Tiscali 2008 Annual Report Download - page 73

As from 1 January 2007, the 2007 Finance Act and the related
implementing decrees introduced significant amendments to the
regulation of staff severance indemnities (TFR), including the
worker’s choice regarding the allocation of their accruing TFR to
supplementary welfare funds or to the “ Treasury Fund” managed
by INPS (national insurance institute for social security).
Therefore, as a consequence, pursuant to IAS 19, the obligation
with respect to the social security institute and the contribution
to supplementary pension funds acquire the nature of “Plans
with defined contributions”, while the quotas assigned to the
staff severance indemnity provision acquire the nature of “Plans
with defined benefits”.
Furthermore, the legislative changes which took place as from
2007 led to a new calculation of actuarial assumptions, and of the
consequent methods used to calculate staff severance indemnities,
whose effects were directly booked to the income statement.
Remunerative schemes involving interests in the share capital
The Group has assigned certain members of senior
management and certain employees additional benefits via
plans for interests in the share capital (stock option plans).
These plans are a component of the beneficiaries’ remuneration.
The cost is the fair value of the stock options at the date of
allocation, and for accounting purposes, it follows the rules
fixed by IFRS 2 – Payments based on shares; the cost is
reported in the income statement with a matching balance
booked directly to the shareholders’ equity.
Provisions for risks and charges
Provisions for risks and charges relating to potential legal and
tax-related liabilities are established following estimates made
by the Directors on the basis of appraisals expressed by the
Group’s legal and tax advisors, concerning the charges that
are reasonably deemed will be incurred in order to settle the
obligation. If in relation to the final result of such appraisals,
the Group is called upon to fulfil an obligation for a sum other
than that envisaged, the related effects are subsequently
reflected in the income statement.
Treasury shares
Treasury shares are booked to reduce the shareholders’ equity.
Revenue recognition
Revenues are stated to the extent that it is probable that the
Group will receive the economic benefits and their amount can
be determined reliably; they are stated net of discounts,
allowances and returns.
Revenues for the provision of services are stated in the income
statement with reference to the stage of completion of the service
and only when the result of the service can be reliably estimated.
In particular, recognition in the income statement for revenues
from internet access services (narrowband and broadband) and
voice services, is based on the actual traffic produced at the
reference date and/or the periodic service fee payable at that date.
Revenues related to the activation of broadband services
(ADSL), consistent with the relevant costs capitalised among
tangible assets, are booked to the income statement on a
straight-line basis in relation to the minimum legal duration of
customer contracts, normally twelve months. Amounts relating
to other financial periods are recorded under other current
liabilities as deferred income.
The revenues originating from the sale of IRU (Indefeasible
Rights of Use) are acknowledged proportionally, depending on
the duration of the concession, while any components which
may be identified separately, whose fair value may be calculated,
are recorded under revenues on the basis of the nature of the
service or sale.
Financial income and charges
Interest income and expense, including interest on bond issues,
is recognised using the effective interest rate method.
Research and advertising costs
Research and advertising costs are expensed directly in the income
statement in the period they are incurred.
Taxes
Income taxes include all the taxation calculated on the taxable
income of the Group companies.
The tax currently payable is based on the taxable result for the
year. Taxable income differs from the result reported in the
income statement because it excludes items of income or
expense that will be taxable or deductible in other years and
it also excludes items which will never be taxable or deductible.
The liability for current taxes is calculated using tax rates
applicable at the balance sheet date.
Deferred taxation comprises taxes which are expected to be
paid or recovered on timing differences between the book value
of the balance sheet assets and liabilities and the corresponding
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CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES