked to ESG objectives • 5% Inclusion of Leonardo in DJSI • 10% Scope 1 & 2 GHG Emissions** • 5%A
Slide 33: Transparency and Integrity at Our Core
TRANSPARENCY AND INTEGRITY AT OUR CORE 33 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 34: Transparency and integrity at our core
Transparency and integrity at our core • Our business culture is based on responsibility, correctness and integrity • Rules and Company culture translating into daily behaviors strengthen our credibility and performance • Our activities are performed in full compliance with all national and internat
Slide 35: Acting responsibly is at the very base of our way to do business
Acting responsibly is at the very base of our way to do business Implementing a robust and ‘fit-for-purpose’ Trade and Business Compliance programme OUR INTERNAL RULES Guidelines and Directive on Trade Compliance + Procedure and Directive on Business Compliance 35 © 2022 Leonardo - Società per azion
Slide 36: Managing and mitigating our risk exposure from a business compliance side
Managing and mitigating our risk exposure from a business compliance side An enhanced level of due diligence on each transaction RISK ASSESSMENT ON COMMERCIAL ACTIVITIES Country risk and level of corruption 40 red flags Local law/regulations requirements Gate Risk Not acceptable Remuneration S
Slide 37: Managing and mitigating our risk exposure on export activities
Managing and mitigating our risk exposure on export activities Rigorous evaluation of the risks associated with each transaction including human rights TRADE COMPLIANCE PROGRAM Red flags Export Controls: Assessing red flags related to any applicable export control laws and regulation concerning HU
Slide 38: Maintaining the highest reputational standard on Compliance and Integrity
Maintaining the highest reputational standard on Compliance and Integrity The importance of continuous training and awareness raising efforts > 47,000 hours of training on business and trade compliance in 2021 to Training for our around 27,000 participants employees >20,800 trained on anti-corru
Slide 39: ESG Driving Our Long-Term Returns
ESG DRIVING OUR LONG-TERM RETURNS 39 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 40: ESG driving growth, capital allocation and long-term returns
ESG driving growth, capital allocation and long-term returns • We have adopted the same rigorous approach to measuring both financial and non-financial performance • We are anticipating the trend for an integrated financial and non-financial accounting standard • Full integration between our financi
Slide 41: Measure, Measure, and be Measured
Measure, Measure, and be Measured Sound internal control system supporting reasonable assurance of ESG data New operational procedures have been put in place detailing the main processes of collection, aggregation and transmission of ESG 1. Mapping data to be included in the non financial statement
Slide 42: ESG Targets
Full alignment and integration of both our financial strategy and ESG Strong confidence in achieving our targets KEY ESG PRIORITIES MEDIUM-TERM FINANCIAL TARGETS SUPPORTING OUR KEY COMMERCIAL ORDERS Confirming cumulated > € 80 bn AND INDUSTRIAL GOALS Book to bill >1 ENABLING SUSTAINABLE GROWTH BY IN
Slide 43: ESG is crucial in optimal capital allocation
ESG is crucial in optimal capital allocation 50% investment is aligned with SDG goals SDG-ALIGNED OUR MAIN CONTRIBUTION INVESTMENTS TO SDGs Ensuring resilient infrastructures, increasing efficient and digital processes and developing technologies with green impact Improving resources efficiency and
Slide 44: 50% of Leonardo funding sources now are ESG linked
50% of Leonardo funding sources now are “ESG linked" FINANCING SOURCES €6,0bn Two ESG linked financial transactions subscribed in 2021 50% € 2.4 bn ESG linked Revolving Credit ESG linked Facility (RCF) € 600 mln ESG linked Term Loan (to refinance January 2022 debt maturing) 2021 * KPIs selected full
Slide 45: Appendix
APPENDIX 45 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 46: Our ESG achievements in 2021
Our ESG achievements in 2021 In 2021, achieved the highest score among Confirmed in the ‘Climate A List 2021’ of the companies in the Aerospace and Defence CDP (formerly the Carbon Disclosure sector for the 3rd consecutive year, included Project), the only company in the A&D sector. for the 12th yea
Slide 47: Materiality analysis
Materiality analysis Internal perspective 27 Top managers involved External perspective >1,600 reviewed regulations >760 mln analysed tweets Stakeholders survey 160 stakeholders involved >100 responded from 11 countries 47 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 48: Independent, inclusive and skilled Board of Directors
Independent, inclusive and skilled Board of Directors BOARD COMPOSITION BOARD DIVERSITY Skills Strategic planning 100% Geopolitics and governmental and institutional relations 100% Executive and non-executive Experience with innovation and advanced technologies 100% 1 executive Digital IT and cyber
Slide 49: Investment aligned with SDG goals
Investment aligned with SDG goals Our main contribution to SDG NEW INITIATIVES INCREASING NEW PRODUCTS INCLUDED IN INDUSTRIAL PROCESS EFFICIENCY OUR SDG ALIGNED PORTFOLIO M-346 and M-345 Energy efficiency Our trainers through a greater use of Transition to LED technology for most simulation systems
Slide 50: Partner in the Italian National Recovery Plan
Partner in the Italian National Recovery Plan: playing with core assets and distinctive capabilities PROJECT STREAMS IDENTIFIED BY LEONARDO Global Monitoring Logistics Space Digital PA Smart City Health systems Research Continuously monitoring Contributing to a Contributing to the Promoting the Incr
Slide 51: Our commitment to human rights
Our commitment to human rights PEOPLE MANAGEMENT SUPPLY CHAIN SALE AND DISTRIBUTION OF PRODUCTS GROUP POLICY ON HUMAN RIGHTS 3 areas where risks related to human rights are significant Release of Trade Compliance Guidelines including Human Rights Impact Assessment 51 © 2022 Leonardo - Società per
Slide 52: Energy management
Energy management Performance in 2021 ENERGY ENERGY RENEWABLE CONSUMPTION MIX SOURCES* Intensity of energy consumption (MJ/€) 9% 3% 32% 40% 0.42 -6% 68% 48% 0.41 Renewable sources Non-renewable sources 0.40 Purchased electricity Natural gas Self-generated electricity Other sources 2019 2020 2021 E
Slide 53: Remuneration Policy aligned with shareholders interests, business strategy and ESG criteria
Remuneration Policy aligned with shareholders interests, business strategy and ESG criteria CEO REMUNERATION COMPONENTS Fixed Remuneration Short-Term Variable Long-Term Variable Remuneration Remuneration • Convergence of interests between management and shareholders 44% 29% 27% • Aligning the remune
Slide 54: Performance Gate
CEO short term variable remuneration (MBO) Type of objective KPIs Weight Functioning mechanism Target / Guidance Performance Gate 1,180 € mil. – If one or both of the following thresholds are not Group EBITA 30% On / off 1,220 € mil. achieved: Economic and • Group EBITA: 85% of Budget Financials • G
Slide 55: Long Term Incentive Plan (LTIP)
Long Term Incentive Plan (LTIP) KPIs Weight Reference Performance range Payout range financial period (Target / Guidance) 1-4 100% Relative Total Shareholder 2024 5- 6 50% 35% Return ( Delta vs 2022) 7 25% 8-13 0% Target (< 2.5 € bil.) 100% Group Net Debt 25% 2024 Minimum 50% Target (>13%) 100% Retu
Slide 56: 2Q/1H 2022 Results
2Q/1H 2022 Results Group Performance 2Q 2021 2Q 2022 % Change 1H2021 1H2022 % Change FY 2021 € mln New Orders 3,261 3,521 +7.9% 6,682 7,310 +9.4% 14.307 Backlog 35,883 36,358 +1.3% 35.534 Revenues 3,555 3,570 +0.4% 6,345 6,576 +3.6% 14.135 EBITA 305 286 -6.2% 400 418 +4.5% 1.123 EBITA Restated* 290
Slide 57: Backlog and revenues by Geography
Backlog and revenues by Geography 1H22 REVENUES € 6.6 bn REST OF WORLD 22% UK 14% UK 13% REST OF WORLD 22% ITALY 29% REST OF EUROPE 16% REST OF ITALY 24% EUROPE 23% NORTH AMERICA 13% 1H22 BACKLOG € 36.4 bn NORTH AMERICA 24% 57 © 2022 Leonardo - Società per azioni ESG2Q/1H22 INVESTOR Results DAY
Slide 58: Safe Harbor Statement
SAFE HARBOR STATEMENT NOTE: Some of the statements included in this document are not historical facts but rather statements of future expectations, also related to future economic and financial performance, to be considered forward-looking statements. These forward-looking statements are based on Co
Slide 59: Contacts
CONTACTS Valeria Ricciotti Head of Investor Relations and Credit Rating Agencies +39 06 32473.697 valeria.ricciotti@leonardo.com Leonardo Investor Relations and Credit Rating Agencies +39 06 32473.512 ir@leonardo.com leonardo.com 59 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY