Tiscali 2014 Annual Report Download - page 16

Annual financial report as at 31 December 2014
Date
File Name
Status
Page
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Annual Report as at 31
December 2014
16
Main risks and uncertainties to which Tiscali S.p.A. and the Group are exposed
Risks relating to the general economic situation
The Group’s economic, equity and financial position is affected by several factors which constitute the
macro-economic scenario – such as, for example, variations in GDP (Gross Domestic Product),
investor confidence in the economic system and interest rate trends. The progressive weakening of
the economic system, together with a reduction in household disposable income, has cut the general
level of consumption, with a depressive impact on the capacity for a quick recovery.
The activities, strategies and prospects of the Tiscali Group are influenced by the related macro-
economic context and as a result this also affects the Group’s economic, equity and financial position.
Risks connected with the performance of the telecommunications market
The telecommunications market the Tiscali Group operates in is extremely competitive in terms of
innovation, price, efficiency and user support. Tiscali competes with other groups at international level
and with various local operators.
The success of the Group’s activities depends on the capacity to maintain and increase shares of the
market in which it currently operates through high quality, innovative services that guarantee adequate
levels of profitability. If the Group is unable to maintain its competitive position with respect to the main
competitors in terms of price and quality and other elements, the Tiscali Group’s market shares could
fall, with a negative impact on the economic and financial results of the Group.
Risks connected with the dependence on technology of the telecommunications sector
The Group, which operates in a highly complex market from a technological point of view, is exposed
to a high risk regarding IT and ICT systems. As regards the management of the risks connected with
the damage to and malfunctioning of said systems, on which the business management is based, the
Group invests adequate resources aimed at protecting all IT tools and processes. The core business
systems are all highly reliable; the data centre in the Cagliari headquarters is equipped with safety
systems such as fire prevention and anti-flood systems, while the copies of data back-ups made by
operational personnel are kept in a different location from the CED (data processing centre)
guaranteeing a high level of reliability
The security system document is drawn up on an annual basis defining the safety measures
(technical, IT, organisational, logistical and procedural tools) aimed at reducing the risks of destruction
or loss, even accidental, of this data, and of unauthorised access or handling of the same.
Risks associated with the high financial and commercial debt of the Group
The evolution of the Group’s financial situation depends on different factors, in particular the
achievement of the forecast objectives in the Business Plan, the trend in the general conditions of the
economy, the financial markets and the sector in which the Group operates.
On 31 December 2014, the Tiscali Group disclosed high financial and commercial debt, which is
expected to fall considerably when the Business Plan has been concluded.
As from 2013, the Group has undertaken a multi-step negotiation process aimed at restructuring its
senior financial indebtedness arising from a loan agreement entered into by the Group companies on
2 July 2009 (GFA), for the purpose of obtaining a financial structure consistent with the expected cash
flows and suitable for supporting the growth objectives envisaged in the Business Plan. This
negotiation process concluded on 23/24 December 2014, by means, amongst other aspects, of: (i)
certification of the Business Plan pursuant to and for the purposes of Article 67.3, letter d) of the Italian