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1 Annual financial report as of 31 December, 2015
Tiscali Group
Annual Financial Report as at 31 December 2015
_____________________
Issue date: 31 December 2015
This report is available on the website www.tiscali.it
Tiscali S.p.A.
Registered office: SS195 Km 2.3, Sa Illetta, Cagliari, Italy
Share Capital EUR 169,076,822.67
Cagliari Companies’ Register and VAT No. 02375280928 Econ. & Admin. - 191784

Table of contents

  • Page 1
    Tiscali Group Annual Financial Report as at 31 December 2015 _____ Issue date: 31 December 2015 This report is available on the website www.tiscali.it Tiscali S.p.A. Registered office: SS195 Km 2.3, Sa Illetta, Cagliari, Italy Share Capital EUR 169,076,822.67 Cagliari Companies' Register and VAT ...

  • Page 2
    ... Corporate Governance Code ...64 5.4 Internal auditing relative to accounting and financial information ...75 5.5 Organisation, management and control model pursuant to Legislative Decree 231/2001 ...77 5.6 Governance of Transactions with Related Parties ...77 5.7 Confidential information and market...

  • Page 3
    ... Net Financial Debt as per Consob Shareholders' equity Investments Operating figures (**) (000) Total Customers of which: Broadband (*) of which MOBILE (Voice and Data) of which OTHER (*) of which Voip (Dual Play) of which Vula new customers of which Broadband Fixed Wireless of the ARIA Group 2015...

  • Page 4
    ...below: Pre-tax result + Financial charges - Financial income Operating result + Restructuring costs and other write-downs + Amortisation/depreciation Gross Operating Result (EBITDA) + Write-downs of receivables from customers Gross Operating Result (Adjusted EBITDA) 2 Annual financial report as of...

  • Page 5
    ... Auditors Emilio Abruzzese Valeria Calabi Alternate Auditors Federica Solazzi Badioli Augusto Valchera Executive in charge of drawing up the corporate accounting documents Pasquale Lionetti Independent Auditing Firm Reconta Ernst & Young S.p.A. 3 Annual financial report as of 31 December, 2015

  • Page 6
    Report on Operations 4 Annual financial report as of 31 December, 2015

  • Page 7
    ... sale of advertising space of the following portal www.tiscali.it but also of other key Italian web properties. Evolution of the Fixed Broadband Market As regards the evolution of the market for broadband Internet access from fixed network, the principal market covered by Tiscali, in September 2015...

  • Page 8
    ... of such products and services qualifies Tiscali as an operator historically focused on innovation made available to its customers, and as a market player able to provide a comprehensive offer integrating access products with digital and web-based services. 6 Annual financial report as of 31...

  • Page 9
    ... provision of broadband Internet via HyperLan network to local customers unable to access fast Internet services via the network of traditional operators. In 2008, the company was strongly recapitalised by a group of international partners and in February 2008 took part in the tender issued by the...

  • Page 10
    ... manage on Tiscali proprietary network Mobile Data services integrated with the BroadBand Fixed Wireless services in the areas covered by the LTE network on 3.5GHz frequency. This possibility is becoming increasingly topical given the following events taking place in the past few months that support...

  • Page 11
    ...On 2 October 2015, Tiscali Italia S.p.A. transferred corporate assets relative to the Streamago project to Streamago Inc, a company with registered office in Delaware, for a book value at 30 September 2015 of approximately EUR 0.7 million, receiving in exchange 51,577,564 privileged shares, equal to...

  • Page 12
    ... that create the infrastructure and subjects operating in the market further downstream) the proper return on investment, in order to foster the rapid circulation of the services. Procedure relating to the partial cancellation of the rules underlying the services for access to the fixed network for...

  • Page 13
    ... size; h) clear rules in the event of switch-off by Telecom Italia of the exchanges open to unbundling, with incentives for the migration to fibre by the operators already placed. The price monitoring measures comprise: i. wholesale access charges, for 2014, equal to the values of 2013; ii. coherent...

  • Page 14
    market given the growing investments in the development of state-of-the-art networks and the resulting diffusion of innovative services based on the fibre-optic access infrastructure. Management of radio spectrum and use of the frequency bands for wireless broadband services With regard to mobile ...

  • Page 15
    ...long term may affect not only operators, but also paying users, who may be forced to sustain costs that are otherwise not due. The system, managed by a subject as yet to be identified by the telephone operators, may only process information regarding non-payment by the customer. 13 Annual financial...

  • Page 16
    ... the Digital Single Market. Upon completion of the consultation stage, the Commission will examine in detail the contributions received, based on which it will develop the final proposal of the legislative intervention expected by the end of 2016. 14 Annual financial report as of 31 December, 2015

  • Page 17
    ... Tiscali shares have been listed on the Italian Stock market (Milan: TIS) since October 1999. At 31 December 2015, market capitalisation came to EUR 180,853,709 million, calculated on the value of EUR 0.0575 per share as at that date. At 31 December 2015, the number of shares representing the Group...

  • Page 18
    ...months of March, July and August. Fig. 2 - Tiscali's share performance in 2015 0,10 0,09 0,08 0,07 0,06 0,05 0,04 0,03 0,02 0,01 0,00 gen feb mar apr mag giu lug ago set ott nov dic Prezzo (Euro... value of EUR 1.2 million. Average Tiscali stock trading on the Italian Stock Exchange in 2015 Price ...

  • Page 19
    ... Holding, a Russian financial group and financial partner of the Operation. The merger by incorporation into Tiscali Spa was accomplished via an increase in the share capital of Tiscali S.p.A, with the issue of new ordinary shares offered in exchange to the shareholders of Aria Italia according...

  • Page 20
    ... of the Informative Document relating to the Merger On 15 September 2015, Tiscali disclosed to the public the informative document drawn up in pursuance of art. 70 of the Issuers' Regulations in order to provide to its shareholders all the necessary informative 18 Annual financial report as of...

  • Page 21
    ... nominal value, with the exclusion of pre-emption rights, in pursuance of art. 2441, paragraph 5 of the Civil Code, reserved for Bank Otkritie Financial Corporation (Public Joint-Stock Company) - ("Bank Otkritie") - to be exercised at the option of the administrative body of post-merger Tiscali as...

  • Page 22
    ... 2015, the Company, in order to finance the merger, increased its share capital via the issue of a total of 1,283,746.550 ordinary shares without nominal value offered to the Shareholders of Aria Italia on the basis of the share-exchange ratio of 50 Tiscali ordinary shares for every 3 Aria Italia...

  • Page 23
    ... Share Capital Increase On 30 January 2015, in execution of the Restructuring Agreements signed on 23 December 2014 and of the SEF Agreement entered into with Société Générale on 24 December 2014, the Extraordinary Shareholders' Meeting of Tiscali issued to the Board of Directors of the Company...

  • Page 24
    ...the business continuity" with reference to the current status of the senior debt rescheduling. Restructuring of the Leasing Contract concerning the Sa Illetta property On 22 December 2014, during the definition of the Restructuring Agreements, Tiscali Italia had accepted the offer from a key Italian...

  • Page 25
    ...with the pool of leasing companies. On 2 October 2015, the Group signed with the pool of leasing companies headed by Mediocredito Italiano an Amending Agreement of the Leasing Contract, providing for the remodulation of the contract in line with the commitments taken by the leasing companies on June...

  • Page 26
    ... by May 2016. Please refer to what reported about in the section "4.7 Significant events after year-end, business outlook and valuations regarding the going concern" with regard to the future management by the Group of services related to CONSIP tender. 24 Annual financial report as of 31 December...

  • Page 27
    ... reached with Telecom Italia Mobile (MVNO). The Group offers its products to consumer and business customers on the Italian Market, mainly via five business lines: (i) "Access", in Broadband modes (LLU, Bitstream, Fixed Wireless), inclusive of VoIP and mobile telephone services (so-called MVNO...

  • Page 28
    ... ref. No 3/2015 published in October 2015), the market share of the Aria Group in the Internet broadband services sector is not significant as it is below 1%. In order to compete with its competitors Tiscali's strategy aimed to provide high-quality Internet access services at competitive prices. Any...

  • Page 29
    ...relating to the high level of financial debt of the Group The evolution of the Group's financial situation depends on various factors and, in particular, on th e achievement of the objectives provided for in its business plan, the trend in the general conditions of the economy, the financial markets...

  • Page 30
    ... Agreement relating to the Leasing Contract concerning Sa Illetta's building, providing for the modification of the contract according to the terms provided for in the commitment presented by the leasing pool to the Company in June 2015. In particular, with respect to the previous conditions, the...

  • Page 31
    ... and conditions less favourable with respect to those currently valid; or (ii) the Group were unable to conclude with Telecom Italia the new contracts necessary for the development of its business; or (iii) in the aforesaid cases Tiscali were unable to conclude equivalent agreements with third-party...

  • Page 32
    ...Operating Result (EBITDA) Write-downs of receivables from customers Gross Operating Result (EBITDA) Restructuring costs, provisions for risk reserves and write-downs Amortisation/depreciation Operating result (EBIT) Net financial income (charges) Pre-tax result Income taxes Net result from operating...

  • Page 33
    ..., write-downs and restructuring costs during the financial year 2015 charges and burdens were recorded amounting to EUR 2.3 million mainly due to the end-of-mandate indemnity of the member of the board of directors of Tiscali S.p.A. (as well as general director of Tiscali Italia) Luca Scano...

  • Page 34
    ...) Voice revenues Business service revenues Media and value-added service revenues Other revenues Gross operating margin Indirect operating costs Marketing and sales Payroll and related costs Other indirect costs Other (income) / expenses Adjusted Gross Operating Result (EBITDA) Write-down of...

  • Page 35
    ... clients were 8.8 thousand units. On a like-for-like basis (excluding users of the Aria Group) the total number of clients was 564.2 thousand units (down by 22.6 thousand units with respect to the recorded figure on 31 December 2014). In this area 33 Annual financial report as of 31 December, 2015

  • Page 36
    ... in download and 20 Mbps in upload. The Company will soon launch a solution using FTTH technology through adherence to the Virtual Unbundling Local Access offer of Telecom Italia in areas directly covered by the Tiscali network. Voice The voice segment includes both the traditional telephone service...

  • Page 37
    ...for the Media and value added services segment (mainly concerning sales of advertising space) amounted to around EUR 20.4 million and were down with respect to the previous year (EUR 23.1 million in 2014). Indirect operating costs during 2015 came to EUR 58.5 million, an increase with respect to the...

  • Page 38
    ... development of the network, IT services and the connection and activation of new ADSL customers, as well as the purchase of equipment for the new OTT projects. Current assets Assets as at 31 December 2015 amounted to EUR 57.4 million, of which EUR 11.5 million relating to the Aria Group. On a like...

  • Page 39
    ...6 million relating to the Aria group), represented by prepaid expenses for service costs, accrued income on access services and sundry receivables. Shareholders' equity The consolidated shareholders' equity amounted to negative EUR 121.4 million as at the 31 December 31 2015, with an increase of EUR...

  • Page 40
    ...term portion of the 'Sale & Lease Back - Sa Illetta' debt. (5) Mainly includes the long-term component amounting to EUR 72.6 million relating to debt payable to the Senior Lenders (GFA) and EUR 19.2 million relating to the Aria Group Rigensis Loan; 38 Annual financial report as of 31 December, 2015

  • Page 41
    ... of the Parent Company (EUR 000) Revenues from services and other income Payroll-related, services and other operating costs and revenues Other write-downs and provisions Net financial income (charges) Income taxes Result from assets disposed of and/or destined for disposal Net result 2015 3,831...

  • Page 42
    ... restructuring charges for about EUR 2 million (of which, EUR 1.1 million relating to the end-of-mandate indemnity of the managing director and CEO of Tiscali Italia S.p.A. Luca Scano, and EUR 1 million for fees relating to the senior loan). Financial Position of the Parent Company 31 December 2015...

  • Page 43
    ... restructuring charges is attributable to the impact on Tiscali S.p.A., as jointly-liable company, of the payable due to the financial institutions of Tiscali UK Holdings Ltd and was entirely reclassified in the provision for credit write-downs relating to the same subsidiary. Current liabilities...

  • Page 44
    "Other current financial payables" are represented by financial payables to subsidiary Tiscali International BV, a sub-holding of the Tiscali Group. Reconciliation between the Parent Company's financial statements and consolidated financial statements As required by CONSOB Communication No. DEM/...

  • Page 45
    ...July 2015, offering Virtual Unbundled Local Access of Telecom Italia). The new fibre offerings enrich the product portfolio for the private and the professional world. Thanks to this new technology infrastructure Tiscali offers the market high-performance services created to meet the ever increasing...

  • Page 46
    ... of the addressable market to areas that are not controlled by Tiscali, such as the Digital Divide areas and areas where the quality of services is particularly low already hedged by the fixed wireless network of Aria, and where it will be possible to offer ultrabroadband services of high quality by...

  • Page 47
    The 2016-2021 Plan also provides: ï,· in relation to the Leasing Contract concerning the Sa Illetta building, headquarters of the Group, a repayment plan consistent with the one defined in the Amending Agreement signed on 2 October 2015, which states the payment of a leasing installment of EUR 3.5 ...

  • Page 48
    ...the transaction of business integration with the Aria Group, which runs from the effective date of 24 December 2015, it is expected that integration will allow the Company to reinforce the leading position of Tiscali in broadband access on fixed and mobile line network, creating a single operator in...

  • Page 49
    ...to enable the group to achieve long term financial and economic balance, recognize that up to date, and in the presence of intrinsic issues into the 2016-2021 Plan - despite the strong Group debt reduction that took place in the year 2015 -uncertainties remain related to events or circumstances that...

  • Page 50
    ... of important distribution points to cover the more strategic Tiscali areas and market segments. 4.8 Other events subsequent to year end 15 January 2016 - Approval of the Information Document of the Stock Option Plan 2015-2019 On 15 January 2016, the Board of Directors of the Company and the...

  • Page 51
    ... the Tiscali fibre transport network with Fixed Wireless access network acquired through the merger with Aria. With ultra-broadband Fixed Wireless LTE services, the company intends to expand the market accessible also to the Digital Divide areas and where the quality of the Broadband Fixed Broadband...

  • Page 52
    ...-Actie WOL, representing a group of approximately 10,000 former minority shareholders of World Online International NV (hereinafter "WOL") minority, issued a claim against WOL (currently 99.5% owned by Tiscali) and against the financial institutions tasked with the stock market listing of the Dutch...

  • Page 53
    ... alleged conduct of false corporate communications related to the financial statements from 2008 to 2012; the subsidiary Tiscali Italia received the same notice in January 2014. The offense refers to alleged incorrect accounting entries in respect of provisions for doubtful debts. Under Article. 25...

  • Page 54
    ... operating Result (EBITDA) Write-downs accounts receivable from customers Cost for stock option plans Gross operating Result (EBITDA) Restructuring costs, provisions for risks and writedowns Operating profit (EBIT) Net Financial income (charges) Pre-tax result Income taxes Net result from operating...

  • Page 55
    ...into Tiscali SpA. In advance of the effective date of the merger, Tiscali Italia SpA has provided connectivity services to Aria Group. ï,· The economic and financial transactions with related parties are detailed in the section "Transactions with related parties" in the notes to the 2015 Financial...

  • Page 56
    ..., which provides for a common procedure for the application of laws and regulations. Cagliari, 25 March 2016 th The Executive Chairman The Executive appointed to draw up the Corporate Accounting Documents Renato Soru Pasquale Lionetti 54 Annual financial report as of 31 December, 2015

  • Page 57
    ... 11971 of 14 May 1999, listed companies are required to prepare a report, on an annual basis, providing information on their Corporate Governance system and adherence to the Code's recommendations (as defined below). This report shall be made available to the Shareholders at least 21 days before the...

  • Page 58
    ... the presence of the Board of Directors and the Board of Statutory Auditors, the Company believes that this system should provide a clear division of roles and responsibilities between governing bodies and an effective management of the Company. Corporate bodies and company assigned for auditing The...

  • Page 59
    ... listed on regulated markets (including foreign markets), in financial, banking, insurance or large companies. Subsequently, following the resignation, in December 2015, by a majority of the Directors, the Shareholders' Meeting took steps, on 16 February 2016, for the appointment of a new Board...

  • Page 60
    ... may not have been covered on an ongoing basis from the date of first appointment (**) This column shows the attendance of directors at meetings of the Committees and qualifications of adviser within the Committee: "P": Chairperson; "M": Member 58 Annual financial report as of 31 December, 2015

  • Page 61
    ... in other companies listed on regulated markets (including foreign markets), in financial, banking, insurance or large companies. It is noted, that the current Board was elected on the single list submitted to the Assembly of 16 February 2016 jointly by Renato Soru, Aria Telecom Holding BV and...

  • Page 62
    ... the date of first appointment It is noted, that the current Board was elected on the single list submitted at the Meeting of 16 February 2016 jointly by Members Renato Soru, Aria Telecom Holding BV and Otkritie Disciplined Equity Fund. Corporate Financial-Accounting Reporting Officer As required...

  • Page 63
    ... Board of Directors, at its board meeting on 30 April 2015, appointed Lead Independent Director, Franco Grimaldi, this position is required by the Corporate Governance Code for listed companies where the same person holds the office of Chairperson 61 Annual financial report as of 31 December, 2015

  • Page 64
    ... report, the share capital subscribed and paid amounts to EUR 169,076,822.67, divided into 3,145,281,893 ordinary shares with no par value, freely transferable in accordance with law without there being any securities that confer special control rights. Stock option incentive plans The Shareholders...

  • Page 65
    .... It is noted that, as reported in accordance with Law, 25 September 2015 Renato Soru, and the direct and indirect shareholders of Aria Italia signed a shareholders' agreement relating to the presentation of a common list to be submitted to the Tiscali Meeting that, after the effective date of the...

  • Page 66
    ... was delegated some executive powers to supervise the Company's management with respect to certain specific areas. Chief Executive Officer (CEO) The Corporate Bylaws also state that the Board of Directors, within legal limits, may appoint one or more Chief Executive Officers, establishing powers to...

  • Page 67
    ... also called to attend the Board of Director's meeting, depending on the specific nature of the topics addressed, this also in order to facilitate timely and in-depth knowledge of the Company and the Group, as well as increasing the capacity to supervise the Board of Directors on business activities...

  • Page 68
    ..., is to provide support for the Board Members with an executive summary specifically prepared by the competent corporate departments, which summarize the most significant and relevant points of the documents placed before the Board. On 13 November 2015, the Board of Directors approved the calendar...

  • Page 69
    ... vote may vote for one list only. The Company has adjusted the current appointment systems to Law no. 120/2011 on gender equality regarding to access to management and supervisory bodies of companies listed on regulated markets; therefore, each list has to submit a number of candidates belonging to...

  • Page 70
    ... pursuant to this point a), one or more lists obtain a number of votes greater than the percentage specified at point a.1) but lower than 5% of the share capital, for the purpose of identifying the directors to be elected : (i) only the most voted among them will be taken into account; (ii) only the...

  • Page 71
    ...the Code of Conduct, please refer to the Remuneration Report to be submitted to the Meeting convened to approve the financial statements as at 31 December 2015. To date, the Board has decided not to adopt a plan for the succession of executive directors. 69 Annual financial report as of 31 December...

  • Page 72
    ... obtains the highest number of votes after the first. The Company also took steps to supplement the appointment system for the Board of Statutory Auditors in order to ensure, however, compliance with the Law 120/2011 on so-called gender equality. 70 Annual financial report as of 31 December, 2015

  • Page 73
    ... Board of Directors for the remuneration of the CEO and other Directors with special duties and, in general, recommendations for the remuneration of key management personnel of the Group, assists the Board of Directors in preparing and implementing any remuneration plans 71 Annual financial report...

  • Page 74
    ... following the changes to the Corporate Governance Code for listed companies and the Borsa Italiana S.p.A. suggestions, the Board of Directors updated the organizational structure of the internal auditing system of the Company, after the structure was updated also to take into account the amendments...

  • Page 75
    ...of the draft of financial statements and the by-yearly interim report, a special report on the system of corporate governance of the Company and the Group and the activities undertaken during the period, the information issued by the Supervisory Board and the Internal Auditing Manager are annexed to...

  • Page 76
    ... the main business risks are identified and appropriately managed; b) evaluates the work plan prepared by the Chief Internal Auditor and receives the periodic reports from the same; c) assesses, jointly with the Company's directors and the independent auditors, the adequacy of accounting standards...

  • Page 77
    ... work other parties, in addition to the CEO, such as the auditing company, the General Manager, Chief Financial Officer and the Corporate Finance Accounting Reporting Officer, etc. The meetings of the Audit and Risk Committee are held, as a rule, before meetings of the Board of Directors scheduled...

  • Page 78
    ... the activity performed submitted to administrative bodies by the Reporting Officer in support to accounting documents. B) Roles and departments involved. The Reporting Officer is in essence at the top of the system that oversees financial reporting and informs company management. At the end of the...

  • Page 79
    ... address ([email protected]). Directors, Statutory Auditors and top management of Tiscali and its subsidiaries are obliged to confidentiality of documents and information acquired in carrying out their tasks. Any dealings between these parties and the 77 Annual financial report as of 31 December, 2015

  • Page 80
    ...investor relations, with the exception of interviews and statements made by the executive Directors. Management and, in any case, all employees and collaborators are required to maintain the confidentiality of price sensitive documents and information acquired as a result, and during the performance...

  • Page 81
    Tiscali S.p.A. Consolidated Financial Statements as at 31 December 2015 79 Annual financial report as of 31 December, 2015

  • Page 82
    ... explanatory notes Comprehensive Income Statement Notes 2015 2014 Consolidated Income Statement (Thousands of Euro) Revenues Other income Purchase of external materials and services Personnel costs Other operating expense (income) Write-downs accounts receivable from customers Restructuring costs...

  • Page 83
    ... equity and financial situation Notes 31 December 2015 (*) 31 December 2014 Equity and Financial Situation (Thousands of Euro) Non-current assets Intangible Assets Property, Plant and Equipment Other financial assets Deferred Tax Assets Current assets Inventories Receivables from customers Other...

  • Page 84
    ... the finalization of the business combination's transaction with the Group headed by A ria SpA, which took place at the end of 2015, the balance sheet data and the operational data as at December 31 , 2015 are not comparable with prior year figures presented. st 82 Annual financial report as of 31...

  • Page 85
    ... for write-downs accounts receivables from customers Gain on disposal of non-current assets Income taxes Release of provisions for risks Write-offs and settlement agreements with suppliers Other changes Financial Charges / income Cash flows from operating activities before changes in working capital...

  • Page 86
    ... ACTIVITIES (42,915) (20,936) FINANCIAL ASSETS Changes in payables to banks of which: Repayment of share capital and interest Senior debt Increase/Decrease in current accounts overdrafts Repayment/acceptance of financial leasing Exchange rate effect OCI reserves Changes in Net Equity (18,597...

  • Page 87
    ... the Group interests Reserves (259,059) (7,185) (4,250) (168,818) 69,840 (4,250) (Thousands of Euro) Balance as at 1 January 2015 Capital increase / merger Rigensis Loan Option Operating results of Comprehensive Income Statement Capital 92,052 77,025 Share premium account Stock option reserve...

  • Page 88
    ... of which to related parties of which to related parties Consolidated Income Statement (Thousands of Euro) Revenues Other income Purchase of external materials and services Personnel costs Other operating expense (income) Write-downs accounts receivable from customers Restructuring costs and other...

  • Page 89
    ... of which to related parties Financial and Economic Situation Notes 31 December 2015 (*) 31 December 2014 (Thousands of Euro) Non-current assets Intangible Assets Property, Plant and Equipment Other financial assets Deferred Tax Assets Current assets Inventories Receivables from customers Other...

  • Page 90
    ...at the Registry Office of Cagliari Companies, headquartered in Cagliari, Sa Illetta. The Tiscali Group provides to its customers, individuals and companies, a wide range of services, from Internet access, dial-up and ADSL, as well as solutions and telecom services with high technological content. As...

  • Page 91
    The Board of Directors on 25 March 2015 authorized the publication of these financial statements. 89 Annual financial report as of 31 December, 2015

  • Page 92
    ...July 2015, offering Virtual Unbundled Local Access of Telecom Italia). The new fibre offerings enrich the product portfolio for the private and the professional world. Thanks to this new technology infrastructure Tiscali offers the market high-performance services created to meet the ever increasing...

  • Page 93
    ... of the addressable market to areas that are not controlled by Tiscali, such as the Digital Divide areas and areas where the quality of services is particularly low already hedged by the fixed wireless network of Ari, and where it will be possible to offer ultrabroadband services of high quality by...

  • Page 94
    ... on March 24, 2016 a comfort letter to the Board of the Company declaring that, at the state of his analysis, no critical issues are arisen that may create obstacles to the issuance of a positive opinion on the business plan of Tiscali analyzed. 92 Annual financial report as of 31 December, 2015

  • Page 95
    ...the transaction of business integration with the Aria Group, which runs from the effective date of 24 December 2015, it is expected that integration will allow the Company to reinforce the leading position of Tiscali in broadband access on fixed and mobile line network, creating a single operator in...

  • Page 96
    ...to enable the group to achieve long term financial and economic balance, recognize that up to date, and in the presence of intrinsic issues into the 2016-2021 Plan - despite the strong Group debt reduction that took place in the year 2015 -uncertainties remain related to events or circumstances that...

  • Page 97
    ... of important distribution points to cover the more strategic Tiscali areas and market segments. Other events subsequent to year end 15 January 2016 - Approval of the Information Document of the Stock Option Plan 2015-2019 On 15 January 2016, the Board of Directors of the Company and the...

  • Page 98
    ... the Tiscali fibre transport network with Fixed Wireless access network acquired through the merger with Aria. With ultra-broadband Fixed Wireless LTE services, the company intends to expand the market accessible also to the Digital Divide areas and where the quality of the Broadband Fixed Broadband...

  • Page 99
    ... operating Result (EBITDA) Write-downs accounts receivable from customers Cost for stock option plans Gross operating Result (EBITDA) Restructuring costs, provisions for risks and writedowns Operating profit (EBIT) Net Financial income (charges) Pre-tax result Income taxes Net result from operating...

  • Page 100
    ...reported that were included special sections aimed at representing the significant related party transactions, as well as the appropriate notes in order to highlight, if any, non-recurring transactions made in the ordinary course of business. - - 98 Annual financial report as of 31 December, 2015

  • Page 101
    ...the sale is highly probable and the asset is available for immediate sale in its present condition and the Board of Directors of the parent company is committed to the sale, which should take place within twelve months from the date of classification of that item. After the sale, the residual values...

  • Page 102
    ... related to the seasonal nature of the business. Consolidation criteria The scope of consolidation includes the Parent Company Tiscali SpA and the companies it controls, those companies over which the Company has the power, directly or indirectly, to govern the financial and operating policies...

  • Page 103
    ... cost compared to the percentage attributable to the Group of 'Fair value' the assets, liabilities and contingent liabilities of the associate at the date of acquisition is credited to the income statement in the year of acquisition. The consolidated financial statements include the Group's share...

  • Page 104
    ...Srl (*) Tiscali UK Holdings Ltd (*) World Online International NV (*) Tiscali International BV (*) Tiscali International Network BV (*) Tiscali Financial Services SA (*) Tiscali Deutschland Gmbh (*) Tiscali Gmbh (*) Tiscali Business Gmbh (*) Tiscali Verwaltung GmbH (*) Italy Italy Italy Italy Italy...

  • Page 105
    ... acquisition cost is measured as the aggregate of the fair values (fair value), The date of exchange, of assets, liabilities incurred or assumed concerning the acquired company, as well as the financial instruments issued by the Group in exchange for control of the acquired business, plus any costs...

  • Page 106
    ... of applications software under Group control and directly associated with the production of services, in particular regarding the 'technology platforms' for access and management of the Tiscali network, are recognized in assets if: they comply with the following general conditions indicated by IAS...

  • Page 107
    ... changes is recognized in the income statement on an estimated basis. The minimum and maximum rates of depreciation applied in 2015 financial year are shown below: Buildings Systems Equipment 3% 12% - 20% 12% -25% With regard to Aria Group, it should be noted that the WiMax Base Station networks...

  • Page 108
    ... amount if the greater amount between fair value net of sales costs and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax rate that reflects current market assessments of money time value and the specific risks of the...

  • Page 109
    .... The liability recognized in the balance sheet represents the present value of the obligation payable upon termination of employment, that employees have accrued at the balance sheet date. Please note that there are no assets servicing the plan. 107 Annual financial report as of 31 December, 2015

  • Page 110
    ... of the Stock Option Plan 2015-2019. As reported in the "Information Document on the Stock Option Plan 2015-2019 Tiscali SpA", the options granted will be exercisable in three tranches: ï,§ The first, consisting of 157,264,095 Options to subscribe for an equal number of Tiscali ordinary shares and...

  • Page 111
    ...recognized using the effective interest rate. Research costs and advertising expenses Research costs and advertising expenses are charged directly to the income statement as incurred. Taxes Income taxes include all taxes calculated on the taxable income of the companies of the Group. The current tax...

  • Page 112
    ... of the accounting standards Activation costs and customer acquisition The costs incurred for the customer activation ( Subscriber Acquisition Costs - SACs), are capitalized and amortized over a period of 36 months. Impairment of Assets (Impairment) Impairment testing is performed annually or more...

  • Page 113
    ... the international accounting standards, changes to existing standards and interpretations, relevant for the Group, taking effect as from 1 January 2015. ï,· IFRIC 21 - Taxes - The interpretation defines the accounting treatment of liabilities for taxes and various government taxes income taxes in...

  • Page 114
    ... 2014 (Regulation EU 2015/28). The IASB has amended seven current principles. Changes concern in particular: the definition of vesting conditions relating to the IFRS 2, Share-based Payments; accounting for contingent consideration balances in the context of business combination transactions in IFRS...

  • Page 115
    ...), as well as leases for assets with a not-significant unit value, or small assets (for instance, pieces of office furniture, PC, etc.) for which accounting treatment is similar to the principle adopted for currently operating leases. ï,· ï,· 113 Annual financial report as of 31 December, 2015

  • Page 116
    ... tax assets related to debt instruments measured at fair value. Said changes, whose entry into force is expected on 1 January 2017, have not yet been approved by the European Union. No significant impacts are expected on the Group's consolidated financial statements from the future application...

  • Page 117
    ...Thousands of EUR) Line/traffic rental and interconnection costs Costs for use of third party assets Portal services costs Marketing costs Other services Total 2015 2014 78,972 4,843 9,229 8,920 29,504 131,468 74,356 6,914 9,815 10,549 30,868 132,501 115 Annual financial report as of 31 December...

  • Page 118
    ... 11,912 35,059 The increase in payroll costs was due to a lower utilization of the solidarity agreement and reduction in capitalized costs on OTT and other projects. The number of employees as of December 31, 2015 is 1,024, of which 118 units is related to the Aria Group. The breakdown by category...

  • Page 119
    ..., in 2015, of 24,000 customers due to massive cancellations and, as a consequence, an increase in bad debts provisions in response to the evaluation of the recoverability of these credits. Please refer to the "Receivables from customers" note for further details. Restructuring costs and other write...

  • Page 120
    ... (regional business tax) and IRES (company earnings' tax) payable by the Italian companies. Operating assets disposed of and/or assets held for sale (note 10) The "Result from operating assets disposed of and/or assets held for sale" was nil as of 31 December 2015. 118 Annual financial report as of...

  • Page 121
    ...market considers the sum of the total risk over the market risk;. Debt Risk Premium. Its debt rate was calculated based on the average cost of refinancing for the Tiscali Group, with reference to the weighted average of the internal rate of return 119 Annual financial report as of 31 December, 2015

  • Page 122
    ... exchange ratio of n. 50 Tiscali ordinary shares for each. 3 ordinary shares of Aria Italia. The shareholders of Aria Italia have accepted the offer and currently they hold a share of 40.81% of the combined entity. Aria is a company operating in Italy in the field of broadband connectivity services...

  • Page 123
    ... fair value at the acquisition date. The fair value of newly issued Tiscali shares was calculated by reference to the share price on the Italian Stock exchange of Tiscali shares at the acquisition date (reference was made to the closing price of 23 December 2015, since on 24 December 2015 the market...

  • Page 124
    ...costs related to the issue of Tiscali shares, equal to EUR 3.2 million were recognized as a direct decrease in net equity of Tiscali.Lastly, it is noted that, upon the result of the above-mentioned approximation outcome with reference to the date of acquisition, in the absence of significant changes...

  • Page 125
    ...concession contracts for transmission capacity (IRU - Indefeasible Right of Use). Relating to IRU accounted for the Tiscali Italia subsidiary; EUR 43 million for licenses and software, of which EUR 38.7 million related to the WiMax license and related charges incurred by the Aria Group. The value of...

  • Page 126
    ... EUR. In-progress Intangible Assets and Accounts, amount to EUR 4.4 million, and include software development projects related to the Consip tender and not yet completed as of 31 December,2015. Properties, Systems and Equipment (note 14) Changes during the financial year are shown in the following...

  • Page 127
    ... to the Tiscali Italia S.p.A subsidiary, as well as the Aria Group (entered under the "Change in Consolidation Scope" entry). The entry Properties, amounting to EUR 44.9 million, mainly relates to the Cagliari office (Sa Illetta), which was subject to a Sale & Lease back financial transaction in...

  • Page 128
    ...merger of the foreign companies could reduce these theoretical tax benefits. Despite the Group's business plan having indicated profits for the next five years, Tiscali S.p.A.'s Directors have not provided for prepaid taxes in the financial statements as at 31 December 2015. Inventories (note 17) As...

  • Page 129
    ..., EUR 10.1 million relating to the Aria Group), were generated predominantly by sales of Internet services, billing of Internet access services, inverse interconnection traffic, advertising revenues, as well as business customer and telephone services provided by the Group. At constant perimeter...

  • Page 130
    ...Aria Group VAT credits for EUR 1.6 million; other receivables of the Aria Group, in the amount of EUR 0.7 million, accrued towards another telecommunications operator for a contract relating to the use of frequency; advances to suppliers in the amount of EUR 0.3 million; 128 Annual financial report...

  • Page 131
    ..., 2015, the Company, in order to service the merger, has increased its share capital by issuing a total of 1.283.746.550 ordinary shares without nominal value offered to shareholders of Aria Italia based upon the exchange ratio of 50 Tiscali ordinary shares for each 3 ordinary shares of Aria Italia...

  • Page 132
    ... shareholders, as of 31 December 2015 is nil. Current and non-current financial liabilities (note 24) Net financial position The Group's net financial position is illustrated in the following table: Financial situation (EUR 000) A. Cash and Bank deposits B. Other cash equivalents C. Securities...

  • Page 133
    ...) Rigensis Loan Bank debts Total Senior debts and other payables to banks 84,248 19,186 19,600 11,600 16,888 72,649 19,186 2,711 31 December, 2015 Current portion Non-current portion 123,034 28,488 94,546 Amounts owed to leasing firms Sale and Leaseback - Sa Illetta Other financial leases Total...

  • Page 134
    ... of the two groups' activities (Tiscali and Aria) based on a combined plan prepared by management in November 2015 updating the business plan on the basis of which the Board of Directors of Tiscali had approved the Merger Plan (so-called "Combined Plan"). 132 Annual financial report as of 31...

  • Page 135
    ... Sanpaolo London Borrower Tiscali UK Holdings Ltd ("Tiscali UK") Guarantors Tiscali S.p.A., Tiscali Italia S.p.A. Tiscali International BV Tiscali Financial Services SA Veesible S.r.l. Additional details of the financing are briefly reported: ï,· Facility A2, equal to the nominal value of EUR 29...

  • Page 136
    ...November 2015. Financial Covenants The Restructuring Agreements call for compliance by the Company of certain financial requirements (cd. "Financial Covenants") on a consolidated basis of the Tiscali Group (to be calculated without taking int o account the debt resulting from the Sa Illetta Leasing...

  • Page 137
    ... on the current accounts of Tiscali and Tiscali UK; assignment as collateral or pledge on receivables deriving from intercompany loans; pledge on the Tiscali UK assets; second-degree pledge on Aria's shares already granted as a pledge in favo ur of Rigensis Bank. 135 Annual financial report as of...

  • Page 138
    ... Loan on 30 March, 2018, the remaining debt will be converted into ordinary shares of Tiscali with an agreed upon value of EUR 0.06 per share; in this case, the conversion will take place in accordance to an option exercised by the Tiscali Group. 136 Annual financial report as of 31 December, 2015

  • Page 139
    ... Option fair value estimated on the effective date of the Merger was determined taking into account the following elements: price of the underlying share: or stock market price of Tiscali shares on the effective date of the Merger (in the absence of the quotation at 24 December 2015 - market closed...

  • Page 140
    ... 2015, without the payment of interest Payables for financial leases The Group's financial leases refer to agreements stipulated by the subsidiary Tiscali Italia S.p.A. and the Aria Group, and concern: the Sales & Leaseback financial lease on the Sa Illetta property, the company's corporate office...

  • Page 141
    ... 2015 Properties Systems and Equipment Other assets Total 46,818 44,928 688 25,357 47,506 70,332 Payments envisaged by the operating lease contracts are indicated below. The items listed in the table below includes EUR 14.4 million related to the Aria Group. 139 Annual financial report...

  • Page 142
    ...towards Tiscali S.p.A. Italia's clients; EUR 0.8 million due to Janna S.c.p.a. (which is involved in the management of an underwater fibre optics cable between Sardinia and the mainland and between Sardinia and Sicily), in an area under Tiscali Italia S.p.A's purview. 140 Annual financial report as...

  • Page 143
    ... were used: the Traditional Unit Credit Method for companies with at least 50 employees, and the Projected Unit Credit Cost - service pro rate for the other companies, in accordance with the following stages: on the basis of a series of financial hypotheses (increase in living cost, remuneration...

  • Page 144
    ... future performances was calculated at the date of estimate, on the basis of the adopted annual interest rate, and of the probability of each performance to be really disbursed; the liability was established for each company concerned, to an extent equating to the average current value of the future...

  • Page 145
    ... debts owed by the Italian subsidiary Tiscali Italia S.p.A. (EUR 10.6 million), Veesible S.r.l. (EUR 1 million), Tiscali UK Holding for EUR 11.6 million (short-term component of the Senior Loan, for details, see Note 24), and EUR 5.3 million related to the Aria Group. 143 Annual financial report...

  • Page 146
    ... for financial leases Payables for financial leases, amounting to EUR 3.5 million, refer to the short-term portion of payables due to leasing companies for financial lease agreements relating to Tiscali Italia S.p.A. For further details, see note 24. Payables to suppliers (note 30) 31 December 2015...

  • Page 147
    ...risk. These risks include market risks (inclusive of currency risks, fair value interest rate risks, and price risks), credit risks, and risks in cash flow interest rates. Risk management linked with interest rate In relation to the outstanding debt, mainly at a fixed rate, the Company does not feel...

  • Page 148
    ... 135,644 12,534 59,303 The fair value of the financial instruments as indicated above was determined using the discounted cash flow method and taking as reference the market interest rates, in addition to contractual spreads (where applicable). 146 Annual financial report as of 31 December, 2015

  • Page 149
    ...-Actie WOL, representing a group of approximately 10,000 former minority shareholders of World Online International NV (hereinafter "WOL") minority, issued a claim against WOL (currently 99.5% owned by Tiscali) and against the financial institutions tasked with the stock market listing of the Dutch...

  • Page 150
    ..., holding that the prospectus used at the time of listing was incomplete in some of its parts and that WOL should have corrected certain information relating to the shareholding held by its former Chairman, reported by the media before said listing; In addition it was felt that the WOL had created...

  • Page 151
    ... alleged conduct of false corporate communications related to the financial statements from 2008 to 2012; the subsidiary Tiscali Italia received the same notice in January 2014. The offense refers to alleged incorrect accounting entries in respect of provisions for doubtful debts. Under Article. 25...

  • Page 152
    ... 2015 (Thousands of EUR) Access Media & Corporate Other Cancellation (BTC Advertising adjustments connectivity and BTB) Total Revenue From third parties Intra-group Total revenues Operating profit Portion of results of equity inv. carried at equity Net Income (expenses) Pre-tax result Income taxes...

  • Page 153
    ... of EUR) Access Media & Corporate Other Cancellation (BTC Advertising adjustments connectivity and BTB) Total Revenue From third parties Intra-group Total revenues Operating profit Portion of results of equity inv. carried at equity Net Income (expenses) Pre-tax result Income taxes Net result from...

  • Page 154
    ...by financial institutions to the Tiscali Group. The same item includes the surety given by Tiscali S.p.A. to guarantee the amount of the loan related with the sale & lease back transaction on the Sa Illetta property, totalling EUR 53.7 million, carried out by the subsidiary Tiscali Italia S.p.A. and...

  • Page 155
    ... be noted that the parent company has provided guarantees for credit lines and leasing to the subsidiary Tiscali Italia SpA for EUR 36.8 and EUR 20.9 million respectively in the year 2015 and 2014. The parent company has also, in both years 2015 and 2014, commitments of EUR 1.6 million related to...

  • Page 156
    ...of business records. (3) Aria Italia S.p.A.: a company acquired by Tiscali Group on 24 December 2015 following the merger by incorporation of Aria Italia SpA into Tiscali SpA. In Advance of the effective date of the merger, Tiscali Italia SpA has provided connectivity services. 154 Annual financial...

  • Page 157
    ... companies included within the consolidation area is presented below. Name Tiscali SpA Tiscali SpA Italia Veesible Srl Indoona Srl Istella Srl Streamago Inc. Aria Italia S.p.A. Media PA Srl Tiscali Holdings UK Ltd World Online International NV Tiscali International BV Tiscali Financial Services SA...

  • Page 158
    156 Annual financial report as of 31 December, 2015

  • Page 159
    ... Financial Business Advisory SpA Subsidiaries of the Aria S.p.A. Group Parent Company - Tiscali S.p.A. 860 45 63 50 1.400 Total Cagliari, 25 March 2016 th The Executive Chairman The Executive appointed to draw up the Corporate Accounting Documents Renato Soru Pasquale Lionetti 157 Annual...

  • Page 160
    ... financial statements, together with a description of the main risks and uncertainties. Cagliari, 25 March 2016 th The Executive Chairman The Executive appointed to draw up the Corporate Accounting Documents Renato Soru Pasquale Lionetti 158 Annual financial report as of 31 December, 2015

  • Page 161
    Tiscali S.p.A. financial statements as at 31 December 2015 159 Annual financial report as of 31 December, 2015

  • Page 162
    7 7.1 Tiscali SpA - Accounting Statements and Explanatory Notes Comprehensive Income Statement (EUR) Revenue Other income Purchase of external materials and services Payroll costs Other operating income/ (costs) Write-down of receivables Restructuring costs and other write-downs Depreciation ...

  • Page 163
    ...of defined benefit plans Other items on comprehensive income statement: 7 (14) Total operating results of Comprehensive income statement Attributable to: Parent Company shareholders Minority shareholders (36,168) 536 (36,168) (36,168) 536 536 161 Annual financial report as of 31 December, 2015

  • Page 164
    ... Provisions for risks and charges Current liabilities Due to banks and other lenders Payables to suppliers Other Current Liabilities Total Liabilities and Shareholders' equity Notes 31-Dec-15 176,493...,809 51,880,571 58,024,380 181,090,093 162 Annual financial report as of 31 December, 2015

  • Page 165
    ...changes in shareholders...734 (3,522,413) (49,975) - (26,903,812) Capital increase / merger Rigensis Loan Option 77,024,793 (7,115,736) (4,250,000) 69,909,057 ...Income Statement Balance as at 31 December 2015 169,076,823 90,734 (14,888,149) (42,676) 163 Annual financial report as of 31 December...

  • Page 166
    ...- Changes in other financial assets - Cash flow from business combinations - Purchases of tangible fixed assets - Purchases of intangible fixed assets - Payments for the sale of financial fixed assets NET CASH USED IN INVESTING ACTIVITIES FINANCING ACTIVITIES Increase (decrease) in other non-current...

  • Page 167
    .../(USED IN) FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN NET CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR CASH AND CASH EQUIVALENTS 5,509,185 (296,979) 367,968 70,989 15,194 360,676 7,292 367,968 165 Annual financial report as of 31 December, 2015

  • Page 168
    7.6 Explanatory Notes Tiscali S.p.A. is a limited company incorporated under the laws of the Republic of Italy at the Cagliari Companies' Register. Tiscali S.p.A. is the Parent Company of the Tiscali Group which offers integrated Internet access services, telephony and multimedia services in ...

  • Page 169
    ...July 2015, offering Virtual Unbundled Local Access of Telecom Italia). The new fibre offerings enrich the product portfolio for the private and the professional world. Thanks to this new technology infrastructure Tiscali offers the market high-performance services created to meet the ever increasing...

  • Page 170
    ... to Fixed Wireless Broadband services in areas covered by LTE network on the 3.5GHz frequency. This incremental development on the Mobile Data however is not being valued in the 2016-2021 Plan. The 2016-2021 Plan also provides: ï,· in relation to the Leasing Contract concerning the Sa Illetta...

  • Page 171
    ... described above; the subsistence of the financial support provided by the lending banks so far. ii. iii. Management Board's assessment The Board of Directors pointed out that the Group has: Generated in the year 2015, before working capital changes, cash from operating activities and cash...

  • Page 172
    ...the transaction of business integration with the Aria Group, which runs from the effective date of 24 December 2015, it is expected that integration will allow the Company to reinforce the leading position of Tiscali in broadband access on fixed and mobile line network, creating a single operator in...

  • Page 173
    ... of important distribution points to cover the more strategic Tiscali areas and market segments. Other events subsequent to year end 15 January 2016 - Approval of the Information Document of the Stock Option Plan 2015-2019 On 15 January 2016, the Board of Directors of the Company and the...

  • Page 174
    ... the Tiscali fibre transport network with Fixed Wireless access network acquired through the merger with Aria. With ultra-broadband Fixed Wireless LTE services, the company intends to expand the market accessible also to the Digital Divide areas and where the quality of the Broadband Fixed Broadband...

  • Page 175
    ... of Draft Preparation The 2015 statutory financial statements represent the separate financial statements of the Parent Company Tiscali S.p.A. and have been prepared in observance of the International Accounting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") as...

  • Page 176
    ... amount if the greater amount between fair value net of sales costs and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax rate that reflects current market assessments of money time value and the specific risks of the...

  • Page 177
    ... to the Board of Directors for the capital increase to service the same plan (Stock Option Plan 2015-2019). The cost, represented by the fair value of the stock options as of the date of allocation will be recorded, for accounting purposes in accordance with IFRS 2- Share-based payment in the...

  • Page 178
    ... most commonly used. Accounting standards, amendments and interpretations effective from 1 January 2015 Below the international accounting standards, changes to existing standards and interpretations, relevant for the Group, taking effect as from 1 January 2015. 176 Annual financial report as of...

  • Page 179
    ...transaction is the purchase of an asset or business combination, must be used IFRS 3 and not the description of additional services of IAS 40. This change has no impact on the Group. ï,·   International accounting standards and/or interpretations issued but not yet in force and/or approved...

  • Page 180
    ... exceptions permitted relate to short-term leases (less than or equal to 12 months), as well as leases for assets with a notsignificant unit value, or small assets (for instance, pieces of office furniture, PC, etc.) for which accounting ï,· ï,· 178 Annual financial report as of 31 December, 2015

  • Page 181
    ... tax assets related to debt instruments measured at fair value. Said changes, whose entry into force is expected on 1 January 2017, have not yet been approved by the European Union. No significant impacts are expected on the Group's consolidated financial statements from the future application...

  • Page 182
    ... comprises sundry revenues, costs recharged and out-of-period income. Revenues by geographical area (thousands of EUR) Revenues from services provided to Group companies Italia Revenues from services to third parties - Denmark - South Africa - Switzerland - The Netherlands Italy 2015 3,716 3,716...

  • Page 183
    ... Tiscali Italia S.p.A. the penalties for late payment accrued on the debt VAT of its competence of EUR 0.2 million. Write-downs of receivables and other write-downs (note 5) EUR 000 Write-down of receivables Restructuring costs and other write-downs Provisions for risks and charges Total 2015...

  • Page 184
    ...669) (1,673) (1,590) Net financial charges refer to EUR 0.2 thousand as adjustment to the calculation of default interest for late payment accrued on the VAT debt over prior years. Income taxes (note 7) EUR 000 Current taxes Advance taxes Other taxes Net taxes for the year 2015 (92) (92) 2014 49...

  • Page 185
    ... issued Tiscali shares provided to the shareholders of Aria Italia) at fair value at the acquisition date (identified in December 24, 2015, effective date of the Merger) has been assessed. The fair value of the newly issued Tiscali shares was calculated by reference to the market price of Tiscali...

  • Page 186
    ... the Put Option is equal to the effective date of the merger, 24 December 2015). The fair value of the Put Option, estimated at the effective date of the Merger, was determined taking into account the following elements: - Price of the underlying share or stock market price of Tiscali shares on the...

  • Page 187
    ... from the 2016-2021 Plan of Tiscali Group (as defined in the Note " Significant events after year-end, business outlook and evaluations regarding the business continuity " ) approved by the Board of Directors on 25 March 2016. Moreover, for the purposes of the impairment test, a time period of five...

  • Page 188
    ... spread of the credit on the risk free element was assessed in line with the conditions of current debt; the risk premium was assessed within a prudent range with respect to the current conditions of financial markets. Based on these parameters, the WACC used for the impairment tests was 8.54%. The...

  • Page 189
    ... EUR 2.4 million. The financial receivables due from Group companies are detailed below: (EUR 000) Tiscali Business Gmbh Tiscali Deutschland Gmbh Tiscali Finance Sa Tiscali Financial Services Sa Tiscali International BV Tiscali Italia S.p.A. Tiscali Verwaltungs GmbH 31 December 2015 1,522 554 32 251...

  • Page 190
    ... 2014 257 55 312 The book value of trade receivables is approximate to their fair value. It is further emphasized that receivables from customers will be due within 12 months and do not present any overdue balances of a significant amount. 188 Annual financial report as of 31 December, 2015

  • Page 191
    ... on 24 December, 2015, which is described in the Equity Investments note, the Company has increased its share capital by issuing a total of 1.283.746.550 ordinary shares without nominal value offered to shareholders of Aria Italia based upon the exchange ratio of 50 Tiscali ordinary shares for each...

  • Page 192
    ... 4.25 million. The number of shares representing the Parent Company's share capital amount to 3,145,281,893 lacking par value, compared with 1,861,535,343 shares as at 31 December, last year. At the end of fiscal year, Tiscali SpA reported a loss of 36,2 million EUR, which, when added to the losses...

  • Page 193
    ... non-current liabilities primarily concerns financial payables due to group companies for 31 million EUR, illustrated in detail in the table below: (EUR 000) Tiscali Gmbh Tiscali Italia S.p.A. Tiscali International Network BV Indoona S.r.l. Istella S.r.l. Veesible S.r.l. Total 31 December 2015 3,518...

  • Page 194
    ... review). In accordance with national regulations and laws, the amount due to each employee matures depending on the service provided, and has to be immediately disbursed when the employee leaves the company. At the end of the work relationship, the amount due is calculated pursuant to Italian civil...

  • Page 195
    ... attributable to professional fees incurred for the business combination with the Aria Group. It should be mentioned that Trade payables are due within 12 months and it is considered that their book value is approximate to their fair value. 193 Annual financial report as of 31 December, 2015

  • Page 196
    ... 634 634 31 December 2014 161 161 EUR 000 Tiscali Italia S.p.A. Other current liabilities (note 20) 31 December 2015 EUR 000 Accrued charges Deferred income Other payables to Group companies Other payables to third parties Total 3 33,640 18,237 51,880 31 December 2013 6 33,640 18,360 52,006 Other...

  • Page 197
    ... loan associated with the sale & lease back transaction on the Sa Illetta property, totalling EUR 54 million, carried out by the subsidiary Tiscali Italia S.p.A. The remaining EUR 37 million are related to guarantees issued by the parent company for credit lines and leased to the subsidiary Tiscali...

  • Page 198
    ... payables to Group companies N. Other non-current payables to third parties O. O. Non-current financial debt (K) + (L) + (M) + (N) P. Net financial debt (J) + (O) 71 71 837 33,640 33,640 32,732 31,015 31,015 63,748 368 368 986 33,640 33,640 32,286 3,918 3,918 36,204 196 Annual financial report as...

  • Page 199
    ... credit risks and risks in cash flow interest rates. Market risks The Company's activities expose it primarily to the financial risk of changes in exchange rates for foreign currency and to the interest rate. Transactions with related parties During 2015, the Tiscali S.p.A. had a number of dealings...

  • Page 200
    ...services Payroll and related costs Other operating costs Write-downs of receivables from customers Restructuring costs and other write-downs Amortisation/depreciation Operating result Portion of result of equity investments carried at equity Net financial income (charges) Pre-tax result Income taxes...

  • Page 201
    ... Total Shareholders' equity Non-current liabilities Current liabilities Total Liabilities and Shareholders' equity 178,925 2,165 181,090 91,158 91,158 31,907 58,025 181,090 2,431 1,207 3,638 1,36% 55,74% 31,015 35,943 66,958 97,20% 61,94% 199 Annual financial report as of 31 December, 2015

  • Page 202
    ... equity Total Shareholders' equity Non-current liabilities Current liabilities Total Liabilities and Shareholders' equity 138,370 1,666 140,036 61,667 61,667 22,475 55,895 140,036 2,201 238 2,438 1,59% 13,85% 3,918 33,640 37,558 17,43% 60,13% 200 Annual financial report as of 31 December, 2015

  • Page 203
    ...income/(e xpense) 15 (8) 5 (1,153) (1,141) EUR 000 Tiscali Business Gmbh Tiscali Gmbh Tiscali International BV Tiscali International Network BV Tiscali Italia S.p.A. Tiscali UK Holdings Ltd Total Group companies Other related parties Statutory Auditors Directors key management Other related parties...

  • Page 204
    ... Financial Services Sa Tiscali Gmbh Tiscali International BV Tiscali International Network BV Tiscali Italia S.p.A. Tiscali UK Holdings Ltd Tiscali Verwaltungs GmbH Indoona S.r.l. Istella S.r.l. Veesible S.r.l. Total Group companies Other related parties: Statutory auditors Directors key management...

  • Page 205
    ... Sa Tiscali Financial Services Sa Tiscali Gmbh Tiscali International BV Tiscali International Network BV Tiscali Italia S.p.A. Tiscali UK Holdings Ltd Tiscali Verwaltungs GmbH Indoona S.r.l. Istella S.r.l. Veesible S.r.l. Total Group companies Other related parties Other related parties Total Group...

  • Page 206
    ...-Actie WOL, representing a group of approximately 10,000 former minority shareholders of World Online International NV (hereinafter "WOL") minority, issued a claim against WOL (currently 99.5% owned by Tiscali) and against the financial institutions tasked with the stock market listing of the Dutch...

  • Page 207
    ... alleged conduct of false corporate communications related to the financial statements from 2008 to 2012; the subsidiary Tiscali Italia received the same notice in January 2014. The offense refers to alleged incorrect accounting entries in respect of provisions for doubtful debts. Under Article. 25...

  • Page 208
    ... to be noted that, the total cost incurred in 2015 for the key management personnel's compensation amounts to approximately EUR 1,9 million, of which EUR 1.1 million refers to the termination's indemnity in favour of the Director and General Manager of Tiscali Italia S.p.A. Luca Scano, who resigned...

  • Page 209
    ... Company - Tiscali S.p.A. Parent Company - Tiscali S.p.A. Fee (EUR 000) 272 860 50 1,182 Accounts auditing Other professional services Reconta Ernst & Young S.p.A. Reconta Ernst & Young S.p.A. Ernst & Young Financial Business Advisory SpA Total 207 Annual financial report as of 31 December, 2015

  • Page 210
    ...: the adequacy in relation to the Company's characteristics; the effective application of the administrative and accounting procedures for the formation of the financial statements during 2015. Tiscali S.p.A. has adopted the Internal Control Model - Integrated Framework issued by the Committee of...

  • Page 211
    ... and mobile telephony for the user calculated over a given period for an average number of active (for other operators) or Tiscali Group customers in the same period. Bitstream (or digital flow) services: service consisting of the supply by an operator of access to the fixed public telephone network...

  • Page 212
    ... protocol for cards and cables for high speed connections between a computer and a local network) of up to 1 gigabit per second. CS Business customers Consumer customers Dial Up Digital Double Play DSL Network DSLAM Fibre Optic GigaEthernet 210 Annual financial report as of 31 December, 2015

  • Page 213
    ... on the same transmission line. Company that provides Internet access to single users or organisations. Lines whose transmission capacity is made available through leasing contracts for the transmission capacity. Long Term Evolution Time Division Duplex is a mobile data transmission technology that...

  • Page 214
    ... event or a film or concert) at the time it is transmitted or broadcast. TV channels on payment. To receive Pay TV or Pay-Per-view, you have to connect a decoder and have an access system subject to conditions. MSAN MVNO Narrowband OLO Opex Pay-Per-View Pay TV 212 Annual financial report...

  • Page 215
    ...Digital Subscriber Line. SHDSL is a technology for telecommunications of the xDSL family and is made by using direct LLU interconnections and enables high speed connections to be made in a balanced way in both directions (transmission and reception). Service including only broadband data access, not...

  • Page 216
    ... via cable or wireless, a direct digital point to point network "unrestricted" at 9,600 bits/s; packet switching (called virtual) service; analogue and direct broadband transmission of TV signals and extra services, such as closed user groups; call waiting; reverse charging; call announcement and...

  • Page 217
    ...2005 for fixed and mobile access. Services that consist of the sale of access services to third parties. Acronym for Wholesale Line Rental, selling on by an operator of the telecommunications service for lines affiliated with an Incumbent. WI-FI Wi-Max Wholesale WLR 215 Annual financial report as...

  • Page 218
    ... and consolidated - financial statement is not attributed to the Board, said Board reports to have supervised the general terms attributed to it, as well as compliance with law for its form and structure. Also in compliance with the guidelines provided by CONSOB with communication dated 6 April 2001...

  • Page 219
    ... for preparing the financial reports of the company on the Administrative and Accounting and on the Internal Control System on Corporate Disclosure produced every six months; ii) the examination of the Internal Audit report on the internal control and risk management system; iii) The examination...

  • Page 220
    ..., the share capital was increased to approximately EUR 77 million by issuing a total of 1,283,746,550 ordinary shares of no par value in favour of the shareholders of Aria Italia according to the exchange ratio of 50 Tiscali ordinary shares for 218 Annual financial report as of 31 December, 2015

  • Page 221
    ... 58/98, we acknowledge that the Directors in their report on Corporate Governance specify that the Tiscali Group adopted and adheres to the Code of Conduct for Italian Listed Companies issued in March 2006 (updated July 2015). Adherence to the rules provided by the above-stated Code was observed...

  • Page 222
    ... number of 250,000,000 shares reserved to Rigensis Bank; on 22 January 2016, the report of the independent auditing company on the issue price of the shares related to the capital increase with exclusion of option rights pursuant to Art. 2441, 220 Annual financial report as of 31 December, 2015

  • Page 223
    ... number of 252,622,551 shares, in service of a maximum 252,622, 551 options reserved for the Chairman of Tiscali Spa, Renato Soru, as beneficiary of the stock option plan 2015-2019; p) on 30 April 2015, expressed its favourable opinion to the following resolutions adopted by the Board of Directors...

  • Page 224
    ... pursuant to Art. 2446 of the Italian Civil Code, the specific report with the comments of the Statutory Board of Auditors, may be referenced. Cagliari, 6 April 2016 THE BOARD OF STATUTORY AUDITORS PAOLO TAMPONI EMILIO ABRUZZESE VALERIA CALABI 222 Annual financial report as of 31 December, 2015

  • Page 225
    ... statements give a true and fair view of the statement of assets and liabilities and financial position of Tiscali Group as at 31 December 2015, of the financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards adopted by the European...

  • Page 226
    ... December 2015, the Tiscali Group reports gross financial debt of EUR 177.9 million and current liabilities greater than current (non-financial) assets for EUR 162.5 million. In this regard it is noted that, during FY 2015, the Tiscali Group has worked on the implementation of a business combination...

  • Page 227
    ... to enable the group to achieve long term asset, financial and economic equilibrium, recognize that to date and in the presence of intrinsic 2016 2021 plan remain critical-despite the Group's financial debt reduction that took place in the year 2015 uncertainties related to events or circumstances...

  • Page 228
    ... Opinion on the consistency of the management report and the information contained in the report on corporate governance and ownership structure with the consolidated financial statements We have performed the procedures required under ISA (AS Italy) no. 720B in order to express, as required by law...

  • Page 229
    ... and financial position at 31 December 2015, the income statement and statement of comprehensive income, from the statement of changes in shareholders' equity, the cash flow statement for the year ending on said date, from a summary of significant accounting standards and other explanatory notes...

  • Page 230
    ...31 December 2015, the Tiscali Group reports gross financial debt of EUR 177.9 million and higher-current liabilities to current (non -financial) assets for EUR 162.5 million. In this regard it is noted that, during the year 2015, the Company has worked on the implementation of a business combination...

  • Page 231
    ... equity, financial and economic situation in the long -term, recognize that at the current date and in the presence of intrinsic critical issues in the 2016 -2021 Plan - despite the Group debt reduction that took place in FY 2015 - uncertainties remain related to events or conditions that may...

  • Page 232
    ...provisions Opinion on the consistency of the management report and the information contained in the report on corporate governance and ownership structure with the financial statements We have performed the procedures required under ISA (AS Italy) no. 720B in order to express, as required by law, an...

  • Page 233
    ... and consolidated - financial statement is not attributed to the Board, said Board reports to have supervised the general terms attributed to it, as well as compliance with law for its form and structure. Also in compliance with the guidelines provided by CONSOB with communication dated 6 April 2001...

  • Page 234
    ... for preparing the financial reports of the company on the Administrative and Accounting and on the Internal Control System on Corporate Disclosure produced every six months; ii) the examination of the Internal Audit report on the internal control and risk management system; iii) The examination...

  • Page 235
    ...management report and the report on corporate governance and ownership structure, limited to the information indicated in Art. 123-bis, paragraph 4 of Legislative Decree 58/1998, are consistent with the financial statements; j) as already noted in the Board report for FY 2014, the Board of Directors...

  • Page 236
    ...' Report 4 to Group Facilities Agreement. - GFA. Due to the merger, the share capital was increased to approximately 77 million Euro by issuing a total of 1,283,746,550 ordinary shares of no par value in favour of the shareholders of Aria Italia according to the exchange ratio of 50 Tiscali...

  • Page 237
    ...Italy Spa into Tiscali S.p.A, the remuneration of Euro 70,000 for issuing of the fairness opinion of the criteria of determination of the issue price of the shares for capital increase with exclusion of option rights pursuant to Art. 2441, Paragraph 5 of the Italian Civil Code, and the fees relating...

  • Page 238
    ... Auditors' Report 6 Chairman of Tiscali Spa, Renato Soru, as beneficiary of the stock option plan 20152019; p) on 30 April 2015, expressed its favourable opinion to the following resolutions adopted by the Board of Directors: on the proposal made by the Chairman of the Board of Directors, after...

  • Page 239
    ... opinion to the approval of the financial statements as at 31 December 2015 jointly with the management report and the resolutions proposed by the Board of Directors and with reference to provisions pursuant to Art. 2446 of the Italian Civil Code, the specific report with the comments of the...

  • Page 240
    Tiscali S.p.A. Consolidated Financial Statements as at 31 December 2015 Independent Auditors' Report pursuant to Articles 14 and 16 of Legislative Decree no. 39 of 27 January 2010

  • Page 241
    ... statements give a true and fair view of the statement of assets and liabilities and financial position of Tiscali Group as at 31 December 2015, of the financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards adopted by the European...

  • Page 242
    ... 2015, the Tiscali Group reports gross financial debt of 177.9 million Euro and current liabilities greater than current (non-financial) assets for 162.5 million Euro. In this regard it is noted that, during FY 2015, the Tiscali Group has worked on the implementation of a business combination...

  • Page 243
    ... Opinion on the consistency of the management report and the information contained in the report on corporate governance and ownership structure with the consolidated financial statements We have performed the procedures required under ISA (AS Italy) no. 720B in order to express, as required by law...

  • Page 244
    Alberto Coglia (Shareholder)

  • Page 245
    Tiscali S.p.A. Financial Statements as at 31 December 2015 Independent Auditors' Report pursuant to Articles 14 and 16 of Legislative Decree no. 39 of 27 January 2010

  • Page 246
    ... and financial position at 31 December 2015, the income statement and statement of comprehensive income, from the statement of changes in shareholders' equity, the cash flow statement for the year ending on said date, from a summary of significant accounting standards and other explanatory notes...

  • Page 247
    ... December 2015, the Tiscali Group reports gross financial debt of 177.9 million Euro and higher-current liabilities to current (non-financial) assets for 162.5 million Euro. In this regard it is noted that, during the year 2015, the Company has worked on the implementation of a business combination...

  • Page 248
    ... balanced equity, financial and economic situation in the long-term, recognize that at the current date and in the presence of intrinsic critical issues in the 2016-2021 Plan - despite the Group debt reduction that took place in FY 2015 - uncertainties remain related to events or conditions that may...

  • Page 249
    Alberto Coglia (Shareholder)