185000000 IT Holding Finance SA

IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2004
Goodwill includes goodwill generated upon the acquisition of the GIANFRANCO FERRÉ group. The carrying
amount at December 31, 2004 was Euro 57,939 thousand (2003: Euro 61,346 thousand). The remaining
amortization period is 17 years.
In the year 2003, management deemed there was an indication of possible impairment due to the significant loss
incurred and therefore tested all assets for impairment. The test was performed by an independent valuer and
estimated the recoverable value on the basis of value in use. The test indicated that Group assets had not been
impaired.
In the year 2004, due to the discontinuance of certain operations and due to the financial restructuring, the
impairment test was newly performed by the Group. Recoverable amount was estimated on the basis of value in
use, determined on the following assumptions:
• Forecast of free cash flows for the next five years;
• Terminal value based on a perpetuity of 1.0%;
• Weighted average cost of capital (WACC) of 7.9% (12.3% pre-tax).
The test indicated that Group assets have not been impaired.
(19) Deferred tax assets and liabilities
Recognized deferred tax assets and liabilities
Deferred tax assets and liabilities at December 31, 2004 and 2003 are attributable to the following:
Deferred tax assets and liabilities
Assets Liabilities Net
(In thousands of Euros) 12/31/2004 12/31/2003 12/31/2004 12/31/2003 12/31/2004 12/31/2003
Property, plant and equipment - - 985 1,456 985 1,456
Intangible assets (13,296) (15,150) 55,525 58,790 42,229 43,640
Investment property - - 936 1,119 936 1,119
Investment in subsidiary (10,897) (14,315) - - (10,897) (14,315)
Interest-bearing loans and borrowings (115) (42) 983 1,098 868 1,056
Employee benefits - - 33 245 33 245
Provisions (5,225) (6,398) 354 359 (4,871) (6,039)
Other items (5,595) (1,855) 1,612 - (3,983) (1,855)
Tax value of loss carry-forwards recognized (6,641) (7,006) - - (6,641) (7,006)
Net tax (assets)/liabilities (41,769) (44,766) 60,428 63,067 18,659 18,301
The caption “Investment in subsidiary” relates to write off of the value of the investment that is tax deductable.
Unrecognized deferred tax assets
Deferred tax assets have not been recognized in respect of the following items:
12/31/2004 12/31/2003 Increase
(In thousands of Euros)
(Decrease)
Intangible assets 372 2,814 (2,442)
Provisions 1,140 131 1,009
Other items 235 1,643 (1,408)
Tax value of loss carry-forwards not recognized 31,335 44,095 (12,760)
Total 33,082 48,683 (15,601)
The tax losses expire in five years. Deferred tax assets have not been recognized in respect of these items because it
is not probable that future taxable profit will be available against which the Group companies can utilize the
benefits there from.
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