11 Innovation Challenges in Finmeccanica’s Supply Chain Giovanni Bertolone Executive Vice President Operations Finmeccanica Montreal, December 6th 2011

22 Agenda  Finmeccanica Overview  Technology & Supply Chain Innovation  Finmeccanica presence in Canada  Conclusions and Way ahead

33 FINMECCANICA : SEVEN SECTORS, ONE GROUP HELICOPTERS AgustaWestland Alenia Aeronautica Alenia Aermacchi ATR DEFENCE SYSTEMS Oto Melara WASS MBDA TRASPORTATION AnsaldoBreda Ansaldo STS BredaMenarinibus DEFENCE AND SECURITY ELECTRONICS DRS Technologies SELEX Elsag SELEX Galileo SELEX Sistemi Integrati SPACE Telespazio Thales Alenia Space ENERGY Ansaldo Energia AERONAUTICS 100% Finmeccanica Companies JVs

44 19% 38% 15% 5% 6% 7% 10% 26% 30% 11% 8% 5% 6% 14% HELICOPTERS DEFENCE AND SECURITY ELECTRONICS AERONAUTICS SPACE DEFENCE SYSTEMS ENERGY TRASPORTATION REVENUES B€ +2.9% ORDERS B€ +6.4% In 2010, the three strategic pillars (Helicopters, Defence and Security Electronics and Aeronautics) generated around 70% of Revenues and Orders 2010 RESULTS REVENUES 2010 ORDERS 2010

B€ = 11% revenues B€ = 11% revenues 2010 More than people involved in R&D/Design & Development on Total FNM Resources more than More than people involved in R&D/Design & Development on Total FNM Resources more than INNOVATION AND R&D IN FINMECCANICA IN NUMBERS R&D expenditures Resources

66 Agenda  Finmeccanica Overview  Technology & Supply Chain Innovation  Finmeccanica presence in Canada  Conclusions and Way ahead

77 Strengthening Global Positioning Internazionalization Value Creation – Customer Satisfaction Competitiveness Profitability Investments Innovation Technologies Processes Integration/Synergies Extracting value from business Markets Products Acquisitions JV FINMECCANICA STRATEGIC FRAMEWORK

88  Aerospace and Defence industry is an increasingly complex network of relationships, due to the shift from vertical programs to highly distributed, multinational and multi-stage operations  A large number of players are involved in an integrated and worldwide value chain, ranking from commodities suppliers (“Transactional Suppliers”) to strategic suppliers (“Fully Integrated Strategic Partner”)  OEMs in this environment have to drive and manage all the complex links and risks, running along their supply chain GLOBAL SOURCING FOOTPRINT

99 Technologies & Processes Innovation What is Market asking for ?  Solutions to operational needs not only products  Greater flexibility to incorporate emerging technologies over the system’s life  Faster time to market  Risk resilience and cost-effective outcomes  Sustainability approach (development of “green” policies)  Full effective Life-Cycle Management Value Chain Global Integration THE DEMAND Supply Chain Optimization

10 Push each company in optimizing the use of resources Define IP strategy at Corporate level with implementati on across the OpCos Lead a coordinated approach to secure a successful participation to EU Research Programs Promote the creation of a strong industrial culture via the definition of a set of common tools and methodologies Establish the Technology Network of FNM in a collaborative model with all the FNM CTOs Phase 1:Knowledge Management Phase 2: Technology Governance Phase 3: Innovation Governance Phase 4: R&D&I Networking Governance from Knowledge Management to a “Strategic R&T Networking”. European projects Coordination IPR Competitiveness Plan Start of Technology Governance Innovation and R&D Strategy Plan 2011 CTO Board 2003 FINMECCANICA GROUP: MAIN PHASES OF INNOVATION

11 Clear Leader Strong Tenable Weak Favourable PacingBaseEmergingKey Core & Common Technology Platform Outsourcing opportunities Core distinctive OPCos Technologies Innovation Breakthrough by Internal development and External collaboration TECHNOLOGY DEVELOPMENT MAPPING

12  Cost reduction and risk sharing lead to a shift from simple outsourcing towards partnerships and collaborative models among the supply chain players (Prime, OEMs, Suppliers, Sub-Suppliers, Logistic Operators, Support and Services Providers, Customers) Technology Network New Business Models Key Performance Indicators Operational Optimization  Further KPI development for monitoring and to control suppliers’ performances, leading to enhance the responsiveness of each Supply Chain player.  Capability to optimize the inventory management minimizing relevant costs along the whole lifecycle  The need to implement new processes, methodologies and tools is due to the large number of relationships and the complexity of our products FOCUS ON INDUSTRIAL COMPETITIVENESS CHALLENGES AND NEEDS IN THE SUPPLY CHAIN DOMAIN

13 Manufacturing Delivery Support /Services Program Management Process Quality Industrial Competitiveness Engineering Customer Satisfaction  Extended Enterprise  Supplier Performance Management  Global Sourcing  Procurement efficiency  Make or Buy (outsourcing vs insourcing)  Information visibility / Communication Platform  Responsibility & Risk sharing SUPPLY CHAIN MANAGEMENT: LEVERAGE FOR COMPETITIVENESS Supply Chain

14 Supplier Management Improvement Initiatives in Supply Chain Improvement Initiatives in Supply Chain Global Sourcing Procurement efficiency Outsourcing & Processes improvement Outsourcing & Processes improvement Economic Impact BENEFITS ON GROSS MARGIN Total Projects Supply Chain Projects Savings from Supply Chain Projects represent more than 50% of total savings CLUSTER OF INITIATIVES SUPPLY CHAIN TARGETS ACHIEVEMENT

15 INTEGRATION Low High VOLUMES IN GLOBAL SOURICING HIgh Low 2008 OFF-SHORE SOURCING IN LCC 2009 OFF-SHORE ACTIVITIES REINFORCEMENT FNM EU/USA BEST PRACTICE INTEGRATION INDUSTRIAL COMPETITIVENESS TASK FORCE 2012 FOSTERING GLOBAL SOURCING FOCUS ON GEOGRAPHIC SCOPE WIDENING (USA AND CANADA) 2013 GROWTH OF VOLUMES ADDRESSED TO GLOBAL SOURCING OUTSOURCING PLANS IN LCC & BEST VALUE COUNTRIES 2007 LAUNCH OF GLOBAL SOURCING PROGRAM IN LOW COST COUNTRIES (LCC) Finmeccanica is committed to collaborate with supply sources worldwide, according to the Best Value principle FINMECCANICA GLOBAL SOURCING ROADMAP

16 “We promote cooperation and efficiency in the supply chain, ……. environmental sustainability and social responsibility become significant elements in negotiations with our suppliers” 31 December 2010 (Finmeccanica Sustainability Report 2010) (€ millions) GOODS AND SERVICES PURCHASED BY FNM GROUP IN 2010 IN 2010 PROCUREMENT COSTS ACCOUNTED FOR 65% OF TOTAL REVENUES

17 Agenda  Finmeccanica Overview  Technology & Supply Chain Innovation  Finmeccanica presence in Canada  Conclusions and Way ahead

18 Testo finto Army Navy Military Air Force LINAPS artillery pointing system Howitzers 105/14 76/62 SR naval guns class Tribal Fregates DRS Canada activities CSH program (Canadian Search & Rescue Helicopter): 15 AW101 SAR Cormorant Civil Commercial 53 AW139, 3 AW 119 Koala for Skyline Helicopters 3 AW119 for London Air service (Vancouver) FNM Acquired Contracts End User 392 people in Canada 3 DRS Technologies facilities  Carleton Place, Ontario – Circuit Card Assembly  Kanata, Ontario – Secure Voice System for tactical comms, the SIRIUS passive LR- IRST system, EW training systems, Simulators  Bedford, Nova Scotia – Power Conversion, Inverters, Converters Alenia Aermacchi Representative Office, Ottawa AgustaWestland Representative Office, Ottawa 392 people in Canada 3 DRS Technologies facilities  Carleton Place, Ontario – Circuit Card Assembly  Kanata, Ontario – Secure Voice System for tactical comms, the SIRIUS passive LR- IRST system, EW training systems, Simulators  Bedford, Nova Scotia – Power Conversion, Inverters, Converters Alenia Aermacchi Representative Office, Ottawa AgustaWestland Representative Office, Ottawa FINMECCANICA PRESENCE IN CANADA

19 Long and successful history of Economic and Industrial Cooperation in Canada, in different sectors: FINMECCANICA FOOTPRINT AND PERSPECTIVE IN CANADA AERONAUTICS  Pratt & Whitney Canada for ATR aircraft (3.5 B$ since 1982)  Bombardier on C-series commercial aircraft for tail plans  CAE for developing the simulator for the M346 Initial Training Capability HELICOPTERS  P&W for AgustaWestland helicopter engines. PW210 engine selected for the AW169.  AgustaWestland and CAE: ROTORSIM consortium for the development of flight simulation for helicopters training DEFENCE AND SECURITY ELECTRONICS  Acquisition of DRS Canada, as part of DRS C3 and Aviation Group (average revenues 80 M$/year)  CMC Electronics for the provisioning of avionics radios (SELEX Elsag) SPACE  Partnership with MDA (MacDonald Dettwiler & Associates) and the Canadian Space Agency for various programs (Earth Observation and Space exploration).  Partnership with NOVATEL and CMC Electronics on GALILEO. Cooperation with NAV Canada for the GNSS (Global Navigation Satellite System) program TRASPORTATION  Strategic Industrial Agreement between Bombardier and Ansaldo Breda for the supply of high- speed trains to the Italian railways and other export markets (excluding Canada)

20 (**): AW orders placed from 2005 up to date. Source: Finmeccanica Estimate FNM PROCUREMENT&OPPORTUNITIES FOR CANADIAN INDUSTRY (> 16 B$) (*): ATR orders placed from 1982 up to date. 3,5 B$ 0,5 B$ 6,5 B$ 2 B$ NEW REGIONAL TURBOPROP NEW AW169 DEVELOPMENT 2,8 B$ = Potential IRB benefit to Canada in case of FWSAR win = Forecasted orders = Placed orders > 12 B$ 0,15B$ 4,2 B$ ATR vs P&W (*) AW vs P&W (**) Others (DRS Canada, CAE, etc…) TODAY total FUTURE OPPORTUNITIES

21  Besides engines, most of procurements in the A&D sector concerns Electric & Electronic Components  More than 60 Canadian Vendors are actually included in FNM Suppliers Database  Pratt&Whitney Canada has been awarded “Finmeccanica Best Supplier 2010”.  The current vendor list can be further increased with a number of high technologies Canadian partners, supporting Finmeccanica in the major strategic opportunities in the Country:  Aeronautics (Fixed Wing Search & Rescue Program)  Helicopters (Canadian Search and Rescue Helicopter fleet upgrading)  Electronic Defence (Integrated Soldier Systems Program - ISSP)  Air Traffic Management (Air Surveillance Radar - ASR) CANADIAN SUPPLY CHAIN

22 Agenda  Finmeccanica Overview  Technology & Supply Chain Innovation  Finmeccanica presence in Canada  Conclusions and Way ahead

23  Canada represents one of the high value markets where Finmeccanica intends to promote a coordinated strategy among the Group Operating Companies and to sponsor partnership/collaboration with local industry, Universities and Research Centers  In the last decades, Finmeccanica has established a strong consolidated economic relationships with major Canadian industries.  In order to increase Finmeccanica presence and recognition in the Country, we will continue to explore the relationship with Canadian suppliers, becoming part of a Global Innovative Network.  High technology Districts, as Aéro Montréal, represent a fundamental support for Finmeccanica to enhance the Supply Chain policy in Canada References for contacts Finmeccanica Group Services Angelo Cecchini – Head of Sourcing CONCLUSIONS AND WAY AHEAD