Page 228 - ENAV eng_Relazione_Finanziaria_Annuale_2014

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.