Annual Report 2014. A Global Leader in Air Navigation Services

Annual Report 2014 A Global Leader in Air Navigation Services

ENAV The Italian Air Navigation Service Provider Annual Report 2014

Table of Contents ENAV SpA The Italian Air Navigation Service Provider 4 Statement of the Board of Directors 8 ENAV SpA Company Profile and Organisation 14 Highlights 2014 24 ENAV SpA Business Review 32 Safety 41 Capacity 43 Environment 45 Investment Plan (2014-2016) 49 Main programs 52 Commercial development 58 International activities 59 Human Resources and training 61 ENAV SpA Financial Results 70 The ENAV Group 80 Glossary 96 ENAV TABLE OF CONTENTS 3

01 ENAV SpA The Italian Air Navigation Service Provider

ENAV SpA The Italian Air Navigation Service Provider ENAV SpA provides air traffic management and control services and other essential navigation services to aircrafts flying through the Italian airspace and at the civil domestic airports for which it is responsible. ENAV ensures the highest technological standards in terms of flight safety and continuous improvement of flight support infrastructure and systems. Our Vision is To be acknowledged as one of the best service providers by users, stakeholders and institutions, by ensuring excellent performance in terms of safety, operational effectiveness, efficiency and environmental impact and creating public value at both a domestic and European level. 1,556,193 Total controlled fligts in 2014 Our Vision is To be acknowledged as one of the best service providers by users, stakeholders and institutions, by ensuring excellent performance in terms of safety, operational effectiveness, efficiency and environmental impact and creating public value at both a domestic and European level. In 2014, ENAV assisted 1,556,193 IFR/GAT flights via four Area Control Centers (ACC) (located in Padua, Milan, Rome and Brindisi), 41 Towers (TWRs) and two Air Traffic Service Reporting Offices (AROs) located at Rome Fiumicino and Milan Linate airports covering a total airspace of 751,728 square kilometers. ENAV also provided around 128 thousand hours of training. ENAV operates 62 primary and secondary radars, 11 surface radars, two meteorological radars, 128 VOR and DME systems, 34 ILSs, 57 NDBs and 30 VDFs. ENAV also manages point to point radio bridges for aeronautical telecommunications. In 2014, ENAV SpA revenues were 831.7 million with a staff of 3,338 people. 4 ACC Area Control Centers 751,728 Km 2 Controlled Airspace 41 Control Towers 831.7 mln Revenues 2014 6 ENAV ANNUAL REPORT 2014

Orio al Serio TWR R Milano Linate TWR R Milano Malpensa TWR R MILANO ACC Torino Caselle TWR R - APP R Torino Aeritalia AFIS Cuneo AFIS - TWR Key Albenga AFIS Genova TWR - APP R Parma TWR - APP Olbia TWR R - APP R Alghero TWR - APP Cagliari TWR R Brescia TWR Firenze TWR - APP R Rieti AFIS Roma Urbe TWR Roma Fiumicino TWR R ROMA ACC ACC: Area Control Centre APP: Approach Control Pantelleria TWR: Control Tower TWR APP R: Radar Services AFIS: Aerodrome Flight Information Services Palermo TWR R - APP R Bolzano AFIS Ciampino TWR - APP R Padova AFIS Venezia Tessera AFIS Ronchi dei Legionari TWR - APP R Venezia Lido AFIS Padova ACC Verona TWR - APP R Forlì TWR Bologna TWR - APP R Ancona Falconara TWR - APP Perugia TWR - APP Pescara TWR - APP Foggia AFIS Bari TWR - APP R BRINDISI ACC Napoli TWR R - APP R Salerno AFIS Lamezia Terme TWR - APP R Reggio Calabria TWR - APP Catania TWR R Comiso TWR Crotone AFIS Grottaglie TWR - APP Border of the area of controlled airspace Lampedusa AFIS - TWR ENAV ENAV SpA The ITALIAN Air NavigATION SERVICE PROVIder 7

Executive Summary

Executive Summary 223.7 mln EBITDA 2014 The Group s annual financial statements for 2014 closed with net income of 40 million and an EBITDA of 224 million. The 2014 results are the best ever achieved given the negative effect of inflation. Due to the EU charging system, the considerable fall in the actual inflation rate (0.2%) compared to that planned at a European level (2%) had a negative effect of around 8 million on results (unlike 2013 when the opposite trend in inflation led to a positive effect of 14.2 million on the year s results). This effect, which is outside the Group s control, caused a reduction of over 22 million in revenues, without which a result actually higher in terms of profits than that of 2013 would have been achieved. 40 mln Net Income 2014 This excellent result is the consequence of outstanding economic, financial and operational management as well as of the expansion of commercial activities to the international markets. This excellent result is the consequence of outstanding economic, financial and operational management as well as of the expansion of commercial activities to the international markets 10 ENAV ANNUAL REPORT 2014

All of this, moreover, has taken place in an uncertain macroeconomic and operational scenario due to the difficulties in North Africa resulting from the closing of Libyan airspace in the second half of 2014. The Group s service quality has enabled it to be awarded for the third consecutive year the maximum bonus of 8 million envisaged by European regulations for the best performing service provider. In this respect, ENAV has been able to guarantee punctuality close to 100% for the over 1.5 million flights it managed in 2014. 0,0002 min Average delay for en-route flights in 2014 Cost savings of over 2% achieved against the performance plan, which sets the annual targets for European service providers, led to a positive effect of around 10 million on the Group s results. Commercial activity on the international markets increased overall by 21% over 2013. ENAV provides services in 20 different countries, with its main markets being South East Asia, the Arab Emirates and Africa. +21% Revenues from commercial activities ENAV Executive Summary 11

The 2014 financial statements, the first prepared in accordance with International Financial Reporting Standards (IFRSs), place ENAV as one of the few European service providers to have accomplished this difficult step, aligning the Company to best international practices and thereby contributing to a further enhancement in its value. Over the next five years ENAV will be called to abide by the new, strict community regulatory framework through which the European Commission has identified the expected performance level of European providers for the period 2015-2019 in terms of economic efficiency and operational effectiveness. It is therefore clear that in an uncertain macroeconomic scenario that is characterized by a constantly changing regulatory framework, over the next few years the Company is going to have to resort to the use of a prudent assessment of the policies underlying its management, with the dual objective of assuring full operational continuity while at the same time ensuring the achievement of economic and operational targets set by national and community schemes. 12 ENAV ANNUAL REPORT 2014

All the effort spent and the results achieved in 2014 are concretely contributing to consolidating the role of ENAV as a global leader in the Aviation sector. We must however take into account that the market and the regulatory frameworks are rapidly changing towards the delivery of the SES, thus making our organisation a factor of key importance for tomorrow s competition. In light of this, the government, fully exerting its right as the 100% shareholder, has decided to sell 49% of its shares, and we will shortly be made aware of the way this will be done (by an Initial Public Offering and/or the disposal of a minority stake). The privatization will be an opportunity for us; on the one hand it will allow us to better cope with rapid changes in future air transport scenarios while on the other it will enable us to consolidate our core business and fully exploit Group synergies towards new market opportunities. If the decision is then taken to go ahead with an IPO, there would also be the possibility for employees to obtain shares, thereby becoming even more a part of our Company. We would like to sincerely thank all the ENAV staff for making 2014 another outstanding year; we have built a solid base and are moving towards a flexible organisation in order to better respond to the challenges we are facing and to continue playing a key role in the ATM community. We would like to sincerely thank all the ENAV staff for making 2014 another outstanding year; we have built a solid base and are moving towards a flexible organisation in order to better respond to the challenges we are facing and to continue playing a key role in the ATM community ENAV Executive Summary 13

ENAV SpA Company Profile and Organisation

ENAV SpA Company Profile and Organisation ENAV is a joint stock company wholly owned by the Italian State. Shareholders rights are held by the Ministry of Economy and Finance. ENAV is supervised by the Ministry of Transport and Infrastructure, which oversees civil aviation. ENAV became a public limited company on 1 January 2001 when a public undertaking that was formerly known as Azienda Autonoma di Assistenza al Volo per il Traffico Generale (Independent Company providing Air Navigation Services for General Traffic in accordance with Law no. 665/1996) became Ente Nazionale di Assistenza al Volo (Italian Company for Air Navigation Services). ENAV is supervised by the Italian Civil Aviation Authority (ENAC), the National Authority that draws up technical regulations and monitors, certifies and supervises air traffic and civil aviation control services in accordance with the EC Single European Sky Regulation and article no. 687 et seq. of the Italian Navigation Code. ENAV s Mission is...to contribute to the overall efficiency of the domestic transport system by ensuring the safety and regularity of flights within the Italian airspace for the benefit of all categories of users and supplying air traffic management and control services guaranteeing the highest technical and flight safety standards... ENAV s Mission is...to contribute to the overall efficiency of the domestic transport system by ensuring the safety and regularity of flights within the Italian airspace for the benefit of all categories of users and supplying air traffic management and control services guaranteeing the highest technical and flight safety standards... 16 ENAV ANNUAL REPORT 2014

Through Techno Sky part of the ENAV Group since 2006 and with proven expertise in the operation and maintenance of facilities and equipment the full availability and efficiency of ENAV s operational and technological infrastructure is ensured. By way of the SICTA Consortium part of the ENAV Group since 2012 - Engineering and R&D services have been improved. Furthermore, in early 2013 ENAV Asia Pacific was set up in the ENAV Group to ensure the development of commercial activities in Asia and Oceania. Finally, ENAV North Atlantic is a limited liability company governed by the laws of the State of Delaware which is wholly owned by ENAV and was established in January 2014 to acquire 12.5% of the share capital of Aireon LLC, a United States registered limited liability company belonging to the Iridium group which by 2018 will create the first global satellite surveillance system for air traffic control. In 2014 the government began a process of selling a portion of the interest held by the Ministry of Economy and Finance in ENAV that will not exceed 49% of the Company s share capital. As part of this privatization process, ENAV has reduced its share capital by 180 million to optimize its financial structure. In addition, in order to give greater visibility to the Company s creditworthiness and diversify its sources of funding, and given the possibility of exploiting the current favourable situation on the debt capital markets, ENAV s Board of Directors has approved the issue of a private placement bonded loan of 180 million. ENAV ENAV SPA Company PROFILE and OrgANISATION 17

Organisation 4.183 Employees ENAV SpA in 2014 From an organisational standpoint the most significant steps taken in 2014 went in the same direction as those of 2013, with the main goal being to drive the organisation towards the flexibility which is needed to cope with a rapidly changing business and regulatory scenario and the financial downturn. The main organisational measures introduced in 2014 were: l reclassification and consequent reorganization of the airport structures on the basis of the traffic volumes handled (Airport Centers of type A, B, C, D, E, F) and the simultaneous renaming of the Operational Area as the Air Navigation Services Department; l setting up the new Ciampino Airport Center following the acquisition by ENAV of the services previously supplied by the Italian Air Force; l reorganization of the Meteorology function as a means of improving control over the planning, monitoring and operational management of meteo services; l reorganization of the Logistics and Support Services function to ensure better control over the logistical and support processes working for business locations; l reorganization, in terms of organizational efficiency, of the Legal Affairs function, which has been renamed Legal and Corporate Affairs; the work previously performed by the Corporate Affairs function has been transferred into the former function and the latter has been closed; l suppression of the Public Funding function, whose activities have been transferred to the new Public Funding Management sector which reports directly to the Planning and Control function. 18 ENAV ANNUAL REPORT 2014

Board of Directors Chairman Maria Teresa Di Matteo Director Nicola Maione Director Alessandro Tonetti ENAV Asia Pacific Sdn. Bhd. A.D. Mauro Iannucci Audit Loredana Piemontese Human Resources Umberto Musetti Administration Finance and Control Luca Colman International Strategies Iacopo Prissinotti Business Development Mauro Iannucci Quality and Management Systems Florenziano Bettini Legal and Corporate Affairs Raffaella Romagnoli Communication Nicoletta Tomiselli Brand Development Giulio Gamaleri Geopolitical Analyses Rosa Maria Di Martino National Air Transport Organisations Giovanni Torre Director General Massimo Bellizzi n Director General n Functions n Subsidiaries ENAV ENAV SPA Company PROFILE and OrgANISATION 19

Director General Massimo Bellizzi Industrial Plan Programme Manager Antonio Serafini Logistics and Support Services Pietro Gerosa Academy Giuseppe Baldetti Safety Corrado Fantini Security Francesco Di Maio Techno Sky Srl A.U. Mauro Cipollini SICTA Consortium Presidente: Massimo Bellizzi n Departments n Functions n Subsidiaries Procurement Giovanni Paolo Vasta Air Navigation Services Department Maurizio Paggetti Technical Department Vincenzo Smorto 20 ENAV ANNUAL REPORT 2014

The main services provided by ENAV are: Air Traffic Services (ATS) ENAV provides a comprehensive range of air navigation services covering all flight phases. ENAV personnel provide air traffic control services and all other support services during take-off, landing and approach, operational from Control Towers located at 40 airports. Cruise phases are managed by ACCs (Area Control Centers) located in Brindisi, Milan, Padua and Rome these are the places where Air Traffic Controllers handle traffic overflying Italian airspace. ENAV ENAV SPA Company PROFILE and OrgANISATION 21

Aeronautical information ENAV provides aeronautical information to pilots and sector operators. This is processed by the Aeronautical Operational Information System (AOIS) which sends it to four Area Control Centers and to the 40 airports where ENAV manages air navigation services. The information is used by the entire aeronautical community (i.e. the Italian Air Force, aeronautical operators, airport management companies and aeronautical authorities) by means of telematics or ENAV s Air Traffic Services Reporting Offices (AROs) located at each airport. AOIS system functions include: l Direct submission of Flight Plans for validation (Self Briefing) to EUROCONTROL; l Live information concerning flight safety (NOTAM - Notices To Air Men, Flight Operation Warnings to the relevant personnel); l Information to departing aircraft on the assigned ATFM-slot in the event of traffic flow restrictions. l MET - Meteorological Services ENAV provides meteorological monitoring and forecast services for air navigation to airport and en-route air traffic through two weather forecast stations located at Rome Fiumicino and Milan Linate airports. Meteorological services are compliant with ICAO and EUROCONTROL regulations and are currently being certified under EU requirements and UNI-ISO 9001 quality standards. 22 ENAV ANNUAL REPORT 2014

Flight Inspection ENAV controls and validates radio-electric signals from Radars, VOR, DME and ILS thanks to its fleet of Piaggio Aero P180 Avanti II aircraft that fly for an average of 1,800 hours per year. Airspace Design Airspace Design aims to identify instrument flight procedures to better define and optimize the airspace and route system for overflight aircraft and aircraft flying towards destination airports. ENAV responds also to innovative international instances such as FEP Flight Efficiency Plan, R-NAV, PBN - Performance Based Navigation, Free-route. Training ENAV conducts ATM research and provides ATM training in accordance with domestic and international standards and regulations. ENAV s internationally renowned Academy provides aeronautical know-how to trainees and is the only school in Italy that has been officially authorized to select and provide courses and give the necessary training for professional careers in the field of Air Traffic Control. ENAV ENAV SPA Company PROFILE and OrgANISATION 23

Highlights 2014

Highlights 2014 01 02 January 2014 The Italian Air Force and ENAV sign a Technology and Service Agreement in order to increase the sharing of collaboration, knowledge and experience as a means of achieving and maintaining the highest standards of safety, efficiency, quality and sustainability for air navigation services. In agreement with the Minister of Infrastructures and Transport, the Ministry of Economy and Finance, ENAC and the Italian Air Force, ENAV reduces flight assistance charges for airport operations. This reduction, effective from 1 January 2014, is applied on the basis of a new charging scheme in line with Community Regulations and provides for the segregation of charges for airport operations into three separate charging zones as opposed to the single zone previously in force. Similar to Rome s implementation in 2013, the Milan ACC qualifies to perform Mode-S Elementary Surveillance (ELS) operations for ACID (aircraft identification) purposes. Milan is also able to receive the identification of the aircraft transmitted from on-board thanks to the assignment of Mode-S conspicuity code A1000 in place of the Mode-A discrete code. The implementation phase in all the 4 ACCs will be completed with Padua ACC by the end of March and with Brindisi by the end of June. February 2014 Using its own suitably equipped aircraft, ENAV performs the testing and validation of the new precision landing execution procedures with the EGNOS European satellite navigation system signal at the Tunisian airport of Monastir. Together with the other six leading European service providers, ENAV is a partner in ESSP (European Satellite Service Provider), the company which has been engaged by the European Commission to manage the EGNOS system until 2021. The head of ENAV s Air Navigation Service Department illustrates the Air Space Reorganization project to the main airlines; this project, launched in 2012, was completed in 2014. 26 ENAV ANNUAL REPORT 2014

03 04 March 2014 After a year of testing, the integration process between ADR and ENAV for the use of the A-CDM (Airport Collaborative Decision Making) procedure at the Leonardo da Vinci airport at Rome Fiumicino starts. Thanks to the A-CDM platform, Italy s leading airport will now be able to send information on the status of all departing flights to the EUROCONTROL Network Management Operations Center, which will distribute it to the other connected airports, optimising full circle operating time. Greater flight punctuality, therefore, and a reduction in taxi-ing and waiting time. On the occasion of the World ATM Congress, ENAV and Boeing sign a non-exclusive collaboration agreement having the aim of developing ideas for continuing the work performed by SESAR and NextGen, in order to ensure a safe, efficient and reliable future for the ATM sector. Two other important agreements are also signed on that occasion, the Air Navigation Services agreement with the FAA and an agreement with the French provider DSNA to develop and distribute the ERATO system in France and Italy in 2015. April 2014 An international simulation organized by ENAV is performed in the ENAC crisis room relating to cases of volcanic eruption. This exercise involves 13 countries and 40 airlines. The scenario envisages the eruption of the Stromboli volcano and the consequent emission of volcanic ash with the involvement of various Eastern and Central European countries. Techno Sky s draft financial statements are closed showing a production value of 89 million and net income of 556,000. The efficiency of Techno Sky, which reduced costs by 16% in 2013, has beneficial impacts on ENAV s service quality thanks to the direct control of the management and maintenance of the complex technological infrastructure for air navigation. ENAV initiates the first implementation phase of the reorganization of Italian airspace by introducing, amongst other things, the concepts of flexible use of airspace and operational configurations more focused on flight efficiency improvement. The increase in the number of operational configurations will allow the ACC to change its organisation on the basis of the different types of traffic demand to be met, fostering an increase in capacity and the maintenance of punctuality performance through 2020. In its first phase this reorganization sees the transfer of responsibilities for managing lower airspace below FL315 at the Calabrian and Sicilian airports from Brindisi to Rome ACC. ENAV Highlights 2014 27

05 06 May 2014 With the implementation of the second phase of the reorganization of Italian airspace on the first day of May, ENAV completes the transfer of the responsibility for the control of upper airspace in the Milan area, above FL 315, from the Rome to the Milan ACC. This second step favours the efficiency on a vertical level of all the direct traffic at the airports located within the Rome TMA, with a considerable reduction in fuel for airlines. On completion, ENAV has estimated an average reduction of 80 kg per flight on lower-consumption trajectories with a decrease of 250 kg of CO2. ENAV continues its consolidation on foreign markets by being awarded the tender called by the Uganda Civil Aviation Authority for the provision of the control and calibration services for air navigation auxiliary systems for the next two years, confirming its worth in the international scenario. The air navigation control service at Rome Ciampino and Verona Villafranca airports passes over from the Italian Air Force to ENAV. This phase marks an important step from military to civil management thanks to the collaboration among ENAV, ENAC and the Italian Air Force. Representing ENAV, Techno Sky and SICTA, the trades unions sign the specific part of the National Collective Bargaining Agreement for the Air Transport Sector on direct and complementary ATM (Air Traffic Management) services, effective from 2014 to 2016. This agreement, the first to be signed in the air transport sector, is a fundamental step towards setting up a National Collective Bargaining Agreement for the entire air transport system. June 2014 ENAV and SINEAA, the Association for Brazilian airports, sign a threeyear agreement designed to ensure development of the Brazilian aeronautic sector. More specifically, ENAV will provide support to SINEAA in the field of air navigation services for airport operations with the aim of developing procedures and infrastructures that can increase airport capacity as a means of responding to growing traffic demand, maintaining high safety standards. 28 ENAV ANNUAL REPORT 2014

07 08 July 2014 With the opening of the ENAV control tower, Lampedusa airport acquires technologies and systems enabling it to provide air navigation services at the required levels of safety, regularity and efficiency. August 2014 ENAV s shareholders approve the 2013 annual financial statements which close with net income of 50.5 million (+9.4%), an EBITDA of 245.2 million (+4.6%) and an EBIT of 94.7 million (+40%). This result, the best ever, has been achieved at a time of great crisis for the air transport sector, with the number of flights over Italian airports contracting by 6.4% in 2013 over what was already an extremely difficult 2012. ENAV Highlights 2014 29

09 September 2014 The new Board of Directors of the ENAV Group is appointed for the three-year period 2014/2016. As part of the Just Culture promotion initiatives ENAV organizes the Air navigation services: technical regulations and legal regulations, considerations from an ATM standpoint workshop. This workshop allowed an open debate to take place around the subject of the interaction between the activities of the judiciary and the responsibilities arising from the provision of air navigation services. 10 October 2014 In October, SEA, the management company for Malpensa and Linate airports, and ENAV complete the integration of the systems for the use of the A-CDM (Airport Collaborative Decision Making) procedure for improving air traffic flow and managing airport capacity by reducing delays to a minimum, improving the predictability of events and optimizing the use of resources. On the occasion of the Virtual Flag 2014, ENAV and the Italian Air Force renew their commitment to cooperate on studies to manage airspace in a theatre of international crisis characterized by the simultaneous presence of military and civil operations. ENAV presents two projects at the 44th General Assembly of IFATSEA, the International Federation of Air Traffic Safety Electronics Associations. The first, relating to the Remote Tower concept, which envisages the provision of remote assistance services to airport traffic. The second, the Link IT project, for the introduction of data link communications between pilots and air traffic controllers which will back up traditional voice communications. 30 ENAV ANNUAL REPORT 2014

11 12 November 2014 Testing is carried out at the NATO Modelling & Simulation center of excellence in Rome based on simulations of the MedALE (Mediterranean ATM Live Exercise) project. This project, funded by the SESAR Joint Undertaking, has as its main objective the integration of RPAS - Remotely Piloted Air Systems within the airspace currently used by civil flights. ENAV successfully completes the third and final implementation phase of the Italian airspace reorganization program, with changes being made to the areas of responsibility of the Milan, Padua and Rome ACCs and the introduction of a new ATS route system. This third step will make it possible to extend to the whole of Italian airspace the operational flexibility and the efficiency for vertical and horizontal profiles already introduced during the previous two phases, which by 30 June 2014 has led to a reduction of approximately 3,500,000 kg in CO2 emissions. December 2014 ENAV initiates the design phase of the 4-Flight program, the new generation air traffic control system responding to European Single Sky requirements and global excellence standards. The 4-Flight system will ensure optimum performance in terms of safety, capacity, environmental impact and cost efficiency for both air navigation service providers and airlines, contributing to the improvement in the performance of the entire European network. ENAV Highlights 2014 31

ENAV SpA Business Review

ENAV SpA Business Review The past few years have been characterized by an uncertain and difficult macroeconomic scenario for the whole of the eurozone and for Italy in particular. This trend was confirmed in 2014, with all the macroeconomic indicators negatively performing. As an indicator representative of the country s economic performance, it suffices to mention the overall fall of 0.4% in GDP (IMF, January 2015) compared to the previous year. This contraction also had its effect on the domestic air transport market, which was characterized during the year by a rise in traffic volumes that was lower than expectations. Further affecting the Italian air transport industry, and no less important, were the reorganization of the country s national airline and the effects caused by the socio-political crisis in North Africa, which in particular led to the closing of Libyan airspace in the second half of 2014. This event had a significant effect on overflight traffic, a component of en-route traffic that is traditionally the most remunerative for the company in terms of service unit development. As the result of the creation of this no-fly zone a large part of the traffic headed to the Europe-Africa routes, which as is known is positioned on our routes, changed its itinerary, therefore crossing routes outside Italian airspace. And in fact, although in the first half of the year overflight traffic was overall positive, the second half of the year saw a sudden fall in terms of service units due to the Libyan situation. 34 ENAV ANNUAL REPORT 2014

On the other hand the situation was just the opposite at the main Italian airports, where 2014 ended with a positive balance for service units (+1.9%) and flights (+0.4%), above all due to the considerable increase in low cost traffic volumes. Taken overall, and thanks also to the rise in international traffic (+3.1% in service units), the Company increased its total volumes of en-route billed traffic (+2.4% in service units) with positive effects on revenues. Taking account of the restrictions imposed by the European regulatory package and with a view to giving continuity to the operational indications and actions adopted until now, albeit in a complex scenario, ENAV succeeded in achieving an operational performance in 2014 that is in line with the Group s strategic objectives and the targets set in the National Performance Plan. In fact for the third consecutive year the excellent result for flight punctuality enabled the Group to be awarded the 8 million capacity bonus provided under the European performance scheme. For the third consecutive year the excellent result for flight punctuality enabled the Group to be awarded the 8 million capacity bonus provided under the European performance scheme From a regulatory standpoint we might call 2014 a watershed year. On the one hand we arrived at the end of the first reference period (2012-2014), which as is known saw the introduction of new community regulations and therefore a different operational logic for EU flight assistance providers through the application of the new performance measurement mechanism and the simultaneous cancellation of the full cost and traffic recovery system; on the other, this last year represents a starting point for ENAV s new operational and economic planning, which will be a fundamental part of the new 2015-2019 Performance Plan. ENAV ENAV SpA BUSINESS REVIEw 35

Last but not least, we should point out the considerable effort made during the year in passing to IFRS international accounting standards in the preparation of the financial statements, and the related work done in updating our accounting systems and setting up the risk management control model (Enterprise Risk Management) with the aim of preparing ourselves for the envisaged privatization. In addition to preparing an annual set of separate financial statements ENAV also draws up consolidated financial statements for the Group in accordance with IFRS international accounting standards. Transition to those standards was made on a voluntary basis starting from the 2013 statements, with the date of Firsttime Adoption (FTA) being 1 January 2013. In terms of financial and economic performance, it should be remembered that the methodology oh the performance scheme is also based on any differences between programmed and actual inflation. 36 ENAV ANNUAL REPORT 2014

Given that this may be estimated as a negative difference of approximately 2 percentage points, the effect on the 2014 result can be quantified as a loss of 7.9 million compared to the gain of 14.2 million recognized in 2013. Nevertheless the non-positive effects of the matters described above have to a large extent been mitigated by the decision by Group companies to adopt steps aimed at protecting economic and financial stability, and as far as ENAV is specifically concerned also measures aimed at complying with the contents of the National Performance Plan and the Program Contract. Looking at the cost baseline, it s worth underlining that at the end of 2014 the level of specific costs was approximately 2% lower than that set in the Performance Plan, generating a beneficial effect of approximately 10 million on economic results. Of no less importance are the steps underlying the Company s financial strategy, which in 2014 led to a reduction of 1.8 million in interest expense on bank debt, and the opening of credit facilities by the EIB at particularly favorable interest rates in order to finance the company s investment plan. The contribution to the Group s turnover for work performed for commercial activities not governed by the Program Contract continued to rise in 2014: the increase of 21% arises from the 9.5 million earned from providing consulting and technical services for Dubai airport and the Libyan Civil Aviation Authority. This acts as confirmation that ENAV s expansion on foreign markets is a cornerstone for enhancing the value of the Company and an area in which investments must continue to be made. ENAV s expansion on foreign markets is a cornerstone for enhancing the value of the Company and an area in which investments must continue to be made ENAV ENAV SpA BUSINESS REVIEw 37

The year was also characterized by the transfer of the military airports of Rome Ciampino and Verona Villafranca to ENAV, and operational planning that foresees taking over at Treviso airport by the end of June 2015, Brindisi airport by the end of December 2015 and Rimini airport by the end of 2016. ENAV has additionally started up a project to rationalize its service and cost levels at low traffic volume airports, which play a key role in local continuity. The project included specific intervention on the workforce directly deployed in the flight assistance service and the identification of standard technological configurations. As far as the rationalization of the services is concerned, the project identified a new Service Mode based on the relationship between resources deployed and traffic served. More specifically, a reduction is planned in service hours, measured on the basis of the effective traffic volumes and typical seasonality of certain airports. The identified solution has become operational on 1 July 2014. At the same time new contractual clauses have been identified for staff directly employed in the flight assistance service which regard working hours, shifts rules and remuneration levels. The new rules are already included in the National Collective Bargaining Agreement which became effective on 1 January 2015 and will apply to newly-hired personnel who work at the airports to which these matters relate. For the reasons outlined above the Company has begun a process of hiring and training new personnel with an average annual unit cost that is 30% to 40% lower than that of the staff currently employed at these locations. The net income of 40 million earned in 2014 may, along with the profit earned in 2013, be considered the best result ever achieved by the ENAV Group Therefore, on the basis of what descrived above, the net income of 40 million earned in 2014 may, along with the profit earned in 2013, be considered the best result ever achieved by the ENAV Group. 38 ENAV ANNUAL REPORT 2014

In conclusion, it should be emphasized that the efforts made by the Group in terms of strategic, economical and operational planning and the measures introduced by management have led to an important result, offsetting the effects on income arising from the community regulatory framework as well as those of a purely external nature depending on the adverse economic situation and the crisis in North Africa. Charging policy ENAV s charging policy in 2014 took into account firstly the changes made to European and Italian laws and regulations relating to the new community performance scheme and the Italian 2012 budget, Finance Law no. 183/2011 (also known as the Stability Law), under which the state grant system for domestic airports was essentially abolished, and secondly the uncertain situation in the air transport sector which in Italy has meant that it has still not been possible to recover from the reductions in traffic volumes suffered in previous years. In this highly complex situation ENAV has succeeded in setting a level of charges which on the one hand has been able to ensure its economic and financial stability while on the other has also taken into account market demands, in a situation where more than in the past the airline companies are looking at the charges for air navigation services as a fundamental element to be kept in consideration when determining their operational strategies. ENAV ENAV SpA BUSINESS REVIEw 39

In terms of en-route charges the Company has assured in 2014 the same level of charges as in the previous two years ( 78.83 per service unit), in line with European accounting principles and regulations as well as in accordance with the requirements of the National Performance Plan presented in June 2011. On the other hand, as far as the terminal charge is concerned, three charging zones have been identified on the basis of the number of movements developed by domestic airports, in line with the requirements of community regulations and the decisions taken by Italy. This differentiation, notified by ENAC in a letter dated 28 January 2014 sent to the European Commission, defines the following zones from 1 January 2014, which are still subject to a cost recovery system for 2014: l IT01, which consists of Rome Fiumicino airport, with an average annual number of IFR movements over the past three years exceeding 225 thousand, with a charge of 195.79; l IT02, which consists of the airports having more than 70 thousand IFR movements, Milan Malpensa, Milan Linate and Venice Tessera, with a charge of 214.15; l IT03, which consists of the remaining 43 airports, with a charge of 246.05. In terms of en-route charges the Company has assured that the same level of charges will be applied in 2014 as in the previous two years Given that a large number of airports in the third charging zone have low volumes of service units, in order to mitigate the natural increase in the charge for that zone, ENAV has initiated a series of measures in conjunction with the institutions involved, such as the use of the Charge Stabilization Provision for over 24 million and the deferral to future years of the under-over charge recovery (the balance ). 40 ENAV ANNUAL REPORT 2014

Safety The 2015/2017 Action Plan was approved in 2014 and contains five Macro-Objectives which will be further detailed into objectives and actions. The tracking of these will then represent the input through which the European Commission will assess and account for business performance as part of the Performance Scheme. With this as a background, here following are listed the areas where the Company has concentrated its efforts: 1 consolidation of preventive safety; 2 development and initial implementation of safety indicators; 3 improvement, cyclicity and tracking through safety culture surveys; 4 development of the Effectiveness of Safety Management Systems (EoSM) formal monitoring process; 5 adherence to the requirements and restrictions set out in Regulation (EC) no. 376/2014 for responsibility in safety matters and the strengthening of the investigation process. ENAV ENAV SpA BUSINESS REVIEw 41

A specific target for the Effectiveness of Safety Management Systems (EoSM) was set in the second period of the 2015-2019 National Performance Plan, measured on the basis of the Standard of Excellence (SoE), and a C classification was achieved for each of the five objectives of which it consists; these refer to safety policy and objectives, safety risk management, safety assurance, safety promotion and a safety culture. The strengthening of the investigation process in 2014 was based on the adoption of automated reporting tools which, prepared in accordance with the requirements of Regulation (EC) no. 376/2014, represent a guarantee for data protection which starting with the architecture then proceeds through system flows, no longer only enunciated in principle but also protected by prohibitions and obligations expressly defined to protect the individuals and organisations involved. In order to classify significant safety events the Risk Assessment Tool was used as follows in 2014: l in 80% of the investigations regarding Minimum Separation Infringement (MSI); l in 88% of the investigations regarding Runway Incursion (RIN). In further detail: I for the En-route environment (airspace managed by the four ACCs in Rome, Milan, Padua and Brindisi) 0.008% of the IFR assisted flights were involved in an MSI and 0.006% in an MSI under ATM responsibility; II for the Airport environment (airspace managed by the ENAV airport structures) 0.006% of assisted movements were involved in an RIN and 0.0009% in an RIN under ATM responsibility. 42 ENAV ANNUAL REPORT 2014

Capacity In 2014 ENAV continued to provide a high level of punctuality to its customers who, in the capacity performance area, and in particular for the en-route phase of the flight, suffered only one minimal delay that could be attributed to air navigation services. The most important and binding performance indicator, used in the period between 2012 and 2014 as an air traffic management service quality measurement parameter, namely the Minutes of en-route ATFM (Air Traffic Flow Management) delay for flights, showed that ENAV achieved a delay of 0.02 minutes/flight. In 2014 only 29,659 minutes of ATFCM delay were attributed to the over 1.5 million IFR/GAT flights assisted during the enroute flight phase. The en-route average delay in 2014 corresponds to approximately 17% of the delay that the European Commission considers suitable and justifiable to attribute to each single assisted flight for the en-route dominion in the whole year, a clear indication of ENAV s ability to manage air traffic safely and efficiently with complete availability and continuity in the use of airspace The en-route average delay in 2014 corresponds to approximately 17% of the delay that the European Commission considers suitable and justifiable to attribute to each single assisted flight for the en-route dominion in the whole year, a clear indication of ENAV s ability to manage air traffic safely and efficiently with complete availability and continuity in the use of airspace. ENAV ENAV SpA BUSINESS REVIEw 43

This qualitative performance represents a significant value for ENAV s customers, also in strictly economic terms. Every minute of ATFCM delay for an airline is equivalent to a cost which studies used by the European Commission have estimated to correspond to 87.00/minute from a gate to gate standpoint. Compared to that parameter the economic value that ENAV s operational performance represents is therefore both clear and significant. Against the increase in traffic seen in domestic airspace in 2014, ENAV has succeeded in managing en-route air traffic by ensuring the maximum operational safety while at the same time minimizing the cost of the ATFCM delay attributed. Capacity En-route - targets vs Actual Performance 2014 IFR/GAT Flights En-route Service Unit En-route ATFCM Delay Cost/Min 1,556,193 8,313,546 87.00 Performance Plan Target Target reached En-route ATFCM Delay per Flight 0.12 0.02 En-route ATFCM Minutes of Delay (Min) 186,743 31,124 En-route ATFCM Delay Cost (Euro) 16,246,641 2,707,788 It is important to emphasize that the result achieved by ENAV is very positive because it is linked to the increase in assisted air traffic volumes during the summer period, as ATFCM delays are usually generated during times of intense demand. Given that air traffic has increased together with daily peaks compared to 2013, it is clear that this excellent performance will continue to depend on the organizational ability that the Company has been able to maintain over time. In brief, using the data shared with the Performance Review Body and the Network Manager, bodies appointed by the European Commission, a comparison with the performance indicators of the leading European ANSPs confirms either the KPI for operational performance, En-route ATFCM Delay for En-route Flights or the correlated economic value generated by ENAV for Airspace Users, Additional ATFCM Delay Cost. 44 ENAV ANNUAL REPORT 2014

Environment The Company s Green Policy sets itself the objective of making a proactive contribution to reducing the environmental impact of flight operations and decreasing the Company s own environmental impact through efficiencies and savings in the consumption arising from its core business. In order to support airspace users in their search for operational procedures designed to reduce the consumption of fuel and the relative environmental impact, ENAV s Flight Efficiency Plan (FEP) sets out and collects together the steps planned to optimize in-flight predictable trajectories and to limit the time for ground operations for aircraft. The contribution arising from the implementation of ENAV s FEP is of fundamental importance with respect to the environmental objectives that must be pursued at a European and domestic level. The State monitors through ENAC the achievement of the planned measures as part of the application of the National Performance Plan. In addition, since 2012 the FEP also represents a contribution to Italy s action plan for the reduction of CO 2 emissions; countries draw up such plans within ECAC/ICAO as input towards meeting the global targets for the reduction of the environmental impact of aviation and combatting climate change. ENAV ENAV SpA BUSINESS REVIEw 45

The measures implemented in 2014 enable airlines that operate to or from domestic airports or overfly the airspace where air traffic services are ENAV s responsibility to improve their flight planning. At the end of 2013 the Free Route Italy project introduced the possibility of using near direct routes at night and during public holidays and weekends, mainly for the use and interest of overflight air traffic. Between the spring and end of 2014, an extremely wide-ranging program for the Reorganization of National Air Space was carried out with the objective of revising the airspace structure with a view to plan an airway network more focused on flight efficiency. 46 ENAV ANNUAL REPORT 2014

As a result of the optimization of turnaround procedures and the integration and constant exchange of data between stakeholders (ENAV, the airport manager, airlines and the European Network Manager), the Airport Collaborative Decision Making (A-CDM) system favors operational management and contributes towards optimizing ground management/ movements and the use of the airport capacity on which it is implemented, thereby improving the profitability of the occupation of airspace and, as a consequence, the management of air traffic flows. Following the implementation of the A-CDM system at Rome Fiumicino airport in 2013 a system was also completed for Milan Malpensa airport in October 2014, while a trial phase was conducted at Venice airport before becoming fully operational in January 2015. Thanks to the implementation of the measures above mentioned, good results were achieved also in 2014. The estimate of savings at the planning stage shows that horizontal routing has improved by 823,500 nautical miles, and that if this is taken together with the significant increase in more beneficial vertical profiles a reduced consumption of CO 2 that can be estimated in 9,240 tonnes is achieved, with a resulting potential reduction in CO 2 emissions of 29,100 tonnes. For what concerns airports, it s worth mentioning that taxiing times at Milan Linate, Milan Malpensa, Rome Fiumicino, Venice and Bergamo have all decreased, and these will be monitored by the European Performance Body for the second reference period of the National Performance Plan. In addition to having a value as support given to a means of sustainable growth, the steps included in ENAV s FEP also lead to an economic saving for Airspace Users. Despite an average aviation fuel price undoubtedly lower than 2013, indicatively around 0.50/kg, the activities monitored as part of the FEP have alone generated a potential economic value that can be estimated in approximately 6.1 million. The activities monitored as part of the FEP have alone generated a potential economic value that can be estimated in approximately 6.1 million ENAV ENAV SpA BUSINESS REVIEw 47

ENAV site In line with the environmental policies it has introduced over the past few years, ENAV is active in reducing both energy consumption and greenhouse gas emissions, also by using equipment for the self-production of energy from renewable sources. In this way it complies with the guidelines of the Kyoto Protocol for reducing polluting emissions, but also achieves a significant reduction in energy costs benefiting from state Energy Account incentives provided by the Electricity Services Manager. Following the Ancona Falconara control tower, since the end of 2012 photovoltaic equipment has progressively been introduced at the control tower and operational building at Bari Palese, at the Brindisi Area Control Center, at the Bitonto radio beacon and at ENAV s legal headquarters in Via Salaria in Rome. Approval has been obtained for all of this equipment to benefit from the incentives, with the exception of ENAV s Rome headquarters. In more detail the following table sets out estimates of the energy produced, the reduced emissions of CO 2 into the atmosphere, the economic savings and the incentives for 2014. Estimated kwh produced Tonnes of CO 2 not emitted Euros saved Euros incentive Rome, Via Salaria 98,933 42.7 19,579 0 Bari TWR 45,166 19.5 8,933 9,124 Bari P.O. 33,025 14.3 6,460 6,678 Brindisi ACC 62,220 26.9 12,774 12,527 Bitonto 21,000 9.1 4,600 4,200 Ancona TWR 49,092 21.2 10,801 13,948 Total 309,436 133.7 63,147 46,477 48 ENAV ANNUAL REPORT 2014

Investment Plan (2014-2016) The Investment Plan, updated annually on the basis of the operational requirements arising during the year and the Group s financial situation, envisages an overall commitment of 342 million in the period 2014 2016. The Investment Plan envisages an overall commitment of 342 million in the period 2014 2016 The objective of this plan is to ensure that the assets supporting air traffic management services throughout the country are: i) consistent with technical, economic and performance targets; ii) compliant with the quality and performance standards set at a national and international level by the sector s regulatory bodies; and iii) compatible with the development of technological platforms and the new operational concepts established and developed at a European level for the ATM network. ENAV ENAV SpA BUSINESS REVIEw 49

Investments included in the plan mainly relate to operational and technological infrastructure, since these have a direct effect on the Group s core business in terms of the efficiency, economy and safety of air traffic management services. Through the measures planned to be taken over the next three years ENAV intends to maintain the primary position it has won in the European air traffic scenario thanks to the demanding investment policies set up in the past, which in addition to having enhanced the strength and technological innovation of the systems supporting the flight assistance service have to a large extent anticipated the vision of the new Air Traffic Management (ATM) network which is characterizing the international reference scenario. The 2014-2016 plan envisages a containment in spending, with precedence being given to the essential measures taken by the Air Navigation Services Department arising from adaption to new regulatory requirements, the completion of technological innovation programs in accordance with European roadmaps and the evolution of the domestic ATM system, currently operational, towards the new European common platform in line with the objectives of the SESAR program, by gradual and harmonized growth consistent with the provision of services and the strengthening of the systems establishing flight and airspace procedures through the use of new technological solutions and designed to increase the capacity of the service and safeguard the environment. 50 ENAV ANNUAL REPORT 2014

Programs worth approximately 126 million were started up between 1 January and 31 December 2014. The most important are: l refurbishment of the control tower at Rome Fiumicino airport; l adaption of radio centers to the new 8.33 KHz range of frequencies; l development of a new Operational Automation platform for 6 control towers; l refurbishment and fitting out of the towers at Rome Ciampino and Verona Villafranca airports which passed over to ENAV in 2014; l modernization and implementation of the radio-assistance systems; l upgrading of the LANs at the Milan, Padua and Brindisi ACCs; l creation of a testing system for the ENET network; l supply of new safety models for the ENET network; l supply of new voice switching systems for the Milan and Padua ACCs; l implementation of Aeronautical Data Quality for processing aeronautical data; l measures to complete the Piastra and Stecca buildings situated at the Rome Ciampino ACC, which enabled staff to be transferred from the various offices in August 2014 and technical rooms to be fitted out. The new objectives set by the SESAR program to deal with the current fragmentation of air traffic control services make it necessary to create complex programs at an international level while at the same time plan significant investments. A series of programs has been set up in this respect and the following paragraphs describe the most important of these. ENAV ENAV SpA BUSINESS REVIEw 51

Main programs SESAR The SESAR program consists of the development of a new generation ATM system capable of ensuring safe and streamlined air transport worldwide over the next 30 years. SESAR is currently fully operational, with 310 projects currently in the execution phase. At present ENAV has a leading role in 15 of the 85 projects it is involved in. The ENAV companies Techno Sky and SICTA are contributing towards the program together with ENAV and the LVNL consortium (LVNL, the Dutch service provider and NLR, the research center participating as an associated partner). From an economic point of view the ENAV Group s contribution, consisting of human, technological and infrastructural resources, amounts to approximately 71 million, 50% of which is co-financed by the SESAR Joint Undertaking. The SESAR Program, which has currently reached peak production, is approaching its final phase and will be closing all open projects over the next three years. New research and development initiatives that commenced under the SESAR Program 2020 will be considered a natural extension (2015-2024) of the SESAR Program. In May 2013 the SESAR Joint Undertaking called a tender to improve the utilization of the resources deployed by its members, as well as allocate a number of new activities as part of a relaunch of the SESAR Program, thereby increasing its efficiency through a reorganization into operational focus areas while at the same time maximizing the use of the available community funds. The value of ENAV s commitment has remained virtually unchanged following the approval of the re-allocation process and the assignment of the new activities. In 2014 ENAV successfully completed the first two SESAR demonstration projects, ATC FULL DATALINK and WE-FREE, constructed simulations of the demonstration project on MeDALE remote pilot aircraft and began two demonstration projects, RACOON and FREE Solutions, both awarded to ENAV under the tender for demonstration projects called by the SESAR Joint Undertaking in May 2014. 52 ENAV ANNUAL REPORT 2014

Demonstration activities and other calls of the SESAR Joint Undertaking As part of the SESAR Program s demonstration activities ATC Full Datalink (AFD) created an operational scenario for carrying out a number of commercial flights in continental airspace without in-frequency voice interaction between controllers and pilots, for all stages of the flight from take-off to landing. In brief, all contacts for exchanging information and instructions for piloting the flight in the controlled airspace take place via CPDLC (Controller Pilot Data Link Communication). The purpose was to demonstrate the technical ability of the ATM system to evolve towards the future SESAR concept of operations, under which ground-based on-board systems exchange information without the need for the intervention via radio of controllers and crew. This project, worth 3 million and co-funded by the SESAR Joint Undertaking, has seen ENAV as the co-ordinator of a group of entities including NATS, Airbus, Boeing, easyjet, Air France, SAS, SITA and Selex-ES. With the testing phase completed during the first four months of 2014, the new system installed at the Rome ACC s Testing and Training Room has been used by ENAV controllers to exchange flight instructions with pilots on board a number of real commercial flights. In particular, ENAV carried out around fifty trials on flights operated by EasyJet between Rome Fiumicino and Palermo, by Air France between Rome Fiumicino and Paris and by SAS between Stockholm and Rome Fiumicino. ENAV ENAV SpA BUSINESS REVIEw 53

In addition, the demonstration project WE-FREE, initiated in 2012 with testing being carried out on journeys using direct routes between Italian and French cities at weekends, was completed in the autumn of 2014. The results aroused significant interest with the airline companies. A total of 125 target flights were carried out over two weekends. The potential saving arising from the possibility of using direct routes during weekends has been calculated to be 600 tonnes of fuel and 2,000 tonnes of CO 2 on an annual basis. In response to the SESAR Joint Undertaking tender for demonstrating the integration of remote pilot aircraft in non-segregated airspace crossed by civil traffic with an on-board pilot, ENAV participated in the MeDALE (Mediterranean Detect & Avoid Live Exercise) project, which started up officially in September 2013. The aim of the simulation is to show that remote piloted aircraft can interact with general air traffic, therefore occupying nonsegregated airspace. The simulation aroused considerable interest with several experts in the sector. The RACOON Project being coordinated by ENAV for 2014-2016 is designed to show the benefits expected to be achieved by remote airport traffic assistance services. The Project s aim is to demonstrate, in a real operational situation, that the combination of the two concepts, Remote Tower and the Vertical Guidance Approach Procedure, can generate considerable performance benefits at a sustainable cost while still keeping the ATC service at a high level for users. The SESAR Joint Undertaking is funding 50% of this project for a total of 6.5 million. ENAV is additionally coordinating the FREE Solutions (2014-2016) demonstration project, whose objective is to carry out a series of demonstration tests in a cross-fab operational environment aiming to show that more efficient solutions for using the European airspace concerned are feasible and can be applied. 54 ENAV ANNUAL REPORT 2014

Coflight COFLIGHT is a new generation flight data processing (FDP) system compliant with SESAR and the result of the joint efforts of ENAV, DSNA and Skyguide. It is considered by the European ATC community as one of the first concrete steps towards the Single European Sky and, according to SESAR, the potential benefits of the system rightfully position it among the most important components of the 2013 baseline. The Program s roadmap includes 4 incremental versions. In 2013 COFLIGHT was integrated under 4-Flight, ENAV s future En-route ATM system, and will be implemented by the end of 2015. Based on EUROCONTROL FDP specifications, COFLIGHT represents an authentic operational and technological step forward. COFLIGHT provides advanced functions such as 4D route prediction (calculated by considering the weight of the aircraft at departure, the airline s instructions and the intentions of the pilot), a new interoperability mechanism based on the exchange of the Flight Object with other Air Traffic Service Units (ATSU) and an integration with datalink services. COFLIGHT has an open modular architecture based on a standardized middleware, thus ensuring the long-term high-scalability of the product. The architecture can be improved with the introduction of new services to continuously provide airspace users with the best performance and support future operational concepts defined by SESAR. ENAV ENAV SpA BUSINESS REVIEw 55

4-Flight Based on the excellent results achieved through joint efforts made by ENAV and DSNA towards COFLIGHT, both service providers decided to strengthen their collaboration on a long-term program: 4-FLIGHT. The objective of 4-FLIGHT is the joint development of a new ATM technological platform based on SESAR operational concepts. The platform will be developed by exchanging know-how, sharing investments and using COFLIGHT as 4-FLIGHT S base component. Underlying this cooperation is a feasibility study, including a business plan and a cost-benefit analysis, which has clearly shown that a significant reduction in the overall Franco-Italian investment can be achieved with a positive effect for network users. After the award of the European tender in 2013 for a 4-Flight implementation framework agreement, the first order was issued in 2014 for the design of the system. 56 ENAV ANNUAL REPORT 2014

ERATO (En-Route Air Traffic Organizer) integration program in SATCAS. ERATO is a tool developed by the French air service navigation provider DSNA which supports the controller in managing air traffic by identifying potential conflicts and highlighting the items that should be assessed for resolving them. ERATO should be seen as a set of cooperation tools designed to support the controller who in any case remains the protagonist in the process for managing potential conflicts and taking decisions in a safe and efficient manner. Suitable working methods and a functional presentation (HMI) must obviously be associated with the new software. After taking place in testing that took place in France at the Brest ACC in 2010 and 2011, since the end of 2012 ENAV has been integrating ERATO into the Italian SATCAS system. The first integration was carried out at the Brindisi ACC in 2013, designed to introduce the services provided by ERATO into the Italian legacy system in order to increase the safety and performance levels of air traffic control operations in domestic ACCs for en-route segments. On the basis of the positive results of these tests, the reliability phase for the deployment of ERATO in operational theatres was initiated in 2014 and is scheduled to be completed in 2015. ENAV ENAV SpA BUSINESS REVIEw 57

Commercial development In 2014 the ENAV Group posted revenues from commercial activities totaling approximately 9.5 million, of which around 6.5 million earned by ENAV, 2.5 million by Techno Sky and 0.5 million by ENAV Asia Pacific. Compared to 2013, revenues from commercial activities increased by approximately 21%. In 2014 the ENAV Group posted revenues from commercial activities totaling approximately 9.5 million marking an increase of 21% over 2013 Commercial activities included various types of work such as: l proposals to non-italian organisations for aeronautic consultancy projects; l participation to international tenders; l aeronautical and technical assistance consultancy agreements with Italian customers and training and technical service agreements with international customers; l promotion and commercial communication directed at international customers through attendance at sector fairs and other events; l commercial cooperation agreements with business partners and technical cooperation agreements with potential customers. ENAV provides its services in over 20 countries, with its main reference markets being Malaysia, the Arab Emirates and Libya. The composition of the Group s revenues shows that the services most requested by the market are aeronautical consultancy and radio-electric measurement. Despite a series of difficulties encountered in acquisitions, 2014 ended in line with the targets set for the Group as a whole. 58 ENAV ANNUAL REPORT 2014

International activities In the European ATM scenario, ENAV was active at all levels and was involved in several institutional and industrial discussion groups to ensure consistent and effective development in the ATM sector for achieving the Single European Sky (SES) objectives. The year 2014 was characterized by changes in the regulations defining Single European Sky made through the SES 2+ legislative package discussed and approved by the European parliament. Italy played a key role in all of this, holding the rotational presidency of the European Council in the second half of the year during which ENAV provided constant support for all of the activities performed in that period. The text for the general approach to the legislative package was approved by the Council of Transport Ministers on 3 December 2014, representing a clear success for Italy. This was acknowledged by the states and European institutions involved for both the merits and the method of resolving the key critical matters that were included in the European Commission s first text, and this also obtained the support of countries which were initially more critical about the Commission s initiative. Still at European level, funds were obtained from the Trans-European Networks - Transport (TEN-T) program through the New European Common Service Provision for PENS and DLS (Data Link Services) proposal drawn up by ENAV in conjunction with the A6 Group. This proposal was selected in July and obtained co-financing of approximately 1.2 million. In the European ATM scenario, ENAV was active at all levels and involved in several institutional and industrial discussion groups to ensure consistent and effective development in the ATM sector for achieving the Single European Sky (SES) objectives ENAV ENAV SpA BUSINESS REVIEw 59

ENAV also took part in the Establishment of the SESAR Deployment Framework Partnership tender for funding of approximately 5.5 million. This proposal, submitted by the SESAR Deployment Alliance (SDA) Consortium of which ENAV is a member, was accepted by the European Commission in November 2014, with the Consortium being assigned the role of Deployment Manager; this will enable ENAV to participate with a key position in activities for the coordination of the implementation of the solutions developed within SESAR. From an economic standpoint the cofunding assigned by the European Commission will assist in the realization of investment projects that had already been funded by ENAV, thereby ensuring that they will indeed be carried out and that there will be the possibility for the Company to invest in additional international programs and projects in order to maintain the level of excellence in providing air traffic control services for which the Company is by now recognized at a European level. ENAV kept its key roles of responsibility in international cooperation in 2014, including that as a Full Member of the Executive Committee of CANSO Global. The A6 Group strengthened its alliance in 2014 to ensure the coordination of its strategies in the SESAR Joint Undertaking and the new structure for the governance of the SESAR Deployment Manager implementation phase in order to further foster the harmonization of the planning for the implementation of future ATM systems. This initiative led to a significant enlargement of the identified areas of common interest and to the adoption of a governance model able to provide the A6 Group with a solid and stable structure. 60 ENAV ANNUAL REPORT 2014

Human Resources and training The ENAV Group had a workforce of 4,183 at 31 December 2014 representing a reduction of 12 people over 2013. ENAV s staff includes those working in the other Group companies, Techno Sky (798 at 31 December 2014) and the SICTA Consortium (47 at 31 December 2014). The following chart shows the distribution of ENAV personnel across the country 238 1.424 416 1186 2.047 13 1618 n ENAV 3.338 People n Techno Sky 798 People n SICTA 47 People 144 34 712 534 ENAV ENAV SpA BUSINESS REVIEw 61

The Group s presence extends to the whole of Italy, where it provides flight assistance and operational equipment maintenance services, and Malaysia, where it is developing commercial activities. The Group s personnel costs totaled 466.2 million in 2014 with a minimal increase of 1.4% over the previous year. In terms of personnel management and development polices, in 2014 the Group continued to finalize the processes and tools used to recognize the individual contributions made to achieve its strategic objectives. Training The Academy provided a total of 127,386 training hours in 2014, of which 63,780 hours of initial training, 9,300 hours of advanced training, 27,620 hours of on-going training, 16,828 hours of training for foreign customers, 8,374 hours of language training and 1,484 hours of additional training on the flight simulator and in e-learning mode. The Academy provided a total of 127,386 training hours in 2014, of which 63,780 hours of initial training, 9,300 hours of advanced training, 27,620 hours of on-going training, 16,828 hours of training for foreign customers, 8,374 hours of language training and 1,484 hours of additional training on the flight simulator and in e-learning mode 62 ENAV ANNUAL REPORT 2014

In addition to continuing with the ADI-TWR RAD initial course, which also includes the TM1 specialist module, professional training activities saw new courses introduced for obtaining the qualification as operational instructors, two ACS/RAD qualification conversion courses, two new courses for specialist qualification as skills examiner and assessor, three new courses for training as operational supervisors and the start of a new FIS operator and TM1 technician course. To these activities should be added the training courses on traffic management given to 12 colleagues arriving from various locations at the former military airports of Rome Ciampino and Verona Villafranca, which since May have been under ENAV s control, This activity enabled a methodology and an intervention model for managing the delicate transition phases to be consolidated, ensuring the high safety levels assured by ENAV standards. ENAV ENAV SpA BUSINESS REVIEw 63

In terms of foreign customers, training for Malaysian controllers had particular importance during the first few months of the year; the purpose of this training was to develop the necessary skills for working in the new area and with the new procedures introduced with the start-up of the new runway at Kuala Lumpur airport. This phase of the project saw the first courses for 130 tower controllers and 50 approach controllers at the Kuala Lumpur ACC for a total of 14,000 hours of training. The courses consisting of 9 modules of 6 days for the tower section and 5 modules of 8 days for the approach section ended in early May, when the new operational procedures were introduced and the third runway and second control tower at Kuala Lumpur airport were turned into operations. Additional activities with foreign customers saw seminars being provided for the aeronautical technical institutes and weather training for the ENEA Antarctic Project staff. The following are also worthy of mention: l the reorganization of the Academy s structure and a further concentration on core business activities, which saw the start of the preparation phase of an important on-the-job training and development project dedicated to the training of operations personnel on non-technical skills, designed to improve traffic management performance; l the Refresher On-the-Job Training Instructor (OJTI) update program. Through the use of e-learning materials support toolkits and workshops held at the sites, this project, for which a pilot edition was carried out for 57 OJTIs of the Rome ACC, will provide the opportunity for instructors working at these locations to be updated on the new methods and new procedures that have been introduced in the on-the-job training scope; l a further thrust for funded training. Thirteen new training courses were initiated in 2014 which, with respect to activities reportable for that year, generated a potential economic return from Fondimpresa of approximately 819 thousand. 64 ENAV ANNUAL REPORT 2014

Concerning managerial and specialist training, courses were given in 2014 amounting to 7,986 hours and involving 241 people from the staff areas. These courses mainly regarded the following: l the development of the ability for Group s management to translate strategic decisions into operational steps in an optimal and rapid way and in an integrated manner; l increasing the professional and specialist skills of staff in the Company s Technical Department, in particular in the roles and responsibilities prescribed by the Public Contract Code on works, services and supplies and the relative Execution and Implementation Regulation, as well as obtaining internationally recognized certifications for project management; l role awareness and ability to act in uncertain situations for assistants to senior management. In addition to classroom training, individual coaching was used on a test basis in this change management initiative with the aim of creating a professional community in the future; l language training, with the use of mini-group courses as well as one-toone training, allowing a total of 54 members of staff working in the various sectors of the Group to be involved; l e-learning training, with new courses for training required by law, while language, ICT and behavioral training continued in 2014. ENAV ENAV SpA BUSINESS REVIEw 65

Industrial relations One aspect of particular importance that distinguished 2014 as far as the ENAV Group s industrial relations are concerned was the signing of an agreement on 27 May 2014 by which the Group has succeeded in obtaining a real collective labor agreement after passing by way of a progressive and often chaotic framework of regulations, circulars and union agreements firstly, and local company agreements afterwards. This agreement is a fundamental step on the way towards creating a National Collective Labor Agreement for the entire air transport sector, and confirms the effectiveness of the new industrial relations model adopted by labor and business representatives, trade union organisations and employers associations This agreement is a fundamental step on the way towards creating a National Collective Labor Agreement for the entire air transport sector, and confirms the effectiveness of the new industrial relations model adopted by labor and business representatives, trade union organisations and employers associations, which together with the institutional authorities that govern the sector have provided important support in determining the conditions needed for discussions based on a high systemic view providing the necessary balance in the sector and ensuring that employment in the domestic air transport industry is maintained and developed. 66 ENAV ANNUAL REPORT 2014

The plan to have three specific sections - strategic locations, low traffic locations and complementary services - is the key change in the framework for the Specific Section of the ATM Services contract. More specifically, the new structure for the contract for low traffic airports will have a double beneficial effect, with a reduction in terminal charges and the creation of new jobs at a lower cost. For these locations this contract will enable an overall reduction in period costs of around 30% to 40% to be achieved, and this will be used for the structural containment of terminal charges to the full benefit of the airline companies. In the meantime this new structure will also provide new job prospects for newly-hired staff and professional development prospects for personnel currently working at the locations who will be reskilled as part of a growth path towards strategic locations having a higher professional level and offering better economic conditions. ENAV ENAV SpA BUSINESS REVIEw 67

Group certifications In terms of ENAC certifications, following the third renewal of the Single European Sky certification as provider of air navigation services obtained in the previous year, in 2014 ENAV was audited by ENAC (25 audits of which 4 performed without prior notice) as a means of ensuring that the Group still holds the requirements needed for the renewal of the certifications: this is planned to take place in June 2015. During these audits ENAV showed that it continues to meet the requirements of Commission Implementing Regulation no. 1035/2011 as far as the general requirements (technical and operational competence and capability, organizational structure and management, safety and quality management, security, financial resources, financial strength, liability and insurance cover, quality of services and reporting requirements) and the specific requirements for the various services provided (ATS, MET, AIS and CNS) are concerned. In early 2014, ENAV also obtained the second renewal of certification by ENAC for operational as a training organisation on the basis of Community Regulation no. 805/2011, which lays down detailed rules for air traffic controllers licenses and certain certificates and also extends this to the training of FISO operators in accordance with the ENAC Regulation and of staff involved in providing meteorological services. During these audits ENAV showed that it continues to meet the requirements of Commission Implementing Regulation no. 1035/2011 as far as the general requirements and the specific requirements for the various services provided (ATS, MET, AIS and CNS) are concerned 68 ENAV ANNUAL REPORT 2014

On 19 December 2014 the international certification body DNV GL Business Assurance successfully completed procedures forming part of its second audit to enable the ENAV Group to maintain certification of its management systems, leading to confirmation of the validity of the compliance certificates in accordance with standard UNI EN ISO 9001:2008 and the confirmation and updating of the compliance certificate in accordance with standard UNI EN ISO/IEC 27001:2014. In early 2014 the Italian certification body ACCREDIA successfully completed its second field assessment for the certification of the Techno Sky calibration laboratory. Concerning ENAV flights inspection air fleet, it s worth mentioning that specific audit were performed through controls and observations and all the requirements for certifications relevant for keeping the Air Operational License were substantially met. ENAV ENAV SpA BUSINESS REVIEw 69

ENAV SpA Financial Results

ENAV SpA Financial Results The financial statements for the year ended 31 December 2014 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission applicable at the balance sheet date (collectively referred to as IFRSs). The financial statements for the year ended 31 December 2014 are accordingly the first set of financial statements that ENAV has prepared in accordance with IFRSs. The financial statements for the year ended 31 December 2014 are the first set of financial statements that ENAV has prepared in accordance with IFRSs On this basis, net income for the year amounted to 38.8 million. 72 ENAV ANNUAL REPORT 2014

Income Statement 31.12.2014 31.12.2013 Changes Values % Revenues from operations 810,251 778,153 32,098 4.1% Balance revenues (16,016) 20,460 (36,476) (178.3%) Other operating income 37,501 38,607 (1,106) (2.9%) Total revenues 831,736 837,220 (5,484) (0.7%) Personnel costs (403,213) (396,814) (6,399) 1.6% Other costs, net (209,453) (205,975) (3,478) 1.7% Total operating costs (612,666) (602,789) (9,877) 1.6% EBITDA 219,070 234,431 (15,361) (6.6%) Depreciation and amortization less investment (144,666) (135,125) (9,541) 7.1% grants Write-downs, impairment losses, reversals of (5,871) (7,755) 1,884 (24.3%) impairment losses and allocations EBIT 68,533 91,551 (23,018) (25.1%) Financial income (expense) (4,954) (1,997) (2,957) 148.1% Income before income taxes 63,579 89,554 (25,975) (29.0%) Income taxes (24,752) (38,374) 13,622 (35.5%) Net income for the year 38,827 51,180 (12,353) (24.1%) Amounts in thousands of euros Revenues from operations totaled 810.2 million with an increase of 4.1% over the previous year ENAV ENAV SpA - FINANCIAL RESULTS 73

Revenues from operations totaled 810.2 million with a rise of 4.1% over the previous year due to an overall increase in the items of which this item is composed. More specifically, the biggest increase was achieved in revenues from en-route traffic after developing an additional 2.4% in service units during the year compared to the 2013 figure at the same charge rate of 78.83. Terminal traffic also increased compared to 2013, although more moderately than en-route traffic, with +2% in service units. This result is also linked to ENAV s takeover of air traffic management for two new airports (Rome Ciampino and Verona Villafranca) in late May 2014. In 2014 terminal charges envisaged three separate charging zones determined on the basis of the thresholds stated in EU regulations. in order to support the air transport market during the current crisis period, a charge lower than the natural charge has been applied to the third zone, which covers 43 airports. This lower charge resulted in the release of 24.3 million to the income statement from the charge stabilization provision, an increase of 4.6 million compared to the previous year. Finally revenues from commercial activities also had a positive effect on operating revenues, rising by 3.2 million due to the aeronautic consultancy services provided abroad by the Group, for example in Dubai and Libya. 74 ENAV ANNUAL REPORT 2014

The balance reduced total revenues by 16 million due to smaller balances recorded in 2014 (mainly due to inflation, which generated a negative balance of 7.9 million as opposed to a positive 14.2 million in 2013) and to the effect of discounting, which amounted to a negative 4 million, 3 million higher than in 2013. Other operating income, which decreased by 1.1 million compared to the previous year mainly due to fewer personnel transfers to third parties (including the German provider DFS), does not include the share of equipment grants linked to financial investments of 12.3 million, entered in direct reduction of depreciation. Operating costs amounted to 612.6 million, an increase of 1.6% over the previous year mainly due to personnel costs and other net costs. Personnel costs increased by 6.4 million, mainly due to the fixed part of remuneration. The variable part, on the other hand, decreased by 2.3 million due mainly to a smaller allocation for vacation leave accrued but not yet taken thanks to the Company s policy of having both office and operating personnel take vacation leave. Other net costs show an increase of 1.7%, of which 1.1 million refers to lower capitalized costs on investment initiatives, higher maintenance costs for new systems and operating maintenance at the Rome Ciampino airport, and to professional services for specialist support for European projects and the transition to international accounting standards. ENAV ENAV SpA - FINANCIAL RESULTS 75

These figures affected the calculation of EBITDA and generated a 6.6% reduction compared to the previous year, to 219 million. EBIT was 68.5 million, decreasing 25.1% compared to 2013 due to the above-described events and to the increased depreciation charged on the investments, such as Coflight, made in 2014. Financial income and expense amounted to negative 4.9 million, a charge 2.9 million higher than in 2013, referring mainly to the adjustment of the present value of the balances recognized in previous years following the change to charge recovery plans. On the other hand, there was a 1.4 million decrease in financial expense linked to bank debt due to decreased use of short-term credit lines and to lower interest rates. Taxes for the year amounted to 24.7 million, 35.5% lower than in 2013, mainly due to lower corporate income taxes (IRES) in 2014. Profit for the year was a positive 38.8 million, lower than in the previous year due the dynamics described above. 76 ENAV ANNUAL REPORT 2014

RECLASSIFIED BALANCE SHEET 31.12.2014 31.12.2013 Changes Property, plant and equipment 1,144,055 1,189,981 (45,926) Intangible assets 57,965 64,896 (6,931) Investments 142,909 114,826 28,083 Other non-current assets and liabilities 8,977 (56,450) 65,427 Liability for employee benefits (40,202) (35,239) (4,963) Net fixed capital 1,313,704 1,278,014 35,690 Inventories 61,645 61,614 31 Trade receivables 224,531 278,093 (53,562) Trade payables (114,552) (128,993) 14,441 Provisions for risks and charges (8,375) (8,791) 416 Other current assets and liabilities (79,722) (104,985) 25,263 Net working capital 83,527 96,938 (13,411) Net invested capital 1,397,231 1,374,952 22,279 Funded by Shareholders' equity 1,283,674 1,294,812 (11,138) Net financial position 113,557 80,140 33,417 Total funding 1,397,231 1,374,952 22,279 Amounts in thousands of euros ENAV ENAV SpA - FINANCIAL RESULTS 77

The reclassified balance sheet shows an increase in net invested capital of 22.3 million compared to the end of the previo us year, amounting to 1,397.2 million, due mainly to the following factors: l net fixed capital for a total increase of 35.7 million. 28 million of this increase is linked to the item investments, regarding the 100% holding in ENAV North Atlantic, established in Delaware (USA) in January 2014 and to which were assigned the obligations deriving from the agreement to acquire 12.5% of Aireon, an American company, which will be acquired in four tranches, two of which will be paid in 2014. The other increase refers to the change in other non-current assets and liabilities for 65.4 million due to increased receivables linked to the balances recognized in 2014 and in previous years, to be included in the charge in years following 2015, and to the decrease in other liabilities following the release to income of the National Operating Program (NOP) for the Transport Sectorgrantsin line withthe depreciation of the investments to which they refer, as well as to the definancing of an investment project by the NOP Networks and Mobility Authority. The other items show a general reduction linked, with regard to property, plant and equipment and intangible assets, to smaller investments in progress compared to amortization and depreciation in the year. In addition, there was an increase in the liability for employee benefits due to the actuarial loss recorded in 2014; l net working capital was 83.5 million, presenting a net decrease of 13.4 million following the reduction of trade receivables due to the collection of receivables owed by the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport, in addition to the classification of non-current receivables exceeding the balances in 2013. The calculation of working capital was also affected by a 14.4 million decrease in trade payables and by a change in other current assets and liabilities linked to the larger VAT credit generated in 2014, for which a 19 million refund was requested in 2015. 78 ENAV ANNUAL REPORT 2014

Shareholders equity amounted to 1,283.6 million, presenting a net decrease of 11.1 million due to the payment of dividends for 31.5 million, the allocation of 16.5 million to the charge stabilization provision in accordance with the resolution of the Shareholders Meeting held to approve the 2013 financial statements, the negative incidence of 3.8 million for the employee benefits reserve, the positive contribution of 1.8 million for the fair value measurement of derivatives and the positive consolidated year-end result of 38.8 million. The net financial position is a negative 113.6 million, 33.4 million higher than in the previous year, which may be analyzed as follows: 31.12.2014 31.12.2013 Changes Cash and cash equivalents 111,089 92,344 18,745 Current financial receivables 1,480 0 1,480 Current debt (44,743) (46,069) 1,326 Net current financial position 67,826 46,275 21,551 Non-current financial receivables 383 0 383 Non-current debt (181,766) (126,415) (55,351) Non-current debt (181,383) (126,415) (54,968) Net financial position (113,557) (80,140) (33,417) The current net financial position shows an improvement of 21.5 million following the greater liquidity received from the European Investment Bank credit line opened in December for 100 million, which affects the increase in non-current debt for 54.9 million, offset by repayments of 43 million in loans made during the year. ENAV ENAV SpA - FINANCIAL RESULTS 79

The ENAV Group

The ENAV Group The ENAV Group consists of ENAV SpA, Techno Sky Srl, the SICTA Consortium, ENAV Asia Pacific Sdn. Bhd., ESSP SaS and ENAV North Atlantic LLC. Techno Sky This company, fully owned by ENAV, is responsible for the management, assistance and maintenance of the systems and equipment used for domestic air traffic control, ensuring its constant availability and operational efficiency without interruption. Techno Sky ended 2014 with net income for the year of 2.2 million, a considerable improvement over the previous year essentially due to an attentive process for managing external costs based on an increased use of internal resources for developing contracts, with these costs falling by 3.6% over 2013 with effectively unchanged revenues. Financial management had a positive effect on the results for the year with an improvement of 40% over 2013, mainly due to the repayment of bank loans. Techno Sky maintained a high level of technical performance in its global maintenance contract for ENAV s operational systems, firstly as far as the management and maintenance of the hardware of the ATC technological infrastructures are concerned, and secondly regarding the maintenance of software in its various forms: corrective, adaptive and perfective. 82 ENAV ANNUAL REPORT 2014

ENAV Asia Pacific ENAV Asia Pacific is a Malaysian registered company established in March 2013 to develop the Group s commercial activities in Asia and Oceania. This company, which is wholly owned by ENAV, ended 2014 with net income of 4 thousand, a slight decrease over the result for the previous year when activities were not carried out for the whole twelve months. The company is managed by a Chief Executive Officer, appointed by the Board of Directors and designated by the parent, and its financial statements are audited. The Sicta Consortium The activities of the SICTA Consortium, in which ENAV has a 60% interest and Techno Sky 40%, consist of the development, testing, simulation and validation of innovative solutions in the field of air traffic management systems, which it performs for the members of the Consortium and European programs, of which SESAR represents the major part. The Consortium, which is a nonprofit organisation, ended 2014 with net income of 1 thousand, in line with 2013, with a slight increase of 5.6% in output compared to the previous year due to its activities for the SESAR program and a small increase in period costs of 3.2%, absorbed by the increase in revenues. Financial management had a favorable effect of 55.7% on the year s result as the result of a significant reduction in bank debt, which fell from 4.3 million in 2013 to 1.4 million in 2014. Under its bylaws the Consortium expires on 31 December 2017. ENAV The ENAV group 83

ESSP The European Satellite Services Provider (ESSP) was founded in 2001 and was initially formed as a European Economic Interest Grouping as this legal form was appropriate for the development phase of the company. In 2008 ESSP was transformed into a new limited liability company and it moved from Brussels to Toulouse. Its shareholders are currently seven key European air navigation service providers, among them ENAV which holds a 16.67% interest. The main purpose of the ESSP is to execute the contract with the European Commission that entitles the company to become the EGNOS system operator and EGNOS Service provider: Open Service, Safety-of-Life Service and EDAS Service. ENAV North Atlantic This company, having the legal form of a limited liability company and governed by the laws of the State of Delaware, is wholly owned by ENAV and was established in January 2014 to acquire 12.5% of the share capital of Aireon LLC, a United States registered limited liability company belonging to the Iridium group, which by 2018 will create the first global satellite surveillance system for air traffic control. The company had a break-even result in 2014, being essentially a non-operational entity which only holds the investment in Aireon. 84 ENAV ANNUAL REPORT 2014

835.5 mln Revenues 2014 ENAV Group Financial Review The consolidated financial statements for the year ended 31 December 2014 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission applicable at the balance sheet date (collectively referred to as IFRSs). 40 mln Net Income 2014 Therefore, the consolidated financial statements for the years ended 31 December 2011, 2012 and 2013 were also restated in 2014 in accordance with IFRSs for the information purposes of the Board of Directors, and were approved by the board on 24 October 2014; the date of transition to IFRS for the ENAV Group was accordingly 1 January 2011. To comply with the requirements of IFRS 1 First-time Application of International Financial Reporting Standards the reconciliations required by that standard were also provided on restating the 2011, 2012 and 2013 consolidated financial statements; these consist of reconciliations between the equity and results of operations determined under Italian accounting standards (Italian GAAP) and the equity and results of operations determined under IFRSs. 1341.9 mln Net Invested Capital 2014 The features and performance of the companies of the ENAV Group at 31 December 2014 are set out in the following. 1234.1 mln Net Equity 2014 ENAV The ENAV group 85

INCOME STATEMENT 31.12.2014 31.12.2013 Changes Values % Revenues from operations 812,638 779,602 33,036 4.2% Balance revenues (16,016) 20,460 (36,476) (178.3%) Other operating income 38,913 39,426 (513) (1.3%) Total revenues 835,535 839,488 (3,953) (0.5%) Personnel costs (466,198) (459,640) (6,558) 1.4% Other costs, net (145,676) (142,561) (3,115) 2.2% Total operating costs (611,874) (602,201) (9,673) 1.6% EBITDA 223,661 237,287 (13,626) (5.7%) Depreciation and amortization less investment (144,025) (135,286) (8,739) 6.5% grants Write-downs, impairment losses, reversals of (6,564) (8,706) 2,142 (24.6%) impairment losses and allocations EBIT 73,072 93,295 (20,223) (21.7%) Financial income (expense) (5,602) (3,305) (2,297) 69.5% Income before income taxes 67,470 89,990 (22,520) (25.0%) Income taxes (27,464) (40,422) 12,958 (32.1%) Net income for the year 40,006 49,568 (9,562) (19.3%) Amounts in thousands of euros Revenues from operations totaled 812.6 million with an increase of 4.2% over the previous year 86 ENAV ANNUAL REPORT 2014

Revenues from operations totaled 812.6 million with an increase of 4.2% over the previous year due to an overall increase in the items of which this item is composed. The largest increase is linked mainly to the parent company due to en-route traffic that generated +2.4% in service units during the year compared to the total for 2013, considering the same applied fee equal to 78.83. Terminal traffic also increased compared to 2013, although more moderately than en-route traffic, with +2% in service units. This result is also linked to the parent company s takeover of air traffic management for two new airports (Rome Ciampino and Verona Villafranca) in late May 2014. In 2014, the terminal charge called for three charging zones defined in conformity to thresholds identified in community regulations. For the third zone, with 43 airports, a lower than normal charge was applied in order to support the air transport market in the current crisis. This lower charge resulted in the release of 24.3 million to the income statement from the charge stabilization provision, with an increase of 4.6 million compared to the previous year. Revenues from commercial activities had a positive effect on revenues from operations, increasing by 4.2 million for consulting services provided by the Group in Dubai and Libya. ENAV The ENAV group 87

The balance reduced total revenues by 16 million due to smaller balances recorded in 2014 (mainly due to inflation, which generated a negative balance of 7.9 million as opposed to a positive 14.2 million in 2013) and to the effect of discounting, which amounted to a negative 4 million, 3 million higher than in 2013. Other operating income, generally in line with the previous year, does not include the share of equipment grants linked to financial investments of 12.3 million, entered in direct reduction of depreciation. Operating costs amounted to 611.9 million, increasing by 1.6% over the previous year mainly due to personnel costs and other net costs. 88 ENAV ANNUAL REPORT 2014

Personnel costs increased by 6.6 million, mainly due to the fixed part of remuneration. The variable part, on the other hand, decreased by 1.9 million, mainly due to a smaller allocation for vacation leave accrued but not yet taken, thanks to the Company s policy of having both office and operational personnel take vacation leave. Other net costs show an increase of 2.2%, mainly due to lower capitalized costs on investment initiatives and to internal costs amounting to a positive 24.7 million compared to 28.1 million in 2013. External costs increased in connection to professional services for European projects and to the transition to international accounting standards, with work performed on the Group s IT systems in 2014. ENAV The ENAV group 89

These figures affected the calculation of EBITDA generating a 5.7% reduction compared to the previous year, to 224 million. EBIT was 73 million, decreasing by 21.7% compared to 2013 due to the above-described events and to increased depreciation charged on the investments, such as Coflight, made in 2014. Financial income and expense amounted to negative 5.6 million, a charge 2.3 million higher than in 2013, referring mainly to the parent company as a result of the adjustment of the present value of the balances recognized in previous years following the change to charge recovery plans. On the other hand, there was a 1.8 million decrease in financial expense linked to bank debt due to decreased use of short-term credit lines and to lower interest rates. Taxes for the year amounted to 27.5 million, 32.1% lower than in 2013, mainly due to lower corporate income taxes (IRES) in 2014. Profit for the year was positive for 40 million, lower than in the previous year due the dynamics described above. 90 ENAV ANNUAL REPORT 2014

RECLASSIFIED BALANCE SHEET 31.12.2014 31.12.2013 Changes Property, plant and equipment 1,125,913 1,173,985 (48,072) Intangible assets 124,759 131,767 (7,008) Investments in other companies 26,431 167 26,264 Other non-current assets and liabilities 34,506 (31,526) 66,032 Liability for employee benefits (60,049) (53,655) (6,394) Net fixed capital 1,251,560 1,220,738 30,822 Inventories 61,691 61,639 52 Trade receivables 232,387 288,053 (55,666) Trade payables (127,986) (142,261) 14,275 Provisions for risks and charges (12,585) (12,693) 108 Other current assets and liabilities (63,219) (87,360) 24,141 Net working capital 90,288 107,378 (17,090) Net invested capital 1,341,848 1,328,116 13,732 Funded by Shareholders' equity 1,234,062 1,241,848 (7,786) Net financial position 107,786 86,268 21,518 Total funding 1,341,848 1,328,116 13,732 Amounts in thousands of euros ENAV The ENAV group 91

The reclassified balance sheet shows an increase in net invested capital of 13.7 million compared to the end of the previous year, totaling 1,341.8 million, mainly due to the following factors: l net fixed capital, which increased by 30.8 million. This increase is due to the change in the consolidation scope with the entry of ENAV North Atlantic, which contributed the investment held in Aireon LLC, a Limited Liability Company subject to United States law, to be acquired by the payment of four tranches, after which the Company will own a 12.5% stake. The first two tranches were paid in 2014. The other increase refers to the change in other non-current assets and liabilities for 66 million due to increased receivables linked to balances recorded in 2014 and in previous years, to be included in the charge in years after 2015, and to the decrease in other liabilities following the release to income of the National Operational Program (NOP) for the Transport Sector grants in line with the depreciation of the investments to which they refer, as well as to the definancing of an investment project by the NOP Networks and Mobility Authority. The other items show a general reduction linked, with regard to property, plant and equipment and intangible assets, to smaller investments in progress compared to the amortization and depreciation of the year. In addition, there was an increase in the liability linked to the liability for employee benefits due to the actuarial loss recorded by the Group in 2014; l net working capital was 90.3 million, presenting a net decrease of 17.1 million following the reduction of trade receivables due to the collection of receivables owed by the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport, in addition to the classification of non-current receivables exceeding the balances in 2013. The calculation of working capital was also affected by a 14.3 million decrease in trade payables and by a change in other current assets and liabilities linked to the larger VAT credit generated in 2014, for which a 19 million refund was requested in 2015. 92 ENAV ANNUAL REPORT 2014

Shareholders equity amounted to 1,234.1 million, presenting a net decrease of 7.8 million due to the parent company s payment of dividends for 31.5 million, the allocation of 16.5 million to the charge stabilization provision in accordance with the resolution of the Shareholders Meeting held to approve ENAV s 2013 financial statements, the negative incidence of the employee benefits reserve for 5.1 million, the positive contribution of the fair value measurement of derivatives for 1.8 million, the change in consolidation scope with the recognition of a translation reserve in foreign currency for a positive 3.5 million and the positive consolidated year-end result of 40 million. ENAV The ENAV group 93

The net financial position is a negative 107.8 million, 21.5 million higher than in the previous year, which may be analyzed as follows: 31.12.2014 31.12.2013 Changes Cash and cash equivalents 118,253 94,301 23,952 Current financial receivables 1,480 0 1,480 Current debt (46,136) (54,154) 8,018 Net current financial position 73,597 40,147 33,450 Non-current financial receivables 383 0 383 Non-current debt (181,766) (126,415) (55,351) Non-current debt (181,383) (126,415) (54,968) Net financial position (107,786) (86,268) (21,518) The current net financial position shows an improvement of 33.5 million following the liquidity contributed by Group companies, from the payback of lines of credit granted to subsidiary Techno Sky, plus greater liquidity received by the parent company from the European Investment Bank credit line opened in December for 100 million, which affects the increase in non-current debt for 54.9 million, offset by repayments of 43 million in loans made by the parent company during the year. 94 ENAV ANNUAL REPORT 2014

ENAV The ENAV group 95

Glossary

Glossary ACC AENA AFIS AIP ANSV AIRPROX AIS AISAS AMI AMS ANSP ANSV AOIS AOP APATSI APP APT ARO-MET ATC ATCO ATFM ATM ATS AVL BAFO BCA BTP CAA CANSO CBO CE Area Control Center Aeropuertos Españoles y Navegación Aérea Aerodrome Flight Information Service Aeronautical information Journal Agenzia Nazionale per la Sicurezza del Volo (National Agency for Flight Safety) a situation in which, in the opinion of a pilot or air traffic services personnel, the distance between aircraft as well as their relative positions and speed are such that the safety of the aircraft involved may be jeopardized Aeronautical Information Service AIS Automated System Italian Air Force Alenia Marconi System Air Navigation Service Providers National Organisation for Flight Safety Automated Operational Information System Operational Area Airport ATS Interface European Program to increase airport capacity Approach Control Service/Office Airport ATS Reporting Office Meteorology Information Office for air traffic and meteorology services Air Traffic Control Air Traffic Control Officer Air Traffic Flow Management centralized by EUROCONTROL in Brussels Air Traffic Management Air Traffic Services; including ATC, FIS, AIS, ALS, etc. Luminous Visual Aids Best And Final Offer Benefit/Cost Analysis Italian Government Bond Civil Aviation Authority Civil Air Navigation Services Organisation Central Briefing Office European Commission 98 ENAV ANNUAL REPORT 2014

CFMU CIP CIPE CNS COTS CTR CTT CUT CWP DCAC DFS DME DNM DNV DSNA DUR EATCHIP EATMN EATMS ECAC EGNOS ENAC ENAV EOIG ERATO ESA ESSP EU EUROCONTROL EWA FAA FAB FBS FDP FIR Central Flow Management Convergence and Implementation Inter-ministerial Committee for Economic Planning Communication Navigation and Surveillance Commercial Off The Shelf Control Zone Fee coefficient for flight assistance (terminal) Unit coefficient fee for flight assistance (en-route) Controller Working Position Department of Civil Aviation of Cyprus Deutsche Flugsicherung GmbH (Germany) Distance Measuring Equipment Directorate Network Management (EUROCONTROL) Det Norske Veritas Direction des Services de la Navigation Aerienne (France) Determined Unit Rate European Air Traffic Control Harmonisation and Integration European Air Traffic Management Network European ATM European Civil Aviation Conference European Geostationary Navigation Overlay System National Organisation for Civil Aviation ENAV SpA Italian Air Navigation Service Provider EGNOS Operators Infrastructure Group En-Route Air Traffic Organiser European Space Agency European Satellite Service Provider European Union The European Organisation for the Safety of Air Navigation EGNOS Working Agreement Federal Aviation Administration Functional Airspace Block Fall Back System Flight Data Processing Flight Information Region ENAV Glossary 99

FIS FL FSS FTS GAT GNSS GPS HCAA IANS ICAO IEEE IFR ILS IP IPR ISO LRST LSSIP MATS MATSE MCC MED MRT NANSC NATO NDB NORACON OACA OAT OJTI OLDI PATM PBN PDR PNS PPN Flight Information Service Flight Level Flight Service Station Fast Time Simulation General Air Traffic Global Navigation Satellite System Global Positioning System Hellenic Civil Aviation Authority Institute Air Navigation Service International Organisation for Civil Aviation Institute of Electrical and Electronic Engineers Instrument Flight Rules Instrument Landing System Implementation Package Intellectual Property Rights International Organisation for Standardisation Local Runway Safety Team Local Single Sky Implementation Plan Malta Air Traffic Services Ltd Ministries of Transport on ATS in Europe Master Control Center ICAO identification code for the Middle East Multi Radar Tracking Navigation Air Navigation Service Company (Egypt) North Atlantic Treaty Organisation Non-directional radio beacon North European and Austrian Consortium Office de l Aviation Civile et des Aeroports (Tunisia) Operative Air Traffic On-the-Job Training Instructor On-Line Data Interchange ATM Performance (ENAV) Performance Based Navigation Performance Premium Single Negotiated Procedures National Performance Plan 100 ENAV ANNUAL REPORT 2014

PSA RADAR Simulation and Training Test Radio Detection and Ranging PRIMARY RADAR works on the principle that the radar transmitter sends out a pulse of radio energy, of which a very small proportion is reflected from the surface or structure of the target aircraft back to the radar receiver SECONDARY RADAR RDP RF RIMS RM RNAV RTO RTS SATCAS SES SESAR SESAR JU SICTA STN SW T/B/T/ TFR TMA TWR UCM UDS UIR UO VDF VHF VOR VHF VPN relies on a piece of equipment aboard the aircraft known as a transponder Radar Data Processing Radio frequencies Ranging Integrity Monitoring Stations Flight Inspections Area Navigation Technical Operational Register Real Time Simulation Selenia Air Traffic Control Automated Systems (ENAV ATC platform) Single European Sky Single European Sky ATM Research SESAR Joint Undertaking Innovative Systems for Air Traffic Control National Remote Management System Software Ground/On-Board/Ground Employees Leaving Entitlement Terminal Control Area Aerodrome Control Tower Unified Change Management Service Unit Upper Information Region Operational Unit Very High Frequency Direction Finder Very High Frequency VHF Omnidirectional radio range Virtual Private Network ENAV Glossary 101

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