Page 144 - ENAV eng_Relazione_Finanziaria_Annuale_2014

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.