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ENAV Group Consolidated Financial Statements

Interest rate risk
The main sources of the Group’s exposure to interest rate risk relate to the volatility
of interest rates associated with financing indexed at a variable rate. and changes in
economic market conditions when negotiating new debt instruments. In this regard,
there is a risk that increases in the interest rate could negatively impact the level of
net financial expenses recorded in the Income Statement and future cash flows, as
well as having a significant impact on financial assets and liabilities measured at fair
value (typically, fixed rate debt instruments).
At 31 December 2015, approximately 23% of the group’s gross financial debt was
represented by variable rates. Current corporate policies to manage interest rate risk
do not envisage the use of derivative financial instruments.
In order to limit the potential adverse effects of rate fluctuations, the Group adopts
policies aimed at containing the cost of funding over time, by limiting the volatility of
results. The Group pursues this objective by systematically undertaking negotiations
with credit institutions, selected amongst banks of top standing, so as to optimise
the average cost of debt. It also strategically diversifies financial liabilities based on
the type of contract, duration and rate conditions (variable/fixed rate). During 2015,
the average cost of bank debt stood at around 1.7%, which was substantially in
line with the previous year, whereas average debt recorded an increase. This was
influenced, inter alia, by the combined effect of the reduced use of available short-
term funding over the reference period, and the ongoing general favourable trend in
the interest rate market and the spreads applied.

Currency risk
The exposure to the risk of adverse fluctuations in the current level of currency rates
results from the Group’s operations in currencies other than the Euro and could have a
negative impact on economic results and the net equity in foreign currencies. Despite
the fact that the Group operates mainly on the Italian market, exposure to currency
risk essentially arises from cash flows relating to investments in other currencies,
mainly the US dollar, referring to the acquisition of a 12.5% equity interest in the
American incorporated company, Aireon. It should be noted that ENAV currently
holds a 5.41% equity interest in Aireon’s share capital; to complete the purchase of
the investment, the Parent Company needs to make two more payments, the last of
which by 2017, for an amount of US$ 22.9 million. It is noted further that the third
instalment that was initially envisaged for September 2015 has been postponed to
2016, as set out in the addendum to the main contract. The Parent Company had
nonetheless purchased currency on the set date, and provided the necessary cash to
the subsidiary ENAV North Atlantic to make payment. In this regard, the Company
has entered into a forward flexitime contract to buy forward the US currency for each
of the payment tranches required by the agreement to purchase said shareholding.
To a lesser extent, the Group is exposed to currency risk relating to the contracts
entered into to provide unregulated services expressed in foreign currency (mainly
in Malaysian Ringitts and United Arab Emirates’ Dirhams). In order to manage the
residual exposure to currency risk, the Group has drawn up a Policy to manage currency
risk, and on the premise of a specific assessment of the individual transactions,

150 ENAV - Annual financial report 2015