Tiscali 2003 Annual Report Download - page 108
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110110
The “start-up and expansion costs” line, which accrued mainly in 1999, includes the cost of starting network roll-out activities
(installation and switchboard activation) and of the first launch campaign for Internet access services.
Decreases are due to the normal process of amortisation.
The item “R&D and advertising costs” in 2003 includes advertising and promotional costs incurred in the first half of the year in
relation to the launch of broadband (ADSL) services. These costs have been capitalised because they refer to specific advertising
campaigns necessary to launch broadband services. These are innovative services that are expected to deliver substantial and
ongoing financial returns, as indicated by the results achieved in the second half of 2003 and early months of 2004.
The costs are to be amortised over two financial years, starting in 2003.
The “industrial patent and intellectual property rights” line mainly includes applications software acquired for an unlimited period
and customised for the exclusive use of the Company. The EUR 9.7m increase is mainly attributable to the costs relating to licen-
ces and the development of software and other services acquired as part of the “mobile Internet” project, investment relating to
the development of the “datawarehouse” project (both projects were completed and entered operation during the year), and costs
involved in the implementation of the Company’s management and administration platform. Around EUR 1.9 million of the increa-
se relates to capitalised costs in respect of the development of internal management software.
The change in “concessions, licences, trademarks and similar rights” relates to the purchase of software licences and associated
costs (EUR 3.5m). In particular, this includes renewals of licences for access systems and management services supplied on the
network, and management and administration software purchased by the Group.
This item includes EUR 27.8m for the purchase of exclusive rights to fibre optics (IRUs) over 15 years. These rights will be amor-
tised over the life of the contract.
The item “payments on account and assets in course of acquisition” shows a decrease of EUR 5.7 million versus the previous
year, recorded under “other changes”, mainly due to the definitive allocation to the item “industrial patent and intellectual pro-
perty rights” of investments which were deemed to come under “industrial patents”, and of other minor projects.
The “other” line chiefly relates to investment in network development, and adaptation of technical sites and operational and admi-
nistrative offices. The EUR 1.4 million decrease relates to the write-down of “upgrade costs” spent on the headquarters in Cagliari
that were removed during the year following the completion of the work on the new building and subsequent transfer there.