ENAV S p A : Board of Directors approves the interim financial report at 31 march 2021

ENAV's Board of Directors approves the interim financial report at 31 march 2021

• En-route and terminal traffic declined by -65.1% and -66.9% respectively, in terms of service units vs. the first quarter of 2020;

• Consolidated revenue of 189.0 million euro (+10.2% YoY) also thanks to the protection provided by European regulation;

• Revenue from operations of 49.3 million euro (-63.4% YoY), more than offset by the effect of balance;

• Consolidated EBITDA at 44.7 million euro (+54.8% YoY), also due to control initiatives on external costs put in place by the Company;

• Consolidated net result at 11.8 million euro vs. a negative result of 6.2 million euro in Q1 2020, mainly due to a different mechanism of evaluation of balance throughout the period.

Rome, 13 May 2021 - The ENAV S.p.A. Board of Directors meeting, held today under the chairmanship of Francesca Isgrò, approved the interim financial report as of 31 March 2021.

Traffic volumes across Italy for Q1 2021 are consistent with those recorded in late 2020. A decrease of nearly 65% was recorded in Q1 2021 compared to Q1 2020 which was mostly unaffected by the negative impact of the pandemic and was even characterized by an increase of nearly 10% in the months of January and February compared to the same period in 2019.

Flights over Italian airspace were in line with data recorded for other European countries where, with reference again to service units, Q1 2021 recorded a decrease of 60.4%. In particular: France -67.2%, Germany -61.4%, Great Britain -67.1%, and Spain -69.5%.

Conversely, positive performances were seen for cargo traffic, which recorded a significant growth in the volumes of freight (+12.3% vs. the same period in 2020).

Q1 2021 results were significantly affected by the temporary adjustment to standard regulation implemented by the European Commission in November 2020 for 2020-21. The balance in Q1 2021 was determined based on the new mechanism of evaluation where the main calculation driver is given by final costs and not by the conventional traffic risk sharing mechanism. The system applied in Q1 2021 reflects an increased linearity in the evolution of costs over traffic and overrides the traditional «business seasonality» effect, which reflects reduced income from traffic during winter compared to summer.

However, the new regulation do not lessen the effects on cash flows, given final balance generated in 2020-21 will not be cashed-in on fares before 2023.

The CEO Paolo Simioni stated: 'The European regulations and the initiatives implemented by ENAV to soften the impact of the Covid pandemic are safeguarding us from the effects of a marked decrease in air traffic. However, we cannot rely on the indemnity that the Community's regulation is guaranteeing; we are developing a set of initiatives - from the infrastructures' digitization to the modernization of operational platforms and to the development of drone-related services - that will allow ENAV to emerge sooner and better from the crisis created by the pandemic. Despite though times are still in front of us, we expect to retrieve at least 50% of the flights flown in 2019 starting from next summer, thanks to the progress of the vaccination campaign.'

En-route traffic, in terms of service units, decreased by 65.1% in the first quarter of 2021, compared to the same period of 2020. Specifically, the international commercial traffic (traffic taking off or landing from an Italian airport) saw a decrease of 76.7%. Overflight traffic (flights that do not take off or land at Italian airports) showed a drop of 61.9%. Domestic traffic (flights both taking off and landing within the Italian territory) suffered less from the effect of the pandemic than other types of traffic. The drop was in fact of 56.7%.

Terminal traffic decreased by 66.9% in Q1 2021 in terms of service units, in line with the figure for en-route traffic. The drop in terminal traffic is generalized across all the Italian territory.

FINANCIAL PERFORMANCE

Total consolidated net revenue in Q1 2021 reached 189.0 million euro, with an increase of 10.2% compared to the same period in 2020, as an effect of the different mechanism of enhancement of balance recently implemented by the temporary derogation of the EU regulation for 2020-21.

Revenue from operations in Q1 2021 reached 49.3 million euro, with a decrease of 63.4% as an effect of the decline in air traffic due to the Covid-19 epidemiological emergency. Specifically, compared to Q1 2020 revenue from en-route services amounted to 30.1 million euro (with a decrease of 68.1%), and revenue from terminal services amounted to 11.7 million euro (down 63.8%).

Revenues from non-regulated business amounted to 4.9 million euro, with a decrease of 0.8 million euro vs. Q1 2020, mainly due to the health emergency.

The effect of balance on net revenue in Q1 2021 was positive for 131.1 million euro; it was determined by considering final cost coverage, to which a cost-efficiency percentage was applied in compliance with the European Commission regulation implemented in November 2020. This new mechanism of balance calculation will be in force throughout 2021, while 2022 will see a return to the traditional traffic risk sharing system.

As a result of the efficiency initiatives adopted, operating costs remained substantially stable compared to Q1 2020 and stood at 144.4 million euro.

In more detail, external costs, amounting to 29.9 million euro, decreased by 7.3% vs. Q1 2020, mainly due to a decline in utilities and telecommunication costs, partly offset by an increase in the expenses for cleaning and extraordinary disinfection of ENAV's premises since the beginning of the Covid-19 emergency.

Personnel costs stood at 120.4 million euro, with an increase of 2.8% compared to Q1 2020. This was mainly due to an increase in staff's vacation time accrued but not yet utilized, vs. Q1 2020.

These data determined an EBITDA of 44.7 million euro, with an increase of 54.8% vs. Q1 2020 and an EBITDA margin of 23.6%, also thanks to the external-cost control initiatives enacted by the Company.

The EBIT amounted to 15.2 million euro.

ENAV Group closed the first quarter of 2021 with a consolidated net profit of 11.8 million euro, compared to the negative result of 6.2 million euro of Q1 2020.

The net financial position stood at 285.9 million euro as of 31 March 2021, with an increase of 49.3 million euro compared to the figure recorded as of 31 December 2020. This variation was due to the collection and payment dynamics related to the ordinary course of business that has produced a negative cash flow linked to a reduction in the income from core business activities.

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