Tiscali 2013 Annual Report Download - page 183

1. We have carried out an audit on the consolidated financial statements, comprising the income statement,
statement of comprehensive income and balance sheet, the cash flow statement, the statement of changes in
shareholders’ equity and the related explanatory notes, of Tiscali S.p.A. and its subsidiaries (“Tiscali Group")
as of and for the year ended 31 December 2013. Tiscali S.p.A.’s Directors are responsible for drafting the
financial statements in compliance with the International Financial Reporting Standards adopted by the
European Union, as well as the provisions issued by way of implementation of Article 9 of Italian Legislative
Decree No. 38/2005. We are responsible for the professional opinion expressed on the financial statements,
based on our audit.
2. Our audit was made in accordance with the audit standards and criteria recommended by Consob. In
accordance with such standards and criteria, we planned and performed our audit to obtain every element
necessary in order to determine whether the consolidated financial statements are materially misstated and if
such financial statements, taken as a whole, may be relied upon. An audit includes examining, on a test basis,
evidence supporting the balances and disclosures in the financial statements, as well as assessing the
appropriateness and suitability of the accounting standards applied and the reasonableness of the estimates
made by the directors. We believe that our audit provides a reasonable basis for our professional opinion.
The consolidated financial statements present the previous year’s balances for comparative purposes. As
illustrated in the explanatory notes in the section “Form and content of the accounting statements”, the
Directors have re-stated certain comparative balances relating to the previously year, with respect to the
balances previously presented and audited by ourselves, in relation to which we had issued the audit report
dated 5 April 2013. The methods for re-calculating the comparative figures and the related disclosure
presented in the explanatory notes have been examined by ourselves for the purpose of expressing an opinion
on the consolidated financial statements for the year ended 31 December 2013.
3. In our opinion, the consolidated financial statements of the Tiscali Group at 31 December 2013 are compliant
with the International Financial Reporting Standards adopted by the European Union, as well as the
provisions issued by way of implementation of Article 9 of Italian Legislative Decree No. 38/2005; they have
therefore been prepared clearly in all the material aspects and provide a true and fair view of the financial and
equity position, the economic result and the cash flows of the Tiscali Group for the year ended as of that date.
4. By way of disclosure, the following aspects are pointed out, more fully dealt with in the explanatory notes:
a. as indicated in the section “Assessment of the business as a going-concern and business outlook”,
the Tiscali Group closed the year with a consolidated loss of EUR 4.8 million and a consolidated
equity deficit of EUR 151.9 million; furthermore, as of 31 December 2013, the Tiscali Group had a
gross financial debt of EUR 201.7 million and current liabilities greater than current assets (non-
financial) for EUR 106.5 million. The Directors have described the factors which indicate the
continuation of uncertainties linked to a situation of equity, economic and financial imbalance, in
the presence of significant gross commercial and financial debt, the latter subject to covenants and
other contractual obligations. In detail, as at 31 December 2013, certain of the financial parameters
envisaged by the loan agreement known as the Group Facility Agreement (“GFA”) had not been
observed. In accordance with the provisions of the GFA, these violations represent a so-called
Event of Default further to which the financing institutions could decide - with the favourable vote
of parties which overall hold more than two thirds of the debt deriving from the GFA - to declare
the entire amount of the loan due and collectable and therefore request the repayment of all that is
due as per the GFA.
The Directors believe that the achievement of a balanced equity, financial and economic situation
over the long-term depends on: (i) the need to finalise with the financing institutions a restructuring
transaction for the financial debt which envisages, amongst other aspects, the waiver by the
financing institutions of availing themselves of the contractual remedies envisaged by the GFA in
the presence of the occurrence of the afore-mentioned Events of Default and the rescheduling of
the debt deriving from the GFA currently falling due in July 2014 and July 2015, amounting
respectively to around EUR 105 million and EUR 27 million, (ii) and the achievement of the
results set out in the Tiscali Group’s 2014-2018 business plan (“Plan”) which envisage the