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ENAV S.p.A. Financial Statement

34. Risk management

Credit risk
ENAV is exposed to credit risk, which essentially refers to the risk of one or more
trading partners being unable to fulfil a portion or all of its payment obligations. This
risk mainly refers to current trade receivables relating to operations, and specifically
regarding the En-Route Services and Terminal Services, which represent the highest
exposure in the balance sheet.These amounts basically refer to receivables accrued in
respect of airline companies relating to Charges, and in respect of which Eurocontrol
acts as a management and collection agent. Irrespective of the intermediary role
played by Eurocontrol, in this context that results in the receivables being formally
recognised in the financial statements and invoiced to Eurocontrol, the assessment
regarding the effective credit risk that the Company is exposed to, is done in relation
to the counterparty’s risk regarding each individual carrier that has accrued an
underlying debt. This because Eurocontrol does not assume any credit risk in relation
to the possible insolvency of carriers and pays its liabilities to ENAV only once it
has received the respective amounts from the airlines. Eurocontrol is proactive in
recovering these monies, and initiates the relative legal action where necessary.
An appropriate bad debts allowance has been made by the Company to meet the
risk of non-payment by debtors. 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, the possible withdrawal
of the carrier’s flight licence, the age of the receivable, the in-house assessment
relating to the individual debtor’s credit capacity, as well as information provided by
Eurocontrol for en-route and terminal receivables. The amounts referring to doubtful
recoveries are recorded in the balance sheet in the appropriate bad debts allowance.
At 31 December 2015, this amount stood at € 51,607 thousand. The extent of the
provision is reviewed on a periodic basis to ensure that it is constantly updated in
relation to the perceived credit risk. At 31 December 2015, the doubtful recoveries
on trade receivables were fully covered by the bad debt allowance allocated in the
financial statements.

Liquidity risk
Liquidity risk refers to the risk that ENAV, while being solvent, could find itself in a
situation where it is unable to promptly meet the obligations related to its foreseeable
or unexpected financial liabilities, resulting in difficulties in procuring financial
resources, or being able to secure these resources at unfavourable conditions due to
factors related to the perception of its risk on the market, or due to systematic crisis
situations, such as for example, a credit crunch and sovereign debt crisis, or being
unable to fulfil the covenants assumed under financing contracts and bonds.
At 31 December 2015, ENAV held cash and cash equivalents for € 157 million,
and has short-term credit lines for a total of € 217 million, of which i) short-term
committed credit lines are for € 50 million and ii) short-term uncommitted lines
amount to € 167 million.

ENAV - Annual financial report 2015 237