Tiscali 2012 Annual Report Download - page 26

Annual financial report as at 31 December 2012
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Date File Name Status Page
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Annual Report as at 31
December 2012 26
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The action described above made it possible to maintain a cash flow from the operating activities
(before the changes in working capital) in line with the previous year (EUR 60 million), contributing
towards reducing the financial debt and the exposure to suppliers. In detail, operations made it
possible to honour the due dates relating to financial debt related to the loan agreement taken out on 2
July 2009 (“Group Facility Agreement” or “GFA”), both in terms of principal and interest. As envisaged
by the GFA and reflected in the financial plan, during 2012 the Group made a payment to the financial
institutions amounting to EUR 7.8 million (of which EUR 2.8 million for interest).
On the basis of the matters set forth above, the Directors, when evaluating the existence of the
condition of the Group as a going concern in the current macro-economic context, and in the current
competitive scenario, identified a number of factors which indicate the persistence of a number of
uncertainties:
i. the Group is still in an unbalanced equity, financial and economic situation, as shown by the
negative consolidated shareholders’ equity for EUR 145.9 million, due mainly to the negative
economic performance and weight of the considerable debt;
ii. the presence of a significant commercial and financial debt, the latter subject to covenants and
other contractual obligations (so-called "events of default”) whose breach, as is standard
practice for this type of contract, leads to the invoking of the acceleration clause (see note 26);
iii. the establishing of a balanced equity, financial and economic situation for the Group over the
long-term depends, in the context of uncertainty of the current economic and financial
scenario:
o on the need to finalise the rescheduling of the financial debt with the Financing
Institutions (in particular, the debt falling due in July 2014, amounting into total to EUR
107.5 million, of which EUR 25 million in interest);
o on the achievement of the results envisaged in the business plan, and therefore on the
realisation of forecasts and assumptions contained therein, and in particular, those
relating to the evolution of the telecommunications market and achievement of the
growth objectives set out in a market context characterised by heavy competitive
pressure.
In this context:
• preliminary assessments have been made and initial contact started with a number of
financing institutions aimed at rescheduling the financial debt;
• the Group’s business plan was updated, covering the entire period for the repayment of the
financial debt. This 2013-2017 business plan, approved by the Board of Directors on 29
March 2013, hypothesises, as from 2014, the rescheduling of the part of debt in excess with
respect to the cash flows which is envisaged will be generated over the plan’s duration (in
detail, in July 2014, when, as indicated previously, the GFA envisaged the repayment of a
significant portion of the financial debt for a total of EUR 107.5 million, including the portion of
PIK interest capitalised for around EUR 25 million). The overall amount of the debt falling due
in 2014 and 2015, to be rescheduled, on the basis of the financial projections, amounts to
approximately Euro 135 million.