Tiscali S p A : 29/04/2017 Annual Group Report 2016

Issue date 31 December 2016

This report is available on the website www.tiscali.it

Tiscali S.p.A.

Registered office: SS195 Km 2.3, Sa Illetta, Cagliari, Italy Share Capital EUR 91,200,922.89

Cagliari Companies' Register and VAT No. 02375280928 Econ. & Admin. - 191784

1. Highlights 1

2. Alternative performance indicators 2
3. Directors and Auditors 3
4. Report on Operations 5

5. Tiscali's position within the market scenario 5

6. Main results obtained in 2016 8

7. Regulatory background 11

8. Tiscali Shares 16

9. Relevant events during the financial year 19

10. Analysis of the economic, equity and financial situation of the Group 26

11. Analysis of the income, financial position and cash-flow statement of Tiscali S.p.A. 45

12. Assessment of the business as a going-concern and future outlook 48

13. Other events subsequent to year end 52

14. Disputes, contingent liabilities and commitments 54

15. Corporate Government and Assets Report 59

16. Introduction 59

17. Corporate Governance Structure 59

18. General principles 59

19. Adopted Model 60

20. Company bodies and independent auditors 60

21. Shareholding 65

22. Amendments to significant agreements of the Company following a control change 67

23. Information on the implementation of the recommendations detailed in the Self-Governing Code 67

24. Board of Directors 67

25. Shareholders' Meetings 72

26. Board of Auditors 73

27. Committees established within the Board of Directors and other Governance bodies 74

28. Internal Control 75

29. Internal controls related to accounting and financial information 78

30. Introduction 78

31. Description of the main features of existing risk management and internal control systems in relation

    to the financial information process 78

32. Model of organization, management and control pursuant to Legislative Decree 231/2001 79

33. Procedure regarding related-party transactions 80

34. Confidential information and market information. Investor Relations 80

35. Consolidated financial statements and explanatory notes 83

36. Income Statement 83

37. Comprehensive Income Statement 84

38. Statement of Assets and Liabilities 85

39. Cash Flow Statement 87

40. Net Assets Variations 89

41. Income statement pursuant to deliberation Consob No.15519 dated July 27, 2006 90

42. Balance sheet pursuant to deliberation Consob No.15519 dated July 27, 2006 91

43. Explanatory Notes 92

44. Considerations regarding business continuity and foreseeable development of the management 93

45. Tiscali SpA - Accounting Statements and Explanatory Notes 156

46. Income statement 156

47. Comprehensive income statement 157

48. Financial and economic results 158

49. Statement of changes in shareholders' equity (EUR) 159

50. Cash Flow Financial statement 160

51. Explanatory notes 160

52. Glossary 197
53. Reports 205

54. 1 Highlights

    Income statement (*) (**)	2016 - before IFRS 5 reclass.	2016 - after IFRS 5 reclass.	2015 - before IFRS 5 reclass.	2015 - after IFRS 5 reclass.
    (EUR mln)
    Revenue	207.2	196.9	202.1	192.6
    Adjusted Gross Operating Result (EBITDA)	41.5	38.4	56.2	53.5
    Gross Operating Result (EBITDA)	30.1	27.1	39.1	36.4
    Operating profit	(35.5)	(28.4)	(1.9)	(2.1)
    Statement of financial position	31 December 2016		31 December 2015	31 December 2015
    (EUR mln)	291.8		290.5
    Total assets
    Net Financial Debt	(186.7)		(165.6)
    Net Financial Debt as per Consob	(191.0)		(173.1)
    Shareholders' equity	(167.6)		(121.4)
    Investments	56.7		38.1
    Operating figures	31 December 2016		31 December 2015	31 December 2015
    (000)	697.1		686.6
    Total number of Clients
    of which: Broadband	449.7		438.8
    of which Fixed Wireless (1)	75.0		103.0
    of which: Mobile (Voice and Data) (2)	166.0		136.0
    of which: Others	6.3		8.8

    (*) The figures for the year ended 31 December 2016 are not comparable with the data as of December 31, 2015, as they include the economic values of Aria Group, which was integrated into Tiscali Group on December 2015. (**) The economic and asset values related to the assets held for sale have been appropriately reclassified. For further details refer to the note.

55. It is also noted that Fixed Wireless customers include as of December 31, 2016 a number of former inactive customers waiting to be activated of approximately 25,000 units.

56. It is noted that the Company has modified the criterion for determining the number of Mobile (Voice and Data) customers in line with the criterion used by other telecom operators, defining the total number of Mobile customers as the number of customers with traffic in the last 6 months, instead of the number of customers with traffic only in the last month. Consequently, in order to make comparable figures for 2016, the number of mobile customers (data and voice) as at December 31, 2015 has been restated using the new criterion, ranging from

116.5 thousand units (data published on 31 December 2015) to 136,000 units (restated on the same date).

1 Annual financial report as of 31 December, 2016