Tiscali 2007 Annual Report Download - page 72

the equity method. Under the equity method, equity invest-
ments in associates are booked to the consolidated balance
sheet at acquisition cost, as adjusted for post-acquisition
changes in the shareholders’ equity of the associate, less any
impairment in the value of individual equity investments.
Any excess of the cost of acquisition over the Group’s share
of the net fair value of identifiable assets, liabilities and con-
tingent liabilities of the associate at the date of acquisition is
recognised as goodwill. The goodwill is included in the book
value of the investment and is subject to impairment testing.
Any excess of the Group’s share of the net fair value of the
identifiable assets, liabilities and contingent liabilities over the
cost of acquisition of the associate at the date of acquisition
is booked to the income statement in the financial year of
acquisition.
When losses in an associate exceed the Group’s interest, such
losses are not recognised, unless the Group has applied a cov-
ering hedge.
2.5 Assets held for sale and discontinued operations
Assets and/or groups of assets undergoing disposal, relating
to equity investments in non-strategic subsidiaries held for sale
(‘Assets Held for Sale and Discontinued Operations)’, as
required by IFRS 5, were classified under a specific item in
the balance sheet and are assessed at the lower of the asset’s
previous book value and market value, net of any sales costs,
until the disposal of the assets themselves.
The assets (related to equity investments) are thus classified
if it is estimated that their book value will be recovered by dis-
posal rather than by continued use. This condition is observed
only when the sale is highly probable, the asset (or investment)
is available for immediate sale in its present condition and the
Board of Directors of the parent company is committed to the
sale, completion of which should be expected within one year
from the date of classification.
After the sale, the remaining values were reclassified in the
different balance sheet items.
For the purposes of classification in the income statement,
gains and losses on assets held for sale and/or assets disposed
of were listed and continue to be listed under the item ‘Results
from assets disposed of and/or intended to be disposed of (dis-
continued operations) if the conditions listed below and estab-
lished by IFRS 5 apply to such assets:
A) they represent an important independent line of business or
geographic business area;
B) they are part of a single co-ordinated plan to dispose of an
independent major line of business or geographic business
area;
C) they involve subsidiaries acquired exclusively with a view to
resale.
The income statement item entitled ‘Results from assets disposed
of and/or destined to be disposed of’ contains the following, in a
single item:
3the period results achieved by subsidiaries held for sale, includ-
ing any adjustment of net assets to fair value;
3the result of the ‘discontinued’ operations, including the peri-
od result achieved by subsidiaries up to the date of transfer of
control to third parties, together with gains and/or losses deriv-
ing from disposal.
Analysis of the composition of the overall results for the assets
concerned is indicated in the explanatory notes.
2.6 Foreign currency transactions
The financial statements of foreign subsidiaries are presented in
the currency of the primary economic environment in which they
operate (operating currency). For the consolidated financial state-
ments, accounting positions are presented in Euro, i.e. the Com-
pany’s operating currency and the reporting currency for the con-
solidated financial statements. When preparing the financial state-
ments of the individual companies, transactions in currencies other
than Euro are initially recognised at the exchange rate prevailing at
the time. At the reference date, the monetary assets and liabilities
expressed in the above-mentioned currencies are retranslated to
the rates prevailing at that date. Non-monetary items recognised at
‘fair value’ and expressed in foreign currency are retranslated at the
rates prevailing on the date of the fair value calculation.
Exchange differences arising from settlement of monetary items
and retranslation of monetary items using current exchange rates
at year end, are booked to the income statement for that period.
For the purpose of presenting the consolidated financial statements,
the assets and liabilities of foreign subsidiaries with operating cur-
rencies other than Euro, are translated into Euro at the rates pre-
vailing at the financial year end date. Revenues and costs are trans-
lated at the average exchange rates for the period. The exchange
differences arising from the application of this method are classi-
fied as equity under the Translation reserve. This reserve is booked
to the income statement as income or expense in the period in
which disposal of the foreign subsidiary is completed.
The exchange differences coming up from intra-group
receivable/payable relationships of financial character are record-
ed in the shareholders’ equity special conversion reserve.
The main exchange rates used for translation of the 2007 and 2006
financial statements for foreign companies into Euro were:
31.12.2007 31.12.2006
average final average final
GB pound 0.6994 0.7334 0.6729 0.6715
Czech coruna 26.317 26.628 27.7780 27.4850
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES AT 31 DECEMBER 2007
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