Tiscali 2001 Annual Report Download - page 35
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27
Extraordinary operations
Extraordinary items were high owing to the Group's corporate and operational restructuring
process.
The total negative balance was EUR 1,036mn, of which EUR 815mn related to extraordinary
goodwill write-downs, and EUR 202mn to other restructuring costs. The most significant
items under the latter heading were the cost of staff downsizing, penalties paid for early
termination of line rental and bandwidth provision contracts signed by the newly acquired
Companies, termination of sponsorship and marketing agreements, and asset write-downs.
However, the restructuring initiative has improved operating and financial performance as
well as laying the foundations for a higher level of efficiency this year.
Goodwill write-down for a total of EUR 815mn was due to the adjustment of the book value
of the holdings — both those acquired through share swaps, adjusted to the current market
value of Tiscali shares, and those transferred or liquidated.
Corporate restructuring
As a consequence of acquisitions made in 2000 (including the World Online Group) and
2001 (including the Liberty Surf Group), the Tiscali Group has expanded to include, as at the
end of 2001, a total of 178 Companies.
In order to reorganise and streamline the Group's structure, which has burgeoned in a very
short period of time, a corporate restructuring plan has been launched, with the following
objectives:
– A leaner corporate structure: the number of Companies will be substantially
reduced. Companies will be merged and wound up, reducing the total number of
legal entities in the Group from 178 to about 80 by the end of 2002;
– Cost cutting: the reduction in the number of Companies will be accompanied by
significant administrative cost savings. Fiscal charges arising from the
restructuring process will be almost negligible, although most of the Group's tax
losses will be maintained;
– Creation of a corporate culture: the restructuring process underway has helped,
and will continue to help create the image (in the minds of both the market and
employees themselves) of a united, closely-knit Group, rather than a loose
gathering of the three Companies Tiscali, Liberty Surf and World Online.
This reorganisation has been implemented along separate guidelines, for each
country, and aimed at concentrating the business activities carried out in each country
into a single legal entity. Any exceptions to this rule are due to the simultaneous
existence in a given country of different business activities (such as B2B, B2C, and
telecoms, for example), or by the need to preserve a domain name.
Report on Operating Performance