2014 Financial Statements A Global Leader in Air Navigation Services

2014 Financial Statements

www.enav.it ENAV SpA ENAV Salaria, 716 Via Roma 00138 

2014 Financial Statements ENAV – 2014 Financial Statements 

Corporate and control bodies of the parent company

Board of Directors in office since 19 September 2014

Chairman Maria Teresa Di Matteo Directors Nicola Maione Alessandro Tonetti

Sole Director in office until 19 September 2014 Massimo Garbini

Board of Statutory Auditors

Chairman Paola Ferroni Standing auditors Vincenzo Donato Antonio Parente

Alternate auditors Daniela De Vincenzo Riccardo Monaco

Magistrate of Court of Accounts assigned to audit ENAV SpA Angelo Buscema

General Manager Massimo Bellizzi

Manager in charge of preparing the Company’s accounting documents Loredana Bottiglieri

Auditing Firm Reconta Ernst & Young SpA ENAV – 2014 Financial Statements 

Contents

Report on Operations 6 Corporate Governance 8 Reference scenario and results of operations 11 Charge policy 14 Market and air traffic trends 15 Safety and quality indicators 21 International activities 23 Commercial activities on domestic and foreign markets 25 Investment plan 25 Human resources 31 Environment 37 Other information 39 Economic performance and financial position of the ENAV Group 44 Risk factors 48 Economic performance, operating results, financial position and cash flows of enav 50 Information on enav Group companies 54 Significant events after year-end 56 Performance forecast 56 Proposal for allocation of net profit of enav SpA 59

Consolidated financial statements of enav Group at 31 December 2014 60

Financial statements of enav SpA at 31 December 2014 154 ENAV – 2014 Financial Statements

1 Report on Operations 8 ENAV – 2014 Financial Statements

Report 1 on Operations

Corporate Governance

ENAV, an unlisted joint stock company, is wholly owned by its sole shareholder, the Italian Ministry of Economy and Finance (MEF), which exercises its rights in agreement with the Ministry of Infrastructure and Transport (MIT). ENAV provides air traffic management and control services and other essential navigation services for the airspace and to the airports for which it has competence pursuant to article 691-bis of the Navigation Code.

ENAV and its main subsidiaries have a traditional corporate governance model. Its bylaws call for a Sole Director or a Board of Directors with a minimum of three to a maximum of five members, and a Board of Statutory Auditors with three members.

On 16 May 2013, the Extraordinary Shareholders’ Meeting modified the bylaws to conform them to the rules adopted under Italian Presidential Decree no. 251 of 30 November 2012 regarding gender balance in administrative and control bodies of government-controlled companies.

The Sole Director, appointed by the Shareholders’ Meeting of 22 November 2011, remained in office until the approval of the 2013 Financial Statements, as resolved by the Shareholders’ Meeting of 5 August 2014, and continued in office until appointment of the new Board of Directors, composed of three members, as resolved by the Shareholders’ Meeting of 19 September 2014.

When the new Board of Directors was appointed, the Shareholder stated that “The Ministry of Economy and Finance and the Ministry of Infrastructure and Transport intend today to approve a resolution that ensures restoration of full operations of the company by renewing its Board of Directors. To ensure more complete governance of the company, the Ministries – at a meeting to be held in the next few days with all shareholders, directors and auditors present – intend to expand the Board of Directors to its maximum number under the bylaws by appointing additional directors, among whom will be the new managing director of ENAV. While awaiting such additional resolution, the Board of Directors appointed today must ensure that all steps will be taken to guarantee complete and orderly operations, passing opportune resolutions, if necessary, to delegate specific management powers to the Company’s executives.” As of the date of this report, the Board of Directors has not yet been expanded as announced, nor has the new managing director been identified and, therefore, without prejudice to the powers of representation attributed to the Chairman by law and by the bylaws, and without prejudice to specific delegations of powers and signature attributed with special resolutions from time to time, powers are exercised collectively by the three members of the Board of Directors.

Under the bylaws, the Board of Directors may delegate part of its powers to a Managing Director and, subject to a resolution by the Shareholders’ Meeting, may delegate operating powers to the Chairman as permitted by law and specify their scope.

The bylaws require the Board of Directors to meet every month and whenever the Chairman deems appropriate or when requested by the Chief Executive Officer or by at least one third of its members or by the Board of Statutory Auditors.

In 2014, the Sole Director held four meetings with the Board of Statutory Auditors and the Magistrate of the Court of Accounts assigned to the Company to report on overall performance and to present a forecast, adopting relative decisions. The Board of Directors appointed by the Shareholders’ Meeting of 19 September 2014 met five times during the year.

The Company has a Chief Executive Officer whose term of office began on 1 December 2012.

The Board of Statutory Auditors of ENAV is composed of 3 standing members appointed by the Shareholders’ Meeting. For the purposes of article 2403 of the Italian civil code, the Board of Statutory Auditors supervises compliance with the law and the bylaws, compliance with principles of proper administration and, specifically, adequacy and operation of the organizational, administrative, and accounting structure adopted by the Company.

The Board of Statutory Auditors was appointed by the Shareholders’ Meeting of 11 June 2013 for the 3-year period 2013- 2015. In 2014, the Board of Statutory Auditors met 11 times. 10 ENAV – 2014 Financial Statements

The Company’s legal audit is performed by an auditing firm selected by means of public tender and appointed by the Shareholders’ Meeting of 16 May 2013 for the 3-year period 2013- 2015. The same auditing firm was assigned to audit the unbundling activities required by article 11-sexies, section 7-bis of Italian Law 248/2005 regarding analytic accounting (identification of revenues and costs relative to services provided by ENAV).

Pursuant to article 18-bis of the bylaws, the Board of Directors has appointed a manager to prepare the Company’s accounting documents.

The Supervisory Body, formed for purposes of Italian Legislative Decree 231/2001, is a mixed collective body composed of 3 members appointed on 20 December 2012 for the 3-year period 2013-2015. Two members, including its Chairman, are external and one is internal. In 2014, the Supervisory Body met 4 times.

ENAV is subject to financial and budgetary audits by the Court of Accounts, which reports annually to the Italian Parliament for the purposes of article 12 of Law no. 259 of 21 March 1958 regarding the legality and conformity of management and operation of internal controls. The report on the audit conducted on the financial management of ENAV SpA for financial year 2013 was isued in February 2015. The magistrate assigned to audit the Company participates in meetings of Company boards.

In 2014, the Italian government commenced a process to sell a portion not exceeding 49% of the share capital held in ENAV by the Ministry of Economy and Finance.

In October 2014, the Ministry of Economy and Finance expressed its intention, in the context of the process to privatize ENAV, to reduce the share capital, and requested the Board of Directors of the Company to conduct its own independent analyses and evaluations regarding the feasibility of such operation.

At the conclusion of the evaluations conducted by the Board of Directors and reported to the Shareholder, the Shareholders’ Meeting of 13 April 2015 resolved, in the extraordinary part, to voluntarily reduce (pursuant to Report on Operations 11

article 2445 of the Italian civil code) the Company’s share capital by ¤180 million and to modify article 5 of ENAV’sbylaws. The Meeting also resolved to commence the process for the issuance of a private placement bonded loan in an identical amount, by means of which the Company intends to pay the above-mentioned extraordinary dividend.

Subsequently, on 8 May 2015, the Board of Directors resolved to issue the private placement bonded loan for ¤180 million.

In addition to its separate financial statements, ENAV prepares Group Consolidated Financial Statements in accordance with IAS/IFRS, voluntarily adopting such standards as of the 2013 Financial Statements with First Time Adoption (FTA) at 1 January 2011. In 2014, the consolidated financial statements at 31 December 2011, 2012 and 2013, previously prepared on the basis of Italian accounting standards were restated in accordance with IAS/IFRS and were approved by the Board of Directors on 24 October 2014; therefore, the date as of which ENAV Group converted to IAS/IFRS is 1 January 2011. On the other hand, the separate financial statements of ENAV and of Techno Sky at 31 December 2014 were the first statements prepared in accordance with IAS/IFRS with First Time Adoption as of 1 January 2013. For purposes of consistency of values stated in the consolidated financial statements, defined with reference to the transition date of the ENAV Group, the amounts stated in the separate financial statements were determined in a manner consistent with those determined at the time of the transition of the ENAV Group.

In conformity to the requirements of article 2364 paragraph 2 of the Italian civil code and article 7 of the bylaws, the Company’s management has availed itself of the extended deadline of 180 days after the close of the financial year for the Shareholders’ Meeting to approve the financial statements for the year ended 31 December 2014.

The Shareholders’ Meeting will be called 180 days after the close of the financial year not only to allow preparation of the consolidated financial statements as expressly required by article 2364 paragraph 2 of the Italian civil code, but also due to transition to IAS/IFRS adopted for the first time for the preparation of ENAV’s separate financial statements for the year ended 31 December 2014.

Reference scenario and results of operations

The macroeconomic situation in recent years has been uncertain and problematic in the entire eurozone as well as in Italy. The negative trend in principal macroeconomic indicators continued in 2014, and in Italy the effects of the recession were felt in all industries and on the labor market. 12 ENAV – 2014 Financial Statements

The economic trend in Italy may be expressed in terms of GDP for 2014, which fell 0.4% compared to the previous year (IMF, January 2015).

Moreover, growth estimates for GDP for 2014 fell from +0.7/+0.6% in January to -0.5/-0.4% in December, while 2015 forecasts fell from +1.4/+1.2% in January to +0.5/+0.2% in December.

This scenario also affected the domestic air transport market, which had lower than expected growth in traffic volumes last year.

Other and equally as critical factors affecting the Italian air transport industry were the reorganization of Alitalia and the socio-political crisis in North Africa, which resulted in the closing of Libyan air space in the second half of 2014.

This event had a significant impact on overflight traffic, a component of en-route traffic that has always been highly profitable for the Company in terms of growth in service units. Due to this no-fly zone, a large portion of traffic flying on the Europe-Africa route had to change itinerary and consequently flew on routes outside Italian air space.

In fact, although overflight data was generally positive in the first half of the year, there was a sudden drop in terms of service units in the second half, attributable to the Libyan situation.

The situation at major Italian airports was just the opposite: in 2014 there were positive results in terms of traffic attributable mainly to substantial growth in volumes of low-cost traffic.

Thanks to growth in international traffic (+3.1% SU), the Company increased total volumes of en-route traffic (+2.4% SU), with positive effects on revenues.

Considering the restrictions imposed by the European regulatory package, and with the aim of giving continuity to the policies and management decisions adopted to date, ENAV achieved positive performance in 2014, in line with strategic objectives and with the targets set in the National Performance Plan, despite a complex scenario. Moreover, in 2014, thanks to excellent results in on-time flights (for the third consecutive year), the Company received the 8 million euro capacity bonus awarded under the Community performance scheme.

From a regulatory point of view, 2014 may be described as a watershed year: on the one hand, the first reference period (2012-2014), which introduced a new Community regulatory system and thus a new management logic for Community air service providers via application of a new mechanism for measuring performance and simultaneous cancellation of the system for full recovery of costs and traffic, has concluded; on the other, last year was the starting point for ENAV’s new operating and economic plan, which will be a fundamental part of the new Performance Plan for the period 2015-2019. In this regard, in June the Company prepared the Performance Plan for the second reference period and, after consultation with Italian authorities, ENAC sent the Plan to the European Commission. Following a series of comments from the Commission, the Company is revising its Plan and will present it to the Commission by the end of July 2015.

Last but not least, to prepare for privatization the Company made great efforts in its transition to IAS/IFRS and in related activities to adapt its accounting system and management control model to best practices.

With regard to performance, foreign events last year undoubtedly prejudiced the ENAV Group’s results. On the one hand, as mentioned above, the socio-political crisis in North Africa and the consequent closing of Libyan air space severely reduced billed traffic volumes compared to forecasts, and on the other there were effects deriving from the substantial difference between the programmed inflation used at the time of planning and real inflation recorded at year-end. It should be remembered that the methodology implicit in the Community’s economic performance scheme provides that any differences between programmed inflation and real inflation generate effects, whether positive or negative, on the Group’s economic results. Considering that such difference at year-end was negative by approximately 2%, the effect on last year’s income statement amounts to a loss of ¤7.9 million, compared to a positive ¤14.2 million reported in the 2013 financial statements.

Nevertheless, the negative effects of the above-described events were in large part mitigated by steps taken by Group companies to safeguard their economic-financial balance, including (with specific reference to ENAV) in relation to the provisions of the National Performance Plan and the Program Agreement.

For example, examination of the cost framework reveals that costs at the end of 2014 were approximately 2% lower than calculated in the Performance Plan. This result is highly significant in the calculation of performance if one considers that, following the elimination of cost recovery provided by the Community scheme, any differences between planned and final costs are no longer applied to the charge via the balance, but are charged to the service provider. In the case at hand, lower cost levels compared to those calculated in the Plan generated approximately ¤10 million in the 2014 year-end result.

In addition to the positive effects deriving from methodical application of the economic performance scheme in the year-end result, benefits were also generated by excellent management, which, for the third consecutive year, resulted in the awarding of a capacity bonus of ¤8 million. No less 14 ENAV – 2014 Financial Statements

important were the actions taken to support the Company’s financial strategy, which in 2014 reduced financial burdens related to bank debt by ¤1.8 million, and the opening of a line of credit by the European Investment Bank (EIB) at an extremely favorable rate for financing the parent company’s Investment Plan.

Therefore, based on the above-described factors regarding the trend for the year, the net result of ¤40 million for 2014 may be considered, along with the result for 2013, one of the best ever achieved by the ENAV Group.

In conclusion, the Group’s efforts in terms of strategic, economic, and operational planning, and the actions taken by management achieved a significant profit for the year, offsetting effects on the income statement linked to restrictions of the Community regulatory framework, as well as purely external effects linked to the negative economic situation and the crisis in north Africa.

Charge policy

ENAV’s 2014 charge policy took account of the changes made to European and Italian regulations related to the new Community performance scheme and to Italian Stability Law 183/2011, which essentially abrogated the state contribution system for national airports, as well as of the uncertain situation in the air transport industry, which has not yet allowed Italy to recover traffic volumes that decreased in previous years.

In this highly complex context, ENAV managed to set a charge level that guaranteed its economic-financial stability and that also took account of market demands, in a situation where, more than in the past, airline companies view the charge for air navigation services as a fundamental element to be considered when defining business strategies.

With regard to the en-route charge, in 2014 the Company guaranteed the same charge level applied in the previous two years (¤78.83 per service unit), in line with accounting standards and European regulations, as well as in conformity to the provisions of the National Performance Plan presented in June 2011.

With regard to the terminal charge, in line with Community regulations and choices made by Italy, three charge bands were identified for terminals based on movements at national airports. This differentiation, which ENAC communicated to the European Commission by letter dated 28 January 2014, defined as of 1 January 2014 the following bands, which remain subject to the cost recovery system for 2014.

l IT01, which includes Fiumicino Airport in Rome, with an average annual number of IFR movements exceeding 225 thousand in the last three years, to which a charge of ¤195.79 is applied; l IT02, which includes airports above 70 thousand IFR movements, Milan Malpensa, Milan Linate and Venice Tessera, with a charge of ¤214.15; Report on Operations 15

l IT03, which includes all 43 remaining airports, with a charge of ¤246.05.

Considering that a large part of the airports in the third band have low service unit volumes, and in order to limit the charge increase for such band, the Company took a number of steps in cooperation with reference institutions, such as use of the charge stabilization provision for over ¤24 million and postponement of under/over charge recoveries (balance) to subsequent years.

Market and air traffic trends

In 2014, the trend for air traffic control activities in Eurocontrol countries was marked by increased volumes compared to 2013. The positive result is attributable to renewed demand beginning in the second half of 2013. En-route service units (*) generated in 2014 recorded a 6.0% increase in traffic volumes compared to the previous year.

With regard to en-route service units of the largest European providers, results were positive for France (+3.3%), Great Britain (+2.3%), Germany (+2.5%), and Spain (+3.8%). Again this year, the best result among major European providers was achieved by Turkey (+20.4%). 16 ENAV – 2014 Financial Statements

Atyear end 2014, the demand for en-route traffic in Italy recorded a 2.4% increase in service units compared to the previous year.

Change Total en-route traffic 2014 2013 no. % service units (**) France 18,496,754 17,899,945 596,809 3.3% Germany 12,880,783 12,569,982 310,801 2.5% Britain 9,979,403 9,754,933 224,470 2.3% Spain 8,767,769 8,447,044 320,725 3.8% Italy (***) 8,313,546 8,117,393 196,153 2.4% EUROCONTROL 123,048,160 116,097,048 6,951,112 6.0%

(*) traffic flying over Italian air space, with or without stopover. (**) “service unit” is the unit of measurement used by Eurocontrol to calculate the value of the service provided, obtained by combining two elements: aircraft weight at takeoff and distance traveled. (***) excluding exempt traffic not reported to Eurocontrol.

En-route traffic

En-route traffic in Italy, reported by Eurocontrol, showed a 2.4% increase in the number of service units (lower than expected) compared to a 1.5% increase in the number of assisted flights. The latter figure, integrated with the flight category Exempt not reported to Eurocontrol, showed a 1.1% overall increase in assisted movements. Report on Operations 17

The better trend in total service units compared to the trend in assisted flights is due to the increased average distance flown per flight and to the increased average weight of aircraft used, variables that affect the calculation of service units produced.

Change En-route traffic 2014 2013 no. % (number of flights Domestic 337,020 336,720 300 0.1% International 1,348,678 1,321,457 27,221 2.1% Total paying 1,685,698 1,658,177 27,521 1.7% Military 40,196 41,559 (1,363) -3.3% Other exempt 28,399 28,061 338 1.2% Total exempt 68,595 69,620 (1,025) -1.5% Total reportedby 1,754,293 1,727,797 26,496 1.5% Eurocontrol Exempt not reported 88,235 94,507 (6,272) -6.6% to Eurocontrol Grand total 1,842,528 1,822,304 20,224 1.1%

Change En-route traffic 2014 2013 no. % (service units) Domestic 1,723,573 1,719,246 4,327 0.3% International 6,444,430 6,253,139 191,291 3.1% Total paying 8,168,003 7,972,385 195,618 2.45% Military 131,701 133,248 (1,547) -1.2% Other exempt 13,842 11,760 2,082 17.7% Total exempt 145,543 145,008 535 0.4% Total reportedby 8,313,546 8,117,393 196,153 2.4% Eurocontrol Exempt not reported 4,886 5,594 (708) -12.7% to Eurocontrol Grand total 8,318,432 8,122,987 195,445 2.4% 18 ENAV – 2014 Financial Statements

In detail, en-route traffic consists of the following components:

l international commercial traffic, which recorded a 3.1% net increase in service units (SU) compared to a 2.1%increase in the number of assisted flights. The highest service units were recorded on flights to other European countries, especially Great Britain, Belgium, Holland, Greece, Turkey, and Israel, due to the greater average distance traveled. On the other hand, movements between Italy and Asia grew in terms of SU, but only slightly in terms of assisted flights. Connections to Africa decreased in number of assisted flights (-3.0%) and in SU (-6.3%). This decrease was due to the shorter average distance traveled (-3.1%) as well as to the sharp drop in the number of flights to and from Egypt (-8.7%). This is not only the principal international route in terms of flights to Africa, but is also the sixth most important in terms of average kilometers flown in Italy. The airline companies that achieved the greatest increases in international flights were easyJet (+18.0% SU; +8.2% flights), British Airways (+13.0% SU; +1.5% flights), Vueling (+58.9% SU; +43.7% flights), Germanwings (+19.7% SU; +35.7% flights), Meridiana (+39.4% SU; +46.4% flights) and Air One (+87.0% SU; +43.6% flights) to the detriment of Lufthansa (-10.5% SU; -16.6% flights) and Air France (-15.2% SU; -22.6% flights). In the international commercial traffic category, the trend in overflight traffic increased in terms of SU (+1.3%) and in number of flights (+2.1%). Overflight was marked by an increase in connections among European countries (+8.3% SU) and by a decrease in connections between Europe and Africa (-10.7% SU) due to the Libyan crisis and to the closing of that country’s air space in late August 2014, causing a progressive decrease in overflight SU for ENAV. This decrease reached its greatest point in December, with a 9% drop in SU compared to December 2013. On the other hand, there were positive data for connections between Asia and Europe (+6.6% SU; +2.8% flights), which confirm the continuous growth in air traffic to the Middle East, especially to Dubai, Saudi Arabia and Qatar. It is no coincidence that the companies with the greatest increases in volumes of overflight traffic are Turkish Airlines (+22.5% SU), by far the carrier with the highest overflight numbers, Saudia (+28.9% SU), Thomsonfly (+9.8% SU), Qatar Airways (+31.7% SU) and the European carrier Vueling (+33.1% SU). Traffic to or from Italy grew more than the overflight component. In 2014, SU increased 4.8% compared to a more moderate growth in flights (2.1%). For this type of traffic as well, connections to other European countries recorded the greatest increase for the year (+6.0% SU); l domestic commercial traffic, which increased by 0.3% in terms of SU and 0.1% in number of assisted flights, confirming that air traffic on domestic routes has not yet recovered, especially if one considers that 2014 follows a two-year period (2012-2013) with a sharp drop in volumes. This result is attributable to the economic crisis in Europe, to problems experienced by Italy’s largest airline company, and to increased competition by high- speed trains. With regard to the largest companies operating on domestic routes, Ryanair showed strong growth (+24.4% SU and +26.8% flights), due among other things to increased connections with southern Italian airports such as Palermo, Catania and Lamezia. On the other hand, there was a decrease in domestic traffic by companies such as Alitalia-CAI (-2.7% SU, +4.1% flights), Meridiana (-20.1% SU; -19.1% flights), easyJet (-0.6% SU; -5.8% flights), and especially Air One (-34.6% SU; -47.4% flights) and Blue Panorama (-50.6% SU; -54.3% flights). In 2014, new Report on Operations 19

companies progressively strengthened their presence and bucked the trend in this traffic segment, recording larger volumes than in the previous year. These companies include Volotea (+8.9% SU; +18.3% flights), Neos (+51.% SU;+35.7% flights) and Vueling, which began its domestic air traffic operations in 2014. With regard to routes served, connections between Rome and Milan continued to decrease due to strong competition by high-speed trains (Rome Fiumicino-Milan Malpensa -19.8% SU; Rome Fiumicino-Milan Linate -22.2% SU). On the other hand, there was considerable growth in connections to Sicily: Rome Fiumicino-Catania (+16.3% SU), by now the most remunerative domestic route for ENAV, Rome Fiumicino-Palermo (+16.4% SU), Bologna-Palermo (+8.2% SU), Turin-Catania, (+9.0% SU), Bergamo-Catania (+56.1% SU); l exempt traffic, divided into: i) exempt traffic reported by Eurocontrol, which decreased by 2.4% in SU and by 1.5% in number of assisted flights, mainly due to a decrease in military activities; ii) exempt traffic not reported to Eurocontrol, with insignificant effect on revenues, which decreased by 12.7% in SU and by 6.6% in number of assisted flights.

Terminal traffic

At the end of 2014, terminal traffic reported by Eurocontrol increased by 1.9% in SU and by 0.4% in assisted flights compared to 2013. This result is due to a fall in the domestic commercial component, which decreased by 1.2% in SU and by 1.5% in assisted flights, and to a rise in the international component, which increased by 4.1% in SU and by 2.3% in assisted flights. 20 ENAV – 2014 Financial Statements

The positive result in terminal traffic was also due to activation of air traffic control services at Rome Ciampino and Verona Villafranca airports, which in late May 2014 were transferred from the Italian Air Force to ENAV.

Changes Terminal traffic (*) 2014 2013 no. % (number of flights) Domestic 296,436 300,938 (4,502) -1.5% International 408,561 399,499 9,062 2.3% International EU 321,471 312,597 8,874 2.8% International Non-EU 87,090 86,902 188 0.2% Total paying 704,997 700,437 4,560 0.7% Military 17,685 18,398 (713) -3.9% Other exempt 15,801 15,701 100 0.6% Total exempt 33,486 34,099 (613) -1.8% Total reported 738,483 734,536 3,947 0.5% by Eurocontrol Exempt not reported 63,173 64,323 (1,150) -1.8% to Eurocontrol Grand total 801,656 798,859 2,797 0.4%

Changes Terminal traffic (*) 2014 2013 no. % (service units) Domestic 332,008 336,011 (4,003) -1.2% International 527,440 506,886 20,554 4.1% International EU 371,150 356,825 14,325 4.0% International Non-EU 156,290 150,061 6,229 4.2% Total paying 859,448 842,897 16,551 1.96% Military 8,648 8,508 140 1.6% Other exempt 3,655 3,517 138 3.9% Total exempt 12,303 12,025 278 2.3% Total reported 871,751 854,922 16,829 2.0% by Eurocontrol Exempt not reported 4,400 4,579 (179) -3.9% to Eurocontrol Grand total 876,151 859,501 16,650 1.9%

(*) traffic involving takeoff and landing within 20km of the runway. Report on Operations 21

As described above for en-route traffic, Service Unit (SU) data presented better results than assisted flight data due to increased average weight of individual aircraft at takeoff (+1.3%). The companies that achieved the largest increases in terms of SU are not the traditional carriers that historically generate the largest volumes of terminal traffic and that had negative results in 2014 (Meridiana –13.1%; Lufthansa –11.7%; Air One –37.8%; Air France –14.8%; Blue Panorama –28.5%), but instead new operators that entered the Italian market in recent years, such as Ryanair (+10.7%), Vueling (+125.3%), KLM (+19.8% SU), Turkish Airlines (+10.8%), Volotea (+19.4%), Emirates (+9.7%) and Germanwings (+24.7%).

Analyzing 2014 terminal traffic for the largest Italian airports, Rome Fiumicino had an increase in SU (+4.0%) and in number of assisted flights (+3.2%); Milan Malpensa also had an increase in SU (+4.1%). On the other hand, Milan Linate had a decrease in SU (-2.3%) and in number of assisted flights (-0.3%). Terminal traffic increased at other large domestic airports such as Catania (+10.4% SU), Palermo (+3.3% SU), Naples (+6.7% SU) and Lamezia (+12.2% SU), driven mainly (with the exception of Naples) by strong growth in the domestic traffic component. Bergamo airport had a negative result (-5.4% SU) due to closing for resurfacing of the runway and to Ryanair’s cancellation of its connection from Rome Ciampino.

Safety and quality indicators

Safety

The 2015-2017 Action Plan was approved in 2014. The Plan contains five Macro-Objectives that will later be defined as objectives and actions whose traceability will be used by the European Commission to assess and report on company performance based on the Performance Scheme.

In this context, the Company’s main efforts have focused on: consolidation of Preventive Safety; the development and initial implementation of Safety indicators; the improvement, cyclicity and traceability of Safety Culture via surveys; the development of formal monitoring of the Efficiency of the Safety Management System (EoSM); the conformity to requirements and limits defined in Community Regulation no. 376/2014 for responsibility regarding Safety; and strengthening of the investigative process.

With regard to efficiency of the Safety Management System (EoSM), monitored on the basis of the Standard of Excellence measurement (SoE) and for which, in the second reference period of the 2015-2019 National Performance Plan a specific target is set, classification “C” was achieved in 2014 for each of the five objectives involved, referring to: policy management and safety objectives, risk management, safety assurance, safety promotion, and safety culture. 22 ENAV – 2014 Financial Statements

In 2014, the investigative process was strengthened by adopting automated reporting tools. Created in conformity to the provisions of Regulation no. 376/2014, these tools are a guarantee for data protection and, beginning from their architecture, form systems that are no longer merely declarations of principle, but are protected by prohibitions and obligations expressly defined to safeguard the individuals and organizations involved.

With regard to the classification of significant safety events in 2014, the Risk Assessment Tool was applied:

l in 80% of investigations regarding Minimum Separation Infringement (MSI); l in 88% of investigations regarding Runway Incursion (RIN).

In detail: i) in En-route environment (air space controlled by the four ACCs of Rome, Milan, Padua and Brindisi), 0.008% of assisted IFR flights were involved in an MSI and 0.006% in an MSI with ATM responsibility; ii) in Airport environment (air space controlled by ENAV airport structures), 0.006% of assisted movements were involved in an RIN and 0.0009% in an RIN with ATM responsibility.

Quality and Punctuality

In 2014, ENAV continued to provide a high level of punctuality to its customers who, in the capacity area, and especially in the en-route area, experienced only a minimal delay attributable to the provision of air navigation services. With regard to the most important and binding performance indicator applied in the 2012-2014 reference period as a parameter to measure the quality of the air traffic and management service, i.e., Minutes of en-route ATFM (Air Traffic Flow Management) delay for flights, ENAV’s performance was 0.02 minutes/flight. In 2014, only 29,659 minutes of ATFCM delay were attributed in over 1.5 million IFR/GAT flights assisted during the en-route flight phase.

The average en-route delay per flight in 2014 was approximately 17% of the delay that the European Commission deemed adequate and justifiable for each assisted flight for the en-route domain in the entire year: a clear indication of ENAV’s ability to manage air traffic safely and efficiently, and with full availability and continuity in the use of air space.

This level of quality implies a significant value for ENAV’s customers in strictly economic terms. For an airline, every minute of ATFCM delay is a cost, which studies used by the European Commission estimate at ¤87.00/minute Gate to Gate. With respect to this parameter, the economic countervalue of ENAV’s performance is therefore obvious and significant.

Despite the increase in domestic air traffic in 2014, ENAV efficiently managed en-route traffic, guaranteeing maximum operating safety and simultaneously minimizing the cost of ATFCM delay. Report on Operations 23

Capacity En-route - targets vs Actual Performance 2014

En-route ATFCM IFR/GAT Flights En-route Service Unit Delay Cost/Min

1,556,193 8,313,546 87.00

Performance Plan Target Target reached

En-route ATFCM 0.12 0.02 Delay per Flight En-route ATFCM 186,743 31,124 Minutes of Delay (Min) En-route ATFCM 16,246,641 2,707,788 Delay Cost (Euro)

It is important to emphasize that ENAV’s performance is very positive precisely because it is related to increased air traffic volumes assisted in the summer, in that ATFCM delays are normally generated at times of high demand. Keeping in mind that air traffic also increased at daily peaks compared to 2013, it is clear that this excellent performance depends on the organizational capacity that the Company has successfully maintained over time.

In short, with reference to the data shared with the Performance Review Body and with the Network Manager, bodies appointed by the European Commission, the comparison of performance indicators of major European ANSP confirms the value of operational performance, KPI En-route ATFCM Delay per En-route Flights as well as the related economic countervalue generated by ENAV for Airspace Users, Additional ATFCM Delay Cost.

International activities

In Europe, ENAV is committed at all levels and in numerous institutional and industrial contexts to ensure consistent and effective development of the ATM sector in order to achieve Single European Sky objectives. Single European Sky (SES) rules were modified in 2014 by means of the so- called SES+2 legislative package discussed and approved by the European Parliament. Italy, which held the presidency of the Council of the European Union in the second half of the year, played a key role in this process, to which ENAV provided constant support for all activities conducted in the period. The text of the general approach for the legislative package was approved by the meeting of Transport Ministers on 3 December 2014 and was a clear success for Italy, recognized by the European States and institutions for its merit and method, as it resolved the principal critical points included in the European Commission’s initial text and also obtained the support of countries that had initially been most critical of the Commission’s initiative. European funds were obtained from the financing program for the Trans- European Transport Network (TEN-T) with the proposal developed by ENAV in cooperation with the A6 Group, New European Common Service Provision for PENS and DLS (Data Link Services). The proposal was accepted last July and obtained a co-financing of about ¤1.2 million.

ENAV also took part in the tender for Establishment of the SESAR Deployment Framework Partnership, for a total financing of about ¤5.5 million. The proposal presented by the SESAR Deployment Alliance (SDA) Consortium, of which ENAV is a member, was accepted by the European Commission in November 2014. The Consortium was appointed as Deployment Manager, which will allow ENAV to play a key role in coordinating the implementation of solutions developed by SESAR. From an economic viewpoint, the co-financings allocated by the European Commission will facilitate the fulfillment of investment plans that had already been funded by ENAV, ensuring both their achievement and the Company’s ability to invest in additional international programs and projects in order to maintain its internationally acknowledged excellence in air traffic control services.

With regard to international cooperation, ENAV had important roles of responsibility in 2014, including the role of Full Member on the Executive Committee of CANSO Global. In 2014, the A6 Group strengthened its alliance to ensure coordination of its strategies in the SESAR Joint Undertaking and the new governance structure for implementation of the SESAR Deployment Manager, as well as to promote even greater harmonization in planning to implement future ATM systems. This initiative led to a significant expansion of areas of common interest and to the adoption of a governance framework to give the Group a solid and stable structure. Report on Operations 25

Commercial activities on domestic and foreign markets

In 2014, ENAV Group had revenues from the sale of services to third party customers of approximately ¤9.5 million, of which about ¤6.5 million earned by ENAV, ¤2.5 million by TechnoSky, and ¤0.5 million by ENAV Asia Pacific. 2014 revenues from third party customers increased by about 21% compared to the previous year.

ENAV conducted numerous commercial activities, including: l proposalsto foreign organization of aviation consulting projects; l participation in international tenders; l stipulation of domestic aviation consulting and technical assistance contracts and of training and technical service contracts with international customers; l promotion and commercial advertising targeted to international customers by attending fairs and industry events; l stipulation of commercial cooperation agreements with industrial partners and of technical cooperation agreements with potential customers.

ENAV provides its services in over 20 countries. Its main markets are Malaysia, the United Arab Emirates, and Libya. The breakdown of revenues shows that the services most in demand are aviation consulting and radio- electric measurement. Despite a few problems encountered in acquisitions, 2014 ended in line with the targets set for the entire Group.

Investment plan

The Investment Plan, updated annually by means of a reformulation that takes account of operating needs emerging during the year and of the Company’s financial situation, foresees a total commitment of ¤342 million for the 2014-2016 period.

The Investment Plan ensures that assets supporting domestic air traffic control services: i) are in line with required technical and economic performance targets; ii) conform to the domestic and international quality and performance standards established by regulatory authorities; iii) are in line with development of the technology platform and with new operative concepts defined and developed in Europe for the ATM network. The largest investments in the plan are allocated to the group of initiatives concerning operative technology infrastructures, in that these directly influence the Company’s core businesses in terms of efficiency, cost-effectiveness, and safety of air traffic control services.

By means of the initiatives planned in the 3-year period, ENAV will maintain its leadership position earned in European air transport thanks to its previous investment policies which, in addition to developing and innovating technology systems to support its flight assistance service, 26 ENAV – 2014 Financial Statements

have to a large extent anticipated the vision of the new Air Traffic Management (ATM) network, which is rapidly becoming the preferred network worldwide.

The 2014-2016 plan calls for cost containment with priority given to essential projects of the Air Navigation Services Department related to compliance with new regulations, completion of technology innovation programs in agreement with European roadmaps, development of the domestic ATM system (currently operative) toward the new single European platform in line with SESAR objectives by means of gradual and harmonized growth, continuity in the supply of services, and strengthening of systems to define flight procedures and air spaces by means of new technological solutions, all of the above with the aim of increasing capacity and safeguarding the environment.

Programs for about ¤126 million were begun in the period 1 January - 31 December 2014, the most important of which were:

l restructuring of the Rome Fiumicino control tower; l upgrading of radio centers to the new 8.33 KHz spacing frequency; l development of a new Operative Automation platform for 6 control towers; l restructuring and equipping of the Rome Ciampino and Verona Villafranca towers, transferred to ENAV in 2014; l modernization and implementation of radio assistance systems; l upgrading of LANs for the ACCs of Milan, Padua and Brindisi; l creation of a test system for the ENET network; l supply of new safety modules for the ENET network; l supply of new Voice Switching Systems for the ACCs of Milan and Padua; l implementation of Aeronautical Data Quality for processing of aeronautical data; l work to complete the Piastra and Stecca buildings at the ACC of Rome Ciampino, which allowed transfer of personnel from various offices in August 2014 and equipping of technical rooms.

The SESAR program’s new objectives to resolve the current fragmentation of air traffic control services require the implementation of complex international programs as well as the planning of large investments. Several projects have been initiated for such purpose, the most important of which are described below. Report on Operations 27

Sesar

The SESAR program, which aims to provide the European Union with an efficient air traffic control infrastructure to ensure the safe and environmentally friendly growth of air transport, with interoperability among all European air transport systems, is now under way with 310 projects in the performance stage.

ENAV is involved in 85 of these projects and leads 15 of them. Also participating in the program are the subsidiaries Techno Sky and the SICTA Consortium, and since 2011 the LVNL Consortium, consisting of Dutch Service Provider LVNL and the NRL Research Center as Associated Partner. From an economic point of view, the ENAV team’s contribution, consisting of human, technological, and infrastructural resources, amounts to approximately ¤71 million, 50% of which is co-financed by the SESAR Joint Undertaking.

After reaching the maximum of its activity, the SESAR program is now entering its final phase. In the next two years it will conclude the various projects under way and begin the new activities budgeted in the SESAR 2020 Program, the natural extension of the SESAR Program, with a time horizon of 2016-2024.

In May 2013, for purposes of relaunching the SESAR program, increasing its efficiency by reorganizing the program in Operational Focus Areas and simultaneously maximizing the use of available Community funds, the SESAR Joint Undertaking issued a call for tenders aimed at making better use of the resources used by members, as well as assigning a number of new activities. After the approval of the reallocation proposal and the assignment of new activities, the value of ENAV’s commitment remained essentially unchanged. In 2014, ENAV successfully completed the first two SESAR demonstration projects, called ATC FULL DATALINK and WE-FREE, conducted simulations of the demonstration project on MeDALE remotely piloted aircraft, and launched two new demonstration projects called RACOON and FREE Solutions, both assigned to ENAV with the tender for the demonstration projects launched by SESAR Joint Undertaking in May 2014.

Report on Operations 29

Demonstration activities and other calls of the SESAR Joint Undertaking

In the context of SESAR demonstration projects, ATC Full Datalink (AFD) proposed the creation of an operative scenario for conducting a certain number of commercial flights in European air space without voice radio communication between controllers and pilots for all flight phases between takeoff and landing. In short, all contacts for data exchange and instructions for conducting the flight in the controlled air space take place via the datalink (CPDLC/Controller Pilot Data Link Communication). Its purpose was to demonstrate the ATM system’s technical capacity to evolve toward the future SESAR operative concept, in which ground and on-board systems exchange data without the controllers and flight crew necessarily making contact via radio.

In this project, valued at approximately ¤3 million and 50% co-financed by SESAR Joint Undertaking, ENAV coordinated a group of companies that included NATS, Airbus, Boeing, easyJet, Air France, SAS, SITA, and Selex- ES.

At the end of the test phase in the first 4 months of 2014, ENAV controllers used the new system, installed in the Test and Training Room of the ACC of Rome, to exchange flight instructions with pilots aboard a few actual commercial flights. Specifically, ENAV conducted about fifty trial flights operated by easyJet between Rome Fiumicino and Palermo, by Air France for flights between Rome Fiumicino and Paris, and SAS flights between Stockholm and Rome Fiumicino.

Also concluded in Fall 2014 was the WE-FREE demonstration project, launched in 2012 with trials on connections with direct routes between Italian and French cities on weekends.

Airlines were very interested in the results. In all, 125 target flights were conducted on two weekends. The potential saving from the possibility of using direct routes on weekends was calculated at 600 tonnes of fuel and

2000 tonnes of CO2 per year.

In response to the SESAR Joint Undertaking call aimed at demonstrating integration of remotely piloted aircraft in non-segregated air spaces entered by civil traffic and with pilots on board, ENAV participated in the MeDALE (Mediterranean Detect & Avoid Live Exercise) project, begun officially in September 2013. The simulation aimed to demonstrate the possibility for remotely piloted aircraft to interact with normal air traffic, thereby occupying non-segregated air space. Numerous industry experts were greatly interested in the simulation.

The RACOON project, coordinated by ENAV for 2014-2016, aims to demonstrate the benefits of remotely providing assistance services to airport traffic. The project intends to demonstrate, in real operating conditions, that combining the two concepts of Remote Tower and Approach Procedure to vertical guidance can generate significant performance benefits, maintaining the ATC service at a high level and 30 ENAV – 2014 Financial Statements

with sustainable costs. This project is 50% financed by the SESAR Joint Undertaking for a total value of about ¤6.5 million.

ENAV also coordinates the FREE Solutions demonstration project (2014- 2016), which will conduct a series of tests in cross-FAB environment aimed at demonstrating the feasibility and applicability of more efficient solutions in the use of the European air space involved.

Coflight

Coflight, in line with SESAR, is the latest-generation flight data processing (FDP) system created by a collaboration among ENAV, DSNA, and Skyguide. The European ATC community considers it the first concrete step toward a Single European Sky and SESAR has identified it as one of the fundamental building blocks for the creation of the 2014 baseline due to the benefits it provides. In 2014, version V2 of Coflight was installed in the new Rome Ciampino structure, where it was commissioned as part of the SESAR exercises. Versions V2R1 and V3 will be completed in the near future for integration with 4-Flight.

Based on EUROCONTROL eFDP specifications, Coflight is a real step forward at both the operative and technological levels. It provides highly advanced functions such as 4D trajectory prediction (calculated by considering aircraft weight at takeoff, airline company routes, and the pilot’s intentions), a new interoperability mechanism based on Flight Object exchange with other ATSU (Air Traffic Service Units), and integration with datalink services.

Its open and modular architecture, based on standardized middleware, guarantees long-term product scalability and the ability to innovate by adding new services, with the aim of providing air space users the best performance and supporting future operating concepts defined by SESAR.

4-Flight

Based on the excellent results obtained with Coflight, ENAV and DSNA have expanded their cooperation by launching a long-term program called 4-Flight, whose aim is to jointly develop a new ATM technology platform based on SESAR operating concepts. They will share know-how and the investment required, and adopt Coflight as a basic component. This cooperation is based on a feasibility study, including a business plan and a cost-benefit analysis, which clearly demonstrated a significant reduction in the overall cost of the French-Italian investment and a positive impact on network users. After the 2013 European tender for a framework agreement to implement 4-Flight was awarded, the first application letter for the design of the system was issued in 2014. Program for integrating erato (En-Route Air Traffic Organizer) in satcas.

ERATO, developed by DSNA in France, is an instrument that helps the controller manage air traffic by identifying potential conflicts and pointing out elements to evaluate in order to eliminate them. ERATO is a group of cooperative instruments that helps the controller, who nevertheless always remains in charge of managing potential conflicts and makes decisions in a safer and more efficient way. Of course, appropriate work methods and a functional HMI must be associated with the new software.

In late 2012, after taking part in the tests run at the ACC of Brest, France in 2010 and 2011, ENAV launched a program to integrate ERATO in the Italian system (SATCSA). An initial integration was conducted at the Brindisi ACC in 2013 for the purposes of adding ERATO services to the Italian legacy system in order to increase the safety and performance levels of air traffic control operations of domestic ACCs for en-route segments. Based on the positive results of these tests, the concession stage for deployment of ERATO was begun in 2014 (scheduled to be completed in 2015).

Human Resources

At 31 December 2014, the ENAV Group had 4,186 employees, 12 fewer than in 2013. The Group provides flight assistance and system maintenance services throughout Italy and has offices in Malaysia for the development of commercial activities. In 2014, the Group’s personnel costs amounted to ¤466.2 million, a 1.4% increase compared to the previous year. 32 ENAV – 2014 Financial Statements

Industrial relations

An extremely important event for the ENAV Group’s Industrial Relations was the signing of a collective labor agreement on 27 May 2014, after working through a progressive and often chaotic regime of regulations, memorandums, labor union agreements, and corporate agreements.

ASSOCONTROL, representing affiliated companies ENAV, Techno Sky and SICTA, and the labor unions FILT-CGIL, FIT-CISL, UILT and UGL-T, signed the specific part of the National Collective Labor Agreement for the Air Transport Industry for direct and related ATM Services. The Agreement is especially significant because it was the first to be signed anywhere in the industry, thereby starting an ambitious project to involve all players in a commitment to adopt a single collective agreement for the entire domestic air transport industry (with about 55 thousand employees), while still considering the respective and independent rules that characterize their various activities.

The agreement is an essential step toward a National Collective Labor Agreement for the entire air transport industry, and confirms the efficacy of the new industrial relations model adopted by social partners, labor unions, and employer associations (Assaereo, Assocontrol, Assareoporti, Assohandling, Assocatering and FAIRO), which, together with the institutional authorities that govern the industry, have offered their support to define conditions for serious and methodical negotiations that can provide the necessary balance to the sector and guarantee protection and expansion of employment in the domestic air transport industry.

Air transport negotiations, begun at the Ministry of Infrastructure and Transport in 2011, led to the signing of a protocol for stipulation of an agreement for the domestic air transport industry. The protocol signed by the government, employer associations and the most representative labor Report on Operations 33

unions was an important step in an attempt to restore the industry’s natural role as driver of economic and social growth. The first concrete result of this new philosophy of dialog among the most sensitive social partners was the signing of the general part of the national collective agreement for the air transport industry, with which, for the first time in Italy, the parties agreed to create a shared framework of rules and safeguards aimed at protecting the entire domestic air transport chain, with the mutual conviction that the interdependence of its sectors is an essential and defining characteristic.

The agreement on the specific part of ATM Services marked the conclusion of the process for defining all of the direct and indirect activities involved in flight assistance, with the participation of the companies affiliated with ASSOCONTROL, whose respective business areas were appropriately allocated in their respective sections.

The organization into three specific sections – strategic systems, low-traffic systems, and related services – is a completely new structural aspect of the specific partof ATM Services, within which, without prejudice to the rules of the employment relationship, traditional subjects of labor union discussions regarding classification of personnel, distribution of working hours, and salary are covered in complete detail.

The section devoted to low-traffic systems is especially important. Derived from the National Plan for Airports, it is the contractual means for implementing ENAV’s plan for rationalization of low-traffic airports, based on logics of profitability and self-payment. Equally important and innovative is the section dedicated to the business area, of critical support to ENAV’s core business, which manages all systems involved in the design, development, operation, and maintenance of technology infrastructures and platforms used for ATM services, which are supplied by ENAV Group companies.

In particular, the agreement’s new low-traffic airport structure generates a dual benefit by reducing terminal charges and creating new jobs at lower cost. For these systems, the agreement will reduce overall operating costs by about 40%, which will be used for a structural containment of terminal charges to the advantage of airline companies without having to resort to the use of charge stabilization provisions, as occurred in the last two years. At the same time, the new structure will offer new job prospects for newly- hired personnel and professional growth for current employees at these systems, who will be requalified by training courses for strategic systems that demand higher qualifications and offer better salaries.

This approach will safeguard employment along ENAV Group’s entire perimeter and prevent the marginalization of less productive operations.

Regardless of any different dates of signing by the parties, the national collective labor agreement for the air transport industry will have a three- year term starting on 1 January 2014 and expiring on 31 December 2016, superimposed on the effective dates of the ENAV agreement (2012-2014) and the Techno Sky and SICTA agreements (both effective 2013-2015). 34 ENAV – 2014 Financial Statements

Personnel management and development policies

The preparation of processes and tools for recognizing individual contributions to the achievement of strategic targets continued throughout 2014. Specifically: i) for executives, the target assignment process was concentrated, in line with previous years, on the most important projects in the Industrial Plan. In addition, consistent with the provisions of the new Labor Agreement for Executives, the process was completed by the 28 February 2014 deadline and differentiations were introduced on the variable incentive according to the complexity of assigned targets; ii) for managers, the definition of targets was developed with top-down logic starting from targets assigned to Department Heads. Economic targets were also introduced, in line with those assigned to Department Heads, for progressive reduction of vacation days remaining from previous years; iii) for non-management personnel, the evaluation of individual performance, previously performed by Department Heads, was delegated to Department Managers, who therefore assume a more important role in defining merit-based actions and in developing their staff. Nevertheless, to ensure homogeneous and consistent evaluation, there will be subsequent checking and evaluation by Department Heads.

In 2014, in line with the principles of efficiency of the Performance Plan and considering the evolving regulatory context, organizational activities mainly regarded operating lines. Specifically:

l the reclassification and consequent review of airport structures based on managed traffic volumes (type A, B, C, D, E, F airports) and simultaneous renaming of the Operations Area as the Air Navigation Services Department; l the institution of the new Ciampino Airport, classified type D, after ENAV’s acquisition of the services previously provided by the Air Force; l the reorganization of the Meteorology Department to improve supervision of planning, monitoring, and management of weather services; l the reorganization of the Logistics and Support Services Department to improve supervision of logistical and support processes for Company facilities; l the reorganization, for purposes of increased efficiency, of the Legal Affairs Department, which was renamed Legal and Corporate Affairs Department, and which took over the responsibilities of the now- eliminated Corporate Affairs Department; l the elimination of the Public Finance Department, whose activities were assigned to the new Public Finance Management office, now a section of the Planning and Control Department. Report on Operations 35

Training

Academy provided 127,368 hours of training in 2014, divided into 63,780 hours of ab-initio training, 9,300 hours of advanced training, 27,620 hours of continuous training, 16,828 hours of training for foreign customers, 8,374 hours of language training, and 1,484 hour of additional training conducted on the Flight Simulator and via e-learning.

In addition to continuation of the ADI-TWR RAD Ab-initio course, which also included the TM1 specialization, professional training offered new Instructor courses, two ACS/RAD conversion courses, two new specialization courses for Skill Examiner and Assessor, three new Supervisor training courses, and a new FIS operator and TM1 technician course.

In addition, there were training projects for 12 colleagues from various systems, dedicated to traffic management at the former Military Airports of Rome Ciampino and Verona Villafranca, which since May have been controlled by ENAV. These activities consolidated a methodology and work model to handle delicate transitional phases and guarantee the high safety levels ensured by the ENAV standard.

With regard to foreign customers, special attention was given early in the year to a training course for Malaysian controllers, aimed at developing the skills needed to operate in the new area and with the new procedures defined with the opening of the third runway at the Kuala Lumpur airport. This project stage included first courses for 130 tower controllers and 50 approach controllers at the Kuala Lumpur ACC, for a total of about 14,000 training hours. The courses, conducted in 9 modules of 6 days for the Tower part and 5 modules of 8 days for the approach part, ended in the second week of May to coincide with activation of the new work procedures and opening of the third runway and second control tower at the Kuala Lumpur airport.

Other activities with foreign customers included seminars for Aeronautics Technical Schools and weather training for ENEA personnel at the Antarctic project.

In addition: l the reorganization of the Academy and increased focus on core business activities allowed the beginning of a preparatory phase of a large training and development project dedicated to training operative personal in non-technical skills and aimed at improving traffic management; l a pilot edition of the “Refresher OJTI” program, created for 57 OJTI of the Rome ACC with e-learning materials, tool kits and workshops in the facilities, will offer an update on new training methods and modalities to instructors working in the facilities; l financed training: 13 new training plans were begun in 2014. With regard to reportable activities for 2014, these plans generated a potential economic return of about ¤819 thousand from Fondimpresa. With regard to managerial and specialist training, 7,986 hours of training courses were provided to 241 persons in staff areas.

The main objectives of the courses were: l the development of corporate management skills to translate strategic decisions into high-quality, rapid, and concrete actions in an integral way; l the growth of professional and specialist skills of technical area personnel, specifically with regard to the roles and responsibilities foreseen by the Public Contracts Code concerning Works, Services, and Supplies, and by the Rules for Execution and Implementation, as well as for the attainment of internationally recognized certifications for project management; l role awareness and capacity of executive assistant personnel to take action in uncertain situations. For this management change initiative, in addition to in-class instruction, individual coaching was provided with the goal of creating a future professional community; l language instruction, with individual courses and mini-groups involving a total of 54 personnel working in various company departments; l e-learning, with new training courses providing instruction required by law, plus the continuation of language, IT, and behavioral studies. Report on Operations 37

Health and safety in the workplace

The Work Safety Department is responsible for supervising the obligations deriving from Italian Legislative Decree no. 81/08 as amended and supplemented regarding the responsibilities of the Prevention and Protection Service and health supervision, including confirmation of the absence of alcohol dependence and the assumption of psychoactive substances and narcotics, as well as periodic and unannounced checks of the fitness of ENAV operative personnel. Environmental monitoring (lighting, noise, air quality, ionizing and non-ionizing radiation, etc.) continued in 2014, conducted by subsidiary Techno Sky, as well as monitoring of radon and radiogenic sources. Training and instruction with regard to professional risks and updating/initial training of emergency management personnel continued as well.

Risk assessment documents and emergency plans were updated by conducting periodic on-site inspections and meetings at production units, and a feasibility plan was worked out for a new method to manage medical checks of the psycho-physical fitness of CTA and FISO personnel, in implementation of regulatory provisions issued by ENAC based on European Regulations.

Environment

The goals of the Company’s Green Policy are to contribute proactively to reduce the environmental impact of flight operations and to reduce the Company’s environmental impact by means of efficiency and saving on consumption of resources linked to its core business activities.

Green Policy in Operations

To support Airspace Users in the study of operating methods to reduce fuel consumption and its environmental impact, ENAV’s Flight Efficiency Plan (FEP) defines and collects scheduled actions to optimize trajectories plannable in-flight and to reduce times for aircraft operations on the ground.

With respect to environmental goals to be pursued at the European and Italian level, the contribution deriving from implementation of ENAV’s FEP is of fundamental importance. In fact, the performance of scheduled measures is monitored by the Italian government through ENAC, in application of the National Performance Plan. In addition, since 2012 the

FEP has also contributed to Italy’s action plan on CO2 emissions reduction, which countries draft pursuant to ECAC/ICAO to help achieve global targets to reduce the environmental impact of aviation and to fight climatic changes. 38 ENAV – 2014 Financial Statements

The measures implemented in 2014 improved the flight planning of airlines that fly to/from Italian airports or that fly over airspace in which ENAV provides air traffic services.

By the end of 2013, the Free Route Italy Project had made practically direct routes (used mainly by fly-over traffic) available at night, on holidays, and on weekends. From the spring to the end of 2014, the more extensive program for Reorganization of National Air Spaces was carried out with the goal of revising the air space structure in order to prepare a more efficient flight network.

Thanks to the optimization of turn-around procedures and the integration and constant exchange of data among Stakeholders (ENAV, airport manager, airline companies, and European Network Manager), the Airport Collaborative Decision Making (A-CDM) system promotes operative management, helps optimize ground management/handling and the use of airport capacity where implemented, increasing the profitability of occupation of air space and, consequently, the management of air traffic flows. The A-CDM system was implemented for Rome Fiumicino in 2013 and for Milan Malpensa in October of 2014; after a trial phase, the system went fully operative at Venice airport in January 2015.

These implementations produced good results in 2014 as well. The estimate of planned saving demonstrates that horizontal routing improved by 823,500 nautical miles and that, together with a sharp increase in more advantageous vertical profiles, an estimated reduction in fuel consumption of 9,240 tonnes was achieved, with a consequent potential reduction of

29,100 tonnes of CO2 emissions. Taxi-ing times were shortened at Milan Linate, Milan Malpensa, Rome Fiumicino, Venice and Bergamo, which will be monitored by the European Performance Review Body for the second period of the National Performance Plan.

Actions under ENAV’s FEP, beyond supporting a model of sustainable development, also generate an economic saving for Airspace Users. Even if the average price of aviation fuel was much lower than in 2013, i.e. about ¤0.50/kg, the activities monitored under the FEP alone generated a potential economic countervalue of approximately ¤6.1 million. Report on Operations 39

Green Policy in Facilities

In line with the green policies launched in recent years, ENAV is committed to reducing energy consumption and to lowering greenhouse gas emissions by utilizing plants for self-generation of energy from renewable sources. In this way it complies with Kyoto Protocol guidelines to reduce emissions of pollutants but also significantly reduces energy costs by benefiting from government incentives linked to the Energy Account and distributed by the Electricity Services Manager.

Since late 2012, after the Ancona Falconara Control Tower system, photovoltaic systems have been activated at the Bari Palese Control Tower and Operations Building, at the Brindisi Area Control Center, at the Bitonto radio beacon, and at ENAV’s headquarters at Via Salaria in Rome.

All of these systems, with the exception of the headquarters system, benefited from incentives. The estimates of produced energy, lower CO2 emissions into the atmosphere, values of economic saving, and incentives for 2014 are shown in the following table:

Estimated kWh Tonnes of CO ENAV site 2 Euros saved Euros incentive produced not emitted

Rome, Via Salaria 98,933 42.7 19,579 0 Bari TWR 45,166 19.5 8,933 9,124 Bari P.O. 33,025 14.3 6,460 6,678 ACC Brindisi 62,220 26.9 12,774 12,527 Bitonto 21,000 9.1 4,600 4,200 Ancona TWR 49,092 21.2 10,801 13,948 Total 309,436 133.7 63,147 46,477

Other information

Enav Group certifications

With regard to certifications issued by ENAC, in 2014, following the third renewal of Single European Sky certification as provider of air navigation services obtained in the previous year, ENAV was audited by ENAC (25 audits, of which 4 unannounced) to check its maintenance of the certified requisites needed to renew the certification, scheduled for June 2015. During these audits, ENAV demonstrated its continuous satisfaction of the requisites provided in Regulation (EC)no. 1035/2011 regarding common requirements (technical and operational competence and capability, organizational structure and management, safety and quality 40 ENAV – 2014 Financial Statements

management, security, human resources, financial strength, liability and risk assessment, quality of services, and communication requirements) as well as regarding specific requisites for the various services provided (ATS, MET, AIS and CNS).

In early 2014, ENAV also received the second renewal of ENAC certification to operate as a training organization under Regulation (EC) no. 805/2011, which specifies rules regarding licenses and some certificates of air traffic controllers and the extension of same to the training of FISO Operators according to ENAC Regulations and of weather service personnel.

With regard to certifications of ENAV Group corporate management systems, on 19 December 2014 DNV GL - Business Assurance, the international management certification body, successfully concluded its second audit regarding maintenance of its certifications, confirming the validity of the certifications of conformity under UNI EN ISO 9001:2008 as well as the update of the certificate of conformity under UNI EN ISO/ IEC 27001:2014.

In early 2014, ACCREDIA, the Italian accreditation body, successfully concluded its second audit for certification of the Techno Sky calibration laboratory.

With regard to the radio-electric measurement aircraft fleet, ENAV underwent specific audits to check maintenance of the Certificate of Approval for the company that manages continuous navigation, of the Certificate of Approval for maintenance companies, and of the Air Operator’s Certificate for direct flights for surveys and observations, the latter preparatory for maintenance of the Air Operating License regarding flights for surveys and observations. Report on Operations 41

Government/ENAV Program and Service Agreements

With regard to Program and Service Agreements for 2010-2012 and 2013-2015, CIPE, with resolution no. 29/2014, registered by the Court of Accounts on 11 December 2014, announced its favorable opinion of both contractual schemes, while nevertheless making a few observations not referring to the economic and performance aspects governed by such agreements.

Following such observations, the work group examined the CIPE report and took steps to make the necessary changes to the contractual schemes and to the technical attachments to the agreements. In early 2015, the contractual schemes and the technical attachments were sent to the Transport Commission of Parliament and to the Senate Public Works Commission for the formulation of a definitive opinion, preparatory to stipulation of same. In this regard, on 6 May 2015 the Senate Public Works Commission issued a favorable opinion on the program schemes, indicating the need to approve the next agreement for 2016-2018 prior to the beginning of the effective period and, in all cases, so that it may be transmitted in a timely manner to the competent parliamentary commissions.

Military Airports

The transfer of military airports to ENAV is governed by article 3 of the 2013-2015 Program Agreement, which calls for the transfer of air navigation services from the Italian Air Force to ENAV, based on specific interministerial transfer decrees, for the military (now civil) airports of Rome Ciampino, Verona Villafranca, Brindisi, Treviso and Rimini. The objective is to ensure a smooth transition of such services and guarantee continuity of air navigation services at such airports without weighing on the economic efficiency of the new managing company.

While awaiting the signing of the 2013-2015 Program Agreement, and to avoid possible disruptions of traffic and services at such airports, the Transport Ministry has authorized ENAV to begin preparations for the transfer in terms of infrastructure and personnel training. The Rome Ciampino and Verona Villafranca airports were transferred to ENAV at the end of May 2014. With regard to the other airports, the current plan calls for ENAV to take over Treviso airport in June 2015, Brindisi airport in December 2015, and Rimini airport by the end of 2016. 42 ENAV – 2014 Financial Statements

Plan for airports with low traffic volume

ENAV has launched a plan to rationalize service and cost levels at low traffic volume airports that are important to ensure domestic continuity. The plan regards the rationalization and optimization of service levels, a specific action on personnel directly involved in the flight assistance service, and the identification of standard technological configurations. For the rationalization of services, the plan identifies a new “Service Method” based on the ratio of resources employed to traffic served. Specifically, it calls for a reduction of service hours calculated on the basis of actual traffic volumes and the typical seasonality of some airports. This solution, reported to the Shareholder and to the Supervising Ministry, was shared with ENAC and presented to the airport management companies. An initial modification of service hours took effect on 1 July 2014.

Likewise, with regard to personnel directly involved in the flight assistance service, new contractual modalities have been identified with respect to working hours, shift rules, and salary levels. The new management rules are contained in the National Collective Labor Agreement that took effect on 1 January 2015 and will be applied to newly-hired personnel working at the airports subject to these changes. With regard to the above, the Company has begun a hiring and training process of new personnel with an average annual unit cost that is 30-40% lower than that for personnel currently working at these facilities.

Legislative Decree no. 196/2003

As required by Italian law, security measures to protect personal data were constantly monitored in 2014.

The Company planned the alignment of risk analysis for ENAV personal data with the analysis for information security risk, as required for ENAV’s conformity with 27001/2006 certification. Security measures and technical/IT precautions adopted to ensure the integrity and availability of data were checked and, as required by order of the Italian Data Protection Authority (Garante), the work of the system administrators was assessed one year after their appointment.

The Company monitored the provision of the privacy training course in self-learning (e-learning) to all personnel who, as part of their assigned duties, have to process personal data and, therefore, be specifically trained to be appointed as data controller or data processor.

The instructions previously in the document called MOS “Manuale Operativo di Sicurezza” (Security Manual) were added to the Rules of the Security Management System.

This set of rules, which govern specific security matters, are addressed to all personnel and to certain groups in the organization, and are in addition to and supplement the contents of ENAV’s Security Policy. Report on Operations 43

Legislative Decree no. 231/2001

In 2014, ENAV’s Organization, Management and Control Model (OMCM) pursuant to Legislative Decree no. 231/01 was updated exclusively with regard to the Transparency Program, previously attributed by the Board of Directors to the Supervisory Authority which, on 28 February 2014, as proposed by the Authority, was transferred to the Human Resources Supervisor in order to ensure timely and regular information flow and effective checking of publication obligations and correct implementation of public access to documents and information.

In 2014, all of the checks programmed by the Supervisory Authority under Legislative Decree no. 231/01 were conducted in implementation of the OMCM.

On 14 November 2014, ENAV’s Board of Directors resolved to assign the role of Manager in charge of Prevention of Corruption to the Manager in Charge of the Audit Department, in application of Italian Law no. 190/2012 (Provisions for the prevention and repression of corruption and illegality in the public administration) and in compliance with instructions from the Ministry of Economy and Finance regarding the requisites for such Manager.

With regard to corruption, ENAV has published on its website, in the “Transparency” section – subsection “Other contents” – item “Corruption”, the Report by the Manager in charge of Prevention of Corruption, describing the results of activities in 2014. 44 ENAV – 2014 Financial Statements

Economic performance and financial position of the enav Group

Income statement

Changes

31.12.2014 31.12.2013 Values % Revenues from operations 812,638 779,602 33,036 4.2% Balance revenues (16,016) 20,460 (36,476) (178.3%) Other operating income 38,913 39,426 (513) (1.3%) Total revenues 835,535 839,488 (3,953) (0.5%) Personnel costs (466,198) (459,640) (6,558) 1.4% Other costs, net (145,676) (142,561) (3,115) 2.2% Total operating costs (611,874) (602,201) (9,673) 1.6% EBITDA 223,661 237,287 (13,626) (5.7%) Depreciation and amortization less (144,025) (135,286) (8,739) 6.5% investment grants Write-downs, impairment losses, reversals of (6,564) (8,706) 2,142 (24.6%) impairment losses and allocations EBIT 73,072 93,295 (20,223) (21.7%) Financial income (5,602) (3,305) (2,297) 69.5% (expense) Income before income 67,470 89,990 (22,520) (25.0%) taxes Income taxes (27,464) (40,422) 12,958 (32.1%) Net income for the year 40,006 49,568 (9,562) (19.3%)

Amounts in thousands of euros

Revenues from operations were ¤812.6 million, 4.2% higher than in the previous year due to an overall increase in the items of which this item is composed. The largest increase is linked mainly to the parent company due to en-route traffic that generated +2.4% in service units during the year compared to the total for 2013, considering the same applied fee equal to ¤78.83. Terminal traffic also increased compared to 2013, although more moderately than en-route traffic, with +2% in service units. This result is also linked to the parent company’s takeover of air traffic management for two new airports (Rome Ciampino and Verona Villafranca) in May 2014. In 2014, the terminal charge called for three charge bands defined in conformity to thresholds identified in community regulations. For the Report on Operations 45

third band, with 43 airports, a lower than normal charge was applied in order to support the air transport market in the current crisis. This lower charge resulted in the release of ¤24.3 million to the income statement from the charge stabilization provision, with an increase of ¤4.6 million compared to the previous year. Revenues from third party customers had a positive effect on revenues from operations, increasing by ¤4.2 million for consulting services provided by the Group in Dubai and Libya.

The balance reduced total revenues by ¤16 million due to smaller balances recorded in 2014 (mainly due to inflation, which generated a negative balance of ¤7.9 million as opposed to a positive ¤14.2 million in 2013) and to the effect of discounting, which amounted to a negative ¤4 million, ¤3 million higher than in 2013.

Other operating income, generally in line with the previous year, does not include the share of equipment grants linked to financial investments of ¤12.3 million, entered in direct reduction of depreciation.

Operating costs amounted to ¤611.9 million, increasingby 1.6% compared to the previous year due to an increase of ¤6.6 million in personnel costs, mainly attributable to the fixed part of remuneration due to: i) increased remuneration provided by the National Collective Bargaining Agreement (CCNL), effective as of July 2013 and therefore affecting the entire year in question as opposed to only six months in 2013, and increased minimi and superminimi effective October 2014 in conformity to the CCNL; ii) changes in qualification and increases in the superminimi due to salary restructuring of CTA personnel; iii) physiological increase in remunerations. On the other hand, the variable part of remuneration decreased by ¤1.9 million mainly due to a smaller allocation for vacation leave accrued but not yet taken, thanks to the Company’s policy of having both office and operating personnel take vacation leave. Other net costs show an increase of 2.2%, mainly due to lower capitalized costs on investment initiatives and to internal costs amounting to a positive ¤24.7 million compared to ¤28.1 million in 2013. External costs increased in connection to professional services for European projects and to the transition to international accounting standards, with work performed on the Group’s IT systems in 2014.

These figures affected the calculation of EBITDA generating a 5.7% reduction compared to the previous year, to ¤224 million. EBIT was ¤73 million, decreasing by 21.7% compared to 2013 due to the above-described events and to increased depreciationcharged onthe investments, such as Coflight, made in 2014.

Financial income and expenseamounted to negative ¤5.6 million, a charge ¤2.3 million higherthan in 2013, referring mainly to the parent company as a result of the adjustment of the present value of the “balances” recognizedin previous years following the change to charge recovery plans. On the other hand, there was a ¤1.8 million decrease in financial expense linked to bank debt due to decreased use of short-term credit lines and to lower interest rates. 46 ENAV – 2014 Financial Statements

Taxes for the year amounted to ¤27.5 million, 32.1% lower than in 2013, mainly due to lower corporate income taxes (IRES) in 2014.

Profit for the year waspositive for ¤40 million, lower than in the previous year due the dynamics described above.

Reclassified Balance Sheet

31.12.2014 31.12.2013 Changes Property, plant and equipment 1,125,913 1,173,985 (48,072) Intangible assets 124,759 131,767 (7,008) Investments in other companies 26,431 167 26,264 Other non-current assets 34,506 (31,526) 66,032 and liabilities Liability for employee benefits (60,049) (53,655) (6,394) Net fixed capital 1,251,560 1,220,738 30,822 Inventories 61,691 61,639 52 Trade receivables 232,387 288,053 (55,666) Trade payables (127,986) (142,261) 14,275 Provision for risks and charges (12,585) (12,693) 108 Other current assets and liabilities (63,219) (87,360) 24,141 Net working capital 90,288 107,378 (17,090) Net invested capital 1,341,848 1,328,116 13,732 Funding Shareholders' equity 1,234,062 1,241,848 (7,786) Net financial position 107,786 86,268 21,518 Total funding 1,341,848 1,328,116 13,732

Amounts in thousands of euros

The reclassified balance sheet shows an increase in net invested capital of ¤13.7 million compared to the end of the previous year, totaling ¤1,341.8 million, mainly due to the following factors:

l net fixed capital, which increased by ¤30.8 million. This increase is due to the change in the consolidation scope with the entry of ENAV North Atlantic, which contributed the investment held in Aireon LLC, a Limited Liability Company subject to United States law, to be acquired by the payment of four tranches, after which the Company will own a 12.5% stake. The first two tranches werepaid in 2014. The other increase refers to the change in other non-current assets and liabilities for ¤66 million due to increased receivables linked to balances recorded in 2014 and in previous years, to be included in the charge in years after 2015, and to the decrease in other liabilities following the release to income of the National Operating Program Report on Operations 47

(NOP) for the Transport Sectorgrantsin line withthe depreciation of the investments to which they refer, as well as to the definancing of an investment project by the NOP Networks and Mobility Authority. The other items show a general reduction linked, with regard to property, plant and equipment and intangible assets, to smaller investments in progress compared to the amortization and depreciation of the year. In addition, there was an increase in the liability linked to the liability for employee benefitsdue to the actuarial loss recorded by the Group in 2014; l net working capital was ¤90.3 million, presenting a net decrease of ¤17.1 million following the reduction of trade receivables due to the collection of receivables owed by the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport, in addition to the classification of non-current receivables exceeding the balances in 2013. The calculation of working capital was also affected by a ¤14.3 million decrease in trade payables and by a change in other current assets and liabilities linked to the larger VAT credit generated in 2014, for which a ¤19 million refund was requested in 2015.

Shareholders’ equity amounted to ¤1,234.1 million, presenting a net decrease of ¤7.8 million due to the parent company’s payment of dividends for ¤31.5 million, the allocation of ¤16.5 million to the charge stabilization provision in accordance with the resolution of the Shareholders’ Meeting held to approve ENAV’s 2013 financial statements, the negative incidence of the employee benefits reserve for ¤5.1 million, the positive contribution of the fair value measurement of derivatives for ¤1.8 million, the change in consolidation scope with the recognition of a translation reserve in foreign currency for a positive ¤3.5 million and the positive consolidated year-end result of ¤40 million. 48 ENAV – 2014 Financial Statements

The net financial position is a negative ¤107.8 Million, ¤21.5 Million higher than in the previous year, which may be analyzed as follows:

31.12.2014 31.12.2013 Changes

Cash and cash equivalents 118,253 94,301 23,952 Current financial receivables 1,480 0 1,480 Current financial debt (46,136) (54,154) 8,018 Net current financial position 73,597 40,147 33,450 Non-current financial receivables 383 0 383 Non-current debt (181,766) (126,415) (55,351) Non-current debt (181,383) (126,415) (54,968) Net financial position (107,786) (86,268) (21,518)

The current net financial position shows an improvement of ¤33.5 million following the liquidity contributed by Group companies, from the payback of lines of credit granted to subsidiary Techno Sky, plus greater liquidity received by the parent company from the European Investment Bank credit line opened in December for ¤100 million, which affects the increase in non-current debt for ¤54.9 million, offset by repayments of ¤43 million in loans made by the parent company during the year.

Risk factors

ENAV’s management identifies and assesses the types of risks related to the Group’s activities in order to manage them in the best way and to safeguard value for the shareholder. The Board of Directors is in charge of defining and approving guidelines for the internal control system and the risk management policy of the Company and the Group.

At the date of this report on operations, there are no elements of uncertainty and risk that may have significant affects on the Company’s and Group’s results of operations, financial position and cash flows, other than those mentioned in the notes. With regard to the management of financial risks (such as credit, liquidity, interest rate, and currency risks), reference is made to note 33 of the consolidated financial statements and to note 32 of the financial statements.

Other risk factors and the measures taken to monitor them are described below. Report on Operations 49

Business and regulatory risk

ENAV’s mission is to ensure air traffic safety in compliance with the industry’s highest technical standards and to optimize the efficiency of its activities in a cost-effective manner through the continuity of air navigation services and flight punctuality. The Group operates in regulated markets and the change of the working rules and the requirements and obligations that are features of these rules can affect the Group’s operations and indeed its results; likewise, it is affected by the trend in air traffic which, in turn, is influenced by the economic situation and by the economic-financial conditions of individual airline companies. The Group’s business depends on the general economic situation which may affect it in terms of developed traffic and regulatory compliance, including laws that implement protocols or international treaties. Under the National Performance Plan, since 2012 for en-route services and since 2015 for terminal services, ENAV has had to comply with targets introduced at a European level, with the result that maintaining and improving the quality of the services it provides, adapting swiftly to changing market demands and paying close attention to internal efficiency objectives, will continue to be critical success factors.

Risk monitoring

As parent company, ENAV is subject to the same business risks and uncertainties as Group companies. Therefore, it has set up an internal control system with rules, procedures and organizational structures in order to prevent or limit the consequences of unexpected results and to achieve strategic and operational objectives, and to ensure conformity to applicable laws and regulations. For this purpose, in addition to corporate bodies and individuals exercising corporate controls, support activities by the audit department continued throughout the year with the aim of assessing and improving control, risk management, corporate and governance processes. This department’s work accompanies that of the manager in charge of preparing the Company’s accounting documents, who prepares adequate administrative and accounting procedures and certifies their effectiveness and correct operation, and ensures the truthfulness and correctness of the financial information to which such procedures refer. To accomplish this guidelines for the evaluation of the internal control system for financial disclosure purposes and the regulations of the manager in charge of preparing the company’s corporate documentswere prepared last year. 50 ENAV – 2014 Financial Statements

Economic performance, operating results, financial position and cash flows of enav

Income Statement

Changes

31.12.2014 31.12.2013 Values % Revenues from operations 810,251 778,153 32,098 4.1% Balance revenues (16,016) 20,460 (36,476) (178.3%) Other operating income 37,501 38,607 (1,106) (2.9%) Total revenues 831,736 837,220 (5,484) (0.7%) Personnel costs (403,213) (396,814) (6,399) 1.6% Other costs, net (209,453) (205,975) (3,478) 1.7% Total operating costs (612,666) (602,789) (9,877) 1.6% EBITDA 219,070 234,431 (15,361) (6.6%) Depreciation and amortization less (144,666) (135,125) (9,541) 7.1% investment grants Write-downs, impairment losses, reversals of (5,871) (7,755) 1,884 (24.3%) impairment losses and allocations EBIT 68,533 91,551 (23,018) (25.1%) Financial income (expense) (4,954) (1,997) (2,957) 148.1% Income before income 63,579 89,554 (25,975) (29.0%) taxes Income taxes (24,752) (38,374) 13,622 (35.5%) Net income for the year 38,827 51,180 (12,353) (24.1%)

Amounts in thousands of euros

Revenues from operations amount to ¤810.2 million, 4.1% higher than in the previous year due to an overall increase in the items of which this item is composed. The largest increase is linked to en-route traffic, which generated +2.4% in service units during the year compared to the total for 2013, equal to ¤78.83 at parity of applied charge. Terminal traffic also increased compared to 2013, although more moderately than en-route traffic, with +2% in service units. This result is also linked to ENAV’s takeover of air traffic management for two new airports (Rome Ciampino and Verona Villafranca) in late May 2014. In 2014, the terminal charge called for three charge bands defined in conformity to thresholds identified Report on Operations 51

in community regulations. For the third band, with 43 airports, a lower than normal charge was applied in order to support the air transport market in the current crisis. This lower charge resulted in the release of ¤24.3 million to the income statement from the charge stabilization provision, an increase of ¤4.6 million compared to the previous year. Revenues from third party customers had a positive effect on revenues from operations, increasing by ¤3.2 million for consulting services provided in Dubai and Libya.

The balance reduced total revenues by ¤16 million due to smaller balances recorded in 2014 (mainly due to inflation, which generated a negative balance of ¤7.9 million as opposed to a positive ¤14.2 million in 2013) and to the effect of discounting, which amounted to a negative ¤4 million, ¤3 million higher than in 2013.

Other operating income, which decreased by ¤1.1 million compared to the previous year mainly due to fewer personnel transfers to third parties (including the German provider DFS), does not include the share of equipment grants linked to financial investments of ¤12.3 million, entered in direct reduction of depreciation.

Operating costs amounted to ¤612.6 million, an increase of 1.6% compared to the previous year deriving from an increase of ¤6.4 million in personnel costs, attributable mainly to the fixed part of remuneration due to: i) increased remuneration provided in the National Collective Bargaining Agreement (CCNL), effective as of July 2013 and therefore affecting the entire year in question as opposed to only six months in 2013, and increased minimi and superminimi effective October 2014 in conformity to the CCNL; ii) changes in qualification and increases in the superminimum due to salary restructuring of CTA personnel; iii) physiological increase in remunerations. On the other hand, the variable part of remuneration decreased by ¤2.3 million due mainly to a smaller allocation for vacation leave accrued but not yet taken thanks to the Company’s policy of having both office and operating personnel take vacation leave. Other net costs show an increase of 1.7%, of which ¤1.1 million refers to lower capitalized costs on investment initiatives, higher maintenance costs for new systems and operating maintenance at the Rome Ciampino airport, and to professional services for specialist support for European projects and the transition to international accounting standards.

These figures affected the calculation of EBITDA and generated a 6.6% reduction compared to the previous year, to ¤219 million. EBIT was ¤68.5 million, decreasing 25.1% compared to 2013 due to the above-described events and to the increased depreciation charged onthe investments, such as Coflight, made in 2014.

Financial income and expenseamounted to negative ¤4.9 million, a charge ¤2.9 million higher than in 2013, referring mainly to the adjustment of the present value of the “balances” recognized in previous years following the change to charge recovery plans. On the other hand, there was a ¤1.4 million decrease in financial expense linked to bank debt due to decreased use of short-term credit lines and to lower interest rates. 52 ENAV – 2014 Financial Statements

Taxes for the year amounted to ¤24.7 million, 35.5% lower than in 2013, mainly due to lower corporate income taxes (IRES) in 2014.

Profit for the year was a positive ¤38.8 million, lower than in the previous year due the dynamics described above.

Reclassified Balance Sheet

31.12.2014 31.12.2013 Changes

Property, plant and equipment 1,144,055 1,189,981 (45,926) Intangible assets 57,965 64,896 (6,931) Investments in other companies 142,909 114,826 28,083 Other non-current assets 8,977 (56,450) 65,427 and liabilities Liability for employee benefits (40,202) (35,239) (4,963) Net fixed capital 1,313,704 1,278,014 35,690 Inventories 61,645 61,614 31 Trade receivables 224,531 278,093 (53,562) Trade payables (114,552) (128,993) 14,441 Provision for risks and charges (8,375) (8,791) 416 Other current assets and liabilities (79,722) (104,985) 25,263 Net working capital 83,527 96,938 (13,411) Net invested capital 1,397,231 1,374,952 22,279 Funding Shareholders' equity 1,283,674 1,294,812 (11,138) Net financial position 113,557 80,140 33,417 Total funding 1,397,231 1,374,952 22,279

Amounts in thousands of euros The reclassified balance sheet shows an increase in net invested capital of ¤22.3 million compared to the end of the previous year, amounting to ¤1,397.2 million, due mainly to the following factors: l net fixed capital for a total increase of ¤35.7 million. ¤28 million of this increase is linked to the item investments, regarding the 100% holding in ENAV North Atlantic, established in Delaware (USA) in January 2014 and to which were assigned the obligations deriving from the agreement to acquire 12.5% of Aireon, an American company, which will be acquired in four tranches, two of which will be paid in 2014. The other increase refers to the change in other non-current assets and liabilities for ¤65.4 million due to increased receivables linked to the “balances” recognized in 2014 and in previous years, to be included in the charge in years following 2015, and to the decrease in other liabilities following the release to income of the National Operating Program (NOP) for the Transport Sectorgrantsin line withthe depreciation of the investments to which they refer, as well as to the definancing of an investment project by the NOP Networks and Mobility Authority. The other items show a general reduction linked, with regard to property, plant and equipment and intangible assets, to smaller investments in progress compared to amortization and depreciation in the year. In addition, there was an increase in the liability for employee benefits due to the actuarial loss recorded in 2014; l net working capital was ¤83.5 million, presenting a net decrease of ¤13.4 million following the reduction of trade receivables due to the collection of receivables owed by the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport, in addition to the classification of non-current receivables exceeding the balances in 2013. The calculation of working capital was also affected by a ¤14.4 million decrease in trade payables and by a change in other current assets and liabilities linked to the larger VAT credit generated in 2014, for which a ¤19 million refund was requested in 2015

Shareholders’ equity amounted to ¤1,283.6 million, presenting a net decrease of ¤11.1 million due to the payment of dividends for ¤31.5 million, the allocation of ¤16.5 million to the charge stabilization provision in accordance with the resolution of the Shareholders’ Meeting held to approve the 2013 financial statements, the negative incidence of ¤3.8 million for the employee benefits reserve, the positive contribution of ¤1.8 million for the fair value measurement of derivatives and the positive consolidated year-end result of ¤38.8 million. 54 ENAV – 2014 Financial Statements

The net financial position is a negative ¤113.6 million, ¤33.4 million higher than in the previous year, which may be analyzed as follows:

31.12.2014 31.12.2013 Changes

Cash and cash equivalents 111,089 92,344 18,745 Current financial receivables 1,480 0 1,480 Current financial debt (44,743) (46,069) 1,326 Net current financial position 67,826 46,275 21,551 Non-current financial receivables 383 0 383 Non-current debt (181,766) (126,415) (55,351) Non-current debt (181,383) (126,415) (54,968) Net financial position (113,557) (80,140) (33,417)

The current net financial position shows an improvement of ¤21.5 million following the greater liquidity received from the European Investment Bank credit line opened in December for ¤100 million, which affects the increase in non-current debt for ¤54.9 million, offset by repayments of ¤43 million in loans made during the year.

Information on enav Group companies

The operations and economic performance of ENAV Group companies at 31 December 2014 are described below.

Techno Sky

The company is wholly-owned by ENAV and deals with the operational management, support and maintenance of national air traffic control plants and systems, ensuring their complete and uninterrupted availability and operational efficiency. Techno Sky closed 2014 with a positive net result of ¤2.2 million thanks to careful management of external costs (linked to greater use of internal personnel for order development), which decreased by 3.6% against revenues that were basically unchanged compared to 31 December 2013. The annual result was positively influenced by financial management, which improved by 40% compared to 2013 following the payback of bank credit lines.

In 2014, Techno Sky maintained high technical performance levels with reference to its global maintenance contract for ENAV plants, which calls for management and maintenance of hardware for ATC technology infrastructures and maintenance of various types of software (corrective, adaptive, and evolutive). Report on Operations 55

Enav Asia Pacific Sdn Bhd

ENAV Asia Pacific is a Malaysian company established in March 2013 for purposes of developing the Group’s commercial activities in countries in Asia and Oceania. Wholly-owned by ENAV, the company closed 2014 with a positive net result of ¤4 thousand, slightly lower than in the previous year, in which it did not operate for a full 12 months. The company is administered by a Chief Executive Officer appointed by the Board of Directors and designated by the parent company, and is subject to legal auditing.

The SICTA Consortium

The SICTA Consortium, held 60% by ENAV and 40% by Techno Sky, conducts research, development, testing, simulation, and validation of innovative solutions of air traffic control systems on behalf of Consortium members and for European programs of which SESAR is the principal party. At 31 December 2014, the SICTA Consortium, a non-profit organization, had a positive net profit of ¤1 thousand, with a 5.6% increase in value of production compared to the previous year for activities linked to the SESAR program, and a 3.2% increase in operating costs, absorbed by increased revenues. The operating result benefited 55.7% from financial management following the significant reduction of bank debt, which decreased from ¤4.3 million in 2013 to ¤1.4 million in 2014.

Pursuant to its bylaws, the SICTA Consortium will expire on 31 December 2017.

ENAV North Atlantic

ENAV North Atlantic, a Limited Liability Company governed by the laws of Delaware (USA), is wholly-owned by ENAV and was formed in January 2014 to participate in an investment to be carried out through the acquisition of 12.5% of the share capital of Aireon LLC, an American company, part of the IRIDIUM Group, that by the end of 2018 will build the first global satellite surveillance system for air traffic control. The financial statements for the year ended 31 December 2014 show a break-even result because the company is essentially inoperative and only holds the investment in Aireon. 56 ENAV – 2014 Financial Statements

Significant events after the year-end

On 21 January 2015, the subsidiary ENAV North Atlantic LLC paid the balance for the second tranche required under the agreement to acquire the stake in Aireon LLC, amounting to approximately $6.4 million.

On 13 April 2015, the Shareholders’ Meeting resolved, for purposes of article 2445 of the Italian civil code, to voluntarily reduce the Company’s share capital by ¤180 million. At the conclusion of the transaction share capital will amount to ¤941.7 million. This releverage transaction, conducted as part of the wider privatization process, should also increase the efficiency of ENAV’s current financial structure, characterized by a leverage level (both in absolute and comparative terms) generally lower than similar listed and unlisted companies, to the benefit of the Company’s rating and of the related expectations of the Shareholder.

With regard to the choice of the financial instrument deemed most appropriate for acquiring the funds needed to service the transaction, given the current highly favorable trend on the debt market due to the combined effect of interest rates at all-time lows and contracting credit spread, on 8 May 2015 the Board of Directors resolved, for purposes of article 2410 of the Italian civil code, to issue a bonded loan to be placed with institutional investors in an amount equal to the above-mentioned reduction in share capital up to ¤180 million, with maturity of up to 10 years and bullet redemption.

Performance forecast

In the next five years, ENAV will have to comply with the new and more stringent Community regulatory framework in which the European Commission has identified expected performance levels for European providers in terms of economic and operational efficiency for 2015-2019.

Under Community regulations, 2015 begins a new 5-year reference period that will conclude in 2019. Therefore, considering the restrictions imposed by this regulatory package, and to give continuity to management policies and actions adopted to date, ENAV has defined its 2015-2019 Economic Plan in line with the Commission’s requirements. This Plan coincides with the Performance Plan of the Blue Med Functional Airspace Block (FAB) composed of Italy, Malta, Cyprus, and Greece. Regarding events in the first reference period, with the emanation of two new Community Regulations (390/2013 (Performance Regulation) and 391/2013 (Charging Regulation)), the Community performance regulator’s attention shifted from domestic to FAB, although with some distinctions. We refer, for example, to the responsibility to achieve economic efficiency targets, which has been left to Member States and thus to providers, whereas the capacity target has been set at the FAB level, although with the obligation of interpretation at the national level. Report on Operations 57

When preparing its 2015-2019 Performance Plan in the first reference period, ENAV adopted an approach aimed at safeguarding the Company’s economic stability and limiting the risk associated with the Community performance scheme.

In a regulatory context in which risk is calculated as the difference between planned and actual performance, it is understood that the plan for the reference period, in addition to ensuring sufficient profitability from services offered, must be prepared with the aim of achieving the targets set by the performance schemes while simultaneously ensuring full operational continuity.

Therefore, it is appropriate to recall that for the next five years the Performance Plan, and therefore the Company’s Economic Plan as well, will be subject to repeated revision and assessment by the European Commission. In the first stage of this process, the Commission expressed its opinion in EU Decision 2015/347 of 2 March 2015 with regard to the Plan’s capacity to adequately contribute to the achievement of Community targets based on the criteria specified in Regulation (EC) no. 390/2013, and requested the Italian Government (and therefore ENAV) to make a number of changes. The Government and ENAV have four months from the date of publication of the Decision in the Official Journal of the European Union to present a new plan. The new plan will then be evaluated by the Commission, which will have another five months to express its opinion. The process for evaluation of the Performance Plan is undoubtedly highly complex, and it may be assumed that the Plan will receive final approval not before the second half of 2015.

Lastly, it should be noted that according to the new Community Performance Regulations, as of 1 January 2015 the terminal component regarding the first two charge bands have been subject to the Community Performance Scheme, whereas the third band has remained in a cost recovery system.

It therefore appears obvious that in this uncertain macroeconomic scenario, with a continuously shifting regulatory framework, the Company’s strategy for the near future must be based on a prudent assessment of management policies, with the dual objective of ensuring full operational continuity and achievement of the economic and operational targets defined by national and Community schemes.

Report on Operations 59

Proposal for the allocation of the net income for the year of Enav SpA

Dear Shareholder,

The financial statements for the year ended 31 December 2014, submitted to the Meeting for its approval, show net income for the year of ¤38,827,033.27.

We accordingly propose that you should: l approve the financial statements for the year ended31 December 2014, consisting of the financial statements, the notes to the financial statements and the report on operations; l allocate the net income for the year of Euro 38,827,033.27 as follows: - 5% (¤1,941,351.66) to the legal reserve, considering that the reserve has not yet reached the limitset by article 2430 of the Italian civil code; - the remaining ¤36,885,681.61 in accordance with the resolutions to be adopted by the Shareholders’ Meeting.

We kindly ask you therefore to adopt resolutionson the above.

Rome, 29 May 2015

Chairman of the Board of Directors Maria Teresa Di Matteo 2 Consolidated Financial Statements of the Enav Group for the Year Ended 31 December 2014 62 ENAV – 2014 Financial Statements

Consolidated Financial 2 Statements of the Enav Group for the Year Ended 31 December 2014

Consolidated Financial Statements 63 of the Enav Group Consolidated statement of financial position 65 Consolidated income statement 67 Consolidated statement of comprehensive income 68 Consolidated statement of changes in equity 70 Consolidated statement of cash flows 72

Notes to the Consolidated Financial 73 Statements of the Enav Group General information 74 Form and contents of the consolidated 75 financial statements Consolidation scope and criteria 76 Accounting standards 85 Information on items in the consolidated 101 statement of financial position Information on items in the consolidated income statement 128 Other information 136 Subsequent events 146

Attestation of the Chief Executive Officer and the Manager in Charge on the Consolidated Financial Statements 148

Report of the Independent Auditors on the Consolidated Financial Statements 151 63

Consolidated Financial Statements of the Enav Group

Consolidated Financial Statements of the Enav Group 65

Consolidated statement of financial position

Assets

Note 31.12.2014 31.12.2013

Non-current assets Property. plant and equipment 5 1,125,912,704 1,173,985,411 Intangible assets 6 124,758,908 131,767,069 Investments in other 7 26,431,187 166,666 companies Non-current financial assets 8 15,886,258 16,111,269 Deferred tax assets 9 27,883,635 25,470,170 Non-current tax receivables 10 25,232,503 25,232,503 Non-current trade receivables 11 119,498,770 85,892,046 Total non-current assets 1,465,603,965 1,458,625,134 Current assets Inventories 12 61,690,642 61,639,253 Current trade receivables 11 232,386,580 288,053,025 Current financial assets 8 1,479,856 0 Tax receivables 10 82,573,170 56,197,670 Other current assets 13 19,162,071 30,692,037 Cash and cash equivalents 14 118,253,256 94,300,723 Total current assets 515,545,575 530,882,708 Total assets 1,981,149,540 1,989,507,842 66 ENAV – 2014 Financial Statements

Consolidated statement of financial position

Shareholders’ equity and liabilities

Note 31.12.2014 31.12.2013

Shareholders' equity Share capital 1,121,744,385 1,121,744,385 Reserves 44,659,584 41,923,965 Retained earnings/(accumulated losses) 27,652,383 28,612,043 Net income for the year 40,005,989 49,567,941 Total equity attributable to equity holders 1,234,062,341 1,241,848,334 1.241.848.334 of the parent Capital and reserves attributable 0 0 to non-controlling interests Net income attributable 0 0 0 to non-controlling interests Total equity attributable 0 0 0 to non-controlling interests Total shareholders' equity 15 1,234,062,341 1,241,848,334 Non-current liabilities Provisions for risks and charges 16 7,890,517 10,866,565 Employees' leaving entitlement and other 17 60,048,816 53,654,907 employee benefits Deferred tax liabilities 9 3,279,086 3,631,802 Non-current financial liabilities 18 181,766,028 126,414,631 Non-current trade payables 19 7,803,390 0 Other non-current liabilities 20 142,529,753 180,600,401 Total non-current liabilities 403,317,590 375,168,306 Current liabilities Current portion of provisions for risks 16 4,693,475 1,826,000 and charges Current trade payables 19 127,986,523 142,260,812 Tax and social security payables 21 32,931,944 32,804,481 Current financial liabilities 18 46,135,656 54,153,848 Other current liabilities 20 132,022,011 141,446,061 Total current liabilities 343,769,609 372,491,202 Total liabilities 747,087,199 747,659,508 Total shareholders' equity and liabilities 1,981,149,540 1.989.507.842 Consolidated Financial Statements of the Enav Group 67

Consolidated income statement

Note 2014 2013

Revenues Revenues from operations 22 812,637,986 779,602,501 Balance revenues 22 (16,015,835) 20,460,475 Other operating income 23 51,252,284 54,681,181 Total revenues 847,874,435 854,744,157 Costs Costs for raw materials.ancillary materials. consumables and 24 (7,256,747) (9,394,201) merchandise Costs for services 24 (153,298,507) (145,795,812) Personnel costs 25 (466,197,769) (459,639,531) Lease and rental costs 24 (6,971,813) (7,346,158) Other operating costs 24 (2,809,339) (8,154,177) Capitalization of internal work 26 24,659,875 28,129,110 Total costs (611,874,300) (602,200,769) Depreciation 5 and 6 (156,364,125) (150,541,510) and amortization Write-downs. impairment losses 5 and 11 (5,619,868) (11,562,103) and reversal of impairment losses Allocations 16 (944,308) 2,855,647 Operating income 73,071,834 93,295,422 Financial income and expense Financial income 3,447,897 4,907,428 Financial expense (9,074,791) (8,226,378) Foreign exchange gains/(losses) 24,616 13,943 Total financial income and expense 27 (5,602,278) (3,305,007) Income before income taxes 67,469,556 89,990,415 Income taxes 28 (27,463,567) (40,422,474) Net income for the year 40,005,989 49,567,941 of which: Net income attributable to equity 40,005,989 49,567,941 holders of the parent Net income attributable 0 0 to non-controlling interests

Euros 68 ENAV – 2014 Financial Statements

Consolidated statement of comprehensive income

Note 2014 2013

Net income for the year 40,005,989 49,567,941 Items of comprehensive income which will subsequently be reclassified to profit or loss: l differences arising on translating foreign financial 3,445,915 (17,457) statements. net of tax l fair value measurement of derivative financial 2,529,447 (670,699) instruments l tax effect of the fair value measurement of derivative (695,598) 184,442 financial instruments Total items of comprehensive income which will subsequently 5,279,764 (503,714) be reclassified to profit or loss: Items of comprehensive income which will not subsequentlybe reclassified to profit or loss: l actuarial gains/(losses) (6,993,827) 2,426,396 on employee benefits l tax effect of actuarial gains/ (losses) on employee 1,923,303 (667,259) benefits Total items of comprehensive income which will not (5,070,524) 1,759,137 subsequentlybe reclassified to profit or loss: Total comprehensive income 40,215,229 50,823,364

Euros

70 ENAV – 2014 Financial Statements

Consolidated statement of changes in equity

Reserves

Reserve for actuarial Miscellaneous Cash flow hedge Retained earnings/ Net income Share capital Legal reserve gains/(losses) on Total reserves Total equity reserves reserve (accumulated losses) for the year employee benefits

1 January 2013 1,121,744,385 9,099,497 61,238,424 (6,371,946) 0 63,965,975 530,976 45,390,600 1,231,631,936 Allocation of prior year 0 2,309,533 0 0 0 2,309,533 43,081,067 (45,390,600) 0 net income Disposal of AVL assets 0 0 (25,606,966) 0 0 (25,606,966) 0 0 (25,606,966) Dividend payment 0 0 0 0 0 0 (15,000,000) 0 (15,000,000) Change in translation 0 0 (17,457) 0 0 (17,457) 0 0 (17,457) reserve Comprehensive income

recognized. of which: l gains/(losses) recognized directly 0 0 0 1,759,137 (486,257) 1,272,880 0 0 1,272,880 in equity l net income for the 0 0 0 0 0 0 0 49,567,941 49,567,941 year 31 December 2013 1,121,744,385 11,409,030 35,614,001 (4,612,809) (486,257) 41,923,965 28,612,043 49,567,941 1,241,848,334 Allocation of prior year 0 2,526,380 0 0 0 2,526,380 47,041,561 (49,567,941) 0 net income Allocation of Charge 0 0 0 0 0 0 (16,500,000) 0 (16,500,000) Stabilization Provision Dividend payment 0 0 0 0 0 0 (31,501,221) 0 (31,501,221) Change in translation 0 0 3,437,554 0 0 3,437,554 0 0 3,437,554 reserve Other changes 0 0 8,361 0 0 8,361 0 0 8,361 Comprehensive income

recognized. of which: l gains/(losses) recognized directly 0 0 0 (5,070,525) 1,833,849 (3,236,676) 0 0 (3,236,676) in equity l net income for the 0 0 0 0 0 0 0 40,005,989 40,005,989 year

31 December 2014 1,121,744,385 13,935,410 39,059,916 (9,683,334) 1,347,592 44,659,584 27,652,383 40,005,989 1,234,062,341 Consolidated Financial Statements of the Enav Group 71

Consolidated statement of changes in equity

Reserves

Reserve for actuarial Miscellaneous Cash flow hedge Retained earnings/ Net income Share capital Legal reserve gains/(losses) on Total reserves Total equity reserves reserve (accumulated losses) for the year employee benefits

1 January 2013 1,121,744,385 9,099,497 61,238,424 (6,371,946) 0 63,965,975 530,976 45,390,600 1,231,631,936 Allocation of prior year 0 2,309,533 0 0 0 2,309,533 43,081,067 (45,390,600) 0 net income Disposal of AVL assets 0 0 (25,606,966) 0 0 (25,606,966) 0 0 (25,606,966) Dividend payment 0 0 0 0 0 0 (15,000,000) 0 (15,000,000) Change in translation 0 0 (17,457) 0 0 (17,457) 0 0 (17,457) reserve Comprehensive income recognized. of which: l gains/(losses) recognized directly 0 0 0 1,759,137 (486,257) 1,272,880 0 0 1,272,880 in equity l net income for the 0 0 0 0 0 0 0 49,567,941 49,567,941 year 31 December 2013 1,121,744,385 11,409,030 35,614,001 (4,612,809) (486,257) 41,923,965 28,612,043 49,567,941 1,241,848,334 Allocation of prior year 0 2,526,380 0 0 0 2,526,380 47,041,561 (49,567,941) 0 net income Allocation of Charge 0 0 0 0 0 0 (16,500,000) 0 (16,500,000) Stabilization Provision Dividend payment 0 0 0 0 0 0 (31,501,221) 0 (31,501,221) Change in translation 0 0 3,437,554 0 0 3,437,554 0 0 3,437,554 reserve Other changes 0 0 8,361 0 0 8,361 0 0 8,361 Comprehensive income recognized. of which: l gains/(losses) recognized directly 0 0 0 (5,070,525) 1,833,849 (3,236,676) 0 0 (3,236,676) in equity l net income for the 0 0 0 0 0 0 0 40,005,989 40,005,989 year

31 December 2014 1,121,744,385 13,935,410 39,059,916 (9,683,334) 1,347,592 44,659,584 27,652,383 40,005,989 1,234,062,341 72 ENAV – 2014 Financial Statements

Consolidated statement of cash flows

2014 2013 A - Cash and cash equivalents at the beginning of the year 94,301 53,967 Cash flows from operating activities Net income for the year 40,006 49,568 Depreciation and amortization 156,364 150,542 Net change in liabilities for employee benefits 6,394 (4,633) Change in reserves (16,291) 1,255 Losses from the disposal of property. plant and equipment 18 0 Impairment of property. plant and equipment and intangible assets 2,269 16,099 Allocations to/releases of provisions for risks and charges (109) (3,468) Net change in deferred tax assets and liabilities (2,766) 758 (Increase)/decrease in inventories and work in progress (51) 1,560 (Increase)/decrease in current trade receivables 55,666 101,288 (Increase)/decrease in non-current trade receivables (33,607) (11,855) (Increase)/decrease in tax receivables (26,376) 5,410 Change in other current assets and liabilities 2,106 (13,765) Change in other non-current assets and liabilities (38,071) (98) Increase/(decrease) in trade payables (1,398) (53,142) Increase/(decrease) in tax and social security payables 127 (1,826) B - Total cash from operating activities 144,281 237,693 of which taxes paid (40,064) (46,792) of which interest paid (3,714) (5,629) Cash flows from investing activities Investments in property. plant and equipment (93,694) (84,126) Investments in intangible assets (9,874) (37,650) Increase/(decrease) in trade payables (5,073) 27,710 Investments in other companies (26,265) 0 C - Total cash used in investing activities (134,906) (94,066) Cash flows from financing activities Disbursement/(repayment) of medium/long-term loans 57,000 (30,000) Net change in long-term financial liabilities (1,649) 31,758 Net change in short-term financial liabilities (8,018) (92,721) (Increase)/decrease in current financial assets (1,480) 1,063 (Increase)/decrease in assets held for sale 0 1,607 (Increase)/decrease in non-current financial assets 225 0 Payment of dividends (31,501) (15,000) D - Total cash from/(used in) financing activities 14,577 (103,293) E - Total cash flows (B+C+D) 23,952 40,334 F - Cash and cash equivalents at the end of the year (A+E) 118,253 94,301

In thousands of euros 73

Notes to the Consolidated Financial Statements of the Enav Group 74 ENAV – 2014 Financial Statements

1. General information

ENAV is a joint stock company with a sole shareholder which is wholly owned by the Ministry of Economy and Finance (MEF) which exercises its shareholder’s rights in agreement with the Ministry of Infrastructure and Transport (MIT), which is also the monitoring ministry in charge of civil aviation. ENAV SpA was established in 2001 following the conversion, under Law no. 665/1996, of the “Ente Nazionale di Assistenza al Volo (the National Agency for Flight Assistance)”, a public undertaking, that was formerly known as “Azienda Autonoma di Assistenza al Volo per il Traffico Generale” (A.A.A.V.T.A.G. – Autonomous Company providing Flight Assistance for General Traffic).

ENAV provides air traffic and management services and other essential navigation services in Italian airspace and to civil national airports for which it has competence, ensuring the highest technological and systemic standards in flight safety and the enhancement of the technology and infrastructure of flight assistance systems. In common with its other logistical infrastructures, the country’s “airspace infrastructure” needs constant maintenance and continuous development to guarantee safety, punctuality and operational continuity. This is moreover clearly stated in the European Union’s Single European Sky regulations that on the one hand have been introduced to design the future structure of the air traffic management system and on the other set the technological, qualitative, economic and environmental targets that all service providers must meet.

ENAV has its registered office in Via Salaria 716, Rome and operating facilities throughout the country.

The Group handles the operational management, support and maintenance of national air traffic control equipment and systems through its subsidiary Techno Sky Srl, acquired at the end of 2006, and engineering activities carried out through the SICTA Consortium.

The subsidiary ENAV Asia Pacific, a Malaysian registered company, carries out commercial activities for the ENAV Group in Asia and Oceania, while the subsidiary ENAV North Atlantic founded in January under US law in the legal form of a limited liability company (LLC) organized under the laws of the State of Delaware (USA) holds the investment in Aireon LLC which will produce the first global satellite surveillance system for air traffic control.

These financial statements were approved by the Company’s Board of Directors on 29 May 2015 and have been audited by Reconta Ernst & Young SpA. Notes to the Consolidated Financial Statements of the Enav Group 75

2. Form and contents of the Consolidated Financial Statements

The consolidated financial statements for the year ended 31 December 2014 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission which were effective at the balance sheet date,which include the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), the previous International Accounting Standards (IAS) and the interpretations of the Standard Interpretations Committee (SIC),as adopted by the European Union and contained in the relative EU Regulations published up to the date on which the Board of Directors authorized the issue of this document. For simplicity, the complete set of the above standards and interpretations are also referred to in the following as “IFRSs”.

The Group has prepared consolidation statements for the years ended 31 December 2011, 2012 and 2013 in accordance with Italian accounting standards which were approved by the Sole Director on 24 May 2012, 28 March 2013 and 23 April 2014 respectively.

The consolidated financial statements for the years ended 31 December 2011, 2012 and 2013 were restated in 2014 in accordance with IAS/IFRS international accounting standards and were approved by the Board of Directors on 24 October 2014; the date of transition to IFRSs for the ENAV Group was accordingly 1 January 2011.

In order to ensure compliance with the requirements of the accounting standard governing transition to IFRSs, the reconciliations required by IFRS 1 First-time Adoption of International Financial Reporting Standards were presented on restating the consolidated financial statements for the three years 2011, 2012 and 2013, namely reconciliations between the equity and the results arising from the application of Italian accounting standards and those arising from the application of IFRSs.

The consolidated financial statements consist of primary consolidated financial statements (statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows) and these notes, applying the requirements of IAS 1 Presentation of Financial Statements and the general criterion of historical cost, with the exception of items in the financial statements that are measured at fair value under IFRSs as stated in the accounting policies adopted for the individual items. The statement of financial position is presented using a format classifying assets and liabilities into current and non-current items, while in the income statement expenses are classified by nature. In addition to including profit or loss for the year, the consolidated statement of comprehensive income also includes changes in other items in equity, presentedseparately on the basis of whether they will or will not subsequently be reclassified to consolidated profit or loss. The consolidated statement of cash flows has been prepared using the indirect method and is presented by classifying cash flows into those arising from operating, investing and financing activities. 76 ENAV – 2014 Financial Statements

The consolidated financial statements are presented in euros, the functional currency of the ENAV Group and the currency of the country where the Group mainly carries out its activities. All the amounts included in the tables in the following notes and in the comments to these notes are expressed in thousands of euros unless otherwise stated.

Comparative figures for the previous year are provided for each item of the consolidated financial statements.

The classification of certain items has been changed with respect to the previous year, and in order to ensure comparability the corresponding item in the consolidated financial statements for the year ended 31 December 2013 has been reclassified, as required by IAS 1. More specifically, in this respect the main items involved are a reclassification of ¤23.6 million from property, plant and equipment to intangible assets to ensure a more suitable presentation of the items involved, a reduction of ¤1.8 million in current trade receivables and other current liabilities followingthe discounting to net present value of the “balance” receivables,which is presented as a direct reduction in those items, anda separation of the fair value of the derivative into its current and non-current portions, which areclassified in provisions for risks and charges and financial liabilities.

3. Consolidation scope and criteria

The consolidated financial statements include the financial statements of ENAV SpA and its subsidiaries as of and for the year ended 31 December 2014.

More specifically, entities are consolidated when the parent company exercises control, either by way of the direct or indirect ownership of shares having the majority of the votes to be exercised at a general meeting of shareholders or by exercising a dominant interest expressed by the power to govern the financial and operating decisions of the entity so as to obtain benefits from its activities, regardless of shareholding relationships.

Control is obtained when the Group is exposed to or has the right to variable returns from its involvement with the investee and at the same time has the ability to use its power over the investee to affect the amount of its returns.

More specifically, the Group controls an investee if and only if it has:

l power over the investee, meaning it has existing rights that give it the current ability to direct the relevant activities of the investee; l exposure, or rights, to variable returns from its involvement with the investee; l the ability to use its power over the investee to affect the amount of its returns. Notes to the Consolidated Financial Statements of the Enav Group 77

Controlled entities are included in the consolidation scope from the date the Group obtains control and leave the scope when the Group loses that control. The assets, liabilities, income and expenses of subsidiaries acquired or disposed of during the year are included in comprehensive income from the date on which the Group gains control until the date that control ceases. The newly-formed company ENAV North Atlantic, wholly owned by ENAV SpA, entered the consolidation scope for the first time in 2014. The following tables sets out the companies included in the consolidation scope, with share or quota capital expressed in thousands of euros:

Share or Consolida- % holding Company name Headquarters Business Currency quota tion method direct group capital

Subsidiaries Techno Sky Srl Rome Services Euro Line-by-line 1,600 100% 100% Malaysian ENAV Asia Pacific Kuala Lumpur Services Line-by-line 127 100% 100% ringgit SICTA Consortium Naples Services Euro Line-by-line 1,033 60% 100% ENAV North Atlantic Miami Services US dollar Line-by-line 28,084 100% 100%

The financial statements of subsidiaries are prepared as of 31 December, the reference date for the consolidated financial statements, specifically prepared and approved by the management bodies of each individual entity and adjusted as necessary to comply with the accounting principles and polices used by the ENAV Group. 78 ENAV – 2014 Financial Statements

Subsidiaries are consolidated on a line-by-line basis as follows:

l like items of assets and liabilities, income and expenses of the companies consolidated are combined line by line in the financial statements l the carrying amount of investments is eliminated against the corresponding portion of the equity of investees, with fair value being allocated to the individual assets and liabilities at the date of acquisition of control; l any gains or losses not yet realized by the Group because they arise from intragroup transactions are eliminated, together with the entries that give rise to receivables and payables and income and expense between the consolidated companies; l consolidation adjustments take into account their deferred tax effect.

Current/non-current classification

The Group’s assets and liabilities are classified on a current/non-current basis.

An asset is current if:

l it is expected to be realized in, or is intended for sale or consumption in, the Group’s normal operating cycle; l it is held primarily for the purpose of being traded; l it is expected to be realized within twelve months after the balance sheet date; or l it is a cash or cash equivalent unless it is restricted from being exchan- ged or used to settle a liability for at least twelve months after the balance sheet date.

All other assets are classified as non-current.

A liability is current if:

l it is expected to be settled in the Group’s normal operating cycle; l it is held primarily for the purpose of being traded; l it is due to be settled within twelve months after the balance sheet date; or l the Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

All other liabilities are classified as non-current. Notes to the Consolidated Financial Statements of the Enav Group 79

Business combinations

Business combinations are accounted for by the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value at the acquisition date, and the amount of any non- controlling interest in the acquiree. For every business combination which does not lead to 100% ownership, the Group measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition costs are expensed in the year and classified as administrative expenses.

When the Group acquires a business, it classifies or designates the financial assets acquired or the liabilities assumed in accordance with the pertinent contractual terms, economic conditions and other factors that exist at the acquisition date. This includes an assessment to determine whether an embedded derivative should be separated from the host contract.

If a business combination is achieved in stages, the previously held equity interest is remeasured at fair value at the acquisition date and any resulting difference is recognized in profit or loss.

Any contingent consideration requiring recognition is measured by the acquirer at its fair value at the acquisition date. Changes in the fair value of contingent consideration classified as an asset or liability, as a financial instrument that is governed by IAS 39 Financial Instruments: Recognition and Measurement, are recognized in profit or loss or in other comprehensive income. If the contingent consideration does not fall within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. If the contingent consideration is classified in equity, its carrying amount is not remeasured and any subsequent settlement is accounted for within equity.

Goodwill is initially recognized at cost, represented by the difference between the aggregate of the consideration transferred and the carrying amount of any non-controlling interest and the net identifiable assets acquiredand the liabilities assumed by the Group. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. In order to carry out impairment testing the goodwill acquired in a business combination is allocated at the acquisition date to each of the Group’s cash- generating units in which benefits from the synergies of the combination are expected to arise, regardless of whether the other assets and liabilities of the entity are allocated to that unit.

If goodwill is allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of is included in the carrying amount of the operation whendetermining the gain or loss on disposal. The goodwill associated with the operation disposed of is measured on the basis of the values relative tothe operation disposed of andthe portion of the cash-generating unit retained.

Each unit or group of units to which goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes. 80 ENAV – 2014 Financial Statements

The Group recognized a consolidation difference on the acquisition of Techno Sky Srl since the price for the company exceeded the book value of its equity, an excess that could not be allocated to specific items and which is accounted for as goodwill. This excess has been tested for impairment as discussed below.

Discretional assessments and significant accounting estimates

The preparation of the Group’s consolidated financial statements requires the directors to make discretional assessments, estimates and assumptions that affect the values of revenues, costs, assets and liabilities and the disclosures relating to these items, and an indication of contingent liabilities. The uncertainty inherent in these assessments and estimates could lead to results that in the future may require a significant adjustment to be made to the carrying amount of these assets and liabilities.

Discretional assessments

In applying the Group’s accounting principles and policies the directors have taken decisions based on the following discretional assessments, excluding those that require estimates to be made, which have a significant effect on the carrying amounts of items in the financial statements.

Presentation of revenues

The presentation of revenues forms part of management’s discretion, in particular as far as the “balance” and related discounting effect are concerned: this item consists ofcharge adjustments arising from the difference between forecast service units and actual service units and is calculated pursuant to Community Regulations.

Definition of CGUs

Management has identified the following two cash-generating units (CGUs) on the basis of the Group’s current structure:

l Air navigation services: the CGU coincides with the legal entity ENAV, the parent company, whose core business is the provision of air traffic and management services as well as the provision of other services essential for navigation, in the Italian skies and at the national civil airports under its jurisdiction, ensuring the maximum technical and systemic standards in flight safety and the enhancement of the technology and infrastructure of flight assistance systems. l Maintenance services: the CGU coincides with the subsidiary Techno Sky Srl, whose core business is the technical management and maintenance of air traffic control systems.

Notes to the Consolidated Financial Statements of the Enav Group 81

Identification of related parties

Based on its assessment to identify related parties, management believes that the other entities controlled by the Ministry of Economy and Finance are not related parties as defined by IAS 24.

Estimates and assumptions

Set out below are the key assumptions regarding the future and other important causes of uncertainty in estimates, which at the balance sheet date present a considerable risk of giving rise to significant adjustments to the carrying amounts of assets and liabilities by the end of the following year. The Group has based its estimates and assumptions on data and information available at the date of preparation of the consolidated financial statements. Current circumstances and assumptions about future development could, however, vary due to changes in the market or events outside the Group’s control. These changes, if they occur, are reflected in the assumptions.

Impairment of assets

An asset or cash-generating unit (CGU) is impaired when its carrying amount exceeds its recoverable amount. At each reporting date, or when circumstances or events require more frequent testing, the Group carries out an assessment for all non-financial assets to determine whether there is any indication of impairment.

Goodwill and other intangible assets with indefinite useful lives are tested for impairment annually and also during the year if there is any indication of impairment. Other non-financial assets are tested for impairment annually, when there are indications that their carrying amount might not be recovered. In the absence of active markets where fair value may be identified, the Group carries out this testing by determining the value in use of a CGU using the discounted cash flow method. When preparing the value in use calculations the directors have to estimate the expected cash flows of the CGU and identify a suitable discount rate in order to calculate the present value of those flows. The discounted flows used for the following five years are taken from the business plans approved by management, which are drawn up on the basis of assumptions that to a large extent are theoretical.

At each balance sheet date the Group assesses whether there is any indication that intangible assets with a finite useful life or property, plant and equipment may be impaired. Impairment testing is carried out if such indicators exist.

The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use, calculated by individual asset, unless the asset generates cash flows that are not largely independent 82 ENAV – 2014 Financial Statements

of those generated by other assets or groups of assets in which case the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

In calculating the recoverable amount, the Group determines fair value less costs to sell by discounting estimated future cash flows to their present value using a pre-tax discount rate that reflects market assessments of the time value of money and the risks specific to the asset.

For estimating value in use, future cash flows are taken from the above- mentioned business plans, which represent the Group’s best estimate of the estimated economic conditions during the period of the plan. The plan’s projections normally cover a period of five years. Future cash flows are estimated by referring to current conditions; accordingly the estimates do not take into account the benefits deriving from any future restructuring to which the Company is not yet committed or any future investments improving or optimizing the asset or the unit.

If the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is impaired and its carrying amount is consequently reduced to its recoverable amount.

The impairment losses of operating assets are recognized in profit or loss. An impairment loss recognized in prior periods is only reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset is increased to its recoverable amount, although the increased carrying amount may not exceed that which would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years. The reversal of an impairment loss is always recognized in profit or loss. After the reversal of an impairment loss is recognized, the depreciation or amortization charge for the asset is adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a straight-line basis over its remaining useful life.

The estimates of these amounts are considered recoverable and reasonable; nevertheless, possible changes in the assumptions underlying the estimates on which the calculation of the recoverable amounts is based could produce different valuations. Notes to the Consolidated Financial Statements of the Enav Group 83

Deferred taxes

Deferred tax assets are recognized for all deductible temporary differences and any tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and/or tax losses can be utilized. Management is required to make a significant discretional assessment to determine the amount of deferred tax assets that can be recognized. The probable timing and amount of future taxable profits has to be estimated as well as a future tax planning strategy.

The directors believe that the recovery of the balance stated in the financial statements is highly probable; nevertheless, should it be noticed that the Group is unable to recover all or part of recognized deferred tax assets in future years, the resulting adjustment is recognized in profit or loss in the period in which this circumstance occurs.

Other items

The following financial statement items are affected by management’s estimates and assumptions: l the allowance for inventory losses; l the bad debts allowance; l the determination of useful lives for calculating depreciation and amortization; l employee benefits; l provisions for risks and charges.

The bad debts allowance and the allowance for inventory losses respectively reflect estimates of the Group’s bad debt losses and of the amount of spare parts that have become obsolete and can no longer be used for the systems and equipment to which they relate. Although it is believed that these allowances are reasonable, the use of different assumptions or a change in economic conditions could lead to changes and accordingly have an effect on results.

The useful lives allocated to assets reflects the estimate made by management of the period of time over which it is expected that each individual asset can be used by the Group. Changes in economic conditions or in the assumptions underlying the estimate could affect the determination of the depreciation or amortizationrecognized in profit or loss.

The calculation of the costs and liabilities associated post employments benefits in Italy (TFR) are based on estimates made by actuarial experts, who use a combination of statistical and actuarial factors such as data relating to previous years and forecasts of future costs, as well as assumptions regarding changes in discount rates, future salary levels and variations in inflation rates. These estimates could differsignificantly from the actual results due to the way in which such factors evolve, and have an effect on the quantification of the relative costs. 84 ENAV – 2014 Financial Statements

The ENAV Group is party to certain litigation for which it is not always possible to predict the final outcome and which in certain casescould end unfavorably. Provisions have been recognized to cover all the significant liabilities in the cases in which the Group’s counsel have concluded that an unfavorable outcome is probable and been able to make a reasonable estimate of the loss.

Translation of financial statements of foreign operations

The financial statements of subsidiaries expressed in a currency other than the euro, which is the Group’s functional currency, are translated into euros in accordance with the following rules:

l assets and liabilities are translated at the closing rate at the balance sheet date; l income and expenses are translated at the average exchange rate for the period, as this is considered to be a reliable approximation to the result that would be obtained by using the exchange rates at the date of each transaction; l the translation reserve, which forms part of consolidated equity, contains the foreign exchange differences arising from the translation of profit or loss items at a rate other than that at the balance sheet date and those arising from the translation of opening net assets at a rate other than that at the balance sheet date. This reserve is reclassified to profit or loss on the disposal of the relative investment.

The following table sets out the exchange rates used to translate the financial statements of companies whose functional currency is not the euro:

Average exchange rate for the year ended Exchange rate at 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Malaysian ringgit 4,3472 4,2237 4,2473 4,5221 US dollar 1,3288 0 1,2141 0

Translation of items in foreign currency

Assets and liabilities arising from transactions in a currency other than the functional currency are recognized at the exchange rate at the date of the transaction. At year end these assets and liabilities are translated using the exchange rate at the balance sheet date and the relative exchange gains and losses are recognized in consolidated profit or loss. Notes to the Consolidated Financial Statements of the Enav Group 85

4. Accounting standards

The most significant accounting principles and policies used in preparing the consolidated financial statements are as follows.

Property, plant and equipment

Property, plant and equipment is recognized at cost, including any costs directly attributable and necessary for the asset to be capable of operating in the manner intended by its purchase. Costs for maintenance and repairs which are unlikely to enhance the value of an asset or extend its useful life are expensed in the year in which they are incurred; otherwise they are capitalized.

Property, plant and equipment is stated net of accumulated depreciation and any impairment losses. Depreciation is charged on a straight-line basis over the estimated useful life of the asset for the business; this is reviewed annually, and any changes, if necessary, are accounted for on a prospective basis. If a depreciable asset is made up of distinctly identifiable elements whose useful lives differ significantly from those of the other components of the asset, depreciation is calculated for each of these components separately using the component approach. Depreciation starts when an asset is available for use. 86 ENAV – 2014 Financial Statements

The following table sets out the estimated useful lives of the main categories of property, plant and equipment:

Category Description Useful life (years)

Buildings Buildings 25 Buildings - extraordinary maintenance 25 Light constructions 10 Plant and machinery Radiophonic systems 10 Recording systems 7 Synchronization systems and control centers 10 Manual and electromechanical centers 7 Electronic centers and systems 10 Radio bridges. A,F, and amplification 10 equipment Power supply systems 11 Industrial and commercial Signaling systems and runway equipment 10 equipment Miscellaneous small equipment 7 Other assets Electronic machines and telephone systems 7 Ordinary office furniture and machines 10 Data processing equipment including 5 computers Motor vehicles. motorcycles and similar 4 Corporate aircraft 15 Equipment for corporate aircraft and radio- 10 electric measurement systems Notes to the Consolidated Financial Statements of the Enav Group 87

The carrying amount of property, plant and equipment is assessed for impairment losses if events or changes indicate that the carrying amount cannot be recovered. If an indication of this nature exists, and if the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. The recoverable amount of property, plant and equipment is the higher of its fair value less costs to sell and its value in use.

If an asset does not generate cash flows that are largely independent the recoverable amount is determined for the cash-generating unit to which that asset belongs. Impairment losses are recognized in profit or loss as part of write-downs and impairment losses and are reversed when the reasons leading to that loss no longer hold.

On the sale of an asset or if no future economic benefits are expected from its use an asset is derecognized and any gain or loss (calculated as the difference between the disposal proceeds and the carrying amount) is recognized in profit or loss in the year of derecognition.

Intangible assets

Intangible assets are identifiable assets without physical substance that are controlled by the Group and from which future economic future benefits are expected to flow to the Group. They are recognized at purchase cost, including any directly attributable costs required to make the asset available for use. Intangible assets such as goodwill acquired as part of business combinations are recognized at their fair value at the acquisition date, if that value can be measured reliably. Internally generated intangible assets are not capitalized and are recognized in profit or loss in the year the related costs are incurred.

The useful life of an intangible asset may be finite or indefinite.

Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives and are tested for impairment whenever there are indications that they may be impaired. The residual useful life of an asset is reviewed at each year end or more frequently if necessary. Changes to the expected useful lives of assets or the way in which the future economic benefits associated with the asset are consumed by the Group are recognized by changing the amortization period and/or method and are treated as changes in accounting estimate: the amortization charge for intangible assets with a finite useful life is recognized in profit or loss in the cost category consistent with the function of the intangible asset.

Gains and losses on the disposal of intangible assets are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss on disposal.

Intangible assets with indefinite useful lives are not amortized and are tested annually for impairment at both an individual and cash-generating 88 ENAV – 2014 Financial Statements

unit level. The assessment that an intangible asset has an indefinite life is reviewed annually to determine whether that assessment still holds. If not, the change in the useful life assessment from indefinite to finite is applied on a prospective basis.

The Group does not have any intangible assets with indefinite useful lives with the exception of the goodwill arising on the business combination.

Investments in other companies

Investments in other companies are measured at fair value. If fair value cannot be reliably determined the cost method is used.

Financial assets

Financial assets are initially recognized at fair value, adjusted for any transaction costs, and are subsequently measured at amortized cost using the effective interest method less any impairment losses. Impairment losses consist of the difference between the carrying amount and the present value of future cash flows discounted using the original effective interest rate.

Trade and other receivables

Trade receivables and other receivables are initially accounted for at fair value and are subsequently measured at amortized cost less a bad debts allowance.

If the due date of trade receivables and other current assets does not fall within normal commercial terms and the receivables or assets do not bear interest, an analytical discounting process is carried out on the basis of assumptions and estimates. Trade receivables whose due dates do not fall within normal commercial terms are not discounted. Trade and other receivables are classified as current assets, except for those having a due date exceeding twelve months from the balance sheet date which are classified as non-current assets. Notes to the Consolidated Financial Statements of the Enav Group 89

Inventories

Inventories, mainly consisting of spare parts for specific use relating to facilities and equipment for flight control, are measured at weighted average cost. If items can no longer be used because they are obsolete, they are written down through the allowance for inventory losses as a direct deduction from the item.

Cash and cash equivalents

Cash and cash equivalents consist of available or very short-term bank deposits and cash on hand. Cash and cash equivalents are recognized at nominal value which corresponds to fair value.

Capital management

For capital management purposes, capital consists of share capital and all other capital and revenue reserves attributable to the parent company’s shareholder. The main objective of capital management is to maximize shareholder value. The Group manages its balance sheet structure and makes adjustments on the basis of economic conditions and the requirements of covenants. For the purpose of maintaining or adjusting its balance sheet structure, the Group may take action on dividends paid or repay capital to the shareholder.

To achieve the above objective, the aim of capital management is among other thingsto ensure that the Group satisfies the loan covenants that determine its balance sheet structure requirements. A breach of the covenants would allow the lending banks to request immediate repayment of loans and other forms of financing.

Reference should be made to notes 33 and 32 of the consolidated financial statements and the separate financial statements respectively for a description of outstanding covenants.

Derivative financial instruments

The derivative financial instruments acquired by the ENAV Group consist of forward foreign exchange contracts hedging currency risk. Derivative financial instruments are recognized at fair value initially at the contract date and then subsequently at each reporting date. Derivatives are accounted for as financial assets if their fair value is positive and as financial liabilities if their fair value is negative.

Derivative financial instruments used for hedging purposes, the only kind acquired by the ENAV Group, qualify for hedge accounting if and only if the 90 ENAV – 2014 Financial Statements

following conditions are met:

l at the inception of the hedge there is formal designation and docu- mentation of the hedging relationship, the Group’s risk management objective and the strategy for undertaking the hedge; l the hedge is expected to be highly effective; l the effectiveness of the hedge can be reliably measured; l the hedge is highly effective throughout the various periods for which it was designated.

If all the above conditions are met for the transaction arranged by the Group, the hedge is accounted for as a cash flow hedge and accordingly the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is classified as a change in other comprehensive income and recognized in the cash flow hedge reserve in equity, while the ineffective portion of the gain or loss on the hedging instrument is recognized in profit or loss.

The amounts recognized as part of other comprehensive income are reclassified to profit or loss in the period in which the hedged transaction affects profit or loss, for example if a sale occurs or if there is a write-down.

If a hedging instrument expires or is sold, terminated or exercised without replacement, or if it is no longer designated as a hedging instrument, or if the hedge no longer meets the criteria for hedge accounting, any gain or loss previously recognized in other comprehensive income remains separately recognized in equity until the forecast transaction occurs.

The Group does not enter derivative contracts for speculative purposes.

The Group complies with the requirements of IFRS 13 whenever IFRSs require fair value measurement to be used for recognition and/or measurement purposes or in providing disclosures with respect to a specific asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of instruments listed on public markets is determined by reference to the bid price at the reporting date.

The fair value of unlisted instruments is measured by reference to financial valuation techniques.

Financial assets and liabilities measured at fair value are categorized in the three levels of the fair value hierarchy described in the following on the basis of the relevance of the inputs used in determining the fair value.

More specifically:

Level 1: financial assets and liabilities whose fair value is determined on the basis of quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2: financial assets and liabilities whose fair value is determined on the basis of inputs other than quoted prices included in Level 1 Notes to the Consolidated Financial Statements of the Enav Group 91

but which are observable in the market, either directly or indirectly; Level 3: financial assets and liabilities whose fair value is determined on the basis of unobservable market data.

Loans, trade payables and other financial liabilities

Loans, trade payables and other financial liabilities are initially recognized at cost, corresponding to the fair value of liabilities, less any directly attributable transaction costs, and are subsequently measured at amortized cost using the effective interest method less any impairment losses. Loans, trade payables and other financial liabilities are classified as current liabilities unless they have a contractual due date exceeding twelve months from the balance sheet date when they are classified as non-current liabilities.

Employee benefits

Liabilities for short-term employee benefits paid during the employment relationship are measured at the amount that has accrued at the balance sheet date and allocationsare classified as personnel costs.

The ENAV Group is party to both defined contribution plans and defined benefit plans. The defined contribution plans are managed by third party fund managers with respect to whom the Group has no obligations and to whom it pays over contractually agreed contributions which are recognized as personnel costs on an accrual basis.

The defined benefit plan consists of the Italian employees’ leaving entitlement scheme (Trattamento di Fine Rapporto or TFR), with the relative amounts accrued through 31 December 2006; in accordance with Law no. 296 of 27 December 2006, on the basis of the implicit and explicit decisions taken by the workers the amounts accruing after that date are transferred to supplementary pension schemes or the treasury fund managed by the Italian national social security organization INPS. In the case of the defined benefit plan, the amount of the benefit due to employees can only be quantified after the termination of the employment relationship and is based on a series of factors such as age, the number of years of service and salary levels. The obligations deriving from this plan are calculated by an independent actuary using the projected unit credit method. The liability recognized in the financial statements accordingly coincideswith the actuarial valuation and any actuarial gains or losses arising from the calculation are recognized in other comprehensive income in the period in which they arise, taking into account the deferred tax effect. 92 ENAV – 2014 Financial Statements

Provisions for risks and charges

Provisions for risks and charges are recognized for losses and charges of a specific nature whose existence is certain or probable but for which the amount and/or date of occurrence cannot be determined. Provisions are only recognized when the Group has a present obligation, legal or constructive, arising from a past event, when it is probable that a future outflow of economic benefits will be required to settle the obligation and when it is possible to make a reliable estimate of that amount.

Where the financial effect of the time value of money is material and the dates of settling the obligations can be reliably estimated, the provisions are discounted using a pre-tax rate that reflects, where suitable, the market’s current assessment of the time value of money and, if applicable, the risks specific to the liability. The increase in the carrying amount of a provision as the result of the discounting process is recognized as financial expense.

Changes in the estimates of allocations to provisions are recognized in profit or loss in the period in which the change occurs and as an increase in the liability. Downwards changes in estimates are recognized by making a counter-entry to the liability up to its carrying amount, whileany excess is recognized in profit or loss in the line item to which the provisions refer.

Amounts included in provisions for risks and charges are classified as either current or non-current depending on the estimated date on which the liability will be settled or extinguished.

Charge Stabilization Provision

The Charge Stabilization Provision was created under a resolution adopted by the parent company’s shareholders on 9 May 2003 by allocating ¤72,697 thousand of the reserve for finalizing and settling tax receivables (Law no. 289/02). This increased in subsequent years following allocations of part of ENAV’s net income approved by the shareholders of the parent company, andis used solely for business purposes.

The Charge Stabilization Provision falls within the scope of government grants, as treated by IAS 20. The grant is initially recognized as a liability (classified in “Other non-current liabilities”). This liability is then released to income onthe determination of the charge as a means of “supplementing” the reduced revenues earned by the parent company in the same year through acharge stabilization process. More specifically, the Charge Stabilization Provision is used when ENAV decides to reduce charges;in this case a part of the costs incurred is not to passed on to carriers but isoffset by releasing a portion of the grant recognized as a liability to income, thereby ensuring economicity. The following points further support these comments: Notes to the Consolidated Financial Statements of the Enav Group 93

l the fund has the nature of a grant used for off-setting purposes; l European regulations on the determination of charges establish that a member state may reduce charges by means of subsidies/grants that enable the operator to offset losses; l resolutions of shareholders’ meetings to create or make changes to the provision are adopted on the basis of Regulation (EC) no. 1794/06.

Revenues

Revenues are recognized on an accrual basis to the extent it is probable that economic benefits will be obtained by the Group and the relative amount can be reliably determined.

Balance

At an international level, until 31 December 2011 Eurocontrol member countries used a cost recovery route charge system. This system is based on the concept that revenues should be proportional to the costs incurred for route air navigation control services. By virtue of this principle, charges were calculated on the basis of the forecast amount that would lead to economic break-even. At the end of the year, if revenues exceeded the costs incurred this would lead to a “negative balance” (over-recovery), giving rise to an adjustment to profit or loss for the extra revenues and the recognition of a “balance” liability. If on the other hand revenues were lower than the costs incurred,an increase in revenues would be recognized together with a “positive balance” (under recovery). In accordance with the cost recovery principle, the “balance” wasthe result of the correcting mechanism used to adjust revenues to the actual amount of the costs incurred and subject to charges. The effects of this mechanism were included for charging purposes from the second year following that of reference and accounted for in profit or loss with a sign opposite to that of their recognition.

Starting in 2012, and as the result of the introduction of the route air navigation services system, a new management system was introduced in accordance with EU Single European Sky legislation that is based on measuring and optimizing operating and economic performance, with the resulting decision to abandon the full cost recovery system. The means for implementing the service scheme is the National Performance Plan approved for the three-year period 2012-2014 which sets out the actions and targets to be achieved in the reference period. The efficiency targets provide for the introduction of risk elements to be borne by the provider relating to both traffic and costs. More specifically, the traffic risk mechanism envisages the sharing of the traffic risk between providers and users of the air space, for which variations, positive and negative, of up to 2% of actual traffic compared to plan are fully borne by the providers, while variations between 2% and 10% are shared, with 70% of these being borne by the airline companies and 30% by the providers. In accordance with the above-mentioned rules, any positive or negative difference with respect to 94 ENAV – 2014 Financial Statements

the traffic risk leads to an adjustment to route revenues, recognized under the line item “balance charge adjustment for the year”.

As far as the cost risk is concerned, the possibility of passing on to air space users the full amount of any differences between the budgeted amount and the actual figure at the end of the year has been eliminated. These variations, either negative or positive, are still borne by the providers in their financial statements.

Since 2010, for terminal services the balance is determined within the meaning of Regulation (EC) no. 1794/06, which amended the system for determining charges, equating it to what was already happening from a route perspective, calculated using a cost-cap logic in accordance with the program agreement entered into with the competent ministries; any difference between the planned and actual figures leads to an adjustment to terminal revenues recognized under the line item “balance charge adjustment for the year”.

The balance charge adjustment is not included in the charge until two years later, while in the current year the balance asset or liability recognized customarily in the two previous years is transferred to profit or loss through the item “utilization of the balance”.

Given that the recovery of the asset and liability balances is deferred over time, in accordance with IAS 18 the parent company measures such revenues at fair value, discounting them using the average interest rate for which it obtains funds on the third party market. The adjustment is recognized as a reduction in the balance receivable or payable to which it refers and as a reduction in revenues for the year. This amount is released to profit or loss in subsequent years for the portion of interest income accruing in the period.

If the plans for the recovery of the balances in the charges are changed, the Group adjusts the balance receivable/payable to reflect the effective and recalculated estimated cash flows. The carrying amount is then recalculated by determining the present value of the future cash flows using the original interest rate; in addition to adjusting the balance receivables and payables, the difference arising is also recognized in profit or loss as financial income or expense. Being a change in estimate arising from the fact that the Group has obtained new or more accurate information, the variation in the balance recovery plans does not lead to an adjustmentto previous financial statements and any changes are applied prospectively.

Grants

Revenue grants are recognized on an accrual basis in the year in which the reasonable assurance arises that the Group is entitled to receive them, regardless of the date of receipt.

Capital grants are recognized when there is reasonable assurance that the conditions for receiving the grant will be met and that the grants will Notes to the Consolidated Financial Statements of the Enav Group 95

be received. Capital grants are recognized as a liability and are released to income over the periods required to match them in proportion to the depreciation of the assets to which they refer using the “income method”.

Costs

Costs are measured at the fair value of the amount recognized and are charged to profit or loss on an accrual basis, matched as appropriate with any revenues.

Financial income and expense

Financial income and expense are recognized on an accrual basis on the basis of the interest earned or due on the relative financial assets and liabilities, using the effective interest rate and, where envisaged, the legal interest rate.

Income taxes

Current taxes are calculated on the basis of an estimate of taxable income and in compliance with the legislation in force in the countries in which the Group carries out its activities. Current tax liabilities are recognized in the balance sheet less any taxes paid on account.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periods when the asset is realized or the liability is settled. A deferred tax asset is recognized when it is probable that taxable profit will be available against which the underlying deductible temporary difference can be utilized, unless the deferred tax asset arises from the initial recognition of an asset or a liability in a transaction that: i) is not a business combination; ii) at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).

Deferred tax assets and liabilities are recognized directly in profit or loss, except for those relating to items recognized in other comprehensive income or equity. In these cases the relative deferred tax assets or liabilities are also recognized in comprehensive income or equity.

The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxation authority.

Deferred tax assets and deferred tax liabilities are classified as non-current assets and liabilities. 96 ENAV – 2014 Financial Statements

New accounting standards, interpretations and amendments adopted by the company

As an addition to the accounting standards adopted to prepare the consolidated financial statements for the year ended 31 December 2013, the following section sets out the main changes occurring in 2014 to the accounting standards of first-time application effective from 1 January 2014 that are of relevance to the Group, together with interpretations and amendments to standardswhich are not yet effective and have not yet been adopted by the European Unionbut which could apply to the consolidated financial statements in the future.

IFRS 10 Consolidated Financial Statements. This standard supersedes SIC 12 Consolidation – Special Purpose Entities and, limited to the part relating to consolidated financial statements, IAS 27 Consolidated and Separate Financial Statements. The standard introduces a new model for assessing whether control exists (an essential assumption for consolidating an equity investment), leaving the consolidation techniques provided in the previous IAS 27 unchanged. Unlike the previous accounting standards with respect to which an analysis of the assumption of control was connected, if a majority of real or potential voting rights is not held, on analyzing the risks and rewards connected with the investment the new standard IFRS 10 places emphasis on the existence of the following conditions, for which an assessment is essential for determining whether control exists: the investor’s exposure to variable returns from involvement with the investee; and a connection between power and returns, meaning the investor’s ability to use its power over the investee to affect the amount of the investor’s returns. The application of this standard, on a retrospective basis, did not lead to any changes in the preparation of these consolidated financial statements.

IAS 27 Separate Financial Statements. IAS 27 was amended when IFRS 10 and IFRS 12 were issued: apart from the change of the standard’s name, the amendments regard the elimination of all references to the preparation of consolidated financial statements, leaving the remaining provisions unchanged. The present IAS 27 only deals with the recognition and measurement criteria and disclosure requirements for investments in subsidiaries, associates and joint ventures when an entity prepares separate financial statements.

IFRS 11 Joint Arrangements. This standard supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers. The new standard introduces a different process for assessing joint arrangements, giving preference to an analysis of the rights and obligations assigned to the parties to the arrangement rather than an assessment of the form of the arrangement on which the previous model was based. The application of this standard, on a retrospective basis, did not lead to any changes in the consolidation scope used to prepare these consolidated financial statements.

IAS 28 Investments in Associates and Joint Ventures. IAS 28 was amended when IFRS 11 and IFRS 12 were issued: the new standard deals with the application of Notes to the Consolidated Financial Statements of the Enav Group 97

the equity method, which must be used in consolidated financial statements to account for investments in associates and joint ventures. The application of this standard had no effect on these consolidated financial statements.

IFRS 12 Disclosure of Interests in Other Entities. This standard governs the disclosures that entities must provide for interests in subsidiaries, joint operations and joint ventures, associates and structured entities. The application of this standard had no effect on these consolidated financial statements.

Amendments to IAS 32- Offsetting Financial Assets and Financial Liabilities. IAS 32 states that a financial asset and a financial liability must be offset and the net amount presented in the balance sheet when and only when an entity: l currently has a legally enforceable right to set off the recognized amounts; and l intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The amendments introduced clarify certain essential requirements for of- fsetting financial assets and liabilities.

The application of this standard, on a retrospective basis, had no effect on these consolidated financial statements.

Amendments to IAS 36- Recoverable Amount Disclosures for Non-Financial Assets. The amendments made to this standard consist of eliminating the disclosures introduced by IFRS 13 and requiring specific disclosures on the measurement of fair value to be made when the recoverable amount of the impaired assets is based on fair value less costs to sell. In addition, the amendments require disclosures on the recoverable value of the assets or CGU for which an impairment loss has been recognized or reversed during the period. The application of this standard, on a retrospective basis, had no effect on these consolidated financial statements.

Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting. The aim of the amendments is to enable companies, when specific conditions are met, not to discontinue hedge accounting in circumstances when a hedging instrument is novated with a central counterparty (CPP) as a result of laws and regulations. The amendments are applicable retrospectively for years beginning on 1 January 2014. The future application of the new requirements will have no effect for the Group. The application of this standard had no effect on these consolidated financial statements.

New accounting standards, interpretations and amendments for periods beginning on 1 January 2015 not adopted by the Group

Amendments to IAS 19- Defined Benefit Plans: Employee Contributions. The aim of the amendments, issued in November 2013, is to clarify how to recognize the contributions paid by employees as part of a defined benefit plan. More specifically, when contributions are linked to service they must 98 ENAV – 2014 Financial Statements

be recognized as a reduction in the service cost: over the period when employees render their service if the amount of contributions is dependent on the number of years of service or in the period in which the service is rendered if the amount of contributions is independent of the number of years of service.

The amendments are applicable retrospectively, subject to adoption, for years beginning on 1 January 2015. The Group is assessing any effects that may arise from the future application of the new requirements.

IFRS 9 Financial Instruments. Issued in November 2009 and subsequently revised, this standard represents the first of the three stages of the project to replace IAS 39. The new standard established the criteria for classifying financial assets and liabilities. Financial assets must be classified on the basis of an entity’s business model and the characteristics of the associated relative contractual cash flows. In addition, the amendments introduced in November 2013 removed a mandatory effective date for the standard, which may be applied immediately. The Group is assessing the accounting effects of applying this standard.

IFRS 14 Regulatory Deferral Accounts. The new standard allows first-time adopters of IFRSs to continue measuring the amounts relating to rate- regulated activities in accordance with their previous accounting standards. The standard does not apply to companies that already prepare financial statements in accordance with international accounting standards. The amendments will applicable retrospectively, subject to adoption, for years beginning on or after 1 January 2015. The application of this standard will not have any effect for the Group.

IFRS 15 Revenue from Contracts with Customers. This standard, which replaces IAS 18, IAS 11, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31, establishes a framework of reference for recognizing and measuring revenues and the related disclosures. IFRS was issued in May 2014 and will apply for years beginning 1 January 2017. The Group is assessing the effects arising from the application of the new standard.

Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortization. The IASB issued a number of amendments to IAS 16 and IAS 38 on 12 May 2014, with the aim of clarifying which depreciation or amortization methods are acceptable within the scope of these standards. In particular, the amendments clarify that a method of depreciation or amortization based on the revenues that may be generated by the tangible or intangible asset is not considered suitable. The amendments must be applied prospectively from years beginning on 1 January 2016; early application is permitted. These amendments have not yet been adopted by the European Union and the Group does not envisage significant accounting effects to arise on the application of the amendments.

Amendments to IFRS 11- Accounting for Acquisitions of Interests in Joint Operations These amendments provide clarification on the accounting treatment to be followed on the acquisition of interests in joint operations. The IASB requires these amendments to apply to financial statements Notes to the Consolidated Financial Statements of the Enav Group 99

beginning on or after 1 January 2016. These amendments have not yet been adopted by the European Union and the Group does not envisage significant accounting effects to arise on the application of the amendments.

Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. On 11 September 2014 the IASB issued amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures in order to coordinate the accounting treatment of the sale or contribution of assets between an investor and its associates or joint ventures. The amendments introduced have the aim of clarifying the accounting treatment of gains and losses deriving from transactions with joint ventures or associates accounted for using the equity method. The IASB requires these amendments to apply to financial statements beginning on 1 January 2016. These amendments have not yet been adopted by the European Union and the Group does not envisage significant accounting effects to arise on their application.

Amendments to IAS 27 -Equity Method in Separate Financial Statements. The amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The amendments are effective for years beginning on or after 1 January 2016; early application is permitted. The Group does not envisage significant accounting effects to arise on the application of the amendments.

Amendments to IAS 1 – Disclosure Initiative. The amendments proposed principally regard the materiality of disclosures, the requirements for using subtotals, the possibility of separating out items, the structure of the notes and the presentation of the share of OCI of associates and joint ventures accounted for using the equity method. The amendments are applicable from 1 January 2016 but early application is permitted. The amendments are currently being reviewed by the European Union. As they regard amendments to information to be provided there is no effect on the consolidated financial statements.

Amendments to IFRS 10, IFRS 12 and IAS 28 – Investments Entities: Applying the Consolidation Exception. The amendments clarify that if the parent company prepares financial statements in accordance with IFRS 10, the exemption from preparing consolidated financial statements extends to the subsidiaries of an investment entity, in turn qualified as investment entities. It is not expected that the application of these amendments will lead to any effects on the preparation of the consolidated financial statements.

IFRIC 21 Levies. This interpretation establishes when an entity must recognize a liability in its financial statements for an obligation to pay a levy, other than income taxes, due to the government or, more generally, to local or international bodies. More specifically, the interpretation requires a liability to be recognized when the event that gives rise to the obligation to pay a levyas determined by legislation (for example reaching a certain threshold of revenues) occurs. If the event that triggers the obligation occurs over a specific period of time, the liability must be recognized progressively. The standard is applicable retrospectively for years that 100 ENAV – 2014 Financial Statements

began on 1 January 2014. The interpretation was adopted by the European Union in 2014 and the community regulation has established that it is applicable at the latest from the commencement date of the first year beginning on or after 16June 2014. The ENAV Group will accordingly apply the interpretation from 2015 and does not expect any effects to arise from the application of the new requirements.

Annual Improvements to IFRSs - 2010-2012 and 2011-2013 cycles. On 12 December 2013 the IASB issued these documents which contain amendments as part of the annual improvement process for standards, concentrating on amendments that are considered necessary but not urgent. The amendments are of a formal nature and regard clarifications to currently effective standards. It is not expected that the application of these amendments will lead to any significant effects for the Group. Notes to the Consolidated Financial Statements of the Enav Group 101

Information on items in the consolidated statement of financial position

5. Property, plant and equipment

The following table sets out changes to property, plant and equipment for the year ended 31 December 2014:

Industrial and Assets in Land and Plant and commercial Other assets course of Total buildings machinery equipment construction

Cost 382,420 1,442,297 283,708 324,847 359,754 2,793,026 Accumulated depreciation (136,665) (1,013,041) (201,681) (267,656) 0 (1,619,043) Net book value 245,755 429,256 82,027 57,191 359,754 1,173,983 at 31.12.2013 Increases 49,725 170,571 3,551 7,212 97,717 328,776 Disposals - cost (41) (1,346) (304) (999) 0 (2,690) Disposals - accumulated 32 1,341 302 997 0 2,672 depreciation Reclassifications 0 (36) (3) 0 (235,040) (235,079) Impairment losses 0 0 0 0 (2,269) (2,269) Depreciation charge (15,869) (91,172) (17,580) (14,859) 0 (139,480) Total changes 33,847 79,358 (14,034) (7,649) (139,592) (48,070) Cost 432,104 1,611,486 286,952 331,060 220,162 2,881,764 Accumulated depreciation (152,502) (1,102,872) (218,959) (281,518) 0 (1,755,851) Net book value 279,602 508,614 67,993 49,542 220,162 1,125,913 at 31.12.2014 102 ENAV – 2014 Financial Statements

Property, plant and equipment decreased by ¤48,070 thousand over the year due to an increase in the depreciation charge over 2013 and to a decrease in assets in course of construction as the result of the decision by the parent company to limit investment plans.

Increases for the year, which total ¤328,776 thousand, regard the following:

l for ¤231,059 thousand,investments completed and entering service during the year, including: i) the V2 version of the Coflight system, which regards the development of a new generation flight data processing (FDP) system capable of providing among other things technological support to the operating concepts introduced by the Sesar and European Single Sky programs. The purpose of the FDP system is to ensure that the trajectory that flights will follow within the air space can be predicted in order to detect any conflict situations at an early stage and that the necessary actionsare taken well in advance to guarantee air traffic flow and safety. The V2 version has been installed at the Rome Area Control Center (ACC) and used as part of the activities connected with the SESAR program. The other phases, also connected with the 4– Flight program, will enter service in subsequent years and the carrying amount involved is classified as assets in course of construction; ii) the refurbishment of the new building at the Rome ACC which contains several of the parent company’s offices; iii) the functional adaptation of the SATCAS system at the ACCs; iv) the new technical block and tower at Lampedusa airport; v) radar modernization at various airports; vi) the construction of an integrated security system as part of the E-net project; vii) the functional adaptation of the mode S management system at the ACCs; viii) the modernization of the TBT radio centers for the remote sites of the Rome ACC; ix) the applications enhancement of various systems; x) the purchase of ILS (Instrument Landing System) measurement instruments in use at certain airports and calibration instrumentation; xi) the purchase of a technical nitrogen gas distribution system for the barometric sensor testing bench;

l for ¤97,717 thousand,investment projects under constructionsuch as (excluding projects that have entered service)the enlargement of the Academy training school in Forlì that envisages the construction ofa new integrated technological hub, the implementation of the data link 2000 plus system, the adaptation of the airport meteorological systems to ICAO Amendment 74, the adaption and modernization of the airport VCS, the construction of the virtual private E-net network, the implementation of the “eTOD New Solution Technology” program for enhancing the eTOD airport mapping system and progress on the Coflight project.

Reclassifications, which amount in total to ¤235,079 thousand,regard investments of ¤231,059 thousand completed during the year, as stated above, and classified to the line item to which they belong, investments of ¤1,257 thousand expensed during the year as they do not qualify for classification as intangibleassets and investments of ¤38 thousand in spare parts and certain operating system components classified as inventories, while the balance represents a reclassification to intangible assets under formation. Notes to the Consolidated Financial Statements of the Enav Group 103

Impairment losses totaling ¤2,269 thousand refer to certain parts of projects and systems which can no longer be used and have been expensed.

Depreciation of ¤139,480 thousand was charged in the year (¤136,708 thousandin the year ended 31 December 2013).

Certain investments, having an original cost of ¤216,995 thousand, are financed by capital grants awarded as part of the National Operating Program for the Transport Sector (PON) for 2000-2006 and 2007-2013 for work carried out at airports in the south of the country and by grants awarded by the Ministry of Infrastructure and Transport for investments in military airports pursuant to Law no. 102/09. The capital grants financing these investments are originally recognized as other liabilities and are released to income in proportion to the depreciation charged on the assets to which they relate. The portion relating to the year amounted to ¤12,303 thousand.

6. Intangible assets

The following table sets out changes to intangible assets for the year ended 31 December 2014:

Patents and Other intangible Assets under intellectual Goodwill Total assets formation property rights

Cost 95,377 2,082 48,075 66,486 212,020

Accumulated amortization (79,188) (1,064) 0 0 (80,252)

Net book value 16,189 1,018 48,075 66,486 131,768 at 31.12.2013 Increases 16,405 0 7,319 0 23,724 Disposals 0 0 0 0 0 Reclassifications 0 3 (13,852) 0 (13,849) Amortization charge (16,188) (696) 0 0 (16,884) Total changes 217 (693) (6,533) 0 (7,009) Cost 111,782 2,085 41,542 66,486 221,895 Accumulated amortization (95,376) (1,760) 0 0 (97,136) Net book value 16,406 325 41,542 66,486 124,759 at 31.12.2014

Intangible assets totaled ¤124,759 thousandat 31 December 2014, representing a decrease of ¤7,009 thousand as the result of an increased amortization charge that did not offset the reduction in investment projects in progress. 104 ENAV – 2014 Financial Statements

Patents and intellectual property rights increased by ¤16,405 thousand due to the acquisition of new assets during the year, such as licenses for the use of management and operating systems and the installation of application software, of which the main items relate to Oracle licenses, new ESPER personnel management system modules, new Autocad back- up software and licenses for meteo and radio-navigation programs.

Intangible assets under formation amount to ¤41,542 thousand, representing an increase of ¤7,319 thousand over the year, and mostly relate to the following investment projects: i)the NOAS (New Operational Area System) programregarding the optimization of systems already developed by the parent company with the Airnas and Athena programs aimed at maintaining Single European Sky certification and the integration of the Ais and Meteo data banks; ii) the new SAPERE airborne control planning and management system.

The net decrease over the year of ¤13,849 thousandrelates for ¤16,405 thousand to projects completed and entering service during the year which are classified under the item to which they relate, ¤3,062 thousand to a reclassification to this item of projects initially classified as tangible assets and ¤747 thousand expensed during the year as the items do not qualify for classification as intangible assets.

Amortization of ¤16,884 thousand was charged during the year (¤13,834 thousand in the year ended 31 December 2013).

Goodwill consists of the higher price paid to acquire the subsidiary Techno Sky Srl over the fair value of its net assets, representing future economic benefits. This balance, amounting in total to ¤66,486 thousand, has been allocated to the Maintenance Services CGU which coincides with the legal entity Techno Sky Srl. In accordance with IAS 36 Impairment of Assetsgoodwill was impairment tested at 31 December 2014 by comparing the value in use of the CGU with the carrying amount of the net assets of that unit, again as required by IAS 36. The recoverable amount was determined on the basis of fair value less costs to sell, calculated on the basis of the cash flows set out in the latest business plan of the subsidiary Techno Sky prepared for 2014-2019. There was no change in the valuation technique compared to the previous year. The assumptions used to determine the recoverable amount were a growth rate of 1% for operating cash flows, consistent with the reference macroeconomic data growth rate, and an EBITDA margin of 20% of revenues for the last year of the period. This test led to the determination of a recoverable amount exceeding the carrying value, and accordingly no impairment loss was recognized.

A WACC (Weighted Average Cost of Capital) of 7.2% was used as the discount rate. Assuming an increase of 1% in WACCfor the sensitivity analysis and keeping a growth rate of 1% the recoverable amount continued to exceed the carrying amount of the net assets relating to the CGU.

No other likely changes in the key impairment parameters were noted that might take value in use below the carrying amount of the CGU’s assets. Notes to the Consolidated Financial Statements of the Enav Group 105

7. Investments in other companies

Investments in other companies amount to ¤26,431 thousandand refer for ¤167 thousandto the 16.67% interest held by the parent company in the share capital ofthe French registered company ESSP SaS, which is held by the main European service providers and manages the EGNOS satellite navigation system and the provision of the related services. A dividend of ¤250 thousand was received from this company in 2014.

The increase for the year of ¤26,264 thousand regards the investment in Aireon LLC, a United States registered limited liability company belonging to the Iridium Group which through innovative ADS-B satellite technology will also enable it to provide a surveillance system with the same precision and accuracy features of terrestrial ADS-B in areas where geographical conditions or infrastructure restrictions do not permit efficient solutions to be achieved with conventional technologies based on land-based installations (radar and terrestrial ADS-B), such as for example oceanic, desert or remote areas and the open sea. This investment is being acquired by payment in four instalments, the last of which in 2017, for a total price of US$61.2 million, at the end of which an investment of 12.5% will be acquired. The first two tranches were paid during the year, the first in February at the closing and the second in July, for a total amount ofUS$31.8 million.

Aireon LLC is an unlisted company whose fair value, considered reliable, is represented by the contractualprice estimated on the basis of valuations carried out during the acquisition process.

8. Current and non-current financial assets

Non-current financial assets amount to ¤15,886 thousand (¤16,111 thousandat 31 December 2013) and mainly relate to a receivable of ¤15,143 thousand (¤15,748 thousand at 31 December 2013) due from the company from which the business unit contributed to Techno Sky was purchased. This balance relates to the leaving entitlement due to the employees of the business unit contributed by the seller to Techno Sky, which decreased during the year as a result of the refunds obtained, in proportion to settlements on leaving and advances on the entitlement paid to the subsidiary’s employees. The receivable bears interest at a three-month 360-day basis Euribor rate plus a spread of 0.05 percentage points and is repayable in a lump sum 15 years from the stipulation date or at the simple request of Techno Sky if employees terminate their employment relationship or request advances. The receivable is secured by a first demand bank guarantee. Non-current financial assets also include an amount of ¤383 thousand representing the portion over 12 months of the fair value of the derivative which at 31 December 2014 consisted of an asset of ¤1,863 thousand, of which ¤1,480 thousand within 12 months. The parent company entered a derivative contract in 106 ENAV – 2014 Financial Statements

December 2013 for the forward purchase of US dollars in four successive tranches connected with the purchase of the investment in Aireon. This contractis fully effective from a hedging standpoint and is accounted for as a cash flow hedge. Reference should be made to note 32 for the disclosures required by IFRS 7. Notes to the Consolidated Financial Statements of the Enav Group 107

9. Deferred tax assets and liabilities

Details of deferred tax assets and liabilities are provided in the following table, which showsitems recognized in profit or loss and those recognized in other comprehensive income (equity).

Increase/decrease Increase/decrease 31.12.2013 31.12.2014 through profit or loss through equity

Deferred Deferred Deferred Deferred Temporary Temporary Temporary Temporary tax assets/ tax assets/ tax assets/ tax assets/ differences differences differences differences liabilities liabilities liabilities liabilities

Deferred tax

assets Taxed provisions 53,979 14,844 494 136 0 0 54,473 14,980 Inventory 9,090 2,500 (591) (163) 0 0 8,499 2,337 write-downs Discounting 1,831 591 7,263 2,144 0 0 9,094 2,735 of receivables Tax effect of IFRS 4,442 1,433 (2,913) (966) 0 0 1,529 467 conversion Discounting 0 0 0 0 1,946 535 1,946 535 of the TFR Non-deductible 0 0 1,654 455 0 0 1,654 455 portion of the TFR Fair value 671 184 0 0 (666) (183) 5 1 derivative Other 18,508 5,918 1,482 454 0 0 19,990 6,372 Total 88,521 25,470 7,389 2,060 1,280 352 97,190 27,882 Deferred tax

liabilities Other 4,140 1,139 2,008 553 0 0 6,148 1,692 Tax effect of IFRS 3,424 1,105 (91) (29) 0 0 3,333 1,076 conversion Discounting 5,048 1,388 0 0 (5,048) (1,388) 0 0 of the TFR Fair value 0 0 0 0 1,863 512 1,863 512 derivative Total 12,612 3,632 1,917 524 (3,185) (876) 11,344 3,280

Deferred tax assets amount to ¤27,882 thousand and mainly relate to taxed provisions. Changes during the year in this item regard the utilization of these provisions, for the reasons discussed in notes 11 and 16, with the resulting tax deduction. The discounting of receivables relates to amounts 108 ENAV – 2014 Financial Statements

recognized as “balance” in prior years and in 2014 which will reverse in future years until 2020, as discussed in note 11. The tax effect arising from the transition to international accounting standards relates to a series of items that will continue to have exclusively a fiscal effect arising from the difference between the accounting treatment followed in the financial statements consistent with the requirements of international accounting standards, starting from the date of first-time adoption on 1 January 2011,and fiscal criteria,for which the date offirst-time adoption of IFRSs was 1 January 2014. The measurement of the employees’ leaving entitlement (TFR) in accordance with IAS 19 led to an actuarial loss, resulting in the recognition of a deferred tax asset net of the reversal of the deferred tax liabilities recognized in the previous year for the actuarial gain. The item others includes the deferred tax effect of the elimination of intragroup margins.

Deferred tax liabilities amount to ¤3,280 thousand, and in addition to the items already discussed concerning the transition to IFRSs relate to prior year arrears interest that has not yet been received and hence not yet taxed. The measurement of the derivative at fair value led to a gain of ¤1,863 thousand and accordingly the recognition of a deferred tax liability, compared to the previous year when a loss, and hence also a deferred tax asset, was recognized.

10. Current and non-current tax receivables

Non-current tax receivables, unchanged compared to 31 December 2013, amount to ¤25,232 thousand and arise from the excess corporate income tax (IRES) paid by the Group in the years 2007/2011 arising from taxable profits from which the regional production tax (IRAP) charged on add- backs for personnel and similar costs was not deducted for IRES purposes. More specifically, the entitlement to a refund arises from article 2 of Decree Law no. 201/2011 which permits the analytical deduction of IRAP from business income for 2012, previously only allowed to the extent of 10% of the tax paid, a decree subsequently supplemented by article 4, paragraph 12 of Decree Law no. 16 of 2012 in order to extend this possibility to prior tax periods starting from 2007. Regarding the timescale for receiving the refund, given that the Tax Revenue Office is envisaging making payment starting from the earliest tax years and on the basis of the order in which the electronic flows are transmitted, and establishes criteria in the cases in which it does not have fully available funds, the receivable has prudently been classified as a non-current asset. Notes to the Consolidated Financial Statements of the Enav Group 109

Current tax receivables amount to ¤82,573 thousandand consist of the following balances.

31.12.2014 31.12.2013 Change

Due from the tax 68,876 52,016 16,860 authorities for VAT IRES for the year 9,912 1,482 8,430 IRAP for the year 1,672 807 865 Receivable for other 2,113 1,893 220 current taxes Total 82,573 56,198 26,375

Of the total receivable due from the tax authorities for VAT amounting to ¤68,876 thousand, ¤41,899 thousand relates to VAT for which the parent company requested a refund in both 2012 and 2014 and consists of a principal of ¤41 million plus interest income of ¤899 thousand accruing at the legal rate of 2% per annum. The net variationof ¤16,860 thousand consists of the net effect of a new receivable of ¤19,786 thousand arising during the year plus interest income of ¤683 thousand accruedduring the year less the receipt of a VAT refund of ¤3,609 thousand for which a request was originally made in the second quarter of 2012.

IRES for the year consists of the 2013 receivable balance plus the tax on account paid in 2014 amounting to ¤14,663 thousand, in addition to retentions of ¤17 thousand, less the portion of IRES relating to the year.

IRAP for the year consists of the receivable due from the tax authorities for the amount stated in the previous year’s tax return plus tax on account paid by the Group during the year, less the portion of the tax relating to 2014.

The receivable for other current taxes mainly relates to taxes paid abroad of ¤402 thousand and taxes of ¤1,662 thousand for which a refund has been requested pursuant to article 6 of Decree Law no. 185/2008 for the excess IRES paid in previous years arising from taxable profits from which 10% of the IRAP charge was not deducted. 110 ENAV – 2014 Financial Statements

11. Current and non-current trade receivables

Current trade receivables amount to ¤232,386 thousandand non-current trade receivables amount to ¤119,499 thousand, as shown by the following table.

31.12.2014 31.12.2013 Change

Current trade receivables Due from Eurocontrol 184,194 163,382 20,812 Due from the Ministry 14,212 25,488 (11,276) of Economy and Finance Due from the Ministry of Infrastructure and 30,000 47,800 (17,800) Transport Due from other customers 42,468 43,489 (1,021) Balance receivables 6,564 51,442 (44,878) 277,438 331,601 (54,163) Bad debts allowance (45,052) (43,548) (1,504) Total 232,386 288,053 (55,667) Non-current trade

receivables Balance receivables 119,499 85,892 33,607 Total 119,499 85,892 33,607

The balance due from Eurocontrol is dueto the fees arisingfrom route and terminal revenues not yet received at 31 December 2014 and amounting to ¤124,281 thousand and ¤59,913 thousand respectively. The net increase of ¤20,812 thousand over the year is mainly due to terminal balancesarising from the delayed receipt of charges compared to the deadlines agreed by certain Italian carriers. Of these receivables, ¤114 million was collected in early 2015.

The receivable from the Ministry of Economy and Finance (MEF), amounting to ¤14,212 thousand, all relates to route and terminal exemptions recognized in 2014. The decrease of ¤11,276 thousand over the year regards the amount accruing in 2014 as discussed above and the following changes: i) the receipt in February of the residual balance of ¤11,328 thousand due from the MEF and relating to 2012; ii) the offset of the residual receivable of ¤14,160 thousand recognized in 2013 with advances relating to the Italian Air Force for the receipts regarding the route charges, that led to a payment of ¤43,245 thousand being made to the MEF in October 2014.

The receivable from the Ministry of Infrastructure and Transport consists of the revenue grant of ¤30,000 thousand designed to offset the costs Notes to the Consolidated Financial Statements of the Enav Group 111

incurred by ENAV for ensuring the safety of its systems and equipment and operating safety, as provided by article 11-septies of Law no. 248/05. The net decrease for the year of ¤17.8 million arises from the receipt of the portion of the 2012 grant which took place in two separate instalments in 2014.In December the amount of ¤30 million recognized in 2013 was also received.

Amounts due from other customers consist of the receivable due from the management company for services rendered by the Group and the balance due from non-Italian customers for contract work in progress. The decrease over the year arises mainly as the result of the receipt of a series of receivables during the first few months of 2014.

The bad debts allowance amounted to ¤45,052 thousandat 31 December 2014 and underwent the following changes during the year:

Decreases

31.12.2013 Increases Utilizations Eliminations 31.12.2014

Bad debts allowance 43,548 4,167 (762) (1,901) 45,052

The increase for the year of ¤4,167 million arises from the write-down of doubtful receivables regarding balances due for route charges from carriers which have become insolvent or which no longer do business following the withdrawal of their license and terminal charges, together with certain management companies in financial difficulty. Decreases totaling ¤2,663 million refer for ¤762 million to receivables prudently written down in previous years and then collected in 2014 and for ¤1,901 million to the elimination of balances that are no longer considered collectible.

Utilizations are recognized in profit or loss under the item impairment losses and reversals of impairment losses.

The current portion of the balance receivable amounting to ¤6,564 million refers to a portion of the route balance generated in 2013 and amounting to ¤8,180 million included in determining the parent company’s 2015 charge, stated net of the short-term portion arising from the discounting process amounting to ¤1,616 million.

The “Balance receivable” of ¤119,499 million, which fully relates to the parent company and is classified as non-current assets, comprises the route and terminal balances generated in previous years, starting from 2011, for an amount of ¤77,713 million plus the route and terminal balances recognized in 2014 for ¤49,264 million lessan amount of ¤7,478 million arising from the process of discounting the receivable to present value. The route balance of ¤41,128 million recognized at 31 December 2014 (¤43,557 million at 31 December 2013) consists of i) the balance for traffic risk of ¤28,681 million (¤24,811 millionat 31 December 2013); ii) the non-recovered portion of the n-2 balance for ¤4,446 million (¤2,566 112 ENAV – 2014 Financial Statements

millionat 31 December 2013); and iii) the bonus awardedfollowing the achievement of the performance target connected with delays in assisted flights expressed in minutes, amounting to ¤8 million, in accordance with the figure recognized in the previous year. Compared to 2013, the actual inflation effect of 0.20% compared to the figure of 2% budgeted in the performance plan was negative, leading to the recognition of a negative balance of ¤7,944 million classified as non-current trade payables. In 2013 a positive balance of ¤14,184 million arose from the inflation effect.

The terminal balance at 31 December 2014 amounted to ¤1,845 million (¤13,948 millionat 31 December 2013), determined on the basis of a cost– cap logic, and is strictly connected with a negative traffic performance compared to budget, as actual costs were lower than charge data. The Company bore the majority of the negative traffic performance compared to budget and this was covered by using ¤24,380 million of the charge stabilization provision.

Transition to international accounting standards led amongst other things to the recognition of certain expenditure in profit or loss not qualifying for classification as intangible assets. Given that this expenditurewas not budgeted as costs on drawing up the 2012-2014 performance plan and that transition to international accounting standards is one of the cases of “unplanned costs” established by community regulations, a route balance of ¤6,292 million has been recognized for the purpose of recovering these costs over a fifteen year period.

12. Inventories

Inventories, which consist mainly of spare parts, amount to ¤61,691 thousand net of the allowance for inventory losses. Changes over the year were as follows:

31.12.2013 Increases Decreases 31.12.2014

Fiduciary inventory 65,541 2,177 (2,869) 64,849 Direct inventory 4,445 724 (571) 4,598 Radio-electric 743 0 0 743 measurement inventory 70,729 2,901 (3,440) 70,190 Allowance for inventory (9,090) (1,313) 1,904 (8,499) losses Total 61,639 1,588 (1,536) 61,691

The increase of ¤1,588 thousand, net of the allowance, relates mainly to fiduciary inventory and specifically to the purchase of spare parts to top up stocks for air navigation operating systems. A small part of the increase, ¤38 thousand, regards spare parts that have been reclassified to this item Notes to the Consolidated Financial Statements of the Enav Group 113

from property, plant and equipment. The decrease of ¤3,440 thousand, gross of the allowance, regards the withdrawal of spare parts for use in operating systems.

The inventory allowance increased by ¤1,904 thousand due to the fact that certain spare parts became obsolete as they relate to systems and equipment that can no longer be used, and decreased by ¤1,313 thousand following the disposal of spare parts that had already been written down in previous years.

13. Other current assets

Other current assets amount to ¤19,162 thousandand can be analyzed as follows:

31.12.2014 31.12.2013 Change

Due from public bodies 10,434 21,562 (11,128) for capital grants Due from personnel 3,502 3,552 (50) Due from public bodies 4,754 4,695 59 for financed projects Guarantee deposits 298 465 (167) Sundry receivables 3,363 3,661 (298) 22,351 33,935 (11,584) Bad debts allowance (3,189) (3,243) 54 Total 19,162 30,692 (11,530)

Due from public bodies for capital grantsrefers entirely to the 2007/2013 Networks and Mobility National Operating Program (NOP) grants which have been approved but had not yet been received at 31 December 2014. This balance decreased by ¤11,128 thousand during the year following the de-financing of the “Brindisi Area Control Center – 4 Flight” project, on which work has not yet begun, as per the resolution of the 2007/2013 Networks and Mobility NOP Management Authority of 24 October 2014.

Due from personnelrefers almost entirely to advances for travel expenses for transfers not yet completed at year end, of which a significant portion amounting to ¤3,189 thousand regards travel expenses advanced to former employees of the parent company, previously subject to judicial investigations and prudently written down in previous years. Following sentence nos. 745/2011 and 966/2012 of the Court of Accounts ordering the defendants to pay the amounts in question, ¤54 thousand has been collected with a corresponding reduction in the allowance, against repayment plans set up for recovering the receivable. As security for the amount an attachment order was served on the persons involved freezing one fifth of their pensions and TFR and TFS leaving entitlements as well as 114 ENAV – 2014 Financial Statements

their bank accounts and in certain cases properties.

Due from public bodies for financed projectsamounting to ¤4,754 thousandmainly relates to the portion of co-financing relating to the year with respect to the SESAR program, for which the accounts will be drawn up in 2015.The amount of ¤4,167 thousand recognized in the previous year was collected in 2014.The remainder of this item relates to training funded by Fondimpresa and other European projects.

Guarantee depositsdecreased by ¤167 thousand over the yearfollowing the refund of the deposit relating to the offices in Via Agri on termination of the rental agreement.

Sundry receivablesconsist of advances of ¤461 thousand made to third party suppliers with whom certain litigation is pending. The balance isunchanged overthat at 31 December 2013.

14. Cash and cash equivalents

Cash and cash equivalents at 31 December 2014 can be analyzed as follows:

31.12.2014 31.12.2013 Change

Bank and post office 118,181 94,238 23,943 deposits Cash and valuables 72 63 9 on hand Total 118,253 94,301 23,952

Cash and cash equivalents with banks and the Central Treasury amounted to ¤118,181 thousand at 31 December 2014, representing a net increase of ¤23,943 thousand over the balance at 31 December 2013. This is due to the cash arising from a new loan taken out by the parent company and the liquidity brought into the Group by the subsidiary ENAV North Atlantic.

A lien on a bank account of ¤1,117 thousand arranged in favor of a bank as security for the payment of certain invoices issued to the subsidiary Techno Sky and sold without recourse to a factoring company, and subject to dispute, was extinguished during the year.

There are no restrictions on cash and cash equivalents that may limit their availability. Notes to the Consolidated Financial Statements of the Enav Group 115

15. Shareholders’ equity

Shareholders’ equityat 31 December 2014 amounted to ¤1,234,062 thousand. Changes during the year can be found in the consolidated statement of changes in equity.

The following table provides details of the equity accounts.

31.12.2014 31.12.2013 Change

Share capital 1,121,744 1,121,744 0 Legal reserve 13,935 11,409 2,526 Other reserves 36,359 36,359 0 Translation reserve 3,428 (17) 3,445 IFRS First-time Adoption (727) (727) 0 (FTA) reserve Reserve for actuarial gains/ (losses) on employee (9,683) (4,613) (5,070) benefits Cash flow hedge reserve 1,348 (486) 1,834 Retained earnings/ 27,652 28,612 (960) (accumulated losses) Net income for the year 40,006 49,568 (9,562) Total equity attributable to equity holders of the 1,234,062 1,241,849 (7,787) parent Capital and reserves attributable to non- 0 0 0 controlling interests Net income attributable 0 0 0 to non-controlling interests Total equity attributable 0 0 0 to non-controlling interests Total equity 1,234,062 1,241,849 (7,787)

Share capital, fully subscribed and paid-in by the sole shareholder, the Ministry of Economy and Finance, consists of 1,121,744,385 ordinary shares each of nominal value 1 euro.

Thelegal reserve amounts to ¤13,935 thousand, representing an increase of ¤2,526 thousand due to the allocation of 5% of 2013 net income.

The other reservesconsist of capital grants received in the period 1996/2002 and originally stated net of deferred taxes which have been discharged. This reserve accordingly became availableand was reclassified 116 ENAV – 2014 Financial Statements

to other reserves in the previous year.

The translation reserve consists of exchange differences arising on the translation of the financial statements of foreign subsidiaries and amounts to ¤3,428 thousand. The increase of ¤3,445 thousand is mainly due to the change inconsolidation scope following the entry of ENAV North Atlantic and the positive effect of the euro/dollar exchange rate at year end with respect to that in force on the establishment of the company.

TheIFRS first-time adoption (FTA) reserve consists of the differences arising on the recognition of assets and liabilities on the first-time adoption of IFRSs.

Thereserve for actuarial gains/(losses) on employee benefitsconsists of the effects of changes in actuarial estimates for post employment benefits (TFR), stated net of the tax effect. There was a deficit balance of ¤9,683 thousand in this reserve at 31 December 2014.

The cash flow hedge reservearises on the fair value measurement fair value of derivatives. There was an increase in this reserve of ¤1,834 thousand during the year, net of the tax effect.

Retained earnings/(accumulated losses) consist of the results achieved by the companies in previous years and the consolidation adjustments recognized in those years.

The following table provides a reconciliation between the parent company’s equity and consolidated equity. Notes to the Consolidated Financial Statements of the Enav Group 117

31.12.2014 31.12.2013

Net income Net equity Net income Net equity

Parent company 38,827 1,283,673 51,180 1,294,812 Amortization 0 (44,324) (44,324) of consolidation difference Elimination of intragroup (1,495) (19,892) (2,959) (18,397) margins Deferred tax assets on the elimination of intragroup 477 6,347 944 5,870 margins Translation reserve 0 3,429 0 (17) Employee benefits reserve 0 (391) 0 881 and FTA reserve Net income of subsidiaries 2,197 5,220 403.0 3,023.0 Group total 40,006 1,234,062 49,568 1,241,848

118 ENAV – 2014 Financial Statements

16. Provisions for risks and charges

Provisions for risks and charges total ¤12,585 thousand, of which the current portion amounts to ¤4,693 thousand, and underwent the following changes during the year:

31.12.2013 Increases Decreases 31.12.2014

Provision for risks from 5,044 41 (1,917) 3,168 personnel litigation Provision for risks from 4,449 1,768 0 6,217 other disputes Provisions for other risks 3,200 0 0 3,200 Total provisions 12,693 1,809 (1,917) 12,585

The provision for risks from personnel litigation, of which the current portion amounts to ¤2,493 thousand, decreased by ¤1,636 thousand over the year, of which ¤1,053 thousand relates to the termination of disputes following settlements or cases in which the courts found against the Company and ¤864 thousand to releases to income in situations where the provisions were considered to be in excess with respect to the risk of the litigation pending for the Group. At 31 December 2014, the total amount of judicial claims relating to pending disputes where the risk of loss has been assessed by the Group’s counsel as “possible” amounts to ¤8.3 million.

The provision for risks from other disputes, of which the current portion amounts to ¤2,200 thousand, increased by ¤1,768 thousand over the year, part of which relating to disputes over price revisions connected with tendered contracts following changes in the orientation of case law on the subject, which extended the applicability of price revision mechanisms to contracts falling within the “special sectors” sphere, and ¤900 thousand to the contingent liabilities arising from the termination of the agreement for the supply of meteo systems for modernizing the Palermo airport system and regarding the lack of availability of certain materials forming part of this agreement. As contractually provided, an arbitration panel was appointed the previous year to settle the dispute, meaning to establish the amounts receivable and amounts payable between the parties, and the panel’s work is currently at a preliminary stage. At 31 December 2014, the Group’s counsel has estimated the costs relating to pending disputes where the risk of loss is “possible” to be ¤1.2 million. In addition, the Group is involved in another dispute, currently at a preliminary stage, that has been assessed as “possible” by the Company’s lawyers but for which outside counsel are unable to estimate the amount of any loss, given the stage of proceedings. Through its legal counsel the Group is taking all the action required to safeguard its interests, including by way of counterclaim. Notes to the Consolidated Financial Statements of the Enav Group 119

Provisions for other risks remain unchanged compared to 31 December 2013 and relate to the liability that could emerge with respect to the rescission of the agreement for the modernization of the flight assistance systems at Parma airport, from which the parent company withdrew in early 2013.

17. Tfr and other employee benefits

This item, amounting to ¤60,049 thousand, consists of the liability for the Italian employees’ leaving entitlement (TFR) which is governed by article 2120 of the Italian civil code, and represents the estimate of the ENAV Group’s obligation determined using actuarial techniques for the amounts to be paid to its employees on termination of the employment relationship.

Changes during the year in the liability for the TFR and other employee benefits were as follows:

31.12.2014 31.12.2013

Liability for employee benefits at the beginning 53,655 58,288 of the year Interest cost 1,689 1,560 Actuarial (gains)/losses 6,994 (2,426) on defined benefits Advances. settlements (2,289) (3,767) and other changes Liability for employee benefits at the end 60,049 53,655 of the year

Advances, settlements and other changes amounting to ¤2,289 thousand consist of balances paid to leavers during the year and advances made to personnel making a request for such.

The difference between the previous balance on this account calculated on the basis of the previous assumptions and the balance recalculated at period end on the basis of the updated assumptions represents actuarial gains (losses). This calculation led to actuarial losses of ¤6,994 thousand in 2014 compared to actuarial profits of ¤2,426 thousand in 2013. 120 ENAV – 2014 Financial Statements

The main assumptions used to calculate the actuarial estimate of the TFR liability at 31 December 2014 and 2013 were as follows:

31.12.2014 31.12.2013

Discount rate 1.49% 3.17% Inflation rate 1.50% 1.75% Employee turnover rate 4.00% 4.00% Advance rate 2.50% 2.50%

The discount rate used to determine the present value of the obligation in both 2014 and 2013 was based on the IBoxx Eurozone Corporate AA duration 10+ index, calculated with reference to companies similar to the ENAV Group and corresponding to the average liability duration. The decrease in the rate is due to the present financial and economic situation which is causing a constant fall in interest rates.

The IP55 tables arranged by gender were used for the annual probability assumptions for mortality rates while retirement rates take account of the most recently enacted legislation.

18. Current and non-current financial liabilities

Current and non-current financial liabilities consist of: i) amounts due to banks for medium/long-term loans, with the current portion being classified as current financial liabilities together with the accrued interest expense, and bank overdrafts; ii) the balance due to the factoring company to which suppliers have sold their receivables from ENAV on a non-recourse basis; iii) the fair value of hedging derivatives, for which reference should be made to note 32. Notes to the Consolidated Financial Statements of the Enav Group 121

Balances at 31 December 2014 and comparative figures at 31 December 2013 are as follows:

31.12.2014 31.12.2013 Change

Current Non-current Current Non-current Current Non-current portion portion portion portion portion portion

Due to banks 46,109 181,766 52,218 126,095 (6,109) 55,671 Due to other lenders 27 0 1,585 0 (1,558) 0 Hedging instruments - 0 0 351 320 (351) (320) derivatives Total 46,136 181,766 54,154 126,415 (8,018) 55,351

Payables to banks at 31 December 2014 consist of medium/long-term loans taken out by the parent company, including an amount of ¤44,743 thousand repayable within 12 months, and current account overdrafts of ¤1,366 thousand. The net increase of ¤49,562 thousand consists of a decrease of ¤5,415 thousandarising from the repayment by the subsidiaries SICTA and Techno Sky of credit facilities granted by banks, and a net increase of ¤54,977 thousand referring to the parent company and arising from the combined effect of the new credit line of ¤100 million granted by the EIB in December, repayments of ¤43,000 thousand made during the year and the settlement of a short-term credit line of ¤2,382 thousand, and includes the effects arising from the use of the amortized cost method. In detail, repayments made during the year regard the following: l a repayment of ¤8,000 thousandbeing the two six-monthly tranchesof the loan taken out with UniCredit SpA, having final due date 30 November 2018; l a repayment of ¤20,000 thousand being the two six-monthly tranches of the loan taken out with UniCredit SpA, having final due date 30 November 2018; l a repayment of ¤15,000 thousandbeing the portion of the three- year loan taken out with Intesa Sanpaolo having final due date 31 December 2015.

On 19 December 2014 a new long-term loan was taken out with the European Investment Bank (EIB) linked to the parent company’s investment plan having a contractual total of ¤180 million, of which ¤100 million had been drawn down by the balance sheet date.

Amounts due to other lenders decreased by ¤1,558 thousand following the payment of invoices sold without recourse and the reduction in such sales made by suppliers.

The fair value of hedging derivatives, which at 31 December 2013 had a negative balance of ¤670 thousand, had a positive balance of ¤1,863 thousand at 31 December 2014, which is included in current and non- 122 ENAV – 2014 Financial Statements

current financial assets and commentated upon in note 8.

At 31 December 2014 the Group had available committed and uncommitted credit lines totaling ¤326 million, including the portion of the EIB facility not yet drawn. The agreements for these facilities provide that interest will be charged at normal market rates, with no-use fees that are not significant. Notes to the Consolidated Financial Statements of the Enav Group 123

The following table provides an analysis of the Group’s loans including the general conditions for each of its relationships with the lender concerned.

Drawn down Carrying Lender Type Ceiling (nominal Availability Interest rate amount value)

Credit line - BNL-Bnp Paribas 52,000 - 52,000 1,470 Euribor + 1,9 overdraft Medium/long- MedioCredito Centrale 10,000 10,000 - 9,962 Euribor + 3,5 term - 5 years Credit line - Credito Valtellinese 5,000 - 5,000 - Euribor + 4,5 overdraft 13 months - 1 BNL-BNP Paribas 50,000 - 50,000 - Euribor + 1,9 day Current account UniCredit 10,000 - 10,000 - Euribor + 2,5 advances - suppliers Current account UniCredit 15,000 - 15,000 - Euribor + 2,5 advances - on invoices issued Lending advances (no UniCredit 50,000 - 50,000 - Euribor + 2,5 restriction on use) Credit line - UniCredit 1,500 - 1,500 - Euribor + 3,2 overdraft Advances on Intesa Sanpaolo 60,000 - 60,000 - Euribor + 1 invoices Credit line - Intesa Sanpaolo 2,500 2,500 Euribor + 1,5 overdraft Medium/long- Intesa Sanpaolo 60,000 60,000 - 14,999 Euribor + 2,75 term - 3 years Medium/long- UniCredit 40,000 40,000 - 31,819 Euribor + 0,34 term - 5 years Medium/long- UniCredit 100,000 100,000 - 69,652 Euribor + 0,34 term - 5 years EIB - European Investment Medium/long- Fixed rate + 180,000 100,000 80,000 100,000 Bank term - 15 years 1,515 Total 636,000 310,000 326,000 227,902

124 ENAV – 2014 Financial Statements

The average interest rate charged on bank loans during the year was 1.8%, in line with the previous year, benefiting from the combined effect of a reduced average use of the short-term credit lines during the year and a decrease in the spreads charged.

19. Current and non-current trade payables

Non-current trade payablesall relate to the Eurocontrol balance of ¤7,944 thousand, which less the portion of ¤141 thousand arising from discounting the liability to present value amounted to ¤7,803 thousand at 31 December 2014. This figure relates wholly to inflation which in actual terms was 0.2% compared to a budgeted figure of 2%. The amount will be paid to carriers through the charge in 2016 and accordingly has been classified as non- current.

Current trade payables amount to ¤127,987 thousand (¤142,261 thousandat 31 December 2013) and consist of a balance of ¤121,381 thousand due to the suppliers of goods and services required for the Group’s activities and the prefinancing received for projects financed at a European level, of which SESAR represents the major part. The change over the year mainly relates to a decrease in amounts due to suppliers following the payments made during the year.

20. Other current and non-current liabilities

Other liabilities consist of the items included in the following table, analyzed between the current and non-current portion:

31.12.2014 31.12.2013 Change

Current Non-current Current Non-current Current Non-current portion portion portion portion portion portion

Charge Stabilization 0 20,304 0 28,184 0 (7,880) Provision Amounts on account 67,014 0 76,060 0 (9,046) 0 Other payables 55,287 0 53,122 0 2,165 0 Grants 9,721 122,225 12,264 152,416 (2,543) (30,191) Total 132,022 142,529 141,446 180,600 (9,424) (38,071)

The Charge Stabilization Provision, which relates wholly to the parent company, was set up in 2003 on the approval of the 2002 financial statements by the Shareholders’ Meeting held on 9 May 2003 by allocating the tax receivable settlement reserve (Law no. 289/02) of ¤72,697 thousand. The provision increased in subsequent years following allocation Notes to the Consolidated Financial Statements of the Enav Group 125

by the Shareholders’ Meeting of a part of ENAV’s net income for the year and has been used solely for business purposes. With the shareholders’ meeting held in August 2013, the provision’s validity was extended to the period 2013/2015 with the aim of supporting the market by introducing a price control mechanism for the costs to be borne by carriers for flight assistance services.

The provision increased by ¤16,500 thousand in 2014 on the allocation of a part of 2013 net income by the Shareholders’ Meeting called on 5 August 2014 to approve ENAV’s 2013 financial statements and decreased by ¤24,380 thousand on reducing the third band terminal charge as had already been established on determining the relative charge for 2014.

Of the total of ¤67,014 thousand of amounts on account, ¤62,829 thousand relates to the balance payable to the Italian Air Force for its portion due of the receipts of the year for route and terminal services and ¤4,185 thousand to the balance payable to ENAC for its portion due of the receipts for the same services. The payable to AMI for route services amounts to ¤52,413 thousand (¤57,404 thousand at 31 December 2013), and this will be offset with the receivable due from the Ministry of the Economy and Finance (MEF) up the balance available, while the remainder will be paid to the MEF subsequent to the approval of the financial statements, as occurred for 2013, for which the outstanding balance was paid on 31 October 2014. The payable to AMI for terminal services amounts to ¤10,415 thousand (¤10,399 thousand at 31 December 2013) and in compliance with Law no. 183/2011, which came into effect on 1 July 2012, the portion due of terminal charge revenues will be paid to the Air Force in two annual instalments. A total of ¤19,271 thousand was paid in 2014 regarding the second half of 2013 and the first half of 2014. The liability at 31 December 2014 represents the portion due for the second half of 2014 which will be paid by the end of April 2015.

Starting 2011 and in compliance with community regulations, the supervisory costs of ENAC (Ente Nazionale per l’Aviazione Civile), the Italian civil aviation authority, are also considered when determining the route and terminal charge. This has led to a situation whereby the portion of the revenues due to ENAC calculated on the basis of the communicated costs and the service units developed represents a liability for ENAV, recognized in this item, which at 31 December 2014 amounted to ¤4,185 thousand (¤8,257 thousandat 31 December 2013). The entire payable recognized at the end of the previous year was fully paid to ENAC in December 2014.

Other payables mainly relate to amounts due to personnel of ¤41,927 thousand, consisting of a balance of ¤14,463 thousand for vacation accrued but not taken, essentially in line with that at the previous year end, and an accrual of ¤26,676 thousand for the variable portion of personnel costs relating to the year, representing a slight decrease of ¤264 thousand compared with the balance at 31 December 2013. This item also includes a balance of ¤8,381 thousand payable for supplementary pensions paid over in early 2015 to the Group’s pension funds such as Prevaer and Previndai and the funds selected by employees. 126 ENAV – 2014 Financial Statements

The increase in other payables over the year mainly relates to the reclassification of an amount of ¤1,857 thousand to this itemfrom the non- current portion of deferred income,which will be refunded to the European Commission in 2015 following the failure to obtain recognition of part of the pre-financing for the parent company’s ADS-B project.

Grants consist of the following: i) the 2000/2006 and 2007/2013 Networks and Mobility National Operating Program (NOP) grants regarding specific investments made in the south of Italy amounting to ¤56,976 thousand (¤79,454 thousandat 31 December 2013). Of the decrease of ¤22,478 thousand in this balance over the year, ¤11,350 thousand regards the release to income of the portion relating to 2014, referring to the depreciation of the investments to which the grants refer, and ¤11,128 thousand regards the de-financing of the “Brindisi Area Control Center – 4 Flight” project as per the resolution of the supervisory Authority. The current portion amounts to ¤8,586 thousand and consists of the amount that will be released to income over the next 12 months; ii) the capital grants awarded for investments at military airports pursuant to Law no. 102/09, amounting to ¤67,596 thousand (¤68,550 thousand at 31 December 2013), a balance which decreased by ¤954 thousand over the year following the release to income of the portion relating to 2014 for the modernization of the technological systems of Verona Villafranca airport and the work performed at Comiso and Ciampino airports. The current portion amounts to ¤993 thousand; iii) other investment grants amounting to ¤7,337 thousand (¤15,717 thousand at 31 December 2013) mainly relating to European funding obtained as part of the TEN-T program. More specifically, the net decrease over the year of ¤8,380 thousand refers to gross decreases totaling ¤11,667 thousand, of which ¤8,920 thousand regards the pre-financing portion received at the end of 2013 relating to the other participants in the “ANSPs Interim Deployment Programme Implementation”, which is funded as part of the TEN-T program for new technological and procedural implementations in air transport and in which the parent company has a coordination role, to whom the amount was transferred in January 2014. The second instalment of the pre-financing for the same project was received in June; the portion relating to the Group which is recognized in this item and which represents the increase over the year amounts to ¤2,540 thousand. Additional funding as part of the TEN-T program was obtained in 2014 for the project of common interest for the implementation of advanced capacities of flight data processing (FDP) in Europe with the receipt of the first instalment of the pre-financing of ¤747 thousand. An amount of ¤828 thousand was released to income, representing the portion relating to the year, while an amount of ¤106 thousand is classified in other current liabilities. Notes to the Consolidated Financial Statements of the Enav Group 127

21. Tax and social security payables

Tax and social security payables amount to ¤32,932 thousand, essentially in line with the balance at 31 December 2013, and consist of the following items.

31.12.2014 31.12.2013 Change

Tax payables 8,322 8,129 193 Social security payables 24,610 24,675 (65) Total 32,932 32,804 128

Tax payables, essentially in line with the previous year end, mainly relate to an amount of ¤7,776 thousand withheld from employee remuneration which was paid over in January 2015 and a balance of ¤366 thousand representing the IRES corporate income tax liability.

Social security payables, basically unchanged compared to the previous year end, consist of the social charges accruing on employee remuneration for December, paid over in January, and the portion of contributions on accrued personnel costs amounting in total to ¤13,356 thousand. 128 ENAV – 2014 Financial Statements

Information on items in the consolidated income statement

22. Revenues from operations and balance revenues

Revenues from operations and balance revenues amount to ¤812,638 thousandand negative ¤16,016 thousandrespectively, representing an increase of ¤33,036 thousandand a decrease of ¤36,476 thousand, again respectively. The following table provides an analysis of the individual items:

31.12.2014 31.12.2013 Change

Route revenues 589,395 567,638 21,757 Terminal revenues 171,722 169,312 2,410 Route and terminal 14,236 14,165 71 exemptions Third party market 12,905 8,695 4,210 revenues Charge stabilization supplementary 24,380 19,792 4,588 contributions Total revenues from 812,638 779,602 33,036 operations

Route revenues totaled ¤589,395 thousand, showingan increase of ¤21,757 thousand over the previous year,due to a rise of 2.45% in service units developed in the year compared to actual 2013 (+0.01% 2013 over 2012)which regards international traffic in particular. The charge applied for 2014 was unchanged over 2013 and corresponds to ¤78.83 as per the 2012–2014 national performance plan.

Terminal revenues, which totaled ¤171,722 thousand, increased by ¤2,410 thousand due to a rise of 2% in the service units developed in the year compared to actual 2013 (-3.6% 2013 over 2012) and the arrival of two new airports for which the parent company is responsible, Rome Ciampino and Verona Villafranca, military airports open to civil traffic since 1 June 2014. Withregard to the terminal charges applicable for 2014, ENAV has established three chargebands determined in accordance with the thresholds stated in European Regulations no. 390 and No. 391 of 2013, without altering the fact that full cost recovery will continue to apply in 2014 in the three bands in accordance with Regulation no. 1794/2006. The charge bands consist of (i) Rome Fiumicino airport with a charge of ¤195.79; ii) Milan Linate, Milan Malpensa and Venice Tessera with a charge of ¤214.15; iii) all the other 43 airports with a charge of ¤246.05, which already discounts a portion that continues to be borne by the parent company for the use of the charge stabilization provision. Notes to the Consolidated Financial Statements of the Enav Group 129

Revenues connected with route and terminal exemptions, amounting to ¤10,940 thousand (¤10,805 thousand at 31 December 2013) and ¤3,296 thousand (¤3,360 thousand at 31 December 2013) respectively, are in general constant compared to the previous year and arise from exempt, mainly military, flights.

Third partymarket revenues amount to ¤12,905 thousand, representing an increase of ¤4,210 thousand over the previous year regarding flight assistance services rendered at Comiso and Crotone airports and the contract for the supply of consultancy, technical and training services for the modernization of the systems and organizational and regulatory processes of the Libyan Civil Aviation Authority and for Dubai airport.

Charge stabilization supplementary contributions amounting to ¤24,380 thousand correspond to the amount entered on determining the third band terminal charge, a measure taken to support the market during the current crisis period. The failure of terminal traffic to increase compared to the charge budget led to the use of the provision for the whole amount committed within the charge sphere.

The adjusting component charges for the “balance” amounted to negative ¤16,016 thousand and was calculated on the basis of the items stated in the following table:

31.12.2014 31.12.2013 Change

Balance charge adjustment 41,321 57,505 (16,184) for the year Discounting effect (4,064) (1,017) (3,047) Balance variations 0 7,623 (7,623) Utilization of the balance (53,273) (43,651) (9,622) Total (16,016) 20,460 (36,476)

The balance charge adjustment for the yearrepresents the charge addition deriving from comparing the actual traffic volumes and/or costs with the planned amounts used in determining the charge before adjustment to fair value through discounting. This item consists of the route balance of ¤33,184 thousand, the terminal “balance” of ¤1,845 thousand and the route “balance” of ¤6,292 thousand for the costs arising from the transition to international accounting standards. Details of this item can be found in note 11.

The discounting effect, negative ¤4,064 thousand, arises from separating out the financial component inherent in the balance mechanism, and is determined by calculating the present value of the balance generated during the year, in accordance with a pre-determined recovery plan.

The utilization of the balance by an amount of ¤53,273 thousand refers to the release to income of the portions of the balance recognized in previous 130 ENAV – 2014 Financial Statements

years in accordance with the agreement reached on determining the charge for 2014. More specifically, the utilization regards the final portion of the 2009 balance and the partial portions of the balances recognized in 2011 and 2012.

23. Other operating income

Other operating income for the year amounted to ¤51,252 thousand, representing a decrease of ¤3,429 thousand over the figure for the year ended 31 December 2013. This item may be analyzed as follows:

31.12.2014 31.12.2013 Change

Capital grants 12,339 15,255 (2,916) Revenue grants 31,623 30,823 800 European funding 4,622 4,633 (11) Other revenues 2,668 3,970 (1,302) and income Total 51,252 54,681 (3,429)

Capital grantsconsist of the release to income of the part of the liability for deferred income in proportion to the depreciation charged on the assets to which the grant refers, as discussed in note 20.

Revenue grantsinclude ¤30 million consisting of the amount awarded to the parent company pursuant to article 11-septies of Law no. 248/05 to offset the costs incurred to ensure the safety of its systems and equipment and operational safety. The remainder of this item, amounting to ¤1,623 thousand, regards short-term projects funded as part of the TEN-T program starting in 2014 and the training funded by Fondimpresa.

European fundingregards the portion attributable to the Group for its participation in European projects such as SESAR, which represents the major item, and other smaller projects such as we free, gamma and accepta.

Other revenues and incomeconsist mainly of the penalties charged to suppliers for delays compared to contractually agreed deadlines. The decrease of ¤1,302 thousand over the previous year mostly regards a reduction in secondments; in this respect those to the German provider DFS came to an end in 2013. Notes to the Consolidated Financial Statements of the Enav Group 131

24. Costs for goods and services, lease and rental costs and other operating costs

Costs for goods and services, lease and rental costs and other operating costs amount in total to ¤170,336 thousand,essentially in line with the figure for the previous year. Details of these costs are set out in the following table:

31.12.2014 31.12.2013 Change

Purchases of goods 7,257 9,394 (2,137) Costs for services: Maintenance expenses 20,973 20,548 425 Costs for Eurocontrol 40,535 41,694 (1,159) contributions Costs for utilities and 42,548 39,103 3,445 telecommunications Insurance premiums 7,282 7,034 248 Cleaning and security 6,190 7,022 (832) Other personnel costs 9,544 11,333 (1,789) Professional services 18,425 13,328 5,097 Other costs for services 7,801 5,734 2,067 Total costs for services 153,298 145,796 7,502 Leases and rentals 6,972 7,346 (374) Other operating costs 2,809 8,154 (5,345)

Total 170,336 170,690 (354)

Purchases of goods consist mainly of the costs incurred to purchase spare parts for systems and equipment used for air traffic control and the relative change in stocks of these items, which in 2013 amounted to negative ¤1,579 thousandand in 2014 to positive ¤13 thousand.

Costs for services rose by a net amount of ¤7,502 thousand over the previous year and relate to: i)maintenance costs for new contracts concluded during the year such as the support and maintenance of the SIPRO – AIRNAS systems; ii) costs for utilities and telecommunications for the new systems linked to the E-net network in 2014; iii) professional services specialist support at an intragroup and European project level, as well as other activities connected with the privatization and transition to international accounting standards with the related requirement to adapt supporting procedures and information systems. The increase is also due to the recognition in the income statement of expenditure that does not qualify for classification as intangible assets, as was the case under Italian accounting standards. This item also benefits from a reduction in security 132 ENAV – 2014 Financial Statements

costs as the result of concluding new agreements in this respect and in other personnel costs relating to transfers.

Lease and rental costs decreased by ¤374 thousand mainly due to the fact that the term of certain rental agreements came to an end in the final quarter of 2014 following the transfer of the parent company’s personnel to new offices situated in the same area as the Ciampino Area Control Center.

Other operating costs decreased by ¤5,345 thousand as the figure for the previous year included the amount of the assets in third party custody which were stolen in December 2013.

25. Personnel costs

Personnel costs amount to ¤466,198 thousand, representinganet increase of ¤6,558 thousandover the prior year as shown by the following table:

31.12.2014 31.12.2013 Change

Wages and salaries. of

which: fixed remuneration 268,415 260,574 7,841 variable remuneration 59,714 61,570 (1,856) Total wages and salaries 328,129 322,144 5,985 Social security 107,091 105,340 1,751 contributions Employees' leaving 20,951 20,167 784 entitlement Other costs 10,027 11,989 (1,962) Total personnel costs 466,198 459,640 6,558

Wages and salaries increased by ¤5,985 thousand, of which ¤7,841 thousand refers to the fixed portion of remuneration, with the difference due to: i) changes in qualification and an increase in thesuperminimo arising from the restructuring of the wages of the CTA personnel that had an effect of approximately ¤3.1 million; ii) an increase in the minimi and superminimi in accordance with the requirements of the national collective labor agreement (CCNL) which became effective in July 2013 and which accordingly had an effect for the full year in 2014 but for only six months in 2013, with an impact of approximately ¤1.8 million; iv) a natural rise in remuneration. On the other hand the variable portion of remuneration decreased by ¤1,856 thousand, mainly due to the reduced accrued vacation leave not yet taken by employees following the Group’s emphasis on having operating and structure personnel take their vacation leave. Notes to the Consolidated Financial Statements of the Enav Group 133

Social security contributions increased by ¤1,751 thousand as the result of a higher income base, while other costs decreased by ¤1,962 thousand due to a reduction of approximately ¤1 million in voluntary redundancy costs, which affected 28 persons (30 in 2013), and a cost saving of ¤894 thousand regardingthe insurance cover for employees and an executive due to the renewal of the convention.

The following table provides a summary of the Group’s workforce analyzed by employee category:

31.12.2014 31.12.2013 Change

Executives 80 87 (7) Middle managers 399 386 13 White-collar workers 3,707 3,725 (18) Total at 31 December 4,186 4,198 (12)

26. Capitalization of internal work

Capitalized costs for internal work amounted to ¤24,660 thousand in the year ended 31 December 2014 (¤28,129 thousandin the year ended 31 December 2013) representing a decrease of ¤3,469 thousandover the previous year. These relate to the capitalization of personnel costs incurred for the work performed on investment projects in progress and the internal production of investment projects relating to the applications enhancement of air traffic control systems and the modernization of a number of Italian airports. 134 ENAV – 2014 Financial Statements

27. Financial income and expense

Net financial expense of ¤5,602 thousand was incurred during the year,consisting of financial income of ¤3,448 thousand, financial expense of ¤9,075 thousandand exchange gains of ¤25 thousand.

Financial income may be analyzed as follows:

31.12.2014 31.12.2013 Change

Income from investments 250 250 0 in other companies Interest income from 0 1,814 (1,814) discounting the "balance" Interest income from non- 43 43 0 current financial assets Interest income on VAT 684 719 (35) receivable awaiting refund Other interest income 2,471 2,081 390 Total financial income 3,448 4,907 (1,459)

Income from investments in other companiesconsist of the dividend paid in 2014 by the French registered company ESSP,in line with that of 2013.

The other items decreased overall by ¤1,459 thousanddue mainly to the financial income arising from discounting the“balance” item, for which financial expense of ¤3,059 thousand was recognized in 2014 as shown in the table below. Other interest income relates mainly to arrears interest charged to air carriers for the late payment of charges.

Financial expense totals ¤9,075 thousandand may be analyzed as follows:

31.12.2014 31.12.2013 Change

Interest expense on bank 3,669 5,436 (1,767) loans Interest expense on 1,689 1,560 129 employee benefits Interest expense from 3,059 0 3,059 discounting the "balance" Other interest expense 658 1,230 (572) Total financial expense 9,075 8,226 849 Notes to the Consolidated Financial Statements of the Enav Group 135

The net increase of ¤849 thousandis mainly due to the financial expense arising from discounting “balance” items to net present value and refers to the adjustment of the present value of the related receivable, recognized following the revision of the charge recovery plans. On the other hand the main decrease is due to the fall in interest expense on bank loans as the result of a reduced use of short-term credit lines and a drop in interest rates.

28. Income taxes

The income tax charge for the year amounts to ¤27,464 thousandand may be analyzed as follows:

31.12.2014 31.12.2013 Change

IRES corporate income tax 6,168 15,412 (9,244) charge IRAP regional production 22,958 24,652 (1,694) tax charge Prior year taxes (126) 81 (207) Total current taxes 29,000 40,145 (11,145) Deferred tax assets - (2,060) (56) (2,004) (income) Deferred tax liabilities - 524 333 191 expense Total current and deferred 27,464 40,422 (12,958) taxes

Reference should be made to note 9 for further details on the recognition of deferred tax assets and liabilities. 136 ENAV – 2014 Financial Statements

Other information

29. Guarantees

Guarantees consist of sureties of ¤3,303 thousand (¤2,526 thousand at 31 December 2013) pledged to third parties in the Group’s interest, representing an increase of ¤777 thousand which arises from new issues and the release of previous sureties. This difference mainly relates to sureties issued to participate in European tenders and entering the relative agreements.

30. Related party transactions

Related parties are identified on the basis of the requirements of IAS 24 (Revised).

Related parties of the ENAV Group consist of the controlling and supervising ministries, such as the Ministry of Economy and Finance (MEF in the table below) and the Ministry of Infrastructure and Transport (MIT in the table below), as well as the entities under the control of the Ministry of Economy and Finance. Relationships with the controlling and supervising ministries are dependent on the provisions of laws and regulations and regard: i) the provision of flight assistance services charged to the Ministry of Economy and Finance; ii) safety services for the systems and equipment contributed by the Ministry of Infrastructure and Transport. These relationships are described in the notes on the individual financial statement items.

The following table provides a summary of the Group’s transactions and balances with related parties:

MEF MIT 2014 2013 2014 2013

Balances Trade receivables 14,211 25,488 40,434 69,362 Financial receivables 0 0 0 0 Trade payables (52,413) (57,404) 0 0 Total (38,202) (31,916) 40,434 69,362 Transactions Revenues 14,211 14,158 30,000 30,000 Costs for services 0 0 0 0 Capitalized costs 0 0 0 0 Total 14,211 14,158 30,000 30,000 Notes to the Consolidated Financial Statements of the Enav Group 137

Related party transactions also include those with key executives in office at 31 December 2014. The relative compensation, understood as gross annual remuneration, amounts to ¤1,073 thousand.

No related party transactions were carried out by the Group, Group companies or related parties of Group companies with key executives during the year, either directly or through their close family members.

31. Maturity analysis of assets and liabilities

Within 1 year From 2 to 5 years After 5 years Total

Non-current financial 719 2,250 12,917 15,886 assets Deferred tax assets 27,884 27,884 Non-current tax 25,232 25,232 receivables Non-current trade 63,414 56,085 119,499 receivables Total 719 118,780 69,002 188,501 Financial liabilities 46,136 93,846 87,920 227,902 Deferred tax liabilities 3,279 3,279 Other non-current 116,472 26,058 142,530 liabilities Non-current trade payables 7,803 7,803 Total 46,136 221,400 113,978 381,514

Non-current financial assets falling due after five years consist of the receivable due from the company from whom the Techno Sky business unit was acquired in respect of the employees’ leaving entitlement (TFR) which is assumed to still be in the company in the reference period.

Non-current trade receivables falling due after five years relate exclusively to the portion of the “balance” recognized in 2014 and previous years.

Financial liabilities falling due after five years consist of bank loans. In this respect reference should be made to note 33.

Other non-current liabilities falling due after five years relate to the portion of capital grants corresponding to the depreciation to be charged on the investment projects to which they relate. 138 ENAV – 2014 Financial Statements

32. Derivative contracts

To hedge against the risks deriving from changes in the exchange rate for the purchase of Aireon in US dollars, on 20 December 2013 the parent company entered four derivative contracts linked to the four instalments agreed for the purchase of a total interest of 12.5%. At 31 December 2014 two foreign currency purchase transactions were concluded with respect to the original four.

At 31 December 2014 the fair value of the remaining contracts was calculated from the figures communicated by the bank, adjusted in accordance with IFRS 13. More specifically, the positive mark to market of ¤1,863 thousand was adjusted to take account of non-performance risk, meaning the risk that one of the parties fails to meet its contractual commitments due to a possible default, and for accounting purposes was recognized as an equity reserve with a counter-entry of ¤383 thousand to current financial assets and ¤1,480 thousand to non-current financial assets.

More specifically, under IFRS 13 the fair value of a derivative must include the risk that one or both of the parties may default on their obligations (the Credit Risk Adjustment). In detail, from a financial standpoint if the fair value of a derivative is positive the Credit Value Adjustment (CVA) is the expected loss due to counterparty default. On the other hand if the fair value is negative the Debt Value Adjustment (DVA) is the expected loss due to the default of the Company.

The contractual features and the relative fair values at 31 December 2014, as communicated by the bank, are as follows:

Forward Forward Type of Contract Notional Bank Counterparty Start date End date exchange amount transaction date (USD) MtM rate (euros)

Buy USD BNL 20/12/2013 14/02/2014 28/09/2015 16,837 1.3580 12,398 1,496 Flex Buy USD BNL 20/12/2013 14/02/2014 27/12/2017 6,122 1.3630 4,492 400 Flex Totale 22,959 16,890 1,896

Notes to the Consolidated Financial Statements of the Enav Group 139

The following table sets out fair values at 31 December 2014 adjusted for the Credit Value Adjustment:

Credit Value Type of Forward amount Bank MtM Counterparty Notional (USD) Bank MtM Adjustment transaction (euros) with CVA (CVA)

BNL Buy USD Flex 16,837 12,398 1,496 (16) 1,480 BNL Buy USD Flex 6,122 4,492 400 (16) 384 Total 22,959 16,890 1,896 (32) 1,864

It was not possible to identify an active market for these instruments. Fair value was therefore determined using a method consistent with Level 2 of the fair value hierarchy defined in IFRS 7 and IFRS 13, meaning that although quoted prices in active markets were not available for the instruments (Level 1) it was possible to obtain inputs other than quoted prices that are observable either directly or indirectly on the market on which valuations could be based.

The derivatives in question have the essential features that enable them to qualify as hedging instruments. The following information is provided for these instruments as required by IFRSs:

Maturity Analysis

Foreign exchange derivatives Maturity date (in euro/000)

Within 1 month Between 1 and 3 months Between 3 and 6 months Between 6 and 12 months 1,482 Between 1 and 2 years Between 2 and 3 years 386 Between 3 and 5 years Between 5 and 10 years Over 10 years Total 1,868 140 ENAV – 2014 Financial Statements

Sensitivity Analysis

Difference NE Difference NE Type of transaction Fair value Eur/USD rate +5% Eur/USD rate -5%

Forward purchase 1,863 2,983 1,128

33. Risk management

Credit risk

The ENAV Group’s credit risk at 31 December 2014 is represented by the carrying amount of current trade receivables due from customers, which represent its highest financial statement exposure. A bad debts allowance is recognized against customer non-performance risk which mainly relates to Eurocontrol, the collection agent for air carriers. The balance on this allowance is reviewed on a regular basis, including on the basis of information provided by Eurocontrol itself on route and terminal receivables. The process followed by ENAV for writing down receivables consists of making write-downs of individual customer balances that depend on the financial situation of the carrier concerned, flight license withdrawal and the age of the receivable. At 31 December 2014 the portion of trade receivables due from customers, including management companies, which is considered of doubtful recovery is fully covered by the bad debts allowance.

Liquidity risk

Liquidity risk is the risk that the although still solvent Group may be unable to meet its planned and contingent payment obligations in a timely manner due to difficulty in obtaining funds, or that it is only able to do so under unfavorable economic conditions due to factors connected with the market’s perception of its riskiness. The Group’s liquidity is generally managed and monitored by the parent company at an essentially centralized level in order to optimize the overall availability of funds. The parent company performs management and control functions over the companies of the Group that are able to obtain direct access to market funding sources, primarily taking care of their requirements with cash flows generated by ordinary operations, using a variety of funding sources as well as at the same time ensuring that any excess cash is appropriately managed. On the basis of general guidelines set by senior management, the administration, finance and control department establishes the short- term and medium/long-term financial structure and the way in which the relative cash flows will be managed. Decisions are mainly directed towards: i) ensuring the availability of adequate funds for planned short- term operating commitments, systematically monitored through a treasury planning and forecast revision activity; ii) keeping an adequate liquidity buffer that is sufficient for dealing with any unexpected commitments; iii) Notes to the Consolidated Financial Statements of the Enav Group 141

ensuring an adequate level of elasticity for the parent company’s medium/ long-term development programs regarding investment contracts for the enhancement of the technology and infrastructure of flight assistance systems. To this end the parent company manages liquidity risks by adopting financial policies based on a diversification of lenders and by pursuing a debt management strategy that envisages a diversified structure for the sources of finance in terms of the nature of bank facilities, characterized by flexibility as far repayment and renegotiation possibilities are concerned which may be used to cover its financial needs, and a balanced repayment profile.

At 31 December 2014 the ENAV Group has access to sources of funding that are sufficient to meet its planned financial needs, taking into account its ability to generate cash flows, the diversification of sources of funding and the availability of credit lines, having at its disposal a cash reserve estimated in ¤480 million and consisting of available cash and unused credit lines.

The following table sets out the due dates of medium/long-term bank loans, presented gross of the effect deriving from the use of the amortized cost method (maturity analysis):

Outstanding Between Between Lender Type balance at <1 year > 5 years 1 and 2 years 3 and 5 years 31.12.2014

Medium/long- MedioCredito Centrale 10,000 1,667 3,333 5,000 0 term - 5 years Medium/long- Intesa Sanpaolo 15,000 15,000 0 0 0 term - 3 years Medium/long- UniCredit 32,000 8,000 8,000 16,000 0 term - 5 years Medium/long- UniCredit 70,000 20,000 20,000 30,000 0 term - 5 years EIB - European Investment Medium/long- 100,000 0 0 12,080 87,920 Bank term - 15 years Total 227,000 44,667 31,333 63,080 87,920

142 ENAV – 2014 Financial Statements

The parent company’s principal long-term loans are based on agreements containing covenants referring to the consolidated financial statements as of 31 December of each year. The main covenants and commitments relating to these loans can be summarized as follows:

l a net debt/EBITDA ratioless than or equal to 1.5–3; l a gross debt/EBITDAratio less than or equal to 3; l a net debt/equity ratioless than or equal 0.7; l an EBITDA/gross financial expenseratio not less than 6; l a negative pledge clause, under which the Company will not create or pledge to third parties any guarantees or privileges in addition to those already governed in the individual agreements entered into by the Company unless an equivalent guarantee is extended in the same way to the loans in question; l a material changes clauseunder which on the occurrence of a significant event (change of control, changes to core activities, cross default, etc.) a resulting revision is made to the agreement, in the absence of which early repayment triggers; l a termination clausewith immediate execution on the occurrence of certain events such as insolvency procedures and a state of insolvency, the suspension of payments at their due date, the non- truthfulness and incompleteness of the statements made and the guarantees pledged.

The loan agreement covenants have always been satisfied by the parent company in previous years. These covenants were defined on the basis of Italian accounting standards as previously adopted. At 31 December 2014, on the basis of the new set of accounting standards adopted by the Group, no matters arose that might indicate that the parent company is not satisfying the covenants.

Interest rate risk

The Group’s main sources of exposure to interest rate risk derive from the volatility of the interest flows arising from outstanding floating rate medium/ long-term loans, whose fluctuations affect the level of net financial expense in the income statement and the volume of future cash flows. To limit this risk, the Group carries out systematic negotiations with banks, all of which always of prime standing, in order to exploit the opportunities of optimizing debt costs, which through a strategic diversification of floating rate and fixed rate financial liabilities provides an effective mix of the structure and technical forms of the loans taken out. The average cost of bank debt was 1.8% in 2014, essentially the same as that in the previous year, representing the combined effect of the continuation of favorable trends on the interest rate markets and the spreads applied and a reduction in the use of the available credit facilities during the period. Once again in 2014 the Group continued with a financial strategy of repositioning its debt structure towards medium/long- term commitments, maintaining adequate reserves of elasticity to deal with managing interim needs. Notes to the Consolidated Financial Statements of the Enav Group 143

Currency risk

Currency risk arises from the possibility of adverse changes in exchange rates between the euro and the leading foreign currencies with resulting negative changes on items of the income statement and balance sheet denominated in foreign currency. The ENAV Group operates mainly on the Italian market and therefore has only a limited exposure to currency risk. The present exposure to currency risk essentially arises from cash flows relating to investments in foreign currency, principally the US dollar, for the purchase of the investment in the US registered company Aireon LLC, which has been hedged by entering a forward contract for the purchase of US dollars for an amount corresponding to the consideration agreed for the purchase of that investment. Further details may be found in note 32 on derivative hedging contracts. In addition, the consolidated financial statements are subject to the currency risk inherent in the balances used for consolidatinginvestees denominated in a currency other than the euro. Currency risk management is pursued as part of a Group hedging policy based on a specific assessment of transactions, which normally also requires the use of derivative financial contracts.

Litigation risks

Litigation of a fiscal, administrative, civil and labor nature is followed by the competent functions of the ENAV Group, which for the preparation of these financial statements have drawn up a complete and exhaustive description of the various civil, administrative and labor law proceedings. The Group has carried out a precise assessment of the risk of an adverse outcome in these proceedings, from which the need emerged to prudently set up specific provisions for those disputes in which an adverse outcome is considered probable and is reasonably quantifiable. In those cases where an adverse outcome is only considered possible, no specific provisions were recognized, in accordance with the accounting standards used to prepare the financial statements.

At the present time it is not considered that the conclusion of the outstanding disputes will lead to significant costs for the Group other than the amounts provided for this purpose at 31 December 2014.

Judicial investigations and proceedings

The year ended 31 December 2014 was characterized by the continuation of the steps already taken in previous years designed to protect the Group in respect of certain pending judicial actions.

The parent company has brought a civil action in the criminal proceedings against a former managing director and former executive of the Company for alleged offences pursuant to articles 319 and 321 of the Italian criminal code. The proceeding against the former managing director for alleged complicity in the offence pursuant to article 7, paragraphs 2 and 3 of Law no. 194/1975 and article 4, paragraph 1 of Law no. 659/1981 has been joined for reasons of connection with this proceeding, which is currently at a preliminary stage, 144 ENAV – 2014 Financial Statements

ENAV has brought a civil action in the criminal proceedings against a former chairman of the board of directors of ENAV, a former executive of ENAV and senior management of a third party company – a former supplier of the subsidiary Techno Sky – in connection with offences pursuant to articles 81, 319 and 321. This proceeding is in the process of being joined with that involving another former executive of ENAV who has been charged with the same offences, in relation to whom the Company will bring a civil action.

An order has been issued to dismiss a criminal proceeding for an alleged offence pursuant to article 323 of the Italian criminal code concerning a former managing director and pursuant to article 640, paragraph 2.1 of the Italian criminal code concerning a former executive.

As far as is known the criminal proceeding is continuing against an executive of the Company for an alleged offence pursuant to article 378 of the Italian criminal code following notification served on the respondent on 29 August 2013 giving notice that the preliminary investigations pursuant to article 415-bis of the Italian code of criminal procedure have been completed.

A criminal proceeding is pending against, amongst others, a senior executive of a former construction planning company, a former managing director and former director of ENAV and a senior executive of an ENAV subcontractorconcerning alleged offences pursuant to article 110 of the Italian criminal code, article 7, paragraphs 2 and 3 of Law no. 195/1974 and article 4, paragraph 1 of Law no. 659/1981, as well as alleged offences pursuant to article 8 of Law no. 74/2000, with specific reference to subcontracts regarding the contract for the modernization of Palermo airport. In respect of this proceeding, on 8 April 2014 documentation available to ENAV was delivered to the judicial authorities; in addition, the Company has engaged a party to conduct a preliminary assessment on adopting protection measures.

Following, amongst other things, the completion by settlement of the criminal proceedings regarding offences emerging as part of the investigations carried out by the Rome public prosecutor in the years 2010 and 2011 concerning former directors, former senior executives of suppliers no longer in business and former senior executives and executives and consultants of third party companies, ENAV has undertaken out-of-court initiatives preliminary to any action designed to obtain compensation for the damage, also to its reputation, caused to the Company, in order amongst other things to interrupt the period of limitations.

In relation to the theftof the goods and materials belonging to ENAV that were held on deposit with third parties, in February 2014 ENAV filed a formal criminal complaint in addition torequesting the insurance company to carry out verifications as to whether the loss is covered by the Company’s policy.

Following the filing of the criminal complaint by ENAV, the public prosecutor brought a criminal action, as part of which the Company has received as the injured party a copy of a request for the immediate committal for trial Notes to the Consolidated Financial Statements of the Enav Group 145

of one of the respondents for the offence pursuant to article 61.11 and article 646 of the Italian criminal code.

In relation to the terminated agreement entered by ENAV with SELEX ES on 26 June 2009 for modernizing theairport system of Palermo airport, the Company continues to withhold an amount of approximately ¤3.9 million, pursuant to and in accordance with the private agreement signed on 24 December 2012, as a caution and pending the further verifications provided therein. Following additional checks carried out by ENAV, which have enable the noted differences with the agreement to be better defined, discussions are taking place with the supplier in order to arrive at a definitive completion of the situation in a prudent manner for ENAV.

In relation to the terminated investment contract relating to the ADS-B system, completed in a prudent manner for the Company with the recognition of amounts lower than those originally included in the contract, considering the fact that a part of the works relating to this contract fell under the TEN-T financing in the Company’s favor, ENAV has provided assurance that it will provide the most transparent information to its national and European institutional interlocutors concerning the initiatives undertaken by ENAV in dealing with this matter. On the completion of its investigation, the agency INEA requested ENAV to return prefinancing amounting in total to approximately ¤1.8 million, given that it is considered that the circumstances provided by articles III.3.7.1 and III.2.5 of the General Conditions attached to the financing decision have not been complied with.

On 3 July 2013, SELEX ES initiated a arbitration proceeding against the subsidiary Techno Sky in order to settle the dispute relating to the receivable and payable balances arising from the terminated contractual relationship between the parties whose object was the supply of meteo systems for modernizing the airport system of the “Falcone Borsellino” airport in Palermo.

This contract, having a value of ¤8.1 million and in terms of negotiations connected to the above-mentioned agreement between ENAV wand SELEX ES, consists of a base lot and an optional lot, both the object of subcontracting for almost the whole amount, approximately ¤7 million, by Techno Sky to Arc Trade Srl, now insolvent.

Following the well-known judicial affairs concerning the latter company, in whose bankruptcy proceedings Techno Sky by standard procedure requested the settlement of ¤6.5 million as an unsecured creditor, as of today the subsidiary has the material availability of the supply relating to the base lot and a portion of the optional lot, while despite having been ordered by Techno Sky from Arc Trade and almost wholly paid for, the Wind Tracer Infrared Doppler Lidar System (Radar Lidar), also forming part of the optional lot, was never actually delivered by the latter.

The above arbitration procedure, for which an award is expected by 27 October 2015 after extensions to the deadline, is currently pending at the preliminary stage.

Following the Decree of 7 March 2013 of the Director General of Finance at 146 ENAV – 2014 Financial Statements

the Ministry of the Economy and Finance in conjunction with the Director of the Department for Transport, Navigation and Information Systems and Statistics at the Ministry of Infrastructure and Transport ordering the decommissioning and simultaneous transfer to the State Property Office of a first tranche of AVL assets (as well as areas outside the airport grounds), not additionally instrumental for the supply of ENAV’s business services in the new sector structure, bilateral ENAC/ENAV discussions are continuing preliminary to the issue of a further provision for the decommissioning of other visual and lighting aids at the time contributed to ENAV and still managed and maintained by the Company.

34. Compensation payable to the audit firm and to directors and statutory auditors

Total fees of ¤849 thousand were payable to the audit firm, a figure which also includes the fees for the year paid to the firm for attestation services other than the legal audit.

Fees totaling ¤496 thousand payable to the directors and statutory auditors may be analyzed as follows:

31.12.2014 31.12.2013 Change

Directors 387 767 (380) Statutory auditors 109 122 (13) Total 496 889 (393)

Directors’ fees consist of those payable to the Sole Director until September and subsequently to the Board of Directors. The fees payable to representatives of the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport are transferred to these ministries if such directors are employees of these bodies.

35. Subsequent events

On 21 January 2015 the subsidiary ENAV North Atlantic LLC paid the balance of US$6.4 million representing the second contractually provided instalment for the purchase of the investment in Aireon LLC.

On 13 April 2015 the Shareholders’ Meeting of ENAV resolved a voluntary reduction of ¤180 million in the Company’s share capital pursuant to article 2445 of the Italian civil code. This releveraging operation, which should be considered as part of a broader privatization process, should in addition make ENAV’s current financial structure more efficient; this structure is currently characterized by having a leverage that is on the average lower than listed and unlisted companies that are in any way comparable, in both absolute Notes to the Consolidated Financial Statements of the Enav Group 147

and relative terms, and the operation should benefit the Company’s rating and the Shareholder’s related expectations.

With regard to the choice of the financial instrument deemed most appropriate for acquiring the funds needed to service the transaction, given the current highly favorable trend on the debt market due to the combined effect of interest rates at all-time lows and contracting credit spread, on 8 May 2015 the Board of Directors resolved, for purposes of article 2410 of the Italian civil code, to issue a bonded loan to be placed with institutional investors in an amount equal to the above-mentioned reduction in share capital up to ¤180 million, with maturity of up to 10 years and bullet redemption. 148 ENAV – 2014 Financial Statements

A ttestationof the Chief Executive Officerand the Manager in Charge on the consolidated financial statements

Attestationof the Chief Executive Officerand the Manager in Charge on the Consolidated Financial Statements 149

ATTESTATION OF THE CHAIRMAN OF THE BOARD OF DIRECTORS AND THE MANAGER IN CHARGE OF PREPARING THE CORPORATE ACCOUNTING DOCUMENTS OF ENAV S.P.A. ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014

1. The undersigned Maria Teresa Di Matteo and Loredana Bottiglieri, respectively Chairman of the Board of Directors and manager in charge of preparing the corporate accounting documents of ENAV S.p.A., taking into account:

§. the requirements of article 18-bis of the bylaws of ENAV S.p.A.; §. the matter described at point 2 below; certify the adequacy, in relation to the Group’s characteristics, and the effective application of the administrative and accounting procedures for preparing the consolidated financial statements during 2014.

2. In this respect representation is made that in addition to representation letters the manager in charge of preparing the corporate accounting documents of ENAV S.p.A. has also obtained information from the principal companies included in the consolidation scope on the activities performed preparatory to issuing the attestations. On the basis of the information obtained no significant matters emerged. These activities were performed in compliance with the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organizations of the Treadway Commission which is an internationally generally accepted reference framework for internal control systems.

3. In addition, it is hereby certified that the consolidated financial statements: a) have been prepared in accordance with the applicable international accounting standards recognized in the European Community pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002; b) correspond to the accounting books and records; c) are suitable for providing a true and fair view of the financial position, results of operations and cash flows of the companies included in the consolidation of the ENAV Group.

Rome, 29 May 2015

Chairman of the Board of Directors Manager in charge of preparing the corporate accounting documents

Maria Teresa Di Matteo Loredana Bottiglieri

150 ENAV – 2014 Financial Statements Report of the Independent Auditors on the Consolidated Financial Statements 151

Report of the Independent Auditors on the consolidated financial statements 152 ENAV – 2014 Financial Statements Report of the Independent Auditors on the Consolidated Financial Statements 153 3 Separate Financial Statements of Enav SpA for the Year Ended 31 December 2014 156 ENAV – 2014 Financial Statements

Separate Financial 3 Statements of Enav SpA for the Year Ended 31 December 2014

Financial Statements of Enav Spa 157 Statement of financial position 158 Income statement 160 Statement of comprehensive income 161 Statement of changes in equity 162 Statement of cash flows 164

Notes to the Financial Statements 165 of Enav SpA General information 166 Form and contents of the financial statements 167 Accounting standards 168 Information on items in the statement of financial position 186 Information on items in the income statement 213 Other information 221 Subsequent events 229 Transition to international accounting standards 230

Attestation of the Chief Financial Officer and the Manager in Charge 242 on the Separate Financial Statements

Report of the Board of Auditors on the Separate Financial Statements 244

Report of the Independent Auditors on the Separate Financial Statements 255 157

ProspettiFinancial Statementscontabili ofdi EnavEnav S.p. SpAA 158 ENAV – 2014 Financial Statements

Statement of financial position

Assets

Note 31.12.2014 31.12.2013 01.01.2013

Non-current assets Property, plant and 4 1.144.054.984 1.189.980.932 1.258.191.108 equipment Intangible assets 5 57.964.972 64.896.225 63.748.043 Investments 6 142.909.458 114.825.938 114.698.647 Non-current financial 7 383.449 0 0 assets Deferred tax assets 8 19.926.468 18.296.837 19.179.526 Non-current tax 9 23.164.181 23.164.181 23.164.181 receivables Non-current trade 10 119.498.770 85.892.046 73.222.592 receivables Total non-current assets 1.507.902.282 1.497.056.159 1.552.204.097 Current assets Inventories 11 61.644.735 61.613.633 63.142.090 Current trade receivables 10 224.531.288 278.092.868 379.406.635 Receivable from Group 12 13.925.666 15.708.197 11.268.208 companies Current financial assets 7 1.479.856 0 0 Tax receivables 9 74.571.339 49.310.747 54.918.773 Other current assets 13 18.110.834 29.453.674 15.984.202 Assets held for sale 0 0 1.607.478 Cash and cash equivalents 14 111.089.486 92.344.388 52.763.881 Total current assets 505.353.204 526.523.507 579.091.267 Total assets 2.013.255.486 2.023.579.666 2.131.295.364

Euros Financial Statements of ENAV SpA 159

Statement of financial position

Shareholders’ equity and liabilities

Note 31.12.2014 31.12.2013 01.01.2013

Shareholders' equity Share capital 1,121,744,385 1,121,744,385 1,121,744,385 Reserves 41,622,660 41,060,671 63,733,028 Retained earnings/ 81,479,457 80,826,824 50,142,675 (accumulated losses) Net income for the year 38,827,033 51,180,234 47,993,682 Total shareholders' equity 15 1,283,673,535 1,294,812,114 1,283,613,770 Non-current liabilities Provisions for risks and charges 16 3,682,255 6,964,943 6,066,254 Employees' leaving entitlement 17 40,201,690 35,238,717 38,444,571 and other employee benefits Deferred tax liabilities 8 3,278,527 3,203,472 2,448,925 Non-current financial liabilities 18 181,766,028 126,414,631 129,065,773 Non-current trade payables 20 7,803,390 0 0 Other non-current liabilities 19 142,529,753 180,600,401 180,698,023 Total non-current liabilities 379,261,643 352,422,164 356,723,546 Current liabilities Current portion of provisions 16 4,693,475 1,826,000 7,093,913 for risks and charges Current trade payables 20 114,551,775 128,993,240 153,022,735 Payable to Group companies 12 34,733,407 38,389,038 44,549,731 Tax and social security 21 25,962,144 25,989,608 27,990,715 payables Current financial liabilities 18 44,743,367 46,068,591 124,281,579 Other current liabilities 19 125,636,140 135,078,911 134,019,375 Total current liabilities 350,320,308 376,345,388 490,958,048 Total liabilities 729,581,951 728,767,552 847,681,594 Total shareholders' equity 2,013,255,486 2,023,579,666 2,131,295,364 and liabilities

Euros 160 ENAV – 2014 Financial Statements

Income statement

Note 2014 2013

Revenues Revenues from operations 22 810,250,562 778,152,578 Balance revenues 22 (16,015,835) 20,460,475 Other operating income 23 49,840,073 53,862,490 Total revenues 844,074,800 852,475,543 Costs Costs for raw materials, Ancillary materials, 24 (3,647,263) (5,657,197) Consumables and merchandise Costs for services 24 (203,467,484) (193,361,152) Personnel costs 25 (403,213,249) (396,813,892) Lease and rental costs 24 (4,596,239) (4,913,648) Other operating costs 24 (3,178,780) (8,544,891) Capitalization of internal work 26 5,436,932 6,501,721 Total costs (612,666,083) (602,789,059) Depreciation and amortization 4 and 5 (157,005,122) (150,379,944) Write-downs. Impairment losses and reversal of 4 and 10 (5,586,031) (11,557,920) impairment losses Allocations 16 (284,444) 3,802,857 Operating income 68,533,120 91,551,477 Financial income and expense Financial income 3,400,597 4,851,505 Financial expense (8,369,011) (6,860,081) Foreign exchange gains/ 14,729 11,229 (losses) Total financial income and 27 (4,953,685) (1,997,347) expense Income before income taxes 63,579,435 89,554,130 Income taxes 28 (24,752,402) (38,373,896) Net income for the year 38,827,033 51,180,234

Euros Financial Statements of ENAV SpA 161

Statement of comprehensive income

Note 2014 2013

Net income for the year 38,827,033 51,180,234 Items of comprehensive income which will

subsequently be reclassified to profit or loss: l fair value measurement of derivative financial 2,529,447 (670,699) instruments l tax effect of the fair value measurement of derivative (695,598) 184,442 financial instruments Total items of comprehensive income which will 1,833,849 (486,257) subsequently be reclassified to profit or loss: Items of comprehensive income which will not

subsequentlybe reclassified to profit or loss: l actuarial gains/(losses) on employee benefits (5,238,951) 1,532,873 l tax effect of actuarial gains/(losses) on employee 1,440,711 (421,540) benefits Total items of comprehensive income which will not (3,798,240) 1,111,333 subsequentlybe reclassified to profit or loss: Total comprehensive income 36,862,642 51,805,310

Euros 162 ENAV – 2014 Financial Statements

Statement of changes in equity

Reserves

Reserve for actuarial Cash flow hedge Retained earnings/ Share capital Legal reserve Miscellaneous reserves gains/(losses) Total reserves Net income for the year Total equity reserve (accumulated losses) on employee benefits

1 January 2013 1,121,744,385 9,099,497 58,920,635 (4,287,104) 0 63,733,028 50,142,675 47,993,682 1,283,613,770 1.283.613.770 Allocation of prior year 0 2,309,533 0 0 0 2,309,533 45,684,149 (47,993,682) 0 0 net income Disposal of AVL assets 0 0 (25,606,966) 0 0 (25,606,966) 0 0 (25,606,966) (25.606.966) Dividend payment 0 0 0 0 0 0 (15,000,000) 0 (15,000,000) (15.000.000) Comprehensive income

recognized. of which: l gains/(losses) recognized directly 0 0 0 1,111,333 (486,257) 625,076 0 0 625,076 625.076 in equity l net income for the 0 0 0 0 0 0 0 51,180,234 51,180,234 51.180.234 year

31 December 2013 1,121,744,385 11,409,030 33,313,669 (3,175,771) (486,257) 41,060,671 80,826,824 51,180,234 1,294,812,114 1.294.812.114

Allocation of prior year 0 2,526,380 0 0 0 2,526,380 48,653,854 (51,180,234) 0 0 net income Allocation of Charge 0 0 0 0 0 0 (16,500,000) 0 (16,500,000) (16.500.000) Stabilization Provision

Dividend payment 0 0 0 0 0 0 (31,501,221) 0 (31,501,221) (31.501.221)

Comprehensive income

recognized. of which: l gains/(losses) recognized directly 0 0 0 (3,798,240) 1,833,849 (1,964,391) 0 0 (1,964,391) (1.964.391) in equity l net income 0 0 0 0 0 0 0 38,827,033 38,827,033 38.827.033 for the year

31 December 2014 1,121,744,385 13,935,410 33,313,669 (6,974,011) 1,347,592 41,622,660 81,479,457 38,827,033 1,283,673,535 1.283.673.535 Financial Statements of ENAV SpA 163

Statement of changes in equity

Reserves

Reserve for actuarial Cash flow hedge Retained earnings/ Share capital Legal reserve Miscellaneous reserves gains/(losses) Total reserves Net income for the year Total equity reserve (accumulated losses) on employee benefits

1 January 2013 1,121,744,385 9,099,497 58,920,635 (4,287,104) 0 63,733,028 50,142,675 47,993,682 1,283,613,770 1.283.613.770 Allocation of prior year 0 2,309,533 0 0 0 2,309,533 45,684,149 (47,993,682) 0 0 net income Disposal of AVL assets 0 0 (25,606,966) 0 0 (25,606,966) 0 0 (25,606,966) (25.606.966) Dividend payment 0 0 0 0 0 0 (15,000,000) 0 (15,000,000) (15.000.000) Comprehensive income recognized. of which: l gains/(losses) recognized directly 0 0 0 1,111,333 (486,257) 625,076 0 0 625,076 625.076 in equity l net income for the 0 0 0 0 0 0 0 51,180,234 51,180,234 51.180.234 year

31 December 2013 1,121,744,385 11,409,030 33,313,669 (3,175,771) (486,257) 41,060,671 80,826,824 51,180,234 1,294,812,114 1.294.812.114

Allocation of prior year 0 2,526,380 0 0 0 2,526,380 48,653,854 (51,180,234) 0 0 net income Allocation of Charge 0 0 0 0 0 0 (16,500,000) 0 (16,500,000) (16.500.000) Stabilization Provision

Dividend payment 0 0 0 0 0 0 (31,501,221) 0 (31,501,221) (31.501.221)

Comprehensive income recognized. of which: l gains/(losses) recognized directly 0 0 0 (3,798,240) 1,833,849 (1,964,391) 0 0 (1,964,391) (1.964.391) in equity l net income 0 0 0 0 0 0 0 38,827,033 38,827,033 38.827.033 for the year

31 December 2014 1,121,744,385 13,935,410 33,313,669 (6,974,011) 1,347,592 41,622,660 81,479,457 38,827,033 1,283,673,535 1.283.673.535 164 ENAV – 2014 Financial Statements

Statement of cash flows

2014 2013 A - Cash and cash equivalents at the beginning of the year 92,344 52,764 Cash flows from operating activities Net income for the year 38,827 51,180 Depreciation and amortization 157,005 150,380 Net change in liabilities for employee benefits 4,963 (3,206) Change in reserves (18,465) (24,982) Losses from the disposal of property, plant and equipment 18 0 Impairment of property, plant and equipment and intangible assets 2,269 6,753 Allocations to/releases of provisions for risks and charges (415) (4,369) Net change in deferred tax assets and liabilities (1,555) 1,638 (Increase)/decrease in inventories and work in progress (31) 1,528 (Increase)/decrease in current trade receivables 55,344 96,874 (Increase)/decrease in non-current trade receivables (33,607) (12,669) (Increase)/decrease in tax receivables (25,261) 5,608 Change in other current assets and liabilities 1,900 (12,409) Change in other non-current assets and liabilities (38,071) (98) Increase/(decrease) in trade payables (5,221) (12,277) Increase/(decrease) in tax and social security payables (27) (2,001) B - Total cash from operating activities 137,673 241,950 of which taxes paid (36,689) (44,258) of which interest paid (3,676) (5,528) Cash flows from investing activities Investments in property, plant and equipment (96,946) (75,975) Investments in intangible assets (9,487) (14,098) Increase/(decrease) in trade payables (5,073) (17,913) Investments in other companies (28,084) (127) C - Total cash used in investing activities (139,590) (108,113) Cash flows from financing activities Disbursement/(repayment) of medium/long-term loans 57,000 (30,000) Net change in long-term financial liabilities (1,649) 27,349 Net change in short-term financial liabilities (1,325) (78,213) (Increase)/decrease in current financial assets (1,480) 0 (Increase)/decrease in assets held for sale 0 1,607 (Increase)/decrease in non-current financial assets (383) 0 Payment of dividends (31,501) (15,000) D - Total cash from/(used in) financing activities 20,662 (94,257) E - Total cash flows (B+C+D) 18,745 39,580 F - Cash and cash equivalents at the end of the year (a+e) 111,089 92,344

In thousands of euros 165

Notes to the Financial Statements of Enav SpA 166 ENAV – 2014 Financial Statements

1. General information

ENAV is a joint stock company with a sole shareholder which is wholly owned by the Ministry of Economy and Finance (MEF) and which exercises its shareholder’srights in agreement with the Ministry of Infrastructure and Transport (MIT), which is also the monitoring ministry in charge of civil aviation. ENAV SpA was established in 2001 following the conversion under Law no. 665/1996 of Ente Nazionale di Assistenza al Volo (the National Agency for Flight Assistance), a public undertaking, that was formerly known as Azienda Autonoma di Assistenza al Volo per il Traffico Generale (A.A.A.V.T.A.G. – Autonomous Company providing Flight Assistance for General Traffic).

ENAV provides air traffic and management services and other essential navigation services in Italian airspace and to the civil national airports for which it has competence, ensuring the highest technological and systemic standards in flight safety and the enhancement of the technology and infrastructure of flight assistance systems. In common with its other logistical infrastructures, the country’s “airspace infrastructure” needs constant maintenance and continuous development to guarantee safety, punctuality and operational continuity. This is moreover clearly stated in the European Union’s Single European Sky regulations that on the one hand have been introduced to design the future structure of the air traffic management system and on the other set the technological, qualitative, economic and environmental targets that all service providers must meet.

ENAV has its registered office in Via Salaria 716, Rome and operating facilities throughout the country.

ENAV has significant subsidiaries and as a consequence prepares consolidated financial statements, which are published together with these separate financial statements.

These financial statements were approved by the Company’s Board of Directors on 29 May 2015 and have been audited by Reconta Ernst & Young SpA pursuant to article 2409-bis of the Italian civil code as amended by article 14 of Legislative Decree no. 39/2010. Notes to the Financial Statements of ENAV SpA 167

2. Form and contents of the financial statements

The financial statements for the year ended 31 December 2014 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission which were effective at the balance sheet date, which include the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), the previous International Accounting Standards (IAS) and the interpretations of the Standard Interpretations Committee (SIC), as adopted by the European Union and contained in the relative EU Regulations published up to the date on which the Board of Directors authorized the issue of this document. For simplicity, the complete set of the above standards and interpretations are also referred to in the following as “IFRSs”.

Starting from the year ended 31 December 2014 the Company has made the election provided in articles 3 and 4 of Legislative Decree no. 38 of 28 February 2005 which governs the exercising of the options prescribed by article 5 of European Regulation (EC) no. 1606/2002 on international accounting standards, and has applied IFRSs in the preparation of its separate financial statements. In previous years ENAV prepared its separate financial statements in accordance with Italian accounting standards pursuant to Legislative Decree no. 127 of 9 April 1991 as interpreted by the accounting standards issued by the Organismo Italiano di Contabilità (OIC),the Italian accounting standards setter.

These separate financial statements for the year ended 31 December 2014 are accordingly the first set of statements that ENAV has prepared in accordance with IFRSs. Details on transition to IFRSs are provided in note 35, to which reference should be made.

The financial statements consist of primary financial statements (statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows) and these notes, applying the requirements of IAS 1 Presentation of Financial Statements and the general criterion of historical cost, with the exception of items in the financial statements that are measured at fair value under IFRSs as stated in the accounting policies adopted for the individual items. The statement of financial position is presented using a format classifying assets and liabilities into current and non-current items, while in the income statement expenses are classified by nature. In addition to including profit or loss for the year, the statement of comprehensive income also includes changes in other items in equity, presented separately on the basis of whether they will or will not subsequently be reclassified to profit or loss. The statement of cash flows has been prepared using the indirect method. The applications of IFRSs has been made in accordance with the recommendations provided in the “Framework for the Preparation and Presentation of Financial Statements” and no critical matters arose which required departure from IFRSs within the meaning of IFRS 1.

The separate financial statements, which have been prepared on a going concern basis, are presented in euros, ENAV’s functional currency. All the 168 ENAV – 2014 Financial Statements

amounts included in the tables in the following notes and in the comments to these notes are expressed in thousands of euros unless otherwise stated.

Comparative figures for the previous year are provided for each item of the financial statements, and in accordance with IFRS 1a statement of financial position is presented as of 1 January 2013.

3. Accounting standards

The most significant accounting principles and policies used in preparing the separate financial statements are as follows. For completeness of information reference should also be made to note 36 discussing transition to international accounting standards.

Property, plant and equipment

Property, plant and equipment is recognized at cost, including any costs directly attributable and necessary for the asset to be capable of operating in the manner intended by its purchase. Costs for maintenance and repairs which are unlikely to enhance the value of an asset or extend its useful life are expensed in the year in which they are incurred, otherwise they are capitalized.

Property, plant and equipment is stated net of accumulated depreciation and any impairment losses. Depreciation is charged on a straight-line basis over the estimated useful life of the asset for the business; this is reviewed annually, and any changes, if necessary, are accounted for on a prospective basis. If a depreciable asset is made up of distinctly identifiable elements whose useful lives differ significantly from those of the other components of the asset, depreciation is calculated for each of these components separately using the component approach. Depreciation starts when an asset is available for use. Notes to the Financial Statements of ENAV SpA 169

The following table sets out the estimated useful lives of the main categories of property, plant and equipment:

Category Description Useful life (years)

Buildings Buildings 25 Buildings - extraordinary 25 maintenance Light constructions 10 Plant and machinery Radiophonic systems 10 Recording systems 7 Synchronization systems 10 and control centers Manual and 7 electromecchanical centers Electronic centers and 10 systems Radio bridges. A,F, and 10 amplification equipment Power supply systems 11 Industrial and commercial Signaling systems and 10 equipment runway equipment Miscellaneous small 7 equipment Electronic machines and Other assets 7 telephone systems Ordinary office furniture 10 and machines Data processing equipment 5 including computers Motor vehicles. motorcycles 4 and similar Corporate aircraft 15 Equipment for aircraft and radio-electric measurement 10 systems

The carrying amount of property, plant and equipment is assessed for impairment losses if events or changes indicate that the carrying amount cannot be recovered. If an indication of this nature exists, and if the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. The recoverable amount of property, plant and equipment is the higher of its fair value less costs to sell and its value in use.

If an asset does not generate cash flows that are largely independent the recoverable amount is determined for the cash-generating unit to which that 170 ENAV – 2014 Financial Statements

asset belongs. Impairment losses are recognized in profit or loss as part of write-downs and impairment losses and are reversed when the reasons leading to that loss no longer exist.

On the sale of an asset or if no future economic benefits are expected from its an asset is derecognized and any gain or loss (calculated as the difference between the disposal proceeds and the carrying amount) is recognized in profit or loss in the year of derecognition.

Intangible assets

Intangible assets are identifiable assets without physical substance that are controlled by the Company and from which future economic future benefits are expected to flow to the Company. They are recognized at purchase cost, including any directly attributable costs required to make the asset available for use. Internally generated intangible assets are not capitalized and are recognized in profit or loss in the year the related costs are incurred.

The useful life of an intangible asset may be finite or indefinite.

Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives and are tested for impairment whenever there are indications that they may be impaired. The residual useful life of an asset is reviewed at each year end or more frequently if necessary. Changes to the expected useful

lives of assets or the way in which the future economic benefits associated with the asset are consumed by the Company are recognized by changing the amortization period and/or method and are treated as changes in accounting estimate: the amortization charge for intangible assets with a finite useful life is recognized in profit or loss in the cost category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are not amortized and are tested annually for impairment at both an individual and cash-generating unit level. The assessment that an intangible asset has an indefinite life is reviewed annually to determine whether that assessment still holds. If not, the change in the useful life assessment from indefinite to finite is applied on a prospective basis.

The Company does not have any intangible assets with indefinite useful lives.

Gains and losses on the disposal of intangible assets are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss on disposal.

In particular, the following main intangible assets are identifiable: patents and intellectual property rights represented by licenses and software and other intangible assets having an estimated useful life of three years. Notes to the Financial Statements of ENAV SpA 171

Equity investments

Investments in subsidiaries are measured at purchase cost, including directly attributable accessory costs, adjusted for any impairment losses that are recognized in profit or loss. An impairment loss is reversed if the reasons underlying the recognition of the loss no longer hold, up the amount of the loss. The reversal of an impairment loss is recognized in profit or loss.

Subsidiaries are companies for which ENAV has the power to govern, directly or indirectly, financial and operating policies in order to obtain the benefits deriving from their activities.

Investments in other companies are measured at fair value. The cost method is used if fair value cannot be reliably measured.

Financial assets

Financial assets are initially recognized at fair value, adjusted for any transaction costs, and are subsequently measured at amortized cost using the effective interest method less any impairment losses.

Impairment losses consist of the difference between the carrying amount and the present value of future cash flows discounted using the original effective interest rate.

Trade and other receivables

Trade receivables and other receivables are initially accounted for at fair value and are subsequently measured at amortized cost less a bad debts allowance.

If the due date of trade receivables and other current assets does not fall within normal commercial terms and the receivables or assets do not bear interest, an analytical discounting process is carried out on the basis of assumptions and estimates. Trade receivables whose due dates do not fall within normal commercial terms are not discounted. Trade and other receivables are classified as current assets, except for those having a due date exceeding twelve months from the balance sheet date which are classified as non-current assets. 172 ENAV – 2014 Financial Statements

Inventories

Inventories, mainly consisting of spare parts for specific use relating to facilities and equipment for flight control, are measured at weighted average cost. If items can no longer be used because they are obsolete, they are written down through the allowance for inventory losses as a direct deduction from the item.

Cash and cash equivalents

Cash and cash equivalents consist of available or very short-term bank deposits and cash on hand. Cash and cash equivalents are recognized at nominal value which corresponds to fair value.

Derivative financial instruments

The derivative financial instruments acquired by ENAV consist of forward foreign exchange contracts hedging currency risk. Derivative financial instruments are recognized at fair value initially at the contract date and then subsequently at each reporting date. Derivatives are accounted for as financial assets if their fair value is positive and as financial liabilities if their fair value is negative.

Derivative financial instruments used for hedging purposes, the only kind acquired by ENAV, qualify for hedge accounting if and only if the following conditions are met:

l at the inception of the hedge there is formal designation and documentation of the hedging relationship, ENAV’s risk management objective and the strategy for undertaking the hedge; l the hedge is expected to be highly effective; l the effectiveness of the hedge can be reliably measured; l the hedge is highly effective throughout the various periods for which it was designated.

If all the above conditions are met for the transaction arranged by ENAV the hedge is accounted for as a cash flow hedge and accordingly the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is classified as a change in other comprehensive income and recognized in the cash flow hedge reserve in equity, while the ineffective portion of the gain or loss on the hedging instrument is recognized in profit or loss.

The amounts recognized as part of other comprehensive income are reclassified to profit or loss in the period in which the hedged transaction affects profit or loss, for example if a sale occurs or if there is a write-down. Notes to the Financial Statements of ENAV SpA 173

If a hedging instrument expires or is sold, terminated or exercised without replacement, or if it is no longer designated as a hedging instrument, or if the hedge no longer meets the criteria for hedge accounting, any gain or loss previously recognized in other comprehensive income remains separately recognized in equity until the forecast transaction occurs.

ENAV does not enter derivative contracts for speculative purposes.

ENAV complies with the requirements of IFRS 13 whenever IFRSs require fair value measurement to be used for recognition and/or measurement purposes or in providing disclosures with respect to a specific asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of instruments listed on public markets is determined by reference to the bid price at the reporting date.

The fair value of unlisted instruments is measured by reference to financial valuation techniques.

Financial assets and liabilities measured at fair value are categorized in the three levels of the fair value hierarchy described in the following on the basis of the relevance of the inputs used in determining the fair value.

More specifically:

Level 1: financial assets and liabilities whose fair value is determined on the basis of quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 2: financial assets and liabilities whose fair value is determined on the basis of inputs other than quoted prices included in Level 1 but which are observable in the market, either directly or indirectly;

Level 3: financial assets and liabilities whose fair value is determined on the basis of unobservable market data.

Loans, trade payables and other financial liabilities

Loans, trade payables and other financial liabilities are initially recognized at cost, corresponding to the fair value of liabilities, less any directly attributable transaction costs, and are subsequently measured at amortized cost using the effective interest method less any impairment losses. Loans, trade payables and other financial liabilities are classified as current liabilities unless they have a contractual due date exceeding twelve months from the balance sheet date when they are classified as non-current liabilities. 174 ENAV – 2014 Financial Statements

Employee benefits

Liabilities for short-term employee benefits paid during the employment relationship are measured at the amount that has accrued at the balance sheet date and allocations are classified as personnel costs.

ENAV is party to both defined contribution plans and defined benefit plans. The defined contribution plans are managed by third party fund managers with respect to whom ENAV has no obligations and to whom it pays over contractually agreed contributions which are recognized as personnel costs on an accrual basis.

The defined benefit plan consists of the Italian employees’ leaving entitlement scheme (Trattamento di Fine Rapporto or TFR), with the relative amounts accrued through 31 December 2006; in accordance with Law no. 296 of 27 December 2006, on the basis of the implicit and explicit decisions taken by the workers the amounts accruing after that date are transferred to supplementary pension schemes or the treasury fund managed by the Italian national social security organization INPS. In the case of the defined benefit plan, the amount of the benefit due to employees can only be quantified after the termination of the employment relationship and is based on a series of factors such as age, the number of years of service and salary levels. The obligations deriving from this plan are calculated by an independent actuary using the projected unit credit method. The liability recognized in the financial statements accordingly coincides with the actuarial valuation and any actuarial gains or losses arising from the calculation are recognized in other comprehensive income in the period in which they arise, taking into account the deferred tax effect.

Provisions for risks and charges

Provisions for risks and charges are recognized for losses and charges of a specific nature whose existence is certain or probable but for which the amount and/or date of occurrence cannot be determined. Provisions are only recognized when the Company has a present obligation, legal or constructive, arising from a past event, when it is probable that a future outflow of economic benefits will be required to settle the obligation and when it is possible to make a reliable estimate of that amount.

Where the financial effect of the time value of money is material and the dates of settling the obligations can be reliably estimated, the provisions are discounted using a pre-tax rate that reflects, where suitable, the market’s current assessment of the time value of money and, if applicable, the risks specific to the liability. The increase in the carrying amount of a provision as the result of the discounting process is recognized as financial expense.

Changes in the estimates of allocations to provisions are recognized in profit or loss in the period in which the change occurs and as an increase in the liability. Downwards changes in estimates are recognized by making a counter-entry to the liability up to its carrying amount, while any excess Notes to the Financial Statements of ENAV SpA 175

is recognized in profit or loss in the line item to which the provisions refer.

Amounts included in provisions for risks and charges are classified as either current or non-current depending on the estimated date on which the liability will be settled or extinguished.

Charge Stabilization Provision

The Charge Stabilization Provision was created under a resolution adopted by the Shareholders’ Meeting of 9 May 2003 by allocating ¤72,697 thousand of the reserve for finalizing and settling tax receivables (Law no. 289/02). This increased in subsequent years following allocations of part of the Company’s net income approved by shareholders, and is used solely for business purposes.

The Charge Stabilization Provision falls within the scope of government grants, as treated by IAS 20. The grant is initially recognized as a liability (classified in “Other non-current liabilities”). This liability is then released to income on the determination of the charge as a means of “supplementing” the reduced revenues earned by ENAV in the same year through a charge stabilization process. More specifically, the Charge Stabilization Provision is used when ENAV decides to reduce charges; in this case a part of the costs incurred is not to passed on to carriers but is offset by releasing a portion of the grant recognized as a liability to income, thereby ensuring economicity. The following points further support these comments: l the fund has the nature of a grant used for off-setting purposes; l European regulations on charge determination establish that a member state may reduce charges by means of subsidies/grants that enable the operator to offset losses; l resolutions of shareholders’ meetings to create or make changes to the provision are adopted on the basis of Regulation (EC) no. 1794/06.

Impairment of assets

The carrying amount of an asset or a cash-generating unit (CGU) is assessed at the balance sheet date to determine whether there is any indication of impairment.

If such indications exist, the recoverable amount of these assets is estimated to calculate the need to recognize an impairment loss.

ENAV carries out this impairment testing and calculates the recoverable amount of its CGUs.

The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use, calculated by individual asset, unless the asset generates cash flows that are not largely independent 176 ENAV – 2014 Financial Statements

of those generated by other assets or groups of assets in which case the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

In calculating the recoverable amount, the Company determines fair value less costs to sell on the basis of the expected cash flows of the CGUs and a suitable discount rate is identified to calculate the net present value of those flows. Future cash flows are taken from business plans, which represent the Company’s best estimate of the estimated economic conditions during the period of the plan. The plan’s projections normally cover a period of five years. Future cash flows are estimated by referring to current conditions; accordingly the estimates do not take into account the benefits deriving from any future restructuring to which the Company is not yet committed or any future investments improving or optimizing the asset or the unit.

If the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is impaired and its carrying amount is consequently reduced to its recoverable amount.

The impairment losses of operating assets are recognized in profit or loss. An impairment loss recognized in prior periods is only reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset is increased to its recoverable amount, although the increased carrying amount may not exceed that which would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years. The reversal of an impairment loss is always recognized in profit or loss. After the reversal of an impairment loss is recognized, the depreciation or amortization charge for the asset is adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a straight-line basis over its remaining useful life.

Revenues

Revenues are recognized on an accrual basis to the extent it is probable that economic benefits will be obtained by the Company and the relative amount can be reliably determined. Notes to the Financial Statements of ENAV SpA 177

Balance

At an international level, until 31 December 2011 Eurocontrol member countries used a cost recovery route charge system. This system is based on the concept that revenues should be proportional to the costs incurred for route air navigation control services. By virtue of this principle, charges were calculated on the basis of the forecast amount that would lead to economic break-even. At the end of the year, if revenues exceeded the costs incurred this would lead to a “negative balance” (over-recovery), giving rise to an adjustment to profit or loss for the extra revenues and the recognition of a “balance” liability. If on the other hand revenues were lower than the costs incurred, an increase in revenues would be recognized together with a “positive balance” (under recovery). In accordance with the cost recovery principle, the “balance” was the result of the correcting mechanism used to adjust revenues to the actual amount of the costs incurred and subject to charges. The effects of this mechanism were included for charge purposes from the second year following that of reference and accounted for in profit or loss with a sign opposite to that of their recognition.

Starting in 2012, and as the result of the introduction of the route air navigation services system, a new management system was introduced in accordance with EU Single European Sky legislation that is based on measuring and optimizing operating and economic performance, with the resulting decision to abandon the full cost recovery system. The means for implementing the service scheme is the National Performance Plan approved for the three-year period 2012-2014 which sets out the actions and targets to be achieved in the reference period. The efficiency targets provide for the introduction of risk elements to be borne by the provider relating to both traffic and costs. More specifically, the traffic risk mechanism envisages the sharing of the traffic risk between providers and users of the air space, for which variations, positive and negative, of up to 2% of actual traffic compared to plan are fully borne by the providers, while variations between 2% and 10% are shared, with 70% of these being borne by the airline companies and 30% by the providers. In accordance with the above-mentioned rules, any positive or negative difference with respect to the traffic risk leads to an adjustment to route revenues, recognized under the line item “balance charge adjustment for the year”.

As far as the cost risk is concerned, the possibility of passing on to air space users the full amount of any differences between the budgeted amount and the actual figure at the end of the year has been eliminated. These variations, either negative or positive, are still borne by the providers in their financial statements.

Since 2010, for terminal services the balance is determined within the meaning of Regulation (EC) no. 1794/06, which amended the system for determining charges, equating it to what was already happening from a route perspective, calculated using a cost-cap logic in accordance with the program agreement entered into with the competent ministries; any difference between the planned and actual figures leads to an adjustment to terminal revenues recognized under the line item “balance charge adjustment for the year”. 178 ENAV – 2014 Financial Statements

The balance charge adjustment is not included in the charge until two years later, while in the current year the balance asset or liability recognized customarily in the two previous years is transferred to profit or loss through the item “utilization of the balance”.

Given that the recovery of the asset and liability balances is deferred over time, in accordance with IAS 18 ENAV measures such revenues at fair value, discounting them using the average interest rate for which it obtains funds on the third party market. The adjustment is recognized as a reduction in the balance receivable or payable to which it refers and as a reduction in revenues for the year. This amount is released to profit or loss in subsequent years for the portion of interest income accruing in the period.

If the plans for the recovery of the balances in the charges are changed, ENAV adjusts the balance receivable/payable to reflect the effective and recalculated estimated cash flows. The carrying amount is then recalculated by determining the present value of the future cash flows using the original interest rate; in addition to adjusting the balance receivables and payables, the difference arising is also recognized in profit or loss as financial income or expense. Being a change in estimate arising from the fact that ENAV has obtained new or more accurate information, the variation in the balance recovery plans does not lead to an adjustment to previous financial statements and any changes are applied prospectively.

Grants

Revenue grants are recognized on an accrual basis in the year in which the reasonable assurance arises that the Company is entitled to receive them, regardless of the date of receipt.

Capital grants are recognized when there is reasonable assurance that the conditions for receiving the grant will be met and that the grants will be received. Capital grants are recognized as a liability and are released to income over the periods required to match them in proportion to the depreciation of the assets to which they refer using the “income method”. Notes to the Financial Statements of ENAV SpA 179

Costs

Costs are measured at the fair value of the amount recognized and are charged to profit or loss on an accrual basis, matched as appropriate with any revenues.

Financial income and expense

Financial income and expense are recognized on an accrual basis on the basis of the interest earned or due on the relative financial assets and liabilities, using the effective interest rate and, where envisaged, the legal interest rate.

Income taxes

Current taxes are calculated on the basis of an estimate of taxable income and in compliance with the legislation in force. Current tax liabilities are recognized in the balance sheet less any taxes paid on account.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periods when the asset is realized or the liability is settled. A deferred tax asset is recognized when it is probable that taxable profit will be available against which the underlying deductible temporary difference can be utilized, unless the deferred tax asset arises from the initial recognition of an asset or a liability in a transaction that: i) is not a business combination; ii) at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).

Deferred tax assets and liabilities are recognized directly in profit or loss, except for those relating to items recognized in other comprehensive income or equity. In these cases the relative deferred tax assets or liabilities are also recognized in comprehensive income or equity.

The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxation authority.

Deferred tax assets and deferred tax liabilities are classified as non-current assets and liabilities. 180 ENAV – 2014 Financial Statements

Estimates and assessments

As required by international accounting standards the preparation of financial statements requires estimates and assessments to be made that are reflected in the determination of the carrying amount of assets and liabilities and the disclosures provided in the notes, including those relating to outstanding contingent assets and liabilities at the end of the year. These estimates and assessments are used in particular to determine the cash flows underlying the calculation of the impairment of assets, provisions for risks and charges, employee benefits, the discounting of the “balance” and deferred tax assets and liabilities.

The actual results might accordingly differ from those estimates. Estimates and assessments are regularly reviewed and updated and the effects of any changes are immediately recognized in the financial statements.

For a complete analysis of the discretional assessments and significant accounting estimates made by management reference should be made to the consolidated financial statements.

Translation of items in foreign currency

Assets and liabilities arising from transactions in a currency that is not ENAV’s functional currency are recognized at the exchange rate at the date of the transaction. At year end these assets and liabilities are translated using the exchange rate at the balance sheet date and the relative exchange gains and losses are recognized in profit or loss.

Non-monetary assets denominated in foreign currency and recognized at cost are translated using the rate of exchange in force at the date of the initial recognition of the transaction.

New accounting standards, interpretations and amendments adopted by the company

The accounting standards used to prepare the separate financial statements of ENAV include any changes effective from 1 January 2014 and the IFRS improvements issued in 2014.

The section below sets out the main changes occurring in 2014 together with an assessment of the effects on the Company’s financial statements, followed by the interpretations and amendments to standards which are already applicable but which are not yet effective or have not yet been adopted by the European Union, and which could apply to the separate financial statements of ENAV in the future.

IFRS 10 Consolidated Financial Statements. This standard supersedes SIC 12 Consolidation – Special Purpose Entities and, limited to the part relating to consolidated financial statements, IAS 27 Consolidated and Separate

182 ENAV – 2014 Financial Statements

Financial Statements. The standard introduces a new model for assessing whether control exists (an essential assumption for consolidating an equity investment), leaving the consolidation techniques provided in the previous IAS 27 unchanged. Unlike the previous accounting standards with respect to which an analysis of the assumption of control was connected, if a majority of real or potential voting rights is not held, on analyzing the risks and rewards connected with the investment the new standard IFRS 10 places emphasis on the existence of the following conditions, for which an assessment is essential for determining whether control exists: the investor’s exposure to variable returns from involvement with the investee; and a connection between power and returns, meaning the investor’s ability to use its power over the investee to affect the amount of the investor’s returns. The application of this standarddid not lead to any changes in the preparation of the separate financial statements.

IAS 27 Separate Financial Statements. IAS 27 was amended when IFRS 10 and IFRS 12 were issued: apart from the change of the standard’s name, the amendments regard the elimination of all references to the preparation of consolidated financial statements, leaving the remaining provisions unchanged. The present IAS 27 only deals with the recognition and measurement criteria and disclosure requirements for investments in subsidiaries, associates and joint ventures when an entity prepares separate financial statements. The application of this standard did not lead to any changes in the preparation of the separate financial statements.

IFRS 11 Joint Arrangements. This standard supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers. The new standard introduces a different process for assessing joint arrangements, giving preference to an analysis of the rights and obligations assigned to the parties to the arrangement rather than an assessment of the form of the arrangement on which the previous model was based. The application of this standarddid not have any effect on the preparation ofthe separate financial statements.

IAS 28 Investments in Associates and Joint Ventures. IAS 28 was amended when IFRS 11 and IFRS 12 were issued: the new standard deals with the application of the equity method, which must be used in consolidated financial statements to account for investments in associates and joint ventures. The application of this standard had no effect on the preparation of the separate financial statements.

IFRS 12 Disclosure of Interests in Other Entities. This standard governs the disclosures that entities must provide for interests in subsidiaries, joint operations and joint ventures, associates and structured entities. The application of this standard had no effect on the preparation of the separate financial statements.

Amendments to IAS 32- Offsetting Financial Assets and Financial Liabilities. IAS 32 states that a financial asset and a financial liability must be offset and the net amount presented in the balance sheet when and only when an entity: Notes to the Financial Statements of ENAV SpA 183

l currently has a legally enforceable right to set off the recognized amounts; and l intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The amendments introduced clarify certain essential requirements for offsetting financial assets and liabilities.

The application of this standard had no effect on the preparation of the separate financial statements.

Amendments to IAS 36- Recoverable Amount Disclosures for Non-Financial Assets. The amendments made to this standard consist of eliminating the disclosures introduced by IFRS 13 and requiring specific disclosures on the measurement of fair value to be made when the recoverable amount of the impaired assets is based on fair value less costs to sell. In addition, the amendments require disclosures on the recoverable value of the assets or CGU for which an impairment loss has been recognized or reversed during the period. The application of this standard had no effect on the preparation of the separate financial statements.

Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting. The aim of the amendments is to enable companies, when specific conditions are met, not to discontinue hedge accounting in circumstances when a hedging instrument is novated with a central counterparty (CPP) as a result of laws and regulations. The amendments are applicable retrospectively for years beginning on 1 January 2014. The future application of the new requirements will have no effect for the Company. The application of this standard had no effect on the preparation of the separate financial statements.

New accounting standards, interpretations and amendments for periods beginning on 1 January 2015 not adopted by the Company

Amendments to IAS 19- Defined Benefit Plans: Employee Contributions. The aim of the amendments, issued in November 2013, is to clarify how to recognize the contributions paid by employees as part of a defined benefit plan. More specifically, when contributions are linked to service they must be recognized as a reduction in the service cost: over the period when employees render their service if the amount of contributions is dependent on the number of years of service or in the period in which the service is rendered if the amount of contributions is independent of the number of years of service.

The amendments are applicable retrospectively, subject to adoption, for years beginning on 1 January 2015. The Company is assessing any effects that may arise from the future application of the new requirements.

IFRS 9 Financial Instruments. Issued in November 2009 and subsequently revised, this standard represents the first of the three stages of the project to replace IAS 39. The new standard established the criteria for classifying financial assets and liabilities. Financial assets must be classified on 184 ENAV – 2014 Financial Statements

the basis of an entity’s business model and the characteristics of the associated relative contractual cash flows. In addition, the amendments introduced in November 2013 removed a mandatory effective date for the standard, which may be applied immediately. The Company is assessing the accounting effects of applying this standard.

IFRS 14 Regulatory Deferral Accounts. The new standard allows first-time adopters of IFRSs to continue measuring the amounts relating to rate- regulated activities in accordance with their previous accounting standards. The standard does not apply to companies that already prepare financial statements in accordance with international accounting standards. The amendments will applicable retrospectively, subject to adoption, for years beginning on or after 1 January 2015. The application of this standard will not have any effect for the Company.

IFRS 15 Revenue from Contracts with Customers. This standard, which replaces IAS 18, IAS 11, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31, establishes a framework of reference for recognizing and measuring revenues and the related disclosures. IFRS was issued in May 2014 and will apply for years beginning 1 January 2017. The Company is assessing the effects arising from the application of the new standard.

Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortization. The IASB issued a number of amendments to IAS 16 and IAS 38 on 12 May 2014, with the aim of clarifying which depreciation or amortization methods are acceptable within the scope of these standards. In particular, the amendments clarify that a method of depreciation or amortization based on the revenues that may be generated by the tangible or intangible asset is not considered suitable. The amendments must be applied prospectively from years beginning on 1 January 2016; early application is permitted. These amendments have not yet been adopted by the European Union and ENAV does not envisage significant accounting effects to arise on the application of the amendments.

Amendments to IFRS 11 - Accounting for Acquisitions of Interests in Joint Operations. These amendments provide clarification on the accounting treatment to be followed on the acquisition of interests in joint operations. The IASB requires these amendments to apply to financial statements beginning on or after 1 January 2016. These amendments have not yet been adopted by the European Union and ENAV does not envisage significant accounting effects to arise on the application of the amendments.

Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. On 11 September 2014 the IASB issued amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures in order to coordinate the accounting treatment of the sale or contribution of assets between an investor and its associates or joint ventures. The amendments introduced have the aim of clarifying the accounting treatment of gains and losses deriving from transactions with joint ventures or associates accounted for using the equity method. The IASB requires these amendments to apply to financial statements beginning on 1 January 2016. These amendments Notes to the Financial Statements of ENAV SpA 185

have not yet been adopted by the European Union and ENAV does not envisage significant accounting effects to arise on their application.

Amendments to IAS 27 - Equity Method in Separate Financial Statements. The amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The amendments are effective for years beginning on or after 1 January 2016; early application is permitted. ENAV is assessing the effect that the adoption of the new requirements may have on the separate financial statements.

Amendments to IAS 1 – Disclosure Initiative. The amendments proposed principally regard the materiality of disclosures, the requirements for using subtotals, the possibility of separating out items, the structure of the notes and the presentation of the share of OCI of associates and joint ventures accounted for using the equity method. The amendments are applicable from 1 January 2016 but early application is permitted. The amendments are currently being reviewed by the European Union. As they regard amendments to information to be provided there is no effect on the Company’s financial statements.

Amendments to IFRS 10, IFRS 12 and IAS 28 – Investments Entities: Applying the Consolidation Exception. The amendments clarify that if the parent company prepares financial statements in accordance with IFRS 10, the exemption from preparing consolidated financial statements extends to the subsidiaries of an investment entity, in turn qualified as investment entities. No effects are expected to arise on the preparation of the separate financial statements.

IFRIC 21 Levies. This interpretation establishes when an entity must recognize a liability in its financial statements for an obligation to pay a levy, other than income taxes, due to the government or, more generally, to local or international bodies. More specifically, the interpretation requires a liability to be recognized when the event that gives rise to the obligation to pay a levy as determined by legislation (for example reaching a certain threshold of revenues) occurs. If the event that triggers the obligation occurs over a specific period of time, the liability must be recognized progressively. The standard is applicable retrospectively for years that began on 1 January 2014. The interpretation was adopted by the European Union in 2014 and the community regulation has established that it is applicable at the latest from the commencement date of the first year beginning on or after 16June 2014. ENAV will accordingly apply the interpretation from 2015 and does not expect any effects to arise from the application of the new requirements.

Annual Improvements to IFRSs - 2010-2012 and 2011-2013 cycles. On 12 December 2013 the IASB issued these documents which contain amendments as part of the annual improvement process for standards, concentrating on amendments that are considered necessary but not urgent. The amendments are of a formal nature and regard clarifications to currently effective standards. It is not expected that the application of these amendments will lead to any significant effects for the Company. 186 ENAV – 2014 Financial Statements

Information on items in the statement of financial position

4. Property, plant and equipment

The following table sets out property, plant and equipment at the beginning and end of the year ended 31 December 2014 and changes for the year.

Industrial and Assets in Land and Plant and commercial Other assets course of Total buildings machinery equipment construction

Cost 383,233 1,454,647 284,465 319,473 362,825 2,804,643 Accumulated depreciation (135,420) (1,014,156) (201,456) (263,630) 0 (1,614,662) Net book value at 247,813 440,491 83,009 55,843 362,825 1,189,981 31.12.2013 Increases 49,688 172,837 3,606 7,014 101,303 334,448 Disposals - cost (41) (1,346) (304) (913) (2,604) Disposals - accumulated 32 1,341 302 911 - 2,586 depreciation Reclassifications - (36) (3) - (237,463) (237,502) Impairment losses - - - - (2,269) (2,269) Depreciation charge (15,903) (92,613) (17,648) (14,421) - (140,585) Total changes 33,776 80,183 (14,047) (7,409) (138,429) (45,926) Cost 432,880 1,626,102 287,764 325,574 224,396 2,896,716 Accumulated depreciation (151,291) (1,105,428) (218,802) (277,140) - (1,752,661) Net book value 281,589 520,674 68,962 48,434 224,396 1,144,055 at 31.12.2014

Property, plant and equipment decreased by ¤45,926 thousand over the year due to an increase in the depreciation charge over 2013 and to a decrease in assets in course of construction as the result of the Company’s decision to limit investment plans.

Increases for the year, which total ¤334,448 thousand, regard the following:

l for ¤233,145 thousand, investments completed and entering in service during the year, including: i) the V2 version of the Coflight system, which regards the development of a new generation flight data processing (FDP) system capable of providing among other things technological support to the operating concepts introduced by the Sesar and European Single Sky programs. The purpose of the FDP system is to ensure that the trajectory that flights will follow within the air space can be predicted in order to detect any conflict Notes to the Financial Statements of ENAV SpA 187

situations at an early stage and that the necessary actionsare taken well in advance to guarantee air traffic flow and safety. The V2 version has been installed at the Rome Area Control Center (ACC) and used as part of the activities connected with the SESAR program. The other phases, also connected with the 4–Flight program, will enter service in subsequent years and the carrying amount involved is classified as assets in course of construction; ii) the refurbishment of the new building at the Rome ACC which contains several of the Company’s offices; iii) the functional adaptation of the SATCAS system at ENAV’s ACCs; iv) the new technical block and tower at Lampedusa airport; v) radar modernization at various airports; vi) the construction of an integrated security system as part of the E-net project; vii) the functional adaptation of the mode S management system at ENAV’s ACCs; viii) the modernization of the TBT radio centers for the remote sites of the Rome ACC; ix) the applications enhancement of various systems; l for ¤101,303 thousand, investment projects under construction such as (excluding projects that have entered service) the enlargement of the Academy training school in Forlì that envisages the construction of a new integrated technological hub, the implementation of the data link 2000 plus system, the adaptation of the airport meteorological systems to ICAO Amendment 74, the adaption and modernization of the airport VCS, the construction of the virtual private E-net network, the implementation of the "eTOD New Solution Technology” program for enhancing the eTOD airport mapping system and progress on the Coflight project.

Reclassifications, which amount in total to ¤237,502 thousand, regard investments of ¤233,145 thousand completed during the year, as stated above, and classified to the line item to which they belong, investments of ¤1,257 thousand expensed during the year as they do not qualify for classification as intangibleassets and investments of ¤38 thousand in spare parts and certain operating system components classified as inventories, while the balance represents a reclassification to intangible assets under formation.

Impairment losses totaling ¤2,269 thousand refer to certain parts of projects and systems which can no longer be used and have been expensed.

Depreciation of ¤140,585 thousand was charged in the year (¤137,431 thousand in the year ended 31 December 2013).

Certain investments, having an original cost of ¤217,258 thousand, are financed by capital grants awarded as part of the National Operating Program for the Transport Sector (PON) for 2000-2006 and 2007-2013 for work carried out at airports in the south of the country and by grants awarded by the Ministry of Infrastructure and Transport for investments in military airports pursuant to Law no. 102/09. The capital grants financing these investments are originally recognized as other liabilities and are released to income in proportion to the depreciation charged on the assets to which they relate. The portion relating to the year amounted to ¤12,303 thousand. 188 ENAV – 2014 Financial Statements

In conjunction with the relevant Company departments, the Territorial Agency has completed its work of identifying and cataloging certain assets included in Annex F of the Ministerial Decree of 14 November 2000, published in the Official Journal no. 174 of 28 July 2001, essentially relating to systems and equipment and light buildings. In this respect a review is currently taking place of the condition of these assets in order to assess their estimated market value for subsequent recognition as assets. Once this work is completed, the items will be recognized in the Company’s balance sheet with counter-entry to equity, without any additional costs for tax charges arising.

5. Intangible assets

The following table sets out intangible assets at the beginning and end of the year ended 31 December 2014 and changes for the year.

Patents and Other intangible Assets under intellectual Goodwill assets formation property rights

Cost 91,492 2,082 48,224 141,798 Accumulated amortization (75,837) (1,064) 0 (76,901) Net book value at 31.12.2013 15,655 1,018 48,224 64,897 Increases 16,167 0 7,170 23,337 Disposals 0 0 0 0 Reclassifications 0 3 (13,852) (13,849) Amortization charge (15,724) (696) 0 (16,420) Total changes 443 (693) (6,682) (6,932) Cost 107,659 2,085 41,542 151,286 Accumulated amortization (91,561) (1,760) 0 (93,321) Net book value at 31.12.2014 16,098 325 41,542 57,965

Intangible assets totaled ¤57,965 thousand at 31 December 2014, representing a decrease of ¤6,932 thousand as the result of an increased amortization charge that did not offset the reduction in investment projects in progress.

Patents and intellectual property rights increased by ¤16,167 thousand due to the acquisition of new assets during the year, such as licenses for the use of management and operating systems and the installation of application software, of which the main items relate to Oracle licenses and new ESPER personnel management system modules.

Intangible assets under formation amount to ¤41,542 thousand, representing an increase of ¤7,170 thousand over the year, and mostly Notes to the Financial Statements of ENAV SpA 189

relate to the following investment projects: i) the NOAS (New Operational Area System) program regarding the optimization of systems already developed by ENAV with the Airnas and Athena programs aimed at maintaining Single European Sky certification and the integration of the Ais and Meteo data banks; ii) the new SAPERE airborne control planning and management system.The net decrease over the year of ¤13,852 thousand relates for ¤16,167 thousand to projects completed and entering service during the year which are classified under the item to which they relate, ¤3,062 thousand to a reclassification to this item of projects initially classified as tangible assets and ¤747 thousand expensed during the year as the items do not qualify for classification as intangible assets.

Amortization of ¤16,420 thousand was charged during the year (¤12,949 thousand in the year ended 31 December 2013).

6. Investments

Investments amount to ¤142,909 thousand representing an increase of ¤28,083 thousand as shown by the following table:

31.12.2013 Increases Decreases 31.12.2014

Investments l subsidiaries 114,659 28,083 0 142,742 l other 167 0 0 167 companies Total 114,826 28,083 0 142,909

The increase for the year of ¤28,083 thousand regards the 100% investment in ENAV North Atlantic, a United States registered limited liability company established in January 2014 and governed by the laws of the State of Delaware. The company was assigned the obligations under the Subscription Agreement signed in December 2013 for the purchase of 12.5% of the quotas of Aireon, a United States registered limited liability company belonging to the Iridium group whose business is the supply of services required for air navigation surveillance activities through the use of a payload system installed on board the 66 operating satellites which Iridium will launch between 2015 and 2017 and which will enable it to make the first global satellite surveillance system available to air traffic with a surveillance coverage of points not currently covered by radar. This investment is being acquired by payment in four instalments, the last of which in 2017, for a total price of US$61.2 million, which are synchronized with the payments made by the company’s major shareholder, NAV Canada, holding 51% of its capital and tied to the realization of the same milestones identified with such. The first two instalments were paid in 2014 for a total of ¤26,264 thousand, corresponding to US$31.8 million and cash has been provided to the subsidiary for the difference in order to 190 ENAV – 2014 Financial Statements

pay the subsequent instalments.

Investments in subsidiaries also includes the 100% interest in Techno Sky amounting to ¤113,827. This carrying amount, which exceeds the subsidiary’s equity, was impairment tested in 2014 to assess its recoverability. No impairment losses arose from the analysis performed, which was based on the fair value of the quotas of Techno Sky and its latest business plan, and the subsidiary’s fair value was actually estimated as being approximately ¤170 million.

In addition, investments in subsidiaries also include the 60% holding in the SICTA Consortium carried at ¤704.9 thousand and the 100% interest in ENAV Asia Pacific headquartered in Kuala Lumpur in Malaysia carried at ¤127 thousand. Notes to the Financial Statements of ENAV SpA 191

The investment in other companies relates to the 16.67% interest carried at ¤167 thousand in the share capital of the French registered company ESSP SaS, which is held by the main European service providers and manages the EGNOS satellite navigation system and the provision of the related services. A dividend of ¤250 thousand was received from this company in September 2014.

Reference should be made to the specific paragraph of the report on operations for comments on the performance of subsidiaries in 2014.

Details of the investments held at 31 December 2014 together with the interest held and carrying amount at that date are as follows:

Share or Net Equity as Head- Balance Carrying Value at Company name quota income for Holding per financial quarters sheet date amount equity capital the year statements

Subsidiaries Techno Sky Srl Rome 31.12.2014 1,600 2,192 100% 7,484 113,827 60,423 Kuala Enav Asia Pacific 31.12.2014 127 4 100% 143 127 143 lumpur Sicta Consortium Naples 31.12.2014 1,033 1 60% 881 705 881

Enav North Miami 31.12.2014 28,084 0 100% 31,521 28,084 31,521 Atlantic 192 ENAV – 2014 Financial Statements

7. Current and non-current financial assets

This item consists entirely of a derivative contract entered by ENAV in December 2013 for the forward purchase of US dollars in four successive tranches of which two purchases were made in 2014 for a total of ¤28,088 thousand. The other two will be made in 2015 and 2017. The fair value of the derivative at 31 December 2014 was equivalent to an asset of ¤1,863 thousand of which the non-current portion was ¤383 thousand. This contract is fully effective from a hedging standpoint and is accounted for as a cash flow hedge. Reference should be made to note 32 for the disclosures required by IFRS 7. Notes to the Financial Statements of ENAV SpA 193

8. Deferred tax assets and liabilities

Details of deferred tax assets and liabilities are provided in the following table, which shows those items recognized in profit or loss and those recognized in equity.

Increase/decrease Increase/decrease 31.12.2013 31.12.2014 through profit or loss through equity

Deferred Deferred Deferred Deferred Temporary Temporary Temporary Temporary tax assets/ tax assets/ tax assets/ tax assets/ differences differences differences differences liabilities liabilities liabilities liabilities

Deferred tax assets Taxed provisions 49,387 13,581 372 102 0 0 49,759 13,683 Inventory 9,090 2,500 (591) (163) 0 0 8,499 2,337 write-downs Discounting 1,831 591 7,263 2,144 0 0 9,094 2,735 of receivables Tax effect 4,410 1,424 (3,453) (1,115) 0 0 957 309 of IFRS conversion Discounting 0 0 0 0 1,749 481 1,749 481 of the TFR Non-deductible 0 0 1,344 370 0 0 1,344 370 portion of the TFR Fair value 671 184 0 0 (666) (183) 5 1 derivative Other 60 17 (24) (7) 0 0 36 10 Total 65,449 18,297 4,911 1,331 1,083 298 71,443 19,926 Deferred tax

liabilities Other 4,140 1,139 2,006 552 0 0 6,146 1,691 Tax effect 3,424 1,105 (91) (29) 0 0 3,333 1,076 of ifrs conversion Discounting 3,490 960 0 0 (3,490) (960) 0 0 of the tfr Fair value 0 0 0 0 1,863 512 1,863 512 derivative Total 11,054 3,204 1,915 523 (1,627) (448) 11,342 3,279

Deferred tax assets amount to ¤19,926 thousand and mainly relate to taxed provisions. Changes during the year in this item regard the utilization of these provisions, for the reasons discussed in notes 10 and 16, with the resulting tax deduction. The discounting of receivables relates to amounts 194 ENAV – 2014 Financial Statements

recognized in in the line item “balance” in prior years and in 2014 which will reverse in future years until 2020, as discussed in note 10. The tax effect arising from the transition to international accounting standards relates to a series of items that will continue to have exclusively a fiscal effect arising from the difference between the accounting treatment followed in the financial statements consistent with the requirements of international accounting standards, starting from the date of first-time adoption on 1 January 2011, and fiscal criteria, for which the date of first-time adoption of IFRSs was 1 January 2014. The measurement of the employees’ leaving entitlement (TFR) in accordance with IAS 19 led to an actuarial loss, resulting in the recognition of a deferred tax asset net of the reversal of the deferred tax liabilities recognized in the previous year for the actuarial gain.

Deferred tax liabilities amount to ¤3,279 thousand, and in addition to the items already discussed concerning the transition to IFRSs relate to prior year arrears interest that has not yet been received and hence taxed. The measurement of the derivative at fair value led to a gain of ¤1,863 thousand and accordingly the recognition of a deferred tax liability, compared to the previous year when a loss, and hence also a deferred tax asset, was recognized.

9. Current and non-current tax receivables

Non-current tax receivables, unchanged compared to 31 December 2013, amount to ¤23,164 thousand and arise from the excess corporate income tax (IRES) paid by the Group in the years 2007/2011 arising from taxable profits from which the regional production tax (IRAP) charged on add- backs for personnel and similar costs was not deducted for IRES purposes, as per the application for a refund filed on 6 March 2013. More specifically, the entitlement to a refund arises from article 2 of Decree Law no. 201/2011 which permits the analytical deduction of IRAP from business income for 2012, previously only allowed to the extent of 10% of the tax paid, a decree subsequently supplemented by article 4, paragraph 12 of Decree Law no. 16 of 2012 in order to extend this possibility to prior tax periods starting from 2007. Regarding the timescale for receiving the refund, given that the Tax Revenue Office is envisaging making payment starting from the earliest tax years and on the basis of the order in which the electronic flows are transmitted, and establishes criteria in the cases in which it does not have fully available funds, the receivable has prudently been classified as a non-current asset. Notes to the Financial Statements of ENAV SpA 195

Current tax receivables amount to ¤74,571 thousand and consist of the following balances.

31.12.2014 31.12.2013 Change

Due from the tax 60,990 45,174 15,816 authorities for VAT IRES for the year 9,912 1,482 8,430 IRAP for the year 1,605 807 798 Receivable for other 2,064 1,848 216 current taxes Total 74,571 49,311 25,260

Of the total receivable due from the tax authorities for VAT amounting to ¤60,990 thousand, ¤41,899 thousand relates to VAT for which a refund was requested in both 2012 and 2014 and consists of a principal of ¤41 million plus interest income of ¤899 thousand accruing at the legal rate of 2% per annum. The net change of ¤15,816 thousand consists of the net effect of a new receivable of ¤19,786 thousand arising during the year plus interest income of ¤683 thousand accruing during the year less the receipt of a VAT refund of ¤3,609 thousand for which a request was originally made in the second quarter of 2012. A request for a refund of ¤19 million was made on filing the 2014 VAT return in February 2015.

IRES for the year consists of the 2013 receivable balance plus the tax on account paid in 2014 amounting to ¤14,663 thousand, in addition to retentions of ¤17 thousand, less ¤4,768 thousand being the portion of IRESrelating to the year.

IRAP for the year consists of the receivable due from the tax authorities for the amount stated in the Unico 2014 tax return plus tax paid on account during the year, leading to a total of ¤22,525 thousand, which less tax of ¤20,920 thousand relating to 2014 amounts to a receivable of ¤1,605 thousand.

The receivable for other current taxes mainly relates to taxes paid abroad of ¤402 thousand and taxes of ¤1,662 thousand for which a refund has been requested pursuant to article 6 of Decree Law no. 185/2008 for the excess IRES paid in previous years arising from taxable profits from which 10% of the IRAP charge was not deducted.

196 ENAV – 2014 Financial Statements

10. Current and non-current trade receivables

Current trade receivables amount to ¤224,531 thousand and non-current trade receivables amount to ¤119,499 thousand, with changes over the year shown in the following table.

31.12.2014 31.12.2013 Change

Current trade receivables Due from Eurocontrol 184,194 163,382 20,812 Due from the Ministry 14,212 25,488 (11,276) of Economy and Finance Due from the Ministry of Infrastructure and 30,000 47,800 (17,800) Transport Due from other customers 34,348 33,289 1,059 Balance receivables 6,564 51,442 (44,878) 269,318 321,401 (52,083) Bad debts allowance (44,787) (43,308) (1,479) Total 224,531 278,093 (53,562) Non-current trade

receivables Balance receivables 119,499 85,892 33,607 Total 119,499 85,892 33,607

The balance due from Eurocontrol refers to the fees deriving from route and terminal revenues not yet received at 31 December 2014 and amounting to ¤124,281 thousand and ¤59,913 thousand respectively. The net increase of ¤20,812 thousand over the year is mainly due to terminal balances arising from the delayed receipt of charges compared to the deadlines agreed by certain Italian carriers. Of these receivables, ¤114 million was collected in early 2015.

The receivable from the Ministry of Economy and Finance (MEF), amounting to ¤14,212 thousand, all relates to route and terminal exemptions recognized in 2014. The decrease of ¤11,276 thousand over the year regards the amount accruing in 2014 as discussed above and the following changes: i) the receipt in February of the residual balance of ¤11,328 thousand due from the MEF and relating to 2012; ii) the offset of the residual receivable of ¤14,160 thousand recognized in 2013 with advances relating to the Italian Air Force for the receipts regarding the route charges, that led to a payment of ¤43,245 thousand being made to the MEF in October 2014.

The receivable from the Ministry of Infrastructure and Transport consists of the revenue grant of ¤30,000 thousand designed to offset the costs Notes to the Financial Statements of ENAV SpA 197

incurred by ENAV for ensuring the safety of its systems and equipment and operating safety, as provided by article 11-septies of Law no. 248/05. The net decrease for the year of ¤17.8 million arises from the receipt of the portion of the 2012 grant which took place in two separate instalments in 2014. In December the amount of ¤30 million recognized in 2013 was also received.

Amounts due from other customers consist of the receivable due from the management company for services rendered by ENAV and the balance due from non-Italian customers for contract work in progress being carried out by the Company.

The bad debts allowance amounted to ¤44,787 thousand at 31 December 2014 and underwent the following changes during the year:

Decreases

31.12.2013 Increases Utilizations Eliminations 31.12.2014

Bad debts allowance 43,308 4,133 (762) (1,892) 44,787

The increase for the year of ¤4,133 million arises from the write-down of doubtful receivables regarding balances due for route charges from carriers which have become insolvent or which no longer do business following the withdrawal of their license and terminal charges, together with certain management companies in financial difficulty. Decreases totaling ¤2,654 million refer for ¤762 million to receivables prudently written down in previous years and then collected in 2014 and for ¤1,892 million to the elimination of balances that are no longer considered collectible.

Utilizations are recognized in profit or loss under the item impairment losses and reversals of impairment losses.

The current portion of the balance receivable amounting to ¤6,564 million refers to a portion of the route balance generated in 2013 and amounting to ¤8,180 million included in determining the 2015 charge, stated net of the short-term portion arising from the discounting process amounting to ¤1,616 million.

The “Balance receivables” of ¤119,499 million, classified as non-current assets, comprises the route and terminal balances generated in previous years, starting from 2011, for an amount of ¤77,713 million plus the route and terminal balances recognized in 2014 for ¤49,264 million less an amount of ¤7,478 million arising from the process of discounting the receivable to present value. The route balance of ¤41,128 million recognized at 31 December 2014 (¤43,557 million at 31 December 2013) consists of i) the balance for traffic risk of ¤28,681 million (¤24,811 million at 31 December 2013); ii) the non-recovered portion of the n-2 balance for ¤4,446 million (¤2,566 million at 31 December 2013); and iii) the bonus awarded following the achievement of the performance target connected 198 ENAV – 2014 Financial Statements

with delays in assisted flights expressed in minutes, amounting to ¤8 million, in accordance with the figure recognized in the previous year. Compared to 2013, the actual inflation effect of 0.20% compared to the figure of 2% budgeted in the performance plan was negative, leading to the recognition of a negative balance of ¤7,944 million classified as non- current trade payables. In 2013 a positive balance of ¤14,184 million arose from the inflation effect.

The terminal balance at 31 December 2014 amounted to ¤1,845 million (¤13,948 million at 31 December 2013), determined on the basis of a cost– cap logic, and is strictly connected with a negative traffic performance compared to budget, as actual costs were lower than charge data. The Company bore the majority of the negative traffic performance compared to budget and this was covered by using ¤24,380 million of the charge stabilization provision.

Transition to international accounting standards led amongst other things to the recognition of certain expenditure in profit or loss not qualifying for classification as intangible assets. Given that this expenditure was not budgeted as costs on drawing up the 2012-2014 performance plan and that transition to international accounting standards is one of the cases of “unplanned costs” established by community regulations, a route balance of ¤6,292 million has been recognized for the purpose of recovering these costs over a fifteen year period.

11. Inventories

Inventories, which consist mainly of spare parts, amount to ¤61,645 thousand net of the allowance for inventory losses. Changes over the year were as follows:

31.12.2013 Increases Decreases 31.12.2014

Fiduciary inventory 65,541 2,177 (2,869) 64,849 Direct inventory 4,420 703 (571) 4,552 Radio-electric 743 0 0 743 measurement inventory 70,704 2,880 (3,440) 70,144 Allowance for inventory (9,090) (1,313) 1,904 (8,499) losses Total 61,614 1,567 (1,536) 61,645 Notes to the Financial Statements of ENAV SpA 199

The increase of ¤1,567 thousand, net of the allowance, relates mainly to fiduciary inventory for the purchase of spare parts to top up stocks for air navigation operating systems. A small part of the increase, ¤38 thousand, regards spare parts that have been reclassified to this item from property, plant and equipment. The decrease of ¤3,440 thousand, gross of the allowance, regards the withdrawal of spare parts for use in operating systems.

The inventory allowance increased by ¤1,904 thousand due to the fact that certain spare parts became obsolete as they relate to systems and equipment that can no longer be used, and decreased by ¤1,313 thousand following the disposal of spare parts that had already been written down in previous years.

The spare parts in the fiduciary inventory are held by the subsidiary Techno Sky, which manages them on ENAV’s behalf.

12. Receivables and payables with group companies

Receivables from Group companies amount to ¤13,926 thousandrepresenting a decrease of ¤1,782 thousandover 31 December 2013. This balance mainly relates to the intercompany account held with the subsidiary Techno Sky which contains the advances made to the company during the year and subsequently used to settle the invoices received from Techno Sky. This account had a balance of ¤13,417 thousand at 31 December 2014 representing a decrease of ¤1,763 thousand over 2013 due to the lower level of advances made during the year.

Payables to Group companies amount to ¤34,733 thousandrepresenting a decrease of ¤3,656 thousand over 31 December 2013. These figures in terms of both the balances and the change over the year mainly relate to the subsidiary Techno Sky with whom ENAV had a liability of ¤31,397 thousand at 31 December 2014 (¤33,951 thousand at 31 December 2013); this mainly relates to the fees for last two months for the maintenance of operating and non-operating systems, the maintenance of luminous visual aids and activities connected with ENAV’s investment projects. The other payables of ¤3,336 thousand consist of open items with the SICTA Consortium, mainly for specialized support activities provided for various projects, also funded by the European Union, amounting to ¤3,151 thousand and a balance of ¤185 thousand due to ENAV Asia Pacific.

200 ENAV – 2014 Financial Statements

13. Other current assets

Other current assets amount to ¤18,111 thousand and may be analyzed as follows:

31.12.2014 31.12.2013 Change

31.12.2014 31.12.2013 Change (11.128) Credito verso il personale 3.447 3.510 (63) Credito verso enti vari 4.754 4.475 279 per progetti finanziati Depositi cauzionali 298 465 (167) Crediti diversi 2.367 2.685 (318) 21.300 32.697 (11.397) Fondo svalutazione altri (3.189) (3.243) 54 crediti Totale 18.111 29.454 (11.343)

Due from public bodies for capital grants refers entirely to the 2007/2013 Networks and Mobility National Operating Program (NOP) grants which have been approved but had not yet been received at 31 December 2014. This balance decreased by ¤11,128 thousand during the year following the de-financing of the “Brindisi Area Control Center – 4 Flight” project, on which work has not yet begun, as per the resolution of the 2007/2013 Networks and Mobility NOP Management Authority of 24 October 2014.

Due from personnel refers almost entirely to advances for travel expenses for transfers not yet completed at year end, of which a significant portion amounting to ¤3,189 thousand regards travel expenses advanced to former employees, previously subject to judicial investigations and prudently written down in previous years. Following sentence nos. 745/2011 and 966/2012 of the Court of Accounts ordering the defendants to pay the amounts in question, ¤54 thousand has been collected with a corresponding reduction in the allowance, against repayment plans set up for recovering the receivable. As security for the amount an attachment order was served on the persons involved freezing one fifth of their pensions and TFR and TFS leaving entitlements as well as their bank accounts and in certain cases properties.

Due from public bodies for financed projects amounting to ¤4,754 thousand mainly relates to the portion of co-financing relating to the year with respect to the SESAR program, for which the accounts were drawn up in 2015 for an amount of ¤4,220 thousand. The amount of ¤4,167 thousand recognized in the previous year was collected in 2014. The remainder of this item relates to training funded by Fondimpresa and other European projects . Notes to the Financial Statements of ENAV SpA 201

Guarantee deposits decreased by ¤167 thousand over the year following the refund of the deposit relating to the offices in Via Agri on termination of the rental agreement.

14. Cash and cash equivalents

Cash and cash equivalents at 31 December 2014 may be analyzed as follows:

31.12.2014 31.12.2013 Change

Bank and post office 111,051 92,302 18,749 deposits Cash and valuables 38 42 (4) on hand Total 111,089 92,344 18,745

Cash and cash equivalents with banks and the Central Treasury amounted to ¤111,089 thousand at 31 December 2014, representing a net increase of ¤18,745 thousand over the balance at 31 December 2013. This is due to the cash arising from a new loan and the termination of previous loans.

There are no restrictions on cash and cash equivalents that may limit their availability. 202 ENAV – 2014 Financial Statements

15. Hareholders’ equity

Shareholders’ equity at 31 December 2014 amounted to ¤1,283,673 thousand. Details of changes during the year can be found in the statement of changes in equity and are in any case connected with the approval of the 2013 financial statements by shareholders in an ordinary general meeting held on 5 August 2014..

The following table provides details of the equity accounts.

31.12.2014 31.12.2013 Change

Share capital 1,121,744 1,121,744 0 Legal reserve 13,935 11,409 2,526 Other reserves 36,359 36,359 0 IFRS First-time Adoption (3,045) (3,045) 0 (FTA) reserve Reserve for actuarial gains/ (losses) on employee (6,974) (3,176) (3,798) benefits Cash flow hedge reserve 1,348 (486) 1,834 Retained earnings/ 81,479 80,827 652 (accumulated losses) Net income for the year 38,827 51,180 (12,353) Total equity 1,283,673 1,294,812 (11,139)

Share capital, fully subscribed and paid-in by the sole shareholder, the Ministry of Economy and Finance, consists of 1,121,744,385 ordinary shares each of nominal value 1 euro.

The legal reserve amounts to ¤13,935 thousand, representing an increase of ¤2,526 thousand due to the allocation of 5% of 2013 net income.

The other reserves consist of capital grants received in the period 1996/2002 and originally stated net of deferred taxes which have been discharged. This reserve accordingly became available and was reclassified to other reserves in the previous year.

The IFRS first-time adoption (FTA) reserve consists of the differences arising on the recognition of assets and liabilities on the first-time adoption of IFRSs.

The reserve for actuarial gains/(losses) on employee benefits consists of the effects of changes in actuarial estimates for the Italian employees’ leaving entitlement (TFR), stated net of the tax effect. There was a deficit balance of ¤6,974 thousand in this reserve at 31 December 2014. Notes to the Financial Statements of ENAV SpA 203

The cash flow hedge reserve arises on the fair value measurement fair value of derivatives. There was an increase in this reserve of ¤1,834 thousand during the year, net of the tax effect.

Retained earnings/(accumulated losses) consist of the results achieved in previous years.The balanceincreased by ¤652 thousand in 2014 as the result of the allocation of 2013 net income.

The following table provides a summary of the purposes for which the equity reserves may be used in accordance with the requirements of article 2427 of the Italian civil code and IAS 1.

Amount Possible use Available portion

Capital reserves Other reserves 33,314 A. B. C 33,314 Revenue reserves Legal reserve 13,935 A.B 13,935 Reserve for actuarial gains/(losses) (6,974) on employee benefits Cash flow hedge reserve 1,348 Retained earnings/(accumulated losses) 81,479 A. B. C 81,479 Total reserves 123,102

A: increase in share capital; B: absorption of losses C: distribution to shareholders. 204 ENAV – 2014 Financial Statements

16. Provisions for risks and charges

Provisions for risks and charges total ¤8,376 thousand, of which the current portion amounts to ¤4,693 thousand, and underwent the following changes during the year:

31.12.2013 Increases Decreases 31.12.2014

Provision for risks from 4,242 0 (1,283) 2,959 personnel litigation Provision for risks from 1,349 868 0 2,217 other disputes Provisions for other risks 3,200 0 0 3,200 Total provisions 8,791 868 (1,283) 8,376

The provision for risks from personnel litigation, of which the current portion amounts to ¤2,493 thousand, decreased by ¤1,283 thousand over the year, of which ¤700 thousand relates to the termination of disputes following settlements or cases in which the courts found against the Company and ¤583 thousand to releases to income in situations where the provisions were considered to be in excess with respect to the risk of the litigation pending for the Company. At 31 December 2014, the total amount of judicial claims relating to pending disputes where the risk of loss has been assessed by the Company’s counsel as “possible” amounts to ¤8.3 million.

The provision for risks from other disputes, of which the current portion amounts to ¤2,200 thousand, increased by ¤868 thousand over the year, relating to disputes over price revisions connected with tendered contracts following changes in the orientation of case law on the subject, which more specifically extended the applicability of price revision mechanisms to contracts falling within the “special sectors” sphere. At 31 December 2014, the Company’s counsel has estimated the costs relating to pending disputes where the risk of loss is “possible” to be ¤1.2 million. In addition, the Company is involved in another dispute, currently at a preliminary stage, that has been assessed as “possible” by the Company’s lawyers but for which outside counsel are unable to estimate the amount of any loss, given the stage of proceedings. Through its legal counsel the Company is taking all the action required to safeguard its interests, including by way of counterclaim.

Provisions for other risks remain unchanged compared to 31 December 2013 and relate to the liability that could emerge with respect to the rescission of the agreement for the modernization of the flight assistance systems at Parma airport, from which ENAV withdrew in early 2013. Notes to the Financial Statements of ENAV SpA 205

17. Tfr and other employee benefits

This item, totaling ¤40,202 thousand, consists of the liability for the Italian employees’ leaving entitlement (TFR) which is governed by article 2120 of the Italian civil code, and represents the estimate of ENAV’s obligation determined using actuarial techniques for the amounts to be paid to its employees on termination of the employment relationship.

Changes during the year in the liability for the TFR and other employee benefits were as follows:

31.12.2014 31.12.2013

Liability for employee benefits at the beginning 35,239 38,445 of the year Interest cost 1,117 1,034 Actuarial (gains)/losses 5,239 (1,533) on defined benefits Advances. settlements (1,393) (2,707) and other changes Liability for employee benefits at the end 40,202 35,239 of the year

The utilization of the provision of ¤1,393 thousand consists of balances paid to leavers during the year and advances made to personnel making a request for such.

The difference between the previous balance on this account calculated on the basis of the previous assumptions and the balance recalculated at period end on the basis of the updated assumptions represents actuarial gains (losses). This calculation led to actuarial losses of ¤5,239 thousand in 2014 compared to actuarial profits of ¤1,533 thousand in 2013.

The main assumptions used to calculate the actuarial estimate of the TFR liability at 31 December 2014 and 2013 were as follows:

31.12.2014 31.12.2013

Discount rate 1.49% 3.17% Inflation rate 1.50% 1.75% Employee turnover rate 4.00% 4.00% Advance rate 2.50% 2.50% 206 ENAV – 2014 Financial Statements

The discount rate used to determine the present value of the obligation in both 2014 and 2013 was based on the IBoxx Eurozone Corporate AA duration 10+ index, calculated with reference to companies similar to ENAV and corresponding to the average liability duration. The decrease in the rate is due to the present financial and economic situation which is causing a constant fall in interest rates.

The IP55 tables arranged by gender were used for the annual probability assumptions for mortality rates while retirement rates take account of the most recently enacted legislation.

18. Current and non-current financial liabilities

Current and non-current financial liabilities consist of: i) amounts due to banks for medium/long-term loans, with the current portion being classified as current financial liabilities together with the accrued interest expense; ii) the balance due to the factoring company to which suppliers have sold their receivables from ENAV on a non-recourse basis; iii) the fair value of hedging derivatives, for which reference should be made to note 32 of the consolidated financial statements.

Balances at 31 December 2014 and comparative figures at 31 December 2013 are as follows:

31.12.2014 31.12.2013 Change

Current Non-current Current Non-current Current Non-current portion portion portion portion portion portion

Due to banks 44,743 181,766 45,437 126,095 (694) 55,671 Due to other lenders 0 0 280 0 (280) 0 Hedging instruments - 0 0 351 320 (351) (320) derivatives Total 44,743 181,766 46,068 126,415 (1,325) 55,351

Financial liabilities at 31 December 2014 consist solely of medium/long- term loans, including an amount of ¤44,743 thousand repayable within 12 months. The net increase of ¤54,977 in these loans arises from the combined effect of the new credit line of ¤100 million granted by the EIB in December, repayments of ¤43,000 thousand made during the year and the settlement of a short-term credit line of ¤2,382 thousand, and includes the effects arising from the use of the amortized cost method. In detail, changes during the year regard the following:

l a repayment of ¤8,000 thousand being the two six-monthly tranches of the loan taken out with UniCredit SpA, having final due date 30 November 2018; Notes to the Financial Statements of ENAV SpA 207

l a repayment of ¤20,000 thousand being the two six-monthly tranches of the loan taken out with UniCredit SpA, having final due date 30 November 2018; l a repayment of ¤15,000 thousand being the portion of the three- year loan taken out with Intesa Sanpaolo having final due date 31 December 2015; l a new long-term loan taken out with the European Investment Bank (EIB) on 19 December 2014 that is linked to ENAV’s investment plan having a contractual total of ¤180 million, of which ¤100 million had been drawn down by the balance sheet date.

The fair value of hedging derivatives, which at 31 December 2013 had a negative balance of ¤670 thousand, had a positive balance of ¤1,863 thousand at 31 December 2014, which is included in current and non- current financial assets and commentated upon in note 7.

At 31 December 2014 ENAV had available committed and uncommitted credit lines totaling ¤297 million, including the portion of the EIB facility not yet drawn. The agreements for these facilities provide that interest will be charged at normal market rates, with no-use fees that are not significant. 208 ENAV – 2014 Financial Statements

The following table provides an analysis of the Company’s loans, including the general conditions for each of its relationships with the lender concerned.

Drawn down Carrying Lender Type Ceiling (nominal Availability Interest rate amount value)

Credit line - BNL-BNP Paribas 37,000 - 37,000 - Euribor + 1,9 overdraft Medium/long- MedioCredito Centrale 10,000 10,000 - 9,962 Euribor + 3,5 term - 5 years Credit line - Credito Valtellinese 5,000 - 5,000 - Euribor + 4,5 overdraft 13 months - 1 BNL-BNP Paribas 50,000 - 50,000 - Euribor + 1,9 day Current account UniCredit 10,000 - 10,000 - Euribor + 2,5 advances - suppliers Current account UniCredit 15,000 - 15,000 - Euribor + 2,5 advances - on invoices issued Lending advances UniCredit 40,000 - 40,000 - Euribor + 2,5 (no restriction on use) Advances on Intesa Sanpaolo 60,000 - 60,000 - Euribor + 1 invoices Medium/long- Intesa Sanpaolo 60,000 60,000 - 14,999 Euribor + 2,75 term - 3 years Medium/long- UniCredit 40,000 40,000 - 31,819 Euribor + 0,34 term - 5 years Medium/long- UniCredit 100,000 100,000 - 69,652 Euribor + 0,34 term - 5 years EIB - European Investment Medium/long- Fixed rate + 180,000 100,000 80,000 100,000 Bank term - 15 years 1,515 Total 607,000 310,000 297,000 226,432

The average interest rate charged on bank loans during the year was 1.8%, in line with the previous year, benefiting from the combined effect of a reduced average use of the short-term credit lines during the year and a decrease in the spreads charged. Notes to the Financial Statements of ENAV SpA 209

19. Other current and non-current liabilities

Other liabilities consist of the items shown in the following table, analyzed between the current and the non-current portion:

31.12.2014 31.12.2013 Change

Current Non-current Current Non-current Current Non-current portion portion portion portion portion portion

ChargeStabilization 0 20,304 0 28,184 0 (7,880) Provision Amounts on account 67,014 0 76,060 0 (9,046) 0 Other payables 48,901 0 46,755 0 2,146 0 Grants 9,721 122,225 12,264 152,416 (2,543) (30,191) Total 125,636 142,529 135,079 180,600 (9,443) (38,071)

The Charge Stabilization Provision was set up in 2003 on the approval of the 2002 financial statements by the Shareholders’ Meeting held on 9 May 2003 by allocating the tax receivable settlement reserve (Law no. 289/02) of ¤72,697 thousand. The provision increased in subsequent years following allocation by the Shareholders’ Meeting of a part of ENAV’s net income for the year and has been used solely for business purposes. With the Shareholders’ Meeting held in August 2013, the provision’s validity was extended to the period 2013/2015 with the aim of supporting the market by introducing a price control mechanism for the costs to be borne by carriers for flight assistance services.

The provision increased by ¤16,500 thousand in 2014 on the allocation of a part of 2013 net income by the Shareholders’ Meeting called on 5 August 2014 to approve the 2013 financial statements and decreased by ¤24,380 thousand on reducing the third band terminal charge as had already been established on determining the relative charge.

Of the total of ¤67,014 thousand of amounts on account, ¤62,829 thousand relates to the balance payable to the Italian Air Force for its portion due of the receipts of the year for route and terminal services and ¤4,185 thousand to the balance payable to ENAC for its portion of the receipts for the same services. The payable to AMI for route services amounts to ¤52,413 thousand (¤57,404 thousand at 31 December 2013), and this will be offset with the receivable due from the Ministry of the Economy and Finance (MEF) up the balance available, while the remainder will be paid to the MEF subsequent to the approval of the financial statements, as occurred for 2013, for which the outstanding balance was paid on 31 October 2014. The payable to AMI for terminal services amounts to ¤10,415 thousand (¤10,399 thousand at 31 December 2013) and in compliance with Law no. 183/2011, which came into effect on 1 July 2012, the portion due of terminal charge revenues will be paid to the Air Force 210 ENAV – 2014 Financial Statements

in two annual instalments. A total of ¤19,271 thousand was paid in 2014 regarding the second half of 2013 and the first half of 2014. The liability at 31 December 2014 represents the portion due for the second half of 2014 which will be paid by the end of April 2015.

Starting 2011 and in compliance with community regulations, the supervisory costs of ENAC (Ente Nazionale per l’Aviazione Civile), the Italian civil aviation authority, are also considered when determining the route and terminal charge. This has led to a situation whereby the portion of the revenues due to ENAC calculated on the basis of the communicated costs and the service units developed represents a liability for ENAV, recognized in this item, which at 31 December 2014 amounted to ¤4,185 thousand (¤8,257 thousand at 31 December 2013). The entire payable recognized at the end of the previous year was fully paid to ENAC in December 2014.

Other payables mainly relate to amounts due to personnel of ¤36,068 thousand, consisting of a balance of ¤13,222 thousand for vacation accrued but not taken, essentially in line with that at the previous year end, and an accrual of ¤22,292 thousand for the variable portion of personnel costs relating to the year, representing a slight decrease of ¤280 thousand compared with the balance at 31 December 2013. This item also includes a balance of ¤8,381 thousand payable for supplementary pensions paid over in early 2015 to the Company’s pension funds such as Prevaer and Previndai and the funds selected by employees.

The increase in other payables over the year mainly relates to the reclassification of an amount of ¤1,857 thousand to this item from the non- current portion of deferred income, which will be refunded to the European Commission in 2015 following the failure to obtain recognition of part of the pre-financing for the ADS-B project.

Grants consist of the following: i) the 2000/2006 and 2007/2013 Networks and Mobility National Operating Program (NOP) grants regarding specific investments made in the south of Italy amounting to ¤56,976 thousand (¤79,454 thousand at 31 December 2013). Of the decrease of ¤22,478 thousand in this balance over the year, ¤11,350 thousand regards the release to income of the portion relating to 2014, referring to the depreciation of the investments to which the grants refer, and ¤11,128 thousand regards the de- financing of the “Brindisi Area Control Center – 4 Flight” project as per the resolution of the supervisory Authority. The current portion totals ¤8,586 thousand and consists i) of the amount that will be released to income over the next 12 months; ii) the capital grants awarded for investments at military airports pursuant to Law no. 102/09, amounting to ¤67,596 thousand (¤68,550 thousand at 31 December 2013), a balance which decreased by ¤954 thousand over the year following the release to income of the portion relating to 2014 for the modernization of the technological systems of Verona Villafranca airport and the work performed at Comiso and Ciampino airports. The current portion amounts to ¤993 thousand; iii) other investment grants amounting to ¤7,337 thousand (¤15,717 thousand at 31 December 2013) mainly relating to European funding obtained as part of the TEN-T program. More specifically, the net decrease over the year of ¤8,380 thousand refers to gross decreases totaling ¤11,667 thousand, Notes to the Financial Statements of ENAV SpA 211

of which ¤8,920 thousand regards the pre-financing portion received at the end of 2013 relating to the other participants in the “ANSPs Interim Deployment Programme Implementation”, which is funded as part of the TEN-T program for new technological and procedural implementations in air transport and in which ENAV has a coordination role, to whom the amount was transferred in January 2014. The second instalment of the pre-financing for the same project was received in June; the portion relating to ENAV which is recognized in this item and which represents the increase over the year amounts to ¤2,540 thousand. ENAV obtained additional funding in 2014 as part of the TEN-T program for the project of common interest for the implementation of advanced capacities of flight data processing (FDP) in Europe with the receipt of the first instalment of the pre-financing of ¤747 thousand. An amount of ¤828 thousand was released to income, representing the portion relating to the year, while an amount of ¤106 thousand is classified in other current liabilities.

20. Current and non-current trade payables

Current trade payables amount to ¤114,552 thousand (¤128,993 thousand at 31 December 2013) and consist of ¤107,946 thousand due to the suppliers of goods and services required for the Company’s activities and the prefinancing received for projects financed at a European level, of which SESAR represents the major part. The change over the year mainly relates to a decrease in amounts due to suppliers following the payments made during the year. Balances due to suppliers fell further in early 2015 following payments of ¤30 million.

Non-current trade payables all relate to the Eurocontrol balance of ¤7,944 thousand, which less the portion of ¤141 thousand arising from discounting the liability to present value amounted to ¤7,803 thousand at 31 December 2014. This figure relates wholly to inflation which in actual terms was 0.2% compared to a budgeted figure of 2%. The amount will be paid to carriers through the charge in 2016 and accordingly has been classified as non- current. 212 ENAV – 2014 Financial Statements

21. Tax and social security payables

Tax and social security payables amount to ¤25,962 thousandand consist of the following items:

31.12.2014 31.12.2013 Change

Tax payables 6,240 6,099 141 Social security payables 19,722 19,891 (169) Total 25,962 25,990 (28)

Almost all of the balance for tax payables, essentially in line with the previous year end, relates to amounts withheld from employee remuneration which were paid over in January 2015.

Social security payables, basically unchanged compared to the previous year end, consist of the social charges accruing on employee remuneration for December, paid over in January, and the portion of contributions on accrued personnel costs amounting in total to ¤11,701 thousand. Notes to the Financial Statements of ENAV SpA 213

Information on items in the income statement

22. Revenues from operations and Balance revenues

Revenues from operations and balance revenues amount to ¤810,251 thousand and negative ¤16,016 thousand respectively, representing an increase of ¤32,098 thousand and a decrease of ¤36,476 thousand, again respectively. The following table provides an analysis of the individual items:

31.12.2014 31.12.2013 Change

Route revenues 589,395 567,638 21,757 Terminal revenues 171,722 169,312 2,410 Route and terminal 14,236 14,165 71 exemptions Third party market 10,518 7,246 3,272 revenues Chargestabilization supplementary 24,380 19,792 4,588 contributions Total revenues 810,251 778,153 32,098 from operations

Route revenues totaled ¤589,395 thousand, representing an increase of ¤21,757 thousand over the previous year, all of which due to a rise of 2.45% in service units developed in the year compared to actual 2013 (+0.01% 2013 over 2012) which regards international traffic in particular. The charge applied for 2014 was unchanged over 2013 and corresponds to ¤78.83 as per the 2012–2014 national performance plan.

Terminal revenues, which totaled ¤171,722 thousand, increased by ¤2,410 thousand due to a rise of 2% in the service units developed in the year compared to actual 2013 (2013 over 2012: -3.6%) and the arrival of two new airports for which ENAV is responsible, Rome Ciampino and Verona Villafranca, military airports open to civil traffic since the end of May 2014. With regard to the terminal charges applicable for 2014, ENAV has established three chargebands determined in accordance with the thresholds stated in European Regulations no. 390 and No. 391 of 2013, without altering the fact that full cost recovery will continue to apply in 2014 in the three bands in accordance with Regulation no. 1794/2006. The charge bands consist of (i) Rome Fiumicino airport with a charge of ¤195.79; ii) Milan Linate, Milan Malpensa and Venice Tessera with a charge of ¤214.15; iii) all the other 43 airports with a charge of ¤246.05, which already discounts a portion that continues to be borne by ENAV for the use of the charge stabilization provision. 214 ENAV – 2014 Financial Statements

Revenues connected with route and terminal exemptions, amounting to ¤10,940 thousand (¤10,805 thousand at 31 December 2013) and ¤3,296 thousand (¤3,360 thousand at 31 December 2013) respectively, are in general constant compared to the previous year and arise from exempt, mainly military, flights.

Third party market revenues amount to ¤10,518 thousand, representing an increase of ¤3,272 thousand over the previous year regarding flight assistance services rendered at Comiso and Crotone airports and new consultancy services provided by the Company also abroad such as in Dubai and Libya.

Charge stabilization supplementary contributions amounting to ¤24,380 thousand correspond to the amount entered on determining the third band terminal charge, a measure taken to support the market during the current crisis period. The failure of terminal traffic to increase compared to the charge budget led to the use of the provision for the whole amount committed within the charge sphere.

The adjusting component charges for the “balance” amounted to negative ¤16,016 thousand and was calculated on the basis of the items stated in the following table:

31.12.2014 31.12.2013 Change

Balance fee adjustment 41,321 57,505 (16,184) for the year Discounting effect (4,064) (1,017) (3,047) Balance variations 0 7,623 (7,623) Utilization of the balance (53,273) (43,651) (9,622) Total (16,016) 20,460 (36,476)

The balance fee adjustment for the year represents the charge addition deriving from comparing the actual traffic volumes and/or costs with the planned amounts used in determining the charge before adjustment to fair value through discounting. This item consists of the route balance of ¤33,184 thousand, the terminal “balance” of ¤1,845 thousand and the route “balance” of ¤6,292 thousand for the costs arising from the transition to international accounting standards. Details of this item can be found in note 10.

The discounting effect, negative ¤4,064 thousand, arises from separating out the financial component inherent in the balance mechanism, and is determined by calculating the present value of the balance generated during the year, in accordance with a pre-determined recovery plan.

The utilization of the balance by an amount of ¤53,273 thousand refers to the release to income of the portions of the balance recognized in previous Notes to the Financial Statements of ENAV SpA 215

years in accordance with the agreement reached on determining the charge for 2014. More specifically, the utilization regards the final portion of the 2009 balance and the partial portions of the balances recognized in 2011 and 2012.

23. Other operating income

Other operating income for the year amounted to ¤49,840 thousand, representing a decrease of ¤4,022 thousand over the figure for the year ended 31 December 2013. This item may be analyzed as follows:

31.12.2014 31.12.2013 Change

Capital grants 12,339 15,255 (2,916) Revenue grants 31,623 30,823 800 European funding 3,038 3,083 (45) Other revenues 2,840 4,701 (1,861) and income Total 49,840 53,862 (4,022)

Capital grants consist of the release to income of the part of the liability for deferred income in proportion to the depreciation charged on the assets to which the grant refers, as discussed in note 19.

Revenue grants include ¤30 million consisting of the amount awarded to ENAV pursuant to article 11-septies of Law no. 248/05 to offset the costs incurred to ensure the safety of its systems and equipment and operational safety. The remainder of this item, amounting to ¤1,623 thousand, regards short-term projects funded as part of the TEN-T program starting in 2014 and the training funded by Fondimpresa.

European funding regards the portion attributable to ENAV for its participation in European projects such as SESAR, which represents the major item amounting to ¤2,901 thousand, and other smaller projects such as we free, gamma and accepta.

Other revenues and income consist mainly of cost recoveries for personnel seconded within the ENAV Group and at third parties, rental income for premises at Naples airport and the penalties charged to suppliers for delays compared to contractually agreed deadlines. The decrease of ¤1,861 thousand arises from reductions insecondments to third parties,such as to the German provider DFS,and the penalties charged. 216 ENAV – 2014 Financial Statements

24. Costs for goods and services, lease and rental costs and other operating costs

Costs for goods and services, lease and rental costs and other operating costs amount in total to ¤214,889 thousand, representing a net increase of ¤2,412 thousand over the previous year. Details of these costs are set out in the following table:

31.12.2014 31.12.2013 Change

Purchases of goods 3,647 5,657 (2,010) Costs for services: Maintenance expenses 76,265 73,860 2,405 Costs for Eurocontrol 40,535 41,694 (1,159) contributions Costs for utilities and 42,087 38,707 3,380 telecommunications Insurance premiums 6,732 6,510 222 Cleaning and security 5,858 7,022 (1,164) Other personnel costs 7,282 9,121 (1,839) Professional services 19,051 10,119 8,932 Other costs for services 5,657 6,328 (671) Total costs for services 203,467 193,361 10,106 Leases and rentals 4,596 4,914 (318) Other operating costs 3,179 8,545 (5,366)

Total 214,889 212,477 2,412

Purchases of goods consist mainly of the costs incurred to purchase spare parts for systems and equipment used for air traffic control and the relative change in stocks of these items, which in 2013 amounted to negative ¤1,573 thousand and in 2014 to only negative ¤7 thousand.

Costs for services rose by a net amount of ¤10,106 thousand over the previous year and relate to: i) maintenance costs relating mainly to operational maintenance at Ciampino airport, for which ENAV has been responsible since May 2014, and costs for new maintenance contracts concluded during the year such as the support and maintenance of the SIPRO – AIRNAS systems; ii) costs for utilities and telecommunications for the new systems linked to the E-net network in 2014; iii) professional services specialist support at an intragroup and European project level, as well as other activities connected with the privatization and transition to international accounting standards with the related requirement to adapt supporting procedures and information systems. The increase is also due to the recognition in the income statement of expenditure that does not Notes to the Financial Statements of ENAV SpA 217

qualify for classification as intangible assets, as was the case under Italian accounting standards. This item also benefits from a reduction in security costs as the result of concluding new agreements in this respect and in other personnel costs relating to transfers.

Lease and rental costs decreased by ¤318 thousand mainly due to the fact that the term of certain rental agreements came to an end in the final quarter of 2014 following the transfer of personnel to new offices situated in the same area as the Ciampino Area Control Center.

Other operating costs decreased by ¤5,366 thousand as the figure for the previous year included the amount of the assets in third party custody which were stolen in December 2013.

25. Personnel costs

Personnel costs amount to ¤403,213 thousand, representinga net increase of ¤6,399 thousand over the prior year as shown by the following table:

31.12.2014 31.12.2013 Change

Wages and salaries,

of which: fixed remuneration 235,704 227,517 8,187 variable remuneration 46,339 48,669 (2,330) Total wages and salaries 282,043 276,186 5,857 Social security 93,353 91,614 1,739 contributions Employees' leaving 17,864 17,119 745 entitlement Other costs 9,953 11,895 (1,942) Total personnel costs 403,213 396,814 6,399

Wages and salaries increased by ¤5,857 thousand, of which ¤8,187 thousand refers to the fixed portion of remuneration, with the difference due to: i) changes in qualification and an increase in the superminimo arising from the restructuring of the wages of the CTA personnel that had an effect of approximately ¤3.1 million; ii) an increase in the minimi and superminimi in accordance with the requirements of the national collective labor agreement (CCNL) which became effective in July 2013 and which accordingly had an effect for the full year in 2014 but for only six months in 2013, with an impact of approximately ¤1.8 million; iv) a natural rise in remuneration having an effect of approximately ¤2.1 million. On the other hand the variable portion of remuneration decreased by ¤2,330 thousand, mainly due to the reduced accrual for vacation vested but not yet taken by employees following the Company’s emphasis on having operating and 218 ENAV – 2014 Financial Statements

structure personnel take their vacation leave; the reduction in this case amounted to ¤2,004 thousand.

Social security contributions increased by ¤1,739 thousand as the result of a higher income base, while other costs decreased by ¤1,942 thousand due to a reduction of approximately ¤1 million in voluntary redundancy costs, which affected 28 persons (30 in 2013), and a cost saving of ¤894 thousand regarding the insurance cover for employees and an executive due to the renewal of the convention.

The following table provides a summary of the Company’s workforce analyzed by employee category:

31.12.2014 31.12.2013 Change

Executives 62 68 (6) Middle managers 364 346 18 White-collar workers 2,912 2,916 (4) Total at 31 December 3,338 3,330 8 Average 3,337 3,297 40

31.12.2014 31.12.2013 Change

Management and coordination 426 414 12 Air traffic controllers 1,644 1,656 (12) Flight assistant experts 434 446 (12) Meteo service operators 30 31 (1) Flight staff 25 29 (4) Administrative staff 483 484 (1) Technical staff 196 179 17 ICT staff 100 91 9 Number at 31 December 3,338 3,330 8

26. Capitalization of internal work

Capitalized costs for internal work amounted to ¤5,437 thousand in the year ended 31 December 2014 representing a decrease of ¤1,065 thousand over the previous year. These relate to the capitalization of personnel costs incurred for the work performed on investment projects in progress. The decrease is due to the reduction of the number of new investments projects starting in 2014 and accordingly in the number of hours deployed compared to previous years. Notes to the Financial Statements of ENAV SpA 219

27. Financial income and expense

Financial income amounted to ¤3,401 thousand and may be analyzed as follows:

31.12.2014 31.12.2013 Change

Income from investments 250 250 0 in other companies Interest income from 0 1,814 (1,814) discounting the "balance" Interest income on VAT 684 719 (35) receivable awaiting refund Other interest income 2,467 2,069 398 Total financial income 3,401 4,852 (1,451)

This item decreased by ¤1,451 thousand due mainly to the financial income arising from discounting the “balance” item, for which financial expense of ¤3,059 thousand was recognized in 2014 as shown in the table below. Other interest income relates mainly to arrears interest charged to air carriers for the late payment of charges.

Financial expense amounted to ¤8,369 thousand and may be analyzed as follows:

31.12.2014 31.12.2013 Change

Interest expense on bank 3,538 4,937 (1,399) loans Interest expense on 1,117 1,034 83 employee benefits Interest expense from 3,059 0 3,059 discounting the "balance" Other interest expense 655 889 (234) Total financial expense 8,369 6,860 1,509

The net increase of ¤1,509 thousand is mainly due to the financial expense arising from discounting the “balance” item to net present value and refers to the adjustment of the present value of the related receivable, recognized following the revision of the charge recovery plans. On the other hand the main decrease is due to the fall in interest expense on bank loans as the result of a reduced use of short-term credit lines and a drop in interest rates. 220 ENAV – 2014 Financial Statements

28. Income taxes

The income tax charge for the year amounts to ¤24,752 thousand and may be analyzed as follows:

31.12.2014 31.12.2013 Change

IRES corporate income tax 4,768 14,325 (9,557) charge IRAP regional production 20,920 22,544 (1,624) tax charge Prior year taxes (126) 105 (231) Total current taxes 25,562 36,974 (11,412) Deferred tax assets - (1,332) 1,067 (2,399) (income)/expense Deferred tax liabilities - 522 333 189 expense Total current and deferred 24,752 38,374 (13,622) taxes

Reference should be made to note 8 for further details on the recognition of deferred tax assets and liabilities.

The following table provides an analysis of the difference between theoretical and effective tax rates for IRES corporate income tax:

2014 2013

Taxable Taxable Tax charge Tax charge profit profit Income before income 63,579 88,034 taxes Theoretical rate 27.5% 27.5% Theoretical IRES charge 17,484 24,209 Permanent differences (41,604) (11,440) (34,414) (9,463) Temporary differences (4,635) (1,275) (1,529) (421) Actual IRES charge 4,768 14,325 Effective rate 7.50% 16.27% Notes to the Financial Statements of ENAV SpA 221

Other information

29. Guarantees

Guarantees consist of suretiesof ¤2,387 thousand (¤2,125 thousand at 31 December 2013) pledged to third parties in the Company’s interest, representing an increase of ¤262 thousand which arises from new issues and the release of previous sureties. This difference mainly relates to sureties issued for participating in European tenders and entering the relative agreements.

In addition, ENAV has signed two letters of patronage totaling ¤27,200 in the interest of its subsidiaries Techno Sky and SICTA Consortium in favor of banks as a guarantee for the credit facilities granted for amounts of ¤22,200 thousand and ¤5,000 thousand respectively, unchanged over 2013.

30. Related party transactions

ENAV carries out related party transactions in the Company’s interest. These form part of ordinary operations and unless otherwise stated are conducted under market conditions. Related parties can be divided into those outside ENAV and those inside ENAV. Outside related parties consist of the controlling and supervising ministries, such as the Ministry of Economy and Finance (MEF in the table below) and the Ministry of Infrastructure and Transport (MIT in the table below), as well as the entities under the control of the Ministry of Economy and Finance. Relationships with the controlling and supervising ministries are dependent on the provisions of laws and regulations and regard: i) the provision of flight assistance services charged to the Ministry of Economy and Finance; ii) safety services for the systems and equipment contributed by the Ministry of Infrastructure and Transport. These relationships are described in the notes on the individual financial statement items. Inside related parties consist of direct and indirect subsidiaries and associates. The transactions carried out by the Company with its subsidiaries mainly relate to the following: l the exchange of goods with and the provision of services to the subsidiaries Techno Sky, ENAV Asia Pacific and the SICTA Consortium; l commercial relations with the subsidiary Techno Sky settled through a non-interest bearing intercompany current account.

More specifically, Techno Sky essentially provides services to the parent company consisting of the maintenance of flight assistance systems and equipment, as well as the maintenance of civil infrastructure not connected with operating functions. 222 ENAV – 2014 Financial Statements

The following table provides a summary of the Company’s transactions and balances with related parties:

ENAV Related party Techno Sky Srl SICTA Consortium MEF MIT Asia Pacific

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 Balances Trade 13,556 15,404 38 140 332 163 14,211 25,488 40,434 69,362 receivables Trade payables (31,396) (33,951) (3,151) (4,206) (186) (232) (52,413) (57,404) 0 0 Total (17,840) (18,547) (3,113) (4,066) 146 (69) (38,202) (31,916) 40,434 69,362 Transactions Revenues 602 561 115 140 391 163 14,211 14,158 30,000 30,000 Costs for (63,188) (61,102) (2,371) (1,259) (408) (232) 0 0 0 0 services Capitalized costs (22,437) (25,200) (224) (942) 0 0 0 0 0 0 Total (85,023) (85,741) (2,480) (2,061) (17) (69) 14,211 14,158 30,000 30,000

Related party transactions also include those with key executives in office at 31 December 2014. The relative compensation, understood as gross annual remuneration, amounts to ¤1,073 thousand.

No related party transactions were carried out by the Group, Group companies or related parties of Group companies with key executives during the year, either directly or through their close family members

Notes to the Financial Statements of ENAV SpA 223

31. Maturity analysis of assets and liabilities

Within 1 year From 2 to 5 years After 5 years Total

Non-current financial 0 383 0 383 assets Deferred tax assets 0 19,926 0 19,926 Non-current tax 0 23,164 0 23,164 receivables Non-current trade 0 63,414 56,085 119,499 receivables Total 106,887 56,085 162,972 Financial liabilities 44,743 93,846 87,920 226,509 Deferred tax liabilities 0 3,278 0 3,278 Other non-current 0 116,472 26,058 142,530 liabilities Non-current trade payables 0 7,803 0 7,803 Total 44,743 221,399 113,978 380,120

Non-current trade receivables falling due after five years relate exclusively to the portion of the “balance” recognized in 2014 and previous years.

Financial liabilities falling due after five years consist of bank loans. In this respect reference should be made to note 32.

Other non-current liabilities falling due after five years relate to the portion of capital grants corresponding to the depreciation to be charged on the investment projects to which they relate. 224 ENAV – 2014 Financial Statements

32. Risk management

Credit risk

ENAV’s credit risk at 31 December 2014 is represented by the carrying amount of current trade receivables due from customers, which represent its highest financial statement exposure. A bad debts allowance is recognized against customer non-performance risk which mainly relates to Eurocontrol, the collection agent for air carriers. The balance on this allowance is reviewed on a regular basis, including on the basis of information provided by Eurocontrol itself on route and terminal receivables. The process followed by ENAV for writing down receivables consists of making write-downs of individual customer balances that depend on the financial situation of the carrier concerned, flight license withdrawal and the age of the receivable. At 31 December 2014 the portion of trade receivables due from customers, including management companies, which is considered of doubtful recovery is fully covered by the bad debts allowance.

Liquidity risk

Liquidity risk is the risk that the although still solvent ENAV may be unable to meet its planned and contingent payment obligations in a timely manner due to difficulty in obtaining funds, or that it is only able to do so under unfavorable economic conditions due to factors connected with the market’s perception of its riskiness. To this end the Company manages liquidity risks by adopting financial policies based on a diversification of lenders and by pursuing a debt management strategy that envisages a diversified structure for the sources of finance in terms of the nature of bank facilities, characterized by flexibility as far repayment and renegotiation possibilities are concerned which may be used to cover its financial needs, and a balanced repayment profile. At 31 December 2014 ENAV has access to sources of funding that are sufficient to meet its planned financial needs, taking into account its ability to generate cash flows, the diversification of sources of funding and the availability of credit lines, having at its disposal a cash reserve estimated in ¤480 million and consisting of available cash and unused credit lines.

The following table sets out the due dates of medium/long-term bank loans, presented gross of the effect deriving from the use of the amortized cost method (maturity analysis): Notes to the Financial Statements of ENAV SpA 225

Outstanding Between Between Lender Type balance at <1 year > 5 years 1 and 2 years 3 and 5 years 31.12.2014

Medium/long- MedioCredito Centrale 10,000 1,667 3,333 5,000 0 term - 5 years Medium/long- Intesa Sanpaolo 15,000 15,000 0 0 0 term - 3 years Medium/long- UniCredit 32,000 8,000 8,000 16,000 0 term - 5 years Medium/long- UniCredit 70,000 20,000 20,000 30,000 0 term - 5 years EIB - European Investment Medium/long- 100,000 0 0 12,080 87,920 Bank term - 15 years Total 227,000 44,667 31,333 63,080 87,920

ENAV’s principal long-term loans are based on agreements containing covenants referring to the consolidated financial statements as of 31 December of each year. The main covenants and commitments relating to these loans can be summarized as follows: l a net debt/EBITDA ratio less than or equal to 1.5–3; l a gross debt/EBITDAratio less than or equal to 3; l a net debt/equity ratio less than or equal 0.7; l an EBITDA/gross financial expense ratio not less than 6; l a negative pledge clause, under which the Company will not create or pledge to third parties any guarantees or privileges in addition to those already governed in the individual agreements entered into by the Company unless an equivalent guarantee is extended in the same way to the loans in question; l a material changes clause under which on the occurrence of a significant event (change of control, changes to core activities, cross default, etc.) a resulting revision is made to the agreement, in the absence of which early repayment triggers; l a termination clause with immediate execution on the occurrence of certain events such as insolvency procedures and a state of insolvency, the suspension of payments at their due date, the non- truthfulness and incompleteness of the statements made and the guarantees pledged.

The loan agreement covenants have always been satisfied by ENAV in previous years. These covenants were defined on the basis of Italian accounting standards as previously adopted. At 31 December 2014, on the basis of the new set of accounting standards adopted by ENAV, no matters arose that might indicate that ENAV is not satisfying the covenants. 226 ENAV – 2014 Financial Statements

Interest rate risk

The Company’s main sources of exposure to interest rate risk derive from outstanding medium/long-term loans and the fluctuations in interest rates which affect the level of net financial expense in the income statement and the volume of future cash flows. To limit this risk, the Company carries out systematic negotiations with banks, all of which always of prime standing, in order to exploit the opportunities of optimizing debt costs, which through a strategic diversification of floating rate and fixed rate financial liabilities provides an effective mix of the structure and technical forms of the loans taken out. The average cost of bank debt was 1.8% in 2014, essentially the same as that in the previous year, representing the combined effect of the continuation of favorable trends on the interest rate markets and the spreads applied and a reduction in the use of the available credit facilities during the period.

Currency risk

Currency risk arises from the possibility of adverse changes in exchange rates with the resulting increase in cash outflows. ENAV operates mainly on the Italian market and therefore has only a limited exposure to this risk. The present exposure to currency risk essentially arises from cash flows relating to investments in foreign currency, principally the US dollar, for the purchase of the investment in the US registered company Aireon LLC, which has been hedged by entering a forward contract for the purchase of US dollars for an amount corresponding to the consideration agreed for the purchase of that investment. Further details may be found in note 32 on derivative hedging contracts.

Litigation risks

Litigation of a fiscal, administrative, civil and labor nature is followed by the competent functions of ENAV, which for the preparation of these financial statements have drawn up a complete and exhaustive description of the various civil, administrative and labor law proceedings. ENAV has carried out a precise assessment of the risk of an adverse outcome in these proceedings, from which the need emerged to prudently set up specific provisions for those disputes in which an adverse outcome is considered probable and is reasonably quantifiable. In those cases where an adverse outcome is only considered possible, no specific provisions were recognized, in accordance with the accounting standards used to prepare the financial statements. At the present time it is not considered that the conclusion of the outstanding disputes will lead to significant costs for the Company other than the amounts provided for this purpose at 31 December 2014.

Judicial investigations and proceedings

The year ended 31 December 2014 was characterized by the continuation of the steps already taken in previous years designed to protect the Company in respect of certain pending judicial actions. Notes to the Financial Statements of ENAV SpA 227

ENAV has brought a civil action in the criminal proceedings against a former managing director and former executive of the Company for alleged offences pursuant to articles 319 and 321 of the Italian criminal code. The proceeding against the former managing director for alleged complicity in the offence pursuant to article 7, paragraphs 2 and 3 of Law no. 194/1975 and article 4, paragraph 1 of Law no. 659/1981 has been joined for reasons of connection with this proceeding, which is currently at a preliminary stage.

ENAV has brought a civil action in the criminal proceedings against a former chairman of the board of directors of ENAV, a former executive of ENAV and senior management of a third party company – a former supplier of the subsidiary Techno Sky – in connection with offences pursuant to articles 81, 319 and 321. This proceeding is in the process of being joined with that involving another former executive of ENAV who has been charged with the same offences, in relation to whom the Company will bring a civil action.

An order has been issued to dismiss a criminal proceeding for an alleged offence pursuant to article 323 of the Italian criminal code concerning a former managing director and pursuant to article 640, paragraph 2.1 of the Italian criminal code concerning a former executive.

As far as is known the criminal proceeding is continuing against an executive of the Company for an alleged offence pursuant to article 378 of the Italian criminal code following notification served on the respondent on 29 August 2013 giving notice that the preliminary investigations pursuant to article 415-bis of the Italian code of criminal procedure have been completed.

A criminal proceeding is pending against, amongst others, a senior executive of a former construction planning company, a former managing director and former director of ENAV and a senior executive of an ENAV subcontractor concerning alleged offences pursuant to article 110 of the Italian criminal code, article 7, paragraphs 2 and 3 of Law no. 195/1974 and article 4, paragraph 1 of Law no. 659/1981, as well as alleged offences pursuant to article 8 of Law no. 74/2000, with specific reference to subcontracts regarding the contract for the modernization of Palermo airport. In respect of this proceeding, on 8 April 2014 documentation available to ENAV was delivered to the judicial authorities; in addition, the Company has engaged a party to conduct a preliminary assessment on adopting protection measures.

Following, amongst other things, the completion by settlement of the criminal proceedings regarding offences emerging as part of the investigations carried out by the Rome public prosecutor in the years 2010 and 2011 concerning former directors, former senior executives of suppliers no longer in business and former senior executives and executives and consultants of third party companies, ENAV has undertaken out-of-court initiatives preliminary to any action designed to obtain compensation for the damage, also to its reputation, caused to the Company, in order amongst other things to interrupt the period of limitations.

In relation to the theft of the goods and materials belonging to ENAV that were held on deposit with third parties, in February 2014 ENAV 228 ENAV – 2014 Financial Statements

filed a formal criminal complaint in addition to requesting the insurance company to carry out verifications as to whether the loss is covered by the Company’s policy.

Following the filing of the criminal complaint by ENAV, the public prosecutor brought a criminal action, as part of which the Company has received as the injured party a copy of a request for the immediate committal for trial of one of the respondents for the offence pursuant to article 61.11 and article 646 of the Italian criminal code.

In relation to the terminated agreement entered by ENAV with SELEX ES on 26 June 2009 for modernizing the airport system of Palermo airport, the Company continues to withhold an amount of approximately ¤3.9 million, pursuant to and in accordance with the private agreement signed on 24 December 2012, as a caution and pending the further verifications provided therein. Following additional checks carried out by ENAV, which have enable the noted differences with the agreement to be better defined, discussions are taking place with the supplier in order to arrive at a definitive completion of the situation in a prudent manner for ENAV.

In relation to the terminated investment contract relating to the ADS-B system, completed in a prudent manner for the Company with the recognition of amounts lower than those originally included in the contract, considering the fact that a part of the works relating to this contract fell under the TEN-T financing in the Company’s favor, ENAV has provided assurance that it will provide the most transparent information to its national and European institutional interlocutors concerning the initiatives undertaken by ENAV in dealing with this matter. On the completion of its investigation, the agency INEA requested ENAV to return prefinancing amounting in total to approximately ¤1.8 million, given that it is considered that the circumstances provided by articles III.3.7.1 and III.2.5 of the General Conditions attached to the financing decision have not been complied with.

Following the Decree of 7 March 2013 of the Director General of Finance at the Ministry of the Economy and Finance in conjunction with the Director of the Department for Transport, Navigation and Information Systems and Statistics at the Ministry of Infrastructure and Transport ordering the decommissioning and simultaneous transfer to the State Property Office of a first tranche of AVL assets (as well as areas outside the airport grounds), not additionally instrumental for the supply of ENAV’s business services in the new sector structure, bilateral ENAC/ENAV discussions are continuing preliminary to the issue of a further provision for the decommissioning of other visual and lighting aids at the time contributed to ENAV and still managed and maintained by the Company. Notes to the Financial Statements of ENAV SpA 229

33. Compensation payable to the audit firm and to directors and statutory auditors

Total fees of ¤695 thousand were payable to the audit firm, a figure which also includes the fees for the year paid to the firm for attestation services other than the legal audit.

Fees totaling ¤290 thousand payable to the directors and statutory auditors may be analyzed as follows:

31.12.2014 31.12.2013 Change

Directors 227 468 (241) Statutory auditors 63 73 (10) Total 290 541 (251)

Directors’ fees consist of those payable to the Sole Director until September and subsequently to the Board of Directors. The fees payable to representatives of the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport are transferred to these ministries if such directors are employees of these bodies.

34. Subsequent events

On 21 January 2015 the subsidiary ENAV North Atlantic LLC paid the balance of US$6.4 million representing the second contractually provided instalment for the purchase of the investment in Aireon LLC.

On 13 April 2015 the Shareholders’ Meeting of ENAV resolved a voluntary reduction of ¤180 million in the Company’s share capital pursuant to article 2445 of the Italian civil code. This releveraging operation, which should be considered as part of a broader privatization process, should in addition make ENAV’s current financial structure more efficient; this structure is currently characterized by having a leverage that is on the average lower than listed and unlisted companies that are in any way comparable, in both absolute and relative terms, and the operation should benefit the valuation of the Company and the Shareholder’s related expectations.

In terms of the selection of the most suitable financial instrument for acquiring the funds required to service the operation, given the present particularly favorable momentum in the debt market due to the combined effect of interest rates at historical lows and narrowing lending spreads, on 8 May 2015 the Board of Directors approved the issue of a bond pursuant to article 2410 of the Italian civil code, to be placed with institutional investors, for an amount equal to the above reduction in share capital, up to ¤180 million, with a ten-year term and bullet redemption. 230 ENAV – 2014 Financial Statements

35. Transition to international accounting standards

The separate financial statements for the year ended 31 December 2014 are the first complete set of financial statements prepared in accordance with the IAS/IFRS international accounting standards issued by the International Accounting Standard Board (IASB) and adopted by the European Commission, effective at the balance sheet date, following the introduction of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002. The previous separate financial statements for the year ended 31 December 2013 were prepared in accordance with Italian accounting standards.

The ENAV Group’s first set of consolidated financial statements prepared in accordance with IAS/IFRS international accounting standards were those for the year ended 31 December 2013. The date of transition to IFRSs was 1 January 2011.

In order to determine the value to be attributed to assets and liabilities in the separate financial statements on transition, in accordance with IFRS First- time Application of International Financial Reporting Standards the Company elected to continue with the use of the balances stated in the consolidated financial statements determined as of the ENAV Group’s date of transition, and accordingly the amounts presented in the following tables, including those for the First-time Adoption Reserve (FTA reserve) have been determined in a manner consistent with the amounts determined on the transition of the ENAV Group.

In order to show the effect of the transition to IFRSs on ENAV’s separate financial statements, this note provides reconciliations between the amounts previously stated in accordance with Italian accounting standards and those recalculated in accordance with IFRSs, together with the relative commentary.

The following have accordingly been prepared:

l notes on the rules of first-time adoption of IFRSs and the other IFRS standards selected, including the decisions taken by the directors on the main optional exemptions permitted by IFRS 1, and on the way in which the items required to be presented in the statement of financial position and income statement have been classified in accordance with IAS 1, with a comparison with the items in the opening statement of financial position as of 1 January 2013 and as of 31 December 2013; l reconciliations between equity calculated in accordance with the previous accounting standards and that calculated in accordance with IFRSs at the following dates:

- the date of transition to IFRSs (1 January 2013); - the balance sheet date of the last year in which the financial statements were prepared in accordance with the previous accounting standards (31 December 2013); Notes to the Financial Statements of ENAV SpA 231

l a reconciliation of the financial position and results from operations reported in the last financial statements prepared in accordance with the previous accounting standards (year ended 31 December 2013) and those arising from the application of IFRSs for the same year; l notes to the reconciliations; l separate statements of the IFRS financial position at 1 January 2013 and at 31 December 2013 and the separate IFRS income statement and statement of comprehensive income for the year ended 31 December 2013.

These reconciliations have only been prepared for the purposes of drawing up, on transition, the first complete set of separate financial statements prepared in accordance with the IFRSs adopted by the European Commission and do not include the comparative figures or notes that are necessary to provide a complete presentation of ENAV’s financial position and results from operations in accordance with IFRSs.

It should also be noted that they have been prepared in accordance with the whole hierarchy of the pronouncements issued by the IASB, consisting of International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) and the previous Standard Interpretations Committee (SIC), as adopted by the European Union.

IFRS 1 requires a retrospective approach to be taken to the first set of financial statements prepared in accordance with IFRSs, meaning that the opening set of financial statements must be prepared in accordance with the standards and interpretations effective in the year of first application, and accordingly the applicable standards are those in effect on the preparation of the separate financial statements for the year ended 31 December 2014.

Notes on first-time application rules

The effects of the transition to IFRSs arise from changes in accounting principle and accordingly, as required by IFRS 1, are recognized in opening net equity at the date of transition, 1 January 2013.

On transition to IFRSs, the estimates previously made under Italian accounting standards were maintained, unless the adoption of international accounting standards required estimates to be made using different methods.

On first-time application ENAV elected took certain decisions regarding the optional exemptions permitted by IFRS 1 when preparing the opening balance sheet: l business combinations: the Company has not applied IFRS 3 retrospectively to business combinations that occurred before the date of transition to IFRSs; l measurement of property, plant and equipment at fair value, or, 232 ENAV – 2014 Financial Statements

alternatively, at revalued cost as deemed cost: the Company did not elect for this option.

In addition, ENAV selected the following accounting treatment as part of the accounting options permitted by IFRSs:

l measurement of property, plant and equipment and intangible assets:subsequent to initial recognition, IAS 16 and IAS 38 allow these assets to be measured at cost or fair value. The Company elected to use the cost method; l inventories: under IAS 2, the cost of inventories must be assigned by using the FIFO or weighted average cost formula. The Company elected to use the weighted average cost formula.

Reconciliation of equity and results between the financial statements prepared in accordance with Italian accounting standards and those prepared in accordance withifrss

The differences arising between the use of IFRSs and the use of Italian accounting standards (Italian GAAP) for determining the opening net equity at 1 January 2013 and at 31 December 2013 and the results for the year ended 31 December 2013 are set out in the following reconciliation.

The individual items are stated before tax while the tax effects are presented cumulatively in note F.

Equity Change in Net income Comprehensive Equity Note Description at 01.01.2013 equity in 2013 for the year income at 31.12.2013

Equity under Italian GAAP 1,288,897 (40,607) 50,528 0 1,298,818 A IAS 38 Intangible Assets (4,651) 0 1,436 0 (3,215) IAS 16 Property, plant B (1,410) 0 573 0 (837) and Equipment IAS 39 Financial C 701 0 (1,039) (671) (1,009) Instruments D IAS 18 Revenue (2,628) 0 797 0 (1,831) E IAS 19 Employee Benefits 1,572 0 (353) 1,533 2,752 F Taxation 1,133 0 (762) (237) 134 Total IFRS adjustments (5,283) 0 652 625 (4,006) Equity under IFRSs 1,283,614 (40,607) 51,180 625 1,294,812 Notes to the Financial Statements of ENAV SpA 233

Notes to the adjustments

Note A – IAS 38 Intangible Assets

Certain items previously recognized in intangible assets do not qualify for recognition as intangible assets under IFRSs and in particular IAS 38 Intangible Assets. The adjustments involved mainly refer to: l patents and industrial property rights; l other intangible assets l assets under formation and payments on account.

Certain items classified as patents and industrial property rights and assets under formation and payments on account have been derecognized as assets for IFRS purposes as they do not qualify for recognition as such under IAS 38, mainly in respect of the future economic benefits that must flow to the Company.

The adjustment to other intangible assets consists of loan accessory costs, which under Italian GAAP may be capitalized and amortized over the loan term but which under IAS 39 must be deducted from the loans to which they relate and be amortized using the effective interest rate method. In addition, leasehold improvements have undergone a different accounting treatment. Under Italian GAAP these are capitalized and amortized over the term of the lease contract to which they relate while for IFRSs they are classified as property, plant and equipment.

Note B – IAS 16 Property, Plant and Equipment

As previously stated certain items consisting of leasehold improvements, previously recognized as “other intangible assets”, have been reclassified to the item of property, plant and equipment to which they refer (such as buildings and plant) in accordance with IAS 16, as the accounting conditions existed. The useful lives of these assets, previously estimated on the basis of the lease contract, have been revised to align them to the category of assets to which they now belong. In addition, to ensure full compliance with IFRS 1, the depreciation charged in the past on the basis of the previous useful lives was reversed at the date of first-time adoption and reclassified in the First-time Adoption reserve in equity, with depreciation thencalculated on the basis of the new useful lives, this too recognized in the First-time Adoption reserve. The effect deriving from the change in depreciation rates is then recognizedin subsequent years.

In compliance with IAS 16, property, plant and equipment includes a portion of inventories recognized under previous GAAP as current assets as these assets qualify for recognition as non-current assets pursuant to paragraph 8 of IAS 16.This reclassification led to the requirement for the Company to calculate past depreciation on these assets as if they had always been considered to be fixed assets from the date of purchase, leading to a negative effect that was recognized in the FTA reserve. In subsequent years, this reclassification leads to effects arising from the recalculation of the depreciation charge. 234 ENAV – 2014 Financial Statements

In addition, using the “component approach”, the useful lives of certain significant components for which a separate estimate is possible were recalculatedas part of the transition process. The effect of this change in accounting policy has been recognized in the FTA reserve. The effect on profit or loss derives from the different depreciation rates used for the different components subject to separate measurement.

Note C – IAS 39 Financial Instruments

The adjustments made as the result of applying IFRSs mainly regard the loans taken out by the Company with certain banks which have beenrecalculated to adjust these to amortized cost as required by IAS 39, being the present value of the amount that must be repaid at the due date discounted using the effective interest rate.

Note D – IAS 18 Revenue

ENAV recognizes revenues for the Eurocontrol balance which are recovered by inclusion in the charges of future years with respect to their recognition in the financial statements. In accordance with IAS 18 these revenues have been adjusted to reflect their fair value, which is determined by discounting the nominal value of the amounts involved at the average interest rate at which the Company obtains funds on the third party market. The discounted amount reducing revenues for the year is recognized as interest income in subsequent years. This adjustment on transition into IFRSs led to a negative effect, recognized in the FTA reserve. Part of the interest income arising from the process of discounting the “balance” items of previous years is then recognized in profit or loss during the year.

Note E – Employee benefits

Under Italian GAAP, the liability for the Italian employees’ leaving entitlement (TFR) is measured on the basis of the nominal obligation due in accordance with civil law requirements in force at the balance sheet date.

Under IAS 19 Employee Benefitson the other hand, the TFR is a defined benefit plan subject to actuarial valuation and requiring a calculation to be made of the liability for each employee using the projected unit credit method. The balance of the TFR is therefore calculated on the basis of actuarial assumptions and valuation methods and the demographic, economic and financial variablesused in the calculation are validated by an actuary on an annual basis.

In accordance with this standard, all actuarial gains and losses at the date of transition to IFRSs were recognized in the FTA reserve and those arising on the annual valuation are recognized in a specific equity reserve. Notes to the Financial Statements of ENAV SpA 235

Note F – Taxation

The adjustments shown in the table for deferred tax assets and liabilities are based on the temporary differences between the carrying amounts of assets and liabilities arising under Italian GAAP and those arising under IFRSs. Deferred taxes are recognized in the separate financial statements using rates of 27.5% for IRES and 4.78% for IRAP.

The ifrs statements of financial position at1 january 2013 and 31 december 2013 and the ifrs income statement for the year ended 31 december 2013

Set out below, supplementing the reconciliations of equity at 1 January 2013 and 31 December 2013 and net income for the year ended 31 December 2013, are the statements of financial position at 1 January 2013 and 31 December 2013 together with the 2013 income statement. These show in column format for each item: l the amounts calculated in accordance with Italian GAAP, reclassified to an IFRS format; l the adjustments made to Italian GAAP following the application of IFRSs; l the reclassifications arising from the different accounting treatment under IFRSs; l the final balances in accordance with IFRSs.

The following tables are expressed in thousands of euros. 236 ENAV – 2014 Financial Statements

Statement of financial position at 1 January 2013

Italian GAAP Adjustments Reclassifications IFRS

Non-current assets Property, plant 1,225,826 6,483 25,882 1,258,191 and equipment Intangible assets 96,998 (7,368) (25,882) 63,748 Investments 114,699 0 0 114,699 Deferred tax assets 16,385 2,794 0 19,179 Tax receivables 23,164 0 0 23,164 Non-current trade 74,037 (814) 0 73,223 receivables Total non-current assets 1,551,109 1,095 0 1,552,204

Current assets Inventories 68,469 (5,327) 0 63,142 Current trade receivables 381,221 (1,814) 0 379,407 Receivable from Group 11,268 0 0 11,268 companies Tax receivables 54,919 0 0 54,919 Other current assets 16,068 (84) 0 15,984 Assets held for sale 1,607 0 0 1,607 Cash and cash equivalents 52,764 0 0 52,764 Total current assets 586,316 (7,225) 0 579,091 Total assets 2,137,425 (6,130) 0 2,131,295 Notes to the Financial Statements of ENAV SpA 237

Italian GAAP Adjustments Reclassifications IFRS

Shareholders' equity Share capital 1,121,744 0 0 1,121,744 Reserves 71,065 (7,332) 0 63,733 Retained earnings/ 49,897 246 0 50,143 (accumulated losses) Net income for the year 46,191 1,803 0 47,994 Total shareholders' equity 1,288,897 (5,283) 0 1,283,614

Non-current liabilities Provisions for risks 61,136 0 (55,070) 6,066 and charges Employees' leaving entitlement and other 40,017 (1,572) 0 38,445 employee benefits Deferred tax liabilities 788 1,661 0 2,449 Non-current financial 130,000 (934) 0 129,066 liabilities Other non-current 0 0 180,698 180,698 liabilities Total non-current liabilities 231,941 (845) 125,628 356,724

Current liabilities Provisions for risks 0 0 7,094 7,094 and charges Current trade payables 153,023 0 0 153,023 Payable to Group 44,550 0 0 44,550 companies Tax and social security 27,990 0 0 27,990 payables Current financial liabilities 124,259 (2) 24 124,281 Other current liabilities 266,765 (0) (132,746) 134,019 Total current liabilities 616,587 (2) (125,628) 490,957 Total shareholders' equity 2,137,425 (6,130) 0 2,131,295 and liabilities 238 ENAV – 2014 Financial Statements

Statement of financial position at 31 December 2013

Italian GAAP Adjustments Reclassifications IFRS

Non-current assets Property. Plant and 1,154,708 5,611 29,662 1,189,981 equipment Intangible assets 99,097 (4,539) (29,662) 64,896 Investments 114,826 0 0 114,826 Deferred tax assets 16,098 2,199 0 18,297 Tax receivables 23,164 0 0 23,164 Non-current trade 85,892 0 0 85,892 receivables Total non-current assets 1,493,785 3,271 0 1,497,056

Current assets Inventories 67,065 (5,451) 0 61,614 Current trade receivables 279,924 (1,831) 0 278,093 Receivable from Group 15,708 0 0 15,708 companies Tax receivables 49,311 0 0 49,311 Other current assets 30,370 (916) 0 29,454 Cash and cash equivalents 92,344 0 0 92,344 Total current assets 534,722 (8,198) 0 526,524 Total assets 2,028,507 (4,927) 0 2,023,580 Notes to the Financial Statements of ENAV SpA 239

Italian GAAP Adjustments Reclassifications IFRS

Shareholders' equity Share capital 1,121,744 0 0 1,121,744 Reserves 47,768 (6,707) 0 41,061 Retained earnings/ 78,778 2,049 0 80,827 (accumulated losses) Net income for the year 50,528 652 0 51,180 Total shareholders' equity 1,298,818 (4,006) 0 1,294,812

Non-current liabilities Provisions for risks 36,975 0 (30,010) 6,965 and charges Employees' leaving entitlement and other 37,990 (2,751) 0 35,239 employee benefits Deferred tax liabilities 1,138 2,065 0 3,203 Non-current financial 127,000 (905) 320 126,415 liabilities Other non-current 0 0 180,600 180,600 liabilities Total non-current liabilities 203,103 (1,591) 150,910 352,422

Current liabilities Provisions for risks 0 0 1,826 1,826 and charges Current trade payables 128,993 0 0 128,993 Payable to Group 38,389 0 0 38,389 companies Tax and social security 25,990 0 0 25,990 payables Current financial liabilities 45,663 670 (265) 46,068 Other current liabilities 287,551 0 (152,471) 135,080 Total current liabilities 526,586 670 (150,910) 376,346 Total shareholders' equity 2,028,507 (4,927) 0 2,023,580 and liabilities 240 ENAV – 2014 Financial Statements

Income statement for the year ended 31 December 2013

Italian GAAP Adjustments Reclassifications IFRS

Revenues Revenues from operations 778,153 0 0 778,153 Balance revenues 21,477 0 (1,017) 20,460 Other operating income 64,035 (10,173) 0 53,862 Total revenues 863,665 (10,173) (1,017) 852,475 Costs Costs for raw materials. Ancillary materials. (4,084) (1,573) 0 (5,657) Consumables and merchandise Costs for services (192,385) 0 (976) (193,361) Personnel costs (397,495) 0 681 (396,814) Lease and rental costs (4,914) 0 0 (4,914) Other operating costs (2,747) (5,798) 0 (8,545) Capitalization of internal 0 6,502 0 6,502 work Change in inventories (1,573) 1,573 0 0 Total operating costs (603,198) 704 (295) (602,789) Depreciation and (153,367) 0 2,987 (150,380) amortization Write-downs. Impairment losses and reversal of (12,254) 696 0 (11,558) impairment losses Allocations (84) 3,887 0 3,803 Operating income 94,762 (4,886) 1,675 91,551 Financial income 3,038 0 1,814 4,852 Financial expense (4,787) 0 (2,073) (6,860) Foreign exchange gains/ 11 0 0 11 (losses) Extraordinary income/ (4,990) 4,990 0 0 (expense) Income before income 88,034 104 1,416 89,554 taxes Income taxes (37,506) (104) (764) (38,374) Net income for the year 50,528 0 652 51,180 Notes to the Financial Statements of ENAV SpA 241

Statement of Cash Flows

The Company presented a statement of cash flows in its last set of financial statements prepared under Italian GAAP on a voluntary basis. This was prepared using the indirect method, adjusting net income for the year for items of a non-monetary nature. This statement presents the cash from and cash used in operating, investing and financing activities respectively. The combined effect of these cash flows leads to the total cash produced by or used during the year and represents the difference between opening and closing cash and cash equivalents.

The statement of cash flows presented by the Company in accordance with IAS 7 is not substantially different from that presented in accordance with previous accounting standards.

The main adjustments made to cash flows were as follows: l the reclassification of cash flows arising from the transfer of trade payables for investing activities from “cash from operating activities” to “cash from investing activities”; l the separate presentation of cash flows from the payment of taxes and interest as part of “cash flows from operating activities”. 242 ENAV – 2014 Financial Statements

Attestation of the Chief Executive Officer and the Manager in Charge on the Separate Financial Statements

Attestation of the Chief Executive Officer and the Manager in Charge on the Separate Financial Statements 243

ATTESTATION OF THE CHAIRMAN OF THE BOARD OF DIRECTORS AND THE MANAGER IN CHARGE OF PREPARING THE CORPORATE ACCOUNTING DOCUMENTS OF ENAV S.P.A. ON THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014

1. The undersigned Maria Teresa Di Matteo and Loredana Bottiglieri, respectively Chairman of the Board of Directors and manager in charge of preparing the corporate accounting documents of ENAV S.p.A., taking into account: §. the requirements of article 18-bis of the bylaws of ENAV S.p.A.; §. the matter described at point 2 below; certify the adequacy, in relation to the Company’s characteristics, and the effective application of the administrative and accounting procedures for preparing the separate financial statements during 2014.

2. The administrative and accounting procedures used for preparing the separate financial statements for the year ended 31 December 2014 were defined, and the assessment of their adequacy was performed, in compliance with the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organizations of the Treadway Commission which is an internationally generally accepted reference framework for internal control systems.

In this respect no significant matters emerged.

3. In addition, it is hereby certified that: §. the separate financial statements: a) correspond to the accounting books and records; b) have been prepared in accordance with the applicable international accounting standards recognized in the European Community pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002; c) are suitable for providing a true and fair view of the financial position, results of operations and cash flows of ENAV S.p.A..

Rome, 29 May 2015

Chairman of the Board of Directors Manager in charge of preparing the corporate accounting documents

Maria Teresa Di Matteo Loredana Bottiglieri

244 ENAV – 2014 Financial Statements

Report of the Board of Statutory Auditors on the Separate Financial Statements Report of the Board of Statutory Auditors on the Separate Financial Statements 245

ENAV S.p.A.

Via Salaria, 716 - 00138 Rome

Share capital € 1,121,744,385.00 fully paid

Rome Companies Register

Tax code and Chamber of Commerce

no. 97016000586 – REA 965162

Company with a Sole Shareholder

Report of the Board of Statutory Auditors

on the financial statements for the year ended 31 December 2014

(Article 2429, paragraph 2 of the Italian civil code)

To the Shareholders’ Meeting of ENAV S.p.A.

Shareholders,

For the first time ENAV S.p.A. has, on a voluntary basis, prepared its

own annual financial statements and the Group’s consolidated

financial statements at 31 December 2014 in accordance with

International Financial Reporting Standards (IFRS).

More specifically, the ENAV Group’s consolidated financial

statements for the years ended 31 December 2011, 2012 and 2013

were restated during 2014 in accordance with International Financial

Reporting Standards and were approved by the Board of Directors on

24 October 2014; the ENAV Group’s date of transition to

International Financial Reporting Standards was accordingly 1

January 2011.

On the other hand the annual financial statements of ENAV S.p.A. for

the year ended 31 December 2014 were the first set of financial 246 ENAV – 2014 Financial Statements

statements prepared in accordance with International Financial

Reporting Standards, and as required by those standards this led to a

retrospective restatement of the figures included in the financial

statements for the years ended prior to 1 January 2013, the established

transition date, and the preparation of an opening IFRS balance sheet

at that date.

In establishing the carrying amounts on transition of assets and

liabilities in ENAV’s annual financial statements, in accordance with

IFRS 1 First-time Adoption of International Financial Reporting

Standards the Company elected for consistency with the amounts

stated in the consolidated financial statements, determined with

reference to the ENAV Group’s transition date; the amounts reported

in the financial statements have therefore been determined on a basis

consistent with the amounts determined on transition by the ENAV

Group.

The transition process involved ENAV and its subsidiary Techno Sky

and required the considerable involvement of the individual

administrative and accounting structures, which operated in working

groups set up specifically for the purpose.

The transition operations were audited by Reconta Ernst & Young,

which pursuant to articles 2409-bis to 2409-septies of the Italian civil

code has been engaged as legal auditors for the three-year period

2013-2015 and to issue an opinion on the financial statements of the

parent company and its subsidiaries and on the consolidated financial

statements. Report of the Board of Statutory Auditors on the Separate Financial Statements 247

The draft financial statements for the year ended 31 December 2014

which the Board of Directors are submitting for your approval within

the time period required by law have been properly prepared in

accordance with International Financial Reporting Standards.

These statements consist of a statement of financial position, an

income statement, a statement of comprehensive income, a statement

of changes in equity, a statement of cash flows and notes to the

financial statements; they are accompanied by the report on operations

and the attestations of the Chairman of the Board of Directors and the

Manager in charge of preparing the corporate accounting documents

on the separate financial statements of ENAV S.p.A. for the year

ended 31 December 2014 and on the consolidated financial statements

The financial statements were made available to the Board of

Statutory Auditors within the time period required by article 2429 of

the Italian civil code.

During 2014 the Board of Statutory Auditors attended two

Shareholders’ Meetings, four meetings of the Sole Director and five

meetings of the Board of Directors, carried out in the presence of the

Magistrate of the Court of Accounts with audit responsibilities, and

drew up an opinion pursuant to the law and the Company’s bylaws on

the appointment of the Manager in charge of preparing the corporate

accounting documents.

The above-mentioned Shareholders’ Meetings and other meetings

complied with the requirements of the Company’s bylaws and the

legislative provisions governing the means by which they are 248 ENAV – 2014 Financial Statements

conducted, and in relation to such the Board of Statutory Auditors is

able to provide reasonable assurance that the actions resolved comply

with laws and regulations and the provisions of the Company’s bylaws

in respect of the principles of proper management as they are not

manifestly imprudent, of a risky nature, in potential conflict of interest

or such as to jeopardize the integrity of the Company’s equity. In

particular, we have verified that the organization and accounting

system are adequate and that the measures prescribed by Legislative

Decree no. 231/01 have been adopted.

The Sole Director firstly, and the Board of Directors thereafter,

provided information on operations and the business outlook as well

as on the transactions of significant strategic importance, in terms of

their size or features, carried out by the Company and its subsidiaries.

The Board of Statutory Auditors requested and obtained documents

concerning the Company’s operational and organizational structure,

including by gathering information from the heads of the various

functions.

The Board of Statutory Auditors also attests that it has not received

any denouncements pursuant to article 2408 of the Italian civil code.

The draft annual financial statements for the year ended 31 December

2014, approved by the Board of Directors at its meeting on 29 May

2015 and obtained at that date by the Board of Statutory Auditors,

close with net income for the year of € 38,827,033.27.

In the notes to the financial statements the Board of Directors

describes the accounting policies used for the recognition and Report of the Board of Statutory Auditors on the Separate Financial Statements 249

measurement of the various items in the financial statements, which

comply with the law and the adopted accounting standards, and

clearly sets out the disclosures required by such regulations for the

statement of financial position and the income statement, additionally

providing any other information considered necessary for a complete

understanding of the financial statements.

The report on operations, approved by the Board of Directors and

prepared in compliance with the requirements of article 2428 of the

Italian civil code, provides information on the Company’s situation

resulting from the operations carried out during 2014, describes

operational matters, provides a description of the Company’s

operating structure and its components and branches, as well as

relations with subsidiaries, highlights the most significant events that

occurred during the year and finally provides a business outlook.

The report additionally states that during the year the Shareholders’

Meeting of 19 September 2014 appointed the new Management Body

consisting of three members, and that as of today’s date this Body has

not yet been extended in the manner announced by the Shareholder at

that Meeting.

In addition, during the course of 2014 the government initiated a

process for the sale of a portion not to exceed 49% of the interest held

by the Ministry of Economy and Finance in the Company’s share

capital and the Ministry-Shareholder expressed its intention to carry

out a voluntary reduction of the Company’s share capital as part of

this privatization process. In this respect the Board of Statutory 250 ENAV – 2014 Financial Statements

Auditors formalized a number of considerations on this announcement

made by the Shareholder.

Subsequently, on 13 April 2015 the Shareholders’ Meeting resolved to

carry out a voluntary reduction of the Company’s share capital by

€ 180 million pursuant to article 2445 of the Italian civil code, and at

its meeting of 8 May 2015 the Board of Directors approved the issue

of a bonded loan amounting to € 180 million to pay the extraordinary

dividend.

On the basis of the information and assurances provided by the

auditing firm during the exchanges of information held for the purpose

of preparing reports on the financial statements, the Board of Statutory

Auditors:

- states that the draft financial statements have been prepared in

accordance with International Financial Reporting Standards (IFRSs),

International Accounting Standards (IASs) and the interpretations to

such issued by the International Financial Reporting Interpretations

Committee (IFRIC);

- notes that the overall lay-out of the financial statements

complies with current law and International Financial Reporting

Standards as far as their formation and structure is concerned, and has

no particular observations to report in this respect;

- acknowledges that in accordance with the requirements of

article 2428 of the Italian civil code, the report on operations,

reviewed for consistency by Reconta Ernst & Young, contains the

main events characterizing operations and the 2014 result as well as Report of the Board of Statutory Auditors on the Separate Financial Statements 251

an analysis of the Company’s investments, fixed assets and financial

situation.

On the basis of the above, acknowledging Reconta Ernst & Young’s

audit report on the financial statements and within its responsibilities,

the Board of Statutory Auditors hereby states that it has not identified

any matters which may prevent the approval of the annual financial

statements for the year ended 31 December 2014 prepared by the

Board of Directors, and recommends the Shareholders’ Meeting to

approve such financial statements.

Concerning the allocation of net income for the year, which as stated

above amounts to € 38,827,033.27, the Board of Statutory Auditors

agrees with the recommendation of the Board of Directors to allocate

€ 1,941,351.66 pursuant to article 2430 of the Italian civil code and

the balance of € 36,885,681.61 in accordance with the resolutions to

be adopted by the Shareholders’ Meeting.

THE GROUP’S CONSOLIDATED FINANCIAL STATEMENTS

As is known, the responsibility for the audit of the consolidated

financial statements falls to the Bodies or parties to which the audit of

the annual financial statements of the parent company is assigned

(article 41, paragraph 3 of Legislative Decree no. 127 of 9 April

1991), which in the case of companies required to prepare

consolidated financial statements (article 25 of Legislative Decree no.

127 of 9 April 1991) is not the Board of Statutory Auditors but the

independent auditor or auditing firm engaged to perform the legal

audit (Reconta Ernst & Young in the case in question), and this 252 ENAV – 2014 Financial Statements

independent auditor or auditing firm must issue an audit report.

Despite this, the Board of Statutory Auditors believes it opportune to

present a short report based on its duty to supervise observance of the

law and the Company’s bylaws and in connection with compliance

with the principles of good administration, to which management is

generally bound (article 2403, paragraph 1 of the Italian civil code), as

well as in accordance with the principle by which the arguments and

documents submitted by the directors to the Shareholders’ Meeting

must be examined by the Board of Statutory Auditors. As a

consequence, therefore, the Board believes it appropriate to report to

the Shareholders’ Meeting on matters of the greatest importance such

as the consolidated financial statements.

We should like to point out that the consolidated financial statements

of the ENAV Group for the year ended 31 December 2014 – put at

your disposal for information purposes – consist of the prescribed

consolidated primary statements and the notes to those statements

The consolidated financial statements are accompanied by the report

on operations and the attestations of the Chairman of the Board of

Directors and the Manager in charge of preparing the corporate

accounting documents on the consolidated financial statements of the

ENAV Group.

These financial statements, for which comparative figures are

presented, close with a net income for the year of € 40.0 million

(2013: € 49.6 million).

Operating income fell from € 237.3 million in 2013 to € 223.7 million Report of the Board of Statutory Auditors on the Separate Financial Statements 253

in 2014, a decrease of € 13.6 million due to a series of events clearly

discussed in the financial statements.

In the report on operations the Directors illustrate the overall

performance of the ENAV Group and that of its subsidiaries, also

setting out details of the individual activities of the consolidated

entities.

A reconciliation of the result and equity between the annual financial

statements of ENAV S.p.A. and the Group’s consolidated financial

statements is also provided, for which comparative figures for the year

ended 31 December 2013 are presented.

As far as its own responsibilities are concerned, the Board of Statutory

Auditors certifies that the financial statements in question have been

prepared, in all their components, in compliance with laws and

regulations and correspond to the accounting entries of the parent

company and the information provided by the other entities included

in the consolidation scope.

In conclusion, in the opinion of the Board of Statutory Auditors the

consolidated financial statements of the ENAV Group for the year

ended 31 December 2014 have been prepared in accordance with

International Financial Reporting Standards.

Rome, 11 June 2015

The Board of Statutory Auditors

Paola Ferroni

Vincenzo Donato

Antonio Parente 254 ENAV – 2014 Financial Statements Report of the Independent Auditors on the Separate Financial Statements 255

Report of the Independent Auditors on the Separate Financial Statements 256 ENAV – 2014 Financial Statements Report of the Independent Auditors on the Separate Financial Statements 257 ENAV – 2014 Financial Statements

ENAV SpA Head Office Via Salaria, 716 00138 Roma Ph. +39 06 81661 www.enav.it

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