Tiscali 1999 Annual Report Download

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


EURO 806,396
Fully Paid

EURO 142,659,076
Financial Statements
As of December 31st, 1999

Table of contents

  • Page 1
    EURO 806,396 Fully Paid EURO 142,659,076 Financial Statements As of December 31st, 1999

  • Page 2
    ... Starting from the month of July, telephone services were extended to cover the whole national territory In late March 1999, the offer of free Internet access, "Tiscali Freenet", was launched. Tiscali was the first operator in Italy and Continental Europe to make this offer. These factors required...

  • Page 3
    ...company sites. In the same year, it is also planned to increase current products, by adding other, more innovative services, the main ones being voice on IP (telephone calls on the Internet), multicasting (real-time audio/video transmission on the Web), unified messaging (sending and receiving email...

  • Page 4
    ...Company to launch a free Internet access service in continental Europe. With Tiscali Freenet, users can access the main Internet services, such as e-mail, the World Wide Web, news group and interactive chat groups. Thanks to ease of access and immediate setup of connection, the number of subscribers...

  • Page 5
    ... shareholders' meeting of 25 October 1999 approved the issue of 120,773 warrants, together with an increase in share capital to cover the same. Total validity of the warrants is 360 days from delivery; they may be exercised and converted into ordinary Tiscali shares after 180 days from delivery...

  • Page 6
    ...order to set up a network of exchanges. Total amount of investments financed with leasing contracts drawn up as of 31 December equals approximately EURO 15 million. Said investments are mainly to be referred to the acquisition of the first 4 telephone exchanges, servers, routers and modems and other...

  • Page 7
    ...and risk provisions Total costs of production Financial charges Amount 2,61 (0,85) 32.51 1,69 3,32 2,92 0,47 42,67 0,3 0,05 Following are comments on the main expenses for services: • Telephone line rentals amounted to approximately EURO 10,3 million. This increase is closely linked to the growth...

  • Page 8
    ... plans were drafted and suppliers' offers were analyzed in order to start up the venture with the support of a Project Financing operation. In the early months of 2000, Banca CIS passed a motion confirming its participation in the Project. Andala Umts. This company was set up in November 1999...

  • Page 9
    ... provides Internet access to some 50,000 users and network access on dedicated lines. Datacomm will be linked by means of a fiberoptic cable network to the associated companies in France, Switzerland, Italy and Spain. CD-Telekomunikace S.r.o. On 24 January 2000, Tiscali SpA stipulated a contract...

  • Page 10
    ...as its corporate aim the offer to the consumer market of Directory telephone services by means of a large Call Center based in Cagliari. According to the business plan, the company will be fully operating starting from the third quarter of 2000. Ideare S.r.l. On 3 February 2000, Tiscali purchased 60...

  • Page 11
    ... market, we find that Tiscali is acquiring on an average 10,000 new subscribers per day. At present, Tiscali has 1,600,000 subscribers to the Internet services, 1,200,000 of whom are in Italy. Dear shareholders We recommend that the loss for financial year ending 31 Dec 1999 be carried forward...

  • Page 12
    ...DUE FROM SHAREHOLDERS FOR CAPITAL CONTRIBUTIONS TO BE PAID: NON-CURRENT ASSETS: 1) 2) 3) 4) 7) start-up and expansion costs costs for research, development and advertising industrial patent rights and rights to intellectual property concessions, licenses, trademarks and similar rights other Total 15...

  • Page 13
    ...EURO) A) I II VIII IX SHAREHOLDERS' EQUITY: Share capital Share premium reserve Retained earnings (Losses carried forward) Profit (loss) for the period... banks other short-term financing trade accounts payable due to subsidiary companies due to affiliated companies taxes payable due to social security...

  • Page 14
    ... (EURO) A) GUARANTEES GIVEN: 1) sureties a) real property guarantees Total Total guarantees given B) OTHER MEMORANDUM ACCOUNTS Leasing payments coming due Bank receipts and bills of exchange outstanding Warrants Total other memorandum accounts GUARANTEES RECEIVED: 1) from third parties and group...

  • Page 15
    ... revenues from sales and services increase in assets for work in progress other revenues and income Other revenues and income Total (-) COSTS OF PRODUCTION: for raw materials, supplies, consumables and goods for services for rentals for personnel: salaries and wages social security charges provision...

  • Page 16
    Tiscali S.p.A. Head Office: Piazza del Carmine, 22 Share capital EURO 806,396 Fully paid Share Premium Reserve EURO 142,659,076 NOTES TO THE FINANCIAL STATEMENTS AS OF December 31st, 1999 FORM AND CONTENT OF FINANCIAL STATEMENTS 1) CRITERIA USED IN PREPARATION OF STATEMENTS The financial ...

  • Page 17
    ... assets. Year 2000 With regards to the information requested in the Consob notice No 98079574 of 9 October 1998 (and subsequent integration No 99066606 of 10 September 1999) it is specified that the software used during the financial year, being new and very recently acquired, was free from any risk...

  • Page 18
    ... and advertising costs are shown in the designated line item on the assets side and are amortized for a period of three years starting from the financial year in which they were incurred, since said costs produce profits over a number of years. Licenses, trademarks and patent rights are recorded...

  • Page 19
    ... into account that they are recent purchases and set-ups. - COMPANY'S OWN SHARES The Company does not possess any company's own shares. h) INVENTORIES - RAW MATERIALS, WORK IN PROGRESS AND FINISHED PRODUCTS Inventories are valued at the lower value between purchase cost, calculated by means of...

  • Page 20
    ... of company setup. The potential fiscal benefit linked to these losses, while it does not represent receivables from the Treasury, has been posted in the balance sheet under the heading "other receivables" of the working capital, since the following two conditions set out in accounting principle...

  • Page 21
    ... in extra-CEE foreign currencies are adjusted to the exchange rates valid at the end of the financial year, by including a specifically designated exchange-rate Risk Fund in the balance sheet. Profits and losses deriving from exchange rate fluctuations are listed as receivables or payables in...

  • Page 22
    ...are disclosed in the following table: CATEGORIES (Euro) Start-up and expansion costs R&D and advertising costs Industrial patent rights and rights to intellectual property Concessions, lic., trademarks, other Other TOTAL BALANCE 31/12/98 Increases Revaluation (Write downs) Other Changes Amortization...

  • Page 23
    ..., right at a time when its listing on the stock exchange has provided a foundation for all future profits. This campaign is allowing the Company to reach a number of subscribers and a volume of traffic enabling it to subsequently launch innovative products, such as the already mentioned internet...

  • Page 24
    ... the creation of internal networks at the sites set up during the financial year; servers; personal computers, and call center equipment. The limited purchase of technical equipment with respect to the corporate activities carried out is due to the fact that the telephone exchanges, routers and most...

  • Page 25
    ... with reference to the net value of fixed assets are as follows: NET VALUE (Euro) Plant and machinery - specific plant and machinery - Internet plant and exchanges Industrial and commercial equipment - network equipment - office automation and furnishing - office computers - other - electronic data...

  • Page 26
    ...000 6,165 - - - INVESTMENTS (Euro) BALANCE 31/12/98 CHANGES IN THE FINANCIAL YEAR INCREASES (DISPOSALS) REVAL. OTHER (DEVAL.) BALANCE 31/12/99 Nets SA Informedia S.r.l. Almanacco S.p.A. Andala Umts S.p.A. Andala S.p.A. Energy Byte S.p.A. TOTAL AFFILIATED COMPANIES Gilla S.p.A. - 7,433,000...

  • Page 27
    ... linking the main cities in France, Switzerland, Italy and Spain. Tiscali plans to use Nets' network and "know how" as a Europe-wide infrastructure linking national initiatives. Informedia S.r.l., a company specializing in on-line payment services, was purchased in July 1999 to support the plans for...

  • Page 28
    ... 1999 and its registration was ratified in the year 2000. This company - set up as a joint venture with Sonera Corporation - has a share capital of EURO 2.5 million; its corporate aim is the development of a Call Center to offer Directory telephone services to the consumer market. The Call Center...

  • Page 29
    ... favor of "A Telecom SA", a company whose acquisition contract was stipulated on 23 December 1999. This contract, as described in the report on operating performance, established that Tiscali S.p.A. would increase its share capital, with the exclusion of option rights and the assignment of A Telecom...

  • Page 30
    ...% The sharp growth in these receivables is closely linked to the progressive consolidation of fixed telephone services and the start of Internet access services; in particular roughly EURO 5,2 million of receivables are payable by Telecom Italia S.p.A. as a consequence of reciprocal interconnection...

  • Page 31
    ... backing given to the subsidiary and affiliated companies in question. Receivables from Informedia S.r.l. will be converted into capital increase account. The account "other receivables" comprises the following line items: TRADE RECEIVABLES (Euro) As of 31.12.1999 179,134 23,684 4,585,425 375...

  • Page 32
    ... They result from the signing of new contracts during 1999, and the ensuing deferral of lease payments for the "maxifee" according to the matching principle. The increase of deferred charges on Telecom lease payments is to be attributed to the substantial development of the network and refers to the...

  • Page 33
    ... of ordinary shares on the "Nuovo Mercato", organized and managed by Borsa Italiana S.p.A., by means of the presentation of a "Global Offer of Ordinary Tiscali Shares ". On 27 October 1999 quotation of the Company's shares on Nuovo Mercato was launched. Stock on the market is approximately 24% of...

  • Page 34
    ...INCREASE 3,114,000 3,114,000 (DECREASE.) 31/12/99 15,614,000 15,614,000 The following table shows the changes in the reserves for risks and future liabilities which occurred during the financial year. (Euro) Balance 31/12/98 Provisions (Usage) Other changes Balance 31/12/99 other: Foreign Exchange...

  • Page 35
    ... - Trade accounts payable include: EURO 11,4 million payable to Telecom Italia S.p.A. for invoices pertaining to network circuit and access rental, as well as interconnection traffic; EURO 5,16 million for purchase of traffic from international operators; EURO 4 million due to advertising suppliers...

  • Page 36
    ...Pursuant to contract terms, Tiscali paid EURO 4 million in cash at the time of signing the contract. For the remaining sum, EURO 3,4 million, Tiscali will issue and deliver new shares. Said shares will be issued in conjunction with the increase in the share capital with exclusion of option rights in...

  • Page 37
    ... lease on contracts with a maturity of 30 to 60 months. Other lease payments refer to the rental of Ericsson exchanges by ECS Italia SpA. Warrants The extraordinary shareholders' meeting of 25 October 1999 approved the issue of 120,773 warrants, together with an increase in share capital to cover...

  • Page 38
    ... the balance sheet. Internet revenues are mainly referred to termination services provided to Telecom Italia S.p.A., to the lease of interconnection accesses and to contributions for the installation and upgrading of interconnection kits. Revenues from domain sale and advertising have a minor impact...

  • Page 39
    ... financial year is linked to the increase in revenues and to the start-up phase of the free internet access service, which required a huge outlay in promotional and information materials, as well as the purchase of telephone and customized routers. This account is partially amended by the posting...

  • Page 40
    ... is referred to the active interest accrued on available liquid assets resulting from the increase in share capital following listing of Tiscali shares on the stock exchange in October 1999. Description: Financial charges on: amounts due to banks for overdrafts amounts due to others Other financial...

  • Page 41
    ... Change (Euro) 31/12/99 Contingent liabilities and non-existent assets Other extraordinary charges (51,138...job category, and the amounts paid to Company Directors and Statutory Auditors. CATEGORY AVERAGE 1999 31/12/99 AVERAGE 1998 31/12/98 Executives Middle Managers...(Euro) - 31/12/98 (Euro)...

  • Page 42
    ... as of 31.12.1999 - FINANCIAL STATEMENT ANALYSIS In order to provide a better understanding of the Company's operations and financial position... presented with the purpose of providing a structured disclosure of the most significant changes in the balance sheet accounts. The statement of changes in...

  • Page 43
    ...EURO 31/12/99 CURRENT ASSETS Cash and banks Receivables from customers Inventories Accrued revenues & def. charges...LIABILITIES Due to banks Trade accounts payable Other liabilities ...686.00% 724.00% 954.01% SHAREHOLDERS' EQUITY Share capital Reserves Net profit 0,81 142,66 (5,54) 137,93 182,35 ...

  • Page 44
    ...Change % Change 32,73 Operating expenses: Purchases Services depreciation / amortization cost of labour increase (decrease) in inventories other operating expenses operating profit financial income financial charges other income other charges profit before taxes income taxes Current Deferred 100...

  • Page 45
    ... indemnities paid during the period Provision (use) of reserve for risks and future liabilities Changes in current assets and liabilities: Amounts due from customers Other receivables Inventories Accrued income and deferred charges Trade accounts payable Other liabilities Accrued liabilities...