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<strong>IT</strong> HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2002<br />
They mainly refer to the following.<br />
(a) Consolidation and Investment in Subsidiaries<br />
Under Italian Accounting Principles, a subsidiary with activities dissimilar to that of the parent or in liquidation can<br />
be excluded from consolidation if such exclusion is essential for the consolidated financial statements to present a true<br />
and fair view of the state of affairs of the parent. Subsidiaries excluded from the consolidation are accounted for using<br />
the equity method or at cost.<br />
Under IFRS, dissimilar activities between a parent and subsidiary are not grounds for excluding the subsidiary from<br />
consolidation.<br />
(b) Intangible assets<br />
Differences in Intangible assets for the two years 2001 and 2002 are as follows:<br />
Shareholders’<br />
equity<br />
January 1,<br />
2001<br />
Group<br />
net<br />
result<br />
2001<br />
Movements in<br />
Shareholders’<br />
equity<br />
2001<br />
F- 136<br />
Shareholders’<br />
equity<br />
December 31,<br />
2001<br />
(In thousands of Euros)<br />
Group<br />
net<br />
result<br />
2002<br />
Movements<br />
in<br />
Shareholders<br />
’<br />
equity<br />
2002<br />
Sharehold<br />
ers’<br />
equity<br />
December<br />
31, 2002<br />
Start-up and expansion<br />
costs....................................... (1,543) (196) — (1,739) (1,167) — (2,906)<br />
Research and advertising<br />
costs....................................... (8,588) (1,174) — (9,762) 207 — (9,555)<br />
Goodwill ............................... (847) 106 — (741) 177 — (564)<br />
Assets in formation and<br />
advances................................ (349) (9) — (358) (1,129) — (1,487)<br />
Total...................................... (11,327) (1,273) — (12,600) (1,912) — (14,512)<br />
Start Up and expansion Costs—Research costs<br />
Under Italian Accounting Principles, certain costs related to the formation, start up and marketing research of a<br />
company may be deferred and capitalized as intangible assets and amortized on a straight-line basis over a period not<br />
exceeding five years, if certain conditions are met. These costs are written down to their recoverable amount when an<br />
impairment exists.<br />
Under IFRS, formation, start-up and marketing research costs are expensed as incurred.<br />
Advertising Costs<br />
Under Italian Accounting Principles, advertising costs may be deferred and capitalized as intangible assets and<br />
amortized on a straight-line basis over a period not exceeding five years, if certain conditions are met.<br />
Under IFRS, advertising costs are expensed as incurred.<br />
(c) Investments in Collection Development<br />
Costs incurred to design, prepare samples and launch new collections (collection development costs):<br />
Under Italian Accounting Principles the costs related to incurred to design, prepare samples and launch new<br />
collections are deferred. Under IFRS, only the costs related to the development phase of the design of the collection<br />
should be capitalized as development costs. Costs incurred in the preliminary phase of the design of the new<br />
collection (i.e. search for materials, basic concept of the collection, preliminary evaluation and selection of possible<br />
alternatives for the new collection) and all costs incurred in presentation of the new collections to buyers and orders
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