185000000 IT Holding Finance SA

IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2004
IAS 1 (revised 2003) Presentation of Financial Statements
IAS 36 (revised 2004) Impairment of Assets
IAS 38 (revised 2004) Intangible Assets
IFRS 3 (issued 2004) Business Combinations
IFRS 5 (issued 2004) Non-current Assets Held for Sale and Discontinued Operations.
The adoption of IAS 1 (revised 2003) and IFRS 5 (issued 2004) will not result in substantial changes to the
Group’s accounting policies other than changes in presentation.
The adoption of IAS 36 (revised 2004) and IFRS 3 (issued 2004) will result in a change in the accounting policy
for goodwill. Goodwill is currently amortized on a straight line basis over a period of 20 years. From the annual
period beginning on 1 January 2005, the Group will:
cease amortization of goodwill;
eliminate accumulated amortization with a corresponding decrease in the cost of goodwill;
test goodwill for impairment annually.
The adoption of IAS 38 (revised 2004) may imply the reassessment of the useful life of certain intangible assets,
which, under the provisions of the new standard might be considered to have an indefinite useful life. The
consequences of such an assessment would be the same as those described above for goodwill.
To improve presentation, certain items on the balance sheet have been reclassified with respect to the prior year.
Comparative figures have as a consequence been adjusted. These reclassifications are described in the notes to the
financial statements.
Basis of preparation
The financial statements are presented in Euros, rounded to the nearest thousand.
The consolidated financial statements have been prepared under the historical cost convention except as disclosed
in the accounting policies set out below.
The accounting policies have been applied consistently by all Group companies.
Principles of consolidation
Subsidiaries
Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power,
directly or indirectly, to govern the financial and operating policies of the entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into
account. Subsidiaries are consolidated from the date that control commences until the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of acquisition is
measured at the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition
plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the
Group’s share of assets and liabilities of the subsidiary acquired is recorded as goodwill.
The assets, liabilities, income and expenses of consolidated companies are combined on a line-by-line basis by
eliminating the book value of the parent’s investment against the Group’s share of equity of each subsidiary at the
moment of their acquisition.
The portion of net assets and net income attributable to third parties are stated separately as minority interests.
All significant intragroup balances, transactions and unrealized profits and losses are eliminated.
F- 11