Tiscali 2009 Annual Report Download - page 161

Tiscali Group: Annual Report 2009
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2. Sale of the subsidiary Tiscali UK Ltd for total consideration of EUR 245.4 million (as set out in Note 11
to the Consolidated Financial Statements); the earnings from the sale were mainly used to repay part
of the group’s debt;
3. Sale of the subsidiary Tiscali International Network for total consideration of EUR 30.9 million;
4. Renegotiation of the terms of the residual senior loan and the debt for the Sale and lease-back (as set
out in the Management Report section 4.4 Significant Events during the Course of the year);
5. Launch and completion of an equity increase for payment offered as an option to Tiscali S.p.A.
shareholders on the 11 November 2009 and immediately used to repay a further part of the financial
loans in execution of the agreements made with the same lending institutions; based on the agreements
the lending institutions have further removed a part of the residual debt equal to around EUR 42.3
million.
Furthermore, in the course of 2009 other action to improve management efficiency took place, in particular
at the subsidiary Tiscali Italia S.p.A., amongst which should be mentioned:
• The sale of IPTV assets;
• The rationalisation of trading and operating costs;
• The implementation of an incentivised retirement plan which, together with other action to improve
management efficiency, have produced a reduction in working cost of around EUR 7 million (EUR 12
million in the Group);
• The optimisation of loan recovery policies;
• Structural and corporate cost rationalisation.
The action referred to above has thus contributed significantly to the reduction of the gross financial
indebtedness from EUR 644.8 million at 31 December 2008 to EUR 240.6 million at the end of December
2009. Furthermore, this action has made it possible to reduce debts to suppliers from EUR 181.1 million at
31 December 2008 to EUR 150.9 million at 31 December 2009.
Then, in the second half of 2009 the Company implemented a series of initiatives that have generated
a reversal of the trend for client acquisition shown in the recent past. In fact the first half of 2009 saw.
Alongside the action to recover management efficiency referred to above, a reduction of the volume of
telecommunications product registrations; on the other hand in the second half, also because of renewed
market confidence, there was an improvement in macroeconomic prospects and with a renewed brand
image, an increase of ADSL and voice registrations was recorded of over 80% compared with the first half
of 2009. This trend was maintained into the first few months of 2010.
On account of the aforegoing, the Directors, in assessing the existence of the condition of the Tiscali Group
as a going concern in the current macro-economic context, has identified some factors that indicate the
persistence of certain uncertainties:
i. The Group is still in a situation of financial and economic disequilibrium, which is made evident by a
net consolidated deficit even after the execution of the debt write-off of EUR 42.3 million (although
the partent company reports a positive shareholders’ equity amounting to EUR 93.7 million), due to
negative economic performance and the considerable burden of Group indebtedness.
ii. In fact, during the year 2009, the results of trading activity, even if greatly improved compared
with the previous year (also by the effect of the debt reduction referred to above) is negative in the
amount of roughly EUR 14.7 million for the Group. However it is noted that the Group operating
result is positive in the amount of EUR 11.4 million thanks to the positive contribution from the
subsidiary Tiscali Italia;
iii. The presence of gross financial indebtedness that, although significantly reduced during the year,