185000000 IT Holding Finance SA

IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2003
Interest expense includes bond interest of Euro 14,710 thousand (2002: Euro 9,348 thousand), bank interest of
Euro 7,827 thousand (2002: Euro 10,263 thousand) and other financial charges of Euro 6,460 thousand
(2002: Euro 2,529 thousand) mainly referred to charges related to the trade receivable securitization agreement.
6. Income taxes
Recognised in the income statement
(In thousands of Euros)
Current tax expenses
Current year 12,335 24,972 (12,637)
Under/(over) provided in prior years - - -
Total 12,335 24,972 (12,637)
F- 64
2003 2002
Increase
(Decrease)
Deferred tax expense
2003 2002 Increase
(In thousands of Euros)
(Decrease)
Origination and reversal of temporary differences (5,656) (25,740) 20,084
Benefit of tax losses recognised (2,542) 2,959 (5,501)
Subtotal (8,198) (22,781) 14,583
Tax benefit on parent company's dividends (25,866) (4,182) (21,684)
Total (34,064) (26,963) (7,101)
Total income tax expense in income statement (21,729) (1,991) (19,738)
Tax benefit on parent Company’s dividends represents the receivable that IT Holding, which is in a tax loss position,
has earned versus tax authorities on the dividends received during the year from Ittierre S.p.A..
The details and the movements of deferred tax assets and liabilities are in note 19, Deferred tax assets and liabilities.
The reconciliation between the actual and theoretical tax rates for 2002 and 2003 is as follows:
2003 2002
(In thousands of Euros)
Loss before tax (84,772) (2,679)
Income tax using the domestic corporation tax rate 37.25% (31,578) 38.25% (1,025)
Temporary differences unrecognised 6.24% (5,287) -
Benefit of tax losses unrecognised -17.09% 14,489 -
Others -0.76% 647 36.06% (966)
Total income tax expenses in income statement 25.63% (21,729) 74.31% (1,991)
7. Discontinuing operation
On March 25, 2004, IT HOLDING S.p.A. sold its 90% shareholding in IBEX 2001 S.p.A. to I.C.R.—Industrie
Cosmetiche Riunite S.p.A., owned by Mr. Roberto Martone. Together with shareholder Mr. Roberto Martone, IBEX
2001 S.p.A. controls ITF S.p.A., which was set up in September 2001 to develop and distribute perfumes and
cosmetics under brands licensed by the IT Holding Group and third parties. At the time of the sale, ITF S.p.A. had 25year
license agreements with certain IT Holding Group companies. For IT HOLDING S.p.A., the transaction is in line
with its strategy of focusing on the core business, comprised of the apparel and accessories collections of owned and
licensed brands. Furthermore, the proceeds from the sale have made the Group more financially flexible.
The sale took place following negotiations between the parties. A merchant bank confirmed the sales price of Euro
31.5 million in its appraisal. The consideration was paid upon signature of the sales contract. This sale will generate a
capital gain of approximately Euro 30 million in the consolidated financial statements for the year ending
December 31, 2004. Lastly, IT HOLDING S.p.A. has not provided for any changes in the fees of the directors of the
company or of any of its subsidiaries following the above transaction.