Tiscali 2008 Annual Report Download - page 123

events or changes in circumstance indicate that the book value
may be impaired. The assets in question are tested annually or
more frequently if there is any indication that those assets have
suffered impairment. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the writedown. Where it is not possible to estimate the
recoverable amount of an asset individually, the Company
estimates the recoverable amount of the Cash Generating Unit
(CGU) to which the asset belongs. The recoverable amount is the
higher between the fair value less sales costs and its utilisation
value. When assessing the utilisation value, the estimated future
cash flows are discounted back to their present value using a pre-
tax discount rate that reflects current market assessments on the
value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash generating unit) is
estimated to be less than its book value, the latter is written down
to its recoverable amount. The relevant impairment is booked to
the income statement under writedowns. If the reasons for the
writedown made in previous years are considered to no longer
apply, the book value of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but
not beyond the net book value that the assets would have had if
the writedown for impairment had not been made. An
impairment writeback is booked to the income statement.
Other financial assets
Other financial assets are valued, consistently with IAS 39
provisions for financial assets ‘available for sale’, at fair value or
alternatively at cost whenever fair value cannot be reliably
calculated. Gains and losses from changes in fair value are directly
booked to equity until the asset is disposed of or is impaired, at
which time the cumulative gain or loss previously booked to equity
is included in the income statement for the period. The original
value is reinstated in the following financial year if the reasons for
the writedown are considered to no longer apply.
Foreign currency transactions
Foreign currency transactions are recorded at the exchange rate
in force as of the date of the transaction.
Amounts receivable and payable in foreign currency are recorded
at the exchange rate valid as of the balance sheet reference date.
Exchange differences generated by the settlement of monetary
items or their conversion at rates other than those used to record
them initially during the year or those in force at the end of the
previous year, are recorded in the income statement.
Receivables and loans
Tiscali S.p.A. receivables are stated in the items Other non-
current financial assets, Receivables from customers, Other
receivables and other current assets and Other current financial
assets. If they have a fixed maturity, they are stated at amortised
cost, using the effective interest rate method. When financial
assets have no fixed maturity, they are stated at acquisition cost.
Appraisals are regularly carried out with the aim of checking
whether there is objective evidence that a financial asset or a
group of assets have been subject impairment. If there is
objective evidence, the impairment must be recorded as cost in
the income statement for the period.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, on-demand and
short-term deposits, in the latter case with an original maturity
envisaged of no more than three months.
Payables and financial liabilities
Tiscali S.p.A.’s payables and financial liabilities are stated in the
items”, “payables to banks and other lenders”, “other non-current
liabilities”, “payables to suppliers”, and are stated at face value.
Financial payables are initially stated at cost, equating to the fair
value of the amount received, net of related charges. Subsequently,
these payables are stated at amortised cost using the effective
interest rate method, calculated considering the issue costs and any
other premium or discount envisaged on settlement.
Liabilities for pension obligations and staff severance indemnities
Defined benefit schemes (as classified by IAS 19), in particular
the Staff Severance indemnities relating to employees of the
parent company and the subsidiaries with registered offices in
Italy, are stated on the basis of valuations made at the end of
each financial year by independent actuaries. The liability
recognised in the balance sheet is the current value of the
obligation payable on termination of the employment
relationship which the employees have accrued at the balance
sheet date. It should be specified that no assets are held in
support of the above scheme.
As permitted by IFRS 1 and IAS 19, the Tiscali Group has not
adopted the corridor method but uses the Projected Unit Credit
method and, therefore, the actuarial gains and losses are stated
in full in the period in which they arise and are booked directly to
the income statement.
Payments made in relation to outsourced pension schemes with
defined contributions are booked to the income statement in the
period in which they are due. The Group does not recognise post-
employment benefit schemes, therefore periodic contributions
do not involve further liabilities or obligations to be recognised as
such in the financial statements.
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