Corporaciòn America Italia S.p.A. · Since February 2014 it has purchased the shares of Società...

Corporaciòn America

Italia S.p.A.

FINANCIAL

STATEMENTS

2016

• Consolidated Financial

Statements of the Group

Corporaciòn America Italia SpA

Report on Operations

Page 1

CORPORACION AMERICA ITALIA SPA

Single-member Company

Offices in MILAN, ITALY - PIAZZALE MARTESANA, 10

Share Capital paid in Euro 85,000,000.00

Registered with the MILAN Chamber of Commerce

Tax Code and Company Register No. 08555440968

VAT No.: 08555440968 - Economic and Administrative Index No.: 2033297

Report on Operations to the Consolidated Financial Statements as at

31/12/2016

Group structure and activities

Introduction

Dear Shareholders,

The company was incorporated on 2014 and so is at its third year of operation.

CAI acquired the controlling interest in Aeroporto di Firenze Spa (hereinafter ADF) in April 2014

and in Società Aeroporto Toscano (hereinafter SAT) in July 2014 . On 2015 SAT incorporated

ADF and changed its company name in Toscana Aeroporti Spa (hereinafter TA).

Having issued a bond loan traded on the Vienna stock market, it is required to prepare and file the

consolidated financial statements.

The Report on Operations to the Consolidated Financial Statements of Corporacion America Italia

SpA and its subsidiaries (hereinafter CAI Group) as at 31 December 2016, approved by the Board

of Directors, is drafted in compliance with the provisions of the International Accounting Standards.

The Consolidated Financial Statements as at 31 December 2016 is drafted in observance of the

International Accounting Standards (“IFRS”) issued by the International Accounting Standards

Board (“IASB”) and homologated by the European Union. “IFRS” also means the International

Accounting Standards (IAS) in effect still today, as well as all of the interpretative documents

issued by the International Financial Reporting Interpretations Committee (“IFRIC”) previously call

the Standard Interpretations Committee (“SIC”).

Auditing of the consolidated and statutory financial statements of the CAI Group is appointed to the

company PricewaterhouseCoopers (PwC).


Page 2

Corporacion America Spa was formed on 19 February 2014 and is domiciled in Italy with

registered office in Milan.

The main purpose of the company is the management of shareholdings.

The company was originally formed with a share capital of Euro 10 thousand in the form of limited

liability company.

On 21 March 2014 it resolved to increase its share capital to Euro 75 million, in order to get the

financial resources needed to meet the scheduled purchase plan of the two equity investments in

SAT and ADF. The share capital was entirely subscribed and paid in.

On 6 November 2014 it resolved to again increase its share capital to Euro 130 million, again in this

case fully subscribed and paid in by the shareholders, and on the same date it resolved to transform

the company into a joint stock company.

Since February 2014 it has purchased the shares of Società Aeroporto Toscano S.p.a. with offices in

Pisa, and afterward the shares of Aeroporti di Firenze S.p.a. with offices in Florence. Both

companies are listed on the Milan Stock Exchange.

In February 2014 it purchased 390,900 shares representing about 3.965% of the share capital of

SAT S.p.A. and 3,017,764 shares representing 33.402% of ADF S.p.a.

In March 2014 it finalised purchase of 2,309,902 shares representing approximately 23.427% of the

share capital of SAT S.p.A., thus taking its investment in SAT S.p.A. to 27.392%. In June 2014 it

purchased further 1,387,519 shares of ADF S.p.a. following the launch of two takeover bids,

“OPA”, one voluntary and for the totality of shares of SAT and the other mandatory and for the

totality of shares of ADF, at 31 december 2014 CAI held the interest in the following percentages:

ADF, 48.983%, and SAT, 53.039%.

In Adf Corporacion America Italia S.p.A. held a total of 4,425,476 equal to 48.983% of the share

capital. Furthermore, considering the AdF S.p.A. shares held by SO.GI.M, with whom Corporacion

America Italia S.p.A. had entered into a shareholder agreement, CAI and SO.G.IM. held at 31

december 2014 a total of 5,537,691 shares, equal to 61.293% of the share capital.

On 19 December 2014 the Boards of Directors of SAT and AdF approved the merger by

incorporation of AdF S.p.A. into SAT S.p.A., as well as the preliminary documents of the

operation. The extraordinary shareholders’ meetings of AdF and SAT held on 9 and 10 February

2015, respectively, approved the same merger in first call without introducing amendments or

supplements and subject to the favourable opinions of the respective committees for transactions

with related parties.


Page 3

Toscana Aeroporti S.p.a. operates the Pisa’s airport “G.Galilei” and the Florence’s airport

“A.Vespucci”; the Group cares for the development of the two airports both in terms of air cargo

and infrastructure and passenger services.

Shareholder Agreements

On 16 April 2014 Corporación America Italia S.r.l. (today S.p.a.) and SO.G.IM. S.p.a. (which

preventively exercised its right to withdraw from the shareholder agreement with the Tuscany

Region) signed a shareholder agreement in virtue of which Corporación America Italia S.p.a. would

be able to exercise a dominating influence over AdF (today incorporated into Toscana Aeroporti

S.p.a.). Said agreement has a term of three years, renewable on expiry.

On 13 May 2015, an addendum was added to the original shareholder agreement existing between

Corporación America Italia S.p.a. and SO.G.IM. S.p.a. to update its contents after the merger signed

on 11 May 2015 with effect from 1 June 2015. With effect from 16 April 2017 the above-

mentioned pact has been re-approved for another 3 years.

National Tax Consolidation

During 2016, CAI and the subsidiary TA exercised the option for the national tax consolidation for

the three-year period 2016-2018, possibly renewable for a further three-year period.

The option was exercised by both companies following the resolution of their respective board of

directors on 5 April 2016 for CAI (consolidating) and on 15 September 2016 for TA (consolidated)

in terms agreed in a specific consolidation agreement signed on 30 September 2016 by CAI and

TA.

Subsequently, on the same date, the option was disclosed to the revenue agency when the statement

of income of the consolidating company CAI was presented, according to art. 117 and the following

of the DPR 917/86 and subsequent amendments.

On 30 August 2016 the revenue office had expressed a favorable opinion to a specific request for

interim filed by CAI in which it was requested to confirm that the stipulation of the pledge

agreement related to the issue of the obligatory loan, would not fail the requirement of the control of

CAI over TA, a requirement required by the rules for effectiveness for the consolidate option.

Macrostructure of Corporation America Italia Group

The macrostructure of the group at 31 December 2016 is shown below


Page 4

Line-by-line consolidation

Full Consolidation

Company Share

Capital (€)

Shareholders’

Equity (€K)

%

Corporacion America Italia Spa 85,000,000.00 84,969 Holding

Toscana Aeroporti S.p.a.

Florence

30,709,743.90 109,806 51.132

Parcheggi Peretola S.r.l.

Florence

50,000.00 2,795 100.00

Toscana Aeroporti Engineering S.r.l. 80,000.00 137 100.00

Jet Fuel Co. S.r.l. 150,000.00 365 51.00

Company Share Capital

(€)

Shareholders’

Equity (€K) %

Immobili A.O.U. Careggi S.p.a

Florence 200,000.00 586 25.00

Alatoscana S.p.a.

Marina di Campo (LI) 2,910,366.20 2,861 13.27


Page 5

Holding – Corporacion America Italia S.p.a. (hereinafter "CAI"). Subholding – Toscana Aeroporti S.p.a (hereinafter “TA”). Subsidiaries- Jet Fuel Co, S.r.l. (hereinafter Jet Fuel), Parcheggi Peretola S.r.l., Toscana Aeroporti Engineering S.r.l. For consolidation purposes, we point out that Toscana Aeroporti owns 33.33% of property and dividend rights and 51% of voting rights. Associated Companies.

Related Parties - (*) Entities currently being wound up.

TOSCANA AEROPORTI S.P.A. 51.132%

51

Jet Fuel Co. S.r.l.

51% Alatoscana S.p.a.

13.27%

Immobili A.O.U. Careggi

S.p.a. 25%

25,00%

Consorzio per l’Aeroporto di

Siena (*) 0.11%

1,42%

Consorzio Turistico Area

Pisana S.c.r.l.(*) 2.37%

Scuola Aeroportuale Italiana

Associazione

52.67%

Tirreno Brennero

S.r.l. 0.27%

Consorzio Pisa

Energia S.c.r.l.

5.26%

Montecatini

Congressi S.c.r.l.(*)

5.0%

Interporto Toscano A.

Vespucci S.p.a.

0.22%

Parcheggi

Peretola. S.r.l.

100%

Toscana

Aeroporti

Engineering S.r.l.

100%

Seam S.p.a.

0.39%

Firenze Convention Bureau

S.c.r.l. 0,97%

Firenze Mobilità S.p.a.

3.98%

CAI S.P.A.


Page 6

YEAR’S PROFILE

Macroeconomic scenario

In 2016, the global economy kept growing at a limited pace and showed a rather good resilience to

potentially disruptive events, such as, primarily, the result of the U.S. elections, with fears of

protectionist policies in exchanges and immigration, but also the result of the UK referendum, as

well as the geopolitical unrest and wars in the Middle East and terrorist attacks.

In Europe, the United Kingdom has a marked economic recovery (+1.8% GDP) in spite of the

considerable uncertainty characterizing the negotiations that will define future trade relationships

with the European Union. Growth continued at a moderate pace in the Euro area and was not

affected significantly by the uncertain global scenario (Germany +1.9%, France +1.1%).

As regards Italy, the national GDP increased by 0.9% in 2016 due to an increase in investments and

consumption.

Scenario of the air transport sector

According to the data published by ACI Europe, passenger traffic in European airports showed a

global 5.1% growth in 2016 compared to 2015, with increased scheduled traffic in EU Countries

(+6.7%) and decreased scheduled traffic in non-EU Countries (-0.9%). Both cargo traffic (+4.1%),

best result since 2010, and aircraft movements (+3.2%) have increased compared to the previous

year.

A total of 164,691,059 passengers transited the 36 Italian airports monitored by Assaeroporti during

2016, up by 4.6% compared to 2015. The increase involved almost all the Italian airports, thus

confirming growing air traffic in all the areas of our Country. Both aircraft movements (+2.6%) and

the cargo sector (+5.9%) have also increased.

TRENDS IN THE TUSCAN AIRPORT SYSTEM’S TRAFFIC

In 2016, the Tuscan Airport System surpassed the threshold of 7.5 million passengers - the absolute

traffic record recorded in both airports - with a final global growth of +3.9%, which means

+280,002 transited passengers compared to 2015.


Page 7

The different components of 2016 traffic are detailed below, with the respective comparison against

the same period of 2015:

The comparison with the Italian Airport System, which shows an average 4.2% growth, is shown

below.


Page 8

Note: The Rome airport system includes the Fiumicino and Ciampino airports, the Milan airport system includes the Malpensa,

Linate, Bergamo Orio al Serio and Parma airports, and the Venice airport system includes the Venice and Treviso airports.

In 2016, Tuscan airports have been connected with 96 destinations, of which 13 domestic and 83

international (20 operated in both airports) and have been served by 40 airlines (of which 6

operating in both airports), including 23 IATA and 17 Low-Cost (hereinafter also “LC”) airlines.

The table below provides details on these destinations and airlines.


Page 9

* Airlines are listed alphabetically.


Page 10


Page 11

Traffic trends in the Pisa ”Galileo Galilei” airport

The table below compares 2016 annual traffic trends against 2015, broken down into the different

components:

During 2016, Pisa reached almost 5 million passengers, precisely 4,989 million, up by 3.8%

compared to 2015.

The scheduled flight load factor increased by 1.8 percentage points (84.5% in 2016 against a load

factor of 82.7% in 2015). The number of seats offered grew by +2.0% and scheduled passenger

traffic by 4.2%.

The number of passengers on rerouted flights, included in commercial traffic, accounts for 0.7% of

the total traffic (with 34,489 passengers). The Florence share is about 78.3% (27,011 pax) of the

total number of rerouted flights.


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Compared to 2015, charter traffic decreased by 28.6% (-8,554 passengers) due to the suspension of

outgoing flights to Egypt (-8,000 passengers), which were operated again during 2016.

General Aviation traffic grew by 11.7% in 2016, with +917 passengers carried compared to 2015.

The table below shows the main factors that affected scheduled passenger traffic trends in the Pisa

Galilei airport during 2016:

Ryanair: both the load factor and operations have substantially increased for the Irish

carrier (+2.6 pts and +3.0% flights respectively). The new flight routes served starting from April

to/from Catania (1 daily flight and 2 daily flights since November), Sofia (2 weekly flights) and

Berlin Schoenefeld (3 weekly flights). The new seasonal flight to Corfu is operated from June to

September.

easyJet: flights to Hamburg and Manchester have been started since April 2015 and June

17th, 2015, respectively. In addition, 3 new flights to Geneva per week were operated starting from

February 1st, 2016 and to Basel starting from March 28th, 2016. Flights to and from London Luton

and Gatwick airports have also increased.

Blue Panorama: the number of flights to and from Tirana increased (from 4 to 7 per week

starting from April and from 4 to 10 per week in November and December). The load factor of this

airline increased to reach 83.9% during 2016. Flights were operated with 148, 168, and 189 seat

B737 aircraft.

Aer Lingus: 3 new flights per week have been operated from May 18th to September 11th

to/from Dublin.

Czech Airlines: 2 new seasonal flights per week have been operated from May 4th to

September 28th to/from Prague.

Delta Air Lines: the flight to New York JFK has been operated from May 28th to

September 6th, with a slight increase in the number of flights compared to 2015.

Eurowings: 2 new seasonal flights per week have been operated to/from Hamburg since


Page 13

March 27th, 2016. A new two-weekly connection to Vienna has started in the winter.

Qatar Airways: this carrier has started operations on August 2nd, 2016 with a direct

connection to the Doha hub (132-seat AB320 aircraft).

Mistral Air: a new flight to Tirana has been operated twice a week since July 8th.

Pobeda: a new direct connection to Moscow VKO has started December 29th, 2016

operated by this LC airline of the Aeroflot Group.

Alitalia: the flights operated by Airone to Catania, Berlin, Prague, Tirana and Moscow in

the past were suspended during the summer 2016. However, these flight routes are still available in

the Galilei airport network being operated by Ryanair (Berlin and Catania), Blue Panorama (Tirana

with increased flights), Czech Airlines (Prague) and Pobeda (Moscow VKO). Alitalia continues

operations on Rome Fiumicino with 24 flights a week and restarted its connection to Olbia (with 4

weekly flights) in the very high season.

In 2016 the Pisa airport has been connected with 83 scheduled destinations operated by 24 airlines,

of which 12 were Full Service Carriers (FSC) and 12 Low-Cost Carriers (LCC).


Page 14


Scheduled passenger traffic by Country

A total of 28 markets have been regularly connected with the Pisa airport with scheduled flights

during 2016.

International traffic accounts for 72% of the total scheduled passenger traffic of the Galilei airport,

while domestic traffic accounts for 28%.

The table below shows the incidence of each European country over the total scheduled passenger

traffic recorded by the Galilei airport during 2016 and the difference, both in absolute and

percentage terms, compared to 2015:


Page 15

In 2016 domestic traffic decreased by 4.0%. The traffic generated by former Airone–Alitalia flight

routes has been entirely recovered by Ryanair, which, however, decreased its capacity in other

destinations (Alghero, Lamezia Terme and Trapani).

The British market, the leader among foreign markets (with 1,029,057 passengers; 20.9% of total

markets), grew by 11.7%, as a result of the full operation of the new twice-weekly flight for

Manchester, starting June 17th, 2016, and of the increased flights to London LGW and London

LTN operated by easyJet. We also recall the higher number of flights operated by Ryanair to

Liverpool, Glasgow Prestwik and Leeds, as well as those operated by British Airways on London

Gatwick and Heathrow (2 additional weekly flights).

The Spanish market grew by 6.0% (with +32,319 passengers carried in 2016). This result mainly

reflects an increased Load Factor (hereinafter also briefly “LF”) for Ryanair flights on Spanish


Page 16

routes (+2.3 pts) and increased flights to Ibiza and Madrid.

The German market grew by +19.2% thanks to the new flights to Hamburg operated by easyJet and

Eurowings, Berlin Schoenefeld operated by Ryanair, and Transavia to Munich.

The French market decreased by 15.5% compared to 2015 due to the reduction of Ryanair flights to

Paris Beauvais, from 9 weekly flights to 1 daily flight, and to the reduction of flights to Paris Orly

by Transavia France (this flight was operated only from April to September).

We should highlight the presence of the new Swiss market with the opening of a three-weekly

connection to Geneva and Basel operated by easyJet; the new Qatar market initiated with the new

flight operated by Qatar Airways; and the Austrian market with the new two-weekly connection

with Vienna operated by Eurowings. In addition, we recall the presence of the new Bulgarian

market with the flight to Sofia operated by Ryanair and the restart of the Russian market with the

two-weekly flight operated by Pobeda starting from December 29th.

Cargo & Mail Traffic

Cargo traffic data recorded during 2016 in the Pisa airport show a growth of +18.4% (with + 1,600

tons of cargo and mail carried). This result mainly reflects DHL results (+2,500 tons of cargo

carried), as this courier has increased its operations in Pisa since November 3rd, 2015 after opening

an import cargo service.

We also remind the reader that 12 all-cargo charters had been operated during 2015 (9 of which for

the transport of marble), with a total of 1,200 tons of cargo carried, which have not been repeated in

2016.

Traffic trends in the Florence ”Amerigo Vespucci” airport

The table below compares 2016 traffic trends with 2015 traffic trends: the comparison is broken


Page 17

down into its different components:

In 2016, the Florence airport exceeded 2.5 million passengers, with a 3.9% increase (+95,318

passengers) compared to 2015.

The main factors that contributed to this record in scheduled traffic are described below:

Air Berlin: at the beginning of the summer, this carrier resumed its operations on

Dusseldorf and Stuttgart, and increased its number of flights passing from 1 to 3 daily flights for the

Florence-Dusseldorf route, thus providing a veritable feedering service for Tuscan and German

business customers.

Air Moldova: this carrier established a new two-weekly connection to Chisinau starting

from 14 June 2016.

Mistral Air: new connection with three weekly flights to Tirana starting from 8 July 2016.

Iberia: full operations on Madrid (in 2015 this flight was operated only starting from April

1st) and increase in number of summer flights.

Blue Air: full operations on Bucharest; since March 20, 2015 the Romanian carrier has


Page 18

been operating three weekly flights with 141-seat B737-500 aircraft.

Swiss Airlines: full operations with 4 flights per week to Geneva starting from March 30,

2015, with 76-seat DashQ-400 aircraft.

Vueling: this carrier operated a flight to Madrid even during the winter and then increased

weekly flights to Barcelona and Catania.

KLM: this carrier increased its weekly flights to Amsterdam, passing from 14 to 16 flights

per week in the winter and from 28 to 30 weekly flights in the summer.

Alitalia: in the period considered, this carrier used a mix of higher capacity aircraft

(AB319).

Albawings: this carrier has been operating a new two-weekly connection with Tirana from

October 31st.

We remind the reader that a high percentage of flights were rerouted or cancelled during 2016,

precisely 1,075 flights, a 6% higher number compared to 2015, which accounted for an estimated

loss of about 96,000 passengers. A significant portion of these flights were rerouted or cancelled for

adverse weather conditions in Florence; this corresponds to 721 flights, i.e. 67% of the total

number, down by 1.5% compared to 2015. After considering this loss, traffic in the Florence

airport shows a 7.2% growth in the number of flights and a 7.9% increase in terms of passengers.

Only a portion of this traffic was recovered by the Pisa airport (approx. 27,000 passengers).

During 2016, the Florence airport has been connected with 33 destinations operated by 22 airlines

(16 of which were Full Service Carriers [FSC]).

1 Air Berlin 12 Etihad Regional

2 Air Dolom iti 13 Flybe**

3 Air France 14 H op!

4 Alitalia 15 Iberia

5 Arkia 16 KLM

6 Austrian Airlines 17 Lufthansa

7 Blue Air 18 M eridiana

8 Blue Panoram a 19 N iki

9 British Airw ays 20 Silver Air

10 Brussels Airlines 21 Sw iss Airlines

11 Cityjet 22 Vueling

Airlines that operated from January to D ecem ber 2015

Florence Airport*


Page 19


Scheduled passenger traffic by Country

A total of 16 markets have been regularly connected with scheduled flights with the Florence

airport in 2016.

The international market accounts for 84.7% of the total scheduled passenger traffic of the Vespucci

airport, while the domestic traffic accounts for 15.3%.

The table below shows the percentage incidence of each European country over the total number of

scheduled traffic passengers recorded by the Vespucci airport during 2016 and the difference, both

in absolute and percentage terms, compared to 2015:


Page 20

The German market, which grew by 4.8%, is the first market with over 563,000 passengers carried

thanks to the new feedering service of Air Berlin on Dusseldorf (3 daily flights) which began in

May 2016.

The French market and the Italian market have remained substantially unchanged (-1% compared to

2015, corresponding to -5,573 and -3,943 passengers carried, respectively).

The Spanish market grew by 22.5% thanks to the full operation of Iberia on Madrid and to the

increased number of flights to Barcelona and Madrid operated by Vueling.

There have been growths as well in the Dutch market (+13.1%), with increased flights to

Amsterdam operated by KLM, and in the Romanian market (+48.8%) with full operations to

Bucharest. Finally, the new Moldavian market has been developed with Air Moldova flights to

Chisinau.

The results of the Non-Aviation Business are commented in the section entitled “Operating Results

of the CAI Group”.


Page 21

SIGNIFICANT EVENTS OCCURRED IN 2016

- Development of the Florence airport infrastructure

The 2014-2029 Master Plan, prepared consistently with the Domestic Airport Plan approved by the

Council of Ministers after the 30 September 2015 meeting to make the Florence airport another

strategic Italian airport, was technically approved by ENAC on 3 November 2014. The 2014-2029

Master Plan is subject to the Environmental Impact Assessment procedure (in It. “Valutazione di

Impatto Ambientale” or “VIA”) required by Legislative Decree no. 152/2006 and to the

requirement of issuing a “Conformità Urbanistica” (document providing evidence of compliance

with town planning schemes) pursuant to art. 81 of DPR 616/1977.

The Environmental Impact Assessment procedure of the Plan concerned has been started by ENAC

on 24 March 2015 at the Ministry of the Environment, Protection of the Territory and the Sea.

The 2014-2029 Master Plan contemplates the expansion of the present Florence airport with the

development of a new runway for flights, related connections and aircraft apron areas, the

development of a new passenger terminal, the related access road network and parking lots, the

development of a logistic area in the west area of the airport, and the necessary preliminary works

for the development of the new airport system.

Within the framework of the environmental impact assessment (“VIA procedure”), after the request

for addition expressed by the Ministry of the Environment and Protection of the Territory and the

Sea on 21 July 2015, all the project investigations and clarifications requested have been arranged

and lodged on 4 September 2015 to be transmitted to all the competent bodies.

The technical support activities for the preliminary environmental impact assessment (VIA) have

continued throughout 2016 and, on 2 December 2016, the Technical Commission issued a positive

opinion with conditions. We are currently waiting for the decree of environmental compatibility, to

be issued by the Ministry of the Environment with specification of the related conditions, and

meanwhile we are working to assess the best financial structure.

In this regard, we point out that, on 16 February 2017, we signed a framework agreement

(“Contratto di Programma Quadro – di finanziamento”) with ENAC for the financing of the works


Page 22

contemplated in the Master Plan, through which the Airport Operator has confirmed its commitment

to make the significant investments described in the aforesaid Florence Airport Master Plan and

ENAC, together with MIT, has committed to contribute its portion of the financing required for the

implementation of the plan for a total amount of Eur 150 million.

- Development of the Pisa airport infrastructure

The 2014-2028 Pisa G. Galilei Airport Master Plan technically approved by ENAC in April 2015

positively concluded its environmental compatibility process over the first nine months of 2016 and

obtained the exemption, with conditions, from the obligation to submit a “VIA” with a Resolution

of the General Director of the DGVA of the Ministry of the Environment prot. No. 158/DVA of 19

April 2016. Then TA, through ENAC, initiated the procedure for the assessment of compliance with

the town plan with the Ministry of Transport, after which all the works contemplated in the Master

Plan will be considered compliant with town planning schemes.

A Conference of Services was held on 6 February 2017 at the Ministry of Infrastructures and

Transport to “check the compliance of the 2014-2028 Pisa G. Galilei Airport Master Plan with town

planning schemes” and was concluded with a positive outcome. Then a protocol of understanding

between the State and the Regions will be issued to specify all the conditions or indications of the

Administrations involved in the same Conference. When the time established for the publication of

the PoU has come, the proposing body - ENAC - will be able to issue the final opinion of approval

of the “2014-2028 Pisa G. Galilei Airport Master Plan” by collecting the opinions of the Ministry of

Infrastructures and Transport and of the Ministry of the Environment, Protection of the Territory

and the Sea.

RESULTS OF OPERATIONS FOR CAI GROUP

-Consolidated Income Statement

The table below compares the data of the 2016 Consolidated Income Statement against the same

document of 2015.


Page 23

CAI GROUP CONSOLIDATED INCOME STATEMENT

Amounts shown in thousand euro (€K)2016 2015

Var/Ass

2016/20 VAR %

REVENUES

Aviation revenues 89.597 83.853 5.744 6,85%

Non-aviation revenues 26.626 25.151 1.475 5,86%

Other revenue and income 4.796 4.938 (142) -2,88%

Total operating revenues 121.019 113.942 7.077 6,21%

Revenues for construction services 7.230 18.616 (11.386) -61,16%

TOTAL REVENUES (A) 128.249 132.558 (4.309) -3,25%

COSTS

Consumables 1.397 1.236 161 13,03%

Cost of personnel 41.045 39.821 1.224 3,07%

Costs for services 42.770 42.690 80 0,19%

Sundrt operating expenses 2.224 2.078 146 7,03%

Airport leases 6.034 5.269 765 14,52%

Operating Costs 93.470 91.094 2.376 2,61%

Costs for construction services 6.271 17.690 (11.419) -64,55%

TOTAL COSTS (B) 99.741 108.784 (9.043) -8,31%

GROSS OPERATNG MARGIN (A-B) 28.508 23.774 4.734 19,91%

Incid.% on total revenue 22,2% 17,9%

Incid.% on operating revenue 23,6% 20,9%

Amortization 15.112 14.833 279 1,88%

Provisions for risks and repairs 4.227 4.682 (455) -9,72%

Provisions for risks and burdens 415 163 252 154,60%

OPERATING EARNINGS 8.754 4.096 4.658 113,72%

Incid.% on total revenue 6,8% 3,1%

Incid.% on operating revenue 7,2% 3,6%

ASSET MANAGEMENT

Financial income 199 2.720 (2.521) -92,68%

Financial expenses (4.878) (5.105) 227 -4,45%

Profit(loss) from equity investments 0 42 (42) -100,00%

TOTAL ASSET MANAGEMENT (4.679) (2.343) (2.336) n.s.

PROFIT (LOSS) BEFORE TAX 4.075 1.753 2.322 132,46%

Taxes for the year (*) (1.945) 4.810 (6.755) -140,44%

PROFIT LOSS FOR THE YEAR 2130 6563 (4.433) -67,55%

Minority interest's loss (profit) for yhe year 2779 5372 (2.593) -48,27%

GROUP'S PROFIT (LOSS) FOR THE YEAR (649) 1.191 (1.840) -154,49%

(*) We remind that operating taxes had a positive impact on earnings for 4.810 due to the effect of current taxes of 4.436 plus offset

by the deferred tax reversal previously allocated (2.499) and the adjustment of the deferred tax provision to the new rates established


Page 24

by the Law 208/2015 (6747). The above-mentioned law had lowered the IRES rate from 2017 to 3.5%

We specify that the summarised income statement details reported can be easily reconciled with

those indicated in financial statements. As to alternative performance indicators, in this

Consolidated Financial Statement CAI will provide, in addition to the financial indicators required

by the IFRS, some indicators derived from the latter, although not required by IFRS (Non-GAAP

Measures).

These indicators are presented with the purpose of allowing for a better assessment of the Group's

management trends and should not be considered as alternative to those required by IFRS. More

specifically:

- the interim EBIT (Earnings Before Interests and Taxes) coincides with the Operating Result

shown in the Income Statement;

- the interim PBT (Profit Before Taxes) coincides with the Profit before taxes shown in the Income

Statement.

In this 2016 Financial Statement, the Company considered it useful to present the indicator called

“Adjusted PBT” for the valuation of the results of the Group compared to the previous year. This

indicator has been determined by adjusting the PBT for 2015, as described above, for the capital

gain deriving from the divestment of AdF shares performed before the merger in 2015.

As regards the EBITDA (Earnings Before Interests, Taxes, Depreciation, Amortization) or Gross

Operating Margins, we point out that it reflects the EBIT before amortization and provisions.

In general terms, we point out that the interim results indicated in this document are not defined as

an accounting measure under IFRS and that, consequently, the criteria for the definition of said

interim results might not be consistent with those adopted by other companies.

The table below shows the main income statement results for the period examined.

REVENUES

Total consolidated revenues went down by 3.3%, from € 132.59 M in 2015 to € 128.2 M as at 31


Page 25

December 2016. This difference is the result of the € 7.06 M increase in Operating Revenues and of

the € 11.39 M decrease in Revenues for Construction Services. The latter have been recognised

against the external and internal costs incurred for the construction and expansion of assets under

concession, as well as for the related design, coordination and control activities performed during

2016.

OPERATING INCOME

Consolidated operating revenues totalled € 121.01 M at 31-Dec-2016, up by 6.2% compared to

2015.

The Group's operating revenue trends for the two business units - Aviation and Non-Aviation - are

broken down below.

Aviation revenues

Aviation revenues totalled € 89.6 M at 31 December 2016, up by 6,9% compared to 2015, when

they totalled € 83.85 M.

The table below shows Aviation revenue items for 2016 and the differences, both in absolute and

percentage terms, compared to 2015:

AVIATION REVENUESamounts in euro/000 2016 2015 VAR. VAR.%

Passenger boarding fees 30.872 28.290 2.582 9,1%

Landing/departure fees 13.696 11.310 2.386 21,1%

Stopover fees 1.118 938 180 19,2%

PRM assistance fees 2.533 2.136 397 18,6%

Cargo fees 574 534 40 7,5%

Passenger security fees 7.209 7.196 13 0,2%

Baggage security fees 4.227 4.807 (580) -12,1%

Handling 27.706 25.993 1.713 6,6%

Centralised infrastructure 1.662 2.649 (987) -37,3%

TOTAL AVIATION REVENUES 89.597 83.853 5.744 6,9%


Page 26

The overall increase in the Group's Aviation revenues (+6.9%) mainly reflects the increase in

revenues deriving from airport duties, fees and taxes, which increased by 7% compared to 2015

reflecting both the higher traffic (+4.1% traffic units) and the positive impact on revenues caused by

the new Florence airport tariffs (+3.5%) determined by the new tariffs effective from 25 May 2015

(which affected 2015 only for 7 months).

Handling revenues increased by +6.6% as a consequence of both the higher global traffic of the two

airports in 2016 (flights: +3.3%; tonnage +4,2%) and the implementation of more remunerative

assistance agreements January 2016.

Non-Aviation revenues

Aviation revenues totalled € 26.63 M at 31 December 2016, up by 5.9% compared to 2015, when

they totalled € 25.15 M. This increase confirms the positive results obtained with the non-aviation

strategies implemented by the Group in spite of the continuing negative repercussions of the

difficult general economic scenario, which still negatively affected consumption in 2016.

The Non-Aviation business consisting in commercial and real estate operations in the two Florence

and Pisa airports are carried out:

i. through subcontracting to third parties (Retail, Food, Car Rental, specific areas and other

sub-concessions);

ii. through direct control (Advertising, Parking Lots, Business Centre, Welcome Desk and

VIP Lounge, Air Ticket Office and Cargo Agency).

At 31 December 2016, revenues deriving from subcontracted activities accounted for 61.8% of

Non-Aviation revenues, while those deriving from directly managed activities accounted for the

remaining 38.2%. In 2015, these percentages were 61.4% and 38.6%, respectively.

The table below provides details on revenues from Non-Aviation activities carried out in 2016 and

2015:


Page 27

NON AVIATION REVENUESamounts in euro/000 2016 2015 VAR. VAR.%

Parking lots 6.093 5.755 338 5,9%

Food 3.344 2.991 353 11,8%

Retail 4.253 3.917 336 8,6%

Advertising 2.240 2.126 114 5,4%

Real estate 2.146 2.008 138 6,9%

Car rentals 4.737 4.582 155 3,4%

Other subconcessions 1.971 1.946 25 1,3%

VIP lounge 1.001 892 109 12,2%

Air tickets 486 540 (54) -10,0%

Cargo agency 356 394 (38) -9,6%

TOTAL NON-AVIATION REVENUES 26.627 25.151 1.476 5,9%

The increase of € 339 K in revenues from Parking Lots, which totalled € 6.09 M in 2016 (+5.9%

compared to 2015), is due to both the higher global passenger traffic of the Tuscan airports (+3.9%)

and the increase in tariffs implemented during 2016.

Non-Aviation revenues deriving from the Food business, which totalled € 3.34 M in 2016,

increased by 11.8% compared to the previous year mainly due to the renewal of an agreement

signed with an important company of the sector at the Florence airport and for the effect of a greater

passenger traffic.

Revenues deriving from the Retail business, which totalled € 4.25 M in 2016, increased by 8.6%

mainly due to the commercial agreement in force for the management of duty-free shops in the

Florence airport, which established an increased minimum requirement compared to the previous

year.

Revenues deriving from the direct management of the Advertising business, which totalled € 2.24

M in 2016, increased by 5.4% compared to 2015 mainly by virtue of the advertising agreements

signed during the last quarter with important event organizers and sellers of vending machines.


Page 28

Revenues from the Real Estate business totalled € 2.15 M in 2016, corresponding to +6.9%, mainly

reflecting the higher revenues deriving from the revision of certain sub-concession agreements for

the use of areas of the Florence airport and the re-recognition of these revenues allocated to the item

“Other sub-concessions” in the previous year.

Revenues from the Car Rental business totalled € 4.74 M in 2016, up by € 156 K (+3.4%) compared

to 2015. This difference is mainly due to the seasonal purchase of a higher number of car park

spaces by some car rental companies operating in the Pisa airport.

Revenues generated by “Other sub-concessions” reached € 1.97 M in 2016, substantially in line

with 2015, with a 1.1% increase.

The increased revenue obtained from the VIP Lounge (+12.2%) is partly due to the greater

passenger traffic (+3.9%) and partly to the higher number of entrances in the lounges of the two

Tuscan airports.

The reduction in revenues from the Air Ticket Office (-9.9%) is due to the increased habit of

passengers to purchase tickets through online reservation systems.

Revenues deriving from the Cargo Agency (only in the Pisa airport) decreased by 9.6% compared

to 2015 due to the cancellation of some charter cargo flights that had positively affected revenues

during that business year (Saudi Arabian Airlines).

Other revenue and income

The table below provides details on 2016 “Other revenues and income” against those of 2015:


Page 29

OTHER REVENUE AND INCOMEamounts in euro/000 2016 2015 VAR. VAR.%

Contingent assets 3.378 3.556 (178) -5,0%

Services and consulting 206 163 43 26,4%

Cost recoveries 1.156 1.168 (12) -1,0%

Minors 56 51 5 9,8%

TOTAL REVENUES AND INCOME 4.796 4.938 (142) -2,9%

Incid.% over revenues 3,62%

Contingent assets consist of past revenues or in the release of cost provisions recognised in previous

years, which decreased by 5 % in 2016 compared to 2015. More specifically, 2016 accounts were

particularly affected by about € 1.5 M of reversed costs related to marketing support agreements

that were mainly due to the earlier termination of a contract with a carrier at the Pisa airport; income

for € 473 K was recognised for the elimination of prescribed accounts payable for advance

payments received (ENAC-SAT Convention no. 3580) and € 303 K for the positive conclusion in

the Court of Cassation of a dispute with the Inland Revenue (Agenzia delle Entrate) for a 2003 tax

assessment regarding Aeroporto di Firenze SpA (company incorporated in 2015).

“Services and Consulting” (administrative staff services charged by the Parent Company to the

associates Immobili AOU Careggi Spa and Alatoscana Spa), “Recovery of Costs” (charging of

common centralized services, such as utilities and equipment, employee canteen service, insurance

reimbursements, etc.), and other “Minor” revenues, on the whole, are substantially in line with 2015

values.

REVENUES FROM CONSTRUCTION SERVICES

As at 31 December 2016, revenues for construction services totalled € 7.23 M, against € 18.62 M in

2015. The € 11.39 M of lower revenues finally reported mainly derive from the greater investments

made in 2015 on the Pisa airport for the adjustment and improvement of the flight infrastructure

(runways and connections) for approx. € 13 M.


Page 30

COSTS

As at 31 December 2016, the amount of total costs was € 99.74 M, down by 8.3% compared to

2015, when they were € 108.78 M. This result reflects a decrease in Costs for construction services

(which passed from € 17.69 M in 2015 to € 6.27 M in 2016 (-64.6%) and a +2.6% increase in

operating costs (passing from € 91.09 M in 2015 to € 93.46 M in 2016)

COSTSamounts in euro/000 2016 2015 VAR. VAR.%

Consumables 1.397 1.236 161 13,0%



Sundry operating expenses 2.224 2.078 146 7,0%

Airport leases 6.034 5.269 765 14,5%

Total operating costs 93.470 91.094 2.376 2,6%

Cost for construction services 6.271 17.690 (11.419) -64,6%

TOTAL COSTS (B) 99.741 108.784 (9.043) -8,3%

OPERATING COSTS

Operating costs in 2016 totalled € 93.47 M, up by 2.6% compared to € 91.09 M reported at the end

of 2015.

The Consumables item shows an amount of € 1,397 K, up by € 161 K compared to € 1,236 K in

2015, mainly due to greater purchases of clothing and materials for operating services, partly

mitigated by savings on fuel and lubricants that benefited from the lower unit cost of oil.

The Group’s “Cost of personnel” item totalled € 41.045 K in 2016, up by € 1,224 K compared to

2015 (+3.1%). This difference reflects the greater number of employees of the Group, the

realignment of wages in connection with organizational or contractual aspects, increased yield

premiums and an increased average cost per FTE employee, partly affected by increases due to the

renewal of the national collective labour agreement (“CCNL”) for the applicable category, which

took place at the end of 2014.


Page 31

“Costs for services” totalled € 42.77 M, substantially unchanged compred to the previous business

year, when they were € 42.69 M (€ +80 K). The increased costs of the period, also affected by the

increased traffic, are mainly due to increases in the cost of related external porterage services (€

+697 K), ordinary maintenance (€ +448 K), surveillance/watch services (€ +230 K), car rental and

equipment (€ +246 K), management of parking lots (€ +115 K), dry cleaning, such as ancillary car

rental services (€ 60 K), and institutional costs (€ +74 K) partly offset by lower costs for

subcontractors (€ -1.156 K), Toscana Aeroporti starting up (€ -326 K), utilities (€ -209 K)

industrial insurance (€ -125 K), communication (€ -128 K), and payroll service (€ -110 K).

In 2016, “Sundry management expenses” totalled € 2,224 K, up by 7% compared to 2015. The

difference mainly reflects the increased costs for industrial associations (€ +234 K), entertainment

(€ +87 K), and sundry administrative charges (+81 K), which are partly offset by lower non-

recurring costs (€ -264 K).

“Airport Fees” totalled € 6,034 K in 2016, up by 14.5% compared to 2015. The difference mainly

reflects the greater traffic finally reported at the end of 2016 and the application of the new airport

tariffs in the Florence airport since 25 May 2015, which marked the termination of the requirements

of Law no. 248/05, i.e. the 75% reduction in airport fees to offset the application of lower

considerations to users of the same size.

COSTS FOR CONSTRUCTION SERVICES

“Costs for construction services” totalled € 6.27 M in 2016, down by € 11.42 M (-64.6%) compared

to 2015, for the same reasons indicated as a comment to the corresponding revenue item.


Page 32

YEAR'S RESULT

As a consequence, the EBITDA totalled € 28.51 M in 2016, up by € 4.73 M (+19.1%) compared to

2015, when it totalled € 23.77 M.

“Amortization and provisions” totalled € 19.7 M in 2016, the same as in 2015 due to the increased

amortization (€ +279 K) and bad debt provision (€ +252 K) offset by the reduction in the provision

for risks and repairs (€ -455 K).

The 2016 EBIT reached € 8.75 M +113.72% compared to 2015, when it was € 4.10 M.

Financial operations passed from a negative amount of € 2.343 K in 2015 to a negative amount of €

4,680 K in 2016. The difference € 2.343 K is mainly the result of the capital gain obtained with the

sale of Aeroporto di Florence S.p.A. shares (€ 1.6 M) recognised in 2015 and lower exchange rate

gains compared to the previous year.

Profit Before Tax (PBT) was € 4 M for 2016, which means +132.46% than in 2015, when it reached

€ 1.75 M.

After considering the positive effect of the aforesaid capital gain on 2015, the adjusted PBT would

have grown by € 3.960 M.

The amount of the year’s taxes is € 1.95 M. We remind the reader that the 2015 tax burden had

benefited from the positive effect ( -€ 6.747 K) of adjusting the deferred tax provision of the new

established rates as a result of the law 208/2015 as well as the minus tax burden of the financial

income generated by the sale of AdF shares, for which a separate tax rate applied (so-called “Pex

regime”). Furthermore, we remind readers that the 2016 taxation benefited from a positive amount

of approx. € 1 M from the tax consolidation agreement signed with the Parent Company

Corporación America Italia and Toscana Aeroporti, for the years 2016, 2017, and 2018.

Net Group profits of - € 649 K have been recognised, down by € 1,840 K compared to 2015. In the

absence of the positive effect of the adjustment to deferred tax provision made in 2015 and the

capital gain on the sale of shares in ADF, the result would have gone from a loss of € 3,096 K in

2015 to € 649 K in 2016, with a reduction in loss of € 2.446 K.


Page 33

Below is the consolidated Statement of Financial Position of the CAI Group as at

31/12/2016 and as at 31/12/2015.

Amounts shown in thousand euro (€K) 2016 2015

NON CURRENT ASSETS

386.666

390.602 (3.936)

Current assets

Receivables from customers 15.495

14.632 863

Receivables from related companies 217 181 36

Tax Receivables 610 2.359 (1.749)

Receivables from others

5.483 6.373 (890)

Cash and cash equivalents 29.352

34.932 (5.580)

TOTAL CURRENT ASSETS 51.157 58.477 (7.320)

TOTAL ASSETS

437.823

449.079 (11.256)

NET ASSETS 206.554

208.600 (2.046)

Non-financial liabilities 84.977

88.075 (3.098)

Financial liabilities

84.682

88.501 (3.819)

Total liabilities 169.659 176.576 (6.917)

CURRENT LIABILITIES

61.609

63.903 (2.294)

TOTAL LIABILITIES

231.269

240.479 (9.210)

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

437.823

449.079

(11.256)

(*) Please note that, in order to offer the reader a greater comparability of the information disclosed

in the financial statements at 31 December 2016, same data regarding the previous period have been


Page 34

altered. More specifically, we reclassified € 4,526 K from the item “Receivables from Customers”

to the item “Receivables from others due within the year”. This change made to 2015 data is

significant in the opinion of the Company.

Information on the main equity and economic indices

Profitability ratios Consolidated

2016 Consolidated

2015

ROE Net Income / Shareholders Equity 1,03% 3,15%

Gross ROE Profit before tax / Shareholders Equity 1,97% 0,84%

ROI Operating income / Net invested Capital(1) 3,27% 1,53%

ROS Operating income / Revenues (2) 7,18% 3,57%

FINANCIAL EXPENSES / REVENUE RATIO Financial expenses /

Revenues (2) 4,00% 4,44%

EBITDA / FINANCIAL EXPENSE RATIO EBITDA / Financial expense 5,8 4,7

Equity ratios Consolidated

2016 Consolidated

2015

STOCK LIABILITIES RATIO 0,83 0,92

Current assets / Current liabilities

DEBT TO EQUITY RATIO 0,30 0,29

Debt(NFP) / Shareholders equity

NET DEBT TO EBITDA RATIO 2,15 2,51

Debt(PFN) / EBITDA

PRIMARY QUOTIENT OF STRUCTURE 0,53 0,53

Shareholders equity / Non-current assets

(1) Net invested capital = non-current assets + CCN (net working capital) - medium / long (non-financial) liabilities. CCN =

current assets - cash and cash equivalents - short - term liabilities.

(2) Total revenues – Cost for construction services

INVESTED CAPITAL


Page 35

The table below compares the summarised data of the capital invested at 31 December 2016 with

those at 31 December 2015

(Amounts in € K)

Consol. 31

dec 2016

CAI

Consol. 31

dec 2015

CAI

Diff. Abs.

2016/2015

Non current assets 386.666 390.602 (3.936)

Net Working Capital (33.774) (34.281) 507

Med./Long term liabilities (84.977) (88.075) 3.098

Invested Capital 267.915 268.246 (331)

Net financial indebtedness

Shareholders' equity 267.915 268.246 (331)

Net assets (206.554) (208.600) 2.046

Net financial indebtedness 61.361 59.646 1.715

Consolidated Net Financial Position

For the sake of complete disclosure, we provide below the Consolidated Net Financial Position at

31 December 2016 and at 31 December 2015 in compliance with the provisions set forth in

Consob’s Notice prot. no. 6064293 of 28 July 2006.

(values in €/000)

31.12.2016

Consolidated

CAI

31.12.2015

Consolidated

CAI

Diff.

2016/2015

A Cash on hand and at banks 29.352 34.933 (5.581)

B Other cash and cash equivalents - - -

C Securities held for trading - - -

D Liquid assets (A) + (B) + (C ) 29.352 34.933 (5.581)

E Current Financial receivables - -

F Current bank payables - -

G Current portion of non-current indebtedness 6.031 6.077 (46)

H Other current financial payables due to leasing companies - -

I Current financial indebtedness (F) + (G) + (H) 6.031 6.077 (46)

J Net current financial indebtedness (I) - (E) - (D) (23.321) (28.856) 5.535

K Non-current bank payables 36.259 40.534 (4.275)

L Bonds iussed 48.423 47.967 456

M Other non-current payables due to leasing companies - -

N Non-current financial Indebtedness (K) + (L) + (M) 84.682 88.501 (3.819)

O Net financial indebtedness (J) + (N) P.F.N. 61.361 59.645 1.716


Page 36

CAI Group headcounts

In 2016 CAI hired an employee and availed itself of the functions and activities of the directors and

external consultants as for 2015.

In 2016 the average number of employees of TA has been 709.4 FTE units, up by 3.0 FTEs in

absolute terms (+0.4%), compared to the same period of 2015, consistently with a 4.0% increase in

the number of traffic units managed.

TA’s ratio between traffic units managed and employees (expressed in Full-Time Equivalent units)

benefited from a 3.6% increase in productivity from 2015 to 2016.

The number of employees of the subsidiary Jet Fuel, the company that manages the fuel storage

facility in the Pisa airport, recognised a 0.7 FTE increase because it hired a new worker during

2016.

TAE’s staff consists in two units hired in 2016. For the infrastructure development contemplated in

the 2014-2029 Florence and Pisa Master Plans, from 1 January 2016 TAE also benefited from the

support of the technical staff (engineers, land surveyors, etc.) of the Parent Company (TA).

The following table illustrates the annual average headcount (stated in Full Time Equivalent) of

CAI Group regarding 2016 and the changes that took place compared to 2015:


Page 37

2016 2015 VAR. VAR. %

Corporacion America Italia 1,0 1,0 - -

Managers 12,4 10,8 1,6 14,8%

Employees 520,0 501,8 18,2 3,6%

Workers 176,9 193,8 (16,9) -8,7%

Toscana Aeroporti 709,3 706,4 2,9 0,4%

Jet Fuel 10,7 10,0 0,7 7,0%

TAE 1,5 - 0,9 -

Gruppo Corporacion America Italia 722,5 717,4 4,5 0,6%

The Group's Cost of Personnel totalled € 41 M in 2016, up by € 1.224 K compared to 2015

(+3.1%). This difference reflects the greater number of employees of the Group, the realignment of

wages in connection with organizational or contractual aspects, increased yield premiums and an

increased average cost per FTE employee, partly affected by increases due to the renewal of the

national collective labour agreement (“CCNL”) for the applicable category, which took place at the

end of 2014.


Page 38

Technical training and education

In 2016 the Company kept implementing its training policies, as already outlined in previous years.

TA delivered a total of 34,489 training hours throughout the year considered, 26% of which for staff

operating in FLR and 74% for staff operating in PSA, based on specific requirements connected

with the specific nature of the two airports (system changes, introduction of new technologies, and

so on).

OCCUPATIONAL HEALTH & SAFETY

TA’s Prevention and Protection Service (PPS) kept monitoring the main health and safety issues.

More specifically, actions were implemented in the following fields in 2016: i) Safety

Organizational Chart; ii) Structure of the Prevention and Protection Service; iii) Competent

Physician, and iv) appointment of Managing Directors.

After the merger and the organization of the centralized Prevention and Protection Service for the

two airports, the need arose to review the existing structure and processes.

So, during 2016 a resource was added after being identified through an internal selection process to

play the role of Manager of the PPS function in the Florence airport.

Furthermore, the appointments and powers of attorneys of the two Delegate Employers have been

defined pursuant to Leg. Dec. no. 81/08 for both the Pisa and Florence airports.

In July 2016, a public competition was called to select a new company for the service of Competent

Physician. This service today is delivered by two physicians, one for each airport, and a Medical

Coordinator.

Procedures and operating instructions have been issued to standardise the processes of the two

airports.

BS OHSAS 18001:2007 Certification

In October 2016, the subsidiary Toscana Aeroporti obtained certification to the BS OHSAS

18001:2007 standard (already obtained by SAT - Aeroporto di Pisa in 2013), which was extended to

the Florence airport. This certification makes the Company compliant with the provisions set forth

in art. 16, paragraph 3, and art. 30 of Leg. Dec. no. 81/08, with important positive implications on

the administrative responsibility of companies for occupational health and safety crimes specified in

Leg. Dec. no. 231/2001.

Risk assessment and protection devices

The Company issued a unified Risk Assessment Model (Italian acronym “DVR” for Documento di

Valutazione dei Rischi) dated 24 May 2016, which contains the respective risk assessments


Page 39

conducted in the two airports. The standardization of the risk assessment process will be completed

by the end of 2017 in the two airports with a new edition of the “DVR”. During 2016 the

investigations for the updating of the physical risk related to the Florence site have been completed.

The PPDs already identified in previous years have been reconfirmed for 2016.

Emergency and evacuation drills

The annual emergency and evacuation drills have been conducted in the two airports as every year,

as required by Ministerial Decree (D.M.) no. 10/03/98, in cooperation with the Fire Brigade and the

Prevention and Protection Service of the Border Police.

More specifically, the following drills have been performed in the two airports:

1) Florence airport - September 29th – Fire scenario in Arrivals area;

2) Pisa airport - September 30th – Fire scenario in Arrivals area.

Training and awareness

In 2016, in addition to the ongoing training program on occupational safety required within the

framework of the State-Regions Agreement (which are also carried out by using an e-learning

platform), the following training and awareness activities have been carried out:

for the Pisa site, training has been completed for 20 new emergency operators;

a course has been organized and delivered for all Managers and Directors;

training has been delivered to Managers and Employees directly with internal PPS resources;

compulsory training updates have been delivered to the resources identified by the law;

awareness, involvement and discussion activities have continued concerning several themes with

the Workers’ Representatives (“RLS”), the Competent Physician and the Qualified Radioprotection

Expert.

Labour accidents

Aggregate accident trends in 2016 are virtually in line with 2015 trends (with a total of 23

“recordables” in 2016 against 25 in 2015).

No accident took place with a prognosis exceeding 40 days and no professional disease has been

recognised.


Page 40

INFORMATION (IT) SECURITY AND PRIVACY LEGISLATION - LEG. DEC. NO. 196 of

30 JUNE 2003

Law no. 35 of 2012 repealed the requirement of the Safety Plan by eliminating point 19, and the

related sub-points contained in Annex B to the Consolidated Act (“Testo Unico”) on privacy. After

the merger and within the framework of the monitoring of the Compliance function, Toscana

Aeroporti took action to ensure that personal data and information are treated in compliance with

the applicable legislation.

RESEARCH & DEVELOPMENT

In 2016, as well as in 2015, the Group carried on its reorganisation, renewal and unification process

regarding the two operating sites, particularly as regards the information systems of the Pisa and

Florence airports. By developing its IT structure, it continued implementing a plan aimed at

optimizing and harmonizing corporate processes.

More specifically, during 2016 the Group:

- prepared the Business Impact Analysis document and designed the new Disaster Recovery &

Business Continuity infrastructure;

- analysed and designed its migration to the new corporate SAP ERP;

- harmonized the Lost & Found systems of the two airports;

- adopted a new unified airport DCS for the two airports;

- activated a network disk shared between the airports;

- performed an external/internal Network Vulnerability Assessment on the networks of the two

airports;

- harmonized the e-learning system;

- implemented a new software for the unified management of training requirements;

- provided Wi-Fi coverage in all the aircraft aprons for baggage reconciliation activities and

alongside aircraft operations in the Florence airport;

- doubled the gates in the Pisa airport and changed their technology;

- activated a numberplate recognition system in the parking lots of the Florence airport;

- activated two Lost & Found kiosks at the Florence airport;

- harmonized the system for the management of the Health Service medical intervention in the

Florence and Pisa airports;

- updated the web sites of the Florence and Pisa airports,

because the creation of a fully operational Tuscan Airport System starts from an efficient

information management network.

MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP IS EXPOSED

The main risk factors that may affect the Group’s operations are described below.

- RISKS ASSOCIATED WITH THE GENERAL CONDITIONS OF THE ECONOMY AND

THE INDUSTRY

The main factors that may affect operations in the transport sector where the Group operates are,

inter alia, the gross domestic product (GDP), the business and consumer confidence level, the

unemployment rate and the oil price. The downturn of the domestic and international economy that

started in the second half of 2008 is continuing and its effects were still felt in 2016. More


Page 41

specifically, the international political unrest, the credit crunch, the high unemployment rate, the

reduction in the available income for families in real terms, and the consequent decrease in

consumption may adversely affect the demand for air transport. Should this weak economy persist,

we cannot exclude a negative impact on the economic situation of the Group.

In any case, the recent traffic trends of the two airports, with significant growths in the number of

passengers recorded in the years from 2013 to 2015, confirmed in 2016, confirms the special

attractiveness of our territory, which in itself mitigates the risk described.

- RISKS ASSOCIATED WITH AIRPORT HANDLING ACTIVITIES AND THE

EXTREMELY COMPETITIVE LAYOUT OF THE RELATED MARKET

Airports with a traffic exceeding 2 million passengers or 50,000 tons of goods are recognised free

access to the “ground assistance services” market (Leg. Dec. no. 18/99). To date, in the Pisa and

Florence airports, these services are mostly provided by the same entity that manages the airport. At

present, the only handling activity to be carried out by providers of ground assistance services other

than TA in the two airports is the general aviation business.

In 2016, revenues generated by the handling business accounted for 21.7% over total revenues

(23% of the total, after deducting revenues from construction services). The market where the

providers of handling services operate is typically characterized by a high level of competitiveness,

as well as by a limited profitability in terms of operating income.

The increase in competitive pressure, on the one hand, and the reduced margins that characterise

these activities, on the other, could adversely affect TA's economic situation, equity and financial

standing.

- REGULATORY RISK

The Subsidiary TA, within the framework of the two concessions for the global management of the

Pisa and Florence airports, operates in a sector regulated by domestic and international legislation.

Any unpredictable change in the regulatory framework might adversely impact the bottom line of

the CAI Group.

A potential risk factor in the airport sector is the constant evolution of the specific legislative and

regulatory scenario where the Subsidiary TA, like the other airport operators, operates. The

Company's financial results are affected by the developments in the regulatory framework,

particularly as regards the airport services tariff regulations and the fee system for the services

offered by airport operation companies. In this regard, we specify that the preliminary stages for the

definition with the new Transport Authority of the new rate levels for the regulatory period 2015-

2018 had been positively concluded during the first half of 2015 for both the Pisa and Florence

airports. In October 2016, the annual consultations with users were positively conducted in Florence

and Pisa, and were followed by the disclosure of the new tariffs effective from 1 January 2017.

- RISKS ASSOCIATED WITH RELATIONSHIPS WITH EMPLOYEES AND TRADE

UNIONS

The Subsidiary TA operates in an industrial context characterised by a significant presence of trade

unions and is potentially exposed to the risk of strikes and interruptions in its production activities.

In the recent past of Toscana Aeroporti, no significant block of the service due to strikes occurred at

either Pisa or Florence airports. In order to avoid the risk of these disruptions as far as possible, the

company is taking a stance aimed at fostering an open dialogue with trade unions.


Page 42

- RISKS ASSOCIATED WITH DECREASING AIRPORT TRAFFIC IN THE TWO

AIRPORTS AND WITH THE CONCENTRATION OF CERTAIN CARRIERS

Like the other operators of the sector, the Subsidiary TA may also be affected by a possible

reduction or termination of flights by one or more carriers, which might be due to an

economic/financial crisis in their business organizations and which might adversely impact the

bottom line of the Group.

In 2016, TA recorded 7,504,634 passengers carried within a system of 40 operating carriers. The

total incidence of the first three carriers is 59.4%. More specifically, the incidence of the first carrier

is 43%, while the incidences of the second and third carriers are 8.5% and 7.9%, respectively.

On the other hand, the Subsidiary, based on past experience and in spite of the typical uncertainty of

the sector, believes that it would be able to face the risk of a reduction or interruption in the services

rendered by one or more carriers with a possible redistribution of passenger traffic among the

various airlines operating in the airport and with its capacity to attract new carriers, as has been

recently demonstrated, in 2016, in the Pisa airport with the replacement of certain carriers for

certain flight routes that had been previously operated by Alitalia.

In addition to that, TA signed with said carriers multi-year trade agreements that include their

commitment to promote marketing and advertising campaigns, and achieve pre-established

objectives in terms of passengers and flights, in exchange for TA’s commitment to contribute to the

related expenses and grant economic incentives for the achievement of the aforesaid objectives.

These agreements also establish that penalties be imposed in case of cancellations not caused by

force majeure events.

However, we should not exclude the likelihood that, notwithstanding the implementation of the

aforesaid remedial measures, a certain amount of time might elapse between the interruption of

flights and their replacement by other carriers and that this interruption might, in any case,

negatively impact the operations and earnings of the Subsidiary.

In order to minimize the risk of traffic concentration on some carriers, the Subsidiary, albeit in the

context of a sector, such as the air transport sector, characterised by integration and merger

processes between carriers, is pursuing a strategy of diversification of the airlines operating in the

two airports.

As to the result of the 23 June “Brexit” referendum in the United Kingdom, where the decision to

leave the European Union prevailed, it is difficult to predict all the possible economic and social

repercussions at the present date, and the impact it might have on air traffic in the medium-long

term.

- RISKS ASSOCIATED WITH DEPENDENCE ON KEY PERSONNEL

The Subsidiary TA believes that its operating and management structure is capable of ensuring the

continuity of the management of its corporate affairs. Furthermore, TA has started a process of

development of human resources in view of a Succession Plan. However, should one or more key

staff of TA, such as the CEO and General Director or other senior/Top Management members,

terminate their cooperation with the company, there could be a negative impact on the perspectives,

business activities and economic/financial results of the Subsidiary.

We stress that the recent corporate merger between the Pisa and Florence airports provided the new

TA Group with a wider executive framework in organizational terms, so we may reasonably expect

a reduction in this risk.

- ENVIRONMENTAL RISK

The activities of the Group are regulated by many European Union regulations and domestic,


Page 43

regional and local legislation on the protection of the environment. The Group has the priority of

carrying out its activity in compliance with the applicable environmental legislation; however, since

the risk of environmental liability is intrinsic to the activity of the Group, there can be no certainty

that any new future regulations may not involve further regulatory requirements for the Group.

- FINANCIAL RISK

As regards financial risks, see the specific section in the Explanatory Notes.

. SIGNIFICANT EVENTS OCCURRED AFTER THE CLOSING OF THE PERIOD AT 31

December 2016

Main new features of the Master Plans of the Florence and Pisa airports

As already explained in the paragraph regarding section 9 “Significant events occurred in 2016”, we

remind readers that

• the “Conference of Services“ on the verification of the compliance of the “2014-2028

Pisa G. Galilei Airport Master Plan” with town-planning regulations was held and positively

concluded on 6 February 2017 at the Ministry of Infrastructures and Transport. A protocol of

understanding between the State and the Regions will be issued to specify all the conditions or

indications of the Administrations that took part in the Conference. When the time established for

the publication of the PoU has come, the proposing body - ENAC - will be able to issue the final

opinion of approval of the “2014-2028 Pisa G. Galilei Airport Master Plan” by collecting the

opinions of the Ministry of Infrastructures and Transport and of the Ministry of the Environment,

Protection of the Territory and the Sea.

• The framework agreement with ENAC for the financing of the works contemplated in

the Master Plan (“Contratto di Programma Quadro – di finanziamento”) was signed on 16 February

2017, so the Airport Operator confirmed its commitment to make the significant investments

described in the aforesaid Florence Airport Master Plan, and ENAC, together with MIT, committed

to contribute their portion of the financing required for the implementation of the plan, for a total

amount of € 150 million.

Main news on the operations of the Pisa airport

• S7: the Russian airline will start operating a new two-weekly flight to Moscow

Domodedovo since April 26th, as an addition to the two-weekly flight to Moscow Vnukovo

operated by Pobeda.

• Eurowings: a new two-weekly flight to Stuttgart will be operated starting from next

summer.

• Transavia: since April 14th, the Dutch carrier will operate 4 weekly flights to

Rotterdam.

News regarding operations in the Florence airport

• BA Cityflyer: operating since May 2017, new flights to London STN, Bristol, and

Birmingham.

• KLM: passed from 16 to 21 weekly flights in February and March.

• Vueling: launched new flights to London Luton, Amsterdam, and Palma de Mallorca


Page 44

starting from April 2017.

• Swiss: starting from July 2017, it will use a larger CS100 aircraft with 125 seats.

• Air Moldova: passed from 2 to 3 weekly flights from May to September.

• Blue Air: will operate a new three-weekly flight to Iasi since June and increase the

number of flights to Bucharest Otopeni (from 3 to 4, from June to September).

OUTLOOK

In February 2017, the Tuscan Airport System recorded a total traffic of over 410 K passengers,

+3,9% higher than the number recorded in the same month of 2016 (leap year).

Year-to-date data regarding the first 2 months of the year show a 6.7% increase compared to the

same period of 2016, for a total of over 850,000 million passengers passed through the Pisa and

Florence airports since the beginning of the year.

This result has been supported by positive Load Factor trends for scheduled flights, which increased

by 3.4 percentage points compared to the first 2 months of 2016 (from 75.5% to 78.9% in 2017).

Considering the growth recorded by the Tuscan Airport System in terms of passenger (+6.7%) and

cargo (+13.5%) traffic in the first two months of the year and the currently scheduled flights for the

summer 2017, the CAI Group is expecting positive growth rates in 2017.

PROPOSAL FOR ALLOCATION OF THE RESULT OF THE YEAR

Dear Shareholders,

We invite you to approve the Financial Statement for the year 2016 prepared by Corporaciòn

America Italia S.p.a. based on the valuation criteria described in the Explanatory Notes.

We propose that the net year profits of € 574,570.07 be allocated as follows:

- € 28,728.50 to the legal reserve based on statutory provisions;

- € 545,841.57 to be distributed as provisions for retained earnings.

Chairman of the Board of Directors

(Roberto Naldi)

Pag. 45


Registered office in Milan - Piazzale Martesana no. 10

Share capital fully paid-up EUR 85,000,000.00

Registered in the C.C.I.A.A. of MILAN

VAT No.: 08555440968 - Tax Code: 08555440968

Economic and Administrative Archive No: 2033297

Consolidated Financial Statement as at 31/12/2016

(Amounts in €K)

ASSETS Notes 31/12/2016 31/12/2015

NON-CURRENT ASSETS

INTANGIBLE ASSETS 341,995 345,480

Concession rights 327,059 334,896

Industrial patent rights. 513 368

Work in progress and advance payments 9,807 5,602

Goodwill 4,615 4,615

TANGIBLE ASSETS 39,162 39,873

Land and Buildings that can be freely assigned 1,734 2,122

Owned property, plant and equipment 37,428 37,751

EQUITY INVESTMENTS 666 678

Investments in Associated Companies 525 525

Equity investments in Other Companies 141 153

FINANCIAL ASSETS 2,696 2,408

Guarantee deposits 146 137

Receivables from others due beyond the year 2,550 2,271

OTHER NON-CURRENT ASSETS 2,147 2,162

Prepaid taxes recoverable beyond the year 2,147 2,162

Consolidated Interim Statement Reports at 31/12/2016 CORPORACION AMERICA ITALIA SPA

Pag. 46

TOTAL NON-CURRENT ASSETS 386,666 390,602

CURRENT ASSETS

Inventories 0 0

ACCOUNT RECEIVABLE 21,805 23,545

Receivables from customers 15,495 14,632

Receivables from associated companies 217 181

Tax receivables 610 2,359

Receivables from others, due within the year 5,483 6,373

CASH AND CASH EQUIVALENTS 29,352 34,933

Cash and cash equivalents 29,352 34,933

TOTAL CURRENT ASSETS 51,158 58,477

TOTAL ASSETS 437,823 449,079

(Amounts in €K)

LIABILITIES Notes 31/12/2016 31/12/2015

TOTAL NET EQUITY AND LIABILITIES

NET ASSETS

Share capital 85,000 85,000

Capital reserves 837 -824

Profit (loss) carried forward -606 0

Profit (loss) of the period -649 1,191

NET ASSETS CAI GROUP 84,582 85,367

Minority shareholder’s equity 121,972 123,233

TOTAL NET ASSETS 206,554 208,600

NON-CURRENT LIABILITIES

Provisions for liabilities and expenses 2,886 3,815

Provisions for repair and replacement 19,081 18,759

Termination benefits and other personnel-related provisions 6,871 6,489

Deferred tax liabilities 56,096 58,207


Pag. 47

Financial liabilities 84,682 88,501

Other payables due beyond the year 43 805

TOTAL NON-CURRENT LIABILITIES 169,659 176,576

CURRENT LIABILITIES

Loans 6,031 6,077

Tax liabilities 7,030 10,038

Payables to suppliers 26,100 29,428

Payables to social security institutions 2,672 2,558

Other payables due within the year 14,624 12,971

Provisions for repair and replacements 4,830 2,453

Advance payments 322 379

TOTAL CURRENT LIABILITIES 61,609 63,903

TOTALE CURRENT AND NON CURRENT LIABILITIES 231,269 240,479

TOTALE NET EQUITY AND LIABILITIES 437,823 449,079

INCOME STATEMENT

(Amounts in €K)

Notes 31/12/2016 31/12/2015

REVENUES 128,249 132,558

Aviation revenues 89,597 83,853

Non-aviation revenues 26,626 25,151

Revenues for construction services 7,230 18,616

Other revenue and income 4,796 4,938

COSTS 99,740 108,784

Consumables 1,397 1,236

Cost of personnel 41,045 39,821

Cost for services 42,770 42,690

Sundry operating expenses 2,224 2,079

Airport leases 6,034 5,269


Pag. 48

Costs for construction services 6,271 17,690

GROSS OPERATING MARGIN 28,509 23,774

Amortization and write-downs 15,112 14,833

Provision for risks and repair 4,227 4,682

Bad debts reserve 415 163

ASSET MANAGEMENT 8,754 4,096

Financial income 199 2,720

Financial expenses -4,878 -5,105

Profit (loss) from equity investments 0 42

TOTAL ASSET MANAGEMENT -4,680 -2,343

PROFIT (LOSS) BEFORE TAXES 4,075 1,753

Taxes for the year -1,945 4,810

PROFIT (LOSS) FOR THE YEAR 2,129 6,563

Minority interest’s loss (profit) for the year -2,779 -5,372

CAI GROUP’S PROFIT (LOSS) FOR THE YEAR -649 1,191


Pag. 49

TOTAL INCOME STATEMENT 31/12/2016 31/12/2015

Profit or loss for the period 2,129 6,563

Other income 0 0

Other gains/(losses) that will not be subsequently reclassified to

profit or loss : 0 0

Gains (losses) deriving from the TFR prov. net of tax (277) 307

Total (277) 307

Financial assets available for sale 0 0

Cash Flow hedging reserve 0 0

Total other income (277) 307

Total Income Statement 1,852 6,870

ATTRIBUTABLE TO OWNERS OF PARENT

COMPANY (791) 1,348

OF WHICH ATTRIBUTABLE TO MINORITY

INTERESTS 2,643 5,522


STATEMENT OF CHANGES IN THE CONSOLIDATED SHAREHOLDER'S EQUITY

Share

Capital

Reserves that

can be freely

assigned

Legal

reserve

Exchange

reserves

Other

Reserves

Total

group's S.E. Total

S.E. at 31.12.2014 130.000 742 (718) 130.024 120.002 250.026

Shareholder's Injections 0 0 0

Profit (loss) of the period 1.191 1.191 5.372 6.563

Other comprehensive income

(expenses) for the year 157 157 150 307

Distributions (45.000) (60) (45.060) (3.327) (48.387)

Other reserves (1.663) 718 (945) 1.036 91

Other handling third parties 0 0

S.E. at 31.12.2015 85.000 0 0 0 (824) 1.191 85.367 123.233 208.600

Shareholder's Injections 0 0 0

Profit (loss) of the period (649) (649) 2.778 2.129

Other comprehensive income

(expenses) for the year (142) (142) (135) (277)

Distributions 0 (3.898) (3.898)

Other reserves 1.191 (1.191) 0 0 0

Other handling third parties 6 6 (6) 0

S.E. at 31.12.2016 85.000 0 0 0 231 (649) 84.582 121.972 206.554

CAI Group's Net Assets Total

Shareholders'

Equity

Total group's

S.E.

Pag. 50

Statement of Cash Flows 1

CORPORACION AMERICAITALIASPARegistered office: PIAZZALE MARTESANA 10 MILANO (MI)

Registered with the Registry of Companies of MILANO

Tax Registration Number 08555440968

Registered with the REA of MILANO no. 2033297

Subscribed share capital € 85.000.000,00 Fully paid

VAT registration number: 08555440968

Single-member Company]

Statement of Cash FlowsCondensed financial statements as at31/12/2016

Statement of Cash Flows

Financial Statement - Indirect method

Amount as at 31/12/2016


A) Financial flow from operations (indirect method)

Profit (loss) for the year 2.129 6.563

Income taxes 1.945 (4.810)

Interest expenses/(income) 4.680 3.985

(Dividends)

(Capital gains)/Capital losses resulting from asset disposal 54 (1.600)

1) Profit (loss) for the fiscal year before income taxes, dividends and capital gains/losses from disposals 8.808 4.138

Adjustments for non-monetary elements with no offset in working capital

Accruals to provisions 6.363 6.733

Depreciation of assets 15.112 14.833

Writedowns due to impairment

Adjustment of value of financial assets and liabilities of derivative financial instruments not involving cash transactions

Other increasing/(decreasing) adjustments for non-monetary items

Total adjustments for non-monetary items with no offset in net working capital 21.475 21.566

2) Financial flow before changes to the net working capital 30.283 25.704

Changes in net working capital

Pag. 51

CORPORACION AMERICA ITALIA SPA Financial statements as at 31/12/2016




Decrease/(Increase) of inventories

Decrease/(Increase) of credits towards customers (863) 1.307

Increase/(Decrease) in payables due to suppliers (3.328) 4.379

Decrease/(Increase) in accrued income and deferred expenses

(Increase)/Decrease in accrued liabilities and deferred income

Other decreases/(Other increases) of net working capital 4.422 (423)

Total changes in net working capital 231 5.263

3) Financial flow after changes to the net working capital 30.514 30.967

Other adjustments

Interest collected/(paid) (3.730) (2.695)

(income taxes paid) (4.300) (4.513)

Dividends collected

(Use of provisions) (8.699) (4.253)

Other collections/(payments)

Total other adjustments (16.729) (11.461)

Financial flow from operations (A) 13.785 19.506

B) Financial flow from investing activities

Tangible fixed assets

(Investments) (2.794) (3.126)

Disinvestments 229

Intangible fixed assets

(Investments) (8.405) (18.838)

Disinvestments

Financial fixed assets

(Investments)

Disinvestments (277) 68

Financial assets not classified as noncurrent

(Investments)

Disinvestments

(Acquisition of company branches net of cash and cash equivalents)

Sale of company branches net of cash and cash equivalents

Cash flow from investing activities (B) (11.247) (21.896)

C) Financial flow from financing activities

Loan capital

Pag. 52

CORPORACION AMERICA ITALIA SPA Financial statements as at 31/12/2016




Increase/(Decrease) in short-term payables due to banks 5.504

New loans 6.000 10.000

(Reimbursement of loans) (10.222) (14.263)

Equity

Increase in paid share capital

(Capital reimbursement) (45.060)

Disposal/(Purchase) of treasury shares

(Dividends and advances on dividends paid) (3.897) (3.327)

Cash flow from financing activities (C) (8.119) (47.146)

Increase (decrease) in cash and cash equivalents (A ± B ± C) (5.581) (49.536)

Effect of exchange rates on cash and cash equivalents

Cash and cash equivalents at the beginning of the fiscal year

Depositi bancari e postali

Assegni

Cash and equivalents on hand

Total cash and cash equivalents at the beginning of the fiscal year 34.933 84.469

Of which, not freely usable

Cash and cash equivalents at the fiscal year end

Depositi bancari e postali

Assegni

Cash and equivalents on hand

Total cash and cash equivalents at the end of the fiscal year 29.352 34.933

Of which, not freely usable

Balance difference

Pag. 53

Pag. 54

EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL

STATEMENTS AT 31 DECEMBER 2016

INTRODUCTION

The Corporaciòn America Italia Group (hereinafter also briefly referred to as the “Group” or the “CAI Group”)

consists of the Holding “Corporaciòn America Italia Spa” (hereinafter also briefly referred to as “CAI”), with

registered office in Piazzale Martesana, 10 - Milan and its subsidiary “Toscana Aeroporti Spa” (hereinafter

also “TA”) and the subsidiaries of TA “Toscana Aeroporti Engineering s.r.l.”, “Parcheggi Peretola S.r.l.” and

“Jet Fuel Co. S.r.l.” The main activities of the Group are described in the Report on Operations.

Corporaciòn America Italia S.p.A was incorporated on 19 February 2014.

The company has as its main object the activity of management of equity investments.

Corporacion America Italy S.p.A is wholly owned by the company DICASA Spain SAU registered office in

Madrid.

From the month of February 2014 it has purchased the shares of Società Aeroporto Toscano SpA (below also

SAT), with registered office in Pisa, following the shares of Aeroporti di Firenze S.p.A (below also ADF),

based in Florence.

Both companies were listed on the Milan stock exchange. ADF managed Florence Airport on the basis of a

concession expiring on 10 February 2043, SAT managed Pisa airport on the basis of a concession expiring on

7 December 2046.

Below are specified the details of the acquisitions:

In February 2014 it purchased 390,900 shares representing approximately 3.965% of the share capital of SAT

S.p.A. and 3,017,764 shares representing 33.402% of ADF S.p.A.

In March 2014 it completed the acquisition of 2,309,902 shares, representing approximately 23.427% of the

share capital of SAT S.p.A., bringing its equity investment in SAT to 27.392%. In June 2014 acquired a further

1,387,519 shares of ADF in S.p.A.

Following the launch of two tender offers to purchase, a voluntary total of SAT and the other compulsory total

in ADF, CAI owns 48.983% to 53.039% of ADF and SAT.

In October 2014, the Boards of Directors of the subsidiaries have approved the guidelines of the proposed

merger of SAT S.p.A. and ADF S.p.A. and those of the Masterplan of the System defining the macro lines of

traffic development and infrastructure of the two airports.

In December 2014, the Boards of Directors of SAT S.p.A. and Aeroporti di Firenze S.p.A. approved the merger

by incorporation of ADF in SAT and the preparatory operation and documentation.

The Merger was part of the industrial and strategic design, already announced to the market with the joint press

release issued by SAT and ADF on 16 October 2014, aimed at achieving integration between SAT and ADF,

Pag. 55

and complied with the requirements of the National Airports Plan within the scope of having one manager of

the airports of Florence and Pisa in order to guarantee them the status of airports of a national strategic interest.

The strategic objective was to build a "best in class" Tuscan airport system and to become one of the main

Italian airports. The integration project is aimed at maximising the coordinated development of the Galilei and

Vespucci Airport through the expansion of the destinations served by the two airports, increasing in number

of seats offered on individual routes, increasing the number of airline companies operating in the system due

to the adjustment of airport infrastructure to traffic volumes by Airport Development Plans (PSA) of the two

airports.

The Merger ensured a uniqueness in the strategic direction of the system that will deliver economies of scale,

thus generating value to be used to finance the investments needed to support the growth plans of the two

airports.

The Shareholders Meetings of ADF and SAT, which met respectively on 9 and 10 February 2015, approved,

in a first meeting, the same merger plan, without making any changes or additions and approved by their

respective committees for related party transactions.

As reported in the "Information Document concerning the merger of Aeroporto di Firenze S.p.A. in Società

Aeroporto Toscano Galileo Galilei S.p.A.", both companies were under the common control of Corporacion

America Italia S.p.A, with 53.039%, exercising the control by law of SAT, while with 48.983% direct and

0.753% indirect, held by SAT for a total of 49.736%, being able to exercise the control over ADF. It also

recalls the agreement signed by the same Corporacion America Italia S.p.A. with SO.G.IM. S.p.A. and

communicated to the market in accordance with Article 122 of the Consolidated Law.

On the basis of IAS/IFRS, applied by ADF and SAT in the preparation of its consolidated financial statements,

the Merger has been configured as a business feature combination between entities under common control.

Therefore, in the case of "business combination Involving entities under common control", the Merger was

explicitly excluded from the scope of IFRS 3 for 2015.

The merger deed by incorporation of ADF in SAT was signed on 11 May 2015.

The merger took effect from the date the statements from the last registration required by Article 2504-bis of

the Civil Code which took place on 25 May 2015, therefore the merger was effective from 1st June 2015. For

accounting and tax purposes, the operations carried out by ADF were recorded in the financial statements of

SAT from 1 January 2015.

On the effective date of the Merger SAT changed its company name in "Toscana Aeroporti Spa", a listed

company with registered office in Florence, whose share capital are held at 51.132% by Corporacion America

Italia S.p.A. No variations occurred in 2016.

In December 2014 CAI issued a bond loan of EUR 50 million, listed on the Vienna Stock Exchange, as detailed

below in this explanatory note.

The bond issue provides for its entire duration, compliance with formalities and financial (known as operating

and financial covenants). The main commitments contemplate sending within a timetable, the representative

Pag. 56

of the noteholders, the financial statements of CAI and of subsidiaries prepared in accordance with accounting

principles, certified by an auditor and approved by the corporate bodies. There should also be informed of the

measures and/or litigation by governmental authority in respect of SAT and ADF, now Toscana Aeroporti, the

changes in the conditions of concessions, any changes in the shareholding control, special items, pledges on

shares, any conditions of delisting of TA. The leverage ratio should also be communicated to the representative

of the CAI bondholders, which must be less than 8.5. The calculation is based on the EBITDA of SAT and

ADF in proportion to the stake held by CAI, compared to indebtedness of CAI, SAT and ADF. The leverage

ratio of the CAI group calculated on the basis of the financial statements as at 31 December 2016 was 4,56.

Failure to comply with the covenants and other contractual obligations applied to the financing in question, if

not adequately remedied, can result in an obligation to early repayment of its outstanding debt.

The loan is secured by a pledge in favour of US Bank Trustees Limited, London, the representative for

bondholders of all the shares held by Corporacion America Italia S.p.A in Toscana Aeroporti Spa and the same

shares CAI. The CAI group meets the contractual terms set out in the financial and operational parameters

(known as “financial and operating covenants”)

In addition to these parameters, as at December 31 2016, there were no other covenants or negative pledges.

The financial statements of the Group as at December 31 2016 complied with all the above parameters.

CAI, having issued a bond traded on the Vienna Stock Exchange, is required to draft consolidated financial

statements.. Since the consolidated financial statements incorporate a listed subsidiary that drafts its financial

statement according to IFRS, the consolidated CAI has also been drafted in accordance with these principles,

while the separated financial statements is drafted in an abridged form according to Italian accounting

principles

The audit is conducted by PricewaterhouseCoopers in the execution of the members’ resolution of 29

September 2014 that has appointed them as auditors until 2022.

This Consolidated Financial Report shows amounts in thousand euro (€K) as this is the currency used by CAI

and its subsidiaries for most of their transactions.

In addition, international accounting standards have been consistently applied for all the companies of the

Group. The financial statements of the Subsidiaries, used for the consolidation, have been appropriately

amended and reclassified, where necessary, for consistency with international accounting standards and

classification criteria.

BASIS FOR CONSOLIDATION

The subsidiaries directly or indirectly controlled by the Holding as defined by art. 26 of Legislative Decree no.

127/1991, have been fully consolidated.

For the structure of the CAI Group at 31 December 2016, see the Report on Operations in this document.

Pag. 57

There are no changes in the scope of consolidation compared to 31 December 2015.

STRUCTURE AND CONTENT OF STATEMENTS AND REPORTS

The 2016 Consolidated Report of the CAI Group has been prepared in compliance with the applicable

International Accounting Standards (IAS/IFRS) in force at that date, as issued by the International Accounting

Standards Board and approved by the European Union.

Interpretations of International Financial Reporting Interpretations Committee (“IFRIC”), previously named

Standing Interpretations Committee (“SIC”), have also been considered.

FORMAT OF FINANCIAL STATEMENTS

The forms used for the Annual Consolidated Financial Report of the CAI Group at 31 December 2016 have

been prepared by using the updated version of IAS 1 “Presentation of Financial Statements” approved with

Regulation no. 1274/2008 issued by the European Commission on 17 December 2008 and effective from 1

January 2009.

As regards the format of financial statements, the Company decided to present the following types of

consolidated statements: Statement of Financial Position, Income Statement, Statement of Comprehensive

Income, Statement of Changes in the Consolidated Shareholders’ Equity, Statement of Cash Flows and

Explanatory Notes. In their turn, Assets and Liabilities have been shown in the Balance Sheet based on their

classifications as current and non-current.

Income Statement

The Income Statement is presented with classifications by nature, as this is considered to be the most

significant classification method for the best disclosure of the earnings of the Company.

Statement of Comprehensive Income

In order to present additional information on its earnings, the Company chose to prepare two separated

statements: the “Income Statement”, which includes the operating result for the period, and the “Statement of

Comprehensive Income”, which includes both the operating result for the period and changes in the

Shareholders’ Equity relating to revenue and expense accounts, which, as specified in international accounting

standards, are recognised among the components of the Shareholders’ Equity. The Statement of

Comprehensive Income is presented with details of Other Comprehensive Profits and Losses to distinguish

Pag. 58

between profits and losses that will be reclassified in the income statement in the future and profits and losses

that will never be reclassified in the income statement.

Statement of Cash Flows

The Statement of Cash Flows is presented subdivided into cash flow formation areas. It has been adopted by

the Group CAI and prepared by using the indirect method. Cash and cash equivalents included in the cash flow

statement include the balance values of said items at the reference date. Income and expenses concerning

interests, dividends received and income taxes are included in the financial flows generated by operations.

Statement of Changes in the Consolidated Shareholders’ Equity

The statement of Changes in the Consolidated Shareholders’ Equity is presented as required by international

accounting standards, with separated items for the year’s result and each revenue, income, charge and expense

not passed in the income statement or in the statement of comprehensive income, but directly recognised in

the Shareholders’ Equity based on specific IAS/IFRS accounting standards.

Basis for consolidation

The main consolidation criteria adopted in preparing the consolidated financial report prepared in compliance

with IFRS at 31 December 2016 are specified below:

a) the book value of investments in subsidiaries is eliminated against the corresponding net worth, with the

assets and liabilities of associates recognised by using the full consolidation method; there is control

when the Group is exposed or is entitled to receive variable returns from its involvement in the enterprise

and has the capacity to affect said variable returns with its power on the subsidiary; the acquisition of a

subsidiary is accounted for by using the acquisition method. The cost of the acquisition is determined

by the sum of current entries at the date when control has been obtained on the given assets, on the

liabilities incurred or undertaken , and on the financial instruments issued by the Group in exchange for

the control of the purchased entity.

b) the assets, liabilities and potential liabilities acquired and identifiable are recognized at their fair value

at the acquisition date. The positive difference between the purchase cost and the share of the Group in

the fair value of said assets and liabilities is classified as goodwill and booked as intangible asset in the

balance sheet.

c) Should a negative difference emerge, IFRS 3 does not provide for the recognition of a negative goodwill,

so the excess of the share of the purchaser in the fair value of the identifiable assets, liabilities and

potential liabilities of the acquired entity compared to the cost of the acquisition is recognised in the

income statement after re-determining the fair value of the identifiable assets, liabilities and potential

liabilities of the acquired entity;

Pag. 59

d) Once the control of the associate has been acquired, the acquisition of further shares is recognised by

charging the price difference paid and the value of the corresponding share of the Shareholders' Equity's

book value of the associate directly to reduce the consolidated Shareholders' Equity. Similarly, in case

of transfer of equity investments without losing control, the capital gain or loss is directly charged to an

item of the Shareholders' Equity and subsequently transferred to the income statement only when the

control of the associate is transferred.

e) The economic results of subsidiaries acquired or transferred during the year are included in the

consolidated income statement from the effective date of the acquisition until the effective transfer date.

f) Investments in associated companies are assessed by using the equity method: if any TA share of the

loss of the associate exceeds the book value of the investment in the balance sheet, then the value of the

investment is zeroed and the portion of the further loss is recorded to the extent that TA is responsible

for it.

g) Any significant transaction occurred between consolidated entities is eliminated, as well as the credit

and debt items, costs and revenues and profits not yet realized arising from transactions between entities

of the of the Group, after any taxes.

h) The share of minority shareholders in the net assets of the consolidated subsidiaries is identified

separately from the Group’s Shareholders' Equity. This share is determined based on the percentage held

in the fair value of the assets and liabilities recorded at the original acquisition date and in the changes

in the Shareholders' Equity after that date. Subsequently, the loss attributable to minority shareholders

exceeding their Shareholders' Equity are attributed to the Group's Shareholders' Equity, except for the

cases where minorities have a binding obligation and are capable of making further investments to cover

losses. For the acquisitions performed before the date of first application of the IFRS, as permitted by

IFRS 1, the consolidation is done based on previously applicable principles. Therefore, the Minority

interest has been originally determined based on the share of Shareholders' Equity of the minority

Shareholder at the acquisition date.

ACCOUNTING PRINCIPLES AND VALUATION CRITERIA

The accounting principles and valuation criteria adopted in the preparation of the Consolidated Financial

Report at 31 December 2016 are described below.

The financial statements isprepared on a historical-cost basis, modified as required for the measurement of

certain financial instruments. The Directors assessed whether it was appropriate to prepare the consolidated

financial statements on a going-concern basis and concluded that the requirements for so doing had been met

in that there were no doubts as to the Company’s ability to remain a going concern.

Pag. 60

Intangible assets

During 2014 CAI acquired control of ADF and SAT with the aim of integrating the management of the two

airports, an objective completed during the first months of 2015, through the merger of ADF in SAT under the

name Toscana Aeroporti S.p.A.

In accordance with the provisions of IFRS 3, the two acquisitions were constituted as a business combination

accounted for using the acquisition method, estimating provisionally, as allowed by the accounting standard,

the fair value of assets and liabilities acquired. For details, see the specific paragraphs of this note.

This assessment is now considered final.

Concession rights reflect the Concessionaire's right to use the asset (the so-called intangible asset method)

under a concession, in consideration of the costs incurred for the design and construction of the asset, with the

obligation to return it at the end of the concession. Concession rights are recognised in the balance sheet based

on the fair value (estimated in the cost incurred, including financial expenses, in addition to a 5% mark-up,

which reflects the estimate of the remuneration of internal costs for the general coordination activity in the

execution of TA works) of intangible assets related to the construction and expansion of assets listed in the

IFRIC 12 framework.

The principle for the determination of the fair value stems from the fact that the Concessionaire has to comply

with section 12 of IAS 18; therefore, if the fair value of the services received (in this case, the right to use the

infrastructure) cannot be determined reliably, the revenue is determined based on the fair value of the services

provided (fair value of the actual building services).

Construction services in progress at year-end are valued on the basis of the progress of works, as required by

IAS 11, and this valuation converges in the Income Statement item “Revenue from construction services”.

Restoration or replacement activities are not capitalized and converge in the estimate of the provision described

below.

Assets under concession are depreciated over the entire duration of each individual concession - a method that

reflects the assumption that the future economic benefits of the asset will be used by the Concessionaire.

Considering that the Pisa airport is a military airport opened to civil traffic, assets under concession also include

the investments made by the Holding in the shared flight infrastructures that belong to the Air Force (Ministry

of Defence)

The provision for impairment and the provision for restoration or replacement expenses, globally considered,

ensure an adequate coverage of the following charges:

free assignment to the State upon expiration of the concession of the assets that can be freely assigned

with a useful life exceeding the term of the concession;

restoration and replacement of the components subject to wear and tear of the assets under concession;

Pag. 61

recovery of the investment, even in connection with the new works contemplated in financial plans.

Should events take place that support the assumption of an impairment of the value of said Intangible assets,

the difference between the book value and the related “recovery value” is recorded in the income statement.

An intangible asset purchased or produced internally is recognised in the assets, as required by IAS 38, only if

it can be identified, controlled, and it can be reasonably predicted to have general economic future benefits

and its cost can be determined reliably.

Intangible fixed assets with an indefinite life are valued at purchase or production cost, after deducting the

related amortization and impairment. Amortization is parameterized with the period of their estimated useful

life and starts when the asset is available for use.

The amortization criteria adopted for the different items of intangible assets are:

- industrial patent rights and use of intellectual property: 2 years;

- multi-year expenses: 5 years or with reference to the different useful life, if shorter;

- concession rights: based on the remaining years of the concession (expiry in 2046 for the Pisa airport and in

2043 for the Florence airport).

The Company elected to maintain the historical purchase cost, as an alternative to fair value, as valuation

criterion for tangible assets after their initial recording.

Work in progress is valued at cost, based on the contract steps reached, as defined with the supplier, and are

amortized starting from the year when they are actually used.

If, regardless of the amortization already accounted for, there is an impairment, the asset is written down

accordingly; if, in subsequent years, the assumption of the impairment ceases to exist, the original value is

restored, adjusted with the sole amortization.

Development costs can be capitalized provided that the cost is reliable, can be determined and the asset can be

shown to be capable of producing future economic benefits.

Research costs are recorded in the Income Statement in the period when they are incurred.

Besides Goodwill,no intangible assets with an indefinite useful life have been recognised in the balance sheet.

Tangible assets

Property, plant, machinery

Property, plant, and machinery are recognised at purchase cost (in particular, according to this principle, the

value of land and of the buildings built on it are separated and only the building is depreciated) and the cost

includes ancillary charges and direct and indirect costs for the share reasonably attributable to the asset. For

an asset that justifies its capitalization, the cost also includes financial expenses that can be directly attributed

to the acquisition, construction or production of the same asset.

Pag. 62

Whenever the individual components of a tangible asset have different lives, they are disclosed separately so

as to be depreciated in accordance with their relative duration (“component approach”).

The costs incurred after the purchase are capitalized only if they increase the future economic benefits of the

asset to which they are referred. All the other costs are recognised in the income statement when they are

incurred. Tangible assets in progress are valued at cost and depreciated starting from the year when they are

actually used.

Fixed assets are systematically depreciated every year on a straight-line basis, based on economic-technical

rates determined in connection with the residual possibilities of use of the assets.

The tax rates applied are:

Property: 4% (25 years)

Plant and machinery: 10% (10 years)

Industrial and commercial equipment: 10% (10 years)

Electronic machines: 20% (5 years)

Furniture and office equipment: 12% (9 years)

Trucks: 25% (4 years)

Cars: 20% (5 years)

Investments made before 1997 on assets that can be freely disposed of, have been depreciated based on the

shorter between the term of the concession (40 years) and the useful life of individual assets.

Ordinary maintenance costs are fully debited to the Income Statement. Incremental maintenance costs are

attributed to the assets to which they refer and depreciated in connection with their residual possibility of use.

Profits and losses arising from transfers or sales of assets are determined as a difference between the sale

revenue and the net book value of the asset and are recognised in the income statement of the year.

During the PPA,at the amounts relating to land of SAT was given a higher value of EUR 13,528,000, definedon

the basis of an expert assessment, in order to adjust the amount of land itself to the fair value, as well as the

provisions of international accounting standard IFRS 3.

Impairment

At each balance sheet date, the CAI Group reviews the carrying value of its tangible and intangible assets to

determine whether there are indications that they have been impaired. When this appears to be the case, the

recoverable amount of said assets is estimated to determine the amount to be written down (impairment test).

When it is not possible to estimate the recoverable value of each individual asset, the CAI Group estimates the

recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the greater between the net sales price and the value in use. In determining value in

use, estimated future cash flows are discounted at their current value using a rate gross of taxes that reflects

the market’s current valuation of the current value of money and the specific risks of the activity.

Pag. 63

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be lower than the related

carrying amount, the carrying amount of the asset will be reduced to the lower recoverable value . An

impairment is immediately recognised in the income statement.

When the circumstances requiring a write-down no longer exist, the carrying amount of the asset (or of the

cash-generating unit) is adjusted upward to its new estimated recoverable amount which, however, does not

exceed what the net carrying amount would have been, had the impairment not been recognized. The recovery

of the value is immediately recognized in the income statement.

Leased assets

The assets owned with a finance lease through which all the risks and benefits associated with ownership are

substantially transferred to the Group, are recognised as assets owned at their current value or, if lower, at the

current value of the minimum payments due for the leasing. The corresponding liability due to the lessor is

posted among financial liabilities in the balance sheet. Assets are amortized by using the criterion and tax rates

used for owned assets.

The leases where the lessor substantially maintains all the risks and benefits associated with the ownership of

assets are classified as operating leases. Costs referred to operating leases are linearly recognised in the income

statement for the entire of the leasing agreement.

Equity investments in other entities

Equity investments in other entities that consist of non-current financial assets not to be used for trading

activities (so-called equity investments available for sale) are booked at fair value at the transaction date. Gains

and losses arising from any subsequent fair value changes based on market prices are recognized directly in

equity until the investments are sold or suffer impairment. When such assets are sold, all gains and losses

previously recognized in equity are recognized through profit or loss for the period. When an asset becomes

impaired, the accumulated losses are recognized in the income statement.

Available-for-sale assets are regularly tested to determine whether there is objective evidence that they may

have become impaired. Whenever there is objective evidence that the asset is impaired, the cumulative loss

that had been recognized in equity is removed from equity and recognized through profit or loss, even though

the financial asset has not been eliminated. If the grounds for the impairment loss cease to apply at a later date,

the loss is recovered through equity.

Equity investments in other minor entities for which market prices are not available are recognized at cost,

written down for impairment as necessary.

Investments in associated companies

These are equity investments in entities on which the CAI Group has a significant influence but not the control

of financial and operating policies. CAI's consolidated financial report includes the relevant portion of results

Pag. 64

of the associates, carried with the equity method starting from the date when the significant influence has

started and until the time when said influence ceases to exist. If TA’s relevant portion of the losses of the

associates exceeds the book value of the investment in the balance sheet, then the value of the investment is

zeroed and the portion of the further loss is recorded to the extent that TA is responsible for it.

The Directors believe that the CAI Group has a very significant influence on Alatoscana S.p.a. (the Elba Island

airport), also for the presence of a share that has become lower than 20% only since the end of 2013. In

particular, this influence is due to the corporate layout and to the possibility of affecting its financial and

operating policies.

Financial Assets

CAI’s financial assets are booked at fair value. Financial assets consisting of receivables are valued at their

estimated realizable value.

Inventories

The CAI Group has no inventories.

Trade and Sundry Receivables

Accounts receivable are booked at their face value, adjusted according to their estimated realizable value, by

booking a provision for bad debt, in order to approximate their fair value. This provision is determined based

on the recovery values determined by analysing the individual positions and the global risk of all receivables.

Since the collection of the consideration is not deferred beyond the normal commercial terms used with clients,

it was not necessary to use the discounting of credit.

Derivative instruments and hedge accounting

No such items are recorded in this Consolidated Financial Report.

Cash and cash equivalents

The “Cash and cash equivalents” item includes cash, bank current accounts and deposits repayable on demand

(postal current accounts held with post offices) that, due to their nature, are not subject to significant changes

in value. Does not include redeemable sighted bank deposits.


These are bank overdrafts, loans and a bond. Loans and the bond are initially recognised at the cost represented

by the fair value of the value initially received net of acquisition ancillary charges. After the initial recognition,

the bond and the loans are recognized according to the amortized cost criterion by using the effective interest

rate method.

Pag. 65

Loans are classified under current liabilities unless the Company has the unconditional right to defer the

redemption of the liability for at least 12 months after the applicable date.

Provisions for liabilities and charges

The CAI Group recognises provisions for risks and liabilities when it has a legal or implicit obligation to third

parties and probably the Company will have to use resources to comply with that obligation and when a reliable

estimate can be made of the amount of the same obligation.

Changes in the estimates are reflected in the income statement for the period when the change occurred.

If the effect is significant, the provisions are calculated by discounting back future estimated cash flows at a

pre-tax discount rate, such as to reflect the current market valuation of the current value of money and specific

risks connected with liabilities.

Provisions for restoration or replacement of assets under concession

As described above, in accordance with the requirements introduced by IFRIC 12, the concessionaire is not

entitled to recognize the infrastructure as property, plant and equipment and the accounting of the work done

on the infrastructure differs depending on its nature. More specifically, they are distinguished into two

categories:

work that can be classified as normal maintenance of the infrastructure; and

replacement and maintenance of the infrastructure scheduled in a future date.

While the former category refers to the ordinary maintenance of the infrastructure, which is recognized in the

income statement when incurred, including after the adoption of IFRIC 12,

the latter, considering that IFRIC 12 does not require the recognition of the physical asset, but of a right, should

be recognized in accordance with IAS 37 - Provisions, Contingent Liabilities and Assets, which requires:

- on one hand, that a provision be booked in the income statement consisting of an operating component

(including any effect arising from changes in the discount rate) and a financial component,

- on the other hand, the recognition of a provision for charges in the balance sheet.

Therefore, in accordance with the obligations established by individual concession agreements, the “Provision

for restoration or replacement of assets under concession” includes the greater estimated present value of the

expenses accrued at year-end for maintenance scheduled in future years and aimed at ensuring the required

functionality, operation and safety of all the assets under concession based on the information available at the

balance sheet date.

Pag. 66

Pension funds and employee benefits

Since IFRS have been adopted, the TI accrued until 31 December 2006 is considered as a defined benefit

obligation to be recognised as recommended by IAS 19 - “Employee Benefits”, so its amount must be

recalculated using the so-called “Projected Unit Credit Method” by making actuarial valuations at the end of

the reference period.

We point out that the Subsidiary TA, upon the first application of this standard, had elected not to use the so-

called “corridor approach”, but rather recognise the aforesaid actuarial components to the income statement.

The amendment made to IAS 19 – “Employee Benefits” eliminates the option to defer the recognition of

actuarial gains and losses with the corridor method and required, instead, that the deficit or surplus of the entire

provision be presented in the statement of financial position, while the labour cost components and net financial

expenses should be recognized separately in the income statement, with actuarial gains and losses deriving

from the re-measurement of the liability and asset being recognized as items of the Statement of

Comprehensive Income. Furthermore, the return on assets included in net financial expenses is determined on

the basis of the discount rate of the liabilities, and no longer on the return expected from them.

Deferred/prepaid taxes

Deferred/prepaid taxes are determined on the basis of the taxable temporary differences existing between the

value of assets and liabilities and their tax value and are classified among non-current assets. Prepaid taxes are

booked only to the extent that adequate future taxable bases are likely to exist against which the credit balance

can be used. The value of deferred tax assets reportable in the balance sheet is audited on an annual basis.

Deferred tax liabilities are determined based on tax rates expected to be used in the year when said deferrals

take place, considering the applicable or subsequent tax rates.

Current and deferred tax assets and liabilities are offset when the income taxes are applied by the same tax

authority and there is a legal right to offset them. Deferred tax assets and liabilities are calculated by using the

tax rates that are expected to be applied in the legal system of the country where the Group operates, in the

years when temporary differences will be realized or paid off.

Accounts payable

Accounts payable are booked at their fair value and subsequently evaluated according to the amortized cost

criterion.

Revenues

The operating activity of the Group essentially consists in the provision of services.

Pag. 67

Revenues are recognized on an accrual basis, when their fair value can be reliably determined and the related

economic benefits are likely to be enjoyed. According to the type of transaction, revenues are booked based

on the specific criteria defined below:

a) revenues for sales of assets when the significant risks and benefits of the ownership of the same assets are

transferred to the buyer;

b) revenues for services based on the completion stage of the assets. Amounts are determined based on airport

fees (regulated and free). Considering the short-term nature of revenues, there is no need to make any

discounting or consider the option of identifying a progress percentage.

c) Leases receivable and royalties during the maturity period, based on the contract agreements signed;

d) interest income (as well as interest expenses) is recognized on an accrual basis, determined on the value of

the related financial assets/liabilities by using the effective interest rate method.

The Group does not defer collection terms in excess of the normal market terms, so there is no need to

distinguish between a commercial component and a revenue interest component, as specified by IAS 18.

Revenues from construction services

Revenue accrued during the period from building activities are recorded in connection with the progress of

works according to the “completion percentage” criterion and based on the costs incurred for said activities,

plus a 5% mark-up representing the remuneration of the internal costs for the general coordination of works

carried out by the Group.

Contributions

The contributions received from the State or Local Bodies for investments in fixed assets are booked at the

time when the right of collection becomes certain, in compliance with IFRIC 12, as an unconditional right to

receive a consideration regardless of the actual use of the same infrastructure (financial asset method).

Costs

Costs are recognized in the income statement when they are actually incurred, if their amount can be

objectively determined, and when it is possible to verify that the company has incurred such costs on an accrual

basis.

Financial expenses

Financial expenses are recorded on an accrual basis and include interests payable on financial debts determined

by using the effective interest rate method and exchange rate differences payable. Financial expenses also

include the financial component of the annual provision for repair.

Pag. 68

The financial expenses incurred for investments in assets for which a given period of time normally elapses to

make the asset ready for use are capitalized and amortized along the useful life of the related class of assets to

which they refer.

Dividends

The dividends in the year’s income statement, earned by minority interest, are booked on an accrual basis, that

is to say at the time when the related credit right has arisen after the resolution for distribution made by the

associate.

Income taxes

They are booked based on the gross year’s result, for the taxable portion, in compliance with the applicable

provisions, taking into account all the applicable exemptions.

Taxes have been subdivided into current taxes, determined on the taxable portion of the year, and deferred

taxes (receivable or payable) concerning the taxable portion of subsequent years.

Reported ammounts reflect the effects of the tax consolidation adopted during the financial year with effects

from 1 January 2016, as already indicated in a specific paragraph of the management report to which reference

is made.

Foreign currency translation criteria

Receivables, payables and any short-term provisions denominated in foreign currency are initially recognized

by using the exchange rates ruling at the date of their inception and, if still existing at December 31st, they are

stated in the balance sheet at the exchange rate ruling at year-end, charging the exchange gains/losses to the

income statement.

Exchange rate differences are of a financial nature, so they are classified in the income statement as finance

income because they are not strictly linked to the sale transaction, but express the fluctuation over time of the

currency chosen for the transaction, when the transaction has been concluded.

Use of estimates

We are now going to summarize the critical valuation processes and key assumptions used by the Group in the

application of IFRS, which may significantly affect the values recorded in the Consolidated Financial Report

or for which there is a risk that significant differences may emerge compared to the book values of future assets

and liabilities.

As already indicated in the Report on Operations, we point out, in this context, that the situation caused by the

present global economic and financial crisis implied the need to make assumptions concerning future trends

characterized by a significant uncertainty. Consequently, we cannot exclude that the results actually achieved

next year might considerably differ from the estimates, and therefore could require adjustments, even

Pag. 69

significant ones, of the book value of the associated items, which at present may clearly not be foreseen or

estimated.

Recoverable value of non-current assets

Non-current assets include: Property, plant and equipment, Intangible assets, Equity investments and Financial

assets. The Group periodically reviews the book value of its non-current assets held and used and of the assets

to be disposed of when events and circumstances so require. When the book value of a non-current asset has

been impaired, the Group writes it down for a value corresponding to the difference between the book value

of the asset and its value that can be recovered through use or sale, determined by making reference to the cash

flows of the most recent corporate plans.

Provision for repair

For the assets held under concession, a special provision has been allocated for the maintenance and restoration

work that will be required over time and recorded in the Assets as these assets held under concession must be

returned to the State in perfect operating conditions at the end of the concession term.

Funds are allocated to this provision for restoration on an annual basis based on a technical assessment and

estimate of future liabilities that will be incurred for the cyclic maintenance required to keep the assets in the

required conditions before being returned for free at the end of the concession term. The provision will be used

during the period for the actual maintenance required.

Current taxes

The determination of tax liabilities requires the Management to assess amounts by considering the transactions

that have uncertain fiscal implications at year-end. The Group recognizes the liabilities that could derive from

future inspections by the tax authority based on the estimate of due taxes. Any result of a tax assessment that

differs from the Management's estimates may significant affect current and deferred taxes.

Pension schemes and other post-employment benefits

Employee termination benefits or indemnities and net financial expenses are valued by using an actuarial

method that requires the use of estimates and assumptions for the determination of the net value of the

obligation. The actuarial method considers financial parameters such as, for example, the discount rate and

salary growth rates, and considers the probability of occurrence of potential future events through the use of

demographic parameters like mortality rates or employee resignation or retirement rates. The assumptions used

for the assessment are detailed in the section entitled “Termination benefits and other personnel-related

provisions”.

Pag. 70

Provision for bad debt

The provision for bad debt reflects the Management's estimate of the expected losses connected with the

customer portfolio. Based on past experiences, provisions are allocated for expected losses on receivables (bad

debt). The Management carefully monitors the quality of the customer portfolio and the current conditions and

forecast of the economy and markets. Estimates and assumptions are periodically reviewed and the effects of

each change are reflected in the Income Statement for the period.

Potential liabilities

The Group ascertains liabilities from pending litigation and legal actions when it deems it likely to face a

financial disbursement and when the amount of the deriving loss can be reasonably estimated. If a financial

disbursement becomes possible but its amount cannot be determined, this fact is disclosed in the Notes. The

Group is a party in legal actions and tax assessments concerning complex and difficult legal issues that are

characterized by a different degree of uncertainty, including facts and circumstances regarding each case,

jurisdiction and different applicable law. Considering the uncertainty of these issues, it is difficult to predict

the disbursement that will be required by said controversies, so the value of provisions for litigation and the

like may vary substantially after future developments in ongoing proceedings. The Group monitors the status

of ongoing legal actions and litigation with the aid of legal consultants and tax advisors.

NEW ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPLIED SINCE

1 JANUARY 2016

Effective from 1 January 2016, some amendments introduced by international accounting standards and

interpretations have been applied; however, none of them significantly affected the Group’s financial

statement. The main differences are illustrated below:

- IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortisation”: the

amendments consider it inappropriate to adopt revenue-based depreciation/amortization methods. Only for

intangible assets, this indication is considered as a relative assumption that can be overcome only when any of

the following circumstances apply: (i) the right to use an intangible asset is associated to reaching a predefined

threshold of revenues to be produced; or (ii) when it can be demonstrated that realizing revenues and using the

economic benefits of the asset are highly correlated.

- IFRS 11 - “Joint Control: Recognition of the acquisition of equity investments in joint control activities”:

amendments clarify the accounting of acquisitions of Interests in joint operations in which the activity

constitutes a business. The amendments are retrospectively applicable for the financial years beginning on or

after 1 January 2016.

Pag. 71

- Annual improvements to IFRS 2012–2014 cycle. The changes concern:

(i) IFRS 5 “Non-current assets held for sale and discontinued operations”;

(ii) IFRS 7 “Financial Instruments: Additional Information”;

(iii) IAS 19 “Employee Benefits";

(iv) IAS 34 “Interim Financial Reporting”.

As regards the first point, the amendment clarifies that balance sheet data do not need to be booked when an

asset or a group of assets available for sale is reclassified as “held for distribution”, or vice versa.

As regards IFRS 7, the amendment establishes that if an entity transfers a financial asset “in such a way that

part or all of the financial assets do not qualify for derecognition”, then the entity is required to disclose

information concerning its involvement in the transferred asset.

The amendment proposed to IAS 19 clarifies that in determining the discount rate of the obligations arising

after employment, it is the currency in which the obligations are denominated that matters rather than the State

where they are located.

The amendment proposed to IAS 34 requires the indication of cross-references between the data disclosed in

the interim financial reports and the associated information.

- IAS 1 “Presentation of Financial Statements”: the amendment provides clarifications on the aggregation or

disaggregation of balance sheet items if their amount is relevant or “material". More specifically, the

amendment requires entities “not aggregate or disaggregate information in a manner that obscures useful

information”. Furthermore, the amendment indicates the need to present headings, partial results and additional

items, also by disaggregating the items listed in section 54 (Financial Position) and 82 (Income Statement) of

IAS 1, when this presentation is significant for the purpose of understanding the financial position and

economic-financial result of the entity.

- IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”.

As regards the first point, the amendment clarifies that the exemption from preparing consolidated financial

statements applies to a parent company that is, in its turn, a subsidiary of an investment entity, when the latter

measures all its subsidiaries at fair value. As regards IAS 28, this standard has been amended concerning

investments held in associates or joint ventures that are “investment entities”: these investments may be valued

with the equity method or at fair value.

AMENDMENTS AND INTERPRETATIONS EFFECTIVE FROM 1 JANUARY 2016 AND NON-

RELEVANT FOR THE COMPANY

The following amendments and interpretations, applicable from 1 January 2016, regulate cases that are not

found in the Group at the date of this financial statement:

- IAS 41 “Agriculture” and IAS 16 “Property, Plant and Equipment”: by amending these international

accounting standards, the IASB established that bearer plants that are used exclusively to grow agricultural

produce through the years should be accounted for like property, plant and equipment under IAS 16, because

their “operation” is similar to that of manufacturing production.

Pag. 72

- IFRS 14 “Regulatory deferral accounts”: the new transitory principle issued by the IASB on 30 January 2014

allows an entity that adopts the international accounting standards IAS/IFRS for the first time to continue using

the previous GAAP accounting policies for the valuation (including impairment) and elimination of regulatory

deferral accounts.

- IAS 27 Revised “Separate Financial Statements”: this amendment will be effective from 1 January 2016 and

will allow an entity to use the equity method to account for investments in subsidiaries, joint ventures and

associates in a separate financial statement.

ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET

APPLICABLE

At the date of this financial statement, the competent bodies of the European Union have not yet concluded

the ratification process required for the adoption of the following accounting principles and amendments:

- In May 2014, IASB and FASB jointly published IFRS 15 - “Revenue from Contracts with Customers”. The

purpose of that principle is to improve the presentation of revenues and their comparability between different

financial statements. The new principle can be applied retrospectively for the financial years beginning on or

after 1 January 2018. Referring to IFRS 15, the Group initiated activities to verify whether the new principle

is applicable to its existing agreements and contracts and to study all the possible implications at operation and

accounting level. More specifically, the analysis of the applicability of the new standard to the concession

agreements for the airport owned by the Group is currently underway, together with the analysis of the sub-

concession agreements in force for the use of retail spaces in the airports, which are the most significant

component of revenues. In addition, the Group is also reviewing contract types (i.e. carrier marketing support,

the various services provided to airlines and users for non-regulated revenues). This analysis phase will be

probably completed over the next few months. Based on the assessments and analyses conducted, no

significant impact on the consolidated financial statement has been recognised to date which may derive from

the adoption of IFRS 15.

- On 24 July 2014, the IASB completed its revision of the accounting standard concerning financial instruments

by issuing the complete version of IFRS 9 “Financial Instruments”. More specifically, the new provisions of

IFRS 9 will: (i) change the model for the classification and valuation of financial assets; (ii) introduce a new

method for the impairment of financial assets, which keeps into account expected credit losses; and (iii) change

hedge accounting provisions. The provisions of IFRS 9 will be effective starting from the financial years

starting on or after 1 January 2018.

- In January 2016, the IASB published IFRS 16 “Leasing”. This new standard will replace the current IAS 17.

The main change concerns leaseholder accounting practices, as based on IAS 17, leaseholders had to

distinguish between finance leases (on balance sheet) and operating leases (off balance sheet). With IFRS 16,

the accounting treatment of operating leases will be the same as that required for finance leases. The IASB

established the option of exemption for certain lease agreements and low-value / short-term leases.

Pag. 73

This standard will apply from 1 January 2019. Anticipated application will be allowed if IFRS 15 “Revenue

from Contracts with Customers” is jointly adopted.

- In January 2016, the IASB issued an amendment to IAS 12 “Income Taxes”. These amendments clarify how

to account for deferred tax assets regarding debt instruments measured at fair value.

These changes will apply from 1 January 2017.

- In January 2016, the IASB issued an amendment to IAS 7 “Statement of Cash Flows”. These amendments to

IAS 7 introduce further disclosures to enable users of financial statements to evaluate changes in liabilities

arising from financing activities. These changes will apply from 1 January 2017.

- In June 2016, the IASB issued an amendment to IFRS 2 “Share-Based Payments”. These amendments clarify

how to account for some payments based on shares. These changes will apply from 1 January 2018.

- In December 2016, the IASB issued an amendment to IAS 40 “Investment Property”. These amendments

clarify that the change of use is a precondition for the transfer to or from investment property. These changes

will apply from 1 January 2018.

- In September 2016, the IASB issued an amendment to IFRS 4 “Insurance Contracts” concerning the

application of IFRS 9 “Financial Instruments”.

These amendments will allow all the companies that issue insurance contracts to use the option of recognising

the volatility that may arise when IFRS 9 will be applied in the comprehensive income statement rather than

in the income statement before the new standard on insurance contracts is issued. Furthermore, they will give

companies whose activities are predominantly connected with insurance an optional temporary exemption

from applying IFRS 9 until 2021. The entities that will put off the application of IFRS 9 will continue to apply

IAS 39. These changes will apply from 1 January 2018.

- In December 2016, the IASB issued a number of annual improvements to IFRSs 2014–2016. The changes

concern:

- IFRS 12 “Disclosure of Interests in Other Entities” (applicable from 1 January

2017)

- IFRS 1 “First-time Adoption of International Financial Reporting Standards” (applicable from 1 January

2018);

- IAS 28 “Investments in Associates and Joint Ventures” (applicable from 1 January 2018).

These amendments clarify, correct or remove the redundant text in the related IFRSs and are not expected to

impact the financial statement or disclosures significantly.

- IFRIC 22 “Foreign Currency Transactions and Advance Consideration”. This amendment deals with the

exchange rate to be used in transactions and advance considerations paid or received in foreign currency. The

amendment will apply from 1 January 2018.

The Group will adopt said new principles, amendments and interpretations based on the effectiveness date

specified and will assess their potential impact when these will be ratified by the European Union.

Pag. 74

MAIN FINANCIAL RISKS

A description of the main financial risks and of the mitigating actions implemented by the CAI Group is given

below.

1) Credit risk

Over the last few years, the effects of the crisis of financial markets and the consequent recessive economy in

the main industrialized Countries negatively affected the balance sheets of the airlines - the main clients of the

Group. Hence, the risk of a partial non-collection of receivables accrued from airlines. The Group believes that

it has suitably controlled said risk through its constant monitoring of accounts receivable, also sometimes

promptly initiating legal actions to protect said receivables, which are reflected in the allocation of a specific

provision for bad debt, currently deemed to be adequate in connection with the amounts of the existing

receivables. Always with the purpose of facing the credit risk, the subsidiary TA usually asks for sureties as

guarantee (e.g. from sub-licensees) or pre-payments (e.g. from unknown airlines). Starting from December

2011, the subsidiary TA took out an excess-of-loss type of insurance on credit positions to cover collection

risks should insolvency proceedings be opened against the assets of any customer. Furthermore, since January

2012, the subsidiary TA hired a company for its long-term debt collection activities.

2) Liquidity risk

At 31 December 2016, the Group had a negative Net Financial Position for € 61,46 M. This is the result of a

positive current NFP of about € 23,3 M and a negative non-current NFP of € 84,7 M regarding the bond loan

issued by the Parent company and two loans granted to TA by banks “Intesa San Paolo” and “MPS Capital

Service” that ensure the subsidiary the availability of up to € 52 M for important investments in infrastructures.

Six-month EURIBOR interest rates are paid on the two loan agreements, expiring in 2022 and 2027, and some

financial covenants are to be complied with, for which at 31 December 2016 there was no criticality.

CAI bond loan was issued in December 2014 for nominal € 50 M, quoted at Vienna’s Stock Exchange, lasting

five years, with annual interest coupons in postponed fixed rates due on 30 June each year.

The bond will be repaid in a single settlement at maturity, in December 2019 and envisages compliance with

financial covenants for which at 31 December 2016 and on the forecast figures at 31 December 2017 there is

no kind of criticism. In line with the Group's strategies, the various options for refinancing or financial support

will be evaluated.

With reference to the net financial position of TA the Group believes that the funds and the currently available

medium/long-term credit lines, in addition to those that will be generated by operations, will suffice to meet

Pag. 75

its investment, working capital management and debt repayment at natural maturity requirements. If necessary,

the Subsidiary also uses short-term bank loans to meet short-term requirements.

3) Interest rate risk

Exposure to the interest rate risk arises from the need to finance both industrial and financial operations, as

well as use the available cash. Changes in market interest rates may have a negative or positive impact on the

Group’s operating result, thereby indirectly influencing the costs and returns of loans and investments. The

Net Financial Position at 31 December 2016 is € 61.36 M and the debt-to-equity ratio (NFP/Shareholders’

Equity) at 31 December 2016 was 0.30, which confirms the financial soundness of the Group.

Based on the NFP at 31 Dec. 2016, the potential impact in terms of annual growth/reduction in interest expense

connected with interest rate trends, as a result of a hypothetical growth/reduction of 100 bp, would be

approximately +/- € 360 K.

The potential impact on the Provision for repairs in terms of growth as a consequence of a hypothetical annual

reduction of 50 b.p. in interest rates would correspond to + € 710 K. Instead, the potential impact on the

Provision in terms of reduction as a consequence of a hypothetical annual growth of 50 b.p. in interest rates

would correspond to - € 760 K.

No further sensitivity analysis is provided, as it is considered immaterial.

4) Exchange rate risk

The CAI Group is not subject to risks linked to fluctuations in exchange rates because it prevalently operates

in a European context where transactions are made in Euro.

OPERATING SEGMENT REPORTING

Since 1 January 2009, compliance with IFRS 8 - “Operating Segments” has become mandatory; it requires

entities to identify operating segments based on internal reporting systems used by the Management to allocate

resources and assess performance.

Information regarding the main operating sectors of the Group is given below as required by IFRS 8. First of

all, it is important to highlight that the type of business activity carried out by CAI Group does not allow for

the identification of business segments related to completely independent activities in terms of

market/customer combinations. Currently, the “traffic” component influences the results of all the company’s

activities.

However, we may identify two significant operating segments characterized by the independent nature of their

products/services and production processes, for which - for the aforesaid reasons - we propose a disclosure

relating to the information directly made available by the company’s analytical accounting system used by

Chief Operating Decision Makers (Definition as by IFRS 8).

Pag. 76

The currently available information regarding the main operating segments identified are provided below:

Aviation, Non-Aviation and Corporate.

- Aviation: this operating segment includes the so-called “air-side” activities (after the security check), which

are the core business of an airport. They include: passenger and aircraft ground handling, landing, aircraft

departure and stopover, security and safety activities, passenger boarding and disembarkation, cargo loading

and unloading.

Revenues for the Aviation segment are represented by the prices paid for airline assistance services and are

generated by airport fees such as: landing, take-off and stopover fees, freight revenue taxes, passenger boarding

fees, passenger and baggage security fees.

- Non-Aviation business: this segment includes activities normally carried out in the “land-side” area (before

the security check), which are not directly associated with the Aviation business. They include retail activities,

catering, car parking, car rental, advertising, ticket office, VIP Lounge.

Non-Aviation Business Revenues consist in the royalties earned from activities conducted under a sub-

concession, in the direct management of certain activities (i.e. car parking, ticket office and advertising) and

in the rents paid by sub-concessionaires.

The table below provides the main information regarding the operating segments described above by

highlighting, in unallocated items, (corporate) revenues, costs, assets and investments not directly attributable

to the two segments. More specifically, the main types of unallocated costs refer to the cost of labour/personnel

(staff), professional services rendered, insurance and industry association membership fees, pro-rata portion

of utilities, maintenance and depreciation, administrative costs, provisions for liabilities, Directors’ and

Auditors’ fees.

- Corporate business: the values indicated in unallocated items mainly refer to revenues and costs not directly

attributable to the two business segments, such as, for example, other revenues and income, the cost of labour,

professional services rendered for the Management, general insurance and industry association membership

fees, pro-rata portion of utilities, general maintenance and unallocated depreciation of infrastructure,

administrative costs, provisions for liabilities, Directors’ and Auditors’ fees, etc.

Pag. 77

(*)We point out that, for a more correct disclosure of comparison data with the previous year, the final

operating costs for the year 2015 for the Florence Airport, have been reclassified according to revenue and

cost allocation method based on the certification of 2015 regulatory accounting that took place in May 2016.

More specifically, € 1.731K have been allocated to the Aviation business and € 926K, previously allocated to

the Non-Aviation business, were allocated to the Corporate business and referred to the direct management

(values in €/000 )

CAI Group - Income

statement2016 2015 2016 2015 2016 2015 2016 2015

Operating income 91.705 83.852 26.626 25.151 2.689 4.938 121.019 113.941

of which Pisa 52.285 50.397 17.142 16.856 3.678 3.362 73.105 70.615

of which Florence 39.420 33.455 9.484 8.295 1.529- 1.575 47.375 43.325

of which parent companies - - - - 540 1 540 1

Revenues from constr. serv. 4.955 15.997 740 158 1.534 2.462 7.230 18.617

of which Pisa 2.706 15.113 69 95 - - 2.775 15.208

of which Florence 2.249 884 671 63 1.534 2.462 4.454 3.409

of which parent companies - - - - - - - -

Total Segment Income 96.660 99.849 27.366 25.309 4.223 7.400 128.249 132.558

Operating Costs (*) 57.956 56.156 18.351 17.752 17.163 17.186 93.470 91.094

of which Pisa 33.529 32.683 16.849 16.272 7.733 8.296 58.111 57.251

of which Florence 24.427 23.473 1.502 1.480 8.063 7.135 33.992 32.088

of which parent companies - - - - 1.367 1.755 1.367 1.755

Cost of constr. serv. 4.074 15.234 715 151 1.482 2.305 6.271 17.690

of which Pisa 2.587 14.393 66 91 - - 2.653 14.484

of which Florence 1.487 841 649 60 1.482 2.305 3.618 3.206

of which parent companies - - - - - - - -

Amortization and provisions 16.173 15.161 1.735 1.729 1.846 2.788 19.754 19.678

of which Pisa 9.566 8.563 1.227 1.183 669 967 11.462 10.713

of which Florence 6.607 6.598 508 546 1.104 1.805 8.219 8.949

of which parent companies - - - - 73 16 73 16

Operating Earnings 18.457 13.298 6.565 5.677 16.268- 14.879- 8.754 4.096

of which Pisa 9.309 9.871 931- 595- 4.724- 5.901- 3.654 3.375

of which Florence 9.148 3.427 7.496 6.272 10.644- 7.208- 6.000 2.491

of which parent companies - - - - 900- 1.770- 900- 1.770-

Asset management - - - - 4.680- 2.343- 4.680- 2.343-

Profit before tax 18.457 13.298 6.565 5.677 20.948- 17.222- 4.074 1.753

Year’s taxes - - - - 1.945- 4.810 1.945- 4.810

Net year’s result 18.457 13.298 6.565 5.677 22.893- 12.412- 2.129 6.563

Loss (profi t) of min. interest - - - 2.778- 5.372- 2.778- 5.372-

Net Group result 18.457 13.298 6.565 5.677 25.671- 17.784- 649- 1.191

CAI Group -Statement of

financial position2016 2015 2016 2015 2016 2015 2016 2015

Current assets 9.623 12.671 5.313 5.437 36.221 40.369 51.157 58.477

Non-current assets 313.378 333.280 45.584 45.621 27.704 11.701 386.666 390.602

CAI Group - Additional

information2016 2015 2016 2015 2016 2015 2016 2015

Investments 6.285 28.370 1.207 702 3.705 3.076 11.197 32.148

Aviation Non AviationUnallocated assets

(Corporate)Total

Pag. 78

of ARC shops As a consequence, the 2015 sector operating results have also been adjusted. These changes

have been considered as non-significant by the Company.

(**) Including airport leases for € 6.034 K in 2016 (€ 5.269 K in 2015),

Information on the main customers of CAI Group.

In the course of 2016, the Subsidiary TA registered 7.504.634 passengers. The total incidence of the first three

carriers is 59,4%. More specifically, the incidence of the first carrier (Ryanair) is 43%, while the incidences

of the second (Vueling) and third (easyJet) carriers are 8,5% and 7,9%, respectively.

NOTES TO THE MAIN ITEMS OF THE CONSOLIDATED FINANCIAL REPORT AT 31

DECEMBER 2016: STATEMENT OF FINANCIAL POSITION

Non-Current assets

Changes in non-current assets at 31 December 2016 are shown below.

More specifically, this aggregate consists of the following categories:

Intangible assets

The values shown are net of accumulated amortization, equal to €11.890K.An aggregate amount of

approximately €8M has been invested in intangible assets in 2016

Investments in intangible assets concerned concession rights for approx. € 3.6 M, including the improvement

of manoeuvring areas (€ 1,525 K) in the Pisa airport and the expansion of the non-Schengen boarding area (€

625 K), the new lift in the Arrivals hall (€ 406 K) and the new staff security gate (€ 379 K) for the Florence

airport; work in progress for approx. € 4.3 M. The latter mainly reflect the development of the Florence airport

Master Plan (€ 1,826 K ), the new Arrivals Terminal in the Pisa airport (€ 589 K), the re-protection of the

amounts in euro/000 31.12.2016 31.12.2015 VAR.

NON CURRENT ASSETS 386.666 390.602 (3.936)


INTANGIBLE ASSETS 341.995 345.480 (3.485)

Pag. 79

offices of State Bodies in the ex Arrivals hall (€ 582 K), the reconfiguration of passenger flows in the Florence

Terminal (€ 426 K), and the project for the harmonization of administrative systems between the two airports

(€ 544 K).

No divestiture of assets was done in 2016.

Details on intangible assets are provided in Annex A.

Concession rights: their value at 31 December 2016 is € 327 M (€ 355 M at 31 December 2015), with an

increase of €7.8 . mainly due to the combined effect of the lower value of investments compared to the value

of the year's amortization.

Industrial patent rights: their value at 31 December 2016 is €513 K (€ 368 K at 31 December 2015), with a

increase of €145K due to the combined effect of the support of expenses and amortization for the period.

Work in progress and advance payments: The value of this item at 31 December 2016 was € 9.8 M (€ 5.6

M as at 31 Dec. 2015), with an increase of € 4.2 M due to the investments made during the year - for more

details, see the Report on Operations.

Goodwill

Goodwill totals € 6M. The outstanding balance is an intangible asset with an indefinite life and, therefore, not

subject to amortisation but subject to an impairment test.

A comparison was made between the consolidated carrying amount and the related prices on the Stock Market,

with a positive result.

Tangible assets

On the whole, investments for approximately €2.8 M were made in the course of 2016, related to:


TANGIBLE ASSETS 39.162 39.873 (711)

Pag. 80

(Amounts in €K)

Land and buildings owned 138

Plants and Machinery 1.615

Industrial and commercial equipment 75

Veichles 172

Furnitures and fixtures 142

Hardware 350

Work in progress assets 301

Total 2.793

Investments in tangible assests mainly concerned the purchase of ramp vehicles and equipment (€ 1,441 K),

the requalification of ramp vehicles (€ 337 K), the purchase of hardware (€ 443 K), the works for the

delocalization of Borgo Cariola (€ 118 K), furniture and fittings (€ 105 K).

The values indicated in the Statement of Assets and Liabilities are net of the depreciation calculated based on

the rates considered to be representative of the residual possibility of utilization of the related tangible assets.

Divestments / decreases of assets have been made during 2016 for € 561 K.

Details on tangible assets are provided in Annex B.

Equity investments in other entities

At 31 December 2016, the Holding “CAI” held other equity investments, valued at purchase cost, consisting

of:

- I.T. Amerigo Vespucci S.p.a. (0.22 % of the capital): €42.1K;

- Consorzio Turistico Area Pisana S.c.a.r.l. (2.4% of the capital): €420;

- Scuola Aeroportuale Italiana Onlus (52.7% of the capital): €13.2K;

- Tirreno Brennero S.r.l. (0.27% of the capital): €238;

- Consorzio Pisa Energia S.c.r.l. (5.27% of the capital): €831;

- Montecatini CB S.c.r.l. (5.0% of the capital): €0K;

- Consorzio per l’Aeroporto di Siena (0.11% of the capital): €18.1K;

- Firenze Convention Bureau S.c.r.l. (1.05% of the capital): €1.3K;

- Firenze Mobilità S.p.a. (3.98% of the capital): €54.6K;

- Società Esercizio Aeroporto della Maremma S.p.a. (0.39% of the capital): €10.2K.

Scuola Aeroportuale Italiana Onlus has been listed with the other entities because it is a non-profit

organization.

Consorzio Turistico Area Pisana, Montecatini Congressi S.c.r.l., Tirreno Brennero S.r.l. and Consorzio per

l’Aeroporto di Siena were winding up at the closing date of this Report.

Pag. 81

Investments in Associated Companies

At 31 December 2016, the value of CAI’s interests in associated and related entities was €525K (€525K at 31

December 2015), as shown in the table below.

For further considerations on the characteristics of the entities in question, see the section “Relationships with

associated companies and related parties” of the Report on Operations.

No impairment indicator applies to these stakes.

Financial Assets

Guarantee deposits

At 31 December 2016 this item totalled €146K (€137K at 31 December 2015). Mainly refers to guarantee

deposits issued in favour of utility providers (for connections), tobacco products, cash floats given to ticket

offices and parking fees.

Receivables from others, due beyond the year

Receivables from others total €2.550K (€2.2717K at 31 December 2015), with receivables mainly deriving

from:

- Requests for IRES reimbursements for not deducted IRAP concerning the cost of personnel for €1,774K,

pursuant to art. 2, paragraph 1, of D.L. [Law Decree] no. 201/2011 (converted into Law no. 214/2011) –

“Manovra Monti” - completed by Law Decree no. 16 of 02/03/2013 (so-called “Decreto semplificazioni

fiscali” [tax simplification decree] converted, with amendments, into Law no. 44 of 26 April 2013), which

provided for the option to apply the new provisions on full deductibility also on previous taxable periods 2007-

2011;

- Receivables from for €605K relating to contractual return plans.

- €171K related to the loan granted to the associated company “Firenze Mobilità SpA” for works competed by

this entity (to be repaid not earlier than 4 years after the testing of the works).


Alatoscana Spa 377 377 -

Immobili AOU Careggi Spa 148 148 -

Total 525 525 -

Pag. 82

Prepaid taxes recoverable beyond the year

Deferred tax assets and liabilities have been posted in their net amount when they could be offset in the same

jurisdiction. The net balance is €2,147K (€2162K at 31 December 2015). This amount mainly includes taxes

determined on the temporary differences due to taxed provisions (for repair, bad debt, etc.) and to the

accounting of intangible assets (concession rights) according to IFRIC 12.

Deferred and prepaid taxes have been assessed by applying the tax rate applicable in the year when temporary

differences will be charged back.

CURRENT ASSETS

As shown in the table, current assets totalled €51.157K at 31 December 2016, with a decrease of €7,319K

compared to 31 December 2015.

More specifically, the main differences reflect:

Inventories

There is no inventory of raw and ancillary materials, consumables and goods.

Trade and Sundry Receivables

At 31 December 2016, this item shows €21,805K (€23,545K at 31 December 2015) and includes:

Receivables from customers

At 31 December 2016, Receivables from customers, net of the Provision for bad debt totalled €15,495K (€

19,158K at 31 December 2015) as detailed below:


CURRENT ASSETS 51.158 58.477 (7.319)

Pag. 83

Bad debts provisions was increased during the year by a provision of € 145K and decreased by € 179K for use.

Below the movements of the fund (amounts in € K).

Receivables from associated companies

Details of these receivables (in €K) are given in the table below:

Tax receivables

At 31 December 2016, this item showed €610K (€2,359K at 31 December 2015), including:

- a € 422 K IRAP and IRES credit of the Parent Company is linked to the tax consolidation.

- a € 65 K Tax credit of the subsidiary TA linked to donations (ART bonus);

- a € 78 K VAT credit of the other Subsidiaries;

- a € 34 K Tax credit of the Subsidiary JetFuel linked to deposits;

- other minor tax credits for €11K.

Receivables from others, due within the year

The item “Receivables from others, due within the year” is broken down below:


Corporacion America Italia 10 10 -

Toscana Aeroporti 18.565 17.699 866

Jet Fuel 160 197 (37)

Total gross receivables 18.735 17.906 829

Bad debts reserve (3.240) (3.274) 34

Total net receivables 15.495 14.632 863

amounts in euro/000 31.12.2015 prov. use 31.12.2016

Bad debt provisions 3.274 145 (179) 3.240


Alatoscana Spa 87 35 52

Immobili AOU Careggi Spa 130 146 (16)

Total 217 181 36

Pag. 84

It should be noted that in order to provide the reader with greater comparability of the information reported in

the financial statements at 31 December 2016, the amount of € 4,526K was reclassified to 2015 data from the

item “receivables from customers” to the item “receivables from others due within the year”.

The receivable for the additional Municipal tax in passenger boarding fees, established by art. 2, paragraph 11,

of Law no. 350 of 24 December 2003, is reduced for a greater collection of receivables. This item has the same

trend of the item “Tax liabilities” in the current Liabilities because the amount collected is paid to the State.

The item “Prepaid expenses” mainly concerns supplies with advanced billing, subscription fees, insurance.

“Advances paid to suppliers” mainly refer to the “People Mover” project.

Cash and cash equivalents

Cash at 31 December 2016 is given below, compared with the same value at 31 December 2015.

We point out that the “Cash and Banks” item includes:

a) a minimum amount of € 1 M, available and deposited in a current account pledged as collateral for the

medium-/long-term Loan Agreement signed with the MPS capital service bank pool;

b) an amount of approx. € 2.2 M, collected by the incorporated AdF on March 18, 2013 from the Ministry of

Transport after the pronouncement of judgement no. 2403/2012 as compensation for the damage suffered for

the non-adjustment of rights in the years 1999-2005, plus monetary revaluation and legal interests. By writ of


3.424 4.526 (1.102)

Prepaid expenses 464 478 (14)

Advance payements made to suppliers 930 651 279

Recepits from monopoly products 95 309 (214)

Recevables from parking lots 100 77 23

Receivables from employees 68 54 14

Receiv. from social ins. And insurance 24 26 (2)

Receivables for land expropriation 135 - 135

other minor items 243 252 (9)

Total 5.483 6.373 (890)


cash and cash equivalents 29.352 34.933 (5.581)

Pag. 85

summons to appeal, the Attorney General’s Office summoned AdF (today “TA”) to appear before the Rome

Court of Appeal, seeking the overturning of the appealed judgement of the Court of Rome no. 2403/2012,

finding that the ordinary courts lacked jurisdiction, and a ruling that no sums are owed by the Ministry that

filed the appeal by way of compensation for failure to update airport fees. As a result, as required by

international accounting standards (IAS 37), the amount referred to above has not had nor will it have any

impact on the Group's income statement until the final proceedings. In any case, in view of the principle of

prudence that constantly guides the management, said amount has been deposited in a separate deposit account,

where it will accrue interest that will in turn by reinvested, and not used until the final assignment to the Parent

Company with the last level of justice.

For more details, see Statement of Cash Flows.

SHAREHOLDERS' EQUITY AND LIABILITIES

Shareholders’ equity

The company was incorporated in February 2014 with a share capital of € 10K as a limited liability company.

On March 21, 2014, it was resolved to increase the share capital to €75M, the financial resources needed to

meet the plan's planned purchase of two stakes in SAT and ADF The capital has been fully subscribed and

paid.

On November 6, 2014, it approved a further capital increase to €130M, again fully subscribed and paid by the

shareholders, and on the same date resolved for the transformation into a joint stock company.

On January 27, 2015, the company resolved to reduce the share capital to surplus by €130M to €85M.

At the date of the financial statements, the share capital amounted to €85M, fully paid-up, divided into 130,000

shares with no nominal value.

Other reserves

Totalling 837K are specified as follows:

Description 31.12.16 31.12.15

Extraordinary Reserve 0 378

Consolidation Reserve 837 (1.202)

Total 837 (824)

The reserve of consolidation refers to the reversal of dividends received by TA, amounting to 4 million Euros

and to the difference of consolidation attributed in previous years, amounting to -1.8 million Euros, to which

must be added the increase of the share in the equity group of the subsidiary from the date of acquisition of

control to 31 December 2016.

The consolidation difference attributed in prior years relates to the adjustment to the IAS of CAI Financial

Pag. 86

Statements and to the effects of amortization of the higher value of the concessions and the reversal of deferred

taxes.

Profit/(Loss) carried forward

This item includes profits carried forward for € 606 K (€ 0 K at 31 December 2015), totally referred to losses

carried forward in 2016 of the parent company CAI.

Group’s profit (loss) for the period

This item shows the result of the CAI Group at 31 December 2016: € (649) K (against € 1,191 K at 31

December 2015).

Minority interest

Based on 2016 balance sheet items, the 59.05% minority interest corresponds to € 121,972 K (€ 123,233 K at

31 December 2015).

For further details refer to the consolidated statement of changes in shareholders' equity attached

Other components of the Statement of Comprehensive Income

The value at 31 December 2016 is broken down below:

The tax effect regarding the other components of the Statement of Comprehensive Income is broken down

below:

Situation al 31.12.2016Fair value

reserve

Profit / (loss)

carried forwardGroup total Minority int. SE

Tot.other

compon.of

compreh.IS

Other comprensiveprofit/(loss) that will

not be subsequently reclassified to the

Income Statement

Profit (loss) arising from the

determination of the termination

benefit after tax 0 (264) (264) (12) (277)

Situation at 31.12.2016 Gross value Net value

(364) 87 (277)

0 0 0

Tax (charge) / benefit

Profit (loss) arising from the determination of the

Termination Benefit after tax

Profit (loss) arising from the redetermination of

available-for-sale financial asstes

Pag. 87

MEDIUM/LONG-TERM LIABILITIES

Details of medium/long-term liabilities during the period considered are given below:


Provisions for liabilities and expenses

The Provision for liabilities and expenses totalled €2,815K at 31 December 2016. Details of the Provision,

which is totally referred to the Subsidiary TA, are given below:

The Provision at 31.12.2016 is mainly composed by the following amounts:

1) €2,351K relating to provisions connected with the “Fire Brigade Protection Service” dispute, better

described in the “Additional information” section;

2) €375K relating to provisions connected with the risk of potential labour dispute liabilities, better

described in the “Additional information” section;

3) €113K as best estimate of the liability associated with risk of a disbursement for the doubling of

general aviation rights – Art. 2 duodecies of Leg. Dec. of 30 September 1994;

4) €47K related to minor risks.

The amounts set aside by the Company to face potential risks deriving from ongoing litigation are deemed to

be appropriate in connection with the predictable outcome of the legal proceedings.

Provisions for repair and replacement

This provision (valued according to the best estimate of the expense required to fulfil the obligation at the

closing date of the report) includes the amounts spent for the maintenance and repair of infrastructures in the

Florence and Pisa airports, to be returned in perfect maintenance conditions to the Grantor at the end of the


MEDIUM / LONG TERM LIBILITIES 169.659 176.576 (6.917)

PROVISION FOR LIABILITIES AND EXPENSES

dati in euro/000 31.12.2015 prov. use 31.12.2016

Provision for liabilities and expenses 3.815 104 (1.033) 2.886

Pag. 88

concession period. The global value of this item at 31 December 2016 was € 23,911 K, up by € 2,698 K with

respect to 31 December 2015 due to the effect of the 2016 provision, partially offset by the uses of the period.

Details are given below:

This fund, depending on the estimated time of its use within the year, this provision is allocated to

medium/long-term liabilities (€ 19,081 K at 31 December 2016) and to current liabilities (€ 4,830 K at 31

December 2016).

The potential impact on the Provision in terms of growth as a consequence of a hypothetical annual reduction

of 50 b.p. in interest rates would correspond to + € 710 K. Instead, the potential impact on the Provision in

terms of reduction as a consequence of a hypothetical annual growth of 50 b.p. in interest rates would

correspond to - € 760 K.

Employee Termination Benefits

It refers almost entirely to the Subsidiary TA.

This item totally refers to the subsidiary TA.

As indicated above, the ETB is considered as a defined benefit obligation to be recognised as recommended

by IAS 19 - “Employee Benefits”. The amount of the termination benefit has been recalculated by using the

so-called “Projected Unit Credit Method”, by making actuarial valuations at the end of the reference period.

The amendment made to IAS 19 – “Employee Benefits” eliminates the option to defer the recognition of

actuarial gains and losses with the corridor method and required, instead, that the deficit or surplus of the entire

provision be presented in the statement of financial position, while the labour cost components and net financial

expenses should be recognized separately in the income statement, with actuarial gains and losses deriving

from the re-measurement of the liability and asset being recognized as items of the Statement of

Comprehensive Income. Furthermore, the return on assets included in net financial expenses should be

determined on the basis of the discount rate of the liabilities, and no longer on the return expected from them.

As regards the economic-financial scenario, the parameters used for the valuation of the Pisa and Florence

staffs at 31 December 2016 are:

- annual technical discount rate: 1.31%

- Annual inflation rate: 1.50%

- annual ETB increase rate: 2.63%

As far as the discount rate is concerned, the Corporate AA iBoxx 10+ index has been selected as criterion for

the valuation of this parameter, as its duration is suitable for the average time of permanence of the two staff

groups being considered.

PROVISION FOR REPAIR AND REPLACEMENT

dati in euro/000 31.12.2015 financial expen. prov. use 31.12.2016

Provision for repair and replacement 21.212 398 4.123 (1.822) 23.911

Pag. 89

There is no defined benefit scheme for the executive personnel of the company.

As required by IAS 19, consolidated liabilities show a value of € 6,871 K at 31 December 2016 (€ 6,489 K at

31 December 2015). This provision is posted net of the advance payments and settlements made during the

period examined and shows an increase of € 380 K compared to 31 December 2015, as specified below:

The difference shown in the Statement of Comprehensive Income (€ -277 K) corresponds to the actuarial loss

of € 364 K, after a taxation of € 87 K.

The valuation of future benefits is obviously affected by all the assumptions required for its identification;

therefore, in order to obtain the sensitivity shown by the actual value as determined above compared to said

assumptions, some tests have been conducted to provide the difference in the actual value against a given

difference in some of the assumptions adopted, which may mostly affect that value. The table below provides

the sensitivity analysis of the Provision.

Finally, the table below provides a prediction of disbursement of the provision.

31.12.2015 Actuarial

(gain)/ loss prov. use 31.12.2016

Termination benefit and other

personnel-related provisions 6.489 364 175 (157) 6.871

YearFlorence

AirportPisa Airport Jet Fuel

0 – 1 37,795 121,158 13,697

1 – 2 37,782 369,379 8,835

2 – 3 39,043 142,644 9,608

3 – 4 41,152 208,315 11,144

4 – 5 113,062 146,421 16,091

5 – 6 74,600 197,271 65,519

6 – 7 46,250 245,438 14,723

7 – 8 157,000 88,662 10,940

8 – 9 41,352 188,921 14,060

9 – 10 170,986 270,964 50,772

Future Cash Flow s (€ )

Pag. 90

Deferred tax liabilities

Concerning the deferred tax provisions related to ADF now TA for €28,274K and relative to SAT now TA for

€27,822K. They are almost entirely referred to enrollment of the tax assessment of the fair value of the assets

and liabilities of SAT and ADF acquired by CAI, net of the use of the accrued portion from the acquisition

date to year end.

They were calculated on temporary differences arising from the amounts recorded in the financial statements

and the corresponding values recognized for tax purposes, based on tax rates that were expected to be applied

at the time when these differences reversed. In 2015,the amount was adjusted to the new tax rate introduced

by art. 1 c. 61 Law 208/2015 which will change from 27,50% to 24% in 2017.

Deferred taxes arise from the bookkeeping, which was performed in accordance with the International

Accounting Standard IFRS 3, of the estimate, the fair value of the assets and liabilities of SAT and ADF when

acquired, as previously highlighted, and as shown in the following table (in thousands of euro):


The amount of non-current liabilities at 31 December 2016 is € 84,682K (€88,501K at 31 December 2015)

. The details of non-current and current financial liabilities are given below (in the “Loans” item).

The amount of € 6,031 K refers to the portions expiring within the subsequent twelve months of the bond loan

and of the long-term loans shown in this section.

At 31-Dec-2016 there were € 18.2 M of non-current financial liabilities due beyond five years.

Said financial liabilities for € 91 M, €50M refers to a bond loan iussed by the parent company, and €41M refers

to two long-term loans granted by banks “Banca Infrastrutture Innovazione e Sviluppo” (“BIIS”, of the Intesa

DEFERRED TAX LIABILITIES ADF SAT TOTAL

Deferred tax on higher concession

valuable 35.012 28.995 64.007

Deferred tax on higher land valuable 0 4.410 4.410

Reversal for amortization charge of

the period (1.215) (896) (2.111)

Reversal for amortization charge of

previous periods (2.122) (1.341) (3.463)

Adjustment 2015 tax rate (3.401) (3.346) (6.747)

Total 28.274 27.822 56.096

amounts in euro/000 31.12.2015 increases refunds Other mov. 31.12.2016

Non-current financial liabilities 88.501 - - (3.819) 84.682

Current financial liabilities 6.077 6.000 (10.222) 4.176 6.031

Total 94.578 6.000 (10.222) 357 90.713

Pag. 91

San Paolo Group) and “MPS Capital Service” to support infrastructure investments. The loans must be repaid

before June 2022 (subscribed with MPS Capital Service and used up for € 12 M) and September 2027 (€ 40

M subscribed and completely used up), and a Euribor 6-month interest rate plus a spread.

The total decrease in financial liabilities, amounting to € 4M, refers to repayments of share capital at maturity.

The aforesaid medium/long-term financial debt is required to comply with certain financial indices defined in

the related agreement, such as a certain net financial position/EBITDA and net financial position/Shareholders’

Equity, according to the definitions agreed with the lending counterparties and measured on the book values

of TA for the €40M loan and of the TA Group for the € 12 M loan.

We finally point out that, in addition to the aforesaid parameters, the € 12 M loan agreement requires a

minimum amount of € 1 M to be made available and deposited in a current account pledged as security for the

same loan and that no extraordinary transaction be entered into with third parties (entities not of the TA Group)

without the previous written consent of the lending banks.

Failure to comply with the covenants and the other contractual obligations undertaken with the loan in question

shall imply, if not remedied under the agreement provisions, the anticipated reimbursement of the residual loan

amount and/or a require a restriction in the distribution of dividends.

The bond loan of CAI was issued in December 2014 for €50M listed on the Vienna Stock Exchange, for a term

of five years, with coupon interest rate in annual deferred installments due on June 30th of each year. The bond

loan will be repaid at maturity in December 2019, plus accrued interest. The loan will be repaid before maturity

at the option of CAI.

The bond loan foresees, throughout its life, compliance with formal and financial obligations (operating and

financial covenants) already mentioned in the premise.

At 31 December 2016 the Company was compliant with all the above-mentioned parameters.

Other payables due beyond the year

Payables due beyond the subsequent year (entirely of the subsidiary “TA”) consist of € 43 K at 31 December

2016 (€ 805 K as at 31 Dec. 2015) and refer to guarantee deposits received from customers as performance

bonds for services provided. The € 762 K difference from the amount shown at 31 December 2015 is mainly

due to the final reversal of the advance payments received from the Ministry of Transport pursuant to Law no.

299/79 (ENAC-SAT Convention no. 3580) from the balance sheet for € 774 K due to running of limitation.

Said payable has as a contraentry the reversal of a receivable from others due beyond the year for € 301 K (a

receivable for infrastructure investments made in the Pisa airport based on advance payments received) and €

473 K of a contingent asset.

Payables due beyond 5 years

The company has loans expiring after 5 years, for which details refer to what has aleready stated inthe

Financial liabilities.

Pag. 92

CURRENT LIABILITIES

Changes in current liabilitiesoccurred during the period are shown below.


Bank overdrafts

At 31 December 2016, the CAI Group had no short-term payables to banks (€0 at 31 December 2015).

The detail of bank creditors at 31 December 2016 are shown below:

Loans

At 31 December 2016, the Subsidiary TA has bank loans for €4,456K( € 4,502K at 31 December 2015),

exclusively referred to the reimbursement prediction in the subsequent year of long-term loans (which are also

shown in the related table ad a comment of non-current financial liabilities).

While the parent company CAI at 31 December 2016 takes over the current portion of the bond equal to €

1,575K ( € 1,575K at 31 December 2015).

It should also be noted that in the first quarter of 2016, the Group switched on a short-term credit line

(c. "Hot money") of € 6 million fully reimbursed during the year.

The Net Financial Position at 31 December 2016, as shown in the Report on Operations in compliance with

Consob Resolution prot. no. 6064293 of 28 July 2006, is specified below:


Current liabilities 61.609 63.903 (2.294)

BANK LOANS


Credit lines granted 55.750 42.350 13.400

of which TA 55.550 42.150 13.400

of which other subsidiaries 200 200 0

Credit lines used 0 0 0

Use % 0% 0% 0%

Pag. 93

See comments in the Report on Operations and to the “Statement of Cash Flows” for a more in-depth analysis

of this item.

Tax liabilities

The aggregate amount of this item at 31 December 2016 is €7,030K (against €10,0387K at 31 December

2015), broken down below:

More specifically:

(values in €/000)

31.12.2016

Consolidated

CAI

31.12.2015

Consolidated

CAI

Diff.

2016/2015

A Cash on hand and at banks 29.352 34.933 (5.581)

B Other cash and cash equivalents - - -

C Securities held for trading - - -

D Liquid assets (A) + (B) + (C ) 29.352 34.933 (5.581)

E Current Financial receivables - -

F Current bank payables - -

G Current portion of non-current indebtedness 6.031 6.077 (46)

H Other current financial payables due to leasing companies - -

I Current financial indebtedness (F) + (G) + (H) 6.031 6.077 (46)

J Net current financial indebtedness (I) - (E) - (D) (23.321) (28.856) 5.535

K Non-current bank payables 36.259 40.534 (4.275)

L Bonds iussed 48.423 47.967 456

M Other non-current payables due to leasing companies - -

N Non-current financial Indebtedness (K) + (L) + (M) 84.682 88.501 (3.819)

O Net financial indebtedness (J) + (N) P.F.N. 61.361 59.645 1.716


Municipal surtax for passenger boarding 5.671 7.153 (1.482)

IRES/IRAP due 259 1.489 (1.230) IRPEF due for employees and self-

employed 787 1.058 (271)

Higher fees due for private flights 157 155 2

Local taxes 149 132 17

VAT due 6 49 (43)

Other minor items 1 2 (1)

Total 7.030 10.038 (3.008)

Pag. 94

i) the account payable to the Inland Revenue for the additional Municipal tax on boarding fees has considerably

decreased due to a greater collection of receivables from air carriers;

ii) the IRES-IRAP payable is lower due to the start of the tax consolidation agreement with TA and CAI;

iii)Payables to tax authorities for employee work decreased mainly due to the alignment of the monthly

payment of salaries between the two airports.

Payables to suppliers

At 31 December 2016, Payables to suppliers totalled €26,1M (€29,4M at 31 December 2015) with an decrease

of €3M for the minor investments made by the Group in the last quarter of the 2016 compared to the same

period of 2015.

Payables to social security institutions

This item includes accounts payable to social security and pension institutions (INPS, INAIL) at 31 December

2016, for a total of €2,672K (against €2,558K at 31 December 2015). The change is due to the increase in labor

costs.

Other payables due within the year

Other payables due within the year at 31 December 2016 consist of €14,6M (€12,9M at 31 December 2015),

which include the following debt items:

More specifically:

- Higher year-end concession fees due to the greater traffic finally recorded by the Subsidiary TA and

to the increase in the Florence airport fees as a consequence of the implementation of the new airport

OTHER PAYABLES DUE WITHIN THE YEAR

amounts in euro/000 31.12.2016 31.12.2015

Concession fees 2.381 2.066

Ministry of Transport 2.205 2.205

Air/bus/train ticket office receipts 849 922

Due to employees 6.609 6.050

Insurance policies and damage excesses 170 92

Due to directors and auditors 288 332

Fire-protection service 1.235 577

Payables to Found./Assoc./ Prev. Fund 191 -

Deferred income 247 248

Other minor items 449 479

Total 14.624 12.971

Pag. 95

tariffs (application of ART Tariff Models), which no longer include the 75% reduction in the fee

provided for by Law no. 248/2005.

- Accounts payable to the Ministry of Transport, € 2.2 M, derive from an amount collected by the

Florence airport in 2013 after the positive outcome of trial no. 2403/2012 that compensated for

damages suffered for the non-improvement of airport fees in the years 1999-2005, which will not be

recognised to the income statement before the last-instance trial, also because of the appeal lodged

with the Attorney General’s Office.

- The increase in the wages accrued by employees is due to the greater number of the Subsidiary TA,

realignment of wages in connection with organizational or contractual issues, increased yield

premiums and an increased average cost per FTE employee, partly affected by increases due to the

renewal of the national collective labour agreement (“CCNL”) for the applicable category, which took

place at the end of 2014.

- The Fire-Protection Service shows the account payable to the Inland Revenue as specified by the 2007

Finance Law. For further considerations, see details in the section “Provisions for liabilities and

expenses”.

- Prepaid expenses refer to non-aviation revenues invoiced in advance.

Advance payments

Advance payments totalled €322K ( €379K at 31 December 2015), mainly consist of advance payments to

customers.

COMMITMENTS AND GUARANTEES

At 31 December 2016, total commitments and guarantees were € 20,026 K (€ 21,005 K at 31 December 2015),

consisting of € 12,813 K of third party suretyships in favour of TA and € 7,213 K of suretyships given by third

parties on behalf of TA. The difference is mainly due to the non-renewal of a suretyship to the Inland Revenue

for a 2011 VAT reimbursement position of € 1,081 K

Suretyships provided by third parties in the favour of TA (€ 12.8 M) mainly refer to performance bonds for

contract works, for compliance with agreements by sub-concessionaires, air carriers and other customers.


Third-party guarantee in favour of

company 12.813 12.862

(49) Third-party guarantee on behalf of

company 7.213 8.143

(930)

20.026 21.005 (979)

Pag. 96

The suretyships provided to third parties on behalf of TA (€ 7 M) mainly refer to performance bonds in favour

of ENAC to ensure full and exact fulfilment of the obligations established with the two 40-year Conventions

signed; of the Municipalities of Pisa and Florence to ensure compliance with municipal regulations in the

execution of works for the expansion of the airport infrastructures by TA; and minor entries.

ADDITIONAL INFORMATION

Information on the main items of the Provision for liabilities and expenses at 31 December 2016

Provision for liability risks connected with the dispute on the Fire Brigade airport service (€ 2,351 K)

As regards the contribution to be paid for the Fund created by the 2007 Finance Law to reduce the cost for the

State of the organization and implementation of the Fire-Protection Service in Italian airports, the Parent

Company (then AdF) in 2012 brought a specific legal action before the Civil Court of Rome to ask the Judge

to repeal the obligation to pay said contribution after a change in the purposes for which the money in said

Fund was used starting from 1January 2009. In fact, since that date, the resources contributed to the Fund had

been used to provide general public rescue and civil defence services, as well as to finance the national

collective labour agreements of the Fire Brigades. The legal action is still ongoing today and, within its

framework, after the legislative change introduced with the 2016 Stability Law in the matter, a specific

application has been lodged to raise a constitutional question concerning art.1, paragraph 478, of Law no. 208

of 28 December 2015, in connection with art. 39-bis, paragraph 1, of DL no. 159 of 1 October 2007, for

violation of articles 3, 23, 24, 25, 41, 53, 111, and 117, first paragraph, of the Constitution, as well as for the

violation of art 6 of the European Convention on Human Rights. Notwithstanding the pending civil case, on

16 January 2015 the Administrations notified the Company with an order of the court regarding the alleged

contributions to be paid to the Fire-protection Fund for the years 2007, 2008, 2009, and 2010. The court order

at issue contains both formal and material errors (e.g. request of contributions already paid for the years 2007

and 2008), so the Company promptly lodged an opposition before the Court of Bologna to ask that the Court

order be cancelled or, as a secondary measure, that the two cases be united because overlapping a new case re-

initiated before the Court of Rome. It is understood that, if no prompt decision will be received concerning the

overlapping of the two cases, a specific constitutional challenge will be raised during the trial concerning the

new rule of art.1, paragraph 478, of the 2016 Stability Law.

In this regard, in March 2016, the Court of Rome specified that “it cannot certainly re-challenge the effects of

the final judgement, which are not affected by the introduction of new provisions, also having a retroactive

effectiveness”, and therefore, “the censored provision (paragraph 478) could not be highlighted” “at least as

regards the companies parties of the trials concluded with final judgements (and hypothetically, also

concerning the others, should the extension of the judgement be recognized in their favour)”.

Pag. 97

The Court of Rome, based on these preliminary remarks, considered that “at present, the applicability of the

provision suspected of being unconstitutional to the matter in the hands of the decider is not certain” with

reference to the airport management companies that claim a judgement that became final, such as Toscana

Aeroporti.

The amounts set aside by the company, including with the support of independent advisors, are consistent with

the predictable outcome of the dispute.

Provision for the risk of potential labour dispute liabilities (375 K)

At 31 December 2016, the Subsidiary TA had a Provision for risks of € 233 K, for any dispute that might be

brought by the Company’s staff concerning allegedly wrong percentage and wage calculations in their so-

called horizontal part-time labour contracts in the period before 2015.

Furthermore, the Company’s Fund contains approx.€ 142 K related to ongoing mediation negotiations with

employees.

The provision set aside by the Company has been estimated with the support of independent professional

opinions and residual provisions already used in previous years to define the same matter.

Other potential risks

We finally report risks for potential liabilities, also assessed as “possible” with the support of independent

professionals, concerning:

i) the dispute for the return of the consideration for fuel supplies requested by certain airlines from oil

companies, where the Subsidiary TA has been summoned as third party;

ii) the dispute initiated last 3 February 2017, where TA was summoned for trial by the company that was

awarded the contract for the expansion works in the west apron of the Florence airport concerning the problems

related to the execution of the contract;

iii) the appeal proposed on 31 December 2016 by the Region of Tuscany1 against judgement no.1310/2016,

with which the Regional Administrative Court (TAR) of Tuscany, in August 2016, had admitted the petitions

lodged by the various Committees and by the Company N.I.T. against the Variant to the P.I.T.2 for the “Parco

della Piana” and Florence airport. Indeed, the TAR's decision detected no insurmountable obstacle to the

construction of the new runway, but simply asked for a more in-depth investigation on certain environmental

issues because its approval does not require a corresponding specification in regional planning documents (i.e.

the “P.I.T.”) and the Local Bodies.

1 Incidental appeal brought by Toscana Aeroporti on 26 January 2017.

2“Piano di Intervento Territoriale”.

Pag. 98

iv) TA’s dispute concerning the request for damage compensation filed by a board member who left the BoD

before the merger and against which the Company lodged a counterclaim.

For the aforesaid disputes, the Group did not consider it appropriate to set aside provisions in the light of the

related progress status.

Reconciliation statement between the Holding's result and equity and the corresponding values in the

CAI Group

We provide below the reconciliation statement between 2016 results and the Shareholders’ Equity at December

31, 2016 (for the portion attributable to the Group) with the parallel values of the Holding.

STATEMENT OF RECONCILIATION BETWEEN THE RESULT AND EQUITY OF

THE PARENT COMPANY AND SIMILAR VALUES IN CAI GROUP

Statement at 31.12.2016Equity

Net year's

profit/(loss)

Balance as per the financial statements

of the parent company84.969 574

Variance for harmonizing the financial

statements of the parent company to

the accounting principles of te group

138 25

Balance as per the financial statements

of the parent company as adjusted85.107 599

Effect of valuation of equity

investments using the integral method

Elimination of the load values of the

subsidiaries(130.360)

Equity of the subsiadiaries 52.278

Profit for the year for the subsidiaries 5.018 5.018

(73.064) 5.018

Other adjustments 72.539 (6.266)

Total adjustments (525) (1.248)

Equity and year's result of the CAI

Group84.582 (649)

Equity and year's result of the Third

Parties121.972 2.778

Totale equity and year's result of the

Group206.554 2.129

Pag. 99

The other Group equity adjustments are related to the recognition of Goodwill and of the higher value of the

concessions, net of deferred taxes and amortization beyond the adjustment to IAS of CAI financial

statements.

The other adjustments of the result of the year of the Group are related to the elimination of dividends

received by CAI, to the amortization of concessions and to the variation of the deferred tax provision.

Directors’, Auditors’ and Top Strategic Executives’ fees

Below the amount in thousands of euros of pre-deduction remuneration of the directors and union

representatives and of CAI’s Group revision Company:

CAI TA

Remuneration for Directors 338 786

Board of Auditors 47 168

Revision Company 20 93

We point out that Directors and Statutory Auditors have interests neither in non-recurring transactions

performed in 2016, nor in any other similar transaction initiated during previous years and not yet concluded.

At year-end, no loan has been given to any member of the Board of Directors or Board of Statutory Auditors.

Relationships with related parties

These are scarcely significant transactions pursuant to art. 3 resolution no. Consob 17221 of 12.3.2010.

The terms governing the relationships with parties identified as related parties are defined on the basis of

contracts concluded under normal market conditions. For more details, see Annex C. Finally, please note that

in 2016 there were no unusual transactions with related parties.

Atypical and/or unusual transactions

Pursuant to CONSOB Communication no. 6064293 of 28 July 2006, we disclose that

no atypical and/or unusual transaction was performed in 2016.

Significant non-recurring events and transactions

Pursuant to Consob’s Notice of 28 July 2006, we specify that no significant non-recurring transaction was

performed.

Fair value measurement hierarchy

Pag. 100

As regards the financial instruments recognised in the Financial Position at fair value, IFRS 7 requires these

values to be classified based on a hierarchy of levels that reflects the significance of the input used in the

determination of fair value.

The following levels are identified:

Level 1 – the price of the asset or liability being measured is drawn from an active market;

Level 2 – the inputs used are not the listed prices indicated above, but may be observed on the market, either

directly (prices) or indirectly (price derivatives);

Level 3 – the inputs are not based on observable market data.

These notions are not applicable to the 2016 Consolidated Financial Report.

Therefore, there is no asset valued at fair value (FVPL or FVOCI) at 31 December 2016.

Information on financial instruments

No derivative financial instrument is used. No liability has been valued at fair value.

NOTES TO THE MAIN ITEMS OF THE CONSOLIDATED FINANCIAL REPORT: INCOME

STATEMENT

VALUE OF PRODUCTION

On the whole, consolidated revenues at 31 December 20165 totalled €128,2M (€ 132,6 M at 31 December

2015) and include:

Aviation revenues

amounts in euro/000 2016 2016 VAR. VAR.%

Aviation revenues 89.597 83.853 5.744 6,9%

Non-aviation revenues 26.626 25.151 1.475 5,9%

Revenues from constrution services 7.230 18.616 (11.386) -61,2%

Other revenue and income 4.796 4.938 (142) -2,9%

TOTAL REVENUES (A) 128.249 132.558 (4.309) -3,3%

Pag. 101

The table below shows the items of “Aviation revenues” at 31 December 2016 and the changes both in absolute

terms and in percentage terms, compared to 31 December 2015 :

The overall increase in the Group's Aviation revenues (+6.9%) mainly reflects the increase in revenues

deriving from airport duties, fees and taxes, which increased by 7% compared to 2015 reflecting both the

higher traffic (+4.2% traffic units) and the positive impact on revenues caused by the new Florence airport

tariffs (+3.5%) determined by the new tariffs effective from 25 May 2015 (which affected 2015 only for 7

months).

Handling revenues increased by +6.6% as a consequence of both the higher global traffic of the two airports

in 2016 (flights: +3.3%; tonnage +4,2%) and the implementation of more remunerative assistance agreements

January 2016.

Non-Aviation revenues

Aviation revenues totalled € 26.63 M at 31 December 2016, up by 5.9% compared to 2015, when they totalled

€ 25.15 M. This increase confirms the positive results obtained with the non-aviation strategies implemented

by the Group in spite of the continuing negative repercussions of the difficult general economic scenario, which

still negatively affected consumption in 2016.

The Non-Aviation business consisting in commercial and real estate operations in the two Florence and Pisa

airports are carried out:

i.through subcontracting to third parties (Retail, Food, Car Rental, specific areas and other sub-concessions);

AVIATION REVENUESamounts in euro/000 2016 2016 VAR. VAR.%

Passenger boarding fees 30.872 28.290 2.582 9,1%

Landing/departure fees 13.696 11.310 2.386 21,1%

Stopover fees 1.118 938 180 19,2%

PRM assistance fees 2.533 2.136 397 18,6%

Cargo fees 574 534 40 7,5%

Passenger security fees 7.209 7.196 13 0,2%

Baggage security fees 4.227 4.807 (580) -12,1%

Handling 27.706 25.993 1.713 6,6%

Centralised infrastructure 1.662 2.649 (987) -37,3%

TOTAL AVIATION REVENUES 89.597 83.853 5.744 6,9%

Pag. 102

ii.through direct control (Advertising, Parking Lots, Business Centre, Welcome Desk and VIP Lounge, Air

Ticket Office and Cargo Agency).

At 31 December 2016, revenues deriving from subcontracted activities accounted for 61.8% of Non-Aviation

revenues, while those deriving from directly managed activities accounted for the remaining 38.2%. In 2015,

these percentages were 61.4% and 38.6%, respectively.

The table below provides details on revenues from Non-Aviation activities carried out in 2016 and 2015:

The increase of € 339 K in revenues from Parking Lots, which totalled € 6.09 M in 2016 (+5.9% compared to

2015), is due to both the higher global passenger traffic of the Tuscan airports (+3.9%) and the increase in

tariffs implemented during 2016.

Non-Aviation revenues deriving from the Food business, which totalled € 3.34 M in 2016, increased by 11.8%

compared to 2015 mainly due to the renewal of an agreement signed with an important company of the sector

at the Florence airport and for the effect of a greater passenger traffic.

Revenues deriving from the Retail business, which totalled € 4.25 M in 2016, increased by 8.6% mainly due

to the commercial agreement in force for the management of duty-free shops in the Florence airport, which

established an increased minimum requirement compared to the previous year.

NON AVIATION REVENUESamounts in euro/000 2016 2015 VAR. VAR.%

Parking lots 6.093 5.755 338 5,9%

Food 3.344 2.991 353 11,8%

Retail 4.253 3.917 336 8,6%

Advertising 2.240 2.126 114 5,4%

Real estate 2.146 2.008 138 6,9%

Car rentals 4.737 4.582 155 3,4%

Other subconcessions 1.971 1.946 25 1,3%

VIP lounge 1.001 892 109 12,2%

Air tickets 486 540 (54) -10,0%

Cargo agency 356 394 (38) -9,6%

TOTAL NON-AVIATION REVENUES 26.627 25.151 1.476 5,9%

Pag. 103

Revenues deriving from the direct management of the Advertising business, which totalled € 2.24 M in 2016,

increased by 5.4% compared to 2015 mainly by virtue of the advertising agreements signed during the last

quarter with important event organizers and sellers of vending machines.

Revenues from the Real Estate business totalled € 2.15 M in 2016, corresponding to +6.9%, mainly reflecting

the higher revenues deriving from the revision of certain sub-concession agreements for the use of areas of the

Florence airport and the re-recognition of these revenues allocated to the item “Other sub-concessions” in the

previous year.

Revenues from the Car Rental business totalled € 4.74 M in 2016, up by € 156 K (+3.4%) compared to 2015.

This difference is mainly due to the seasonal purchase of a higher number of car park spaces by some car rental

companies operating in the Pisa airport.

Revenues generated by “Other sub-concessions” reached € 1.97 M in 2016, substantially in line with 2015,

with a 1.1% increase.

The increased revenue obtained from the VIP Lounge (+12.2%) is partly due to the greater passenger traffic

(+3.9%) and partly to the higher number of entrances in the lounges of the two Tuscan airports.

The reduction in revenues from the Air Ticket Office (-9.9%) is due to the increased habit of passengers to

purchase tickets through online reservation systems.

Revenues deriving from the Cargo Agency (only in the Pisa airport) decreased by 9.6% compared to 2015 due

to the cancellation of some charter cargo flights that had positively affected revenues during that business year

(Saudi Arabian Airlines).

Revenues from construction services

As at 31 December 2016, revenues for construction services totalled € 7.23 M, against € 18.62 M in 2015. The

€ 11.39 M of lower revenues finally reported mainly derive from the greater investments made in 2015 on the

Pisa airport for the adjustment and improvement of the flight infrastructure (runways and connections) for

approx. € 13 M.

For further details, see section “Investments of the Group”.

Pag. 104

Other revenue and income

The table below provides details on 2016 “Other revenues and income” against those of 2015:

Contingent assets consist of past revenues or in the release of cost provisions recognised in previous years,

which decreased by 5% in 2016 compared to 2015. More specifically, 2016 accounts were particularly affected

by about € 1.5 M of reversed costs related to marketing support agreements that were mainly due to the earlier

termination of a contract with a carrier at the Pisa airport; income for € 473 K was recognised for the

elimination of prescribed accounts payable for advance payments received (ENAC-SAT Convention no. 3580)

and € 303 K for the positive conclusion in the Court of Cassation of a dispute with the Inland Revenue (Agenzia

delle Entrate) for a 2003 tax assessment regarding Aeroporto di Firenze SpA.

The item “Services and Consulting” (administrative staff services charged by the Subsidiary TA to the

associates Immobili AOU Careggi Spa and Alatoscana Spa), “Recovery of Costs” (charging of common

centralized services, such as utilities and equipment, employee canteen service, insurance reimbursements,

etc.), and other “Minor” revenues, on the whole, are substantially in line with 2015 values.

COSTS

As at 31 December 2016, the amount of total costs was € 99,73 M, down by 8.3% compared to 2015, when

they were € 108.78 M. This result reflects a decrease in Costs for construction services, which passed from €

17.69 M in 2015 to € 6.27 M in 2016 (-64.6%) and a +2.6% increase in operating costs (passing from € 89.35

M in 2015 to € 92.09 M in 2016).

OTHER REVENUE AND INCOMEamounts in euro/000 2016 2015 VAR. VAR.%

Contingent assets 3.378 3.556 (178) -5,0%

Services and consulting 206 163 43 26,4%

Cost recoveries 1.156 1.168 (12) -1,0%

Minors 56 51 5 9,8%

TOTAL REVENUES AND INCOME 4.796 4.938 (142) -2,9%


Pag. 105

Consumables

This item refers to the cost of consumables, which totalled €1,397K at 31 December 2016 ( € 1,236 K at 31

December 2015), as broken down below:

Cost of Personnel

The Group’s “Cost of personnel” item totalled € 41,04 M in 2016, up by € 1,23 K compared to 2015 (+3.1%).

This difference reflects the greater number of employees of the Group, the realignment of wages in connection

with organizational or contractual aspects, increased yield premiums and an increased average cost per FTE

employee, partly affected by increases due to the renewal of the national collective labour agreement “CCNL”

for the applicable category, which took place at the end of 2014.

.

This cost item is broken down below:


Consumables 1.397 1.236 161 13,0%



Sundry operating expenses 2.224 2.078 146 7,0%

Airport leases 6.034 5.269 765 14,5%

Total operating costs 93.470 91.094 2.376 2,6%

Cost for construction services 6.271 17.690 (11.419) -64,6%

TOTAL COSTS (B) 99.741 108.784 (9.043) -8,3%


Stationery 79 61 18 29,5%

Fuel, lubrificants 636 677 (41) -6,1%

Materials for car parking lots 11 8 3 37,5%

Small tools 12 11 1 9,1%

Security contr. Serv. (mat) 65 40 25 62,5%

Clothing 357 244 113 46,3%

Mat. For operating services 237 194 43 22,2%

TOTAL CONSUMABLES 1.397 1.235 162 13,1%

Pag. 106

The table below provides details on the average annual staff (expressed in Equivalent Full Time) for 2016

and any difference from 2015:

In the table above, 2 part-time units are considered as 1 full-time unit.


Remuneration 40.659 39.593 1.066 2,7%

of wich:

Wages 22.982 21.387 1.595 7,5%

Salaries 7.112 7.571 (459) -6,1%

Social security contributions 8.429 8.584 (155) -1,8%

Term. Benef. 2.136 2.051 85 4,1%

Other labour costs 386 227 159 70,0%

of wich:

Contribution to CRAL 11 10 1 10,0%

Social fund 10 9 1 11,1%

Benefits to personnel 96 49 47 95,9%

Administred and sundry 269 159 110 69,2%

TOTAL COSTS OF PERSONNEL 41.045 39.820 1.225 3,1%


Corporacion America Italia 1,0 1,0 - -

Managers 12,4 10,8 1,6 14,8%

Employees 520,0 501,8 18,2 3,6%

Workers 176,9 193,8 (16,9) -8,7%

Toscana Aeroporti 709,3 706,4 2,9 0,4%

Jet Fuel 10,7 10,0 0,7 7,0%

TAE 1,5 - 0,9 -

Gruppo Corporacion America Italia 722,5 717,4 4,5 0,6%

Pag. 107

7. Costs for services

On the whole, costs for services in 2016 consist of:

Sundry operating expenses

“Sundry management expenses” €2,2M ( € 2 M in 2015) - mainly include taxes and levies, membership fees,

sundry administrative costs, non-recurring costs and other minor items.


Commercial services 14.618 14.540 78 0,5%

Institutional expenses 1.755 1.699 56 3,3%

Other services 4.478 6.024 (1.546) -25,7%

Services for the personnel 1.739 1.720 19 1,1%

Mantenance services 5.219 4.771 448 9,4%

Utilities 3.401 3.610 (209) -5,8%

Operating services 11.560 10.326 1.234 12,0%

TOTAL COSTS FOR SERVICES 42.770 42.690 80 0,2%



Publications 19 22 (3) -13,6%

Ins. Entities and sundry institutions 564 330 234 70,9%

Taxes and levies 625 617 8 1,3%

Entertainment 209 122 87 71,3%

Revenue stamps 36 28 8 28,6%

Non-recurring costs 295 559 (264) -47,2%

Post and telegraph 18 24 (6) -25,0%

Rebates and allowances 458 377 81 21,5%

SUNDRY OPERATING EXPENSES 2.224 2.079 145 7,0%


Pag. 108

Airport leases

“Airport leases” €6M ( € 5,3 M in 2015) - include concession fees and the contribution paid to the fire-

protection fund.

Costs for construction services

Costs for construction services, totalling €6,3M ( € 17,7 M at 31 December 2015), arise from the investment

made in the airport infrastructures under concession in 2016 and have as contraentry the item “Revenues for

construction services” with the addition of the capitalization of internal costs for the general coordination of

work carried out by the subsidiary TA.The lower costs for € 11,4M are mainly due to the major investments

made in 2015 at Pisa airport for the adjustment and the upgrade of the flight infrastructures (Track and Fittings)

Amortization and write-downs

In 2016 the total of this item is €15,1M (€ 14,8 M in 2015). It includes the amortization of intangible assets

for €11.9M (€ 11,5 M in 2015) and the depreciation of tangible assets for €3.2M (€ 3,3 M in 2015).

Provision for liabilities and charges

This item, with a value of €4.2M (€ 4,7 M in 2015), mainly includes the provision for repair, which has been

introduced in compliance with accounting standard IFRIC 12 starting from 2010, which is the year’s accrual

required for future maintenance expenses relating to repairs and replacements required to keep the assets used

under the two ENAC concessions in good operating conditions.

Provision for bad debt

This item totals €415K ( € 163 K in 2015) and consists in the amount set aside based on an estimate of the

estimated realizable value of receivables existing at 31 December 2016.

Financial income

This item totals €199K ( € 2,720 K in 2015) and includes interests receivable accured on bank current accounts

( € 67 K), interests on arrears (€43K), dividends from related companies (€30K), exchange differences ( €53K)

and other minor items (€6K).


Concessions and security fees 4.730 4.136 594 14,4%

Fire brigade fee 1.304 1.133 171 15,1%

TOTAL AIRPORT FEES/LEASES 6.034 5.269 765 14,5%


Pag. 109

It should be noted that in 2015 the financial income was influenced by the proceeds of the sale of the shares in

Aeroporto di Firenze Spa for €1,6M and for major exchange difference for €850K.

Financial expenses

This item totals €4,878K (€ 5,105K in 2015) and refers for €3.5M to bond interest issued by the Parent

Company while the difference is mainly composed of interests payable and commissions on bank current

accounts for €717K ( € 1.104K in 2015), interest cost as defined in IAS 19 for €160K ( € 105K in 2015),

financial expenses relating to the discounting of the provision for repair and replacement for €398K ( € 392 K

in 2015).

Profit (loss) of minority interest

This item totals €0K (€ 42K in 2015) and indicates the valuation in the Shareholders’ Equity of the interests

in associated companies (Immobili A.O.U. Careggi S.p.a. and Alatoscana S.p.a.).

Year's income taxes

This item includes an aggregate amount of €-1,945K for 2016 (€4,810K in 2015) arising from:

- current taxes assessed on 2016 taxable income for -€4,700K, of which -€3,520K for IRES and -€1,080K

for IRAP;

- Deferred taxes for €1,984K;

- Income from tax consolidation for € 1,153K;

- Other minors for -€382K.

Minority Interest’s loss (profit) for the period

This item shows:

- the result of the subsidiary Jet Fuel owned by minority shareholders for €116K;

- the result of the subsidiary Toscana Aeroporti for €2,663K.

TABLE OF CHANGES IN INTANGIBLE ASSET IN 2016 (Amounts shown in €K)

Annex A

Concession

Rights

Patent and

intellectual

property rights

Work in

progress and

advance

payments

Godwill Total

Historical cost 376.621 10.070 5.602 4.615 396.908

Accumulated

depreciation(41.725) (9.702) 0 0 (51.427)

Values as at

31.12.2015334.896 368 5.602 4.615 345.480

Year's differences

Purchases 2.242 477 5.685 0 8.404

Previous year work in

progress1.446 34 (1.480) 0 0

Disinvestment 0 0 0 0 0

Amortization (11.524) (366) 0 0 (11.890)

Reversal of past years

accumulated

depreciation

0 0 0 0 0

Historical cost 380.309 10.581 9.807 4.615 405.312

Accumulated

depreciation(53.249) (10.068) 0 0 (63.317)

Value as at

31.12.2016327.059 513 9.807 4.615 341.995

Pag. 110

Annex B

Work in

progress

intangible

assets and

deposit

Land,

buildings and

runway

installation

that can be

freely

assigned

Land,

buildings and

runway

installation

owned by the

company

Plant and

machinery

Other

assets

Industrial

and

commercial

equipment

Total

Historical cost 238 5.632 32.754 30.423 15.621 1.070 85.738

Accumulated

depreciation0 (3.510) (4.315) (23.629) (13.579) (832) (45.865)

Value as at

31.12.2015238 2.122 28.439 6.794 2.042 238 39.873

Year's differences

Purchases 332 16 125 1.625 620 75 2.793

Appreciation 0 0 0 0 0 0 0

Disinvestment/

Decrease0 0 (297) (150) (113) 0 (560)

Amortization 0 (403) (146) (1.713) (915) (45) (3.222)

Reversal of past years

accumulated

depreciation

0 0 (25) (150) (102) 0 (277)

Historical cost 570 5.648 32.582 31.898 16.128 1.145 87.971

Accumulated

depreciation0 (3.913) (4.436) (25.192) (14.392) (877) (48.810)

Value as at

31.12.2016570 1.734 28.146 6.707 1.737 268 39.162

TABLE OF CHANGE IN TANGIBLE ASSETS IN 2016 (Amounts shown in €K)

Pag. 111

Annex C

values in €

% incidence

on balance

sheet item

Balance (€) at

12/31/2016

Aviation Revenues 993,0 1,11% 89.597

Non-aviation Revenues 620,9 2,33% 26.626

Other revenues and income 769,1 16,08% 4.782

Costs for services 516,3 1,21% 42.716

Sundry operating expenses 75,0 3,31% 2.264

Receivables from customers 542,1 3,50% 15.495

Receivables from others due within one year 427,0 7,79% 5.483

Payables to suppliers 35,9 0,14% 26.100

Other payables due within one year 616,8 4,22% 14.624

RELATIONSHIPS WITH RELATED PARTIES (12.31.2016)

Financial statement item

Pag. 112

Pag. 113

CORPORACION AMERICA ITALIA S.P.A.

Single-Member Company

Piazzale Martesana, 10 - Milan

R.E.A. MI-2033297 Fully paid-up Share Capital 85.000.000,00

VAT number and Tax Code: 08555440968

BOARD OF AUDITORS’ REPORT ON THE 2016 FINANCIAL STATEMENT AND TO

SHAREHOLDERS’ (pursuant to art.2429, par. 2, of the Italian Civil Code)

To the Shareholders of Corporacion America Italia Spa

Dear Shareholders,

During the business year ended December 31, 2016, we, the Board of Auditors, carried out our auditing tasks

as required by the applicable legislation in compliance with the Code of Conduct recommended by the Italian

Consiglio Nazionale dei Dottori Commerciali e degli Esperti Contabili (the national Association of Chartered

Accountants and Business Advisers), concerning corporate control and auditing activities.

The Board of Auditors, was appointed during the Shareholders’ Meeting held on 8 July 2014 and due to remain

in office until the approval of the 2016 financial statement.

The statutory auditing assignment was assigned on September 24, 2014 to PricewaterhouseCoopers Spa until

the year ending on December 31, 2022.

Upon accepting their assignement and subsequently during their period in office, the Board of Auditors

checked their Members’ compliance with the applicable honourability and professional qualification

requirements and checked that there was no reason for ineligibility, incompatibility or forfeiture under the

applicable legislation, and that the members of the BoA met the indipendece requirements specified by articles

2382 and 2399 of the Civil Code, in order to be enabled to carry out their tasks in a fair and honest manner,

with no economic conflict of interests.

This report has been approved collegially and the college has waived the terms of art. 2429 of the Civil Code.

The Board of Directors thus made available the following documents approved on May, 02, 2017 for the year

ended at December, 31, 2016:

- The separate financial statement, complete with explanatory notes;

- Consolidated financial statement, complete with explanatory notes, cash flow statement and

management report.

Supervisory activities pursuant to art. 2403 and fol. of Civil Code The Board of Statutory Auditors supervised the observance of the law, the articles of association and the

Statute.

Supervisory activity planning has been implemented considering the type of business carried out by

Corporacion America Italia, the size and the issues of the Company as well as its organizational and accounting

structure.

It was therefore possible to confirm that:

- the typical activity carried out by the company has not changed during the year under review and is consistent

with what is provided by the corporate object;

- the organizational structure remained largely unchanged;

- the human resources that make up the "workforce" are not substantially altered.

The above is indirectly confirmed by the comparison of the results of the values expressed in the income

statement for the last two financial years, i.e. the one in question (2016) and the previous one (2015). It is also

possible to find out how the company operated in 2016 in terms of comparison with the previous year and, as

Pag. 114

a result, our controls took place on these assumptions by verifying the substantial comparability of values and

results with those of the previous year.

This report therefore summarizes the activity concerning the information provided by art. 2429, para 2, of the

Civil Code.

And more specifically:

- the results of the financial year;

- the activity carried out in the performance of the duties provided for by the standard;

- remarks and proposals on the budget, with particular reference to the possible use by the administration of

the exemption provided for in art. 2423, para 5,of the Civil Code;

- the eventual receipt of complaints by the shareholders referred to in art. 2408 of the Civil Code.

Activities carried out During 2016, the Board of Statutory Auditors currently in office met 6 times and attended 6 Board of Directors

and 1 Ordinary Shareholders' Meeting.

The activities carried out by the College relate, over time, to the entire financial year and during the same

financial year, the meetings referred to in art. 2404 of the Civil Code. Such meetings, as already mentioned in

the previous paragraphs, have been drawn up by means of appropriate report duly signed for unanimous

approval.

During the periodic audits, the college has taken note of the evolution of the company's activities, paying

particular attention to contingent and / or extraordinary issues in order to identify its economic and financial

impact on operating result and on the balance sheet structure , as well as any risks, like those arising from loan

losses, which are monitored on a regular basis.

As the company's business consists mainly in the holding and management of the Toscana Aeroporti Spa

partecipation, the risks of the parent company are heavily influenced by the corresponding risks of the

subsidiary. These risks are adequately represented in the CAI's annual report of consolidated financial

statements, referred to in full.

The Board of Statutory Auditors has periodically evaluated the adequacy of the organizational and functional

structure of the company and its possible mutations with respect to the minimum requirements posed by the

management's performance.

Relationships with people in the aforementioned structure - directors, employees and external consultants -

have been inspired by mutual collaboration in the respect of the roles assigned to each one.

Throughout the year, it was found that:

- the internal administrative staff responsible for the recording of company facts have not materially changed

with respect to the previous year;

- the level of technical preparation remains adequate with respect to the type of ordinary business events to be

taken;

- external consultants and external accounting, tax and corporate accountants have not changed and therefore

have a historical knowledge of the business activity and of the extraordinary management issues that have

affected the results of the financial statements.

Given its simplicity of directional organization, the information required by art. 2381, paragraph 5, of the Civil

Code, have been provided by the Chairman with a periodicity even higher than the minimum set of six months,

both at scheduled meetings and through telephone and contacts with the administrative body: from all the

above, it follows that the Executive Director has, in substance and in form, respected the provisions of the

aforementioned provision.

The Board of Statutory Auditors has acquired knowledged and has monitored the observance of the principles

of correct administration, in the exercise of its responsibilities, primarily through participation at the meetings

of the Board of Directors and also through the mutual exchange of relevant data and information with the

Legal Review Company. From the information received from the Directors and the meetings with the

representatives of the Independent Auditors, there were no atypical or unusual transactions made during the

2016 financial year.

In conclusion, as far as it has been possible during the course of the year, the Board of Statutory Auditors can

state that:

- the decisions taken by the members and the board of directors have been in accordance with the law and the

articles of association and have not been manifestly imprudent or endangering the integrity of the company's

assets;

Pag. 115

- sufficient information has been obtained on the overall performance of the management and on its foreseeable

evolution as well as on the most significant operations, by size or characteristics, carried out by the company;

- the transactions carried out have also been in accordance with the law and the articles of association and not

in potential conflict with the resolutions adopted by the shareholders' meeting or such as to compromise the

integrity of the company's assets;

- no specific observations are made as to the appropriateness of the organizational structure of the company,

nor on the adequacy of the administrative and accounting system, nor on the reliability of the latter in properly

representing the facts of management;

- in the course of the supervisory activity, as outlined above, no further significant facts have arisen that require

their reporting in this report;

- there was no need to intervene for omissions by directors under art. 2406 of the Civil Code;

- no complaints have been received pursuant to art. 2408 of the Civil Code;

- no complaints were made pursuant to art. 2409, paragraph 7, of the Civil Code;

- During the financial year the Board of Auditors did not issue any opinions provided by law.

Observations regarding the financial statements

The financial statements for the year ended 31 December 2016 have been approved by the Board of Directors

and consist of the balance sheet, the income statement and the explanatory notes.

Furthermore:

- the directors also prepared the consolidated financial statements of the group consisting of the Balance Sheet,

the Income Statement, the Cash Flow Statement, the Explanatory Notes to the Financial Statements and the

Management Report;

- such documents have been delivered to the Board of Statutory Auditors in good time to be deposited at the

registered office of the company accompanying this report, irrespective of the deadline provided for in art.

2429, para 1, of the Civil Code.

It therefore examined the financial statements for which the following additional information is provided:

- It was not necessary to change the evaluation criteria as a result of the first application of the amendments

introduced in art. 2426 of the Civil Code pursuant to Legislative Decree no. 139/2015 without making any

assumptions.

- Attention has been paid to the approach given to the financial statements, its general compliance with the

law as regards its training and structure, and there are no observations in this respect;

- compliance with the law on the preparation of the Management Report has been verified and there are no

observations to this effect in this report;

- the Directors in the drafting of Financial Statement, did not derogate from the law in accordance with art.

2423, para 5, of the Civil Code;

- the financial statements have been verified to the facts and information that they have been aware of as a

result of the performance of the duties of the Board of Statutory Auditors, and no further observations are

made;

- pursuant to art. 2426, para 1, n. 5, of the Civil Code the significant amounts recorded in points B-I-1) and B-

I-2) of the balance sheet of the separate financial statements were the subject of our specific control with

consequent consent to their inclusion in the assets;

- pursuant to art. 2426, para 1, n. 6, of the Civil Code the Board of Statutory Auditors has noted that there is

no goodwill recognized in item B-I-5) of the balance sheet assets of the separate financial statements;

- for a mere recall, it is not possible to distribute dividends by affecting the reserves of profits beyond the net

amount of plant and expansion costs, development costs and goodwill recognized in assets;

- the accuracy of the information contained in the notes to the financial statements has been verified as regards

the presence of active and passive financial and monetary positions originated in currencies different from

Euro;

- the information required by art. 2427-bis of the Civil Code have been provided in the explanatory notes,

relating to financial derivative and financial fixed assets recorded at a value greater than their fair value;

- Potential commitments, warranties and contingencies have been exhaustively illustrated.

The Firm of Auditors has issued their report today without any relief or information.

With regard to the proposal of the Board of Directors regarding the allocation of net profit for the year, the

Board of Directors has nothing to observe, but notes that this decision is up to the Shareholders' Meeting.

Pag. 116

Result of the financial year

The net result for the year ended December 31, 2016, as presented in the financial statements prepared by the

Directors, is positive for 574,570.07 euros.

Observations and proposals on the approval of the financial statement

The Board of Auditors acknowledges the correctness of the preparation of the documents that made up the

financial statements and the consolidated financial statements as well as the procedure with which they were

prepared and submitted to the Shareholders' Meeting.

The Board of Auditors, in its area of expertise, states that there are no impediments to the approval of the

financial statements and proposals for resolutions formulated by the Board of Directors.

Milan, June, 05, 2017

THE BOARD OF AUDITORS

Dr. Silvia Bresciani, Chairman of the Board of Auditors

Dr. Giuseppe Nicosia, Auditor

Dr. Claudio Pedrazzani, Auditor

Pag. 117

Pag. 118

Pag. 119

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