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ENAV Group Consolidated Financial Statements

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 increa-
sed in subsequent years following allocations of part of ENAV’s net income ap-
proved by the shareholders of the parent company, and is used solely for business
purposes.
The Charge Stabilization Provision falls under the scope of IAS 20 - Government
Grants and Disclosure of Government Assistance. 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. Specifically, this provision is utilised when ENAV decides to reduce char-
ges, and in this case a portion of the costs incurred are not charged to carriers, but
offset by releasing a portion of the grant recognized as a liability to income, thus
offsetting the low prices. The following points further support these comments:
• the fund has the nature of a grant used for off-setting purposes;
• European regulations on charge determinations establish that a member state

may reduce charges by means of subsidies/grants that enable the operator to
offset losses;
• resolutions of shareholders’ meetings to create or make changes to the provision
are adopted on the basis of EU Regulation No. 1794/06;
• the provision is recognised by the member country, which in this case does not act
as a shareholder but as a party carrying out economic policy within the country.

Revenues

Revenues are recorded at fair value of the amount received or receivable, net of
discounts and rebates, and are recognised on an accruals basis, to the extent that it is
probable that the Group will receive the economic benefits, and the relevant amount
can be reliably determined.

Balance

At an international level, up until 31 December 2011, Eurocontrol member countries
used a cost recovery en-route charge system. This system is based on the concept
that revenues should be proportional to the costs incurred for en-route air navigation
control services. By virtue of this principle, charges were calculated on the basis of the
forecast amount that would lead to an 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 “payback” liability. If on the other hand, if revenues were lower

88 ENAV - Annual financial report 2015