Tiscali 2012 Annual Report Download - page 60

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 60
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(both single and double play) with a pick-up in the same; this bears witness to the strength of
the Tiscali brand and the quality of the Company’s services;
• media revenues increased 11.7% with respect to the previous year, thanks to the
improvement in the editorial product on tiscali.it (news oriented), the innovation of the formats
and sales strategies (theme-based channels, interactivity with social networks and with the
mobile internet, etc.), factors which made it possible to make traffic on the portals of the
network more profitable;
• the Group continued to focus on innovation. In particular, mention is made of the Indoona
service (a rich communications service dedicated to smartphones, tablets and PCs), which
confirms the historic positioning of Tiscali as innovative operator in the sphere of internet
services, and which achieved more than one million downloads. Istella was recently launched,
an innovative search engine dedicated to the Italian language which facilitates the active
contribution by users.
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:
a. 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);
b. 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;