Tiscali 2013 Annual Report Download - page 186

1. We have carried out an audit on the statutory 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. 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 we planned and performed our audit to obtain every element necessary in
order to determine whether the statutory 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.
For the opinion on the previous year’s financial statements, whose balances are presented for comparative
purposes as required by law, please refer to our report dated 5 April 2013.
3. In our opinion, the statutory financial statements of Tiscali S.p.A. 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 Tiscali S.p.A. 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“,
Tiscali S.p.A. closed the statutory financial statements with a loss of EUR 0.8 million and
shareholders’ equity of EUR 61.1 million; it is the parent company of a Group (the “Tiscali
Group”) which closed 2013 with a consolidated loss of EUR 4.8 million and a consolidated equity
deficit of EUR 151.9 million; furthermore, at 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
achievement of the growth objectives established in a market context characterised by heavy
competitive pressure.