Tiscali 2014 Annual Report Download - page 31

Annual financial report as at 31 December 2014
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File Name
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Annual Report as at 31
December 2014
31
things stand, the Company is awaiting the completion of the formal controls, preparatory to the final
assignment which is envisaged to take place by the end of the first half of 2015.
Preliminary non-binding agreement for a business combination transaction with Aria S.p.A.
On 19 March 2015, a non-binding memorandum of understanding was signed for a business
combination transaction with Aria S.p.A., an Italian service provider which offers wireless broadband
services, on the basis of the licence obtained during the auction in 2008 for use of the 3.5 GHz band
throughout Italy. The possible transaction, which also envisages a capital contribution made by the
shareholders of Aria S.p.A., would make it possible to strengthen the business and financial position of
the company, consolidating Tiscali’s coverage in the field of broadband access from the fixed and
mobile networks and creating a sole operator on the Italian market potentially capable of offering high-
capacity Broadband services throughout Italy thanks to the combination of the two network
infrastructures.
3.8 Assessment of the business as a going-concern and future outlook
Events and uncertainties regarding the business continuity
The Tiscali Group closed 2014 with a consolidated loss of around EUR 16.4 million and negative
consolidated shareholders’ equity of EUR 168.8 million. Furthermore, as at 31 December 2014, the
Group had a gross financial debt of EUR 204.3 million and current liabilities greater than current
assets (non-financial) for EUR 108.9 million.
As of 31 December 2013, the consolidated loss amounted to EUR 4.8 million, with negative
consolidated shareholders’ equity of EUR 151.9 million. Furthermore, as at 31 December 2013, the
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.
As from 2009, the Group, after having completed the disposal of Tinet and the UK subsidiaries,
allocating the proceeds of the sale to the repayment of part of the debt, implemented action with the
aim of achieving economic, equity and financial balance over the long term, and launching a phase of
recovery for the sales activities, which has been reflected in the business and financial plan.
In a recessionary context, the transformation under way for some years in the telecommunications
market has led to greater competitiveness and erosion of the revenues and the margin for the
operators.
Progressive saturation for the fixed network broadband market, the sharp competition of the data
proposals on the mobile networks and the possibility for customers to migrate from one provider to
another has generated a greater response from the customers to promotions and consequently a
declining trend of the prices.
In the presence of such factors (and other collateral ones such as the progressive replacement of the
fixed lines with mobile ones, the increasing weight of the costs linked to customer service, the
establishment of the so-called Over-The-Top products), Tiscali, like the other telecommunications
companies, has rationalised its internal processes implementing rigorous cost cutting programmes to
preserve margins and maintain the competitive position, as well as to try and diversify its revenue
streams in web and Over-The-Top services.
During 2014, from an operational perspective and within a context involving competitive pressure in
the market of accesses from a fixed network, management continued to pursue the following: