Tiscali shareholders’ meeting approved 2003 accounts

Cagliari, 6th May 2004 - The annual accounts for the year ending 31 December 2003 were approved at the Tiscali ordinary shareholders’ meeting today, confirming the figures approved by the board of directors on 5 April.

2003 was a year of strong growth for the group: with 7 million dial-up clients in Europe, Tiscali established itself as a provider of broadband services thanks to the improvement in the regulatory situation and an effective and targeted commercial policy.

ADSL user numbers increased from 214,000 at end-2002 to 840,000 at 31 December 2003. The new adds rate continues to grow, and the company had signed up 1,240,000 ADSL users as of 31 March 2004.

A key feature of 2003 was the ongoing improvement in profitability at EBITDA level, which was positive for the fifth quarter in a row. The EBITDA margin is also improving continually (8.2% of revenues). EBITDA breakeven has now been achieved in all of Tiscali’s main markets.

2003 highlights were as follows:

• revenues totalled EUR 901 million, up 20% on the previous year and mostly the result of organic growth
• gross profit came in at EUR 455.1 million, up 25% on the previous year; the gross margin expanded to 51% of revenues versus 49% in 2002
• EBITDA was EUR 74.7 million (8.2% of revenues), up from just EUR 1 million in 2002
• net losses more than halved versus 2002, from EUR 593.1 million to EUR 242.4 million

The positive effect on the bottom line came from:

• changes in the estimated residual life of intangible (goodwill) and tangible assets, which reduced depreciation and amortisation charges by EUR 142 million in 2003 (of which EUR 130 million related to goodwill)
• the booking of deferred tax credits of EUR 51.6 million relating to the subsidiaries that made a pre-tax profit in 2003 (in the Netherlands and South Africa)

Investments in 2003 totalled EUR 129.6 million, of which around EUR 30 million was spent on the new headquarters in Cagliari. In the second half of the year, investment began in the roll out of the infrastructure necessary to support unbundled ADSL services in the Netherlands.

The shareholders’ meeting also approved a proposal to increase the number of directors from six to eight, and Ruud Huisman and Massimo Cristofori were appointed to the board. At the board of directors’ meeting to be held on 13 May for approval of Tiscali’s first quarter 2004 results, Ruud Huisman will be appointed CEO of the group.