Tiscali 2009 Annual Report Download - page 132

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Accrued expenses include EUR 1.3 million relating to operating expenses, such as costs for contents, costs
for network access, costs for professional consulting and costs for line rentals.
Deferred income mainly refers to the deferral of capital gains:
• on disposal relating to the sale & lease back transaction on the Sa Illetta property, amounting to around
EUR 25.5 million which is released pro-rata depending on the duration of the lease agreement;
• deferrals on IRU sales contracts for around EUR 16 million;
• deferred income from the activation of ADSL services. These deferrals were affected by the changes
in accounting estimates related to the policy for recognizing revenues described in the section
“Assumptions for the application of accounting standards – Policy for recognizing revenues”. The effect
of this change in the accounting estimate amounts to about EUR 1 million.
The item Other payables, totally EUR 19.0 million, mainly includes payables due to the tax authorities (VAT
in the first instance) and due to welfare institutions for a total of EUR 9.7 million, together with payables due
to employees totalling EUR 6.0 million and other payables for the remaining balance.
Payables to employees for EUR 6 million include EUR 2.7 million for contributions, amounts owed for
vacation leave and leaves of absence accrued for about EUR 1.2 million and about EUR 1.4 million for
bonuses.
Financial instruments
Financial risk management objectives
The Group’s Corporate Treasury division provides business services, co-ordinates access to the local and
international financial markets, and monitors and handles the financial risk associated with Group operations
by means of internal risk reports which analyze the exposures by degree and magnitude of the risk. These
risks include market risks (inclusive of currency risks, fair value interest rate risks and price risks), credit
risks and risks in cash flow interest rates.
The use of financial derivatives is regulated by policies approved by the Board of Directors, which provides
written standards on foreign exchange risks, interest rate risks, credit risks and the investment of surplus
liquidity.
Market risk
Group activities expose it primarily to the financial risk of changes in exchange rates for foreign currency
and to the interest rate.
Handling of the foreign exchange risk
Analysis of foreign currency sensitivity
This analysis is no longer applicable since the UK group was disposed of during the year.
Risk management linked with interest rates
The Group is not exposed to the risk linked to interest rate fluctuations since the Group’s financial debt is
mainly at a fixed rate. At 31 December 2009 the financial debt amounted to EUR 224.4 million, of which EUR
163.9 million (EUR 158.5 million nominal) is at a fixed interest rate.
Consolidated Financial Statements and Explanatory Notes