Investor Presentation October 2016 DRAFT Disclaimer This document - - PowerPoint PPT Presentation

DRAFT DRAFT

Investor Presentation

October 2016

DRAFT

Disclaimer

2

This document has been prepared by Space2 S.p.A. (“Space2” or the “Company”) exclusively for use in the presentation of the envisaged business combination between Space2 and the target company. This document does not constitute or form part of any offer or invitation to sell, or any solicitation to purchase any shares or any other kind of financial instruments issued or to be issued by Space2 and/or the combined entity resulting from the envisaged business combination between Space2 and the target company. Not all the information contained and the opinions expressed in this document have been independently verified. In particular, this document contains forward-looking statements that are based on current estimates and assumptions made by the management of Space2 to the best of their knowledge. Such forward-looking statements are subject to risks and uncertainties, the non-occurrence or occurrence of which could cause the actual results including the financial condition and profitability of Space2 and the combined entity resulting from the envisaged business combination to differ materially from, or be more negative than, those expressed or implied by such forward-looking statements. Consequently, Space2 and its management can give no assurance regarding the future accuracy of the estimates of future performance set forth in this document or the actual

• ccurrence of the predicted developments.

The data and information contained in this document are subject to variations and integrations. Although Space2 reserves the right to make such variations and integrations when it deems necessary or appropriate, Space2 assumes no affirmative disclosure obligation to make such variations and integration and no reliance should be placed on the accuracy or completeness of the information contained in this document. No person accepts any liability whatsoever for any loss howsoever arising from the use of this document or of its contents or otherwise arising in connection therewith. By accepting this document, you agree to be bound by the foregoing limitations.

DRAFT

Today’s presenters

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Giulio Ranzo

Chief Executive Officer

Alessandro Agosti

Chief Financial Officer

Sergio Scippa

SVP Business Unit & CEO Regulus

Paolo Bellomi

SVP Product Development

Roberto Italia

Partner

Carlo Pagliani

Partner

Edoardo Subert

Partner

Gianni Mion

Partner

DRAFT Table of Contents

• 1. Investment overview
• 2. Avio highlights
• 3. Market and Business
• 4. Technology&Operations
• 5. Future Prospects
• 6. Financials
• 7. Transaction overview

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• 1. Investment overview

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Space2: enabling the growth of Italian champions

• Space2 is the second Italian SPAC promoted by Space Holding

and listed on MIV, the regulated segment for investment vehicles of the Milan Stock Exchange, since 31 July 2015

• On listing, Space2 raised an aggregate € 308m, including € 8m

from Space Holding

• Space, Space2's predecessor, merged with Fila SpA, now listed
• n the STAR segment of the Milan Stock Exchange, in November

2015

• Searching for a leading Italian company with an attractive profile

and a strong management team

• Space2 will use € 154m to acquire a unique Italian target. The

remaining € 154m will go into Space 3, a newly created SPAC still promoted by Space Holding

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DRAFT

Avio: our selected target

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At the forefront of Italian technological leadership

• A key European player with an essential role in the growing space

economy

• A global technology leader, with over 50 years of experience in space

propulsion and launch systems

• At the heart of designing, developing, manufacturing, assembling and

delivering the most successful European launchers

• An established international footprint, with exclusive access to critical

launch infrastructure at the European spaceport

• Solid revenue growth and robust cash generation supported over time

by substantial backlog and dedicated public R&D funding

• Experienced and dedicated team, with over 760 skilled employees

DRAFT

Our partners: Leonardo and Avio Management

Access to broader space technologies and further global presence Vision, leadership and competence Access to capital markets

Space2 investors Leonardo Avio Management

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4%(1) 28%(1) 68%(1)

(1) Shareholding structure at Business Combination with the acquisition of 85.7% stake and assuming that (i) no Space2 shareholder exercises the Right to Withdrawal and (ii) Avio Management acquires 5.6% of the Avio share capital (“Base Case”)

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• 2. Avio highlights

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Avio: a key player in EU Space Launchers

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Vega

• 10 tons to

Geostationary Orbit

• Large

Telecom & Broadcasting Satellites

• Current flight

rate : 6/year

• In operation

since 1996

• 1,5 tons to

Low Earth Orbit

• Small

Earth

• bservation

Satellites

• Current flight

rate : 3/year

• In operation

since 2012

Ariane 5

Industrial partner (ca. 10% share(1)) Prime Contractor (ca. 65% share(1))

(1): Management estimate

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Launchers enable all other Space business segments

Satellite manufacturing

$ 16.6bn

Satellite services(2)

$ 127.4bn

End users

Global space value chain (2015)

Launch industry(1,2)

$ 5.4bn

(1) Includes launcher manufacturing and launch service activities (2) Commercial services revenues only Sources: based on Satellite Industry Association (2015)

Ground Segment

$ 58.9bn

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End-market demand driven by various application domains

Broadband Data Earth

• bservation

Technology Meteorology Navigation

• Mobile Data
• Managed network

services (fleet management)

• Machine 2

machine

• Agriculture and

urban planning

• Mining

development

• Disaster

management

To gain deeper insight of the earth’s surface To connect people and devices worldwide

• Weather forecast
• Climate change /

environment analysis

To discover new worlds and the cosmos To understand and forecast the weather

• In-orbit testing
• Health

experiments

• Navigation
• Positioning

To navigate people to their destinations Broadcasting

• Satellite television

/ satellite radio

• Satellite

broadband End users

Our daily lifestyle hinges upon what happens in space

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it takes 5 min to get to Space, two hours to position satellites

13

First three stages: 7.5km/s reached and

• ut of atmoshere

Fourth stage first firing: orbital conditions reached Fourth stage second firing: circular orbital reached Fourth stage third firing: de-

• rbiting

Example of typical Low Earth Orbit mission

Propelled phase Coasting phase

Earth’s atmosphere

800km 200km 5min 1hr 2hrs Propulsion stages separations Fairing separation Upper stage maneuvers and satellite injection into orbit

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Avio has over 50 years in Space Launchers

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Evolved from supplier to integrated operator 1988 2012 Today 1980

Solid rocket motors supplier

1960

Qualified supplier

A pre-requisite to enter in the space business

Explosives maker Propulsionist

Design authority of Ariane 5 P230 SRM and vulcan TP Vega LV prime and design authority Vega Evolution Ariane 6

Integrated

• perator

Prime contractor

DRAFT

Today Avio has 3 main competency areas

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Solid propulsion

Materials :Pre-preg and TP rubber Propellant casting

Liquid propulsion System integration

Insulated motor Case Mfg Nozzles Vulcain Lox TP MIRA TP and Firing Test TP integration Mission simulation Vinci Lox TP Launcher integration All system testing and verification

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Avio generates today 257M€ annual revenues

16

€112M Vega launcher Ariane propulsion

Ariane 5 Ariane 6 Vulcain Vinci Vega Vega C

Production Development

Turbopumps

≈48% ≈47% ≈4%

Rev 257 M€

Boosters

Tactical propulsion

Aster 30 Camm ER

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Consistent financial track record in the last 10 years

Ariane and Vega flights Order Backlog (M€) Net revenues (M€)

179 489 329 206

ESA Funding (M€) Growing flight rates 3.5 years backlog visibility 7% revenue CAGR in 10 years Stable funding

5 5 6 6 7 6 5 7 4 6 6

1 1 1 3

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ariane Vega

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DRAFT

Strong partnership with leading EU Space players

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• Ariane 5 and Ariane 6 Prime Contractor
• Partner in the two Joint Ventures since 1990
• Europropulsion (solid stage integration)
• Regulus (propellant casting)
• World leading Commercial Launch Service Provider
• Avio as a shareholder since 1984
• Research and Technology program definition
• Partner in Vega’s project (ELV) since 2000

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Avio plays a pivotal role between market demand and product development

• Technology/

product development

• Manufacturing
• Testing
• Procurement
• System

integration

• Testing,

verification

• Commercialization
• Launch operations

Product development and production Commercial exploitation Satellite services Funding & product policy

• Satellite operations

Vega Ariane

Avio at the heart of the EU launcher industry

Supplier Integrator

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…OTHERS

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Skilled and experienced management team

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Sergio

Scippa

SVP Business & CEO REgulus

Marco Biagioni

SVP Purchasing Salvatore

Spinosa

VP Industrial Operations

Francesca

Lillo

VP HSE & Material Eng

Alessandro

Agosti

CFO

Carmine

Schips

SVP Plants & Planning Giulio

Ranzo CEO

Francesco

Depasquale SVP Spaceport Operations.

Pierluigi

Pirrelli CEO ELV

Roberto Ciervo SVP HR Manrico

Mastria

SVP Quality Giorgio Martellino General Counsel Paolo

Bellomi

SVP Product Development Francesco

Libri

Internal Auditor Roberto

Nasi

CEO Secosvim

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• 3. Market and Business

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Different orbits for different applications

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36k km 300 / 2000 km 20k km

GEO/GTO orbits 36,000 km (Heavy launchers) MEO orbits 22,000 km (Medium launchers) LEO orbits 300-1,500 km (Light launchers)

Atmosphere

Altitude (km)

Telecom Broadcasting Navigation

Satellite mass (kg)

2000 kg 4000 kg 6000 kg 1000 kg

Satellite internet constellations Weather forecasting

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Sources: OECD: The Space Economy at a Glance 2014, LCA Elaboration

Small satellites will drive market demand

Multi-satellite adaptability and multi-orbit deployment capabilities become key factors for launchers vehicles

Lower

• rbit

serviced with light launchers Higher

• rbit

reached by heavy launchers

50 100 150 200 250 300 350 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

%

CAGR # of satellites 2015-2020 +7% p.a. 2010-2015

By orbit (2010 - 2020)

+20% p.a.

Demand driven by emerging commercial customers in LEO (deployment of mega-constellations) By mass (2010 - 2020) Demand driven by ever smaller satellites thanks to technological breakthroughs and the CubeSat standard

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

< 1,5 tons > 1,5 tons 47% 53% 10% 90% 23

Satellite market

% of satellites

SatCom SmallSat for E.O.

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Source: Union of Concerned Scientists, Teal Database, Science and Technology Policy Institute, LCA Elaboration

Total satellites

The number of satellites to be launched will double in the next 5 years

The number of total satellites in orbit will be pushed by commercial exploitation of space, in particular with the deployment of new satellite constellations in LEO orbits

2010 - 2015 2016 - 2020

642 1,318

≈ 2 X

Satellites to be launched by customer (2010 - 2020)

436 636 206 682

≈ 3 X ≈ 1.5 X

Commercial customers Institutional customers

# of satellites

• f which

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• /w 70%

accessible market for EU launchers

DRAFT

27

HIIA Epsilon

Competitive landscape in the launch service business

EU fleet covers all relevant segments and provides extremely reliable services

GEO/GTO orbits 36,000 km (Heavy launchers) MEO orbits 22,000 km (Medium launchers) LEO orbits 300-1,500 km (Light launchers)

2006-2015 launches 183

Falcon 9 Atlas 5 Delta 2 Minotaur

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GLSV PSLV

65 287

Proton Soyuz Rockot Dnepr

136

CZ-3 CZ-4 CZ-2C

Global launch industry segmentation by orbit

(1) It does not take into considerations 15 Soyuz launches realised by Kourou Spaceport (EU) Source: spacelaunchreport.com (update 2015)

+++ Reliability + +++ ++

(1)

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Ariane 5

Vega

Closed market

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2017 to 2019

Robust, fully contracted backlog

Backlog for Vega

2015 2016

Backlog for Ariane 5

(1) MPL: Multiple payload

Predictable production revenues for the next three and half years from backlog

MPL(1) ECA Single PL GTO ES Galileo MEO ECA Single PL GTO ECA Double PL GTO ES Galileo MEO

2 4

ECA Double PL GTO

6

Flown Contracted 26

2014

ECA Double PL GTO

5

ECA Single PL GTO

1

ECA Double PL GTO ES Galileo MEO

Total backlog : 9 Launchers The signature of an additional

• rder of 10

launchers is expected beginning 2017 The signature of an additional

• rder of 18

launchers is expected beginning 2017

ECA Double PL GTO ECA Double PL GTO ECA Double PL GTO ECA Double PL GTO

Total backlog :15

…

DRAFT

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Vega E, to capture the full SSO market in single/double launch, with an increased versatility Vega C , with its multi-sats dispenser for small satellites, and increased performance to capture radar satellites market segment Ariane 6, in its two versions, to address all types of missions in MEO and GTO, also filling the gap left by Soyuz, with a competitive price

The product roadmap for the future

DRAFT

Growing and changing industry: Avio ideally positioned

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Sector prospects

Institutional demand expected to continue while commercial demand to grow exponentially

1



Positioning

From GEO to LEO, from large to small satellites (90% of satellites in 2024 will be small sats, pushing exploitation of LEO orbits)

2



Launch vehicles to adapt offering: multi-satellite dispensers and multi-orbit capable launch vehicles

3

Impeccable reliability increasingly requested by customers

4

Launch industry to face a bottleneck: satellites / launchers ratio to increase from 1.3x (2010 – 2015) to 2.4x (2016 – 2020)

5

  

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• 4. Technology & Operations

DRAFT

Avio has a leadership across three core technologies

Extensive know-how and proprietary technologies

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Solid propulsion System integration

Insulated motor case Launcher integration Proprietary solutions on filament winding and thermal protections

Liquid propulsion

Vulcain/Vinci LOx TP, LOx-LNG engine Application of additive layer manufacturing, breakthrough LOx-LNG engine design Fully independent in launcher integration including campaign

• Over the years Avio has constantly been at the edge of developing proprietary core technologies

for space launch systems

• Its core set of technologies enjoy patent protection and keep improving

DRAFT

Mastering the complexity of launching

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• System integration and avionic skills
• Multi-physics by a large simulation factory and strict compliance to test-as-you-fly doctrine

GNC algorithms and software Propulsion Flight mechanics Trajectories Dynamic, environment and loads Stage thermal control

DRAFT

Vega: a unique launch vehicle

Reliability, precision, versatility and ability to adapt are Vega's core features

Highest level of versatility in adapting to multiple payloads and exploiting engine technology to allow for multi-orbit dispatching One of 2 launch systems worldwide with proven in-orbit maneuvering capabilities 100% reliability; first launch system in history with such a track record after 7 launches

Propelled phase Coasting phase

Earth’s atmosphere

800km 200km 5min 1hr 2hrs Propulsion stages separations Fairing separation Upper stage maneuvers and satellite injection into orbit

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DRAFT

Recent case study: VV07

• 15th September 2016
• 7th consecutive successful launch
• Lift-off on-time by the millisecond,

mission lasted 1h 42m 59s

• 5 satellites dispatched on different
• rbits
• 4 for Terra Bella (Google)
• 1 for Peruvian space agency

CONIDA

• Dispatching well within distance

tolerance limits (180m versus 1km)

Source: Arianespace data

4 SkySat satellites for Google (Terrabella) PerùSAT-1 satellite for Peruvian space agency CONIDA

US and international commercial customers begin to enjoy sustained track record and unique performance

Orbited satellites

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DRAFT

Avio at the heart of the European space industry evolution

New products afforded by modular technology approach

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Vega C >2,400kg LEO Vega E

>3,000kg LEO + MPL extension

Vega 1,450kg LEO 2019 2024 Common Block P120C the brick and pillar for next gen ESA vehicles New upper stage: unprecedented versatility 2020 Ariane 6 Up to 11t GTO (A64) Zefiro 40 Consolidate and improve a winning concept Ariane 5 up to 10,5t GTO

LEO Reference: Polar Earth Orbit @ 700 km

DRAFT

Avio is part of the EU critical space infrastructures

Source: Company information

35

Turin

• LOx&LNG turbo-pump

design, manufacturing and assembly

Paris

• Management and design
• f SRM for development

and production programs

Kourou City

Kourou European Spaceport (CSG)

• Solid rocket motor casting (Regulus)

and integration (Europropulsion)

• Vega integration and launch
• perations (Mobile Gantry)

Airola

• Carbon Epoxy Prepreg

manufacturing and testing

Colleferro

• Solid rocket motor design,

production

• System activities, mission

design

• Flight Software Factory
• Liquid propulsion design,

production,

• Stage integration (Vega)
• Test center

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DRAFT

Main orbital spaceports worldwide

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Limited number of spaceports worldwide

Kourou Spaceport (Guiana)

Existing spaceport

4 1 4 4 2 1

Operating spaceports

Guaranteed access to EU spaceport

DRAFT

Unique access to the only European Spaceport

Spaceport (Kourou)

• Solid rocket motor casting and integration
• Vega integration and launch operations

Full control from production to launch

Equipment integration Segment assembling

Stage delivery Casting

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Launch Vehicle Integration Propellant Preparation

70% 30% 50% 50% 60% 40%

DRAFT

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• 5. Future Prospects

DRAFT

Strong additional growth potential

Advanced Vision Into Orbit

39

• Fresh capital from Space2 (approx. € 66m) will enable a further acceleration of Avio’s growth

potential New product development

• Further broadening of product and

technology portfolio

New markets

• Potential access to new markets

and new business segments

Consolidated existing market leadership

• Greenlight Vega to 3 launches

per year (ready four 4)

• Maintaining key presence in

Ariane, the world leading commercial launch system

Industrial supply chain consolidation

• Insourcing of critical industrial

supplies to consolidate margins and reduce dependency from external suppliers

Efficient operations on ground infrastructure

• Streamlining of ground

segment operations to improve productivity and flight readiness as well as launch cadence with Avio’s partners

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• 6. Financials

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47% 48% 4% Vega Ariane Tactical 2013A 2014A 2015A

Stable revenue generation

Stable revenue generation and increasing backlog over last years

Total net revenues and backlog (€m) 2015A net revenue breakdown by activity 2015A net revenue breakdown by business

336 679 905 232 224 257 Net revenues Backlog

6M2015A 6M2016A

649 119 835 119 41

24% 76% Research & Development Production

DRAFT

14.1 14.1 7.5 7.4 6M2015A 6M2016A

12%

37.9 39.4 35.5 24.7 26.3 22.2 2013A 2014A 2015A

Steady profitability

Steady profitability over last years both at EBITDA and Net Income level EBITDA and EBIT Adjusted (€m)(1) Net Income Adjusted (€m) (2)

Net income adj. Margin on net revenues (1) Main adjustments related to non recurring items and investors’ fees (2) In addition to EBITDA adjustments, main adjustments are related to interests on Shareholders loans and exceptional tax items

12% 12% 7% 5% 3% 16% 18% 14%

2014 higher margin attributable to cyclical factors mainly related to Vega development contracts

42

11% 12% 9% 6% 12% 6%

EBITDA Adj. EBIT Adj. Margin on net revenues

• FY15vsFY14 mainly driven by EBITDA and interests on bank financing
• HY16vsHY15 due to interests on bank financing (since May 2015)

27.6 26.4 17.5 2013A 2014A 2015A 6.4 3.7 6M2015A 6M2016A

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• Light asset base due to Goodwill resulting to past LBO transaction (c. 65% of Net Invested Capital) and exclusive free use

(comodato) of assets, not included in the Net Invested Capital, belonging to European Space Agency

Light asset base

High level of returns on capital employed

Net invested capital and ROCE Adjusted

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20% 22% 19% ROCE Adj. (%)(1)

(1) Calculated as EBIT Adjusted on relevant net invested capital, i.e. net invested capital excluding € 221m of goodwill related to space business

Currently includes €96m financing at c. 4% annual interest rate connected to past LBO capital structure

€m Sources Net debt

• c. € 40m

Equity

• c. € 305m

345

124

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Net working capital

• Structurally favourable net operating working capital position

Evolution of net operating working capital (€m)

Advances to suppliers Net Work In Progress Net Operating Working Capital Trade payables Inventories

In line with industry practices, customers’ advances very important in financing operating working capital

44

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Adjusted EBITDA

Operating cash flow generation

OCF € 24m Cash absorption OCF € 46m FY2014 Cash generation FY2015

36 10 (4) 29

Operating cash flow (€m)

Capex Δ Other Assets/Liab + Provisions Δ net op. working capital

45

Operating Cash Flow Adjustments to EBITDA

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46

• 7. Transaction overview

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Current shareholding structures

• Ordinary Shares: 400,000,000
• Cinven: global Private Equity fund
• Leonardo: industrial minority partner
• Viasimo: investment vehicle of previous managers
• Ordinary Shares: 30,000,000
• Special Shares: 800,000

− No entitlement to ordinary dividends, no voting rights − 4.5-to-1 conversion in ordinary shares at certain triggers

• Market Warrants: 15,000,000

− Strike price: € 9.5 − 1 warrant every 4 shares delivered to shareholders at IPO – Currently listed − 1 warrant every 4 shares to be assigned @ BC

• Sponsor Warrants: 1,600,000

− Strike price: € 13 – Cash exercise

47

81% 14% 5%

Cinven Leonardo Viasimo

97% 3%

Market investors Space Holding

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Implied metrics of the transaction

• Approach: Net Asset Value
• Approach: DCF and multiples
• Reference valuation date: 1st January 2016 (“Locked

Box mechanism”)

(1) Based on net debt as of 31-Dec-15 of € 34.0m, book value of financial receivables vs Termica Colleferro of € 6.4m, book value of minority interests

• f € 8.2m, book value of associates of € 5.2m, book value of provisions for risks and employee benefits € 38.3m, 50% of the book value of deferred tax

assets of € 28.4m, contractual leakages of € 7.3m

48

• Space2 NAV per share of € 10 per share at

Business Combination Valuation approach Valuation approach

• Purchase Price: € 159.7m
• Reference bridge to Enterprise Value(1):

€ 47.8m

• Implied Enterprise Value: € 207.5m
• Implied multiples on 2015 financials:
• 2015 adjusted EBITDA multiple: 5.8x
• 2015 adjusted EBIT multiple: 9.3x
• 2015 adjusted P/E multiple: 9.1x

Transaction data Transaction data

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Key transaction elements(1)

Total net cash contribution into Avio of c. € 66m

3 subsequent steps, all occurring by merger completion Demerger

A

Acquisition

B

Merger

C

• Partial demerger of

cash not utilized for the acquisition into Space3, net of cash utilized for withdrawals

• Space2, Leonardo and

Management acquire respectively a 53%, 27% and 6% interest in Avio from financial investors (Cinven and Viasimo)

• Merger by

incorporation of Avio into Space2

• Avio shareholders(2)

receive new Space2 shares in exchange for Avio shares

(1) Base Case (2) Excluding Space2 for its interest in Avio acquired under B

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6 Demerger(1)

A

• Space2 is equally split through a proportional demerger
• Ordinary shares, special shares and market warrants will be split proportionally(3)

50

DEMERGER

(1) Base Case (2) Not including IPO costs and expenses incurred in up to Business Combination (3) In case of withdrawal, ordinary shares and special shares will be split proportionally whereas market warrants will be split 1:1 (i.e. 50% / 50%)

Cash: € 308m(2) NAV: € 10 p.s. Cash: € 154m(2) NAV: € 10 p.s.

3

Cash: € 154m(2) NAV: € 10 p.s.

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6 Acquisition(1)

• Purchase Price for 85.68% stake of Avio equal to c. € 136.8m (100% Purchase Price to c. € 159.7m)
• Space2 acquires a 53% interest in Avio for a total acquisition cost of c. € 84.9m
• Leonardo acquires a 27% interest in Avio for a total acquisition cost of c. € 42.9m
• The Management acquires a 6% interest in Avio for a total acquisition cost of c. € 9.0m
• Transfer of shares completed simultaneously with the execution of the Deed of Merger

(1) Base Case

51

B

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6 Merger(1)

C

• Merger by incorporation of Avio into Space2
• The resulting company assumes the name of Avio
• Tender offer threshold set at 25%
• Avio price per share equal to € 0.3992, corresponding to a Purchase Price for 100% of € 159.7m
• Space2 price per share equal to € 10.0
• The exchange ratio of newly issued Space2 ordinary shares for Avio ordinary shares, is set as follows:
• € 0.3992 / € 10.0 equal to an exchange ratio of 0.0399x

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(1) Base Case

€ 66m(1) additional cash for BP growth acceleration 68% 4% 28%

Resulting shareholders at Business Combination

Free float

• Implied equity value

~ € 235m

• NAV ~ € 54m(2)

Alternative scenarios at business combination

• Implied equity value

~ € 233m(1)

• NAV ~ € 154m(2)

Scenario 1: No withdrawal Scenario 2: Maximum withdrawal

(1) Estimated multiplying € 10 p.s. to the number of outstanding shares at Business Combination (including conversion of the first tranche of special shares) (2) Not including IPO costs and expenses incurred in up to Business Combination

53

3 3

• Withdrawal price set equal to € 9.893 per share

Transaction timeline

54

1st December Within the first half of March

• Space2’s Shareholders Meeting to approve Avio as the target for the

Business Combination

• Fulfillment of all conditions precedent provided under SPA, including the

authorization of the French Government

• Upon listing of Space3 on the MIV, effectiveness of the Demerger
• After 5 days from the effective date of the Demerger: closing date and

execution of the deed of Merger

• Upon obtainment of Consob’s nulla-osta, listing of Avio’s shares on the

regulated market, possibly STAR segment

27th December – 10th January

• Period for the exercise of the Withdrawal right by Space2 shareholders
• Signing of the SPA and ancillary documents, calling of the general

meeting of Space2

19th October

October December March

2016 2017

January

23rd December

• Space2’s Shareholders Meeting to approve the Demerger and the Merger

DRAFT

Proposed new Board of Directors

• Shareholder

agreement between Space2 and Leonardo in place to define the first Board of Directors, in charge for 3 years:

• Giulio Ranzo confirmed as CEO
• Space Holding will name the Chairman
• Space2 will name 4 directors, of which 3

independent

• Leonardo will name 3 directors, of which 1

independent

• All decisions of the Board of Directors to be taken by a

simple majority quorum

• Lock-up obligations for key shareholders
• Space Holding: 12-month lock up
• Leonardo: 24-month lock up
• Avio Management: 24-month lock up

Board of Directors will consist of 9 members, of which 4 independent

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DRAFT Avio: your Space company in short

56

• Very attractive market developments
• Extremely solid competitive position
• A highly qualified and committed management team
• Strong and market-oriented ownership structure
• Substantial opportunity for growth and further value creation

A unique investment for our Space2 shareholders

57

Appendix

58

Income Statement 2013-2015, H1 2015-2016

Consolidated Income Statement (€'000) 2013 2014 2015 H1 2015 H1 2016 Revenues 232,070 224,460 279,227 118,562 127,892 Change in inventory (1,652) 1,464 764 3,559 2,599 Other operating revenues 6,180 9,072 9,119 2,280 2,867 Raw material costs (63,241) (64,680) (83,461) (36,198) (43,100) Service costs (99,472) (92,426) (123,140) (52,505) (53,015) Personnel costs (49,268) (51,600) (53,894) (26,480) (29,474) D&As (17,342) (17,157) (17,399) (8,628) (8,703) Other operating costs (14,008) (5,191) (9,160) (1,832) (1,806) Change in equity investments accounted with net equity method (operating) 2,311 1,970 1,893 781 1,270 Capitalised costs 5,506 9,907 6,558 3,576 4,154 EBIT 1,083 15,818 10,508 3,115 2,685 Financial income 1,809 2,453 2,272 1,607 298 Financial expenses (4,047) (12,446) (5,604) (2,151) (3,238) Net financial income / (expenses) (2,238) (9,993) (3,332) (544) (2,940) Change in equity investments accounted with net equity method (financial)

• (2,799)

(2,461)

• Other income / (expenses) relating to equity investments

979 48

• Net income / (expenses) relating to equity investments

979 48 (2,799) (2,461) Net income before taxes and discontinued operations (176) 5,873 4,378 110 (255) Taxes (12,224) 1,974 986 1,673 (1,192) Net income from continued operations (12,399) 7,847 5,364 1,784 (1,447) Net income from discontinued operations after tax 1,290,062 (1,349)

• Net income

1,277,663 6,498 5,364 1,784 (1,447)

• of which attributable to Group's shareholders

1,276,669 5,554 4,589 1,818 (1,560)

• of which attributable to minorities

994 944 775 (35) 112

59

EBIT and EBITDA adjustments

(1) Includes non-recurring provisions, due diligence costs and costs related to other extraordinary activities (2) Related to the Tax assessment on the registration tax (imposta di registro), mortgage tax (imposta ipotecaria) and cadastral tax (imposta catastale), in the context

• f the 2013 sale of the Aeroengine business to General Electric, for which there is a contractual indemnity to the benefit of Avio

(1) (2) (2) Adjustment to EBIT and EBITDA (€'000) 2013 2014 2015 H1 2015 H1 2016 A EBIT reported 1,083 15,818 10,508 3,115 2,686 B Total non recurring costs / (income) 14,017 4,751 6,464 1,727 2,134

• Personnel incentives and reorganization costs

1,426 490 2,703 361 111

• Non-recurring legal and fiscal advisory costs

7,211 1,735 2,154 900 1,596

• Expenses related to environmental intervents

3700 104

• Personnel costs related to cash-settled share-based payment plans and other personnel costs

658 730 1,015

• Accruals for tax risks

221 167 41 58,220

• Indemnity related to tax provisions

(58,220)

• Other non recurring costs / (income)

1,022 1,471 425 425 427 C Investor Fees 1,196 1,179 1,167 585 588 D Other non recurring expenses 4287 510

• E

Amortization of customer relationship assets 4,084 4,084 4,084 2,042 2,042 F Adjusted EBIT A+B+C+D+E 24,667 26,342 22,223 7,469 7,450 G D&As 13,258 13,073 13,315 6,586 6,661 Adjusted EBITDA F+G 37,925 39,415 35,538 14,054 14,111

60

Balance Sheet 31st December 2013 - 30th June 2016

Assets (€'000) 31/12/2013 31/12/2014 31/12/2015 30/06/2016 Non current assets Tangible assets 46,181 47,640 50,224 52,021 Real estate investments 2,486 2,589 2,693 2,700 Goodwill 221,000 221,000 221,000 221,000 Intangible assets 97,162 95,234 88,786 87,154 Investments 8,162 8,032 5,161 4,537 Financial assets 6,040 6,200 6,400 7,440 Tax deferred assets 42,580 54,490 56,793 56,413 Other non resurring assets 13,941 11,397 8,633 67,371 Total non recurring assets 437,553 446,583 439,691 498,636 Current assets Inventory 64,358 76,717 109,147 129,299 WIP 27,635 41,849 64,562 54,429 Trade receivables 10,793 6,927 8,344 5,072 Current financial assets 1,265,457 21,454 130 1 Cash and cash equivalents 57,383 165,232 70,378 72,717 Current tax assets 16,080 29,970 43,270 46,723 Other current assets 20,377 12,155 9,697 11,758 Total current assets 1,462,083 354,304 305,528 319,999 Total assets 1,899,636 800,886 745,219 818,635 Equity and liabilities (€'000) 31/12/2013 31/12/2014 31/12/2015 30/06/2016 Net equity Share capital 40,000 40,000 40,000 40,000 Share premium reserve 73,576 73,576 73,576 73,576 Other reserves (2,037) (2,526) (3,319) (3,732) Net income frow previous years 72,524 400,193 185,760 190,348 Net income of the year 1,276,669 5,554 4,589 (1,560) Total net equity of the Group 1,460,732 516,797 300,605 298,632 Minorities 8,687 8,526 8,223 6,733 Total net equity 1,469,419 525,323 308,828 305,365 Non current liabilities Financial loans 139,929

• 91,272

87,994 Provisions for employees 11,333 11,320 10,804 11,352 Provisions for risks 23,754 19,342 19,278 18,027 Deferred tax liabilities 302 252

• Other non recurring liabilities

56,795 55,210 55,908 118,053 Total non recurring liabilities 232,113 86,124 177,261 235,427 Current liabilities Current financial liabilities 27,690 7,919 8,767 18,079 Portion of non current fin. loans

• 4,439

6,375 Provisions for risks 16,488 19,958 8,170 6,859 Trade payables 48,623 51,641 46,872 82,899 Advances from customers for WIP 28,270 86,876 172,878 145,376 Current tax liabilities 46,831 6,620 2,050 962 Other current liabilities 30,202 16,426 15,954 17,293 Total current liabilities 198,105 189,439 259,130 277,843 Total liabilities 430,217 275,563 436,390 513,270 Total liabilities and net equity 1,899,636 800,886 745,219 818,635

61

Net debt 31st December 2013 - 30th June 2016

Net debt (€'000) 31/12/2013 31/12/2014 31/12/2015 30/06/2016 (A) Cash and cash equivalents 57,383 165,232 70,378 72,717 (B) Current financial assets 1,265,457 21,454 130 1 (C) Total current financial assets (A+B) 1,322,840 186,686 70,508 72,718 (D) Financial derivatives

• (368)

(429) (E) Current financial loan (27,690) (7,919) (8,399) (17,650) (F) Total financial liabilities (D+E) (27,690) (7,919) (8,767) (18,079) (G) Current portion of non current financial debt

• (4,439)

(6,375) (H) Current financial debt (F+G) (27,690) (7,919) (13,206) (24,454) (I) Net current debt (C+H) 1,295,150 178,767 57,302 48,264 (J) Non current financial loans (139,929)

• (91,272)

(87,994) (K) Net debt (I+J) 1,155,221 178,767 (33,970) (39,730) (L) Non current financial assets 6,040 6,200 6,400 7,440 (M) Net debt adjusted (K+L) 1,161,261 184,967 (27,570) (32,290)

62

Cash flow 2013-2015, H1 2015-2016

Cash flow statement (€'000) 2013 2014 2015 H1 2015 H1 2016 Operating activities Net income from continuing operations (13,649) 7,847 5,363 1,783 (1,447) + Taxes 13,353 (1,973) (986) (1,674) 1,192 + Costs / (income) related to change in equity investments (979) (608) 906 1,680 (1,270) + Financial costs / (income) 6,538 11,135 3,332 661 2,808 + D&As 17,616 17,157 17,399 8,627 8,702 + Costs / (income) related to disposal of tangible assets (7) (343)

• change in reserves due to echange rates (before tax)

1,565

• Δ provisions for risks

(43,701) (943) (5,067) (4,462) (2,561) + Dividends from controlled companies

• 949

1,980 1,894

• Δ provisions for employees

287 (687) (472) (83) 195

• Δ inventory

(629) (12,359) (32,430) (28,443) (20,152)

• Δ work in progress

(10,672) 44,391 63,289 15,217 (17,369)

• Δ trade receivables

(3,633) 3,866 (1,417) 2,490 3,272

• Δ trade payables

(4,257) 3,018 (4,769) 4,628 36,027

• Δ other current and non current assets

(8,078) (3,123) (8,078) (3,189) (64,298)

• Δ other current and non current liabilities

(20,900) (21,553) (4,346) (1,251) 62,369 Cash flow from operating activities (67,146) 46,774 34,704 (4,016) 9,362

• Taxes

(18,742) (43,801) (8,486) (4,243) (737)

• Financial expenses
• (3,057)

(661) (2,399) Net cash flow from operating activities (A) (85,888) 2,973 23,161 (8,920) 6,226 Investing activities Tangible asset and real estate investments (3,360) (7,018) (8,286) (1,271) (4,755) Intangible asset investments (6,367) (9,808) (5,367) (3,590) (4,119) Non cosolidated financial investments (102)

• Bond investments

(1,150,000)

• Disposal of tangible, intangible and financial assets

1,923,197 1,150,377

• Dividends from non consolidated investments

979

• Other cash items from investing activities

17,583 (1,393)

• Cash flow from investing activities (B)

781,930 1,132,158 (13,653) (4,861) (8,874) Financing activities Financial loan drawdown

• 100,000

100,000 (1,750) Financial expenses related to loan drawdown

• (4,875)

(4,875) Financial loan reimbursement (820) (151,064)

• (4,519)

9,251 Capital and share premium reserve increase

• 1,030
• Dividends distributed to Group's shareholders

(555,074) (949,000) (220,000) (176,516)

• Dividends distributed to minorities
• (1,080)

(1,080) (1,080) (1,602) Financial loans to related companies (2,000) (1,400) (200)

• (1,040)

Change in the escrow account related to the disposal of GE Avio S.r.l. (115,000) 93,695 21,313 21,313

• Change in net equity attributable to minorities

(896)

• Other changes of financial assets and liabilities

(9,281) (19,463) 480 92 129 Cash flow from financing activities (C) (683,071) (1,027,282) (104,362) (65,585) 4,988 Cash flow of the year (A+B+C) 12,971 107,849 (94,854) (79,366) 2,340 Cash and cash equivalent - Beginning of period 44,412 57,383 165,232 165,232 70,378 Cash and cash equivalent - End of period 57,383 165,232 70,378 85,866 72,717