Bilancio Consolidato - Borsa Italiana [PDF]

Jun 30, 2002 - In the first half of 2002 the ePlanet Group generated consolidated production value of 24,826 thousand eu

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Idea Transcript


Half-year Report at 30 June 2002

ePlanet S.p.A., strada 4, palazzo Q1, 20089 Rozzano (MI) Planetwork S.p.A., via G. Catani 28/c, 59100 Prato (PO) eConsiag S.p.A., via Targetti 26, 59100 Prato (PO)

HALF-YEAR REPORT AT 30 JUNE 2002 CONTENTS • •

Corporate officers of ePlanet S.p.A. Letter to the Shareholders

page page

4 5

page page page page page page page page page page page page

8 9 9 11 11 13 13 14 15 17 17 18

ePlanet Group consolidated financial statements •



• •

Information on management Group Structure Strategic Outline Fibre optic metropolitan area networks (MAN) National Backbone Network Services Strategic Partnerships Group organisational structure and operative processes Evolution of the regulatory framework Information on economic, equity and financial management Transactions with related parties Significant events occurring after the end of the period Outlook for operations Annexes

-

Group reclassified balance sheet Group reclassified income statement Group cash-flow statement

Group financial statements Explanatory notes to the Group financial statements Drafting criteria Scope of consolidation Principles of consolidation Accounting principles and valuation criteria Information on balance sheet assets Information on balance sheet liabilities Information on the income statement Other information

page 20 page 21 page 22 page 23 page page page page page page page page

28 28 29 29 34 42 47 52

page page page page page page

59 59 60 60 60 61

Report of the independent auditing company Reconta Ernst & Young ePlanet S.p.A. financial statements •



Information on management Description of operations Information on economic, equity and financial management Significant events occurring after the end of the period Outlook for operations Other information required by the terms of Italian civil law Relations with subsidiaries and related parties Annexes

-

Parent company reclassified balance sheet Parent company reclassified income statement 2

page 63 page 64

• •

Parent company cash-flow statement

Parent company financial statements Explanatory notes to the Parent company financial statements Drafting criteria Accounting principles and valuation criteria Information on balance sheet assets Information on balance sheet liabilities Information on the income statement Other information

3

page 65 page 66 page page page page page page

71 71 75 81 84 88

EPLANET S.p.A. CORPORATE OFFICERS BOARD OF DIRECTORS Roberto Ruozi Chairman

(1)

(*)

Paolo Brunetti (2) Managing Director Giampaolo Acerbi Director Stefano Bruscolini Director Leonardo Lombardi Director Nicolò Francesco Rienzi Director BOARD OF AUDITORS

(3)

Lionello Jona Celesia Chairman Luigi Carlo Spadacini Cesare Piovene Porto Godi Statutory Auditors Maurizio Foti Fabio Montalbetti Acting Auditors INDEPENDENT AUDITING COMPANY Reconta Ernst & Young S.p.A.

(1)

The Board of Directors is in office until the Financial Statements at 31 December 2003 are approved.

(2)

Paolo Brunetti was coopted by the Board of Directors on 9 September 2002 as a Director in replacement of Alex Schmitt, whose letter of resignation was received on 7 August 2002, and appointed Managing Director by the Board of Directors on 16 September 2002 in replacement of Dario Cassinelli, who resigned on the same date.

(3) The Board of Statutory Auditors will remain in office until the Shareholders’ Meeting convened to approve the financial statements for the year ending 31 December 2002. (*)

Non-executive director

4

LETTER TO THE SHAREHOLDERS

Dear Shareholders, In the first half of 2002 the ePlanet Group generated consolidated production value of 24,826 thousand euro, up by 68% compared to the 14,791 thousand euro in the equivalent period of 2001. This result means that the Group has increased its revenues for three consecutive quarters, surpassing the goals set out in the Industrial plan and even the more ambitious targets reviewed at the start of the year. Significantly contributing to this result was the Wholesale sector (services addressed to licensee operators, international carriers, resellers and Internet service providers), which registered turnover of 11.6 million euro in the first half. The consolidated operating result before non-operative amortisation and deprecation (EBITDA) for the first half of 2002 was still negative in the amount of 17,004 thousand euro, while the consolidated operating result (EBIT) was negative for 25,776 thousand euro, although it reflects losses that are almost halved with respect to 30 June 2001 (negative for 44,555 thousand euro). EBITDA and EBIT are anyway better than the Business Plan forecasts and in line with the competition, although they remain under pressure due to financial market tensions and the slow pace of market transformation. The process of optimisation of internal resources led to downsizing of personnel to 200 at 30 June 2002 (including eConsiag), compared to the 289 at the end of June 2001.

The Group’s net financial position in the first half of 2002 was positive at 28,465 thousand euro. This amount includes the payment of 18,221 thousand euro relative to the early conversion of Warrants by several reference shareholders in a tied-up current account, which came under the cash on hand of the parent company on 4 July 2002, plus the 247 thousand euro paid by the market prior to 30 June 2002. We remind you that the rescheduling plan for debt dating from before the second half of 2001 was communicated to the market on 15th September 2001 and is being implemented, as announced by the Group in the press at the end of every month until 31/12/2001 and with quarterly updates, as requested by Consob, until 30/6/2002. In order to address the non-receipt of revenue from the disinvestments and, in general, the difficult market conditions, on 10th June 2002 the Extraordinary Shareholder’s meeting approved the Board of Directors’ proposal of 19th April 2002 to award all warrant holders an early option right to subscribe ordinary shares linked to the Warrants. In particular, the early 5

conversion option gives holders of Warrants in each Category - - “ePlanet Share Warrant 20022004 ‘Category 1’, ‘Category 2’ and ‘Category 3’” - the right to request a subscription to ordinary company Shares during the period from 14 June 2002 to 4 July 2002 at one new ordinary Share of nominal value 0.52 euro for each Warrant submitted for the financial period, at a price of 0.80 euro, of which 0.28 euro as a premium. ePlanet reference shareholders (Kabuto Servicos de Consultoria, Mr Holger Van Den Heuvel, Fidicontrol, Cuneo e Associati and Alessandro Acerbi), further to signed undertakings, exercised early conversion of 100% of the Warrants in their possession on that date, equivalent to approximately 30% of total Warrants. This operation saw the conversion of 24,042,401 Warrants for an amount of 19,233,920.80 euro, of which 18,221,095.20 euro paid by the reference shareholders.

On 16 September 2002 Dario Cassinelli handed in his resignation as Managing Director, after having enabled the Group, despite the difficult economic and competitive period described previously, to increase results over that last three quarters, laying the foundations for a new phase of rationalisation and development. On the same date the Board of Directors appointed Paolo Brunetti as the new Managing Director.

ePlanet S.p.A. The Chairman of the Board of Directors Roberto Ruozi

6

The ePlanet Group Information on management

7

GROUP STRUCTURE At 30 June 2002, the Group headed by ePlanet is composed of the following companies (hereinafter collectively the “Group”): -

ePlanet S.p.A., founded on 31 August 1999, with registered offices in Strada 4 Palazzo

Q1, Milanofiori Rozzano (MI), and fully paid up share capital of 69,052,048.52 euro, listed on the Nuovo Mercato stock market segment organised and managed by Borsa Italiana S.p.A.; ePlanet holds shares equivalent to 0.5% of the capital of IPSE 2000 S.p.A.; -

Planetwork S.p.A., founded on 30 July 1996, with registered office in Via G. Catani

28/C, Prato (PO), with fully paid-up share capital of 26 million euro, a 100%-owned subsidiary of ePlanet; -

eConsiag S.p.A., founded on 26 October 2001, with registered office at 26 Via Targetti,

Prato, and share capital 4,700,000 euro, of which 1,410,000 euro paid up, is 58% controlled by ePlanet. The income values of eConsiag at 31 December 2001 were not of significance. The subsidiary was consolidated only starting from the first half of 2002; -

ConsiagNET S.p.A., founded on 26 October 2001, with registered office at 26 Via Tar-

getti, Prato, and share capital 10,740,000 euro, of which 3,222,000 euro paid up, is 10% owned by ePlanet; The following diagram shows a graphic representation of the ePlanet Group structure:

ePlanet

10%

ConsiagNET

58%

100%

eConsiag

Planetwork

0.5%

Ipse 2000

We point out that the holding in Planet eCom S.p.A., consolidated at 31 December 2001, was sold to Accenture at book value on 28 January 2002. The company Planet Mobile, consolidated on 31 December 2001 has been placed in liquidation as from 1 January 2002.

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STRATEGIC OUTLINE The ePlanet Group, reference operator and supplier of integrated broadband services (voice, Internet-data, video), IT applications and outsourcing services for e-commerce solutions (Housing, Hosting, ASP), addresses its offer primarily to the business market of SOHOs, SMEs and other operators/ISPs (wholesale). 2002 sees the ePlanet Group fully engaged in the pursuit of programmed business objectives: focus on the acquisition of new customers and customer retention actions for the installed base extension, development and rationalisation of products in the portfolio, particularly for value added services, also in liaison with qualified external parties completion of fibre optic loops and optimisation of infrastructure requalification of direct and indirect sales channels optimisation of internal human resources in particular, the company continues to address and analyse opportunities for aggregation or mergers which, in the framework of the consolidation process currently under way among operators in the sector, will allow ePlanet to bring forward its break-even forecasts (currently pointing to 2005 in terms of consolidated net results) and to achieve a revised critical mass, in the context of the difficult and fiercely competitive scenario of the telecommunications market. Transfer of the line of business that handles network infrastructure (MAN) from the subsidiary Planetwork to the parent company ePlanet lays the foundations for future prospectives which envisage the Group operating in a diversified scenario.

FIBRE OPTIC METROPOLITAN AREA NETWORKS (MAN) During the course of the first half of 2002, despite negative economic contingencies, the ePlanet Group proceeded with the process of completion of fibre optic metropolitan area networks in several of the largest Italian cities, with the aim of offering, via a single ultra-highspeed connection (up to 200 times faster than alternative access technology currently available on the market), integrated voice, Internet-data, and video services with levels of quality and reliability that only a fibre optic network of the latest generation is able to guarantee. The cities in which MAN networks are currently being completed are Milan, Rome, Bologna, and Calenzano. The works programmed in the current plan have now been completed in Reggio Emilia, Padua, Bari, Turin and Naples. Specifically, at 30 June 2002 the Group has completed 300 km of network infrastructure in the nine cities. In 2001 the Group also entered into an infrastructure swap agreement with Edisontel that has enabled the acquisition of a further 9.4 km of 50 mm conduit in the city of Rome; this new infrastructure will allow connection of the infrastructures already completed in the centre of Rome with those completed in the suburban areas where the Group’s Exchange Centre is located. Moreover, on 28 June 2002 an important agreement with Autostrade Telecomunicazioni was signed, by virtue of which the Group obtained an indefeasible right to use cable ducts in Bologna totalling 5 km (thanks to which another 7 km metropolitan network will be completed) for 15 years, and an identical right lasting 5 years relative to a 2.5 Gbps system that links the Milanofiori Exchange to the Via Caldera technological pole. Therefore, by adding together the sections made directly by the Group and those obtained in concession, we arrive at a network infrastructure extension of 314 km (compared to the 296 km completed at 31 December 2001). The 314 km account for approximately 98% of the revised cabling plan, which envisages 319 km. 9

It is also to be pointed out that a swap agreement was signed on 1 July 2002 with COLT Telecom, which led to acquisition of dark fibre in Rome for a total of 2.8 km (not included in the lengths given in this table), completing the network in the Eur - Laurentina area. During the course of the first quarter of 2002, the Group reached an agreement with Global Crossing for the 5-year irreversible right of use of dark fibre in Milan, for a total length of 1.4 km, that has allowed interconnection to the main exchange of international telecommunications operators with whom commercial agreements are currently being drawn up. This agreement joins those already entered into during the course of 2001 (specified below) that have led to the acquisition of the following sections: fibre optic swap agreement with Albacom (19 km in Rome and 6.7 km in Turin) irreversible Right of Use agreement for dark fibre from Global Crossing for 15 years (28.4 km in Milan) dark fibre rental with Metroweb (7.7 km in Milan) dark fibre rental with Autostrade TLC (5.5 km in Milan). This has enabled the completion of several new networks and the coverage of areas unreachable through MANs although strategic for the Group’s business. In particular, the premises of several major Telecommunications Operators listed below, and with whom commercial agreements for the resale of transmission capacity are in effect, were connected to the Planetwork fibre optic network Noicom in Turin Cable & Wireless in Milan Global Crossing in Milan and Turin Albacom in Rome Interconnections with other premises of important Operators are currently in the planning stage. At 30 June 2002, the Group has also successfully installed networks and fibre optic connections for a total of 235 km which, if added to the dark fibre in use (through swap, IRU or leasing), total 304 km compared to the 237 km at 31 December 2001 (+28%). Plans have been made to sell the Calenzano (Florence) network to network company ConsiagNET as part of the Consiag agreement, just as the fibre optic equipment located at the transmission exchange and the offices of customers in the Calenzano area will be sold to the eConsiag service company. This agreement has been extended until the second half of 2002. METROPOLITAN AREA NETWORKS 31/12/01 30/06/02 Growth Km completed 287 300 +5% 9 14 +55% Km of infrastructure operated under concession from third parties (swap) Km authorised or being laid 6 0 302 314 +4% Total Km completed/being laid Total km with ePlanet fibre (closed networks 170 235 +38% and single line connections) Total km with dark fibre (swap or rental) 67 69 +3% 237 304 +28% Total km with installed fibre

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NATIONAL BACKBONE NETWORK (IP/ATM) The local broadband networks (MAN) are connected through 14 multimedia nodes (Points of Presence) to a high-capacity (up to 2.5 Gbps) national backbone (over 3000 km) leased from Autostrade Telecomunicazioni. Turin is currently served by a 155 Mbps flow leased from Global Crossing. The 14 POPs active at 30 June 2002 are located in 13 cities: 9 cities in which a MAN network is present (Milan - 2 POPs, Turin, Padua, Rome, Florence-Calenzano, Reggio Emilia, Bologna, Naples, Bari), and 4 cities without MANs (Genoa, Brescia, Verona and Modena). Specifically, the network infrastructure developed during the year incorporates technology of the latest generation and is based on the concept of convergence of voice and data traffic. In fact, also telephone traffic carried on the network over long distances, is implemented on the packet switched network. Specifically, the integrated carrier network includes a national switched circuit backbone for voice telephony and a national packet switched network (IP, ATM, Frame Relay) for data traffic and, in certain sections, also for voice traffic. For termination of international voice/data traffic, ePlanet has selected top operators, basing decisions on quality offered, connection capacity, and the reliability of individual partners. For these reasons, our list of partners features several top international carriers including Cable&Wireless, Telia, Teleglobe, Global Crossing, Infonet, and others. For termination of Internet/IP traffic, the network is connected to MIX for domestic Internet traffic and to Cable&Wireless and Telecom Italia for international Internet traffic. Each of the national backbone hubs is accommodated in equipped technological sites covering an area of approximately 1650 sq.m (Milan) and an average of 150 sq.m in other cities. The very high level of technology and constant updating of the server farms ensures constant innovation in all services offered to customers.

SERVICES During the course of 2001 the Group started a strategic refocusing phase aimed at achieving rapid development of our core business in the supply of direct access voice-data connectivity services, wherein ePlanet stands among the top alternative operators in target cities and industrial zones for both SMEs and for other operators/ISPs (wholesale). In the first half of 2002 the company pursued its activity of development and the commercial launch of innovative services divided according to product lines, and, in particular, the supply of direct access integrated voice and Internet services and value added Internet services. PRODUCTS PORTFOLIO a) BROADBAND Products Line •



BROADBAND PLUS and BROADBAND BUILDING: integrated solution of voice and Internet telecommunications services on fibre optic broadband connections for medium/large companies or for buildings in the proximity of the fibre optic Metropolitan Area Networks in Milan, Padua, Turin, Florence-Calenzano, Reggio Emilia, Bologna, Rome, Bari and Naples; BROADBAND LIGHT and BROADBAND EASY: integrated solutions of voice and Internet telecommunications services on conventional telephone lines utilising XDSL technology for professionals and SMEs that can exploit the service of unbundled access to the Telecom Italia network, through the use of the terminating exchanges (SGU) in which ePlanet is co-located in Milan and Turin;

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• •

BROADBAND SMART: solution for access to the Internet and voice traffic on IP protocol via 640kbps/128kbps ADSL technology (on Telecom Italia network) for professionals and small companies in Milan, Bergamo, Brescia, Padua, Turin, Florence, Reggio Emilia, Bologna, and Rome. BROADBAND SMART ALL: ePlanet’s integrated proposal to combine ADSL connectivity with fixed telephone services in CPS mode (carrier pre-selection) with very competitive rates. BROADBAND WEB: Internet connectivity solution via Telecom Italia XDSL technology for access to value-added services offered by ePlanet to business customers.

b) ALTERNATIVE Products Line • •

ALTERNATIVE ACCESS: voice telephony service for the collection and termination of telephone traffic via both dialler and carrier pre-selection (CPS) offered to the business segment.. ALTERNATIVE 800: called party charge service that handles calls originating anywhere in Italy on both fixed and mobile networks. With this service the cost of the call is entirely reversed to the called party.

c) DIRECT Products Line •

DIRECT VPN: solution for the creation of private virtual networks using Frame Relay technology to interconnect customer sites in various parts of Italy, characterised by exceptional reliability, security, and quality for data transmission. International connectivity is provided by Infonet Italia S.p.A.;

d)NET Products Line • •

NET HOUSING: provision of housing space to accommodate and connect to the Internet customer servers on the ePlanet server farm (Rozzano), designed and built to ensure high levels of security, scalability, and modularity; NET HOSTING: provision of disk space on servers (Unix platform) located in the ePlanet server farm. The disk space leased under net hosting contracts can be used to accommodate a website.

e)WEB Products Line •

• •



WEB YOUR NAME: domain name registration service oriented towards large and small companies; includes services for the registration of new names on second level domains (companyname.it, .com, .org, .net, ...) and maintainer changeover, whereby a domain registered with another maintainer can be transferred to ePlanet. WEB YOUR MESSAGING: value-added service to receive and transmit e-mail, voice and fax messages using, as the sole tool, the unified message box assigned by ePlanet and the relative associated telephone number. WEB YOUR SELF: videoconferencing service on IP designed to transform a videoconference into a routine activity performed in the context of normal working procedures: the users called can enter the videoconference simply by clicking a link in the convocation mail. WEB YOUR MAIL: integrated and flexible e-mail service that allows customers to manage their messages via a personalisable webmail interface;

e) Residential Products Line • DRIN10050: voice telephony service for the collection and termination of telephone traffic via both dialler and pre-selection carrier, offered to the consumer segment. • BROADBAND LIGHT CASA: integrated solution of voice and Internet telecommunications services on conventional telephone line by means of local loop unbundling and ADSL technology for the home. This service is available at the terminating exchanges (SGU) in which ePlanet is co-located in Milan and Turin. 12

STRATEGIC PARTNERSHIPS During the first half of 2002 several consolidated partnerships were successfully pursued, namely: Consiag Infonet Autostrade Telecomunicazioni Teleglobe UK Tele2 Accenture The first six months of the year also saw the signing of several new partnership agreements with the following domestic and international carriers: Noicom Noicom, leading TLC operator in the North West and part owned by the Turin AEM energy company, together with ePlanet, have signed a major agreement that will allow Noicom to make use of ePlanet’s fibre optic network infrastructure and implement TLC services of the latest generation. On the basis of the agreement, Noicom will utilise ePlanet wholesale SDH capacity or the license to use the ePlanet MAN in Turin and also, to access remote offices of its customers in the North West, in the main industrial districts connected with ePlanet cable (Milan, Rome, Bologna, Padua, Reggio Emilia, Florence Calenzano, Naples and Bari). Cable & Wireless With the aim of offering ultra high speed local terminations for customers using its international network, Cable & Wireless will utilise ePlanet’s dark fibre and the transmission capabilities of its MANs - extending over more than 300 km - in the principal Italian cities. In this context ePlanet therefore becomes one of the main suppliers of services of this type for Cable & Wireless in Italy. The agreement forms part of a wider framework of collaboration between the two companies that has already been operational for several years, wherein Cable & Wireless is among ePlanet’s principal suppliers of international telephone traffic termination and Internet connectivity services and for the leasing of international transmission capacity. Albacom Albacom, national TLC operator for business communications, has signed an important agreement that will allow it to use ePlanet’s fibre optic network infrastructure. Albacom will utilise the license to use ePlanet’s MANs to reach the offices of its customers in the main industrial districts equipped with ePlanet cables (Milan, Rome, Bologna, Padua, Reggio Emilia, Florence Calenzano, Naples and Bari). Oy Cubio Communications (Finland) Pursuant to the terms of the agreement, ePlanet will utilise Oy Cubio’s network to offer its customers international telephony services in several North European countries. At the same time, through ePlanet’s domestic infrastructure, Oy Cubio will be able to terminate a significant proportion of the Italian inbound traffic generated by its customers. This agreement further consolidates the international expansion of ePlanet. GROUP ORGANISATIONAL STRUCTURE AND OPERATIVE PROCESSES The process of optimisation of internal resources which was started during 2001 proceeded also during the first half of 2002 leading to a reduction in staffing levels from the 289 units of 30 June 2001 to 200 at 30 June 2002, including also the personnel of the eConsiag affiliate. In the framework of the organisational reshaping process, in January 2002 the function of Operative General Manager was created and assigned to Pier Luigi Guerra, who now heads the 13

Sales, Customer Service, Business Development, Product Marketing, and Technical structures. The Affiliates Management function was also implemented and assigned to Maurizio Marchisio. The role of Direct and Indirect Sales Management is currently held by Marco Lanzani, originally with Compaq. On 1 July Giuliano Cavalli assumed the role of Personnel Manager. During the second half of 2001 the Information Technology Management was created with the role of handling the administration and development of Information Systems, hitherto managed by ePlanet and Accenture joint venture, Planet eCom. The strategic decision to reappropriate management of our own IT systems led to the definition of a migration and training plan aimed at the handing over of the systems and the need to update software releases and perform the changeover to euro accounting. In consequence, at the start of 2002 Information Technology Management took over responsibility for systems from Planet eCom. The set of software applications utilised is identical to that of 2001, while licenses and contracts were transferred to the name of ePlanet. The start of 2002 also coincided with the introduction of the single European currency, which called for the conversion from the billing system in use in 2001 to a new euro-compatible system. The simultaneous release of competences and responsibilities with the introduction of the new and more complex version of the application created various operational difficulties and a few teething problems in the execution of the initial billing cycle for target customers, which were subsequently solved in full. The Information Systems support structure in 2001 employed a total of 41 staff, a figure that has been trimmed to just 24 at 30 June 2002 thanks to restructuring and optimisation strategies.

EVOLUTION OF THE REGULATORY FRAMEWORK IN THE FIRST HALF OF 2002 Because the liberalisation process has progressed since 2001, the first half of 2002 saw fewer TLC regulatory developments, although Italian communications authority AGCOM continued to pursue the implementation of services including Carrier Pre-selection (CPS) and Number Portability (NP). Among key elements in the reference period we draw your attention to the Authority’s decisions concerning the reference interconnection offer of Telecom Italia, the offer of wholesale leased lines, and of the general telephone directory.In May 2002 the Authority also adopted a resolution containing “measures designed to guarantee the full application of the principle of equal internal and external treatment by operators possessing significant market strength in wireline telephony”. This measure should help assure the development of competition on the telecommunications market, governing aspects relative to regulatory accounting, the methods of offering services to other operators, and, more centrally, the interconnection charges applied. Carrier Pre-selection (CPS) and Number Portability (NP) The supervisory activity of the Authority proceeded also in 2002 with regard both to the procedures relative to number portability and those concerning carrier pre-selection. In particular, in relation to CPS in response to notifications of several newly arriving operators the Authority launched a specific monitoring activity concerning the procedures for deactivation of the CPS service, with the intention of making them equivalent to the activation procedure, thereby making it possible for both OLOs and Telecom Italia to perform the same technical and commercial checks before implementing the relative instruction. Telecom Italia proposed a document containing “Integrations to the process of deactivations of the Carrier Preselection service”, which failed to fully respond to requirements of transparency voiced by OLOs. This procedure is consequently still the subject of discussions between OLOs and Telecom and is being closely monitored by AGCOM. Unbundling (ULL) AGCOM continued to follow activities of implementation of unbundled access services, in consideration of the fact that this is the key tool for further development of broadband services. As in the previous year, in 2002 the monitoring activities of the Authority were assigned to a

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specific internal unit (UPIM) which, in certain cases, developed detailed standards in order to define specific technical and procedural aspects. General Telephone Directory With Resolution 36/02/CONS, AGCOM adopted “Organisational rules and methods for the creation and offer of a service of general telephone directory and adaptation to the universal service”, which implements EU regulations concerning the liberalisation of services associated with telephone directories; the competition is thereby extended also to include the subscriber information services market, the telephone directories market, and that of operator-based subscriber information services. The availability of the information contained in telephone directories may also be useful for new operators for the implementation of new additional services such as business category directories and online directory services. With regard to the definition of the methods of management of the single database, the access methods, and the possible identification of the organisation that will bear responsibility for the data, an outline agreement is currently being drawn up among the various active TLC operators. Telecom Italia Interconnection Offer In the framework of AGCOM decisions, verification of the technical and economic conditions for the supply of services is one of the most significant, given that interconnection is the main instrument for newly arrived operators in supplying telecommunications services. Firstly, we point out that already in 2001 the valuation was performed on the basis of new regulatory accounting criteria, founded on the system of current costs; also worthy of note is the introduction in the reference offer of collection and termination services via district SGU exchanges and the facility to exploit transit services also via SGUs, which makes it possible to take advantage of the relative cost reductions with respect to the transit, collection and termination on network transit exchanges (SGT). Among the other most significant changes we point out that as from 2002 the distances and hence the prices of urban transmission connections for all types of services will be considered on a straight line basis rather than in terms of kilometre travel distance, with consequent savings in the cost of circuits; with regard to decade 7 services, Internet access services, termination rates towards 701 numbers, and all the rates concerning the network elements supporting decade 7 collection services, have been reduced, bringing them into line with those of other voice services.

INFORMATION ON ECONOMIC, EQUITY AND FINANCIAL MANAGEMENT We invite you to consult the reclassified income statement given in the annexed accounting tables, including the cash-flow data of the subsidiary eConsiag, which was included in the scope of consolidation with effect from 1/1/2002. The global value as at 30 June 2002 of operating revenues and net operating profits (loss) of the subsidiary were respectively equivalent to 361 thousand euro and (918) thousand euro. Revenues Consolidated revenues for the first half of 2002 totalled 23,111 thousand euro, mainly referred to the activities of the Planetwork subsidiary. These revenues reflect growth of 69% compared to revenues for the equivalent period in 2001, which amounted to 13,656 thousand euro. Value added Value added remained in negative figures for 10,949 thousand euro, improving by some 60% with respect to the previous year (17,830 thousand euro). Cost of labour 15

The cost of labour at 30 June 2002 amounted to 4,979 thousand euro compared to the 7,937 thousand euro of the previous financial period: this drastic reduction reflects the structural rationalisation that has taken place in the interim. Pretax result The result before taxes for the first half of 2002 was negative in the amount of 24,586 thousand euro, showing a stark improvement compared to the first half of 2001, when the figure was 44,451 thousand euro, reflecting similar improvements in terms of both EBIT (loss of 25,776 thousand euro compared to loss of 44,555 thousand euro) and EBITDA (loss of 17,004 thousand euro against a loss of 27,195 thousand euro in the previous period). This boost in results is due to several factors: the 13% reduction in the incidence of direct traffic costs, thanks to more careful management of product margins, lower incidence of amortisation and depreciation, and milder impact of write-downs on entries posted under assets. CAPITAL SITUATION We invite you to consult the reclassified balance sheet given in the annexed accounting tables, including the cash-flow data of the subsidiary eConsiag, which was included in the scope of consolidation with effect from 1/1/2002. The global values as at 30 June 2002 of balance sheet assets and shareholders equity of the subsidiary were, respectively 5,823 thousand euro and 3,705 thousand euro. Fixed assets Fixed assets fell from the 101,279 thousand euro of 31/12/2001 to 93,348 thousand euro at 30/6/2002, in line with the business plan, discounting a proportion of increases lower than depreciation. With regard to financial assets, the reduction from 15,211 thousand euro at 31/12/2001 to 12,513 thousand euro at 30/6/2002 is due to the difference in the scope of consolidation (inclusion of eConsiag and omission of Planet eCom). Short-term assets Short-term assets rose from 80,162 thousand euro at 31/12/2001 to 86,249 thousand euro at 30/6/2002, reflecting an increase in trade receivables from 14,742 thousand euro at 31/12/2001 to 30,730 thousand euro at 30/6/2002 and a reduction in the item “cash and banks” which fell from 40,369 thousand euro at 31/12/2001 to 28,798 thousand euro at 30/6/2002. The increase in the customer balance reflects the rise in turnover during the half year and the delays accumulated in the billing process during the first months of the period. The item “other receivables” posted at 25,468 thousand euro is mainly composed of VAT amounts due. Short-term liabilities Short-term liabilities rose from 81,458 thousand euro at 31/12/2001 to 84,879 thousand euro at 30/6/2002. The most significant item concerns trade payables, which edged upwards from the 73,893 thousand euro of 31/12/2001 to 75,893 thousand euro at 30/6/2002, reflecting only marginal improvement in the average duration of debt. Medium/long-term liabilities and reserves Medium/long-term liabilities dropped from 3,031 thousand euro at 31/12/2001 to 2,703 thousand euro at 30/6/2002.

16

Shareholders’ equity Group shareholders’ equity shaded from 96,623 thousand euro at 31/12/2001 to 90,459 thousand euro at 30/6/2002: this reduction of 6,153 thousand euro constitutes the balance between the loss for the period and the increase in other reserves due to the early conversion of warrants. Cash-flow Statement The operations in the period generated financial requirements of 30,195 thousand euro due to the losses in the financial period of 24,586 thousand euro, the increase in net working capital of 14,426 thousand euro, and amortisation/depreciation and write-downs for 8,817 thousand euro. Movements relative to investments generated liquidity for 243 thousand euro, due to an increase in intangible and tangible fixed assets for 2,455 thousand euro, which is more than balanced by the reduction in financial assets of 2,698 thousand euro. This requirement was partially covered by cash arriving from the share capital increase totalling 18,468 thousand euro. At the end of the period the net financial position was 28,465 thousand euro, constituting the net balance between cash on hand at the end of the period for 28,797 thousand euro and amounts payable to banks for 333 thousand euro. This amount includes the payment of 18,221 thousand euro relative to the early conversion of Warrants by several reference shareholders in a tied-up current account, which came under the cash on hand of the parent company on 4 July 2002, plus the 247 thousand euro paid by the market prior to 30 June 2002.

TRANSACTIONS WITH RELATED PARTIES Studio Spadacini, a related party of the parent company’s statutory auditors Spadacini and Piovene, provided corporate and fiscal consultancy services both during the course of normal management of the company and during the course of the recapitalisation operations. During the first half of 2002 eConsiag S.p.A. received consultancy and management services from shareholder Consiag for the amount of 37.5 thousand euro. In the framework of ordinary operations Planetwork Spa commissioned network purchase orders, at normal market prices, from Sirti Spa, a shareholder of the parent company since the 2001 financial year. In the first half of 2002 the overall total of orders commissioned from Sirti was 972 thousand euro.

SIGNIFICANT EVENTS OCCURRING AFTER THE END OF THE PERIOD The main events that occurred after 30/06/2002 are as follows: −

on 10 June 2002 the ePlanet Board of Directors established the Internal Auditing Committee with advisory and proposal-making functions within the new Corporate Governance rules. The committee is made up of: Prof. R. Ruozi, G.Acerbi, N.Rienzi and L.Lombardi. The Auditing Committee sat for the first time on 14 June 2002;



a total of 24,042,401 Warrants for a total amount of 19,233,920.80 euro were converted between 14 June 2002 and 4 July 2002, the early warrant conversion period;



on 28 June 2002 the deadlines in the private agreement with the municipal enterprise Consiag of Prato were put back to 30 September 2002;



on 2 July 2002 the ePlanet Board of Directors instructed its Managing Director to transfer the line of business relative to network infrastructure from the subsidiary Planetwork to 17

parent company ePlanet, thus making it possible to focus more closely on the two business areas, managing them in an even more effective manner, and seizing opportunities of specific interest to the lines of business being created. This operation must be completed by the end of this year; −

on 10 July 2002 the ePlanet Ordinary Meeting of Shareholders approved the financial statements at 31/12/2001;



the director Alex Schmitt handed in his resignation on 7 August 2002;



on 2 September 2002 the term for signing of the private agreement with Accenture relative to Planet eCom was put back to 30/9/2002;



on 16 September Dario Cassinelli resigned as Managing Director and, on the same date, Paolo Brunetti was appointed to the position by the Board of Directors.

OUTLOOK FOR OPERATIONS The Group has still not reached a position of economic and financial balance. With regard to the outlook for operations and continuation of company business however, ePlanet has prepared an operational plan that contains a conservative forecast for the results of the Group, in accordance with current market conditions, the results achieved thus far, and the management outlook. Actions currently underway, mainly aimed at further restructuring of due dates with several major suppliers and obtaining payment of the substantial VAT receivables outstanding, together with further actions defined by the plan, including those that should assist the continuing favourable trend of turnover that already started in the first half of 2002 and the willingness of shareholders to make up for possible temporary cash requirements as has already occurred in the past, strongly indicate that the Group will be able to find the resources necessary to finance its operations in the short term.

18

Annexes

19

ePlanet GROUP ****** HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO/1000) ****** R E C L A S S I F I E D

B A L A N C E

S H E E T

30.06.2002

31.12.2001

30.06.2001

ASSET S SHORT-TERM ASSETS Cash and banks Inventories Trade receivables Other receivables Other short-term assets Accruals and prepaid expenses

86,249 28,798 131 30,730 25,468 0 1,122

80,162 40,369 131 14,742 23,229 0 1,691

33,985 5,741 142 8,182 18,571 0 1,348

FIXED ASSETS Intangible fixed assets Tangible fixed assets Financial fixed assets Other fixed assets

93,348 21,584 57,869 12,513 1,382

101,279 24,358 61,710 15,211 0

97,801 27,265 59,657 10,878 0

179,597

181,440

131,786

84,879 293 0 75,893 745 3,923 4,026

81,458 190 0 73,165 1,046 3,410 3,646

95,268 183 0 90,448 896 3,460 281

2,703 1,777 886 40 0

3,031 2,039 761 231 0

3,150 2,232 589 329 0

87,582

84,489

98,418

90,459 56,550 0 141,832 (83,337) (24,586)

96,623 56,550 1 123,365 2 (83,294)

33,125 3,873 0 119,202 (45,490) (44,460)

90,459

96,623

33,125

1,942 (386)

251 77

251 (8)

1,556

329

243

179,597

181,440

131,786

TOTAL ASSETS LIABILITIES SHORT-TERM LIABILITIES Bank payables and current portion of medium/long-term loans Sources of finance Suppliers Tax and contribution payables Other liabilities Accruals and deferments MEDIUM/LONG-TERM LIABILITIES AND PROVISIONS Provisions for risks & charges Employees severance indemnity Medium/long-term loans net of current portion Other medium/long-term liabilities TOTAL LIABILITIES SHAREHOLDERS’ EQUITY SHAREHOLDERS’ EQUITY Share capital Legal reserve Other reserves Profits carrired forward Result for the period TOTAL SHAREHOLDERS’ EQUITY Minority interest capital and reserves Minority interest result for the period TOTAL MINORITY SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

20

ePlanet GROUP ****** HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO/1000) ****** RECLASSIFIED INCOME STATEMENT

30.06.2002

NET SALES

Changes in raw materials and finished product inventories Increase in fixed assets for internal work Other revenues and income PRODUCTION VALUE

Raw materials consumption Costs for services and leasing charges Other operating costs VALUE ADDED

Personnel costs Other operating reserves GROSS OPERATING RESULT (EBITDA)

Amortization/depreciation Other non-operative reserves OPERATING RESULT (EBIT)

Interest income Interest expenses ORDINARY RESULT

Extraordinary income Extraordinary expenses Value adjustments of financial assets PRE-TAX RESULT

Pre-tax minority profit (loss) Profit (loss) for period before acquisition PRE-TAX PROFIT (LOSS)

Income tax POST-TAX PROFIT (LOSS) FOR THE PERIOD

21

31.12.2001

30.06.2001

23,111

29,265

13,656

0 0 1,715

(644) 0 982

95 776 360

24,826

29,603

14,886

(200) (34,969) (602)

(556) (57,482) (1,889)

(310) (30,633) (1,772)

(10,946)

(30,324)

(17,830)

(4,979) (1,079)

(13,701) (3,640)

(7,937) (1,428)

(17,004)

(47,665)

(27,195)

(8,450) (322)

(27,418) (7,851)

(10,183) (7,177)

(25,776)

(82,934)

(44,555)

435 (131)

533 (1,073)

341 (242)

(25,472)

(83,475)

(44,456)

840 (328) (13)

673 (2) (399)

0 (4) 0

(24,972)

(83,203)

(44,460)

386 0

(77) 0

8 0

(24,586)

(83,280)

(44,451)

0

(15)

0

(24,586)

(83,295)

(44,451)

ePlanet GROUP ******

HALF-YEAR REPORT AT 30 JUNE 2002 ******

CASH-FLOW STATEMENT

30/06/2002

31/12/2001

Euro/1.000 Gross profit for the period Amortization/depreciation & write-downs Change in severance indemnity provision Net change in risks & charges provision (Increase) decrease in trade receivables (Increase) decrease in other receivables (Increase) decrease in inventories (Increase) decrease in other current assets Increase (decrease) in trade payables Increase (decrease) in other current liabilities

Euro/1.000

(24,586)

(83,295)

8,954 125 (262)

36,979 381 1,626

(16,357) (2,239) (0) 569 2,727 874

(5,897) (8,434) 1,121 951 (6,006) 3,557

(Increase) decrease in circulating capital

(14,426)

(14,708)

Total liquidity generated (absorbed) by operations

(30,195)

(59,016)

(2,004) (451) 2,698

(15,043) (19,931) (4,365)

243

(39,338)

Subsidiary shareholders’ equity before acquisition

0 (88) 0 18,468 0

0 (180) 0 102,327 0

Total liquidity generated (absorbed) by loans

18,380

102,147

(11,572)

3,792

Cash on hand at period start

40,369

36,577

Cash on hand at period end

28,797

40,369

Investments in fixed assets (net) Intangible Tangible Financial Total liquidity generated (absorbed) by investments New medium/long-term loans Medium/long-term loan repayments Increase in short-term debts with banks and other financers Increase (decrease) in share capital and other reserves

Increase (decrease) of liquidity

22

Group Financial Statements

23

ePlanet GROUP ****** HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO) ****** B A L A N C E

S H E E T

30.06.2002

31.12.2001

30.06.2001

ASSET S A) RECEIVABLE FROM SHAREHOLDERS for outstanding subscriptions

1,381,800 1,381,800 91,966,130

B) FIXED ASSETS

0 0 101,278,766

0 0 97,800,991

I. INTANGIBLE FIXED ASSETS 1) Plant and extension costs 2) Research, development and advertising costs 3) Industrial patents and intellectual property rights 4) Concessions, licenses, trade marks and similar 5) Consolidation difference 6) Assets under construction and advances 7) Other

21,584,155 6,734,587 810,917 1,191,672 1,269,110 6,089,511 0 5,488,357

24,358,145 7,830,024 923,354 2,238,000 411,716 6,488,483 0 6,466,569

27,265,458 8,930,026 1,085,694 2,317,412 298,467 6,887,455 832,980 6,913,425

II. TANGIBLE FIXED ASSETS 2) Plant and machinery 3) Industrial and commercial equipment 4) Other 5) Assets under construction and advances

57,868,850 35,615,416 1,311,027 1,646,618 19,295,789

61,709,632 37,572,257 2,309,024 1,837,775 19,990,577

59,657,703 28,613,075 3,364,761 2,110,336 25,569,531

III. FINANCIAL FIXED ASSETS 1) Equity investments a) subsidiaries c) other companies 2) Receivables a) From subsidiaries d) From others

12,513,126

15,210,989

10,877,830

0 12,355,000

2,726,000 12,355,000

0 10,750,000

0 158,126 85,126,783

C) CURRENT ASSETS

0 129,989 78,470,580

0 127,830 32,636,655

130,557 0 130,557

130,557 0 130,557

141,622 0 141,622

56,198,714 30,730,319 0 0 0 25,468,395

37,970,935 14,741,558 0 0 0 23,229,377

26,753,625 8,182,322 0 0 0 18,571,303

0 0

0 0

0 0

IV. CASH ON HAND 1) Bank and post office deposits 3) Cash and securities

28,797,512 28,242,965 554,547

40,369,088 40,367,879 1,209

5,741,408 5,740,629 779

D) ACCRUED INCOME & PREPAID EXPENSES

1,121,968

1,691,009

1,348,235

179,596,681

181,440,355

131,785,882

I. INVENTORIES 2) Products under construction 4) Finished products and goods II. RECEIVABLES 1) From customers 2) From subsidiaries 3) From other group companies 4) From parent companies 5) From others

Due within 1 year 30,730,319 0 0 0 14,130,756

Beyond 1 year 0 0 0 0 11,337,640

III. FINANCIAL ASSETS 4) Other equity investments

TOTAL ASSETS

24

ePlanet GROUP ****** HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO/1000) ****** B A L A N C E

S H E E T

30.06.2002

31.12.2001

30.06.2001

LIABILITIES 92,014,974 56,550,000 123,364,620 0 0 0 0 18,467,719 (83,337,094) (24,586,311)

96,951,326 56,550,000 123,364,620 0 1,299 0 0 0 2,055 (83,295,303)

33,376,557 3,873,427 119,202,115 0 0 0 0 0 (45,489,993) (44,451,944)

251,234 77,420

251,234 (8,282)

1,776,943 0 1,776,943

2,038,810 0 2,038,810

2,231,857 0 2,231,857

886,020

761,018

588,859

80,893,243 333,079 0 2,611,317 75,892,662 0 0 0 336,261 408,379 1,311,545

78,043,386 421,304 0 479,118 73,165,326 0 0 0 601,435 444,938 2,931,264

95,306,961 513,051 0 559,130 90,447,752 0 0 0 323,336 572,321 2,891,372

E) DEFERRED INCOME & ACCRUED EXPENSES

4,025,501

3,645,817

281,647

TOTAL SHAREHOLDERS’ EQUITY & LIABILITIES

179,596,681

181,440,355

131,785,882

A) SHAREHOLDERS’ EQUITY I. Capital II. Share premium reserve III. Revaluation reserve IV. Legal reserves V. Riserve for treasury shares in portfolio VI. Statutory reserves VII. Other reserves VIII. Profit (loss) carried forward IX. Profit (loss) for the period * *

1,941,720 (385,680)

Minority capital and reserve Minority profit (loss)

B) PROVISIONS FOR RISKS AND CHARGES 1) For pensions and similar obligations 3) Others C) EMPLOYEES SEVERANCE INDEMNITY D) PAYABLES 3) Due to banks 4) Due to other sources of finance 5) Advances 6) Trade payables 8) Due to subsidiaries 9) Due to other group companies 10) Due to parent companies 11) Tax payables 12) Due to Social Security Institutions 13) Other payables

Within 1 year 293,412 0 2,611,317 75,892,662 0 0 0 336,261 408,379 1,311,545

Beyond 1 year 39,667 0 0 0 0 0 0 0 0 0

MEMORANDUM ACCOUNTS Leasing and hire charges

50,586,000.00 5,064,000.00 5,722,000.00 0,00 39,785,000.00 15,000.00

Group assets held by third parties Sureties received from third parties Commitments Guarantees received

25

56,859,345.06 4,981,226.79 5,721,825.99 4,783,423.80 41,357,868.48 15,000.00

96,522,179.24 4,207,574.36 5,721,825.99 5,591,678.85 80,417,503.76 583,596.30

ePlanet GROUP ******

HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO) ******

INCOME STATEMENT A)

B)

30.06.2002

PRODUCTION VALUE 1) REVENUES FROM SALES AND SERVICES - third party - inter-group Total revenues from sales and services 2) CHANGE IN PRODUCT INVENTORIES 3) CHANGE IN WORK IN PROGRESS TO ORDER 4) INCREASES IN FIXED ASSETS FOR INTERNAL WORK 5) OTHER REVENUES & INCOME PRODUCTION COSTS 6) COSTS FOR RAW MATERIALS, AUX. CONS. & GOODS 7) COSTS FOR SERVICES - third party - inter-group Total costs for services 8) LEASING COSTS 9) PERSONNEL COSTS a) payroll b) contributions c) severance indemnity e) other personnel costs Total personnel costs 10) AMORTIZATION/DEPRECIATION AND WRITE-DOWNS a) Amortization of intangible assets b) Depreciation of tangible assets c) Write-downs of fixed assets d) Write-downs of current assets Total amortization/deprecation and write-downs 11) CHANGE IN RAW MATERIALS & GOODS INVENTORIES 12) RISKS PROVISIONS 14) OTHER OPERATING EXPENSES

DIFFERENCE BETWEEN PRODUCTION VALUE AND COST (A-B) C)

D)

31.12.2001

24,825,511

30,247,621

14,791,460

23,110,736 0 23,110,736 0 0 0 1,714,775

29,265,484 0 29,265,484 0 0 0 982,137

13,655,686 0 13,655,686 0 0 775,857 359,918

(50,601,697) (200,114)

(113,181,911) (556,316)

(59,347,039) (310,670)

(32,162,582) 0 (32,162,582) (2,806,482)

(52,119,036) 0 (52,119,036) (5,362,595)

(28,315,270) 0 (28,315,270) (2,318,099)

(3,510,281) (1,138,661) (232,805) (97,317) (4,979,064)

(9,510,901) (3,133,860) (862,974) (193,456) (13,701,192)

(5,706,311) (1,686,406) (399,249) (145,604) (7,937,569)

(3,967,891) (4,481,915) 0 (504,335) (8,954,141) 0 (897,237) (602,078)

(19,710,549) (7,707,741) (5,773,705) (3,787,479) (36,979,474) (644,458) (1,929,888) (1,888,952)

(6,519,971) (3,663,727) (4,572,095) (2,474,832) (17,230,624) 94,599 (1,557,689) (1,771,716)

(82,934,290)

(44,555,579)

(25,776,186)

FINANCIAL INCOME AND EXPENSES 15) INCOME FROM EQUITY INVESTMENTS 16) OTHER FINANCIAL INCOME d) income other than the above - from others Total other financial income 17) INTEREST & OTHER FINANCIAL EXPENSES - from parent companies - from others Total interest & other financial expenses VALUE ADJUSTMENTS OF FINANCIAL FIXED ASSETS 18) REVALUATIONS 19) WRITE-DOWNS

E) EXTRAORDINARY INCOME & EXPENSES 20) EXTRAORDINARY INCOME 21) EXTRAORDINARY EXPENSES PRE-TAX RESULT (A-B+/-C+/-D+/-E) 22) INCOME TAX FOR THE PERIOD

304,426 0

(540,535) 0

98,825 0

434,961 434,961

532,504 532,504

340,659 340,659

0 (130,535) (130,535)

0 (1,073,039) (1,073,039)

0 (241,834) (241,834)

(12,911) 0 (12,911)

(399,000) 0 (399,000)

0 0 0

512,680 840,459 (327,779)

671,261 673,166 (1,905)

(1,905) 0 (1,905)

(24,971,991)

(83,202,564)

(44,458,659)

(15,319)

(1,567)

(24,971,991)

(83,217,883)

(44,460,226)

385,680

(77,420)

8,282

0

PROFIT (LOSS) FOR THE PERIOD MINORITY INTEREST (PROFIT) LOSS FOR THE PERIOD PRE-ACQUISITION RESULT FOR THE PERIOD

0

26) PROFIT (LOSS) OF THE GROUP

(24,586,311)

26

30.06.2001

0 (83,295,303)

0 (44,451,944)

Explanatory notes to the Group Financial statements at 30 June 2002

27

DRAFTING CRITERIA These supplementary notes to the Group financialstatements are designed to illustrate the data shown in the consildated tables by means of analysis, integration and development of the various items. The notes include the information required by article 38 and other provisions of Italian legislative decree 127/1991, the information required by article 81 of the Nuova Mercato Regulations, and the ancillary information considered necessary for a comprehensive description of the Group situation that is both fair and truthful. The attached half-year financial statements (balance sheet and income statement), of which the present supplementary notes form an integral and substantial part, were prepared by the Board of Directors on the basis of accounting records as at 30 June 2002. The consolidated half-year financial statements are presented together with data for comparison with the situation at 30 June 2001 and 31 December 2001. The explanatory notes to the financial statements make reference to the values at 31 December 2001 for the balance sheet, while the income statement data is compared with corresponding values at 30 June 2001. No exceptional events were registered such as to require recourse to the derogations as per Article 2423, subsection 4 and Article 2423-bis, subsection 2 of Italian Civil Law. We point out that the amounts indicated in the supplementary notes are shown in thousands of euro unless otherwise specified. SCOPE OF CONSOLIDATION The consolidated half-year financial statements of the ePlanet Group at 30 June 2002 have been drawn up on the basis of the capital, economic and financial situations of the Parent Company, with reference to the same date, and those of the companies in which ePlanet S.p.A. directly or indirectly controls the majority of votes exercisable at the Ordinary Shareholders’ Meeting. Companies included in the scope of consolidation H.Q. Currency ePlanet S.p.A.

-

Capital

% stake

Rozzano - MI

Euro

56,550,000.00

Parent company

Planetwork S.p.A.

Prato - PO

Euro

26,000,000.00

100%

eConsiag S.p.A.

Prato - PO

Euro

4,700,000.00

58%

Planetwork S.p.A. (“Planetwork”), operating since 1996 in the supply of telecommunications services. eConsiag S.p.A. (“eConsiag”), founded on 26 October 2001 and engaged in the supply of telecommunications services since the first quarter of 2002.

With respect to the scope of consolidation, considered in drawing up the consolidated Financial Statements closed at 31st December 2001 and in the half-year report at 30 June 2002, the following variations occurred: Exclusions from the scope ofconsolidation: - Planet Mobile Srl: placed into voluntary liquidation as from 1 January 2002; - Planet eCom Spa: the holding in this company, which was consolidated at 31 December 2001, was sold to Accenture at book value on 28 January 2002. The overall values of total assets and 28

shareholders’ equity of the subsidiary at 31 December 2001 were, respectively 7,626 thousand euro and 822 thousand euro, while revenue for the year and the net result for 2001 were respectively 9,525 thousand euro and 194 thousand euro. Additions to the scope of consolidation area The income and asset values of eConsiag at 31 December 2001 were not of significance. The subsidiary was consolidated only starting from the first half of 2002 since the company only effectively started its business during this period. The overall values of total assets and shareholders’ equity of the subsidiary at 30 June 2002 were respectively 5,823 thousand euro and 3,705 thousand euro, while the value of revenue and the net profit(loss) for the first half of 2002 totalled 361 thousand euro and (918) thousand euro, respectively. PRINCIPLES OF CONSOLIDATION The consolidated half-year financial statements of the ePlanet Group include the statements of ePlanet S.p.A. and of the above-mentioned companies, which were directly controlled by ePlanet S.p.A. on the same date. Consolidation was based on the equity, economic and financial situations at 30 June 2002 of the subsidiaries as communicated by their respective Boards of Directors, suitably reclassified and adjusted to bring them into line with the accounting principles and valuation criteria of the parent company, which are in line with those provided for by Article 2423 et seq. of Italian Civil Law, and with those recommended by stock exchange authority CONSOB. In drafting the consolidated financial statements, the components of assets and liabilities and the income and expenses of the companies in the scope of consolidation are included on a line-by-line basis in accordance with the global integration method. According to this method, the accounting value of equity investments has been offset against the corresponding portions of shareholders’ equity, as a consequence of the assumption of assets and liabilities, and income and expenses of the consolidated companies. The difference between the acquisition price of the equity investment and shareholders’ equity at the date on which the company was included in the scope of consolidation, is entered, within the attributable limits, under the items of assets and liabilities of the consolidated companies. The remainder is entered in a specific assets item designated “consolidation differences” if positive, while if it is negative and not attributable to predictable future losses or adjustment of capital elements of the holding at the date of acquisition, the amount is entered under an item of shareholders’ equity designated “consolidation reserve”. Profits and losses not yet realised arising from Group inter-company transactions are eliminated, as are those items that give rise to payables and receivables, income and expenses between consolidated companies. ACCOUNTING PRINCIPLES AND VALUATION CRITERIA The accounting criteria used in drawing up the financial statements at 30 June 2002 are in line with those used for the composition of the financial statements for the previous period ending 31 December in terms of valuation and continuity of the same principles. The accounting principles and valuation criteria were uniformly applied to all the companies within the scope of consolidation. The valuation criteria adopted in the consolidated financial statements are those utilised by Parent company ePlanet S.p.A. and they comply with the previously cited statutory legal provisions, integrated and interpreted by the Accounting Principles issued by the Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri (Italian national councils of certified public accountants). 29

The items of the financial statements were valuated in accordance with general criteria of prudence and competence, in the prospective of continuation of company operations. Application of the principle of prudence led to the individual valuation of elements making up individual items or entries under assets and liabilities, to avoid adjustments between losses otherwise to be acknowledged and profits not to be acknowledged because they have not as yet matured. In compliance with the pro-tempore competence principle, the effect of operations and other events has been accounted and attributed to the year to which the relative operations and events refer, rather than the years in which the amounts are effectively collected or disbursed. Profits are therefore included if accrued or collected before the period-end date, while risks and losses are considered even when arising after the period-end date although before the date of approval of the financial statements by the Board of Directors. As illustrated in the Director’s Report, the actions currently underway, mainly aimed at further restructuring of due dates with several major suppliers and obtaining rebates of the substantial VAT receivables outstanding, together with further actions defined by the plan, including those that should assist the continuing favourable trend of turnover that already started in the first half of 2002 and the willingness of shareholders to make up for possible temporary cash requirements as has already occurred in the past, indicate that the Group will be able to find the resources necessary to finance its operations in the short term. Therefore, the financial statements have been drafted in the prospective of continued operations of the company. Capital items to be allocated for durable use have been entered under fixed assets. Miscellaneous elements included under the individual items of the financial statements have been valuated separately. No revaluations were applied. Specifically, the valuation criteria adopted in the composition of the interim accounting statements at 30 June 2002 were as follows: 1. INTANGIBLE FIXED ASSETS Intangible fixed assets are entered at purchase cost or at internal production cost, inclusive of accessory expenses, and shown net of amortization applied during the course of the years, these amounts being shown in specific provisions each referred to the individual items. Intangible fixed assets are amortised on a straight line basis in each period in relation to their residual possibility of use and in accordance with corporate plans for business operations. If the economic value of intangible assets posted under assets in the balance sheet is found to be durably lower than the residual cost to be amortised, the relative assets are written down to the same amount as their economic value. If the reasons for the write-down cease to exist in future years, the original value is restored. Plant and extension costs, which mainly refer to multiannual costs, are amortised on a straight line basis over five years starting from the year in which they were sustained. Specifically, for multiannual listing costs the portion relative to the first year has been calculated in proportion to the number of months following the listing date. Advertising costs not considered to be of multiannual usefulness are entered at cost in the period in which they were sustained. The Internet website development costs are amortised on a straight line basis over a period of five years. Software for internal use and the relative development costs are amortised on a straight line basis over a period of three years. The trademark and concessions, licenses and type approvals are amortised on a ten year and fifteen year basis respectively. Indefeasible rights of use (IRU) acquired from other operators are capitalised at cost under the item concessions and licenses and amortized over the lesser period of either the technical lifetime or the contractual lifetime. 30

Indefeasible rights sold are entered in the item “other income” and posted to the income statement in accordance with the accrual principle, by means of deferrals. The consolidation difference is amortised on a straight line basis over a period of ten years, which represents the estimated period of future usefulness, on the basis of the operative/strategic plan, taking into account the residual duration of the telephone operator license held by Planetwork. Research and development costs are entirely accounted in the income statement in the year in which they were sustained. Costs if capitalised, referred to specific projects associated with the company startup phases continue to be entered against assets under construction until the project in question becomes operational. Improvements on leased assets are amortised over the lesser period of the estimated useful life of the improvement and the contract term. The costs of other intangible fixed assets are entered under assets in the balance sheets only when their usefulness is protracted through time. The foregoing costs are amortised in accordance with the duration of their use, if this is defined, or on the basis of their contractual duration, if this period is lesser. The amortization rates applied range from 18% to 33%. 2. TANGIBLE FIXED ASSETS Tangible fixed assets are entered at purchase or production cost, inclusive of directly attributable expenses, and adjusted by the corresponding depreciation provisions. Depreciation amounts are systematically calculated on a straight line basis, with rates reduced by 50% for the first year, on the basis of the useful life of the individual assets, established in conformity with company plans for use that consider also physical and technological degradation, taking into account their presumed estimated realisation value net of disposal expenses. Depreciation starts in the year in which the asset is available and ready for use, and proceeds constantly through time. With regard to telecommunications networks, the normal rate of depreciation, applied on the basis of the above considerations, is also related to the period of effective use in the course of the year, in accordance with the date that the relative asset comes on stream. In the event that, irrespective of the depreciation already accounted, the asset suffers a durable loss of value, it is written down accordingly through the application of higher depreciation until reaching the estimated economic value; if the reasons for the write-down cease to exist in future years, the original value of the asset is restored. Maintenance costs of a preservative nature are entered in full in the income statement of the period in which they are sustained. Maintenance costs of an incremental nature, since they are sustained in order to extend the useful life of the asset, to adapt it technologically and/or to increase the relative productivity and security, thereby furthering the productive economy of the company, are attributed to the asset to which they refer and amortised over its residual useful life. Applied depreciation rates Telephone exchanges and network apparatus Networks Data transmission systems and apparatus Telefox routers Servers, computers, and other equipment Furniture and fittings Telephones Vehicles

% 18% 6.67% 20% 33% 20% 12% 20% 25%

Assets under construction are entered at purchase or production cost, inclusive of all directly attributable expenses. Network construction works are valuated by applying the tariffs agreed with suppliers and/or the best estimates of the predicted cost in reference to the progress status of the network expressed in metres. 31

Financial leasing operations are reported according to the so-called capital method. This method, which is widely adopted in Italian accounting practice, in accordance with the generally accepted interpretations of statutory legal provisions and allowed by national accounting principles, involves the accounting of leasing instalments as costs relative to the period and their entry into the memorandum accounts as residual financial commitments towards the leasing company. Tangible fixed assets have not been revalued in accordance with special or general laws, specific provisions for the telecommunications sector, or on the basis of discretionary or voluntary valuations. 3. FINANCIAL FIXED ASSETS If they can be considered as durable investments, equity investments are entered under financial fixed assets, or, if acquired for subsequent disposal, among financial assets other than fixed assets. Other equity investments entered under financial fixed assets are valuated at acquisition or subscription cost. The balance sheet value is aligned with the possible lower value assumed on the basis of reasonable expectations for usefulness and recovery in future years. Write-downs of equity investments are not maintained in subsequent years if the reasons for the reduction in value cease to exist. 4. INVENTORIES Goods inventories are entered at purchase cost, calculated according to the average cost during the period. If the presumed realisation value is lower than the purchase cost, inventories are entered at the lower of the two values by creation of a specific “obsolescent stock reserve” which is applied in direct reduction of the value of the relative inventories. The presumed realisation value is calculated taking into account any construction costs that have yet to be sustained and also direct sale costs. 5. RECEIVABLES Receivables are assessed at their presumed realisation value by entering the nominal value under balance sheet assets, adjusted by the specific “doubtful receivables provision” to take into account reasonably predictable losses. Receivables subject to solvency proceedings, in conditions of proven difficulty, or for which it is considered pointless to engage in legal proceedings, are entirely entered as a loss or are written down in accordance with their presumed permanent irredeemability, assessed in relation to information obtained and proceedings in progress. 6. CASH ON HAND Bank and post office receivables and payables on deposits or current accounts are entered into the financial statements on the basis of their presumed realisation value. Cash and securities are entered at face value. 7. PROVISIONS FOR RISKS AND CHARGES Provisions for risks and charges have been allocated to cover losses or debts of a fixed nature and of certain or probable existence, although for which it was not possible to calculate the amount or contingency date at the end of the period. These allocations reflect the best possible estimate on the basis of the available information, and they are valued in accordance with general criteria of prudence and competence.

32

The risks in relation to which the emergence of a liability is possible although not probable are indicated, in accordance with their significance, in the information concerning the balance sheet, without creating a specific risks and charges provision. 8. EMPLOYEES SEVERANCE INDEMNITY Employees severance indemnity is composed of the account payable to employees at the end of the period, calculated in compliance with Article 2120 of the Italian Civil Code, in accordance with the law, the collective employment contracts in force and any independent company agreements, considering all forms of remuneration of a continuing nature. This indemnity is revalued annually on the basis of the cost-of-living increase (ISTAT index) specified by the Italian Government. The balance sheet shows the effective account payable matured towards employees at the year end date, net of advances disbursed, and in the same amount as the sum that would have to be paid to employees assuming the termination of their employment contract on the same date. 9. PAYABLES Payables are entered at their presumed pay-off value, which is normally represented by the nominal accounted value. Payables for accrued holidays of employees and for deferred remuneration, including amounts due to social security institutions, are allocated on the basis of the amount that would have to be disbursed if the employment contract were to terminate on the date of the financial statements. 10. ACCRUALS AND DEFERMENTS Accruals and deferments include portions of costs and income, shared by two or more years, to implement the principle of pro-tempore competence. For accruals and deferments of multiannual duration the initial conditions that gave rise to their original entry were verified, making any necessary adjustments. 11. COSTS AND REVENUES FOR THE PERIOD Revenues for telecommunications services and sales, costs for purchase, production and sale, and, in general, other expenses and income, are reported in accordance with the competence principle. Revenues and income are entered net of returns, discounts, allowances, and bonuses. More specifically: i. revenues for telecommunications services are recorded on the basis of amounts relating to the effective use of the services, as shown by the central data processing system; ii. revenues for sales of products are recorded at the time of transfer of ownership, which normally coincides with the delivery or despatch of the goods; iii. revenues for services supplied are recorded on the basis of the effective service and in accordance with the relative contracts; iv. financial income and expenses are entered in accordance with the pro-tempore competence principle. 12. INCOME TAXES FOR THE PERIOD Current taxes are determined on the basis of taxable income calculated in accordance with the provisions of statutory fiscal legislation. Account is also taken of the deferred taxation on temporal differences between the value shown in the balance sheet and the fiscal value of the relative assets and liabilities (balance sheet liability 33

method). Deferred taxes are also determined by those items which, although not allocated in the balance sheet, can produce potential future tax receivables (such as, for example, tax losses that can be carried forward fiscally). The financial statements do not show prepaid taxes in respect of deducible temporary differences and fiscal losses carried forward for which there is no reasonable certainty of utilisation against future corresponding taxable income, and deferred taxes payable in relation to temporary taxable differences for which the payment of future taxes is not probable. 13. MEMORANDUM ACCOUNTS Guarantees granted directly or indirectly and commitments for financial and operative leasing contracts are entered in the memorandum accounts for an amount equal to the amount of the effective commitment. Collateral security and leased assets are entered at the value of the asset or entitlement provided as security. Commitments for leasing contracts and other multiannual contracts are entered for an amount equal to the sum of the instalments until the end of the contractual term or the minimum obligations, if specified. INFORMATION ON BALANCE SHEET ASSETS B) FIXED ASSETS I) Intangible fixed assets Balance at 30/06/2002 Balance at 31/12/2001 21,584

Changes

24,358

(2,774)

The following table shows the composition of intangible fixed assets as at 30 June 2002, with separate indication of the historic cost, the relative amortization provision, and the final net value. Values are given in euro/1000.

Historic cost 30/06/02

COMPOSITION

Amort. reserve 30/06/02

Net value

11,071

4,336

6,735

Research, development and advertising costs

8,283

7,472

811

Patents and intellectual property rights

3,332

2,140

1,192

Concessions, licenses, trade marks and similar rights

1,358

88

1,269

Consolidation difference

7,979

1,890

6,090

833

833

0

Other

14,284

8,796

5,488

Total

47,141

25,557

21,584

Plant and extension costs

Assets under construction and advances

34

The following table shows a breakdown of changes in intangible fixed assets with separate indication of the increases, decreases, to the historic cost applied during the first half of 2002, and increases and reclassifications made to amortization provisions during the same period. Values are given in euro/1000.

CHANGES

Hist. cost 31/12/01

Plant and extension costs Plant and extension costs Multiannual listing costs

11,066 312 10,754

Research, development and advertising costs

8,226

Incrs.

Decrs.

Hist. cost 30/06/02

Amort. Reserve 31/12/01

Amort. 30/06/02

Net value

5 0 5

0 0 0

11,071 312 10,759

3,239 192 3,047

1,098 22 1,076

6,735 99 6,636

58

0

8,283

7,302

170

811

Research, development and advertising costs Capitalised advertising costs Fairs, exhibitions, conventions Easy Web advertising costs Website development

0 4,738 209 1,982 1,297

2 0 0 0 56

0 0 0 0 0

2 4,738 209 1,982 1,353

0 4,738 159 1,982 424

0 0 35 0 135

2 0 16 0 793

Industrial patents and intellectual property rights

3,221

111

0

3,332

1,593

548

1,192

Software and software projects

3,221

111

0

3,332

1,593

548

1,192

Concessions, licenses, trade marks & similar rights

290

1,068

0

1,358

54

35

1,269

120 126 44

1,068 0 0

0 0 0

1,188 126 44

17 24 12

28 4 2

1,143 97 29

Consolidation difference Consolidation difference

7,979 7,979

0 0

0 0

7,979 7,979

1,491 1,491

399 399

6,090 6,090

Assets under construction and advances WLL research & development costs

833

0 0

0 0

833 833

833 833

0 0

0 0

622 3,385 826 2,712 1,460 1,555 1,122 750

763 0 196 0 46 114 406 0 0

0 0 0 0 0 0 0 0 0

14,284 622 3,581 826 2,758 1,574 1,961 1,122 750

7,056 498 1,201 413 2,202 458 303 740 150

1,740 124 358 413 251 157 176 185 75

5,488 0 2,022 0 305 959 1,481 196 525

1,090

0

0

1,090

1,090

0

0

45,137

2,004

0

47,141

21,567

3,990

21,584

Concessions, licenses Individual licenses Trade marks

Other Personnel recruitment costs Other fixed assets Strategic consultancy Telefox installation costs Multiannual expenses on leased assets Increase of Rozzano leased assets IT systems installation costs Network design and construction costs Loan acquisition costs Total

833

13,522

In relation to the individual items making up this entry, we refer you to the following additional information. Plant and extension costs Plant and extension costs include 99 thousand euro of legal and notary expenses connected to the incorporation of the company at the start of its operations and 6,636 thousand euro sustained for listing on the Nuovo Mercato, which took place on 3 August 2000.

35

Research, development and advertising costs The costs entered for the development of the Internet website showed an increase in the period equal to 56 thousand euro; they include consultancy fees destined for the construction of the website and certain costs sustained for the development of platforms relative to advanced Internet services. Industrial patents and intellectual property rights This item refers to licenses for software applications used in Planetwork. The increase for the period is ascribable to the purchase of licenses for the use and development of new databases. Concessions, licenses, trademarks, and similar rights This item includes mainly ministerial licenses and authorisations, which allowed Planetwork to install its telecommunications network and to interconnect with the networks of other operators, in addition to the registration costs of the Planetwork logo. The increase registered in the period of 1,068 thousand euro is related to contracts entered into with other operators for indefeasible rights of use of fibre optic cables. Consolidation difference Planetwork was acquired on 18 February 2000 for 4,132 thousand euro, with the commitment to pay the residual amount of 2,889 thousand euro of the share capital increase subscribed by the seller before the above date. The difference of 7,975 thousand euro between the purchase cost and Planetwork’s shareholders’ equity deficit at the date of acquisition was attributed to goodwill and amortised over a period of future usefulness estimated at 10 years. Goodwill was maintained because it is considered as a cost of multiannual utility in relation to the operative/strategic plan that foresees the arrival at an appropriate level of profitability in the medium term, and taking into account the residual duration of the telephone operator license held by Planetwork. Other assets Other intangible fixed assets are almost exclusively referred to the subsidiary Planetwork. This item can be broken down as follows: i. other assets mainly refer to the cost of charges for activation of interconnections with other operators’ networks. During the period this item increased by 196 thousand euro;

ii.

multiannual costs on leased assets concern improvements and wiring of rented equipment premises. Specifically, these costs refer to the expenses incurred for the new data centre and the Rozzano offices, and also the equipped areas serving as network points of presence. These expenses were amortised for the residual duration of the relative leasing contract.

36

II) Tangible fixed assets Balance at 30/06/2002 Balance at 31/12/2001 57,869

Changes

61,710

(3,841)

The following table shows a breakdown of tangible fixed assets as at 30 June 2002, with separate indication of the historic cost, the relative depreciation provision, and the final net value. Values are given in euro/1000.

Historic cost

COMPOSITION

30/06/02 Plant and machinery

Deprec. reserve

Net value

30/06/02

45,652

10,036

35,615

Industrial and commercial equipment

6,747

5,436

1,311

Other assets

2,474

828

1,647

Fixed assets in construction and advances

19,296

0

19,296

General total

74,169

16,300

57,869

The following table shows a breakdown of changes in tangible fixed assets with separate indication of the increases and decreases to the historic cost applied during the first half of 2002, and increases and write-backs made to depreciation provisions during the same period. Values are given in euro/1000.

37

CHANGES

Hist. cost 31/12/01

Incrs.

Decrs.

Hist. cost 30/06/02

Deprec. Reserve 31/12/01

Deprec. 30/06/02

Write back. deprec. reserve

Net value

Plant and machinery Electronic telephone systems Data IP Routers CVX Electronic telephone system accessories Data handling system accessories IP Router apparatus accessories Rozzano Data centre SDH in operation Padua active loops Florence active loops Padua active PoPs Turin active PoPs Milan active loops Turin active loops Bari active loops Reggio Emilia active loops Rome active loops Naples active loops Bologna active loops Bologna active PoPs Florence active PoPs Genoa active PoPs Verona active PoPs Reggio Emilia active PoPs Milan active PoPs Bari active PoPs Naples active PoPs Brescia active PoPs Network Final Drop in operation Apparatus Final Drop in operation

44,612 16,492 4,137 1,664 336 569 351 300 1,285 2,713 489 1,061 188 196 541 7,079 888 2,277 0 953 1,584 109 105 133 133 141 86 136 132 130 288 118

2,008 0 0 3 0 0 3 2 20 0 0 23 0 0 500 41 348 0 1,069 0 0 0 0 0 0 0 0 0 0 0 0 0

969 706 117 0 0 0 0 0 0 145 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

45,652 15,786 4,020 1,667 336 569 354 302 1,305 2,567 489 1,084 188 196 1,041 7,120 1,236 2,277 1,069 953 1,584 109 105 133 133 141 86 136 132 130 288 118

7,040 3,530 854 510 336 432 143 68 234 244 32 70 17 18 32 311 54 13 0 5 9 10 9 12 12 13 8 12 12 12 9 19

3,232 1,367 402 275 0 52 58 50 117 231 16 35 17 18 29 234 33 75 12 31 52 10 9 12 12 13 8 12 12 12 9 19

236 192 31 0 0 0 0 0 0 13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

35,615 11,081 2,794 882 0 86 153 185 954 2,105 440 979 154 160 979 6,574 1,149 2,189 1,057 917 1,523 90 86 109 109 116 70 111 108 107 269 79

Industrial and commercial equipment Telefox Other electronic equipment Telefox installation materials/equipment Internet TV set

6,734 5,720 541 177 296

13 0 13 0 0

0 0 0 0 0

6,747 5,720 554 177 296

4,425 3,992 130 125 178

1,011 872 55 25 59

0 0 0 0 0

1,311 856 369 27 59

Other assets Office furniture, equipment & machines Electric and electronic office machines Office systems and machinery Mobile handsets

2,145 227 1,700 173 45

329 213 48 68 0

0 0 0 0 0

2,474 440 1,748 241 45

611 46 512 38 15

217 20 172 20 4

0 0 0 0 0

1,647 375 1,064 183 26

Assets under construction and advances Padua cable routing Florence cable routing Milan cable routing Reggio Emilia cable routing Bologna cable routing Bologna PoP Modena PoP Parma PoP SDH Unbundling Local Loop Network Final Drop Apparatus Final Drop Bari cable routing Rome cable routing Naples cable routing Fixed assets under construction

19,991 677 635 3,220 409 1,124 0 124 144 1,934 405 234 89 637 9,841 517 0

1,414 225 0 0 0 86 6 0 0 0 798 5 12 0 0 0 282

2,109 0 23 168 30 0 0 0 0 1,170 0 0 0 335 383 0 0

19,296 902 612 3,053 380 1,210 6 124 144 763 1,204 239 101 301 9,458 517 282

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

19,296 902 612 3,053 380 1,210 6 124 144 763 1,204 239 101 301 9,458 517 282

General total

73,482

3,765

3,078

74,169

12,076

4,460

236

57,869

The net increases in tangible fixed assets in the period amount to 687 thousand euro divided according to category as shown in the above table. During the first half of 2002 fibre optic loops for a total value of 1,309 thousand euro were also brought into operation. The depreciation of these investments was made over a period of 15 years, in consideration of the predictable technical and economic life of the works performed. 38

Assets in progress, which are not amortized/depreciated during the period, are composed of continuing works for the construction of loops or local networks that are lit but not yet tested, and by works in progress at peripheral POPs. Taking account of the strategic agreements entered into in recent months with eConsiag for the joint performance of telecommunications activities in the provinces of Prato, Florence and Pistoia, and the proposed company strategies for rationalisation of network management, the company entered into agreements for the sale of network loops in several cities which will be defined by the end of 2002 (sale of the Calenzano (Florence) network to consignet as part the agreement with municipal utilities company Consiag). Currently there are no plans to dispose of assets at lower values than the value entered in the financial statements. No revaluations of tangible assets have been applied. We also draw your attention to the fact that no tangible fixed assets have been granted as collateral security. Financial leasing operations are shown in the financial statements in accordance with the so-called equity method. If these operations had been entered into the financial statements in accordance with the financial method, in accordance with the provisions of international accounting principles (IAS 17), which involves the entry in the income statement, in place of the instalments, of the interest on residual capital financed and the portions of depreciation of leased assets, in addition to the entry under assets of the relative tangibles and the entry of the residual debt under liabilities, the impact on the loss for the period and on shareholders’ equity would not have been significant. Operative leasing transactions, primarily related to systems for the billing platform, are shown in the financial statements in accordance with the equity method. The commitment assumed by the Group at 30 June 2002 for the value of future financial leasing charges and operative rentals has been posted under the memorandum accounts. During the course of the first half of 2002 further to the receipt of credit notes from suppliers, the corresponding values of assets were decreased for 969 thousand euro and the depreciated amounts were written back in the measure of 236 thousand euro. III) Financial fixed assets Changes

Balance at 30/06/2002 Balance at 31/12/2001 12,513

15,211

(2,698)

Financial fixed assets can be broken down as follows:

COMPOSITION

Equity investments IPSE 2000 S.p.A. (0.5%) Consorzio Dix.it (14.3%) eConsiag S.p.A. (58%) ConsiagNET S.p.A. (10%) Total equity investments

Hist. cost

10,750 738 2,726 1,074 15,288

Historic Historic subscriptions write-downs

930 930

Receivables from others (deposits)

399 738 1,137

Net at 31/12/01

11,280 2,726 1,074 15,081 130

Total

15,211

39

Consolidation basis Net at area adjustments 30/06/02

(2,726) (2,726)

11,280 1,074 12,355 158

12,513

The equity investments item, net of write-down provisions, can be broken down as follows: i. cost for acquisition of the equity investment in IPSE 2000 S.p.A., which was written down for 399 thousand euro in 2001. In the first half of 2002 ePlanet adapted the value of the equity investment by prudentially allocating 322 thousand euro to the risk provisions to take into account the relative portion of the losses incurred by the holding. There is no evidence pointing to durable losses in value that could make it necessary to make further writedowns; ii. cost of the 14.3% equity investment in the Dixit consortium for UMTS telephony, which is in liquidation. This equity investment was entirely written down during the course of previous financial periods; iii. cost of the 10% equity investment in ConsiagNET S.p.A. C) CURRENT ASSETS I) Inventories Balance at 30/06/2002 Balance at 31/12/2001 131

Changes

131

0

The valuation criteria adopted, illustrated in the first part of these explanatory notes, remain unchanged with respect to the previous period. Inventories, mainly composed of Telefox routers not yet installed on customers’ sites, and TV Internet top boxes for television based Internet connection (Easy Web), are entirely attributable to Planetwork. The values posted at 30 June 2002 are considered to be net of a write-down provision totalling 1,285 thousand euro, which did not undergo any changes during the half year. II 1) Trade receivables Balance at 30/06/2002 Balance at 31/12/2001 30,730

Changes

14,742

15,989

The amount posted for trade receivables can be broken down as follows: COMPOSITION Italian customers Foreign customers Doubtful receivables provision

Total

Balance at 30/06/2002 Balance at 31/12/2001 38,964 208 (8,441)

30,730

22,471 208 (7,937)

14,742

Changes 16,493 0 (504)

15,989

The balance of trade receivables, which totalled 30,730 thousand euro at 30 June 2002 is composed of amounts due within the 12 months. The balance of receivables from customers includes invoices to be issued at the date of the financial statements in the amount of 2,996 thousand euro excluding VAT, which are mainly referred to telephone traffic accrued by customers during May and June. Trade receivables are shown net of the doubtful receivables provision of 8,441 thousand euro. The allocation to the doubtful receivables provision for the period (504 thousand euro) was made mainly in order to adapt the positions of accounts receivable to their presumed realisation value. 40

Allocation to the doubtful receivables provision takes into account the specific risks associated with positions of doubtful collection and generic risks based on prudential considerations concerning the expected recoverability of the volume of receivables in existence. II 5) Accounts receivable from others

Balance at 30/06/2002 Balance at 31/12/2001 25,468

Changes

23,229

2,239

Accounts receivable from others, broken down according to type, are shown in the following table: COMPOSITION

Balance at 30/06/2002 Balance at 31/12/2001

Changes

From Tax Authorities for VAT From Tax Authorities for corp. inc. tax From Tax Auth. for interest receivable

22,670 578 175

21,395 578 109

1,275 0 65

From Tax Auth. for regional prod. tax From agents and brokers Trade receivables Others

4 164 272 1,605

5 74 243 823

(1) 90 29 782

Total

25,468

23,228

2,240

The VAT receivable is connected to the compensaton between tax credits and tax debit items relative to the management of operations in the period, in addition to the credit relating to previous periods entirely attributable to Planetwork and equivalent to 9,808 thousand euro which has been requested for reimborsement. Receivables from the tax authorities for IRPEG (corporate income tax) are composed of the amount brought forward for tax with holdings from bank current account sustained during the course of previous periods by Parent company ePlanet, together with deferred taxes receivable accounted by Planetwork in 1999 and concerning losses that can be carried forward without limits, the relative credit being considered reasonably certain. Receivables from agents and brokers are composed of advance commission payments. Trade receivables are relative to prepayments and guarantee deposits. Other receivables are made up of residual portions. IV) Cash on hand Balance at 30/06/2002 Balance at 31/12/2001 28,798

40,369

Changes (11,572)

The balance shows cash in bank current accounts, short-term loans and the amount of cash on hand at 30.6.2002. A breakdown is provided in the following table:

41

COMPOSITION

Balance at 30/06/2002 Balance at 31/12/2001

Bank & post office deposits Cash & securities on hand

28,243 555

Total

Changes

40,368 1

28,798

(12,125) 553

40,369

(11,572)

The total of bank deposits includes 18,221 thousand euro for the payment made by shareholders into the IntesaBCI Spa-Comit tied-up account on 3 June 2002 in relation to the early conversion of warrants. That amount was credited to the company’s ordinary acount on 4 july 2002. D) ACCRUED INCOME AND PREPAID EXPENSES

Balance at 30/06/2002 Balance at 31/12/2001 1,122

1,691

Changes (569)

This entry reflects income and expenses whose temporal competence is anticipated or delayed with respect to cash and/or documentary payment; these amounts do not consider the date of payment of the relative income and expenses, common to two or more years and distributable in terms of time. As at 30 June 2002 there were no accruals or deferments having a duration greater than five years. The item can be broken down as follows: i. ePlanet 418 thousand euro; ii. Planetwork 704 thousand euro; INFORMATION ON BALANCE SHEET LIABILITIES A) SHAREHOLDERS’ EQUITY COMPOSITION Capital Share premium reserve Revaluation reserves Legal reserve Riserve for treasury shares in portfolio Statutory reserves Other reserves Profits (losses) carried forward Profit (loss) for the period

Balance at 30/06/2002

Balance at 31/12/2001

56,550 123,365

56,550 123,365 -

18,468 (83,337) (24,586)

Changes

1 2 (83,295)

0 0 0 (1) 0 0 18,468 (83,339) 58,709

Total Group shareholders’ equity

90,459

96,623

(6,164)

Minority intrerest capital Minority interest reserves Minority interest profit (loss)

1,974 (32) (386)

247 4 77

1,727 (36) (463)

92,015

Total

42

96,951

(4,936)

Changes in shareholders’ equity are shown in the following table: Capital subscription

Share capital Share premium reserve Other reserves Profit (loss) carried forward Result for the period

56,550 123,364 2 2 (83,295)

18,468 -

(83,295) 83,295

(24,586)

(2) (44) -

Minority portion Capital Reserves Profit (loss) carried forward Group at 30/06/2002

247 4 77 96,951

-

-

(386) (24,972)

1,727 (36) (77) 1,568

18,468

Profit allocation

Other changes

Starting Shareholders’ equity

COMPOSITION

Result for period

Closing shareholders’ equity

56,550 123,364 18,468 (83,337) (24,586) 0 0 1,974 (32) (386) 92,015

The share capital of the parent company, as at 30 June 2002, stands at 56,550,000 euro, represented by 108,750,000 shares of nominal value 0.52 euro each. In order to address the non-receipt of revenue from the disinvestments and, in general, the difficult market conditions, on 10th June 2002 the Extraordinary Shareholder’s meeting approved the Board of Directors’ proposal of 19th April 2002 to award all warrant holders an early option right to subscribe ordinary shares linked to the Warrants. In particular, the early conversion option gives holders of Warrants in each Category - - “ePlanet Share Warrant 2002-2004 ‘Category 1’, ‘Category 2’ and ‘Category 3’” - the right to request a subscription to ordinary company Shares during the period from 14 June 2002 to 4 July 2002 at one new ordinary Share of nominal value 0.52 euro for each Warrant submitted for the financial period, at a price of 0.80 euro, of which 0.28 euro as a premium. ePlanet reference shareholders (Kabuto Servicos de Consultoria, Mr Holger Van Den Heuvel, Fidicontrol, Cuneo e Associati and Mr Alessandro Acerbi), further to signed undertakings, exercised early conversion of 100% of the Warrants in their possession, equivalent to approximately 30% of total Warrants. This operation saw the conversion of 24,042,401 Warrants for an amount of 19,234 thousand euro, of which 18,221 thousand euro paid by the reference shareholders on 3 June 2002 into the tied-up account and 247 thousand euro paid by the market prior to 30 June 2002. The following table shows an overview of the differences between the parent company financial statements, and the consolidated financial statements with reference to the items that have impacted on the results for the period and shareholders’ equity. COMPOSITION

Loss

Shareholders’ equity

ePlanet Contribution of eConsiag to result and shareholders’ equity Contribution of Planet eCom to result and shareholders’ equity

(23,936) (533) (118)

91,036 (577)

Total

(24,586)

90,459

(386)

1,556

Minority portion Consolidated result and shareholders’ equity

(24,972)

43

92,015

B) PROVISIONS FOR RISKS AND CHARGES Balance at 30/06/2002 Balance at 31/12/2001 1,777

Changes

2,039

(262)

The balance posted in the consolidated financial statements for 1,777 thousand euro is attributable to the parent company in the amount of 478 thousand euro (risk for the liquidation of the Dixit consortium and write-down of the equity investment in IPSE 2000) and to the Planetwork subsidiary in the amount of 1,299 thousand euro. In the first half of 2002 the risks provision saw a decrease of 1,000 thousand euro due to the penalty paid to Accenture for the sale of Planet eCom, and an increase of 738 thousand euro referred to possible expenses for the termination of agency contracts, variable remuneration of personnel, and other specific risk positions described hereunder in heading B12. No allocations were made to cover generic risks. C) EMPLOYEES SEVERANCE INDEMNITY Balance at 30/06/2002 Balance at 31/12/2001 886

Changes

761

125

The accumulated provision of 886 thousand euro, constitutes the effective payable for severance indemnity due to employees as at 30 June 2002, net of advances already disbursed.. This provision was determined in compliance with Article 2120 of Italian civil law. D) PAYABLES Balance at 30/06/2002 Balance at 31/12/2001 80,893

Changes

78,043

2,850

Payables, broken down according to type, are shown in the following table: COMPOSITION Payables to banks Advances Trade payables Payables to subsidiaries Payables to other Group companies Tax payables Payables to social security institutions Other payables Total

Balance at 30/06/2002 Balance at 31/12/2001 333 2,611 75,893 336 408 1,312 80,893

44

421 479 73,165 601 445 2,931 78,043

Changes (88) 2,132 2,727 0 0 (265) (37) (1,619) 2,850

D3) Payable to banks Accounts payable to banks are wholly referred to loan contracts held by Planetwork with Cassa di Risparmio di Alessandria and with Cassa di Risparmio di Tortona; in accordance with the relative servicing plan, repayment will have been completed by the end of 2003. The current portion of bank loans is 293 thousand euro, while the amount due beyond 12 months is 40 thousand euro. D5) Advances The advances item is mainly attributable to the Planetwork subsidiary, and it is primarily composed of advances from customers relative to prepaid traffic in the amount of 2,568 thousand euro. D6) Trade payables Trade payables can be broken down as follows: COMPOSITION Trade payables – Italian suppliers Trade payables – EU suppliers Trade payables – Non-EU suppliers Total

Balance at 30/06/2002 Balance at 31/12/2001 68,341 5,269 2,284 75,893

67,468 4,412 1,285 73,165

Changes 872 857 999 2,728

The balance at the end of the period is attributable, with regard to Planetwork, to supplies of plant, machinery, network infrastructure and equipment delivered in previous financial periods and not invoiced, of which the principle suppliers are Nortel and Sirti, and also to telephone operators for national and international termination and service costs. The remaining debt is composed of miscellaneous services, including consultancy, advertising, outsourcing activities, and software. The balance of Planetwork at 30 June 2002, for 66,205 thousand euro, includes verifications for invoices to be received (net of VAT) totalling 23,830 thousand euro in addition to credit notes to be received for 1,740 thousand euro. These verifications refer mainly to work in progress concerning the completion of the networks and the costs of telephone carriers for the last two-monthly period. Payables to ePlanet suppliers total 9,333 thousand euro and include invoices to be received (net of VAT) for 4,811 thousand euro, mainly concerning the supply of services, advertising and consultancy. Payables to eConsiag suppliers total 355 thousand euro. There are no significant amounts connected with invoices to be received. During the course of the six-month period, with reference to the restructuring of debt performed in 2001, payments were made for a total of 51,539 thousand euro. The remainder of restructured debt at 30 June 2002 totals 28,279 thousand euro. D11) Tax payables The tax payables item, totalling 336 thousand euro, mainly reflects the amount due to the tax authorities for IRPEF personal income tax relative to employees and consultants

45

D12) Payables to social security institutions Payables to Social Security Institutions, posted at 408 thousand euro, mainly reflect accounts payable to INPS for contributions due on employee salaries and accounts payable to other Social Security Institutions relative to management, executives, agents, and journalists. D13) Other payables Other payables, posted at 1,312 thousand euro, are composed of accounts payable to employees, agents, and brokers for commissions. E) DEFERRED INCOME AND ACCRUED EXPENSES Balance at 30/06/2002 Balance at 31/12/2001 4,026

Changes

3,646

380

Accruals and deferments constitute the connecting accounts of the period. The amounts were determined in accordance with the pro-tempore competence principle and they are mainly attributable to: i. remuneration of personnel; ii. prepaid telephone traffic call credit cards. MEMORANDUM ACCOUNTS The following table shows a breakdown of memorandum accounts: COMPOSITION

Balance at 30/06/2002

Balance at 31/12/2001

Changes

Assets leased by Group companies Group assets held by third parties Sureties received from third parties Commitments Guarantees received

5,064 5,722 39,785 15

4,981 5,722 4,783 41,358 15

83 0 (4,783) (1,573) 0

Total

50,586

56,859

(6,273)

Details of the above data referred to Group companies are given below: Assets leased by Group companies Assets leased by Group companies concern Planetwork and are composed of third party assets employed with rental or leasing contracts. Group assets held by third parties Group assets held by third parties concern Planetwork and refer to Telefox routers at customer premises for the amount of 5,722 thousand euro before applied depreciation.

46

Group commitments a) Surety to Mediocredito Centrale for 6,558 thousand euro for a pro-rata guarantee of the commitments of IPSE 2000 S.p.A. towards the Ministry of Communications in relation to respecting license obligations concerning the payment of future instalments; b) Commitments for operational leasing and financial leasing charges for 10,504 thousand euro; c) Commitments for residual leasing charges for the rental of administrative and commercial offices for 4,971 thousand euro; d) Network construction contracts for 10,606 thousand euro (representing the maximum commitment for orders, net of works already carried out); e) Commitments to Italian railway company FFSS for the obligation to pay the agreed charge for the use of space for the installation of equipment on behalf of IPSE 2000 for 1,549 thousand euro; f) Commitments for 400 thousand euro relative to dark fibre purchase contracts entered into with Global Crossing; g) Commitments for 4,235 thousand euro for sureties to be granted to Telecom in guarantee of the supply of telephone traffic. h) Commitments for 316 thousand euro for sureties to be granted to Polis Fondi to guarantee property leasing charges. i) Comfort letter to Banca Popolare di Novara issued by ePlanet to guarantee leasing contracts entered into by Planetwork for 646 thousand euro. Guarantees received The bank guarantees received, in the amount of 15 thousand euro, concern Planetwork and are made up of bank sureties issued by customers. INFORMATION ON THE INCOME STATEMENT A) PRODUCTION VALUE Balance at 30/06/2002 Balance at 30/06/2001 24,826

Changes

14,791

10,034

A1) Revenue from sales and services Revenues can be broken down by type as shown in the following table: COMPOSITION Telephone traffic revenues Discounts Revenues from product sales Direct traffic revenues ASP revenues Total

Balance at 30/06/2002 Balance at 30/06/2001 23,127 (216) 2 197 23,111

13,142 (511) 100 198 727 13,656

Changes 9,985 295 (99) (0) (727) 9,455

Turnover in the first half of 2002 with minority interests was almost entirely generated by Planetwork and is correlated to recurrent services of telephony and Internet access, activation charges and ancillary activities. 47

Due to the nature of the business (which calls for metering of telephone traffic) a part of revenues as at 30 June 2002 was entered into the financial statements as “invoices to be issued”. A breakdown by geographical area is not relevant, since the Group operates exclusively in Italy. At 30 June 2001 ASP revenues were relative to services rendered by Planet eCom, which is no longer included in the scope of consolidation. A5) Other revenues and income Other revenues, posted at 1,715 thousand euro, were almost entirely generated by Planetwork and they mainly related to recovery of costs in addition to contingent assets and capital gains. B) PRODUCTION COSTS Balance at 30/06/2002 Balance at 30/06/2001 50,602

Changes

59,347

(8,745)

The following table shows a breakdown of production costs according to type: COMPOSITION

Balance at 30/06/2002 Balance at 30/06/2001 200 32,163 2,806 4,979 8,954 897 602

6) raw and auxiliary materials, consumables, goods 7) services 8) leasing, hire and rental 9) personnel 10) amortizaton, depreciaton and write-downs 11) changes in raw & aux. materials, consum. and goods inventories 12) provisions for risks 13) other provisions 14) other operating expenses

Total

Changes

311 28,315 2,318 7,938 17,231 (95) 1,558 1,772

50,602

59,347

(111) 3,847 488 (2,959) (8,276) 95 (660) 0 (1,170) (8,745)

B6) Costs for raw materials, auxiliary materials, consumables, and goods COMPOSITION

Balance at 30/06/2002 Balance at 30/06/2001

Changes

Capital goods < 1,000,000 (lire) Stationery Miscellaneous equipment and materials Fuel and lubricants Other

1 23 100 71 5

33 43 25 190 20

(32) (20) 75 (119) (15)

Total

200

311

(111)

48

B7) Service costs COMPOSITION National telephone line charges International telephone line charges Mobile phone line charges Data access and Internet charges Other access / interconnection costs Domestic traffic cost International traffic cost Mobile traffic cost Data traffic cost Internal costs for fixed and mobile telephony Commissions and expenses Marketing, advertising, agency costs Directors’ and auditors’ remuneration Consultancy and sundry external services Preparation and management of invoices Maintenance Insurance Meal vouchers Training courses Eletricity, water and gas Office cleaning and security Revenue stamps and shipments Other service costs Total

Balance at 30/06/2002 Balance at 30/06/2001 1,416 137 32 22 1,918 4,797 11,697 4,626 58 123 1,320 533 230 3,278 47 594 30 85 19 137 127 164 775 32,163

2,766 133 844 1,199 3,667 3,829 4,109 93 1,299 623 274 7,089 132 1,204 60 75 62 150 118 63 527 28,315

Changes (1,350) 4 32 (822) 719 1,129 7,868 517 58 30 22 (91) (44) (3,812) (86) (609) (31) 10 (43) (13) 9 102 248 3,847

Costs relative to third party services are distributed among various Group companies as follows: i. ePlanet (parent company) 2,980 thousand euro; ii. Planetwork 28,962 thousand euro; iii. eConsiag 220 thousand euro; Costs for national and international connection charges refer to the dedicated telephone lines that Planetwork has leased from Telecom Italia to connect its central exchanges in the territory and/or dedicated lines in order to supply services to its customers. National telephone traffic is mainly determined by means of reports of interconnection with the national operators that have guaranteed collection and termination of customer calls. For international traffic the costs refer to the termination of calls on the networks of foreign carriers, which have guaranteed voice services for this type of call. Marketing, advertising and agency costs include all the expenses sustained during the period to advertise the Group services, plus the cost of advertising material for the organisation of exhibitions and conventions to promote the services. Costs for consultancy and external services primarily include expenses for legal services, strategic consultancy, administrative and financial assistance services, together with expenses for the use of temporary staff. Expenses for preparation of invoices and management relate to outsourced billing services and costs of printing and transmission of invoices throughout the period.

49

B8) Leasing, hire and rental costs The table below contains a breakdown of this expense entry: COMPOSITION

Balance at 30/06/2002 Balance at 30/06/2001

Property rentals Hardware, software, and office machines Vehicles hire Other hire charges Leasing charges

1,009 1,153 280 0 364

Total

873 671 368 406

2,806

2,318

Changes 136 482 (87) 0 (42) 488

Property rentals refer to costs sustained for the Rozzano offices and rental of equipped areas (PoPs) prepared or being prepared in various Italian cities.. Hire charges are related to LAN network servers, hardware and software for company IT systems, PCs and notebooks used by company personnel, and leasing charges relative to the contract for electronic equipment. Vehicles allocated to personnel or unassigned company vehicles are hired from primary hire companies with contracts inclusive of maintenance. Leasing costs are all sustained by Planetwork and refer mainly to telephone exchanges (DMS), plus hardware, furniture, office machines and several cars. B9) Personnel costs This item includes the entire payroll for employees including betterments, career advancements, automatic cost-of-living increases, cost of accrued holidays not taken and provisions prescribed by law and collective employment contracts. For the comment on this item we invite you to refer to the contents of the first part of this Half-year Report. B10) Amortization, deprecation and write-downs COMPOSITION

Amortization Depreciation Write-downs of fixed assets Write-downs of current assets Total

ePlanet

1,527 1 1,528

Planetwork

2,041 4,481 504 7,026

eConsiag

Consolidation difference

1 -

399 -

1

399

Balance at 30/06/2002 3,968 4,482 504 8,954

This item is shown in detail in the following table, with separate indications for Group companies of amortization, depreciation, and write-downs of fixed assets and current assets: Amortization and depreciation are detailed in the fixed assets tables; the relative rates have already been illustrated under valuation criteria.

50

The write-down of current assets for the period, totalling 504 thousand euro, refers exclusively to credit risks of the subsidiary Planetwork and reflects the best prudential estimate of doubtful receivables. B12) Provisions for risks Provisions for risks total 322 thousand euro for the parent company and 575 thousand euro for Planetwork. The allocations of the parent company refer to the adaptation of the write-down relative to the IPSE 2000 S.p.A. equity investment to take account of the relative portion of losses incurred during the first half of 2002. Allocations of the subsidiary Planetwork refer to specific provisions relative to litigation with agents, variable remuneration of personnel, and other specific risk situations. B14) Other operating expenses Balance at 30/06/2002 Balance at 30/06/2001 Other operating expenses

602

Total

602

Changes

1,772

(1,170)

1,772

(1,170)

The most significant items making up this category of costs are relative to the Planetwork subsidiary, and, more precisely, they account for contingent liabilities totalling 231 thousand euro and the payment to the Communications Ministry of telephone operator licenses for the period, totalling 211 thousand euro. The remaining items are mainly referred to bank charges and other deductible charges and taxes. C) FINANCIAL INCOME AND EXPENSES COMPOSITION Income Expenses

Balance at 30/06/2002 Balance at 30/06/2001Changes 435 (131)

341 (242)

94 111

304

99

206

Total

The following table shows a breakdown of this entry: COMPOSITION

Balance at 30/06/2002 Balance at 31/12/2001

Interest receivable on bank accounts Currency exchange gains Other financial income Total income

235 0 200 435

Interest payable on bank accounts Currency exchange losses Other financial expenses Total expenses

(114) (0) (18) (131)

Net total

304 51

Changes

231 104 5 341

3 (104) 195 94

23 (13) (206) (242)

(91) 12 189 111

99

202

E) EXTRAORDINARY INCOME AND EXPENSES COMPOSITION

Income Expenses Total

Balance at 30/06/2002 Balance at 30/06/2001Changes 840 (328)

(2)

840 (326)

513

(2)

515

Extraordinary income is exclusively referred to the subsidiary Planetwork, reflecting the capital gains resulting from the lower expenditure following transactions with suppliers and other non operative contingent assets. OTHER INFORMATION EMPLOYMENT DATA The average company workforce at 30 June 2002, excluding 8 consultants, broken down by category , underwent the following changes during the course of the six-month period: Workforce Managers Executives Staff Total

30/06/2002 12 29 154 195

31/12/2001 Changes 10 2 28 1 172 (18) 210 (15)

Staff remuneration is based on the national employment contract for the trade sector. REMUNERATION DUE TO DIRECTORS AND AUDITORS Annual remuneration due to Directors and Auditors of the Group companies is as follows: Directors 613 thousand euro Auditors 229 thousand euro Total 842 thousand euro In accordance with Consob decision no. 11971/1999, we provide the following table showing remuneration deliberated for 2002 for directors and auditors, under any title and in any form, also from subsidiaries of the parent company ePlanet.

52

Name

Office

Resignation

ePlanet Board of Directors Roberto Ruozi

Chairmanof the B. of Directors

Dario Cassinelli Paolo Brunetti

Managing Director Managing Director

16/09/02

Appntmnt Annual remuneration

14/02/02

126,000

15/04/01 16/09/02

52,000 310,000

Fringe benefits

Bonuses and otherOther annual incentives remuneration

Car + Health plan

TFM max 30% of remuneration

488,000 ePlanet Board of Auditors Lionello Jona Celesia

Chairman of the B. of Aud.

Luigi Carlo Spadacini

Statutury auditor

Cesare Piovene Porto Godi

Statutury auditor

63,000 42,000 15/11/01

42,000 147,000

Planetwork Board of Directors Dario Cassinelli

Chairman and Managing Director

16/09/02

15/04/01

52,000

Car + Health plan

129,000 as Planetwork employee

242,000 as Planetwork dipendente employee

41,500 as Planetwork employee 36,150 as Planetwork employee

115,000 as Planetwork employee

Paolo Brunetti

Managing Director

16/09/02

Pier Luigi Guerra

Director and Operative General Manager

04/09/96

Car + Health plan

Maurizio Marchisio**

Director and Associate coys. Director

29/05/01

Car + Health plan

16/09/2002 from office of Director

96,700 as Planetwork employee

52,000 Planetwork Board of Auditors Roberto Spada

Chairman of the Board of Auditors

Marco Spadacini

Statutory auditor

Marco Sironi

Statutory auditor

Alessandro Giusti

Statutory auditor

Andrea Musselli

Acting auditor

26,700 17,800

10/05/02

05/07/01

5,900

21/06/02

10,400 1,500 62,300

eConsiag Board of Directors Enzo Viti

Chairman

25,400

Maurizio Marchisio*

Deputy Chairman and Managing Director

35,000

Venanzio De Rienzo

Director

2,600

Leonardo Lombardi

Director

2,600

Marco Gramigni

Director

2,600

Dario Cassinelli*

Director

2,600

Pier Luigi Guerra*

Director

2,600 73,400

eConsiag Board of Auditors Michele Marallo

Chairman of the Board of Auditors

7,900

Davide Ciardi

Statutory auditor

5,700

Carlo Brogioni

Statutory auditor

5,700 19,300

* Planetwork employed directors have undertaken to waive their salaries in favour of their employer.

FISCAL POSITION We have received no notification of inspections concerning direct and indirect taxation, and there are no instances of current litigation concerning the direct tax responsibilities of the company. Previous losses were not utilised. LITIGATION IN PROGRESS Planetwork S.p.A/Alcatel S.p.A. On 4 January 2002 Alcatel filed a petition to obtain the payment of 453 thousand euro for invoices relative to the construction of network sections in the Bari and Calenzano areas and for interface equipment between the collection network and termination phase. Planetwork appeared before the court on 3 April 2002 to call for the rejection of the plaintiff’s demands and evidencing the faulty operation of the equipment sold and the consequent damages sustained. 53

The case is still in the preliminary investigation phase and a hearing has been set for 30 October 2002. Planetwork S.p.A./Telecom Italia S.p.A. Trial proceeding are pending before the Court of Milan concerning a case brought against Planetwork S.p.A., by plaintiff Telecom, which is suing for compensation for damages of 1,549 thousand euro for an advertising campaign which, it is claimed, contained elements of unfair competition. The case was adjourned to 31 March 2004 for the statement of conclusions and the preliminary motions presented by Telecom were rejected. On the same subject Telecom Italia had taken a case before the Giuri della Pubblicità (advertising commission) and an appeal pursuant to art. 700, both of which were concluded with substantive rejection of the motions presented by Telecom. Planetwork International LTD /CTI Data Solutions In August 2000 CTI requested the payment of USD 139 thousand for outstanding invoices, plus penalties and compensation for damages of approximately USD 700 thousand for the illegitimate use of a software application owned by the company. In November 2001 two indictments were sent to the Rozzano office from Pennsylvania (US), to be presented to Planetwork LTD. Both documents were rejected because they were addressed to a legal subject other than the subject with registered office in Rozzano. Further to these communications no further requests have been received from CTI. Planetwork S.p.A./Vincenzo Caldarola Legal action initiated by Mr Vincenzo Caldarola, a Planetwork customer, is pending before the Civil Court of Fermo, in which it is claimed that the company is responsible for having disclosed sensitive information concerning the plaintiff in the transmission of telephone bills, thus infringing Law no. 675 pf 31 December 1996. In relation to this alleged illicit practice, Mr Caldarola is claming 516 thousand euro in damages from Planetwork in addition to legal interest from date of claim to settlement. State of the action: Planetwork has filed an appearance claiming the invalidity of the petition due to absolute indeterminacy of the subject and lack of legal grounds for the claim. The preliminary motions of the plaintiff were declared to be inadmissible, and the case is pending a decision. Planetwork S.p.A./Nortel Networks S.p.A. On 2 August 2002 Nortel Networks S.p.A. filed a summary judgement for the amount of 6,141 thousand euro for supplies of TLC equipment and the relative management systems. The judgement will be opposed within the time limits established by the law. Planetwork S.p.A./Edap Trading The company Edap Trading (now named Global Protection) filed two suits between the end of 2000 and the start of 2001 to claim, on the basis of an agency contract entered into with Planetwork, commission amounts and compensation for damages connected to alleged non-fulfilment by Planetwork. In November 2001 the parties reached a compromise agreement for the payment of the total amount of 155 thousand euro, of which half in a single instalment on 15 December 2001 and the remainder in six equal quarterly instalments from 31 December 2001 to 31 March 2003. This agreement is integrated with a commitment by both parties to waive all pending actions and request their extinction. Planetwork S.p.A./Siemens S.p.A. Siemens is claiming the payment of a penalty in the amount of 282 thousand euro, corresponding to 20% of orders issued and subsequently suspended by Planetwork for ULL equipment. Planetwork opposes this amount because it is not due according to the terms of the contract. 54

Planetwork S.p.A./Guidotto S.p.A To define the matter concerning the calculation of all sums due in relation to the cancellation of agency agreements and commissions accrued during 2002, Planetwork and Guidotto are considering the possibility of reaching a compromise agreement: payment of 284 thousand euro with the following terms: 141 thousand euro at the time of signing of the agreement, and 143 in seven monthly instalments of 20 thousand euro each from 31 October until 30 April 2003. This liability has been posted to the risks provisions at 30 June 2002. Planetwork S.p.A./Global ONE Global One Communication Limited filed a petition with the High Court of Justice (UK) to enforce the payment of GBP 156 thousand. This amount concerns an agreement drawn up in 1996 between Global One and Planetwork International Limited and subsequently transferred to Planetwork Italia s.r.l. in 1999. Planetwork contests the existence of any such debt. The associated potential liability was allocated to the risks provisions at 30 June 2002. ePlanet S.p.A./Parsec On 27 February 2002 Parsec Finance S.r.l. filed a summary judgement for the amount of 372 thousand euro corresponding to the full settlemente of an agreement entered into to define the amount due for consultancy in the search for investors. ePlanet filed an opposition to this suit, primarily demanding cancellation of the summary judgement, termination of the consultancy contracts and the agreement, and an equitable valuation of the services rendered by Parsec. The first hearing is scheduled for 15 October 2002. Other There are several summary judgements in existence for a total value of 55 thousand euro, filed against Planetwork and ePlanet by suppliers for the settlement of invoices, the most significant of which, referred to IPO World S.p.A for 52 thousand euro, has been contested. The potential liabilities deriving from litigation currently in progress have been evaluated in the light of the declared accounting principle and with the benefit of legal advice; wherever necessary, suitable allocations have been made to the risks provisions. EVENTS OCCURRING AFTER THE END OF THE PERIOD, CONTINUATION OF THE COMPANY, AND RELATED PARTIES We refer you to the information on operations given under the headings “Outlook for operations”, “Significant Events occurring after the end of the period”, and “Related Parties”.

55

RECONTA ERNST & YOUNG

Via Torino 68 20123 Milan

Tel: 02.722.121 (50 lines) Fax: 02.72212037 72212038

INDEPENDENT AUDITING COMPANY REPORT ON THE LIMITED AUDIT OF THE HALF-YEAR REPORT OF ePLANET S.p.A.

To the Shareholders of ePlanet S.p.A. 1.

We have performed the limited audit of the half-year report at 30 June 2002 of ePlanet S.p.A. (parent company) and of the consolidated financial statements, composed of the accounting tables (balance sheet and income statement) and the relative explanatory notes. We have also checked the part of the explanatory notes concerning information on management with the exclusive scope of ensuring correspondence with the remainder of the half-year report.

2.

Our examination was conducted in accordance with the principles and criteria for financial auditing prescribed by CONSOB with Resolution no. 10867 of 31 July 1997. The limited audit consisted primarily of the collection of information concerning the items in the accounting tables and verification of the uniformity of the valuation criteria applied by means of interviews with company management and the execution of financial analysis of the data given in the accounting tables. The limited audit omitted the auditing procedures of conformity surveys and verifications of the validity of assets and liabilities, and, in general, involved a scope of investigation that was significantly reduced with respect to a complete audit performed in accordance with statutory auditing principles. Consequently, in contrast with our statements concerning the annual financial statements of the parent company and the consolidated financial statements, we refrain from expressing our professional audit judgement in relation to the half-year report.

3.

With regard to the comparative data relative to the annual financial statements and the consolidated financial statements and the half-year report of 2001, we draw your attention to our reports issued, respectively, on 14 June 2002 and 25 September 2001.

4.

On the basis of our operations, we found no evidence of significant changes or additions that should be brought to the financial statements and the relative explanatory notes as identified in paragraph 1 of this report, such as may be necessary to achieve conformity with the drafting criteria of the half-year report as required by article 81 of the Consob regulation approved with Resolution no. 11971 of 14 May 1999 and subsequent amendments.

Reconta Ernst & Young S.p.A Registered Office: 00196 Rome – Via G.D. Romagnosi 18/A Fully paid-up Share Capital € 1,043,330.00 Entered in the Company Register of the Rome Chamber of Commerce Tax code and registration number 00434000584 VAT number 0089123103 (ex Company Register number 6697/89 – Business Code (REA) no. 250904) 56

5.

As evidenced by the Information on Operations and in the Explanatory Notes, the Group remains in a position of economic and financial imbalance. The directors consider that the progressive implementation of the business plan and the willingness of the company shareholders to cover possible temporary cash requirements as has occurred in the past will be sufficient to ensure that the Group has access to the necessary resources for the financing of operations in the short term. Milan, 14 October 2002 Reconta Ernst & Young Paolo Zocchi (Partner)

57

ePlanet S.p.A. Information on management

58

DESCRIPTION OF OPERATIONS The company, which was incorporated on 31 August 1999 and became operative in February 2000, performs the role of group parent company, guaranteeing the desired strategic orientation of Group member companies and providing them with administrative and financial services. The main activities performed in the first half of 2002 concerned the definition and revision of the Group strategic plan, financing of development of business of the company’s subsidiaries and corporate activities and administration of the various shareholdings. INFORMATION ON ECONOMIC, EQUITY AND FINANCIAL MANAGEMENT We invite you to consult the reclassified income statement given in the annexed financial statements. Revenues Revenues totalled 2,802 thousand euro displaying an increase of 37% compared to the figure of 2,048 thousand euro at 30 June 2001. Operating margin Although it remains negative, the operating margin shows a substantial improvement with respect to the equivalent period last year: -3,861 thousand euro versus the -9,121 thousand euro at 30 June 2001. Cost of labour The constant reduction of personnel has led to a balance of 273 thousand euro compared to the 798 thousand euro at 30 June 2001. Pretax result The result before taxes for the first half of 2002 was negative in the amount of 23,936 thousand euro, compared to the -44,446 thousand euro recorded at 30 June 2001. As in 2001, the most significant item making up this result, posted for -20,118 thousand euro (-35,537 thousand euro at 30 June 2001) is constituted by value adjustments of financial assets. CAPITAL SITUATION Fixed assets Fixed assets remained substantially unchanged. The reduction of the net balance is due to the incidence of depreciation and write-down of the equity investment held in Planetwork. Short-term assets With respect to 31 December 2001 short-term assets are up 22%, from 31,192 thousand euro to 38,413 thousand euro. Short-term liabilities Short-term liabilities are up in the first half of 2002 by 1,766 thousand euro primarily due to the increase in trade payables (+1,742 thousand euro) and other debts (+789 thousand euro). In contrast, payables to Group companies fell from 752 thousand euro to zero. Medium/long-term liabilities and reserves This item is up with respect to 31 December 2001 although by a relatively modest amount compared to the global value of the balance sheet.

59

Shareholders’ equity Compared to 31 December 2001 shareholders’ equity was down by 5,468 thousand euro, falling from 96,504 thousand euro to 91,036 thousand euro. This change is a consequence of two items: the operating loss (-23,936 thousand euro) and the early conversion of warrants (+18,468 thousand euro) SIGNIFICANT EVENTS OCCURRING AFTER THE END OF THE PERIOD The main events that occurred after 30/06/2002 are as follows: −

on 10 June 2002 the ePlanet Board of Directors established the Internal Auditing Committee with advisory and proposal-making functions within the new Corporate Governance rules. The Committee is made up of: Proff. R. Ruozi, G.Acerbi, N.Rienzi and L.Lombardi. The Auditing Committee sat for the first time on 14 June 2002;



a total of 24,042,401 Warrants for a total amount of 19,233,920.80 euro were converted between 14th June 2002 and 4th July 2002, the early exercising of warrant conversion period;



on 28 June 2002 the deadlines in the private agreement with the municipal enterprise Consiag of Prato were put back to 30 September 2002;



on 2 July 2002 the ePlanet Board of Directors instructed its Managing Director to transfer the line of business relative to network infrastructure from the subsidiary Planetwork to parent company ePlanet, thus making it possible to focus more closely on the two business areas, managing them in an even more effective manner, and seizing opportunities of specific interest to the lines of business being created. This operation must be completed by the end of this year;



on 10 July 2002 the ePlanet Ordinary Meeting of Shareholders approved the financial statements at 31/12/2001;



Director Alex Schmitt handed in his resignation on 7 August 2002;



on 2 September 2002 the term for signing of the private agreement with Accenture relative to Planet eCom was put back until 30/9/2002;



on 16 September Dario Cassinelli resigned as Managing Director and, on the same date, Paolo Brunetti was appointed to the position by the Board of Directors.

OUTLOOK FOR OPERATIONS The Group has still not reached a position of economic and financial balance. With regard to the outlook for operations and continuation of company business, however, ePlanet has prepared an operational plan that contains a conservative forecast for the results of the Group, in accordance with current market conditions, the results achieved thus far, and the expectations of management. Actions currently underway, mainly aimed at further restructuring of due dates with several major suppliers and obtaining payment of the substantial VAT receivables outstanding, together with further actions defined by the plan, including those that should assist the continuing favourable trend of turnover that already started in the first half of 2002 and the willingness of shareholders to make up for possible temporary cash requirements as has already occurred in the past, strongly indicate that the Group will be able to find the resources necessary to finance its operations in the short term. OTHER INFORMATION REQUIRED BY THE TERMS OF ITALIAN CIVIL LAW With regard to the information required by the terms of Civil Law, we draw your attention to the following: 60

a) research and development activities concern the design, implementation, and optimisation of networks and telecommunications systems, with the purpose of improving the services on offer, with particular reference to the experimentation of cutting edge technology for connection of customers to the company’s network; a) at the period-end date the parent company and its subsidiaries did not hold own shares nor shares of Group companies, either directly or through third parties; b) at the date of drafting of these financial statements, the company headquarters are located at the following address: − ePlanet S.p.A., strada 4, palazzo Q1, 20089 Rozzano (MI)

RELATIONS WITH SUBSIDIARIES AND RELATED PARTIES Studio Spadacini, a related party of statutory auditors Spadacini and Piovene, provided corporate and fiscal consultancy services both during the course of normal management of the company and during the course of the recapitalisation operations.

61

Annexes

62

ePlanet S.p.a. Registered office in Rozzano - Strada 4, Palazzo Q1 Paid-up Share Capital 56,550,000 euro Tax code and VAT number: 12897160151 ****** HALF-YEAR FINANCIAL STATEMENTS AT 30 JUNE 2002 (AMOUNTS IN EUROx1000) ****** R E C L A S S I F I E D

B A L A N C E

S H E E T

30.06.2002

31.12.2001

30.06.2001

ASSETS SHORT-TERM ASSETS Cash and banks Inventories Trade receivables Other receivables Other short-term assets Accruals and prepaid expenses

38,413 22,296 0 541 15,158 0 418

31,212 18,973 0 0 12,225 0 13

5,745 1,565 0 3 4,110 0 66

FIXED ASSETS Intangible fixed assets Tangible fixed assets Financial fixed assets Other fixed assets

65,791 6,752 15 59,024 0

76,396 8,216 16 68,164 0

40,223 9,731 17 30,476 0

104,203

107,608

45,967

12,629 0 0 9,333 134 3,110 52

10,881 0 0 7,591 305 2,915 71

5,266 0 0 4,872 112 283 0

538 478 60 0 0

223 158 65 0 0

7,559 7,493 67 0 0

13,167

11,104

12,826

91,036 56,550 0 141,832 (83,410.52) (23,935.71)

96,504 56,550 0 123,365 0.00 (83,411.00)

33,141 3,873 0 119,202 (45,487.97) (44,446.28)

91,036

96,504

33,141

104,203

107,608

45,967

TOTAL ASSETS LIABILITIES SHORT-TERM LIABILITIES Bank payables and current portion of medium/long-term loans Sources of finance Suppliers Tax and contribution payables Other payables Accruals and deferments MEDIUM/LONG-TERM LIABILITIES AND PROVISIONS Provisions for risks and charges Employee severance indemnity Medium/long-term loans net of current portion Other medium/long-term liabilities TOTAL LIABILITIES SHAREHOLDERS’ EQUITY SHAREHOLDERS’ EQUITY Share capital Legal reserve Other reserves Profits carried forward Result for the period TOTAL SHAREHOLDERS’ EQUITY T OT AL LIABILIT IES AND SHAREHOLDERS’ EQUIT Y

63

ePlanet S.p.a. Registered office in Rozzano - Strada 4, Palazzo Q1 Paid up share capital 56,550,000 euro Tax code and VAT number: 12897160151 ****** HALF-YEAR FINANCIAL STATEMENTS AT 30 JUNE 2002 (AMOUNTS IN EUROx1000) ****** RECLASSIFIED INCOME STATEMENT

30.06.2002

NET SALES

Changes in raw materials and finished product inventories Increase in fixed assets for internal work Other revenues and income PRODUCTION VALUE

Raw materials consumption Costs for services and leasing charges Other operating costs VALUE ADDED

Personnel costs Other operating reserves GROSS OPERATING RESULT (EBITDA)

Amortization/depreciation Other non-operative reserves OPERATING RESULT (EBIT)

Interest income Interest expenses ORDINARY RESULT

Extraordinary income Extraordinary expenses Value adjustment of financial assets PRE-TAX RESULT

Income tax POST-TAX PROFIT (LOSS) FOR THE PERIOD

64

30.06.2001

31.12.2001

0

10

0

0 0 2,802

0 0 3,640

0 0 2,048

2,802

3,650

2,048

(0) (4,460) (79)

(19) (4,859) (84)

(10) (3,858) (52)

(1,738)

(1,311)

(1,873)

(273) 0

(1,207) 0

(798) (155)

(2,011)

(2,519)

(2,826)

(1,528) (322)

(13,726) (4,055)

(2,396) (3,899)

(3,861)

(20,299)

(9,121)

155 (17)

336 (637)

215 (4)

(3,723)

(20,600)

(8,909)

0 (95) (20,118)

0 0 (62,810)

0 0 (35,537)

(23,936)

(83,411)

(44,446)

0

0

0

(23,936)

(83,411)

(44,446)

ePlanet S.p.A. ******

HALF-YEAR REPORT AT 30 JUNE 2002 ******

PARENT COMPANY CASH-FLOW STATEMENT

30/06/2002 Euro/1,000

31/12/2001 Euro/1,000

(23.936)

(83.411)

1.528 20.118 (5) 320

17.625 62.810 20 158

(3.089) (384) 0 (404) 1.148 600

(4.167) (899) 0 90 (7.162) 2.747

(Increase) decrease in circulating capital

(2.130)

(9.391)

Total liquidity generated (absorbed) by operations

(4.104)

(12.188)

Financial

(63) 0 (10.978)

(10.102) (14) (91.610)

Total liquidity generated (absorbed) by investments

(11.041)

(101.726)

Subsidiary shareholders’ equity before acquisition

0 0 0 18.468 0

0 0 0 102.327 0

Total liquidity generated (absorbed) by loans

18.468

102.327

3.323

(11.587)

Cash on hand at period start

18.973

30.560

Cash on hand at period end

22.296

18.973

Gross profit for period Amortization/depreciation & write-downs Write-downs of equity investments Change in severance indemnity provision Net change in risks and charges provision (Increase) decrease in trade receivables (Increase) decrease in other receivables (Increase) decrease in inventories (Increase) decrease in other current assets Increase (decrease) in trade payables Increase (decrease) in other current liabilities

Investments in fixed assets (net) Intangible Tangible

New medium/long-term loans Medium/long term loan repayments Increase in short-term debts with banks and other financers Increase (decrease) in share capital and other reserves

Increase (decrease) of liquidity

65

Parent company financial statements

66

ePlanet S.p.a. Registered office in Rozzano - Strada 4, Palazzo Q1 Paid-up share capital 56,550,000 euro Tax code and VAT number: 12897160151 ****** HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO) ****** B A L A N C E

S H E E T

30.06.2002

31.12.2001

30.06.2001

ASSETS A) RECEIVABLE FROM SHAREHOLDERS for outstanding subscriptions B) FIXED ASSETS I. INTANGIBLE FIXED ASSETS 1) Plant and extension costs 2) Research, development and advertising costs 3) Industrial patents and intellectual property rights 4) Concessions, licenses, trade marks and similar rights 5) Goodwill 6) Assets under construction and advances 7) Other II. TANGIBLE FIXED ASSETS 2) Plant and machinery 3) Industrial and commercial equipment 4) Other 5) Assets under construction and advances III. FINANCIAL FIXED ASSETS 1) Equity investments a) subsidiaries c) other companies 2) Receivables a) From subsidiaries d) From others C) CURRENT ASSETS

0 0

0 0

0 0

65,790,616

76,395,587

40,222,707

6,751,624 6,658,626 64,705 0 9,906 0 0 18,386

8,215,952 7,734,078 15,493 0 10,502 0 0 455,878

9,730,868 8,814,031 18,076 0 9,449 0 832,980 56,332

14,645 0 0 14,645 0

15,661 0 0 15,661 0

16,339 0 0 16,339 0

59,024,348

68,163,974

30,475,500

46,669,348 12,355,000

55,808,974 12,355,000

386,310 0

0 0

0 0

30,089,190 0

37,995,021

31,198,828

5,678,012

0 0 0

0 0 0

0 0 0

15,699,258 540,901 11,040,143 0 0 4,118,215

12,225,714 418 8,491,439 0 0 3,733,857

4,112,787 3,176 1,664,628 0 0 2,444,983

0 0

0 0

0 0

22,295,764 22,295,764 0

18,973,114 18,973,114 0

1,565,225 1,564,878 347

417,570

13,239

66,294

I. INVENTORIES 2) Products under construction 4) Finished products and goods II. RECEIVABLES 1) From customers 2) From subsdiaries 3) From other Group companies 4) From parent companies 5) From others

Due within 1 year 540,901 11,040,143 0 0 2,299,413

Beyond 1 year 0 0 0 0 1,818,802

III. FINANCIAL ASSETS 4) Other equity investments IV. CASH ON HAND 1) Bank and post office deposits 3) Cash and securities D) ACCRUED INCOME AND PREPAID EXPENSES TOTAL ASSETS

104,203,208

MEMORANDUM ACCOUNTS Leasing and hire charges

21,898,000.00 0.00

107,607,654

45,967,012

13,796,630 0.00

12,504,454 0.00 0.00

Company assets held by third parties

0.00

0.00

Sureties received from third parties

0.00

316,071.62

0.00

21,898,000.00

13,480,557.98

12,504,454.44

0.00

0.00

0.00

Commitments Guarantees received

67

ePlanet S.p.a. Registered office in Rozzano - Strada 4, Palazzo Q1 Paid up Share Capital 56,550,000 euro Tax code and VAT number: 12897160151 ****** HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO) ****** BALANCE SHEET

30.06.2002

31.12.2001

30.06.2001

LIABILITIES A) SHAREHOLDERS’ EQUITY I. Capital II. Share premium reserve III. Revaluation reserve IV. Legal reserves V. Riserve for treasury shares in portfolio VI. Statutory reserves VII. Other reserves VIII. Profit (loss) carried forward IX. Profit (loss) for the period

91,036,117 56,550,000 123,364,620 0 0 0 0 18,467,719 (83,410,518) (23,935,705)

96,504,102 56,550,000 123,364,620 0 0 0 0 0 0 (83,410,518)

33,141,003 3,873,427 119,202,115 0 0 0 0 0 (45,488,166) (44,446,372)

B) PROVISONS FOR RISKS & CHARGES 1) For pensions and similar obligations 3) Other

478,188 0 478,188

157,880 0 157,880

7,492,913 0 7,492,913

60,202

65,054

66,637

12,576,347 0 0 0 9,332,723 2,264,616 0 0 81,216 52,811 844,983

10,810,042 0 0 0 7,590,629 2,106,930 751,800 0 270,764 33,743 56,176

5,266,459 0 0 (1,620) 4,872,008 23,106 0 0 38,403 73,128 261,433

52,353

70,575

0

C) EMPLOYEES SEVERANCE INDEMNITY D) PAYABLES 3) Due to banks 4) Due to other sources of finance 5) Advances 6) Trade payables 8) Due to subsidiaries 9) Due to affiliates 10) Due to parent companies 11) Tax payables 12) Due to Social Security Institutions 13) Other payables

Within 1 year 0 0 0 9,332,723 2,264,616 0 0 81,216 52,811 844,983

Beyond 1 year 0 0 0 0 0 0 0 0 0 0

E) DEFERRED INCOME & ACCRUED EXPENSES TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES

104,203,208

68

107,607,654

45,967,012

ePlanet S.p.a. Registered office in Rozzano - Strada 4, Palazzo Q1 Paid up Share Capital 56,550,000 euro Tax code and VAT number: 12897160151 ****** HALF-YEAR REPORT AT 30 JUNE 2002 (AMOUNTS IN EURO) ****** IN CO ME A)

B)

ST AT EMENT

30.06.2002

PRODUCTION VALUE 1) REVENUES FROM SALES AND SERVICES - third party - inter-group Total revenues from sales and services 2) CHANGES IN PRODUCT INVENTORIES 3) CHANGES IN WORK IN PROGRESS TO ORDER 4) INCREASES IN FIXED ASSETS FOR INTERNAL WORK 5) OTHER REVENUES AND INCOME PRODUCTION COSTS 6) COSTS FOR RAW MATERIALS, AUX. CONS. AND GOODS 7) COSTS FOR SERVICES - third party - inter-group Total costs for services 8) LEASING COSTS 9) PERSONNEL COSTS a) payroll b) contributions c) severance indemnity e) other personnel costs Total personnel costs 10) AMORTIZATION/DEPRECIATION & WRITE-DOWNS a) Amortization of intangible assets b) Depreciaton of tangible assets c) Write-downs of fixed assets d) Write-downs of current assets Total amortization/depreciation & write-downs 11) CHANGE IN RAW MATERIALS AND GOODS INVENTORIES 12) RISKS PROVISIONS 14) OTHER OPERATING EXPENSES

DIFFERENCE BETWEEN PRODUCTION VALUE AND COST (A-B) C)

D)

FINANCIAL INCOME AND EXPENSES 15) INCOME FROM EQUITY INVESTMENTS 16) OTHER FINANCIAL INCOME d) income other than the above - from others Total other financial income 17) INTEREST & OTHER FINANCIAL EXPENSES - from parent companies - from others Total interest and other financial expensesexpenses VALUE ADJUSTMENTS OF FINANCIAL FIXED ASSETS 18) REVALUATIONS 19) WRITE-DOWNS

E) EXTRAORDINARY INCOME & EXPENSES 20) EXTRAORDINARY INCOME 21) EXTRAORDINARY EXPENSES PRE-TAX RESULT (A-B+/-C+/-D+/-E) 22) INCOME TAX FOR THE PERIOD 23) PROFIT (LOSS) FOR THE PERIOD

69

30.06.2001

31.12.2001

2,801,574

3,650,227.65

2,047,954.86

0 0 0 0 0 0 2,801,574

0 10,424 10,424 0 0 0 3,639,803

0 0 0 0 0 0 2,047,955

(6,662,716) (53)

(23,949,580) (18,910)

(11,168,471) (10,031)

(2,980,301) 0 (2,980,301) (1,479,876)

(3,893,457) 0 (3,893,457) (965,156)

(3,461,028) 0 (3,461,028) (397,217)

(143,150) (62,747) (13,081) (54,152) (273,129)

(689,016) (305,458) (83,118) (129,868) (1,207,459)

(561,179) (195,855) (41,123) 0 (798,158)

(1,526,877) (1,016) 0 0 (1,527,893) 0 (322,367) (79,096)

(13,725,012) (1,175) (3,898,803) 0 (17,624,990) 0 (155,811) (83,797)

(2,395,609) (497) (3,898,803) 0 (6,294,909) 0 (154,937) (52,191)

(3,861,143)

(20,299,352)

(9,120,516)

138,146 0

(300,852) 0

211,086 0

154,755 154,755

336,417 336,417

215,210 215,210

0 (16,610) (16,610)

0 (637,269) (637,269)

0 (4,123) (4,123)

(20,117,873) 0 (20,117,873)

(62,810,314) 0 (62,810,314)

(35,536,942) 0 (35,536,942)

(94,834) 0 (94,834)

0 0 0

0 0 0

(23,935,705)

(83,410,518)

(44,446,372)

0

0

0

(23,935,705)

(83,410,518)

(44,446,372)

Explanatory notes to the parent company’s financial statements at 30 June 2002

70

DRAFTING CRITERIA These supplementary notes to the parent company’s financial statements are designed to illustrate the data shown in the six-monthly statement by means of analysis, integration and development of the various items. The notes include the information required by article 38 and other provisions of Italian legislative decree 127/1991, the information required by article 81 of the Nuovo Mercato Regulations, and the ancillary information considered necessary for a comprehensive description of the company situation that is both fair and truthful. The attached half-year financial statements (balance sheet and income statement), of which the present explanatory notes form an integral and substantial part, were prepared by the Board of Directors on the basis of the accounting records as at 30 June 2002. No exceptional events were registered such as to require recourse to the derogations as per Article 2423, subsection 4 and Article 2423-bis, subsection 2 of Italian Civil Law. The half-year financial statements are presented together with data for comparison with the situation at 30 June 2001 and 31 December 2001. The explanatory notes to the financial statements make reference to the values at 31 December 2001 for the balance sheet, while income statement data is compared with corresponding values at 30 June 2001. We point out that the amounts indicated in the explanatory notes are shown in thousands of euro unless otherwise specified. ACCOUNTING PRINCIPLES AND VALUATION CRITERIA The accounting criteria used in drawing up the financial statements at 30 June 2002 are in line with those used for the composition of the annual financial statements for the previous period ending 31 December 2001 and the half-year report at 30 June 2001 in terms of valuation and continuity of the same principles. The valuation criteria adopted comply with the previously cited statutory legal provisions, integrated and interpreted by the Accounting Principles issued by the Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri (Italian national councils of certified public accountants). The items of the financial statements were valued in accordance with general criteria of prudence and competence, in the prospective of continuation of company operations. Application of the principle of prudence led to the individual valuation of elements making up individual items or entries under assets and liabilities, to avoid adjustments between losses otherwise to be acknowledged and profits not to be acknowledged because they have not as yet matured. In compliance with the pro-tempore competence principle, the effect of operations and other events has been accounted and attributed to the year to which the relative operations and events refer, rather than the years in which the amounts are effectively collected or disbursed. Profits are therefore included if accrued or collected before the period-end date, while risks and losses are considered even when arising after the period-end date although before the date of approval of the financial statements by the Board of Directors. As illustrated in the Information on payment, the actions currently underway, mainly aimed at further restructuring of due dates with several major suppliers and obtaining payment of the substantial VAT receivables outstanding, together with further actions defined by the plan, including those that should assist the continuing favourable trend of turnover that already started in the first half of 2002 and the willingness of shareholders to make up for possible temporary cash requirements as has already occurred in the past, indicate that the Group will be able to find the resources necessary to finance its operations in the short term. Therefore, the financial statements have been drafted in the prospective of continued operations of the company. Capital items to be allocated for durable use have been entered under fixed assets. Miscellaneous elements included under the individual items of the financial statements have been valued separately. No revaluations were applied. 71

Specifically, the valuation criteria adopted in the composition of the half-year financial statements at 30 June 2002 were as follows: 1. INTANGIBLE FIXED ASSETS Intangible fixed assets are entered at purchase cost or at internal production cost, inclusive of accessory expenses, and shown net of amortization applied during the course of the years, these amounts being shown in specific provisions each referred to the individual items. Intangible fixed assets are amortised on a straight line basis in each year in relation to their residual possibility of use and in accordance with corporate plans for business operations. If the economic value of intangible assets posted under assets in the balance sheet is found to be durably lower than the residual cost to be amortised, the relative assets are written down to the same amount as their economic value. If the reasons for the write-down cease to exist in future years, the original value is restored. Plant and extension costs, which mainly refer to multiannual listing costs, are amortised on a straight line basis over five years starting from the year in which they were sustained. Specifically, for multiannual listing costs the portion relative to the first year has been calculated in proportion to the number of months following the listing date. Advertising costs not considered to be of multiannual usefulness are entered at cost in the period in which they were sustained. The Internet website development costs are amortised on a straight line basis over a period of five years. The trademark and concessions, licenses and type approvals are amortised on a ten year and fifteen year basis respectively. Research and development costs are entirely accounted in the income statement in the year in which they were sustained. Costs, if capitalised, referred to specific projects associated with the company start-up phases continue to be entered against assets under construction until the project in question becomes operational. The costs of other intangible fixed assets are entered under assets in the balance sheets only when their usefulness is protracted through time. The foregoing costs are amortised in accordance with the duration of their use, if this is defined, or on the basis of their contractual duration, if this period is lesser. The amortization rates applied range from 18% to 33%. 2. TANGIBLE FIXED ASSETS Tangible fixed assets are entered at purchase or production cost, inclusive of directly attributable expenses, and adjusted by the corresponding depreciation provisions. Depreciation amounts are systematically calculated on a straight line basis, with rates reduced by 50% for the first year, on the basis of the useful life of the individual assets, established in conformity with company plans for use that consider also physical and technological degradation, taking into account their presumed estimated realisation value net of disposal expenses. Depreciation starts in the year in which the asset is available and ready for use, and proceeds constantly through time. In the event that, irrespective of the depreciation already accounted, the asset suffers a durable loss of value, it is written down accordingly through the application of higher depreciation until reaching the estimated economic value; if the reasons for the write-down cease to exist in future years, the original value of the asset is restored. Maintenance costs of a preservative nature are entered in full in the income statement of the year in which they are sustained. Maintenance costs of an incremental nature, since they are sustained in order to extend the useful life of the asset, to adapt it technologically and/or to increase the relative productivity and security, thereby furthering the productive economy of the company, are attributed to the asset to which they refer and amortised over its residual useful life. 72

The applied depreciation rates are as follows: Rates applied

%

Furniture and fittings Mobile phones

12% 20%

For this financial year also no recourse was made to accelerated depreciation; moreover, tangible fixed assets were not revalued either in accordance with special or general laws, specific provisions for the telecommunications sector, or on the basis of discretionary or voluntary valuations. 3. FINANCIAL FIXED ASSETS If they can be considered as durable investments, equity investments are entered under financial fixed assets, or, if acquired for subsequent disposal, among financial assets other than fixed assets. Taking into account the importance of the shareholding and significant influence exerted by ePlanet in the management of Planetwork, the main operative subsidiary, this equity investment was valuated with the net equity method. This method consists in adjusting the balance sheet value of the investment in accordance with the operating result of the holding, which in turn is adjusted to take into account the higher cost sustained for acquisition of the equity investment. The value adjustment is made in proportion to the portion of company capital acquired by the holding company. Other equity investments entered under financial fixed assets are valuated at acquisition or subscription cost. The balance sheet value is aligned with the possible lower value assumed on the basis of reasonable expectations for usefulness and recovery in future years. Write-downs of equity investments are not maintained in subsequent years if the reasons for the reduction in value cease to exist. 4. RECEIVABLES Receivables are assessed at their presumed realisation value by entering the nominal value under balance sheet assets, adjusted directly to take into account reasonably predictable losses. Receivables subject to solvency proceedings, in conditions of proven difficulty, or for which it is considered pointless to engage in legal proceedings, are entirely entered as a loss or are written down in accordance with their presumed permanent irredeemability, assessed in relation to information obtained and proceedings in progress. 5. CASH ON HAND Bank and post office receivables and payables on deposits or current accounts are entered into the financial statements on the basis of their presumed realisation value. Cash and securities are entered at face value. 6. PROVISIONS FOR RISKS AND CHARGES Provisions for risks and charges have been allocated to cover losses or debts of a fixed nature and of certain or probable existence, although for which it was not possible to calculate the amount or contingency date at year end. These allocations reflect the best possible estimate on the basis of the available information, and they are valued in accordance with general criteria of prudence and competence. 73

The risks in relation to which the emergence of a liability is possible although not probable are indicated, in accordance with their significance, in the information concerning the balance sheet, without creating a specific risks and charges provision. The company did not establish generic risk provisions without economic justification or justified purely by improbable scenarios. 7. EMPLOYEES SEVERANCE INDEMNITY Employees severance indemnity is composed of the account payable to employees at year end, calculated in accordance with article 2120 of the italian code Civil, in accordance with the law, the collective employment contracts in force, and any independent company agreements, considering all forms of remuneration of a continuing nature. This indemnity is revalued annually on the basis of the cost-of-living increase (ISTAT index) specified by the Italian Government. The balance sheet shows the effective account payable matured towards employees at the year end date, net of advances disbursed, and in the same amount as the sum that would have to be paid to employees assuming the termination of their employment contract on the same date. 8. PAYABLES Payables are entered at their presumed pay-off value, which is normally represented by the nominal accounted value. Payables for accrued holidays of employees and for deferred remuneration, including amounts due to social security institutions, are allocated on the basis of the amount that would have to be disbursed if the employment contract were to terminate on the date of the financial statements. 9. ACCRUALS AND DEFERMENTS Accruals and deferments include portions of costs and income, shared by two or more years, to implement the principle of pro-tempore competence. For accruals and deferments of multiannual duration the initial conditions that gave rise to their original entry were verified, making any necessary adjustments. 10. COSTS AND REVENUES FOR THE PERIOD Revenues from services and sales, costs for purchase, production and sale, and, in general, other expenses and income, are reported in accordance with the competence principle. Revenues and income are entered net of returns, discounts, allowances, and bonuses. More specifically: v. revenues for the supply of services are recorded on the basis of the effective service, and in accordance with the relative contracts; vi. income and expenses of a financial nature are entered in accordance with the pro-tempore competence principle. 11. INCOME TAXES FOR THE PERIOD Current taxes are determined on the basis of taxable income calculated in accordance with the provisions of statutory fiscal legislation. Account is also taken of the deferred taxation on temporal differences between the value shown in the balance sheet and the fiscal value of the relative assets and liabilities (balance sheet liability method). Deferred taxes are also determined by those items which, although not allocated in the 74

balance sheet, can produce potential future tax receivables (such as, for example, tax losses that can be carried forward fiscally). The financial statements do not show prepaid taxes in respect of deducible temporary differences and fiscal losses carried forward for which there is no reasonable certainty of utilisation against future corresponding taxable income, and deferred taxes payable in relation to temporary taxable differences for which the payment of future taxes is not probable. 12. MEMORANDUM ACCOUNTS Guarantees granted directly or indirectly and commitments for financial and operative leasing contracts are entered in the memorandum accounts for an amount equal to the amount of the effective commitment. Collateral security and leased assets are entered at the value of the asset or entitlement provided as security. Commitments for leasing contracts and other multiannual contracts are entered for an amount equal to the sum of the instalments until the end of the contractual term or the minimum obligations, if specified. INFORMATION ON BALANCE SHEET ASSETS B) FIXED ASSETS I) Intangible fixed assets Balance at 30/06/2002 Balance at 31/12/2001 6,752

8,216

Changes (1,464)

The following table shows the composition of intangible fixed assets as at 30 June 2002, with separate indication of the historic cost, the relative amortization provision, and the final net value. Values are given in euro/1000.

COMPOSITION

Historic cost 30/06/02

Plant and extension costs

Amort.reserve 30/06/02

Net value

10,805

4,146

6,659

3,905

3,840

65

13

3

10

833

833

0

Other

1,197

1,179

18

Total

16,753

10,001

6,752

Research, development and advertising costs Concessions, licenses, trade marks and similar rights Assets under construction and advances

75

The following table shows a breakdown of changes in intangible fixed assets with separate indication of the increases and decreases to the historic cost applied during the first half of 2002, and for the amortization provisions the increases applied during the same period. Values are given in euro/1000.

CHANGES

Hist. cost 31/12/01

Plant and expansion costs Plant and expansion costs Multiannual listing costs

10,800 46 10,754

Research, development & advertising costs

3,847

Research, development & advertising costs Capitalised advertising costs Website development

Concessions, licenses, trade marks, and similar rights Concessions, licenses Trade marks

Assets under construction and advances WLL research and development costs Other Personnel recruitment costs Other fixed assets Strategic consultancy Loan acquisition costs

Total

Increase

Decrease.

Hist. cost 30/06/02

Amort. reserve 31/12/01

Amort. 30/06/02

Net value

5 0 5

0 0 0

10,805 46 10,759

3,065 19 3,047

1,080 5 1,076

6,659 23 6,636

58

0

3,905

3,832

8

65

0 3,822 26

2 0 56

0 0 0

2 3,822 81

0 3,822 10

0 0 8

2 0 63

13

0

0

13

2

1

10

0 0

0 0

2 10

0 2

0 1

2 8

0 0

0 0

833 833

833 833

0 0

0 0

100 37 826

0 0 0 0

0 0 0 0

1,197 100 37 826

742 80 15 413

437 21 4 413

18 0 18 0

234

0

0

234

234

0

0

16,690

63

0

16,753

8,474

1,527

6,752

2 10

833 833

1,197

In relation to the individual items making up this entry, we refer you to the following additional information. Plant and extension costs Plant and extension costs include 23 thousand euro of legal and notary expenses connected to the incorporation of the company at the start of its operations and 6,636 thousand euro sustained for listing on the Nuovo Mercato, which took place on 3 August 2000. Concessions, licenses, trademarks, and similar rights This item mainly concerns the software licenses and costs sustained for creation of the ePlanet logo and trade mark. Other assets This item includes the residual value of expenses for strategic consultancy.

76

II) Tangible fixed assets Changes

Balance at 30/06/2002 Balance at 31/12/2001 15

16

(1)

The following table shows a breakdown of tangible fixed assets as at 30 June 2002, with separate indication of the historic cost, the relative depreciation provision, and the final net value. Values are given in euro/1000.

COMPOSITION

Historic cost 30/06/02

Deprec. reserve 30/06/02

Net value

Other assets

16

2

14

General total

16

2

14

The following table shows a breakdown of changes in tangible fixed assets with separate indication of the increases and decreases to the historic cost applied during the first half of 2002, and increases made to depreciation provisions during the same period. Values are given in euro/1000.

CHANGES

Historic cost 31/12/01

Increase

Decrease

Historic cost 30/06/02

Deprec. reserve 31/12/01

Write back. deprec. reserve

Deprec. 30/06/02

Net value

Other assets Furniture, fittings and office machines

16 16

0 0

0 0

16 16

1 1

1 1

0 0

14 14

General total

16

0

0

16

1

1

0

14

No revaluations of fixed assets have been applied. We also draw your attention to the fact that no tangible fixed assets have been granted as collateral security. The company has not entered into any financial leasing contracts during the period. III) Financial fixed assets Balance at 30/06/2002 Balance at 31/12/2001 59,024

68,164

Financial fixed assets can be broken down as follows:

77

Changes (9,140)

Balance at 30/06/2002 Balance at 31/12/2001

COMPOSITION

Equity investments in subsidiaries Planetwork S.p.A. (100%) Planet eCom S.p.A. (60%) Planet Mobile S.r.l. (100%) eConsiag S.p.A. (58%) Equity investments in other coys. IPSE 2000 S.p.A. (0,5%) Consorzio Dix.it (14.3%) ConsiagNET S.p.A. (10%) Total cost

43,943 2,726

52,697 373 13 2,726

11,281 1,074

11,281 1,074

59,024

68,164

The equity investments item, net of write-down provisions, can be broken down as follows: iv. the value assigned to the subsidiary Planetwork through application of the net equity method. The decisive influence of this value is explained in the following headings; v. the cost of the 58% equity investment in eConsiag S.p.A. vi. the cost for acquisition of the equity investment in IPSE 2000 S.p.A., which was written down for 399 thousand euro in 2001. In the first half of 2002 ePlanet adapted the value of the equity investment by prudentially allocating 322 thousand euro to the risk provisions to take into account the relative portion of the losses incurred by the holding. There is no evidence pointing to durable losses in value that could make it necessary to make further writedowns. vii. the cost of the 10% equity investment in ConsiagNET S.p.A. viii. the cost of the 14.3% equity investment in the Dixit consortium for UMTS telephony, which is in liquidation. This equity investment was entirely written down during the course of previous financial periods. A list of equity investments with values quoted in euro is given below: Name

H.Q.

Share capital No. shares/stake

Face value (euro)

Total value

%

ePlanet shareholding Book value (euro)

No. shares/stake

Planetwork S.p.A.

Prato (PO)

26,000,000

1,00

26,000,000.00

100%

26,000,000

43,943,348.19

eConsiag S.p.A.

Prato (PO)

4,700,000

1,00

4,700,000.00

58%

2,726,000

2,726,000.00

Consiagnet S.p.A.

Prato (PO)

10,740,000

1,00

10,740,000.00

10%

1,074,000

1,074,000.00

IPSE 2000 S.p.A

Rome (RM)

2,150,000,000

1,00

2,150,000,000.00

0,5%

10,750,000

11,281,000.00

The list of investments in subsidiaries with the information prescribed in point 5) of Article 2427 of Italian Civil law is as follows: NAME

Shareholders’ equity 30/06/2002 A

Planetwork S.p.A. eConsiag S.p.A.

Balance at 30/06/2002

37,853 3,705 41,558 -

Profit (loss) for the period B

(19,706) (918) 20,624

Fin. statement shareholders’ equity

Valutation ex art.2426 par. 1 no. 1

C

D

37,853 2,149 40,002

166,715 2,726 169,441

Book value

Difference E-C

Difference E-D

E

43,943 2,726 46,669

6,090 577 6,667

(122,772) (122,772)

The adjustments made to the book value of the equity investment in Planetwork for 20,105 thousand euro, due to the application of the net equity method, are made up of losses sustained in the year by

78

Planetwork (19,706 thousand euro), for the remaining part of the corresponding portion of goodwill amortization (399 thousand euro), and equity loans for 11,351 thousand euro. Planetwork was acquired on 18 February 2000 for 4,132 thousand euro, with the commitment to pay the residual amount of 2,889 thousand euro of the share capital increase subscribed by the seller before the above date. The difference of 7,975 thousand euro between the purchase cost and Planetwork’s shareholders’ equity deficit at the date of acquisition was attributed to goodwill and amortised over a period of future usefulness estimated at 10 years. Said goodwill was determined on the basis of the operative/strategic plan, taking into account the duration of the telephone operator license held by Planetwork. The goodwill is maintained because it is considered as a cost of multiannual utility in the light of the operative/strategic plan that involves the arrival at an appropriate level of profitability in the mid-term. The following table contains a breakdown of the operations that the parent company performed in relation to company capital during the year: i. on 02 January 2002 disbursement of an equity loan for 51 thousand euro; ii. on 08 May 2002 disbursement of an equity loan for 5,000 thousand euro; iii. on 20 June 2002 disbursement of an equity loan for 3,000 thousand euro; iv. on 21 June 2002 disbursement of an equity loan for 1,000 thousand euro; v. on 28 June 2002 disbursement of an equity loan for 2,300 thousand euro; C) CURRENT ASSETS II 1) Trade receivables Balance at 30/06/2002 Balance at 31/12/2001 541

Changes

0

541

The balance of trade receivables is composed of amounts due within twelve months, mainly consisting of receivables arising further to the disposal of Planet eCom. II 2) Receivables from subsidiaries Balance at 30/06/2002 Balance at 31/12/2001 11,040

Changes

8,491

2,549

This item refers, in the amount of 5,000 thousand euro, to receivables due from Planetwork further to the share capital increase operations in 2001. The remaining amount of receivables from subsidiaries refers to parent company ePlanet’s chargeback to the subsidiary Planetwork of structural costs and for the rental of the Rozzano offices. II 5) Accounts receivable from others Balance at 30/06/2002 Balance at 31/12/2001 4,118

3,734

79

Changes 384

Accounts receivable from others, broken down according to type, are shown in the following table: COMPOSITION

Balance at 30/06/2002 Balance at 31/12/2001

From the Tax authorities for VAT From the Tax authorities for corp.inc. tax From the Tax authorities for interest

2,819 199 126

2,485 199 84

334 0 42

212 762

217 749

(5) 13

Trade receivables Others Total

Changes

4,118

3,734

384

VAT receivables are associated with the compensation between tax receivables and tax payables relative to the management of operations during the period. Receivables from the tax authorities for IRPEG (corporate income tax) are composed of the amount brought forward for tax with holdings from bank current account, the collection of which is considered reasonably certain. Trade receivables are relative to prepayments and guarantee deposits. IV) Cash on hand Balance at 30/06/2002 Balance at 31/12/2001 22,296

Changes

18,973

3,323

The balance shows cash in bank current accounts, short-term loans and the amount of cash on hand at the year-end date. A breakdown is provided in the following table: COMPOSITION

Balance at 30/06/2002 Balance at 31/12/2001

Banks and post office deposits Cash and securities on hand

22,296 -

Total

Changes

18,973 -

22,296

3,323 -

18,973

3,323

The total of bank deposits includes 18,468 thousand euro, of which 18,221 thousand euro for the payment made by shareholders into the IntesaBCI Spa-Comit tied-up account on 3 June 2002, and 247 thousand euro paid in by the market at a date prior to 30 June 2002, in relation to the early conversion of warrants. The amounts paid into the tied-up account were credited to the company’s ordinary bank account on 4 July 2002. D) ACCRUED INCOME AND PREPAID EXPENSES Balance at 30/06/2002 Balance at 31/12/2001 418

13

Changes 405

This entry reflects income and expenses whose temporal competence is anticipated or delayed with respect to cash and/or documentary payment; these amounts do not consider the date of payment or the relative income and expenses, common to two or more years and distributable in terms of time. As at 30 June 2002 there were no accruals or deferrals having a duration greater than five years. 80

INFORMATION ON BALANCE SHEET LIABILITIES A) SHAREHOLDERS’ EQUITY COMPOSITION

Balance at 30/06/2002

Capital Share premium reserve

Balance at 31/12/2001

Changes

56,550

56,550

-

123,365

123,365

0

Revaluation reserves

-

-

-

Legal reserve

-

-

-

Reserve for treasury shares in portfolio

-

-

-

Statutory reserves

-

-

18,468

Other reserves

-

-

18,468

Profit (losses) carried forward

(83,411)

-

(83,411)

Profit (loss) for the period

(23,936)

(83,411)

59,475

91,036

96,504

(5,468)

Total

Changes in shareholders’ equity are shown in the following table:

COMPOSITION

Opening shareholders’ equity

Share capital Share premium reserve Other reserves Profits (losses) carried forward Result for the period

56,550 123,365 (83,411)

Balance at 30/06/2002

96,504

Capital grant

Loss allocation

(83,411) 83,411 0

Result for the period

18,468 18,468

(23,936) (23,936)

Closing shareholders’ equity

56,550 123,365 18,468 (83,411) (23,936) 91,036

As at 30 June 2002 ePlanet’s share capital stood at 56,550,000 euro, represented by 108,750,000 shares having a face value of 0.52 euro each. In order to address the non-receipt of revenue from the disinvestments and, in general, the difficult market conditions, on 10th June 2002 the Extraordinary Shareholder’s meeting approved the Board of Directors’ proposal of 19th April 2002 to award all warrant holders an early option right to subscribe ordinary shares linked to the Warrants. In particular, the early conversion option gives holders of Warrants in each Category - - “ePlanet Share Warrant 2002-2004 ‘Category 1’, ‘Category 2’ and ‘Category 3’” - the right to request a subscription to ordinary company Shares during the period from 14 June 2002 to 4 July 2002 at one new ordinary Share of nominal value 0.52 euro for each Warrant submitted for the financial period, at a price of 0.80 euro, of which 0.28 euro as a premium. ePlanet reference shareholders (Kabuto Servicos de Consultoria, Mr Holger Van Den Heuvel, Fidicontrol, Cuneo e Associati and Mr Alessandro Acerbi), further to signed undertakings, exercised early conversion of 100% of the Warrants in their possession, equivalent to approximately 30% of total Warrants. This operation saw the conversion of 24,042,401 Warrants for an amount of 19,234 thousand euro, of which 18,221 thousand euro paid by the reference shareholders on 3 June 2002 into the tied-up account and 247 thousand euro paid by the market prior to 30 June 2002.

81

B) PROVISIONS FOR RISKS AND CHARGES Balance at 30/06/2002 Balance at 31/12/2001 478

Changes

158

320

The balance posted in the financial statements is entirely attributable to the risk related to the winding up of the Dixit consortium and write-down of the equity investment in IPSE 2000, which are already discussed in these explanatory notes under the financial assets, which you are invited to consult for further details. No allocations were made to cover generic risks. C) EMPLOYEES SEVERANCE INDEMNITY Balance at 30/06/2002 Balance at 31/12/2001 60

Changes

65

(5)

The accumulated provision constitutes the effective payable for severance indemnity due to employees as at 30 June 2002, net of advances already disbursed. This provision was determined in compliance with Article 2120 of Italian civil law. D) PAYABLES Balance at 30/06/2002 Balance at 31/12/2001 12,576

Changes

10,810

1,766

Payables, broken down according to type, are shown in the following table:

COMPOSITION Advances Trade payables Payables to subsidiaries Payables to other group companies Tax payables Payables to social security institutions Others payables Total

Balance at 30/06/2002 Balance at 31/12/2001 9,333 2,265 81 53 845 12,576

82

7,591 2,107 752 271 34 56 10,810

Changes 1,742 158 (752) (190) 19 789 1,766

D6) Trade payables Trade payables can be broken down as follows: COMPOSITION

Balance at 30/06/2002 Balance at 31/12/2001

Payables due to Italian suppliers Payables due to E.U. suppliers Payables due to non-E.U. suppliers

6,944 1,370 1,018

5,650 1,370 570

9,333

Total

Changes 1,294 0 448

7,590

1,743

Payables to ePlanet suppliers total 9,333 thousand euro and include invoices to be received (net of VAT) for 4,811 thousand euro. The amounts due are mainly related to the supply of services, advertising, and legal and strategic consultancy. D8) Payables to subsidiaries This item reflects, almost exclusively, the payable that arose further to the acquisition of the equity investment in eConsiag. D11) Tax payables Tax payables, posted at 81 thousand euro, mainly reflect the amount due to the tax authorities for IRPEF personal income tax relative to employees and consultants. D12) Payables to social security institutions Payables to Social Security Institutions, posted at 53 thousand euro, mainly reflect accounts payable to INPS for contributions due on employee salaries and accounts payable to other Social Security Institutions relative to management, executives, agents, and journalists. D13) Other payables Other payables, posted at 845 thousand euro, are primarily composed of accounts payable to employees.

E) DEFERRED INCOME AND ACCRUED EXPENSES Balance at 30/06/2002 Balance at 31/12/2001 52

71

Changes (19)

Accruals and deferments constitute the connecting accounts of the year. The amounts were determined in accordance with the pro-tempore competence principle and they refer mainly to personnel salaries.

83

MEMORANDUM ACCOUNTS The following table shows a breakdown of memorandum accounts: Balance at 30/06/2002 Balance at 31/12/2001

COMPOSITION

Assets leased by group companies Group assets held by third parties Sureties received from third parties Commitments Guarantees received

21,898 -

Total

21,898

Changes

316 13,481 -

0 0 (316) 8,417 0

13,797

8,101

The following points contain a detailed description of memorandum accounts: a) Surety to Mediocredito Centrale for 6,558 thousand euro for a pro-rata guarantee of the commitments of IPSE 2000 S.p.A. towards the Ministry of Communications in relation to respecting license obligations concerning the payment of future instalments; b) Comfort letter to Banca Popolare di Novara issued by ePlanet to guarantee leasing contracts entered into by Planetwork for 646 thousand euro; c) Commitments for residual leasing charges for the rental of administrative and commercial offices for 3,042 thousand euro in addition to 9,787 thousand euro for financial leasing charges; d) Commitments to Italian railway company FFSS for the obligation to pay the agreed charge for the use of space for the installation of equipment on behalf of IPSE 2000 for 1,549 thousand euro; e) Commitments of sureties to be issued to Polis Fondi to guarantee property leasing charges INFORMATION ON THE INCOME STATEMENT A) PRODUCTION VALUE Balance at 30/06/2002 Balance at 30/06/2001 2,802

Changes

2,048

754

Composed of “Other revenues and income”, the nature of revenue generated from minority interests or the group breaks down as follows: COMPOSITION

Balance at 30/06/2002 Balance at 30/06/2001

Revenues from others Intra-group revenues

72 2,730 2,802

Total

10 2,038 2,048

Changes 62 692 754

Turnover generated among Group companies was entirely attributable to Planetwork, this amount being correlated to the chargeback of the following cost categories: i. structural costs; ii. administrative costs; iii. rental costs; borne by the parent company on behalf of the subsidiary. Part of the revenues as at 30 June 2002 appears in the financial statements as “invoices to issue”.

84

B) PRODUCTION COSTS Balance at 30/06/2002 Balance at 30/06/2001 6,663

11,168

Changes (4,505)

The following table shows a breakdown of production costs according to type: COMPOSITION

Balance at 30/06/2002 0 2,980 1,480 273 1,528 322 79

6) raw and auxiliary materials, consumables and goods 7) services 8) leasing, hire and rental 9) personnel 10) amortization, depreciation and write-downs 12) provisions for risks 14) other operating expenses

Total

6,663

Balance at 30/06/01

Changes

10 3,461 397 798 6,295 155 52

(10) (481) 1,083 (525) (4,767) 167 27

11,168

(4,505)

B6) Costs for raw materials, auxiliary materials, consumables, and goods COMPOSITION

Balance at 30/06/2002 Balance at 30/06/01

Changes

Miscellaneous equipment and materials Fuel and lubricants Other

0 0

5 4 1

(5) (4) (1)

Total

0

10

(10)

85

B7) Service costs COMPOSITION

Balance at 30/06/2002 Balance at 30/06/01

Internal costs for fixed and mobile telephony Marketing, advertising, agency costs Directors’ and auditors’ remuneration Consultancy and sundry external services Maintenance Insurance Meal vouchers Training courses Electricity, water and gas Revenue stamps and shipments Other service costs

1 317 183 2,314 12 65 88

Total

Changes

0 85 217 3,052 0 24 5 2 1 74

2,980

1 233 (34) (738) (0) (12) (5) 0 (2) 63 13

3,461

(481)

The most significant portion of this accounting item is made up of the costs of consultancy and miscellaneous external services. These costs can be generally referred to activities for strategic, legal and regulatory consultancy, and also to costs for activities associated with drafting of the half-year statements. Marketing, advertising and agency costs include all the expenses sustained during the year to advertise company services, plus the cost of advertising material for the organisation of exhibitions and conventions for the promotion of services. The remaining entries fall under the item “other service costs”. B8) Leasing, hire and rental costs The table below contains a breakdown of this expense entry: COMPOSITION

Balance at 30/06/2002 Balance at 30/06/01

Property rentals Hire charges

614 866 1,480

Total

397 397

Changes 217 866 1,083

Property rentals refer to costs sustained for the Rozzano building, which is partially sublet to the subsidiary Planetwork. This chargeback is made on the basis of the spaces effectively granted and utilised by the subsidiary, calculated at market value. Hire costs refer to equipment leasing charges. B9) Personnel costs This item includes the entire payroll for employees including betterments, career advancements, automatic cost-of-living increases, cost of accrued holidays not taken and provisions prescribed by law and collective employment contracts. This expense is comprehensively detailed in the income statement so that no further comment is necessary.

86

B10) Amortization, deprecation and write-downs This item is shown in detail in the following table, with separate indications for amortization, depreciation, and write-downs of fixed and current assets: COMPOSITION

Balance at 30/06/2002 Balance at 30/06/01

Amortization Depreciation Write-downs of fixed assets

1,527 1 -

Total

1,528

Changes

2,396 0 3,899 6,295

(869) 1 (3,899) -

4,767

Amortization and depreciation are detailed in the fixed assets tables: the relative rates have already been illustrated under valuation criteria. B12) Provisions for risks Risks allocations include the adaptation of the write-down of the equity investment in IPSE 2000 S.p.A. B14) Other operating expenses The most significant items that make up this category of costs arise from contingent liabilities directly concerning the company’s core business. The remaining items are essentially composed of deductible charges and taxes. C) FINANCIAL INCOME AND EXPENSES COMPOSITION

Balance at 30/06/2002 Balance at 30/06/2001 Changes

Income Expenses Total

155 (17)

215 (4)

(60) (12)

138

211

(73)

The following table shows a breakdown of this entry:

COMPOSITION

Balance at 30/06/2002 Balance at 30/06/2001

Bank account interest receivable Currency exchange gains Other financial income Total income

155 0 155

Bank account interest payable Currency exchange losses Other financial expenses Total expenses

0 0 (17) (17)

Net total

138

87

Changes

206 9 0 215

(52) (9) 0 (60)

(0) 0 (4) (4)

0 0 (13) (12)

211

(73)

The most significant item making up the category other financial charges concerns receivable interest accrued in relation to cash on hand. D) VALUE ADJUSTMENTS OF FINANCIAL ASSETS COMPOSITION Revaluations Write-downs Total

Balance at 30/06/2002 Balance at 30/06/2001 Changes (20,118)

(35,537)

(20,118)

(35,537)

15,419 15,419

This item refers in the amount of 20,105 thousand euro to the write-down of the equity investment in the subsidiary Planetwork, resulting from the application of the net equity valuation method discussed in the heading concerning valuation criteria at the beginning of these explanatory notes, and in the amount of 13 thousand euro to the write-down of the equity investment in Planet Mobile S.r.l., in liquidation as from 1 January 2002. OTHER INFORMATION EMPLOYMENT DATA The average company workforce in the period, broken down by category underwent the following changes during the course of the six-month period to 30 June 2002 : Workforce Managers Executives Staff Total

30/06/2002

1 3 6 10

31/12/2001

Changes

2 3 7 12

(1) 0 (1) (2)

Salaries are based on the national employment contract for the trade sector.

REMUNERATION DUE TO DIRECTORS AND AUDITORS Annual remuneration due to Directors and Auditors of the company is as follows: Directors 488 thousand euro Auditors 147 thousand euro Total 635 thousand euro In accordance with Consob decision no. 11971/1999, the table shows remuneration voted for 2002 for directors and auditors, under any title and in any form.

88

Name Board of Directors Roberto Ruozi

Office

Resignation Appntmnt.

Chairman of the Board of Directors

14/02/02

Annual remuneration 126,000

Fringe benefits

Other annual remuneration -

-

52,000 Dario Cassinelli Paolo Brunetti

Managing Director Managing Director

16/09/02

15/04/01 16/09/02

310,000

Car + Health Plan

TFM max 30% of salary

488,000 Board of Auditors Lionello Jona Celesia Luigi Carlo Spadacini

Chairman of the Board of Auditors Statutory auditor

Cesare Piovane Porto Godi

Statutory auditor

63,000 15/11/01

42,000

-

-

42,000

-

-

147,000

FISCAL POSITION We have received no notification of inspections concerning direct and indirect taxation, and there are no instances of current litigation concerning the direct tax responsibilities of the company. Previous losses were not utilised. LITIGATION IN PROGRESS ePlanet S.p.A./Parsec On 27 February 2002 Parsec Finance S.r.l. filed a summary judgement for the amount of 372 thousand euro corresponding to the full settlement of an agreement entered into to define the amount due for consultancy in the search for investors. ePlanet filed an opposition to this suit, primarily demanding cancellation of the summary judgement, termination of the consultancy contracts and the agreement, and an equitable valuation of the services rendered by Parsec. The first hearing is scheduled for 15 October 2002. Other There is a summary judgement in existence for a value of 52 thousand euro filed against ePlanet by IPO World S.p.A; this judgement has been contested. The potential liabilities deriving from litigation currently in progress have been evaluated in the light of the declared accounting principle and with the benefit of legal advice; wherever necessary, suitable allocations have been made to the risks provisions. EVENTS OCCURRING AFTER THE END OF THE PERIOD, CONTINUATION OF THE COMPANY, AND RELATED PARTIES We refer you to the information on operations given under the headings “Outlook for operations”, “Significant Events occurring after the end of the year”, and “Related Parties”.

89

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