Tiscali 2008 Annual Report Download - page 66

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the Standing Interpretations Committee (“SIC”).
Preparation of the financial statements requires management
to make accounting estimates and in certain cases, adopt
assumptions in the application of accounting standards. The
areas of the financial statements which, under the
circumstances, presuppose the adoption of applicative
assumptions and those more fully characterized by estimates
made, are described in the note
Critical decisions in applying
accounting standards and in the use of estimates
on page 73.
The annual financial statements, as required by reference
legislation, have been drawn up on a consolidated basis, and
have been audited by Reconta Ernst & Young S.p.A..
Please note that the income statement balances at 31
December 2008 are not comparable with the corresponding
balances at 31 December 2007 further to the acquisition of
the Pipex division on 13 September 2007.
Financial Statement formats
The consolidated financial statements comprise the accounting
statements (Income Statement, Balance Sheet, Statement of changes
in consolidated shareholders’ equity, and Cash Flow Statement),
with explanatory notes. The Income Statement was drawn up in
line with the minimum contents envisaged by IAS 1 – Presentation
of Financial Statements – with costs assignment by nature; the
Balance Sheet was drawn up by following the scheme pointing out
division of “current/non-current” assets and liabilities; the Cash Flow
Statement was drawn up by following the indirect method.
As from the 2007 accounting period, the intermediate “gross
operating result” is no longer disclosed reflecting greater
compliance with the illustrative income statement layout
proposed by IAS 1. The income statement for 2007 has been
consistently reclassified to ensure comparability of the data.
Please note that if the conditions apply, as envisaged by IFRS
5, the income statements of the assets destined to be disposed
of, and specifically the assets of TiNet, have been recorded in
the consolidated income statement item “result from assets
disposed of and/or destined to be disposed of” both for 2008
and for 2007, presented for comparative purposes in these
financial statements. Please also note that the income statement
item “costs for stock option plans” has been introduced, and
the charges associated with the “writedown of receivables from
customers” and “restructuring costs and other writedowns”
have been stated in separate items.
Segment reporting
The activities of the Tiscali Group and the related strategies,
as well as the underlying activities linked to head office control,
e) the definition of the financial manoeuvre aimed at rendering
the Tiscali Group’s financial debt compatible with the related
income-related and financial prospects, also in light of the
matters envisaged in the guidelines of the Business Plan;
f) the launch of negotiation for the definition of an agreement
with the financial institutions, aimed at restructuring the Group’s
financial debt. The Board of Directors discloses that negotiations
have been started with the afore-mentioned institutes for the
definition of a new structure of the debt on a consistent basis
with the expected cash flows;
g) the definition of agreements with the main suppliers so as to
ensure the regular continuation of operating activities; in this
connection, the Directors have disclosed that the Group’s
business activities in Italy and the UK are proceeding on a
regular basis vis-à-vis the customers and the suppliers.
Final assessment of the Board of Directors
In light of the above comments, the Board of Directors believes
that as things stand, reasonable probability exists of being able
to achieve the restructuring of the Tiscali Group’s financial debt
on a consistent basis with the cash flows and suitable for
supporting the new Business Plan.
As a point of fact, the attention and interest demonstrated by
the financial institutions in relation to the Company, the signing
of a waiver and standstill agreement (with the aim of permitting
the finalization of the restructuring agreement), the willingness
to extend the standstill period until 31 December 2009
expressed, the start of negotiations, and the fact that both the
Business Plan and the related Financial Plan have been
prepared in accordance with maximum prudence and
seriousness, converge in the sense of the afore-mentioned
positive assessment made by the Board of Directors.
In light of the above, the business continuity is therefore
considered to exist, since the Board believes that as things
stand there is reasonable probability of finalizing an agreement
with the financial institutions.
Form and content of accounting statements
Basis of presentation
The 2008 consolidated financial statements were drawn up by
following both the International Accounting Standards (“IFRS”)
issued by the Accounting Standards Board (“IASB”) as ratified
by the European Union, and the measures issued in conformity
with Article 9 of Italian Legislative Decree No. 38/2005. The IFRS
also include all the reviewed international accounting standards
(“IAS”) and all the interpretations by the International Financial
Reporting Interpretations Committee (“IFRIC”) previously called
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES