RAI GROUP Reports and financial statements 2004

Transcription

RAI GROUP Reports and financial statements 2004
RAI GROUP Reports and financial statements at 31 December 2004
Contents
Organisational structure
4
Corporate bodies
5
Group Profile
6
RAI: Public service broadcasting
7
Report on operations
9
The reference context
The radio and television audience
Revenues
Regulatory framework
RAI and Europe
11
12
12
14
16
RAI in 2004
TV Division
Radio Division
New Media & DTT Division
Commercial Division
Broadcasting Division
17
22
32
34
35
37
Financial performance
38
Human resources
40
Research and development
42
Intercompany relations
43
Additional information
Significant post-period events
Outlook
Supplemental information
47
47
48
48
Recommendation to shareholders
49
Corporate Directory
50
Statutory financial statements at 31 December 2004
53
Consolidated financial statements at 31 December 2004
153
Rai Organisational structure
Organisational structure
Ministry for Economic
Affairs and Finance
SIAE
99.56%
0.44%
Board
of Directors
General Manager (*)
Staff areas
TV Division
Networks
- Rai Uno
- Rai Due
- Rai Tre
- Rai Internazionale
- Rai Notte
News programs
- TG1
- TG2
- TG3
- TG R
- Rai Sport
- TSP
- Rai Notizie24
- Televideo
- Foreign correspondents
Radio Division
Radio
- Marketing
- Programme and
scheduling optimisation
- Production
- Radio resources
- Radio 1 (**)
- Radio programming
- Public service channels
New Media &
DTT Division
New media
- Digital Terrestrial TV
- Support & planning
Multimedia engineering
- RaiNet
- RaiSat
- Rai Click
Commercial
Division
Sipra
Rai Trade
Broadcasting
Division
Rai Way
TV support
- Television resources
- TV production
- Archives
- Rai Corporation
Genres
- Rai Cinema
- 01 Distribution
- Rai Fiction
- Rai Educazione
4
(*) includes RAI-Vaticano and RAI Quirinale
(**) includes the Giornale Radio radio news programme
Incorporated entities in bold
Rai Corporate bodies
Corporate bodies
Rai Holding S.p.A.
(through 30 November 2004)
Rai Radiotelevisione italiana S.p.A.
(from 1 December 2004)
Board of Directors
Chairman
Piero Gnudi
Board
members
Pietro Ciucci
Maurizio Prato
Francesco Alberoni (1)
Angelo Maria Petroni
Giorgio Rumi
Marcello Veneziani
Secretary
Pierpaolo Dominedò
Franco Di Loreto
Board of Statutory Auditors
Chairman
Andrea Monorchio (2) Carlo Cesare Gatto (3)
Regular
auditors
Lucio Mariani (2)
Antonio Marotti (2)
Paolo Germani (3)
Salvatore Randazzo (3)
Alternates
Luigi Pacifico (2)
Mario Paolillo (2)
Domenico Mastroianni (3) Domenico Mastroianni
Carlo Tixon (3)
Carlo Tixon
General Manager
Carlo Cesare Gatto
Paolo Germani
Salvatore Randazzo
Flavio Cattaneo
Independent Auditors
PricewaterhouseCoopers
PricewaterhouseCoopers (4)
(1) Following the resignation of the Chairman of the Board of Directors, Lucia Annunziata, Francesco Alberoni became the
acting Chairman of the Board.
(2) In office through 16 June 2004
(3) Appointed on 16 June 2004
(4) The firm has also been hired to monitor the accounts pursuant to Article 2409-bis of the Civil Code as approved by the
shareholders on 20 December 2004.
Note: In compliance with Law 112/2004 at the time of the merger of RAI SpA into RAI Holding SpA (effective as of 1 December 2004),
the corporate bodies of the surviving company, which has assumed the name of the merged RAI SpA, are as follows: the Board of Directors
is that of the absorbed company, RAI SpA; the Board of Auditors is that of the surviving company, the former RAI Holding SpA.
5
Rai Group Profile
Group Profile
Television
3 channels
RaiUno, RaiDue, RaiTre
- approx. 26,000 hours of nationwide broadcasting
- 79.5% service programming (93.6% for RaiTre)
- 10.1% for children and teens (7:00-22:30 time slot)
Televideo teletext service
Radio
5 radio stations
Radio1, Radio2, Radio3, Isoradio, GR Parlamento
- 90,000 hours of broadcasting
- 260 hours per day live
Wired radio service
Digital
2 thematic channels
RaiDoc - RaiFutura, RaiUtile
- Reaches 70% of the population (1 January 2005)
- RaiDoc - RaiFutura: 6 hours of original programming per day (RaiDoc);
6 hours of original programming per week (RaiFutura)
- RaiUtile: 4 hours of original programming per day
3 general-topic channels, 3 free channels via satellite, 3 radio channels
V wire radio channel
Satellite
6 free channels
RaiSport, Rai Edu 1, Rai Edu 2, Rai Notizie 24, Rai Med, Rai Internazionale
5 RAI Sat premium channels (on the Sky platform)
Extra, Premium, Cinema World, Gambero Rosso, Ragazzi
2 channels for third parties (on the Sky platform)
Inter Channel
Roma Channel
Broadband
RAI Click platform
- 55,000 subscribers
- 5 million videos downloaded (1,800,000 hours)
Internet
Rai.it portal
- 1.5 million unique visitors per month
- 39 million page views per month
Film
Rai Cinema
- 50 million Euro for the co-production and acquisition of Italian films
01 Distribution
- 30 films distributed in at least 150-200 cinemas
6
Rai Public service broadcasting
RAI: Public service broadcasting
Rai, the largest broadcasting company in Italy, has been reporting and depicting the
evolution of Italy’s civic, social, religious and economic life for over 50 years. It has
now renewed its mission within the communications industry.
As described in greater detail below, the reform of the Italian communications
system (Law 112 of 3 May 2004) envisages direct legislative authorisation for RAI
to provide public service broadcasting. Before, the concession had been granted by
administrative order.
This service is provided through our overall programming, including that which is
not of an informative nature.
We pursue our mission in accordance with a national service contract with the
Ministry of Communications (currently in force for the period 2003-2005 as signed
on 23 January 2003), as well as contracts for the regions and the autonomous
provinces, which define the rights and obligations of the public service provider.
Article 17(2) of Law 112 specifies the public service broadcasting obligations (the
minimum guaranteed content from which the service contracts may not deviate)
that RAI is required to fulfil as part of its global programming package.
The law establishes the licence fee as a function of the need to cover the costs to
fulfil the specific obligations of the general public broadcasting service. In that
regard, the public service broadcaster must provide separate accounts for the
revenues from licence fees and costs incurred in delivering public service
broadcasting based on a format approved by the Communications Authority.
The same law also confirms that the service provider is authorised to perform,
either directly or through associated companies, commercial and publishing
activities related to the transmission of images, audio, and information and other
related activities.
In essence, EU regulations (Protocol C9 of the Amsterdam Treaty of 2 October
1997 and annexed to the Treaty establishing the European Community and the
Commission Communication 2001/C 320/04) and national legislation, Italy’s
position as presented to the authorities in Brussels in conjunction with the
investigation conducted by the European Commission regarding broadcast
licence fees, and related EC decisions have established a clear, consistent framework
for the scope of the general public service mission entrusted to RAI, which the
company carries out through its programming.
7
Rai Public service broadcasting
The following section summarises the main public service broadcasting obligations
as defined under Article 17 of Law 112:
• the broadcast of all public service television and radio transmissions throughout Italy;
• a sufficient number of hours of television and radio broadcasts dedicated to education,
information, and culture, with particular emphasis on promoting theatre, cinema, television
(including foreign language), and music which is either of significant artistic value or
particularly innovative;
• access to programming, within the limits and in accordance with the methods established
by law, in favour of the political parties and the groups represented in Parliament and
in the regional assemblies and councils, of the local self-government associations, national
labour unions, religious groups, political movements, political and cultural associations,
legally recognised national associations of the cooperative movement, the associations
of social promotion listed with regional and national registers, ethnic and linguistic
groups, and other groups of social significance that should request it;
• the establishment of a company for the production, distribution, and broadcast of
programming abroad for the purpose of promoting the Italian language, culture and
economy;
• the broadcast of television and radio programming in German and Ladin for the
autonomous province of Bolzano, in Ladin for the autonomous province of Trento, in
French for the autonomous region of Valle d’Aosta, and in Slovenian for the autonomous
region of Friuli Venezia Giulia;
• the free broadcast of public service messages required by the Italian Prime Minister’s
Office and the broadcast of adequate information regarding Italian roads and traffic;
• the transmission, at appropriate times, of content designed for children;
• the maintenance of radio and television archives and providing public access to such
archives;
• the allocation of no less than 15% of total annual revenues to the production of European
programming, including programmes produced by independent providers;
• the provision, within the terms specified by law, of the infrastructure for digital terrestrial
broadcasting;
• the provision of interactive digital public services;
• the observance of the advertising ceilings defined by Article 8(6) of Law 223 of 6 August 1990;
• the structuring of the public service broadcasting company into one or more national
headquarters and in main offices in each region and, for the region of Trentino-Alto
Adige, in the autonomous provinces of Trento and Bolzano;
• the adoption of appropriate accessibility measures for the visually and hearing impaired
• the promotion and strengthening of decentralised production centres;
• the provision of distance learning services.
8
Rai Report on operations
Report on operations
To our shareholders,
In 2004, the broadcasting industry as a whole was marked by strong recovery in
advertising spending, confirming the gains posted in the latter part of 2003.
This recovery, after a number of years of stagnant investment, is estimated at
around 7.3% for all media (including the press).
Television viewers also confirmed their appreciation of the programming
provided, with total viewers reaching unprecedented levels.
The revival in spending came in conjunction with the reform of the communications
system (Law 112 of 3 May 2004). This reform is key to providing broadcasters
with the legislative certainty we need in order to develop broader, more forwardlooking strategies.
In this favourable environment, RAI SpA closed the year with a net profit of 113
million Euro (based on accounts which implemented legislation eliminating tax
distortions), sharply higher than the outturn for 2003 (24.5 million Euro)
despite the expense of nearly 130 million Euro for rights related to the major
sporting events broadcast during the year (the Summer Olympics in Athens and
the European soccer finals in Portugal). Consolidated net profit, although lower
than that of the parent company alone because tax distortions had already been
eliminated, came to 82.2 million Euro, essentially in line with the previous year
(81.9 million Euro). These results also take into account provisions for the
programming inventory totalling 58 million Euro (of which 39 million Euro for
the parent company alone).
Our financial situation is strong, with the parent company’s net financial position
positive at more than 269 million Euro, compared with 191 million Euro at the
end of the previous year, similar to the trend for the Group as a whole, where the
net financial position reached 124 million Euro (34 million Euro at 31 December
2003).
In addition to the economic factors described above, our performance is attributable
to actions begun in the previous year to enhance programming and the overall
efficiency of operations:
• programming: the optimisation and rationalisation of programming enabled us
to further strengthen our leadership in terms of audience, both in prime time
and throughout the entire day. Viewer appreciation translated into a significant
increase in advertising revenues, which posted growth of just over 10%, a rate
surpassing that of the television segment as a whole, therefore enabling us to
recover market share;
• costs: we have intensified efforts to rationalise operations in order to implement
a significant and steady reduction of costs for the purchase of goods and services.
9
In 2004, we continued our extraordinary strategic commitment to developing the
Digital Terrestrial Television (DTT) project.
On 1 January 2004, we began DTT broadcasting over two multiplexes able to provide
coverage to more than 50% of the population. During the year, in accordance with
the agreement with the Ministry of Communications, the project was extended to
reach 70% of the population with both multiplexes by 1 January 2005.
In order to extend coverage to 70% of the population, RAI made use of two
temporary business groupings, which had already been awarded the first phase of
the project, thereby achieving significant savings – thanks, also, to the careful
rescheduling of activities – compared with the initial budget, both in terms of
infrastructure and in the acquisition of the related frequencies.
During 2004, and in accordance with the 2004-2006 business plan, RAI continued
its efforts to:
• reacquire a strong position in the creation and production of content;
• expand operations in platforms/activities from the current focus on traditional
means, i.e. television and radio;
• strengthen commercial activities to supplement our primary sources of revenue
(i.e. licence fees and advertising);
• complete the process of repositioning our TV product range;
• reverse performance trends in the radio segment in conjunction with initiatives
aimed at improving current broadcast systems;
• begin a process to optimise capital employed.
In this regard, a particularly important role has been played by the revision of
the Group’s organisation with the definition of the main corporate processes and
of the missions and activities assigned to the individual components of the Group.
These initiatives were undertaken in response to the need to achieve substantial
improvements in financial performance in anticipation of the placement of shares
on the market.
At the end of the year, the procedure for the partial sale of RAI began. To that
end, at the end of November 2004, the Ministry for Economic Affairs and
Finance, based on recommendations of the Privatisation Committee, selected
Rothschild to act as financial advisor for the transaction. Rothschild and Unicredit
Banca Mobiliare (UBM) were chosen to appraise the company.
According to the most recent indications received from the Ministry, the operation
should begin in the second half of 2005.
Within this context, the merger of RAI SpA into RAI Holding was completed
effective as of 1 December 2004, with the surviving company assuming the name of
the absorbed subsidiary. This operation had essentially no effect on the consolidated
accounts of the Group.
On the labour relations front, of particular note were the renewal of the national
collective bargaining agreement for middle management, office staff and workers
10
and the signing of the agreement with USIGRAI (the trade union for RAI journalists)
regarding non-permanent journalists, which had a positive effect on the pending
legal dispute.
In December, the Board of Directors approved the guidelines for the 2005-2007
business plan. In light of the rapid evolution in platforms and the way they are
used, as well as in the industrial landscape and the Italian regulatory and legislative
context, RAI’s strategic objectives are to strengthen its leadership in the multi-channel
and multi-platform context and improve profitability and its capacity to create
value, in part through the revision of its current industrial structure.
Finally, we should note that in May 2004 the Board of Directors approved the Code
of Ethics, which specifies the values that define the Group and which the Group
applies as a regular part of doing business.
Here at RAI, we feel it is essential to forge ahead along the path we have chosen
towards the model of an integrated broadcasting/publishing company, while
confirming our duty to public service broadcasting in this digital age in a manner
that guides the advancement of our nation and facing the challenges and seizing the
opportunities that the market provides.
The reference context
Last year witnessed significant change in both the market and its technologies.
On the technology side, digital terrestrial broadcasting is now fully operational.
In accordance with legislative requirements, RAI is committed to accelerating the
transition to this new technology in anticipation of the termination of analogue
broadcasting scheduled for 31 December 2006.
In terms of the market, as we await the impact of digital technology on the
number of broadcasters and the consequent expansion of content, the key players
in the telecommunications industry are redefining their strategic priorities in their
respective market segments.
Below are a number of considerations regarding broadcasting revenues, the radio
and television audience, developments in the regulatory framework – as this has a
profound effect on the activities of the Group – and, finally, the Group’s role and
positioning both domestically and in Europe.
11
The radio and television audience
Again in 2004, television continued to be the medium of choice within the
integrated system of communications, a position which was confirmed by new
audience records.
The full-day average television audience reached nearly 9.3 million viewers, an
increase of more than 140 thousand (1.6%) over the previous year.
There was an even greater rise in the prime-time audience, which reached an
all-time high of 25.14 million viewers, compared with the 24.67 million of 2003
(+1.9%), breaking through the 25 million viewer threshold for the first time.
TV audience
thousands
(source: Auditel)
Radio remained essentially stable.
Revenues
The main sources of revenue for the Italian broadcasting system are licence fees
and advertising.
Total licence revenues reached 1,474 million Euro (an increase of 40 million
Euro) as a result of the increase in the licence fee from 97.10 Euro to 99.60 Euro
(+2.6%), which remains the lowest in Europe.
The number of licenced viewers exceeded 16,300,000, with a total of 422,170
new licences (up 2.7% over 2003).
Licence fees
In 2004, television advertising revenue grew by more than 10%, confirming the
upward trend that began in 2003, while radio spending increased by 21.7%.
Advertising
It is also important to note two key elements in understanding the dynamics of the
advertising market:
12
• 2004 results were the net result of a declining trend over the course of the year:
the first quarter closed with an increase of 8.2%; the second quarter, with a gain
of 10.5%; the third and fourth quarters, however, closed with gains of just 6.7%
and 4%, respectively;
• the positive performance of the Italian advertising market was not supported
uniformly across all industries, but was linked to performance of specific
segments: the services segment posted an increase of 24% (due primarily to
telecommunications, finance & insurance and retailing). Also up were the leisure
(+13%) and durable goods (+12%) sectors, buoyed in particular by the
automotive component, which invested heavily despite the weakness in sales.
The personal (clothing, health & hygiene, personal items) and consumer
(particularly food & beverage) segments were both down.
Net investment
millions of euros
(source: Nielsen)
RAI television posted estimated growth of around 11.7%, compared with the 9.1% of
our main competitor, thanks in part to the important sports events during the year (the
Summer Olympics in Athens and the European soccer championships in Portugal).
RAI radio, on the other hand, posted an increase of 7.7%, which is less than the
market average but reverses the trend of previous periods.
(source: Nielsen)
Share of 2004 TV revenues
Other broadcasters
3.2 bn (+9.8%)
RAI Group
1.3 bn (+11.7%)
Share of 2004 Radio revenues
Other broadcasters
310.5 mn (+26.4%)
RAI Group
89.8 mn (+7.7%)
13
Regulatory framework
Considering the particular characteristics and complexity of our industry, it is
important to describe in detail the developments in the regulatory framework,
which is influenced not only by changing legislation but also by the actions taken
by the various competition regulators.
a) legislative developments
The regulatory framework is influenced, above all, by the law reforming the
communications system in order to achieve a more ordered and regulated
development of the market. This legislation has:
• established the integrated communications system and defined the related
antitrust legislation;
• established limits in the accumulation of radio and television programmes by
a single content provider;
• granted RAI the concession to act as the provider of public service broadcasting
for a period of 12 years;
• defined the fundamental principles for the corporate governance of RAI;
• required that RAI provide separate accounts for the revenues from licence fees
and costs incurred for the provision of public service broadcasting based on a
format approved by the Communications Authority;
• laid down the procedures for opening RAI to private investors;
• defined the timetable for RAI to make the transition to digital terrestrial
broadcasting.
b) actions of regulatory and supervisory bodies
On 31 August, following a process which began in the mid-1990s in response
to a complaint made by a television broadcaster, the European Commission
established that there appear to be no further doubts, based on prior analysis,
that the regime of state aid, represented by the licence fee, which was already
in place at the time of the Treaty of Rome, is compatible with the rules
governing state aid.
This favourable decision was reached by the Commission both because of the
separate accounting principles introduced with the reform law and the efforts
recommended by the Commission itself to prevent excessive compensation of the
public service broadcaster by means of the license fee. This responsibility, which
is subject to periodic audits, has been assumed by the Italian Government and
concerns:
• relations with the subsidiaries engaged in activities not related to the
public service broadcasting mission, which must comply with standard
market practice;
• appropriate commercial exploitation of the broadcaster’s activities, including
the sale of advertising space and leveraging intellectual property rights.
14
The Communications Authority, in accordance with Law 43/2004, has analysed
the total offering of digital terrestrial television programming in order to determine:
• the percentage of the population covered by the new digital networks (which
must not be less than 50%);
• the availability of decoders at reasonable prices;
• the actual provision to the public of programmes different from those that are
broadcast over the analogue networks.
In its report to the Government and the competent parliamentary committees, the
Authority indicated that the conditions specified by law regarding the procedures
and timing for the definitive conclusion of the transition period called for by Law
249 of 31 July 1997 have been met.
With its measure no. 13137 of 29 April 2004, the Italian Competition Authority
authorised RAI to acquire, as part of the digital terrestrial project, 11 business
units comprising a total of 84 television broadcast systems and the related
frequencies.
These acquisitions are aimed at conducting testing for the digital terrestrial
broadcast of programmes and services, and are part of a project to create two digital broadcasting networks (or “multiplexes”).
Having obtained the favourable opinion of the Communications Authority, the
Competition Authority has therefore concluded that the reported operations,
although not strictly necessary for the realisation of the multiplexes, will not result
in RAI having a dominant position in the market.
With resolution no. 297/04/CONS of 15 September 2004, the Communications
Authority launched an investigation aimed at determining whether RAI,
R.T.I., and Publitalia ’80 have failed to comply with the provisions of resolution
no. 226/03/CONS of 27 June 2003 (conclusion of the process of ascertaining the
existence of dominant positions in the television industry for the period 1998-2000)
for the purpose of the possible application of sanctions as defined by Article 1(31)
of Law 249/97.
The preliminary investigation, related to the period following the notification of
resolution no. 226 on 7 July 2003, was declared closed in January 2005, and RAI
presented its defence at the hearing held in February.
At the same time, RAI has also filed an appeal with the Administrative Court of the
Region of Lazio requesting the voidance of resolution no. 297/04/CONS, as well as
resolution 226/03/CONS and all other related and consequential documents.
On 9 March 2005, upon conclusion of the proceedings pursuant to resolution no.
297, the Authority declared that RAI had failed to comply with the formal reprimand established by resolution no. 226 and levied the sanctions specified under
Article 1(31) of Law 249/1997 in the amount of about 20 million Euro.
15
Given that RAI feels that the Authority’s decision is unfounded both in procedure
and in substance, we will be appealing the decision to the Administrative Court of
the Region of Lazio, requesting that the decision be suspended pending the appeal
and that the resolution be struck down.
Given the merits of this appeal, which is also supported by the opinion of qualified
external counsels, we believe that it is highly probable that court will allow our
appeal.
For this reason, we have made no provision in the financial statements at 31
December 2004, as the prerequisites for such a provision have not been met.
With its resolution no. 326/04/CONS of 6 October 2004, for the purpose of
identifying any dominant positions within the individual markets that make up the
integrated communications system and pursuant to Article 14(2) of Law 112
of 3 May 2004, the Communications Authority initiated a process aimed at
identifying any dominant positions in the television market, analysing related
sources of funding, and defining any measures to be taken.
RAI and Europe
Every European country has a public service broadcaster funded by a licence fee,
with the exception of Spain where its broadcaster, RTVE, is funded directly by the
government.
The licence fee varies significantly from country to country, but, as mentioned
above, the licence fee paid to RAI is clearly the lowest in Europe, an especially
significant fact when one considers that the quality and quantity of programming
provided by the Italian public service broadcaster is in line with European best
practices.
This programming quantity and quality is confirmed by RAI’s average daily audience
share, which topped the rankings for public service broadcasting in 2004 at 44.5%.
BBC
ARD/ZDF
France T l vision
RTVE
RAI
2
3
2
3
16
3
(one regional)
12
7
8
14
2 national
(50 regional)
41.0%
-
6
5
Average daily share (2004)
6 analogue
11 digital
34.7%
42.4%
2004 licence fee (in euros)
175.46
193.8
Revenues (2003)
5,355.4
Breakdown of revenues (2003)
General channels (2004)
Thematic channels (2004)
National radio stations (2004)
(Licence fee/gov. funding; advertising; other)
Ratio of revenues other than licence
fee to total revenues (2003)
Workforce (2003)
(source: e-media, Auditel, Audiradio, Eurodata, Nielsen)
16
28.9%
44.5%
99.6
7,283.3
116.5 government
funding
2,372.0
852.1
2,815.7
4,385.7
6,412.7
1,508.9
75.0
1,432.0
0
146.0
610.5
697.2
1,095.0
969.7
625.6
152.6
80.0
288.7
18.1%
11.9%
36.4%
91.2%
49.1%
27,632
23,800
9,125
8,901
11,511
RAI in 2004
Operations
Once again in 2004, RAI’s main priority for operations was to increase programming
resources, which is considered a key part of the strategy of strengthening the
company’s position as a multiplatform media provider.
The new corporate organisation was configured precisely for the purpose of
supporting this transformation in the company’s structure. The main lines of
change at the heart of the new model are:
• the confirmation of the central importance of the product and the focus on
innovation;
17
• a development strategy that emphasises medium and long-term goals;
• the introduction of operating strategies that focus on the reorganisation and
efficiency of supporting activities, so as to free up resources that can then be
directed to the product area.
In greater detail, these objectives prompted the following actions in the area of
television broadcasting:
• returning central power to the networks rather than divisions;
• preserving the structure of the news programmes, which is crucial in ensuring the
scope and quality of information;
• strengthening the capacity for innovation and development of the product offering
by creating network support functions;
• freeing the networks from non-programming functions;
• ensuring an adequate focus on regional and international programming objectives.
The progressive, generalised confirmation of strong audience numbers and the
consequent satisfaction of advertisers made it possible to dedicate greater
resources to television programming, both in terms of higher costs (especially
for immediate-use programmes) and investment, while maintaining a selective
approach that emphasises strategic programming segments.
Our successes in broadcasting, with the consequent improvement in competitive
position, enabled us to leverage programming on a more continuous basis, generating
further sales revenues by channelling content through other platforms as well.
On the cost side, we increased our focus on rationalising operating expenses and
fixed costs.
The most significant ongoing initiatives in 2004 can be summarised as follows:
• costs: rationalisation of the purchase of goods and services and application of
standard production models, with an increased focus on controlling the cost of
programming and production contracts;
• revenues: in addition to the increased commercial effectiveness of programming,
agreements with government were developed and revenues from adjacent markets
(telephony, broadband, satellite, etc.) were expanded.
In essence, 2004 saw the beginning of the process of repositioning our radio and television product offering and a convincing return to a leadership position, as well as the
implementation of action to recoup efficiency and effectiveness, which produced its first
effects in terms of profitability.
Programming
The company’s programming activities are organised into the following thematic areas:
Information: RAI’s information services confirmed their authority, frequency and
timeliness. Pluralism and balance are also essential characteristics of the diverse
product offering. In 2004, particular emphasis was placed on key current events,
such as the Italian political debates, the process of European integration and the
18
signing of the EU’s Constitution, the situation in the Middle East, Italy’s participation
in the peace process, and the tsunami in Asia and its devastating consequences. RAI
also fulfils its role as information provider through a number of programmes of news
analysis and topic-based programming and on the company’s web site, RAI.it, an
Internet portal that provides news and information, weather, traffic, programme
guides, and public discussion forums.
Children and teens: RAI’s programming policies support the company’s
commitment to in-house production dedicated to kids. The flagship programme for
this age group is Melevisione, which is produced by RAI.
Education, as well as entertainment, is always a primary focus, and the success of
programmes like Art Attack, Disney Club, and GT Ragazzi – a news programme
specifically for kids – is confirmation of the appreciation shown by all viewers, and by
the younger audience in particular. The 47th edition of Zecchino d’Oro, a traditional
feature of RAI’s programming for young people, was also a major success.
Culture and public interest: In 2004, RAI continued its commitment to promoting
topics of social, cultural and environmental interest.
The programming in this area begins in the morning with Uno Mattina, Cominciamo
Bene, Occhio alla Spesa, and the series of RAI Educazione broadcasts, and continues
throughout in the day with the programme dedicated to the environment
(Lineaverde). Cultural events are plentiful during prime time, as well, in the areas
of medicine (Elisir), science and technology (Superquark, Ulisse Il Piacere della
Scoperta, La Grande Storia, etc.), and public interest (Mi Manda Raitre, Chi l’ha
Visto?).
Series and film: The success of TV series produced by RAI continued throughout
the year, with numerous programmes recounting the “Italian tale” with breadth and
masterful storytelling.
In a multitude of languages, TV series produced by RAI dealt with sometimes
challenging current events and social issues, biographies of important figures
in Italian history (Don Bosco, Virginia la Monaca di Monza), and lesser stories
(Don Matteo, etc.), reaching a vast audience with their captivating storylines and
artistic quality.
Sports: RAI is the leading broadcaster of major sports events. 2004 was a great
year for sports at RAI, with both the European soccer championships in Portugal
and the enormous efforts made to broadcast the Summer Olympics in Athens live on
RaiDue (“RAI Olympia”). Formula One, the Giro d’Italia, and all soccer-related
programming (90° Minuto, Quelli che il Calcio, etc.) also met with great success.
RAI programming also reserved a great deal of space for minor sports.
The company is committed to consolidating the very encouraging results posted in
all these areas of programming, without losing sight of the competitive importance
of the quality of the entertainment we provide.
In 2004, we confirmed the positive results achieved in the autumn of the previous
year by continuing with the enhancement of RAI’s entertainment portfolio.
19
Alongside time-tested productions (Stasera Pago Io, the 54th edition of the
Festival di Sanremo - the Italian Song Contest - and Miss Italia), we have also seen
encouraging audience levels with new programmes such as the reality show L’Isola
dei Famosi.
But perhaps the most striking is the continuing success of the time slot that leads
into prime time: for RaiUno: the programme Affari Tuoi has returned the channel to
the top of the charts in this key time slot.
The broadcasting schedule
RAI’s television programming is broadcast over three networks (RaiUno, RaiDue,
and RaiTre), the unencrypted satellite channels of RAI Internazionale, and the
theme-based channels RAI Sport Satellite, RAI Notizie 24, RAI Edu Lab 1 and 2,
and RAI Med.
RAI’s well-received product offering fully complies with the obligations defined in
the service contract stipulated with the Ministry of Communications, comfortably
surpassing the specified programming thresholds.
From 6 a.m. to midnight, the genres specified under Article 3 of the contract (news,
information and analysis, culture, sport, public interest, European film and TV
series, programming for kids) reached 79.5% of total programming (compared with
the minimum threshold of 65% required by contract) and 93.6% for RaiTre
programming (for which the minimum threshold is 80%).
This programming is also provided during the most popular time slot, 8 p.m. to 11
p.m., where RAI dedicates 73% of all programming to these genres, with peaks of
83% for RaiTre.
Radio programming is broadcast over five national FM networks (RadioUno,
RadioDue, RadioTre, Isoradio, and GR Parlamento) and a national AM network (a
unified medium-frequency broadcast) that broadcasts RadioUno with frequent
opportunities for local broadcasts.
RadioRAI also broadcasts locally a wide range of special programming for minority
language groups. Along side this product offering, we also have the two wire radio
channels, IV (easy listening) and V (classical music), as well as international Italianlanguage programming broadcast via shortwave radio by RAI Internazionale.
20.5%
79.5%
20
20.5% News & information
8.7% Analysis
1.2% Institutions
13.9% Public interest
8.7% Children & teens
3.6% Educational
5.2% Science & environment
7.7% Sports
1.3% Art films
8.7% European film and series
7.9% Non-European film/series
12.6% Other entertainment
TV programming by genre
(excluding advertising
source: Auditel)
TV programming by genre
RaiTre
(excluding advertising
source: Auditel)
22.9% News & information
10.7% Analysis
1.0% Institutions
13.6% Public interest
9.6% Children & teens
8.9% Educational
10.2% Science & environment
7.2% Sports
2.4% Art films
7.1% European film and series
4.1% Non-European film/series
2.3% Other entertainment
6.4%
93.6%
Radio programming by genre
(source: Audiradio)
13%
11% News
32% Music
2% Service
15% Information
4% Public interest
14% Culture
9% Society
13% Entertainment
87%
Analogue TV broadcasts
Nationwide (*)
RAIUNO
RAIDUE
RAITRE
Via satellite
RaiSport
Rai Notizie 24
Rai Edu Cultura
Rai Edu Lab
Rai Med
Local
- in Italian
- in German
- in Ladin
- in Slovenian
- in French
International
Total
Analogue radio broadcasts
2004
%
2003
%
8,784
8,784
8,335
25,903
11.1
11.1
10.5
32.7
8,760
8,760
8,486
26,006
11.1
11.1
10.7
32.9
8,784
8,784
8,784
8,784
2,196
37,332
11.1
11.1
11.1
11.1
2.7
47.1
8,760
8,760
8,760
8,760
2,190
37,230
11.1
11.1
11.1
11.1
2.7
47.1
6,118
744
47
301
92
7,302
7.7
0.9
0.1
0.4
0.1
9.2
5,924
724
46
239
80
7,013
7.5
0.9
0.1
0.3
0.1
8.9
8,784
79,321
11.1
100.0
8,760
79,009
11.1
100.0
2004
%
2003
%
8,627
8,784
8,784
26,195
13.0
13.1
13.1
39.2
8,603
8,760
8,760
26,123
12.9
13.1
13.1
39.1
5,448
4,831
369
4,573
152
15,373
8.2
7.2
0.6
6.8
0.2
23.0
5,430
4,813
372
4,541
130
15,286
8.1
7.2
0.6
6.8
0.2
22.9
GR Parlamento (**)
Isoradio (**)
International (***)
Total
5,124
8,784
11,300
66,776
7.7
13.1
17.0
100.0
5,110
8,760
11,576
66,855
7.6
13.1
17.3
100.0
Other:
Wire radio (IV + V)
13,176
Nationwide
RadioUno (**)
RadioDue (**)
RadioTre (**)
Local (**)
- in Italian
- in German
- in Ladin
- in Slovenian
- in French
(*) figures for nationwide broadcasts differ from those on page 17 in the chart “Hours of broadcasting” in that they include advertising,
infomercials, and promotional content
(**) including via satellite
(***) 11,300 hours of shortwave broadcasting; 1,380 hours of medium-wave
21
TV Division
Networks
In 2004, RaiUno provided intellectually stimulating programming and promoted
dialogue with its viewing public, so as to strengthen its role as public service
broadcaster and information provider, as well as to consolidate its position as the
leading Italian network.
A distinguishing feature of its programming are its live broadcasts, as these and
other time-tested magazine formats are a means of remaining in close contact with
viewers from when they wake up in the morning and throughout the day, and
ending in the evening with high-quality TV series, film, seasonal events, and the
various other forms of entertainment.
During the year, we made a particular commitment to creating an upcoming season
of reality shows, such as Il Ristorante, developed in accordance with RaiUno’s
traditional principles and methods in order to unite traditional forms of entertainment
and new broadcasting styles and formats.
Public interest
Entertainment
Uno mattina
Occhio alla spesa
Affari tuoi
Stasera pago io revolution
...Ma il cielo è sempre più blu
Sogni
Trash
Una giornata particolare
Adesso sposami
I raccomandati
Il Ristorante
La prova del cuoco
Casa Raiuno
Events:
Festival di Sanremo
Miss Italia
La partita del cuore
Telethon
Culture/ science/ environment/ society
Sports
Film / series
Passaggio a Nord Ovest
Linea verde
Linea blu
La seconda guerra mondiale
European soccer championships
Formula 1
90° minuto
Monday-night movies:
Faccia a Faccia
La carica dei 102
Kate & Leopold
Apocalipse Now
TV series:
Un medico in famiglia
Orgoglio
La tassista
Il Commissario Rex
Un ciclone in convento
La omicidi
Don Matteo
Information
Porta a Porta
Batti e ribatti
La vita in diretta
RaiDue has continued its broadcasting strategy that targets the younger, more
active audience with topics that include public service, sports and programming for
children and teens, confirming the network’s philosophy behind its approach to
music, culture, and entertainment that goes beyond magazine programming and
other “packaged” formats.
Two of the most significant events include the reality shows L’Isola dei Famosi and
Music Farm.
22
Public interest
Information
Entertainment
Vivere in salute
10 minuti di
Confronti
Italia sul 2
L’isola dei famosi
Music Farm
Bulldozer
My compilation
CD Live
Vojager
TV series
Kids
Sport
E.R. Medici in prima linea
Senza traccia
Friends
Disney Club
Go cart
L’albero azzurro
Quelli che il calcio
La domenica sportiva
Sport sera
Studio sprint
With deep roots in public service broadcasting and a marked focus on promoting
and analysing social and cultural themes, always on the side of the viewing public,
RaiTre programming clearly reflects the network’s audience: viewers seeking to
enrich their knowledge and culture with the help of the media.
Important experience has been gained in TV for children and teens (La Melevisione,
Treddi, Screensaver, Il Giornale del Fantabosco, and È Domenica Papà) and the
evening TV series produced by RAI, Un Posto al Sole, which faces social issues in
line with the network’s identity.
Public interest
Mi manda RaiTre
Chi l’ha visto
Cominciamo bene
Racconti di vita
Un giorno in pretura
La Grande Storia
Correva l’anno
Elisir
Per un pugno di libri
Blob
Doc3
La musica di RaiTre
Information
Kids
Ballarò
Report
Blu notte
Italiani
C’era una volta
Ombre sul giallo
La Melevisione
Screensaver
Treddi
Il giornale del Fantabosco
Sfide
Geo&Geo
Alle falde del Kilimangiaro
Gaia
Ulisse
Passepartout
Il pianeta delle meraviglie
Prima della Prima
RAI Internazionale broadcasts the best of RAI programming throughout the world,
together with original programmes designed for Italians living abroad and anyone
else with an interest in or connection with this country. RAI Internazionale operates
under a convention with the Prime Minister’s Office to develop the public service
aspect of international broadcasting and to meet the needs of the international
Italian community for information and services. In 2004, the network produced
more than 700 hours of television broadcasts (48% information and 52% other
programming) and 1,380 hours of radio broadcasts (59% information and 41%
other programming).
Among the initiatives of particular note: Qui Roma, Sestante, Cristianità, l’Italiana,
Sportello Italia, L’agenda italiana e L’agendina, Il caffè, Anteprima TV, Le voci dell’italiano, Un’ora con voi, Sport Italia, Non solo calcio, and La grande giostra del gol.
23
During 2004, RAI Notte programming continued down “memory lane” with
high-quality programming taken from the RAI Teche archives (films, TV series,
documentaries, entertainment, and TV history anthologies) and a social theme
with programming produced by RAI and focusing on issues related to modern-day
Italian society and analysis of specific cultural themes (music, publishing, art,
cinema, and theatre).
Total programming on RaiUno, RaiDue, and – from November – RaiTre came to
about 2,400 hours, of which 1,400 hours of programmes with a historical focus.
News & Information
Again in 2004, the news programme TG1 confirmed its leadership in audience share
for all twelve editions. In fact, the evening edition of TG1 (at 8 p.m.) has led the
rankings of the most popular news broadcasts for more than 30 months, with an
annual daily average of more than 6.8 million viewers (a 31.3% share) and posting
constant growth throughout the year (up to 32.34% in December).
TG1 news is supplemented by a variety of standard segments (TG1 Economia,
Speciale TG1, TV7, Libri). In October, the broadcast was further enriched with the
addition of five more weekly segments (Turbo, Musica, Cinema, Mostre ed Eventi,
and Teatro) which air immediately following the evening edition and are repeated
after the late-night edition.
Of particular importance, too, was the success of the special editions on the delicate
situation in Iraq, with the dramatic involvement of the Italian military and Italian
civilians, as well as on the U.S. elections and the tsunami disaster in Asia.
In 2004, TG2 totalled 1,277 hours of broadcasts: 648 hours of news; 277 hours of
information and analysis (Costume e Società, Salute, Medicina 33, Eat Parade,
Motori, Neon Cinema, Neon Libri, Si Viaggiare, and Nonsolosoldi); and 71 hours of
special segments (Dossier and Dossier Storie), in addition to segments for the
weather and the lottery drawing.
Changes in 2004 included pushing back the 6 p.m. afternoon edition to become the
early evening edition at 6:30, thereby becoming the first evening broadcast of RAI’s
news programming.
TG3 was once again well received by the viewing audience in 2004, with five
editions throughout the day and 800 hours of broadcasts (568 hours of news and
185 hours of special segments).
Information and analysis is provided by the following special segments: Primo
Piano; Agenda del Mondo covering international issues and non-profit organisations;
Agri3; Chi è di Scena for the theatre; Cifre in Chiaro for the economy; GT Ragazzi;
Punto Donna; Sabato Notte for culture; and Shukran on immigration).
In 2004, the TGR regional news desk continued the process of innovation in terms
of both technical and human resources: the position of “resident editor” has proven
to be the key to more flexible regional coverage, and a number of standards of
digital technology have been defined to facilitate this.
24
Notte
TGR provides:
• daily regional news broadcasts, including 3 on TV and 2 via radio;
• Il Settimanale, analysis of regional news, culture, economy, politics, society and
entertainment;
• daily segments on science (Leonardo) and technology and the Internet (Neapolis);
• 9 weekly segments on the environment, culture, art, the economy and international
topics (Estovest and Levante, Ambiente Italia, Mediterraneo, Bellitalia, Italia
Agricoltura, Economia e Lavoro, Europa and RegionEuropa);
more
than 200 hours (including TV and radio) of political discussion and public
•
service announcements;
• Riva Sud: analysis of the economy and development of Mediterranean countries as
part of RAI Med;
• radio and television programmes in Italian, French, German, Slovenian and Ladin
broadcast by the offices located in the Italian regions that enjoy special autonomy.
The news desk produced 6,000 hours of informative TV broadcasts, 6,500 hours of
informative radio broadcasts, and more than 35,000 contributions to other RAI
programmes.
Tribune e Servizi Parlamentari (TSP) provides daily information on the workings of
Italian Parliament and, in general, on Italian politics and government with 281
hours of television broadcasts and more than 23 hours of radio programming (with
news programmes, live broadcasts from Parliament, and Question Time).
Programming comprises the three daily editions of TG Parlamento, the segment
Speciale Europa, and four segments of analysis (Settegiorni al Parlamento, Giorni
d’Europa, Speciale Europa presenta Euro Zone, and TSP/Regioni).
In 2004, 68 debates (for a total of more than 33 hours) were also broadcast, with a
particular focus on the European elections.
In 2004, RAI Sport was particularly committed to two major sporting events: the
Summer Olympics in Athens and the European soccer championships in Portugal.
The Olympics, in particular, absorbed significant resources in order to transform
RaiDue into the Olympic network, dedicated entirely to live broadcasts,
tape-delayed events, and analysis of everything happening in and around
the event.
RAI Sport completed its programming with the traditional attention paid to
Formula One, cycling (with live coverage of the Giro d’Italia and the Tour de
France), the soccer championships, world cup skiing, athletics, swimming, and
other team sports.
Alongside the traditional news programmes (Sport sera, RAISport Notizie,
RAISport3) and other programmes (90° minuto, La domenica sportiva, Dribbling,
Stadio 2 Sprint, Sport 2 sera and Domenica Sprint), of particular note was the
launch of the digital studio for RAI Sport Satellite, a sports channel offering the
news bulletins brought to the public with a host.
25
RaiNews 24 is RAI’s multimedia news channel that broadcasts digitally 24 hours a
day, 7 days a week, on the Internet and other new media.
The programming includes news updates every 30 minutes with analysis of the
leading stories, weather and traffic information, and daily and weekly topic-specific
supplements. Rai Notizie 24 monitors press agencies, video, and foreign
broadcasters, and provides formats for television, the web, and mobile telephony
(both GPRS and UMTS).
In 2004, Televideo further enhanced the quality and quantity of the information
provided in its national teletext service. It also expanded its offering of public
services in agreement with the Social Secretariat and other public entities.
In accordance with the service contract, Televideo provides the subtitles for the
hearing impaired and telesoftware programming for the blind.
Without doubt, the challenges for the years to come will be related to the
development of content in order to compete with the growing popularity of
the Internet.
Significant events in 2004:
• the entrance into digital terrestrial television by transporting the high-value
production of news to the new platform;
• the redesign of the web site in terms of both graphics and functionality;
• reaching the goal of subtitling three news programmes for the hearing impaired
one year ahead of the schedule specified in the service contract;
• the strengthening of the 21 regional editions with a doubling of the user base to
5.6 million readers.
Genres
RAI Cinema’s role is the acquisition of films, TV series, and cartoons and the
development of activities related to the production of Italian and European films for
its primary customer, RAI.
However, the company is also working to broaden its range of action by increasing
its customer base and the number of services in a market-oriented approach,
although the satisfaction of RAI programming needs will remain the company’s core
business.
To that end, along side the exclusive relationship with RAI for the broadcast of free
TV, there is also the creation of a direct channel in the distribution of theatrical and
home video through the establishment, in July 2001, of 01 Distribution (held in
partnership with Studio Canal until July 2003, but now wholly owned).
RAI Cinema’s objectives include the development of films and the acquisition of
other Italian and European films, which are in fact the primary product within the
quota defined by the service contract between RAI and the Ministry of
Communications.
In 2004, rights acquisition activities were aimed at theatrical and home video
products both for the current year and for the future. RAI Cinema continued
26
its pursuit of the medium to long-term procurement strategy begun at the end of
2001, which emphasises the acquisition of packages that closely meet RAI’s
programming needs, both in terms of quantities and genres, and visibility, so that
the value of the product can be determined accurately.
The company also continued with its longstanding policy (launched in 2001) of
acquiring full rights to the use of carefully selected foreign films for a significant
period of time. On the one hand, this policy enables optimal use of the product
across the range of available channels in order to be able to recoup the greater
investment made, while, on the other, it makes relations with the distributors/sellers
more efficient, in part because it becomes possible to select and acquire products on
a case-by-case basis.
In the film production area, RAI Cinema continued to focus on creating films that
join quality and popular success. The company targeted both the films of the great
names in Italian cinema and the debut works of the up and coming.
This resulted, towards the end of 2004, in the release of three important Italian films
distributed by 01 Distribution – Le Chiavi di Casa, by Gianni Amelio; La Vita che
Vorrei, by Giuseppe Piccioni; and Ovunque Sei, by Michele Placido – crowning
efforts of an increasingly close focus on Italian cinema.
The growth in RAI Cinema’s production of debut works and a focus on experimental
cinema continued in 2004 with 12 films, two more than in the previous year.
As mentioned above, RAI Cinema also distributes home video through its subsidiary,
01 Distribution.
Last year, 01 Distribution consolidated its brand and position within Italian film
and home video markets.
In fact, the company recorded its greatest box office numbers ever; while in the area
of home video, it completed the transition from distribution through third-party
providers to direct distribution by creating an in-house unit that makes it possible
for the company to maintain a presence in both markets under the same brand.
This generated synergies that are not commonly found in the Italian market.
Among the most important films of 2004, of particular note were: Le Chiavi di
Casa, by Gianni Amelio, with ticket sales of over 4 million Euro; Ovunque Sei, by
Michele Placido and starring Stefano Accorsi; The Phantom of the Opera; and Shall
We Dance?, with Richard Gere and Jennifer Lopez, which recorded ticket sales of
more than 12 million Euro.
In the home video segment, direct distribution began at the end of August and met
with great success, even though the video catalogue certainly has a great deal of
room for improvement.
27
Rai Fiction produces TV programming, where RAI has established a position of
recognised leadership, both in audience (122 prime time broadcasts on RaiUno
and an average share of 27%) and in programme quality.
In 2004, the offering of prime time TV series posted excellent results with the
launch of new series (Orgoglio, Amanti e segreti), confirmation of the success of
already popular shows (Un medico in famiglia, Don Matteo, and Incantesimo),
and a number of prestigious miniseries (La fuga degli innocenti, Raccontami una
storia, Don Bosco, Cime Tempestose, La Monaca di Monza, Le cinque giornate di
Milano, and others).
Also of note was the significant contribution in the area of cartoons made in Italy and in
Europe, which far exceeded U.S. and Japanese productions within RAI programming.
In 2004, RAI Educazione broadcast about 690 hours of programming (with 434 hours
of premiere broadcasts on RaiTre, 41 hours on RaiDue, and 32 hours on RaiUno).
Particularly successful programmes included: La Storia siamo noi, Il grande Talk,
Quarto piano scala a destra, Diario di famiglia.
Activities in the area of theme-based satellite channels focused on Divertinglese and
Divertipc on RAI Edu 1, which were developed as part of our relationship with the
Ministry of Education, and Explora on RAI Edu 2, which is dedicated to science and
medicine.
TV Support
RAI Teche
Last year saw the continuation of intensive efforts to gather, catalogue, digitise and
maximise the value of RAI’s immense portfolio of documentary and historical heritage.
This commitment was flanked by the significant creative efforts required for the two
events that characterised the year: the 50th anniversary of television in Italy and the
80th anniversary of radio in the country.
RAI Teche worked together with all of the channels and programmes of the Group
in order to assist with research and reproduction of material, to support the
production and distribution of RAI products, and to facilitate access to the archives
by researchers and non-profit organisations.
RAI Teche and RAI Eri produced the book and the multimedia CD RicordeRai,
which was awarded the Premio Ostia and the special jury prize at the Salerno Film
Festival, to celebrate the 50th anniversary of Italian television.
The RAI Teche archives in numbers:
• 38,050 hours of historical material and 34,325 hours of daily TV material digitised
and documented;
• 46,834 hours of historical material and 35,712 hours of daily radio material digitised
and documented;
• 932,073 hours of fully accessible audio-visual material;
• 39,000 viewable photos;
• 7,755 registered users of the multimedia catalogue;
• 6,173,614 searches of the multimedia catalogue in 2004.
28
Teche
Audience
In 2004, as mentioned above, the television audience reached all-time highs: the
full-day audience reached an average of 9.2 million viewers, and the prime-time
audience surpassed the 25 million mark for the first time.
These numbers are essentially due to the major sporting events during the year and,
in part, to the increase in viewers of satellite broadcasts (an area in which RAI has
a prestigious free and pay-TV product offering on the Sky platform).
Daytime (7 a.m. - 2 p.m.)
With the increase in satellite TV (+1.6%), RAI essentially maintained its position,
with a slight drop of just 0.6% - less than that of its main competitor - for an
audience share of 44.56%.
RaiUno is the confirmed leader with a share of 23.10%, down just 0.5 points, with
RaiDue once again the third most popular Italian network, outpacing Italia 1 by
nearly 0.8 points, and RaiTre still in fifth place with a share of 9.15%, compared
with 8.90% for Rete 4.
Satellite TV acquired a share of more than 4% in this time band.
Prime time (8:30-10:30 p.m.)
RAI increased its share by 1.7 percentage points, even greater than that of satellite
TV (+1.5%), to reach 46.40% and regain a clear lead after two years of losing
ground against its main competitors during prime time.
RaiUno ended the year with an exceptional 25.67% share, an increase of more
than 2 points from 2003, thanks to the great success of Affari Tuoi, a lead-in
programme to prime time, and the programming in the 9-11 p.m. time slot as a
whole (+1.3%).
29
RaiDue’s 11.12% share places it nearly level with Italia 1 (with a share of 11.17%),
while RaiTre held steady in fifth and in front of Rete 4 by 0.76 points.
RAI leads the way not only in terms of audience numbers, but also programme
quality. RAI is at the top of nearly every broadcasting category, based on Auditel
data:
• the most watched programme in 2004, the Italy-Bulgaria match at the European
soccer championships (with over 21 million viewers and a 71.25% share);
• 6 RAI programmes in the top 10 most watched shows (including Affari Tuoi and
Un Medico in Famiglia, with shares of 45.89% and 41.61%, respectively);
• leadership in public service broadcasts regarding culture, science, information,
and analysis;
• leadership in sports broadcasts (soccer and Formula One, as well as the highly
successful Summer Olympics and the European soccer championships);
• the excellent results of the major events in the world of entertainment (such as the
54th Festival di San Remo and the Miss Italia finals) and reality shows (with
nearly 11 million viewers for L’Isola dei Famosi);
• the success of the TV series produced by RAI.
At least as important as all of these successes is the continuing leadership of the
main editions of the company’s news programmes.
Afternoon time slots
time
edition
share
13:00
TG2 - daytime
TG5
TG1
TG4
22.5
26.3
28.9
8.0
14:00
TGR
14:20
TG3
13:30
30
Evening time slots
time
edition
share
19:00
TG3
TG4
15.7
8.3
19:30
TGR
17.2
17.3
20:00
12.0
20:30
TG1
TG5
TG2
31.3
27.7
10.7
News share
(source: Auditel)
Quality and satisfaction
The IQS project (Indicatore di Qualità e Soddisfazione – Quality and Satisfaction
Index) began in 1996 as an experiment to create a system of monitoring quality as
perceived by viewers.
The 2003-2005 service contract assigns strategic importance to the quality of
programming and calls for the establishment of a joint commission (with two
members from the Consiglio Nazionale degli Utenti – the national radio and TV
users council - two from RAI, and one from the Ministry of Communications) to
verify the steps taken to implement the principles followed in assessing the quality of
television and radio programming. The commission conducted a preliminary
study to define the quality targets and verify the parameters for measuring perceived
quality, which include parameters for television programming in general, as well
as specific parameters for the various genres and for the RAI product offering.
The process establishes:
• the reference population: Italians 15 years and older;
• the survey: 1,500 phone calls for a total of 800 valid interviews each day;
• timeframe: 7 days a week, 250 days per year;
• scope of the survey: RAI programming from 7 a.m. to midnight;
• research institutes: Doxa for the survey; evaluation and certification by the
Consorzio Interuniversitario per le Applicazioni di Supercalcolo e Ricerca (CASPUR);
• IQS index: on a scale of 1 to 100.
IQS Index by genre
Culture
TV series
Films
Entertainment
Information
Sports shows
Public interest and social
News
Cartoons
Programmes for children
7:00-24:00 time slot 21:00-23:00 time slot
86.6
78.2
71.4
79.2
77.2
75.1
83.4
75.6
86.6
89.1
86.8
78.4
71.4
75.5
77.4
74.7
84.0
31
Radio Division
Radio RAI continued its commitment in 2004 to achieving the goals of:
• confirming an emphasis each day on the leading domestic and international
news stories;
• providing listeners with timely, accurate, and authoritative information;
• making room for the views of all of the nation’s social, cultural, and political groups.
Performance for the year was positive in a number of areas, particularly for
RadioUno and RadioTre as a result of the major sporting events, for the former,
and the high degree of listener loyalty for the latter.
The guidelines of the business plan approved during the year call for a search for
solutions able to restore the competitiveness of RadioDue, as well, which traditionally
targets a younger audience more susceptible to the aggressiveness of the great
many commercial networks.
In May 2004, the unification of the medium-frequency broadcasts led to the closure
of Radio2 and Radio3, which, in part, penalised the more traditional audience.
During the year, a series of technology investments were planned to improve the
quality of FM broadcasting, which is affected by longstanding critical issues
and structural defects (interference) resulting from the rapid expansion of local
broadcasters.
The top radio station in
terms of audience
Station dedicated to news,
current events, and analysis
(politics, economy, society,
science and technology)
Station dedicated to
entertainment, rock and
pop music, and direct
contact with listeners
Young audience
News and commentary for
sporting events
Segments for
information
32
Station dedicated to highquality music, cultural
events, the promotion of art,
national and international
musical events, theatre and
high-quality cinema, and the
major international issues in
politics and the economy
Analysis in the fields of
science and philosophy
regional
Radio news leader with
more than 50 editions
broadcast via radio and
over the Internet
Station that provides
information regarding the
Italian
Senate
and
Chamber of Deputies.
Information for people on
the move, providing frequent
updates on traffic, safety,
weather, and transport.
GR1 for general news,
GR2 for social and youth
issues, GR3 for the economy
and international news
Segments of analysis,
debate, and press reviews
Segments of analysis
(employment, health, free
time, and the environment)
and music
These are a few of RadioRAI’s most successful broadcasts:
• on RadioUno: Radio anch’io, Tutto il calcio, Questione di soldi, Italia, istruzioni
per l’uso, Zapping, Baobab, Con parole mie, Ho perso il trend, Baco del millennio,
La Radio ne parla, Zona Cesarini, i Concerti del venerdì;
• on RadioDue: Viva Radio2, Il ruggito del coniglio, Fabio&Fiamma, Caterpillar,
28 minuti, Atlantis, Catersport, Il Cammello di Radio2, Condor, Black out, Hit
Parade Live Show, Giocando, 610 - Sei uno zero;
• on RadioTre: Prima pagina, Fahrenheit, Hollywood party, Radio3 Scienza,
Radio3 Mondo, La barcaccia, Radio3 Suite, Ad alta voce, Il terzo anello, I Concerti
del Quirinale, Uomini e profeti.
Audience
In the highly competitive landscape and extreme diversity in available programming
that characterised the year 2004, RadioRai posted moderately positive results:
• RadioUno maintained its position of leadership with 7,212 thousand listeners,
thereby reversing the downward trend of the previous years (+1.4% from
2003);
• RadioDue, with 4,502 thousand listeners, remained in third place in terms of
average daily audience despite a certain decline from 2003 (-6.1%);
• RadioTre, with 2,125 thousand listeners, remained in eighth place but increased
significantly over the previous year (+6.8%);
• Isoradio, with an average of 1,212 thousand users per day, decreased compared
with 2003 (-14.2%).
33
New Media & DTT Division
The RAI Group and its subsidiaries, including RAI Sat, RAI Net and RAI Click, are
keenly focused on developing business in media areas that complement radio and
television.
This includes specific initiatives in the production of thematic channels distributed
via satellite on the Sky platform (including the channels Extra, Premium, Gambero
Rosso, Ragazzi, and Cinema World), the publication of multimedia content on the
web, and video-on-demand over broadband connections (on the RAI Click web site
and for Fastweb users).
In confirmation of the important development in these media, Sky subscribers with
access to the RAI Sat theme-based channels through the Primo Sky package
totalled 3.06 million at the end of the year, while subscribers with access to the RAI
Sat Cinema World channel through the Cinema Premium package numbered
2.79 million.
Alongside these well established activities, the RAI Group has signed agreements for
the distribution of information and multimedia content to the mobile telephony
market.
Digital Terrestrial Television
The year 2004 was a crucial one for RAI’s commitment to developing the digital
terrestrial television (DTT) project, in accordance with the agreement stipulated
with the Ministry of Communications, and included the start of digital broadcasting
at the beginning of the year.
The radio and TV programming on the two multiplexes, which cover 70% of the
population as of the start of 2005, is as follows:
• Multiplex 1: RaiUno, RaiDue, RaiTre (simulcast with their corresponding analogue
broadcasts);
• Multiplex 2: Rai Sport, Rai Notizie 24, Rai Edu1 (simulcast with their
corresponding satellite broadcasts), RaiDoc, RaiUtile (channels created specifically
for DTT), RadioUno, RadioDue, RadioTre, and V, the wire radio station.
RaiDoc is dedicated to high-quality cultural entertainment (art, music, theatre,
cinema, literature, dance, opera, and so on), with prime-time broadcasts of
entertainment that you are not likely to find on the other more generic networks.
Since September, RaiDoc programming has included the productions of RaiFutura,
whose mission is to create and produce experimental programmes with new
protagonists and new production models. The channel has created 1,140 hours
of premiere transmissions so far.
RaiUtile provides a public forum for civil society, business, government, schools
and universities. The channel is particularly innovative because of the way it
interacts with its viewers. The channel’s interactive portal is home to Italia Utile – an
34
application created in collaboration with the Centro Nazionale per l’Informatica
della Pubblica Amministrazione (the National Centre for IT in Government CNIPA) – which digitises a portion of the content found on Italia.gov.it, the national
portal for the Italian public. In 2004, the channel achieved 537 hours of premiere
transmissions.
In 2004, interactive programming included the following applications:
• Guida!: an interactive programme guide for the 8 digital channels;
• Televideo teletext service;
• La Radio: an interactive radio programming guide;
• the Rai Notizie 24 portal;
• the Rai Utile portal.
In addition, 42 transmissions were made interactive (including the Festival di
Sanremo, I 50 Anni della RAI, the European elections, the Olympics, the
Paralympics, the European soccer championships) with information magazines
always on the air, totalling an additional 174 days of programming.
The guidelines for the development of DTT call for the definition, where possible, of
agreements able to place RAI at the heart of the market for the new services made
possible by digital technology, as well as the provision of high-quality programming
so that the Group can continue to achieve success in experimental television.
Actually, RAI is the key contact for Italian government and its initiatives in
t-government, communication and training involving the public.
Commercial Division
The development of commercial activities in the field of advertising is entrusted to
SIPRA, a subsidiary of the RAI Group that manages advertising on the television
and radio networks, as well as on the teletext service, the free and pay-TV
satellite channels (the theme-based RAI Sat channels and the channels managed by
RAI Trade), the interactive RAI Click channels, the RAI.it portal, and the cinema
segment.
SIPRA advertising revenues
(millions of euros)
1,096.1 Television
76.1 Radio
8.6 Other RAI
31.4 Film
3.7 Other
0.9 Internet
1.6 Pay Rai Trade
1.0 Pay Rai Sat
0.2 Other
35
As noted earlier, the results for 2004 were extremely positive, outperforming the
market in the area of television revenues, due in part to the major sporting events
during the year and the general recovery in audience for the RAI networks,
particularly in the high-value time slots.
The drivers of this growth included:
• the increase in marketing activities targeting customers, with specific initiatives
for the European soccer championships and the Olympics;
• the development of film advertising and the promotion of radio;
• internal reorganisation, with particular regard to the development of sales
structures, the corporate information system, and business support systems.
Two initiatives are of particular note:
• the launch of a new working group dedicated to testing for advertising in relation
to programmes intended for digital broadcast in collaboration with the relevant divisions;
• testing in 2004 within the Lombardy region of the new development network
responsible for initiating relations with customers that traditionally tend to invest
in media other than those that are managed by SIPRA (print media, billboards,
etc.). The findings of the testing suggest that the project should be extended to
other regions.
In order to optimise the commercial development of the Group as regards revenues
other than advertising and the licence fee and as part of the corporate restructuring
mentioned above, we have created a specific structure dedicated to sales
development and coordination.
The initiatives planned are aimed at:
• defining global sales strategies for the Group;
• identifying new revenue opportunities in domestic and international markets and
developing the related business plans;
• coordinating the Group’s sales revenue plan.
The actions taken, which have already produced concrete results, involved:
• the maintenance and development of established revenue areas (such as the
conventions for government communications);
• the identification of global sales strategies in the telecommunications market
(UMTS, ADSL and other broadband, etc.);
• the implementation of initiatives aimed at exploiting the opportunities offered by
the new media market;
• the coordination of sales activities related to the programming of the three main
networks, in part through the joint development of strategies for maximising
commercial revenues;
• the definition of initiatives aimed at consolidating and developing commercial
opportunities for the Group.
36
In terms of commercial distribution, RAI Trade has focused on consolidating
activities connected with its agreement with the parent company (sale of rights to
sporting events, TV series, etc.), as well as developing the management of rights
related to the mobile telephony market. It is also worth highlighting the successes
seen in the area of music sales.
Of particular note in 2004 were:
• music was driven by significant growth in the product catalogue, with ethnic and
contemporary music, the production of music for radio and television, and the
creation of new recordings generating greater revenues than originally expected.
The compilation for the Festival di Sanremo was also particularly successful;
• the sale of rights to sports events posted solid performance, particularly the
rights to the events and news for the Athens Olympics and the European soccer
championships. Also of note is the co-distribution agreement with SEDS (Sportfive
Group) for the foreign distribution of the Italian soccer championships;
• film and TV series posted higher sales despite difficulties related to strategic and
operational issues in international markets;
• the thematic channels, thanks in particular to the increase in subscribers to
the Inter Channel and the recent distribution via Fastweb, confirmed their solid
performance;
• home video benefited from co-distribution and licensing agreements. The
Momenti di Gloria initiative in collaboration with RCS Gazzetta dello Sport
posted strong results;
• the production of high-quality music and music sales optimised their business by
focusing, above all, on agreements with the major Italian cultural organisations,
as well as on TV and DVD rights and the maximisation of the value RAI’s
historical archives.
Broadcasting Division
During the year, this division, which is managed by Rai Way, was characterised by
the launch of projects to implement the unified network for medium-wave radio
broadcasting, as well as the development of the digital terrestrial television project.
With regard to the former, on 15 May redundant systems were shut down, and
investment began for the completion of the new network.
Investments also focused on improving and upgrading systems in order to maintain
quality and availability at the levels required by the service contract.
On the commercial side, we are currently experiencing a slowdown in demand for
the provision of network infrastructures primarily for telecommunications
companies, public administration, and broadcasting, as well as a contraction in the
market for broadcasting services due to the repositioning of a number of
broadcasters.
37
Financial performance
In 2004, the results for the Group showed a positive trend both in terms of
profits and financial position.
The net profit for the Group (82 million Euro) was essentially in line with 2003,
despite the costs related to the major sporting events during the year, while the net
financial position, at a positive 124 million Euro, marked a sharp improvement
on the previous year.
More specifically, the gross operating margin (759 million Euro) and operating
profit (89.5 million Euro), excluding the cost of the major sporting events for the
year and the subsequent increase in advertising revenues (net effect in the order
of 100 million Euro), improved by more than 50 million Euro and 10 million
Euro, respectively.
Operations were characterised by the favourable trend in consolidated revenues,
which exceeded 3 billion Euro, an increase of 6% over 2003. Viewer satisfaction,
and the consequent appreciation of advertisers, translated into a significant increase
in advertising revenues, which grew by over 11%, more than the market average.
The number of licensed viewers also increased (by more than 400,000), in
confirmation of the trust the public has shown in RAI.
Also affecting 2004 results for the Group was an improvement in our tax
position, due primarily to the recognition of deferred tax assets related, in
particular, to the significant level of taxable provisions on the Group’s balance
sheet.
38
In terms of operating expenses (2,273 million Euro), more than half of the increase
over the previous year (+11%) is related to costs in respect of the major sporting
events (the Summer Olympics and the European soccer championships totalled
nearly 130 million Euro in rights alone), along with the initiatives to strengthen
television programming that began in the autumn of 2003. Efforts also continued
to rationalise purchasing, which helped curb the overall increase in operating costs.
With regard to the Group’s subsidiaries, operations for the year focused on
consolidating their strategic market positions and on optimising the various
synergies within the Group.
In the area of film rights in particular, sales rose in the film distribution market
(theatrical and home video, etc.) in conjunction with an investment strategy which,
as in previous years, focused especially on enriching the portfolio of premium
repeat-use products.
Sales also benefited from the consolidation of activities to take advantage of rights
to sporting events internationally, as well as from the maximisation of the product
value in the telecommunications segment and in that of new media (satellite,
Internet, broadband, etc.).
Finally, in the area of digital terrestrial broadcasting, the significant investments
during the year enabled us to meet the statutory coverage requirements (more than
70% of the population for both multiplexes).
This improvement in profitability was also accompanied by an improvement in our
balance sheet and financial position. The Group strengthened its balance sheet
and recorded a positive net financial position of 124 million Euro, an improvement
of 90 million Euro over the previous year.
It is also important to note that the average financial position for the year turned
positive for the first time in seven years (at 26 million Euro).
Cash flow was also affected by outflows of about 100 million Euro related to the
rights to major sporting events, both for 2004 and for future events.
The parent company also closed 2004 on a positive note with a net profit of 113
million Euro, significantly better than the previous year (24.5 million Euro).
In addition to the factors described for the Group as a whole, the parent company’s
result was affected by the elimination of tax distortions, as required by under current
legislation (see the notes to the financial statements for more information).
The positive earnings performance was also reflected in cash flow, which boosted the
net financial position of RAI SpA from 191 million Euro in 2003 to more than 268
million Euro in 2004.
Furthermore, last year’s performance was better than the forecasts used in preparing
the 2005-2007 business plan (i.e. growth in gross operating profit of around 5%
and an increase in the net financial position of around 80 million Euro), which was
developed to support the process of privatisation.
39
The achievement in 2004 of some of the targets for the full three years thereby
reinforces the reliability of the business plan’s forecasts.
For further information on the income statement, the balance sheet and the
financial situation, please see the related sections below both for the Group and for
the parent company, RAI SpA, as well as the notes to the financial statements.
Human Resources
The new corporate structure became operational in 2004, replacing the divisional
model adopted in 1999 with six macro-areas that are in line with the objectives
established for the 2004-2006 business plan.
The Human Resources and Organisation Department designed and implemented
the new structure, defining the corporate divisions, their related missions and the
structure of responsibilities and redesigning processes.
Of particular significance was the work done to redistribute corporate resources in
line with this new structure.
With regard to compensation policies, in the early part of the year an analysis of
skills was also carried out in conjunction with the preparation of the budget for
all employees.
A programme was also prepared to analyse the MBO plan in order to rationalise
the experiences of past years with a view to continuing to perfect this management
and motivational tool, which, more than any other, is seen to be directly linked to
corporate results.
Training and internal communication
Some 160 employees participated in inter-company or in-house professional or
managerial training courses.
Foreign language training for journalists and executives with international
responsibilities also continued in 2004.
On the issue of job safety, of particular note were the initiatives for employees
active in high-risk areas, such as journalists and other employees in Iraq, and skill
updating for those on fire and first-aid teams.
With the help of Istituto Superiore per la Sicurezza sul Lavoro (ISPESL), an Italian
organisation for workplace safety, a multimedia product was completed to provide
“video-terminal” training. RAI’s document on safety, fire prevention and first aid
was also revised, in part in response to the changes involved in implementing the
new corporate structure.
40
In the areas closer to the company’s core business, courses were held in relation to
the introduction of digital terrestrial television and on the use of digital video
cameras, and the two-year masters programme for television screenwriters came to
a close. A seminar on “television and minors” was also held.
As for external training activities, courses were organised for the employees of Iraqi
television broadcasters and, as part of the European “CARDS” project, for the
journalists of the Serbian broadcaster RDP92 and the Bosnian broadcaster
Alternativa Televizija, and about 350 interns from various schools and organisations
were also accepted.
On the internal communication front, in addition to the routine management and
maintenance of the intranet used to disseminate useful information to employees, a
great deal of effort was dedicated to communications regarding the corporate
reorganisation.
Labour relations
The key events in the area of labour relations included:
• the renewal, on 25 May, of the supplemental agreement for management for
2004-2005, which had expired on 31 December 2003;
• the signing, on 9 June 2004, of the agreement with the trade unions for the
establishment of a pool of directors for fixed-term appointments, consisting of
candidates with at least 1300 days of experience in this position;
• the signing, on 23 December, of the proposal for the renewal of the collective
bargaining agreement for middle management, office staff and workers, the
compensation portion of which is to expire on 31 December 2005, with the
regulations portion expiring on 31 December 2007. The trade unions provided
their response on 3 February and 22 February 2005.
With regard to journalists, of particular importance was the signing, on 23
February 2005, of the agreement with USIGRAI regarding non-permanent
employment, which calls for:
• the creation of a pool of 300 qualified journalists on call;
• the commitment of the company to use the journalists in this pool at least 8
months per year, for a five-year period, on temporary contracts;
• the hiring on permanent contracts of the first 100 journalists (with a portion for
the regional offices) by 30 June 2009;
• the formalisation, by way of a settlement agreement, of the commitment of the
journalists in the pool not to file legal action against the company for the period
of application of the agreement.
The agreement will therefore have positive effects on the outcome of the legal
dispute under way and, in particular, on the phenomenon of court-ordered
reinstatement for the years to come.
Finally, the new text of the supplemental company-level contract for journalists
was also signed during the year.
41
The workforce at 31 December 2004 totalled 10,064 employees, compared with
9,983 at the beginning of the year.
A total of 152 people left the company, while new hires numbered 233, as follows:
4 were the result of resolutions by the Board of Directors or authorised by the
General Manager; 125 were reinstated following legal action; 45 were the result of
previously defined trade union agreements; 18 were due to intra-group transfers;
and 41 were hired for the purposes of a targeted strengthening of staff in the most
critical sectors.
Finally, 26 employees on trainee contracts and two-year journalist contracts
signed in 2002 were converted to permanent contracts.
Staff (RAI SpA) by position
FY2004
FY2003
279
335
614
1,328
1,093
2,708
1,593
526
794
150
1,048
132
9,372
9,986
78
10,064
289
332
621
1,332
1,069
2,747
1,592
525
718
161
1,032
134
9,310
9,931
52
9,983
Executives & equivalent
Executives
Journalists
Journalists
Middle management
Office workers (including medical staff)
Office workers (production)
Camera crew
Programme direction
Technicians
Workers
Creative staff
Staff on permanent contracts
Staff on trainee contracts
Total staff
Although increasing significantly compared with past years due to the mandatory
court-ordered reinstatements, the total workforce was nevertheless 31 employees
lower than the target set in the budget.
Research and Development
Research and development is mainly the responsibility of the Centro Ricerche e
Innovazione Tecnologica (CRIT, or the Center for Research and Technological
Innovation), which is part of the Strategic Technologies Department. It collaborates
with leading national and international organisations, universities and research
centres to define new standards and develop new technologies and services, and
which also participates in a great many funded projects.
These projects can be grouped into three main categories:
• the optimisation of production techniques, particularly as regards the use of
information technology in the documentation and use of archive audio-visual
material;
• the extension and introduction of digital technologies for the broadcast and
distribution of television programming – particularly for the launch of digital
and interactive television – as well as radio;
• the dissemination of technical and technological information.
42
The main projects in 2004 included:
• the efforts to launch the DTT service and provide support to the various
corporate units involved in fine-tuning the process of producing and broadcasting
interactive services, as well as in developing applications and testing them on
the decoders currently on the market;
• the completion of the development of a multimedia home platform (MHP) to
simulate interactive applications, such as t-government, to be used on nextgeneration set-top boxes;
• projects funded by the European Union’s fourth framework programme related
to the latest digital video broadcasting (DVB) standard, DVB-H, for mobile
phones and other handheld devices.
Finally, we should point out the commitment to promoting, through a variety
of publications (such as the RAI Eri on-line periodical “Elettronica e
Telecomunicazioni” published every four months through the CRIT web site), our
participation in national and international seminars and conferences.
In conjunction with the 50th anniversary of Italian television, an exhibit was created
at CRIT describing the role RAI has always played in the field of technology, and
a special issue of the magazine “Nuova Civiltà delle Macchine” was also published.
Proposed projects to further technological development include:
• the extension of DTT coverage beyond 70%;
• the improvement of the quality of reception for Radio Rai;
• the enhancement of the company’s networks (telephone and telecommunications);
• the introduction of multi-channel audio in MF radio and DTT broadcasts.
Intercompany relations
In the first half of 2004, the RAI Group continued operations based on a
decentralised organisation model for a number of activities managed by
special-purpose companies. Relations with subsidiaries and associated companies are
all conducted on an arm’s length basis on current market terms and conditions.
Certain services, such as accounting and administration, personnel, real estate,
legal affairs, research and development, warehouse management, and information
systems, are centrally managed for some companies.
RAI also has a centralised treasury management relationship with its subsidiaries
in order to ensure the coverage of financing needs and to optimise the investment
of available liquidity.
These are the main subsidiaries within the RAI Group and their respective
missions:
• Rai Cinema: handles the acquisition of broadcast rights for films, as well as the
production and distribution of Italian and European films and the sale of
related rights.
• 01 Distribution: responsible for the acquisition and distribution to movie
theatres and through the Italian home video network of films, TV shows, and
advertising, as well as for the use of related rights.
43
• Rai Click: distribution and sale of audio-visual and multimedia products via
broadband Internet connections.
• Rai Corporation: provides technical and editorial support for RAI’s journalistic
programming.
• NewCo Rai International: responsible for the broadcast and distribution of
radio and television programming abroad as part of its mission to promote the
Italian language and culture throughout the world.
• Rai Net: handles the portfolio of RAI programmes and services on the Internet
and manages the RAI.it portal.
• RaiSat: handles the programming of thematic satellite channels for third
parties, as well as the digital terrestrial channels for RAI.
• Rai Trade: responsible for marketing and distributing RAI products, particularly
rights to sports events, high-quality music and theatre.
• Rai Way: handles the broadcasting for RAI radio and TV channels, contributes
to the creation of programming, provides hosting services on its own systems for
other broadcasters, assesses environmental impact, and provides other technical
services.
• Sipra: responsible for the sale of advertising for RAI.
The following tables provide financial highlights for the Group’s subsidiaries:
Rai Cinema (millions of euros)
2004
2003
%
Revenues
Operating costs
Amortisation, depreciation, provisions & other, net
Net financial income (expense)
Operating profit/(loss)
293.1
36.4
223.0
- 9.1
33.7
309.9
32.2
185.8
- 11.7
91.9
- 5.4
13.0
20.0
- 22.2
- 63.3
31.8
241.6
- 199.5
284.0
47.3
170.5
- 197.8
287.1
- 32.8
41.7
0.9
- 1.1
62
63
2004
2003
%
44.2
43.4
0.2
37.7
37.5
0.1
17.2
15.7
Net profit (loss)
Equity
Net financial position
Investment
0.6
3.1
-
0.5
2.8
-
Workforce (permanent + trainee contracts)
25
12
Net profit (loss)
Equity
Investment
01 Distribution (millions of euros)
Revenues
Operating costs
44
100.0
20.0
10.7
Rai Click (millions of euros)
2004
2003
%
Revenues
Operating costs
2.4
3.8
0.1
-1.7
1.1
3.1
0.2
-2.5
118.2
22.6
-50.0
-32.0
Net profit (loss)
Equity
Investment
-1.0
6.5
6.2
0.3
-2.3
7.6
7.7
0.2
-56.5
-14.5
-19.5
50.0
1
2
2004
2003
%
Revenues
Operating costs
17.8
18.3
-0.9
17.5
17.0
0.1
1.7
7.6
-1000
Net profit (loss)
Equity
Investment
-1.1
-1.1
2.5
1.1
1.1
0.1
-100.0
-200.0
2400.0
48
44
Rai Corporation (millions of euros)
Newco Rai International (millions of euros)
2004
2003
Revenues
Operating costs
0.4
-0.4
0.3
-0.3
Net profit (loss)
Equity
Investment
-0.3
0.5
0.4
-
-0.3
0.7
-
-
-
2004
2003
%
Revenues
Operating costs
5.9
11.1
0.1
-6.5
4.8
10.0
0.1
-6.7
22.9
10.8
-3.0
Net profit (loss)
Equity
Investment
-4.6
3.8
1.9
0.5
-6.6
4.4
3.7
0.3
-30.3
-13.6
-48.6
66.7
57
61
Rai Net (millions of euros)
%
33.3
33.3
-28.6
45
Rai Sat (millions of euros)
2004
2003
%
59.0
38.2
-0.2
7.0
47.9
30.8
-0.3
4.6
23.2
24.0
-33.3
52.2
3.4
7.3
-12.4
11.8
2.0
5.7
-2.6
10.6
70.0
28.1
376.9
11.3
71
62
Rai Trade (millions of euros)
2004
2003
%
Revenues
Operating costs
72.4
49.9
-1.6
8.1
66.0
46.6
-0.8
6.1
9.7
7.1
100.0
32.8
Net profit (loss)
Equity
Investment
4.3
19.6
10.7
16.6
2.5
17.6
1.7
14.4
72.0
11.4
529.4
15.3
87
85
Rai Way (millions of euros)
2004
2003
%
Revenues
Operating costs
203.5
142.8
-0.8
16.7
199.2
142.8
-2.5
14.1
2.2
-68.0
18.4
Net profit (loss)
Equity
Investment
7.8
91.2
-21.8
30.0
5.1
83.4
-44.4
30.8
52.9
9.4
-49.8
-2.6
711
724
Revenues
Operating costs
Net profit (loss)
Equity
Investment
Sipra (millions of euros)
2004
2003
%
1,226.5
1,193.8
1.7
28.0
1,103.1
1,085.0
2.5
10.7
11.2
10.0
-32.0
161.7
Net profit (loss)
Equity
18.5
42.5
67.5
8.3
32.1
69.0
122.9
32.4
-2.2
Investment
1.9
428
1.8
425
61.1
Revenues
Operating costs
46
Transactions between RAI and related parties
(thousands of euros)
Sundry trade relations
Receivables Payables Costs (*)
Rai Corporation
SIPRA
Rai Way
Rai Trade
Rai Click
RaiSat
RaiNet
NewCo Rai International
Rai Cinema
01 Distribution
San Marino RTV
Auditel
Audiradio
Secemie
Sacis
Memorandum accounts
Revenues Receivables Payables Expenses Income Guarantees Commitments
27 1,425 12,551
139
345,629 6,162 1,260 1,111,306
6,188 59,584 165,212
18,114
15,829 8,696 16,453
19,080
131
598
354
6,524 4,445 10,353
11,484
1,236 3,162 2,038
2,745
29
128
53
15,520 4,737 265,031
9,043
44
63
128 1,569
17
248
4,451
1
1
388
5
1,740
3
Financial relationships
1,106
0
66,798
11,005
6,248
22
1,141
19
78
130
1,859
352
76
7
21,801
12,362
2
8,219
199
2,330
1,901
199,499
49,254
896
5,576
21
Other
3,304
33,308
1,735
19,126
1,092
1,390
7,261
7,091
93,380 20,014
473
2,582
68
(*) of which capitalised:
- RAI Corporation 19,
- RAI Trade 68,
- RAISat 17
Additional information
The following additional information is being provided in accordance with Article
2428 of the Italian Civil Code.
Significant post-period events
Among the significant events subsequent to the close of the financial year, some
of which have already been mentioned above, we should note:
• the decision to set the licence fee at 99.60 Euro, unchanged from the previous year;
• with resolution no. 102/05/CONS of 10 February 2005, the Communications
Authority required RAI to provide separate accounts for its public service
broadcasting, in accordance with general and international accounting
principles and taking into account the analytical accounting methods specified
in European Commission Recommendation 98/322/EC. Within thirty days of
its publication in the Gazzetta Ufficiale, RAI must send the Authority the format
for the separate accounts, and the Authority will then have 30 days to send its
observations to RAI, which will have a further 10 days in which it can state its
intention to comply or submit a memorandum, which may include a request for
a hearing. The Authority shall make its decision by way of a reasoned order on
the separate accounting format in the 30 days following the receipt of the
statement of compliance or the memorandum.
47
• on 23 February 2005, an agreement was signed with USIGRAI on the so-called
non-permanent employment of journalists.
• on 9 March 2005, the Communications Authority declared that RAI had failed
to comply with the terms of the formal reprimand required by resolution
no. 226/03/CONS of 27 June 2003, and assessed sanctions totalling about
20 million Euro.
In that regard, given that the Authority’s decision is deemed to be unfounded,
RAI will be appealing the decision to the Administrative Court of the Region of
Lazio, requesting that the decision be suspended pending the appeal and that the
resolution be voided.
Outlook
This year – the first of the new 2005-2007 business plan – is expected to see a
significant improvement in earnings performance, both in absolute terms and on a
like-for-like basis after adjusting for the distortions related to the fact that charges
for the acquisition of rights to the major sporting events only occur in
even-numbered years.
When analysing this expected improvement, one must also consider:
• the continuing development of digital terrestrial broadcasting and, therefore, the
investment in technologies and programming related to that project. Furthermore,
the positioning of other broadcasters could make it essential to respond quickly
and effectively to the overall strategy defined thus far by RAI for the various
platforms;
• the unchanged licence fee from the previous year (99.60 Euro). This will effectively
result in a reduction in revenues, as it does not include any adjustment for
inflation, which is forecast at 1.6% the Italian Government’s Economic and
Financial Planning Document for the period 2005-2008.
After the excellent year posted in 2004, advertising revenues could see slower rates
of growth, but they are, nonetheless, expected to increase, despite the lack of the
contribution of the major sporting events we had in 2004. The completion of the
repositioning of our product offering and the consolidation of audience numbers
should drive the continuation of the growth that began in 2004.
In line with the objectives to boost profitability, efforts will continue towards the
rationalisation and optimisation of external costs (both operational and variable
costs), which will, in any event, be consistent with the goals of the company to
consolidate our position in the television industry and in communications in general.
Supplemental information
With regard to the technical requirements associated with the obligation of
preparing consolidated financial statements, and pursuant to Article 16(4) of the
company’s bylaws, RAI may exercise the option envisaged under Article 2364 of the
Civil Code whereby the company may call an Ordinary Shareholders’ Meeting to
approve the financial statements within 180 days of the close of the financial year.
48
As regards the new deadline established in the opinion of Privacy Authority issued
on 22 March 2003, RAI has updated its security policy document, prepared in
accordance with Legislative Decree 196/03, in compliance with reference
legislation.
Finally, we report that the company holds no treasury stock, either directly or
through trust companies or other third parties, and that the company did not
purchase or sell such shares during the year.
Recommendation to shareholders
The year ended 31 December 2004 closed with a net profit of 112,969,764.00 Euro,
which we recommend be allocated as follows:
• 5,648,488.20 Euro (5% of the total) to the legal reserve;
• 477,544.41 Euro to the reserve for foreign currency gains pursuant to Article
2426(8 bis) of the Civil Code;
• the remainder to be allocated by the Shareholders’ Meeting.
49
Rai Corporate Directory
Corporate Directory
Management headquarters
Viale Mazzini, 14
Via Cernaia, 33
00195 Rome
10121 Turin
Research
Corso Giambone, 68
10135 Turin
Radio Production
Via Asiago, 10
00195 Rome
TV Production
Largo Willy De Luca, 4
00188 Rome
Production
Corso Sempione, 27
20145 Milan
Production
Via Verdi, 16
10124 Turin
Production
Via Marconi, 9
80125 Naples
Valle d Aosta
Via Chambéry, 36/38
11100 Aosta
Liguria
Corso Europa, 125
16132 Genoa
Veneto
Palazzo Labia
Campo San Geremia, 275
30131 Venice
Trento
Via F.lli Perini, 141
38100 Trento
Bolzano
Piazza Mazzini, 23
39100 Bolzano
Friuli Venezia Giulia
Via Fabio Severo, 7
34133 Trieste
Emilia Romagna
Viale della Fiera, 13
40127 Bologna
Tuscany
Largo Alcide De Gasperi, 1
50136 Florence
Marche
Piazza della Repubblica, 1
60131 Ancona
Umbria
Via Masi, 2
06121 Perugia
Abruzzo
Via de Amicis, 29
65123 Pescara
Molise
Viale Principe di Piemonte, 59
86100 Campobasso
Calabria
Via G. Marconi
87100 Cosenza
Basilicata
Via dell’Edilizia, 2
85100 Potenza
Puglia
Via Dalmazia, 104
70121 Bari
Sicily
Viale Strasburgo, 19
90146 Palermo
Sardinia
Viale Bonaria, 124
09100 Cagliari
50
Rai Corporate Directory
Profilo di Gruppo
Rai SpA
Viale Mazzini, 14
00195 Rome
Tel. 06.38781
Rai Cinema SpA
Piazza Adriana, 12
00193 - Rome
Tel. 06.684701
info@raicinema.it
Rai Click SpA
Viale Mazzini, 14
00195 - Rome
Tel. 06.3202969
Rai Corporation
1350 Avenue of the Americas
21st Floor
New York - NY 10019
USA
Tel. 011.212.468.2500
Rai International SpA
Largo Willy De Luca, 5 - Saxa Rubra
00188 - Rome
Tel. 06.331711
RaiNet SpA
Corso Sempione, 27
20145 - Milan
Tel. 06.38781
rai-net@rai.it
RaiSat SpA
Viale Mazzini, 14
00195 - Rome
Tel. 06.68889068
Rai Trade SpA
Via Umberto Novaro, 18
00195 - Rome
Tel. 06.374981
info@raitrade.it
Rai Way SpA
Via Teulada, 66
00195 - Rome
Tel. 800.111.555
raiway@rai.it
Sipra SpA
Corso Unione Sovietica, 612/3D
10135 - Turin
Tel. 011.3915111
info@sipra.it
01 Distribution srl
Piazza Adriana, 12
00193 - Rome
Tel. 06.684701
51
RAI SpA Statutory financial statements at 31 December 2004
Contents
Highlights
54
Reclassified financial statements
56
Financial review
57
Statutory balance sheet and income statement
69
Pro forma balance sheet and income statement
77
Notes to the financial statements
85
Supplemental schedules
133
Report of the Board of Statutory Auditors
139
Report of the independent Auditors
148
Shareholders’ Meeting Resolution
151
Rai SpA Highlights
Highlights
54
(millions of euros)
Rai SpA Highlights
Note: The Rai SpA figures for 2003 and 2002 have been adjusted pro forma to enable comparison with the figures for
2004, which show the performance of the company created with the merger – effective as of 1 December 2004 - of Rai SpA
into in Rai Holding SpA.
55
Rai SpA Reclassified financial statements
Income statement (millions of euros)
31.12.2004
31.12.2003
Change
%
Revenues from sales and services
2,799.6
Changes in inventories
Capitalisation of internal development/construction costs
8.7
Total revenues
2,808.3
Cost of goods and external services
-1,600.9
Personnel costs
-822.6
Total operating costs
-2,423.5
Gross Operating Margin
384.8
Amortisation of programmes
-205.4
Depreciation
-130.8
Other income (expense), net
-44.1
4.5
Financial income, net
57.6
Value adjustments to financial assets
-4.5
Profit/(loss) before extraordinary items
57.5
Anticipated depreciation
Extraordinary income (expense), net
64.5
Profit/(loss) before taxes
122.0
Income taxes for the year
-9.0
Net profit (loss) for the year
113.0
2,648.5
-1.3
10.1
2,657.3
-1,427.9
-794.0
-2,221.9
435.4
-208.5
-110.5
-35.1
81.3
21.2
-7.8
94.7
-34.6
11.1
71.2
-46.7
24.5
151.1
1.3
-1.4
151.0
-173.0
-28.6
-201.6
-50.6
3.1
-20.3
-9.0
-76.8
36.4
3.3
-37.2
34.6
53.4
50.8
37.7
88.5
5.7
nc
-13.9
5.7
12.1
3.6
9.1
-11.6
-1.5
18.4
25.6
-94.5
171.7
-42.3
-39.3
nc
481.1
71.3
-80.7
361.2
31.12.2004
31.12.2003
Change
%
1,146.6
-309.3
-345.8
491.5
760.0
-268.5
491.5
1,099.3
-317.2
-325.9
456.2
647.1
-190.9
456.2
47.3
7.9
-19.9
35.3
112.9
-77.6
35.3
4.3
-2.5
6.1
7.7
17.4
40.6
7.7
Balance sheet (millions of euros)
Non-current assets
Working capital
Staff severance pay
Capital employed, net
Equity
Net debt (net liquidity)
Note: The Rai SpA figures for 2003 have been adjusted pro forma to enable comparison with the
figures for 2004, which show the performance of the company created with the merger – effective as
of 1 December 2004 - of Rai SpA into in Rai Holding SpA.
56
Rai SpA Financial review
Financial review
Income Statement
The parent company posted a net profit of 113.0 million Euro in 2004, up from
24.5 million Euro in 2003.
The following section provides an overview of the main items of the Income
Statement and the reasons behind the most significant changes with respect
to 2003.
Revenues from sales and services consist of licence fees, advertising and other
commercial revenues.
The item totalled 2,799.6 million Euro in 2004, an increase of 151.1 million Euro
(+5.7%) on the previous year.
Revenues from sales and services (millions of euros)
Licence fees
Advertising
Other revenues
Total revenues from sales and services
2004
2003
Change
%
1,473.8
1,108.0
217.8
2,799.6
1,432.0
1,005.3
211.2
2,648.5
41.8
102.7
6.6
151.1
2.9
10.2
3.1
5.7
Licence fees amounted to 1,473.8 million Euro, an increase of 41.8 million Euro
(+2.9%), most of which is attributable to the increase in the licence fee from
97.10 Euro to 99.60 Euro (+2.6%) and, to a much smaller extent, a larger
number of subscribers.
Licence fee (euros)
Basic fee
Radio surcharge
TV surcharge
Government concession fee
VAT
Total licence fee
2004
2003
0.22
1.05
90.53
91.80
4.13
3.67
99.60
0.22
1.05
88.13
89.40
4.13
3.57
97.10
As a direct consequence of efforts to contain licence fee evasion, which included
an intensive advertising campaign, the number of new subscribers came to
422,170, confirming the trend of recent years.
57
The number of cancellations rose from 350 thousand in 2003 to 376 thousand in
2004, while the percentage of delinquent payments was broadly stable at 4.25%.
TV subscriptions — Changes
New
Renewals
Paying subscribers
Delinquent subscribers
Total subscribers
Delinquent subscriber rate
Cancellations
Cancellations + delinquent positions
2004
2003
2002
% 03/04
422,170
15,223,550
15,645,720
676,764
16,322,484
4.25
376,316
1,053,080
410,920
15,196,852
15,607,772
668,858
16,276,630
4.21
350,296
1,019,154
416,979
15,114,348
15,531,327
684,679
16,216,006
4.33
332,275
1,016,954
2.7
0.2
0.2
1.2
0.3
7.4
3.3
The licence fee in Italy, which will remain unchanged in 2005, is still the lowest
in Western Europe. For comparative purposes, the table below shows the annual
licence fee in Euros in selected European countries in 2004.
Licence fees in Europe (euros)
Switzerland
Denmark
Austria
Norway
Sweden
Germany
285.68
283.20
237.60
215.21
203.70
193.80
Finland
United Kingdom
Ireland
France
Italy
186.60
175.45
152.00
116.50
99.60
Advertising (1,108 million Euro) showed an increase of 102.7 million Euro
(+10.2%) on the previous year. The rise was due to the opportunities offered
by the major sports events that took place during the year (the Athens Olympics
and the European soccer championships) and to the recovery in the advertising
market, which grew by 7.3% overall. The growth in TV advertising (+10.7%)
slightly outpaced that for the sector as a whole (+10.4%, Nielsen figures).
Advertising (millions of euros)
TV advertising
Radio advertising
Promotions and sponsorships
Other advertising
Total Advertising
2004
2003
Change
%
950.5
61.5
87.3
8.7
1,108.0
858.8
58.3
79.8
8.4
1,005.3
91.7
3.2
7.5
0.3
102.7
10.7
5.5
9.4
3.6
10.2
Other revenues grew by 6.6 million Euro (+3.1%), mainly as a result of the
performance of rights management activities (+3.6 million Euro) and the
provision of new-generation information and content to cellphone network
operators (+5.7 million Euro), partially offset by the decline of 3.2 million Euro
in revenues from production services provided to third parties.
58
Revenues from other activities were essentially unchanged.
Other revenues (millions of euros)
Special public broadcasting services
Sale of rights
Telephony services
Production services
Services to investees
Other
2004
2003
Change
%
82.9
44.1
8.6
10.7
28.5
43.0
217.8
82.5
40.5
2.9
13.9
26.7
44.7
211.2
0.4
3.6
5.7
- 3.2
1.8
-1.7
6.6
0.5
8.9
196.6
- 23.0
6.7
-3.8
3.1
As shown in the following table, the relative weight of the three components in
total revenues from sales and services shows an increase of more than 1 percentage
point in that of advertising, to the detriment of licence fees; other revenues were
broadly stable.
Revenues (%)
Licence fees
Advertising
Other revenues
2004
2003
52.6
39.6
7.8
100.0
54.1
38.0
7.9
100.0
This item regards capitalised costs in respect of internal resources used for the
production of plant or programmes posted under non-current assets.
Capitalisation of internal development/construction costs (millions of euros)
Capitalisation of costs for programmes
Capitalisation of costs for plant
2004
2003
Change
%
2.8
5.9
8.7
4.4
5.7
10.1
-1.6
0.2
-1.4
-36.4
3.5
-13.9
Operating costs
Operating costs totalled 2,423.5 million Euro, an increase of 201.6 million Euro
compared with the previous year. The rise of about 9.1% primarily reflected
the cost of broadcasting rights for major sports events, which amounted to
nearly 130 million Euro.
The item includes internal costs (personnel) and external costs involved in the
company’s ordinary operations, with the exception of those associated with
financial operations. They break down as follows.
59
Cost of goods and external services – The item includes external costs in respect
of the production of immediate-use programmes (purchases of consumables,
external services, etc.), filming rights, especially for sports events, copyright, services
from subsidiaries, other operating costs (lease of computers, freelance services
and consulting, rental of studios, telephone, postage, etc) and the public broadcasting
concession fee. As shown in the table, the item shows an increase of 173 million
Euro (+12.1%) on the previous year as a result of increased costs incurred to
acquire rights to sports events (+117.3 million Euro, or 62%), the acquisition and
production of immediate-use programmes (+39.5 million Euro, or 22.6%) and the
cost of freelance artistic and professional services (+9.2 million Euro, or +7.9%).
The cost of acquiring viewing rights from RAI Cinema declined by 21.9 million
Euro, or 7.6%.
Cost of goods and external services (millions of euros)
Purchase of materials
External services
Freelance work
Services for purchase and production of programmes
Signal broadcasting and transport - Rai Way
General services (postage, copying and translation,
cleaning, lease of plants, archive services, etc.)
Daily, travel and subsistence allowance
Other
Rent, leasing and similar costs
Acquisition of viewing rights from Rai Cinema
Filming rights for sports events
Usage rights
Leases and rentals
Other
Concession fee
Total
2004
2003
Change
%
21.9
24.6
- 2.7
- 11.0
126.2
214.4
165.0
117.0
174.9
150.8
9.2
39.5
4.2
7.9
22.6
2.6
110.8
34.7
128.0
779.1
108.3
31.7
116.7
709.4
2.5
3.0
11.3
69.7
2.3
9.5
9.7
9.8
264.9
306.5
113.7
65.5
22.1
772.7
27.2
1,600.9
286.8
189.2
108.0
62.2
22.0
668.2
25.7
1,427.9
- 21.9
117.3
5.7
3.3
0.1
104.5
1.5
173.0
- 7.6
62.0
5.3
5.3
0.5
15.6
5.8
12.1
Personnel costs – These came to 822.6 million Euro, compared with 794 million
Euro at 31 December 2003.
Personnel costs (millions of euros)
Salaries and wages
Social security
Staff severance pay
Pensions and similar liabilities
Other costs
Total
60
2004
2003
Change
%
592.0
163.0
42.2
11.6
13.8
822.6
569.5
158.7
41.7
15.0
9.1
794.0
22.5
4.3
0.5
- 3.4
4.7
28.6
4.0
2.7
1.2
- 22.7
51.6
3.6
The increase of 28.6 million Euro (+3.6%) in personnel costs in 2004 is partly
attributable to the impact of changes in the previous year (+10.9 million Euro for
changes in personnel, contract renewals, automatic increases and compensation
policy) and partly to changes last year (+14.3 million Euro, of which contract
renewals for 10.1 million Euro) as well as increased provisions for labour
disputes (up 5 million Euro on 2003).
Staff at 31 December 2004 (permanent contracts and trainees) totalled 10,064,
an increase of 78 on end-2003.
Number of personnel on end-year (units)
Permanent employees
Trainees
Total
2004
2003
Change
%
9,986
78
10,064
9,931
52
9,983
55
26
81
0.5
50.0
0.8
The average number of employees, including those on fixed-term contracts, came
to 11,667, an increase of 74 on the previous year.
A total of 238 employees took advantage of the benefits envisaged under Law
243/2004, postponing their retirement and seniority pension rights. This reduced
charges for social security contributions and increased those for compensation by
460 thousand Euro.
The Gross Operating Margin came to 384.8 million Euro, a decrease of 50.6
million Euro or about 11.6% on 2003.
Net of the impact on costs and advertising associated with major sports events,
which in 2004 generated a net expense on the order of 100 million Euro, the gross
operating margin would increase by about 50 million Euro on 2003.
Investment and amortisation of programmes
Last year saw the continuation of the rising trend in investment in programming,
which rose by about 8.4 million Euro (+3.6%), with a specific focus on the
“TV series” segment, which saw spending rise by about 18.8 million Euro
(+10.3%), while investment in available light entertainment programming
declined by 13.3 million Euro, or 32.5%.
61
Investment in programmes (millions of euros)
TV series
Immediate-use programmes
Other programmes
2004
2003
Change
%
201.8
27.6
11.1
240.5
183.0
40.9
8.2
232.1
18.8
-13.3
2.9
8.4
10.3
-32.5
35.4
3.6
Amortisation for the period, which is calculated on the basis of the criteria
described in accounting policies section of the notes to the financial statements, was
recognised for completed programmes with rights available by the end of 2004.
The steep fall in amortisation of immediate-use programmes, which are amortised
in a single year, is a direct consequence of the decrease in investment in this
programming.
Amortisation of programmes (millions of euros)
TV series
Immediate use programmes
Other programmes
2004
2003
Change
%
170.3
28.3
6.8
205.4
160.1
41.0
7.4
208.5
10.2
-12.7
-0.6
-3.1
6.4
-31.0
-8.1
-1.5
Investment and depreciation
The necessity of ensuring service quality and quantity, the need to invest in
upgrading technology to keep abreast of technical progress and the costs in
respect of acquiring frequencies for the digital terrestrial network led to
investment of about 91.8 million Euro, an increase of about 20.5 million Euro, or
28.8%, on 2003.
Investment (millions of euros)
Property, plant and equipment
Other non-current assets
2004
2003
Change
%
54.4
37.4
91.8
70.2
1.1
71.3
-15.8
36.3
20.5
-22.5
3300.0
28.8
Depreciation for the year rose by 15.8 million Euro owing to the elimination of
accelerated depreciation accrued in previous years, which increased the value of
property, plant and equipment by 60.1 million Euro, in addition to the effect of
new investment and the entry into service of equipment.
Depreciation (millions of euros)
62
2004
2003
Change
%
125.4
5.4
130.8
108.5
2.0
110.5
16.9
3.4
20.3
15.6
170.0
18.4
Other net expense
Other net expense amounted to 44.1 million Euro (up 9 million Euro with respect
to 2003). It is the balance of income and expense not directly related to the
company’s core business. More specifically, they consist of prior-year income and
expense, provisions for liabilities and risks, indirect taxes, municipal property tax,
charges in respect of prize competitions and other charges.
As in previous years, in order to take account of risks jeopardising the possibility
of transmission or re-broadcasting of repeat-use programmes, the calculation of
which also reflects forecast audience figures, capitalised programmes have been
written down by 39 million Euro against a specific provision, compared with the
provision of 17.2 million Euro in 2003. The provision is recognised under this
heading.
The developments in operating revenues and costs described above led to a decline
of 76.8 million Euro in operating profit, from 81.3 million Euro in 2003 to
4.5 million Euro last year. The comments made for the Gross Operating Margin
concerning the net charges for major sports events in 2004 also hold for the
operating result. Without these costs Operating Profit would improve by about
23 million Euro.
Net financial income
Net financial income came to 57.5 million Euro (21.2 million Euro in 2003),
comprising income from equity investments (56.7 million Euro) and net income
from financial operations (0.8 million Euro).
Net financial income (millions of euros)
Income from equity investments
2004
2003
Change
%
56.7
0.8
57.5
24.1
-2.9
21.2
32.6
3.7
36.3
135.3
-127.6
171.2
Income from equity investments - This item comprises dividends received in
the period in respect of profits for the previous year.
The rise of 32.6 million Euro on 2003 is attributable to the dividend paid by RAI
Cinema, which was partially offset by the elimination of the tax credit on
dividends following the introduction of new tax regulations.
63
Income from equity investments (millions of euros)
2004
2003
Change
%
8.2
44.5
2.3
1.7
56.7
56.7
10.0
2.0
1.6
1.8
15.4
8.7
24.1
-1.8
44.5
0.3
0.1
-1.8
41.3
-8.7
32.6
-18.0
n.c.
15.0
6.2
-100.0
268.2
-100.0
135.3
Dividends
Sipra
Rai Cinema
Rai Trade
RaiSat
Other
Tax credit on dividends
Net financial income in respect of financial operations amounted to 0.8 million
Euro. It comprises net interest income or expense with banks and group companies
and net foreign exchange gains or losses.
Net financial income (expense) (millions of euros)
2004
2003
Change
%
Net interest expense paid to others
-1.7
Net interest income from subsidiaries and associated companies 3.7
Other net financial income (expense)
Net foreign exchange losses
-1.2
0.8
-6.4
5.4
0.8
-2.7
-2.9
4.7
-1.7
-0.8
1.5
3.7
-73.4
-31.5
-100.0
-55.6
-127.6
The outturn for financial operations swung from net expense of 2.9 million Euro
to net income of 0.8 million Euro owing to the improved financial profile of
operations. Thanks in part to the recovery of prior-year receivables in respect of
licence fees, the average net financial position was a positive 170 million Euro,
compared with 25 million Euro in 2003.
The average cost of bank debt was broadly unchanged at 3.7% (2.5% at short
term), as was the deposit rate received by the company (close to 2%). This was
achieved by employing temporary excess liquidity in risk-free operations with
leading banks. Spreads on lending and deposit rates are among the most
competitive applied by banks to prime customers.
The item, which improved with respect to the previous year, reports impairments
of value of equity investments due to losses for the period.
The most significant component regards the loss at RAI Net, which decreased
compared with the loss in 2003.
64
Value adjustments to financial assets (millions of euros)
Revaluations
Writedowns
Rai Net
Other equity investments
2004
2003
Change
%
1.2
-
1.2
n.c.
-4.6
-1.1
-4.5
-6.6
-1.2
-7.8
2.0
0.1
3.3
-30.3
-8.3
-42.3
Net extraordinary income
Net extraordinary income came to 64.5 million Euro, mainly (63.4 million Euro)
as a result of the elimination of tax distortions from previous years, which
primarily regarded accelerated depreciation, on which deferred tax liabilities have
been recognised.
Income taxes
The structure of taxes recognised in income changed considerably with respect to
2003.
The recognition of accelerated depreciation in income prompted the posting of
deferred tax liabilities of more than 13 million Euro, which add to the 16 million
Euro provision in respect of the non-deductibility of future depreciation arising
from the elimination of accelerated depreciation taken to income in previous
years.
Conversely, a total of 60.4 million Euro in deferred tax assets were recognised as
the estimated tax benefits for future years in respect of taxable provisions for the
year and previous periods and the negative taxable income posted for 2004.
Income taxes (millions of euros)
IRPEG/IRES
IRAP
Deferred tax liabilities
Deferred tax assets
2004
2003
40.0
29.4
-60.4
9.0
7.2
40.1
-0.6
46.7
65
Balance sheet
Non-current assets
Non-current assets (millions of euros)
Tangible assets
Programmes
Equity investments
2004
2003
Change
%
533.9
255.1
295.0
62.6
1,146.6
583.1
260.8
212.3
43.1
1,009.3
-49.2
-5.7
82.7
19.5
47.3
-8.4
-2.2
39.0
45.2
4.3
Tangible assets amounted to 533.9 million Euro, of which 56.9% accounted for
by land and buildings.
Tangible assets (millions of euros)
Land and buildings
Plant and machinery
Industrial and commercial equipment
Other assets
Assets under construction and payments on account
2004
2003
Change
%
303.8
152.2
5.4
29.4
43.1
533.9
383.3
124.9
4.5
26.0
44.4
583.1
-79.5
27.3
0.9
3.4
-1.3
-49.2
-20.7
21.9
20.0
13.1
-2.9
-8.4
The decrease of 49.2 million Euro with respect to 2003 is the balance of:
• investments of 52.6 million Euro net of eliminations totalling 1.8 million Euro;
• revaluations of 60.1 million Euro following the elimination of tax distortions
(accelerated depreciation) recognised in previous years;
• depreciation of 125.4 million Euro;
• writedowns of buildings in Turin (via Cernaia) and Rome (viale Mazzini) totalling
36.5 million Euro. In previous years a provision had been recognised in respect of
the buildings owing to structural problems with the properties. Pending the
placement of the buildings on the market for sale, part of the provision (36.529
thousand Euro) was prudentially used to reduce the carrying values of the assets
directly. The reduction was based on an independent appraisal, which confirmed
the impairment loss of the buildings’ value.
Programmes are mainly represented by programming from the TV series segment
(234.2 million Euro), which accounted for most investment during the period
(201.8 million Euro).
Programmes (millions of euros)
TV series
Immediate-use programmes
Other programmes
66
2004
2003
Change
%
234.2
0.9
20.0
255.1
243.5
1.6
15.7
260.8
-9.3
-0.7
4.3
-5.7
-3.8
-43.8
27.4
-2.2
The change with respect to the previous year (down 5.7 million Euro) is the net
result of the following factors:
• investment totalling 238.6 million Euro, net of the elimination of programmes
under development amounting to 1.9 million Euro;
• amortisation of 205.3 million Euro;
• writedowns of programmes totalling 39 million Euro, for the reasons mentioned
above.
The increase of 82.7 million Euro in equity investments is the net outcome of the
capital increase at RAI Cinema (+83.9 million Euro), the decrease (0.6 million
Euro) in respect of the writedown prompted by the loss at RAI Net (4.6 million
Euro), net of coverage of losses during the year and residual minor items.
Other non-current assets showed a net increase of 19.5 million Euro, the result
of increases for investments in the purchase of frequencies needed for the
development of the digital terrestrial network (32.4 million Euro), and decreases
in respect of the disposal of securities held as non-current assets (10 million Euro)
and other residual items.
The acceleration with respect to 2003 (when the item expanded by 7.9 million
Euro) is entirely attributable to normal operational developments.
Working capital
The most significant change regards the decrease in trade receivables (down
43.1 million Euro), mainly as a result of the collection of receivables in respect of
licence fees from previous years (60.9 million Euro), offset by the normal growth
in other minor items.
After last year, when advances were paid for major sports events, other assets
decreased by 107 million Euro, offset by the recognition of deferred tax assets
(60.4 million Euro) and the payment of advances for the soccer World Cup (33
million Euro).
There were no significant changes in provisions for liabilities and risks, other than
the use of the provision for the writedown of the buildings in viale Mazzini and
via Cernaia. The level of coverage offered by existing provisions continues to be
sufficient to meet future liabilities and risks.
Trade receivables include receivables from subsidiaries, mainly Sipra for a total
of 345.6 million Euro (333.1 million Euro in 2003) and receivables for
agreements with ministries amounting to 144.7 million Euro (142.8 million Euro
in 2003).
67
Working capital (millions of euros)
Inventories
Trade receivables
Other assets
Trade payables
Provisions for liabilities and risks
Other liabilities
2004
2003
Change
%
2.5
581.5
232.3
-539.5
-426.6
-159.5
-309.3
2.9
624.6
247.1
-560.1
-461.2
-170.5
-317.2
-0.4
-43.1
-14.8
20.6
34.6
11.0
7.9
-13.8
-6.9
-6.0
-3.7
-7.5
-6.5
-2.5
The end-year net financial position was positive and sharply improved on the
previous year (268.6 million Euro, compared with 190.9 million Euro in 2003).
It breaks down as follows:
Net financial position (millions of euros)
Banks and other lenders, net
medium/long-term
short term
cash and cash equivalents
Net financial position with subsidiaries
payables
receivables
Securities held as current assets
Average financial position
2004
2003
Change
%
-3.5
- 13.2
143.3
126.6
-65.1
-4.4
114.2
44.7
61.6
-8.8
29.1
81.9
-94.6
200.0
25.5
183.2
-92.7
234.7
142.0
268.6
170.0
-83.3
225.6
142.3
3.9
190.9
25.0
-9.4
9.1
-0.3
-3.9
77.7
145.0
11.3
4.0
-0.2
-100.0
40.7
580.0
Cash flow was positive by about 78 million Euro due to the almost complete
collection of receivables in respect of prior-year licence fees from the Ministry for
Economic Affairs and Finance and to the increase in advertising receipts. It was
therefore possible to finance the major sports events and the launch of the digital
terrestrial project without recourse to borrowing.
Last year also saw the full repayment of a 300 billion lire loan granted by Cofiri
in 1997.
68
Rai SpA Stato Patrimoniale e Conto Economico
Rai SpA
Statutory Balance Sheet and Income Statement
statements according
to the Italian Civil Code
69
Rai SpA Statutory Balance Sheet and Income Statement
Balance Sheet - Assets
A) SUBSCRIBED CAPITAL UNPAID
B) NON-CURRENT ASSETS
I. INTANGIBLE ASSETS
3.- Industrial patent and intellectual property rights
4.- Concessions, licences, trademarks and similar rights
6.- Assets under development and payments on account
7.- Other intangible assets
TOTAL INTANGIBLE ASSETS
II. TANGIBLE ASSETS
1.- Land and buildings
2.- Plant and machinery
3.- Industrial and commercial equipment
4.- Other tangible assets
5.- Assets under construction and payments on account
TOTAL TANGIBLE ASSETS
III. FINANCIAL ASSETS
1.- Equity investments in
a)subsidiaries
b)associated companies
d)other companies
2.- Receivables
d)others
amounts falling due within one year
amounts falling due after one year
3.- Other securities
TOTAL FINANCIAL ASSETS
TOTAL NON-CURRENT ASSETS
70
(in euros)
31.12.2003
31.12.2004
-
-
-
153,739,572
32,475,125
102,452,721
7,688,643
296,356,061
-
303,734,700
152,223,716
5,417,611
29,410,215
43,119,562
533,905,804
236,282,544
236,282,544
293,511,025
824,486
670,187
295,005,698
9,990,000
246,272,544
246,272,544
2,944,849
14,852,864
17,797,713
3,561,805
316,365,216
1,146,627,081
(in euros)
C) CURRENT ASSETS
I. INVENTORIES
1.- Raw materials, supplies and consumables
4.- Finished goods and merchandise
TOTAL INVENTORIES
II. CURRENT RECEIVABLES
1.- Customers
2.- Subsidiaries
3.- Associated companies
4.b - Tax receivables
4.c - Deferred tax assets
5.- Others
TOTAL CURRENT RECEIVABLES
III. CURRENT FINANCIAL ASSETS
TOTAL CURRENT FINANCIAL ASSETS
IV. CASH AND CASH EQUIVALENTS
1.- Cash at banks and post offices
2.- Cheques
3.- Cash and cash equivalents on hand
TOTAL CASH AND CASH EQUIVALENTS
TOTAL CURRENT ASSETS
D) ACCRUED INCOME AND PREPAID EXPENSES
b) accrued income and other prepaid expenses
TOTAL ACCRUED INCOME AND PREPAID EXPENSES
TOTAL ASSETS
31.12.2003
31.12.2004
-
2,076,427
396,226
2,472,653
148,701
324,280
3,924,777
4,397,758
190,137,101
625,429,409
127,703
29,430,522
62,831,699
122,882,375
1,030,838,809
-
-
610,875
761
611,636
5,009,394
143,015,163
800
255,292
143,271,255
1,176,582,717
275,527
17,720,617
275,527
251,557,465
17,720,617
2,340,930,415
71
Balance Sheet - Liabilities and equity
(in euros)
31.12.2003
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
VIII.RETAINED EARNINGS (LOSSES CARRIED FORWARD)
IX. NET PROFIT (LOSS) FOR THE YEAR
TOTAL EQUITY
B) PROVISIONS FOR LIABILITIES AND RISKS
1.- Pensions and similar liabilities
2.- Current and deferred taxes
3.- Other provisions
TOTAL PROVISIONS FOR LIABILITIES AND RISKS
C) STAFF SEVERANCE PAY
D) PAYABLES
4.- Due to banks
5.- Due to other lenders
6.- Advances
7.- Suppliers
9.- Subsidiaries
11.- Parent companies
12.- Tax payables
13.- Social security
14.- Other payables
TOTAL PAYABLES
E) ACCRUED EXPENSES AND DEFERRED INCOME
b) accrued expenses and deferred income
TOTAL ACCRUED EXPENSES AND DEFERRED INCOME
TOTAL LIABILITIES AND EQUITY
72
241,447,000
509,578
9,669,703
(168,248 )
251,458,033
31.12.2004
242,518,100
509,578
394,519,904
9,501,456
112,969,764
760,018,802
-
154,458,507
31,698,296
240,439,203
426,596,006
25,113
345,783,970
-
15,376,323
1,204,720
16,732
37,297
17,179,909
432,008,724
180,742,419
2,464,694
30,932,165
9,721
10,569
74,319
39,633,396
87,725,743
807,268,093
251,557,465
1,263,544
1,263,544
2,340,930,415
Memorandum accounts
(in euros)
31.12.2003
31.12.2004
-
72,017,302
2,582,285
269,000
74,868,587
Total unsecured guarantees given
-
3,303,722
3,303,722
78,172,309
2.- Secured guarantees given
b)own commitments other than payables
c) recognised payables
Total secured guarantees given
-
3,536,000
50,561,130
54,097,130
3.- Purchase and sale commitments
-
93,379,788
4.- Other memorandum accounts
-
238,414,003
464,063,230
1.- Unsecured guarantees given
a)Sureties:
- subsidiaries
- associated companies
- others
c) Other guarantees given:
- subsidiaries
73
Income Statement
(in euros)
31.12.2003
A) VALUE OF PRODUCTION
1.- Revenues from sales and services
2.- Changes in inventories of work in progress, semifinished and finished goods
4.- Capitalisation of internal development/construction costs
5.- Other revenues and income
a) operating grants
b) gains on disposal of assets
c) other
TOTAL VALUE OF PRODUCTION
B) PRODUCTION COSTS
6.- Raw materials, supplies, consumables and merchandise
7.- Services
8.- Rent, leasing and similar costs
9.- Personnel costs
a) salaries and wages
b) social security contributions
c) staff severance pay
d) pensions and similar liabilities
e) other costs
10.- Amortisation, depreciation and writedowns
a) amortisation
b) depreciation
c) other writedowns
d) writedowns of current receivables and cash and cash equivalents
11.12.13.14.-
Changes in inventories of raw materials, supplies, consumables and merchandise
Provisions for risks
Other provisions
Sundry operating costs
a) losses on disposal of assets
b) concession fee
c) other
TOTAL PRODUCTION COSTS
74
238,536
238,536
238,536
31.12.2004
2,744,262,667
(19,975)
8,694,372
685,848
1,631,097
129,281,850
131,598,795
2,884,535,859
(485,789)
(29,138)
(21,917,568)
(779,119,206)
(772,316,021)
(170,879)
(58,197)
(11,700)
(70,413)
(311,189)
(592,012,167)
(162,975,206)
(42,173,325)
(11,640,137)
(13,817,382)
(822,618,217)
-
(224,740,418)
(125,373,802)
(40,932,023)
(391,046,243)
-
(387,921)
(6,007,394)
(8,863,451)
(43,495)
(43,495)
(869,611)
(631,075)
(1,446,221)
(27,166,841)
(49,220,072)
(77,833,134)
(2,880,109,155)
4,426,704
Income Statement
cont.
(in euros)
31.12.2003
C) FINANCIAL INCOME AND EXPENSE
15.- Income from equity investments
a) dividends from subsidiaries
c) dividends from other companies
d) other income from equity investments
16.- Other financial income
a) non-current receivables
. others
b) non-current securities other than equity investments
c) current securities other than equity investments
d) income other than the above
. interest and commission income from subsidiaries
. interest and commission income from others and sundry income
17.- Interest and other financial expense
a) interest and commission expense to subsidiaries
b) interest and commission expense to associated companies
d) interest and commission expense to others and sundry charges
17 b.- Exchange gains and losses
TOTAL FINANCIAL INCOME AND CHARGES
D) VALUE ADJUSTMENTS TO FINANCIAL ASSETS
18.- Revaluations
a) equity investments
19.- Writedowns
TOTAL VALUE ADJUSTMENTS TO FINANCIAL ASSETS
E) EXTRAORDINARY INCOME AND EXPENSE
20.- Extraordinary income
a) gains on disposal of assets
b) prior-year income and non-existent assets
c) other
21.- Extraordinary expense
b) prior-year taxes
c) other
TOTAL EXTRAORDINARY INCOME AND EXPENSE
Profit (loss) before taxes
22.- Income taxes for the year: current, deferred tax assets and liabilities
23.- Net profit (loss) for the year
31.12.2004
-
56,752,137
56,752,137
-
460,644
460,644
238,234
-
492,414
-
243,445
243,445
481,679
5,152,738
2,365,569
7,518,307
8,471,365
(5,094)
(5,094)
476,585
(1,472,202)
(21,405)
(4,999,155)
(6,492,762)
(1,198,801)
57,531,939
-
1,198,051
1,198,051
-
(5,713,852)
(5,713,852)
(4,515,801)
-
435,000
1,318,492
63,353,351
65,106,843
(1,229)
(1,229)
(1,229)
(605,920)
(17,892)
(623,812)
64,483,031
(155,719)
121,925,873
(12,529)
(168,248)
(8,956,109)
112,969,764
75
Rai SpA Stato Patrimoniale e Conto Economico
Rai SpA
Pro forma Balance Sheet and Income Statement
pro forma comparison
The following pages offer a comparison of the balance sheet and income statement
for 2004 and the pro forma financial statements at 31 December 2003 resulting
from the merger of Rai Holding SpA and Rai Radiotelevisione Italiana SpA.
77
31.12.2003
Rai Holding
2.- Receivables
d)others
78
Rai Elimination
Total
in merger pro forma
Rai
-
-
-
-
-
-
188,993
86
91,139
7,884
288,102
-
188,993
86
91,139
7,884
288,102
153,740
32,475
102,453
7,688
296,356
-
383,315
124,939
4,474
25,963
44,425
583,116
-
383,315
124,939
4,474
25,963
44,425
583,116
303,735
152,224
5,418
29,410
43,119
533,906
236,283
236,283
211,151
278
830
212,259
(236,283)
(236,283)
211,151
278
830
212,259
293,511
824
670
295,005
9,990
246,273
246,273
2,324
18,055
20,379
3,569
236,207
1,107,425
2,324
18,055
20,379
13,559
(236,283)
246,197
(236,283) 1,117,415
2,945
14,853
17,798
3,562
316,365
1,146,627
II. TANGIBLE ASSETS
a)subsidiaries
b)associated companies
d)other companies
31.12.2004
31.12.2003
31.12.2004
Rai Holding
Rai
Elimination
in merger
Total
pro forma
Rai
-
2,464
416
2,880
-
2,464
416
2,880
2,076
396
2,472
149
324
3,925
4,398
248,965
600,515
131
36,538
192,387
1,078,536
248,965
(149)
600,515
131
36,862
196,312
(149) 1,082,785
190,137
625,429
128
29,431
62,832
122,882
1,030,839
-
-
611
1
612
5,010
274
274
TOTAL ASSETS
251,557
C) CURRENT ASSETS
I. INVENTORIES
TOTAL INVENTORIES
1.- Customers
2.- Subsidiaries
4.b- Tax receivables
4.c - Deferred tax assets
5.- Others
TOTAL CURRENT FINANCIAL ASSETS
2.- Cheques
-
-
-
113,306
3
270
113,579
1,194,995
113,917
3
271
114,191
(149) 1,199,856
143,015
1
255
143,271
1,176,582
18,258
18,258
2,320,678
18,532
18,532
(236,432) 2,335,803
17,721
17,721
2,340,930
79
Balance Sheet - Liabilities and equity
31.12.2003
Rai Holding
Rai Elimination
Total
in merger pro forma
Rai
A) EQUITY
I. SHARE CAPITAL
241,447
IV. LEGAL RESERVE
510
VII. OTHER RESERVES
9,669
(168)
TOTAL EQUITY
251,458
500,000
12,846
94,305
24,723
631,874
(498,929)
(12,846)
275,492
(236,283)
242,518
510
369,797
9,669
24,555
647,049
242,518
510
394,520
9,501
112,970
760,019
-
157,009
2,342
319,991
479,342
-
157,009
2,342
319,991
479,342
154,459
31,698
240,439
426,596
25
325,878
-
325,903
345,784
-
56,855
3,526
-
56,855
3,526
15,376
1,205
17
37
5,215
3,101
477,422
163,874
2,960
149
36,038
(149)
-
5,215
3,101
477,439
163,874
2,960
36,075
17,180
432,009
180,742
2,465
30,932
10
10
74
38,240
94,447
881,827
(149)
38,250
94,457
881,752
39,633
87,726
807,268
251,557
1,757
1,757
2,320,678
1,757
1,757
(236.432) 2,335,803
1,263
1,263
2,340,930
D) PAYABLES
4.- Due to banks
6.- Advances
7.- Suppliers
9.- Subsidiaries
11.- Parent companies
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
80
31.12.2004
Memorandum accounts
31.12.2003
31.12.2004
Rai Holding
Rai
-
108,693
2,582
111,275
-
108,693
2,582
111,275
72,017
2,582
269
74,868
-
1,980
1,980
113,255
-
1,980
1,980
113,255
3,303
3,303
78,171
-
3,536
68,946
72,482
-
3,536
68,946
72,482
3,536
50,562
54,098
-
88,565
-
88,565
93,380
-
227,458
501,760
-
227,458
501,760
238,414
464,063
a)Sureties:
- subsidiaries
- others
- subsidiaries
Elimination
Total
in merger pro forma
Rai
81
Income Statement
31.12.2003
Rai Holding
2.- Changes in inventories of work in progress,
semifinished and finished goods
a) operating grants
c) other
11.- Changes in inventories of raw materials, supplies,
consumables and merchandise
12.- Provisions for risks
14.- Sundry operating costs
b) concession fee
c) other
82
Rai Elimination
in merger
Total
pro forma
Rai
-
2,593,038
-
2,593,038
2,744,263
-
(1,295)
10,096
-
(1,295)
10,096
(20)
8,694
239
239
239
483
806
133,533
134,822
2,736,661
(239)
(239)
(239)
483
806
133,533
134,822
2,736,661
686
1,631
129,282
131,599
2,884,536
(24,567)
(709,488)
(668,482)
239
-
(24,567)
(709,735)
(668,511)
(21,918)
(779,119)
(772,316)
(569,348)
(158,637)
(41,740)
(15,014)
(9,003)
(793,742)
-
(569,519)
(158,695)
(41,752)
(15,014)
(9,073)
(794,053)
(592,012)
(162,975)
(42,173)
(11,640)
(13,818)
(822,618)
-
(235,523)
(143,057)
(1,699)
-
(235,523)
(143,057)
(1,699)
(224,740)
(125,374)
(40,932)
-
(4,299)
(384,578)
-
(4,299)
(384,578)
(391,046)
-
594
(3,028)
(25,292)
-
594
(3,028)
(25,292)
(388)
(6,007)
(8,863)
(3,088)
(25,667)
(52,089)
(80,844)
239 (2,690,014)
(1,446)
(27,167)
(49,220)
(77,833)
(2,880,108)
B) PRODUCTION COSTS
6.- Raw materials, supplies, consumables and merchandise
7.- Services
(486)
(29)
9.- Personnel costs
(171)
(58)
(12)
e) other costs
(70)
(311)
a) amortisation
b) depreciation
c) other writedowns
d) writedowns of current receivables and
cash and cash equivalents
31.12.2004
(3,088)
(25,667)
(44)
(52,045)
(44)
(80,800)
(870) (2,689,383)
(631)
47,278
-
46,647
4,428
Income Statement
cont.
31.12.2003
Rai Holding
a) dividends from subsidiaries
. others
b) non-current securities other than
equity investments
. interest and commission income from subsidiaries
. interest and commission income
from others and sundry income
a) interest and commission expense to subsidiaries
d) interest and commission expense to others
and sundry charges
17 b- Exchange gains and losses
TOTAL FINANCIAL INCOME AND EXPENSE
18.- Revaluations
19.- Writedowns
c) other
b) prior-year taxes
c) other
22.- Income taxes for the year: current,
deferred tax assets and liabilities
31.12.2004
Rai Elimination
in merger
Total
pro forma
Rai
-
13,594
1,798
8,673
24,065
-
13,594
1,798
8,673
24,065
56,752
56,752
-
612
612
-
612
612
461
461
238
-
98
69
-
336
69
492
-
-
6,791
-
6,791
5,153
243
243
481
2,394
9,185
9,964
-
2,637
9,428
10,445
2,365
7,518
8,471
-
(1,261)
(88)
-
(1.261)
(88)
(1,472)
(22)
(5)
(5)
476
(9,220)
(10,569)
(2,699)
20,761
-
(9,225)
(10,574)
(2,699)
21,237
(4,999)
(6,493)
(1,199)
57,531
-
-
-
-
1,198
1,198
-
(7,790)
(7,790)
(7,790)
-
(7,790)
(7,790)
(7,790)
(5,714)
(5,714)
(4,516)
-
1,147
1,044
11,770
13,961
-
1,147
1,044
11,770
13,961
435
1,319
63,353
65,107
(1)
(1)
(1)
(266)
(2,417)
(135)
(2,818)
11,143
-
(266)
(2,417)
(136)
(2,819)
11,142
(606)
(18)
(624)
64,483
(156)
71,392
-
71,236
121,926
(12)
(168)
(46,669)
24,723
-
(46,681)
24,555
(8,956)
112,970
83
Rai SpA Nota integrativa
Rai SpA
85
Rai SpA Notes to the financial statements
1) Activity of the company
Following the entry into force of Law 112 of 3 May 2004 (“Regulations establishing
principles for the organisation of the radio and television system and RAI
Radiotelevisione italiana S.p.A., as well as granting enabling authority to the
Government to issue a consolidated radio and television law”), 17 November of
the same year saw the completion of the merger - with effect as from 1 December
- of RAI - Radiotelevisione Italiana SpA into RAI Holding SpA. The latter had
been established in January 2001 to hold the equity stake of 99.55% of the
capital of RAI - Radiotelevisione Italiana SpA.
As a result of the merger, RAI Holding S.p.A. changed its name to RAI
Radiotelevisione italiana S.p.A., and the Board of Directors of the absorbed company
became the Board of Directors of the surviving company.
The accounting and tax effects of the merger were back-dated to 1 January 2004.
The company is the exclusive provider of the public broadcasting service for radio
and television programmes via any technical means.
Subject to authorisation by the Ministry of Communications, the company may
act through subsidiaries to carry out activities related to the performance of the
services it is charged with delivering.
RAI Radiotelevisione italiana’s operations must be conducted in compliance with
the applicable regulations in force contained in Law 103 of 14 April 1975 (“New
regulations governing radio and television broadcasting”), Law 223 of 6 August
1990 (“Regulation of the public and private radio and television system”), the
“Measures governing the concession holder for the public radio and television
broadcasting service” enacted with Law 206 of 25 June 1993 and subsequent
amendments, Law 249 of 31 July 1997 on the “Establishment of the
Communications Authority and regulations governing telecommunications and
the radio and television system” and Law 112 of 3 May 2004 (“Regulations
establishing principles for the organisation of the radio and television system and
RAI Radiotelevisione italiana S.p.A., as well as granting enabling authority to the
Government to issue a consolidated radio and television law”).
The public radio and television service concession is governed by the concession
agreement between RAI and the Ministry of Communications of 15 March 1994,
approved with Presidential Decree of 28 March 1994 and published, after registration
with the State Audit Court on 5 August 1994, in the Gazzetta Ufficiale of 12
August 1994.
Pursuant to the provisions of Article 20, paragraph 1, of Law 112 of 3 May 2004,
the concession agreement has a duration of twelve years as from the date the law
entered force.
86
The Gazzetta Ufficiale no. 59 of 12 March 2003 published the Presidential Decree
of 14 February 2003 approving the service contract between the Ministry of
Communications and RAI envisaged in Article 3 of the concession agreement.
The contract became valid the day following its publication and will expire on 31
December 2005.
The rationale underlying the above regulatory framework lies in the public interest
functions entrusted to the concession holder. Under the regulations, RAI has
special institutional characteristics and operating constraints, in addition to the
specific obligations undertaken with the service contract.
2) Introduction
The financial statements at 31 December 2004 are prepared in conformity with
the relevant provisions of the Italian Civil Code. They are supplemented with
reclassified schedules providing an analysis of the balance sheet, the income
statement, cash flows and a statement showing the effects of the merger between
RAI Holding and RAI SpA, with pro forma financial statements.
The tables of the financial statements are expressed in Euros, without decimals;
rounding was carried out in compliance with the instructions in the Revenue
Agency circular no. 106/e of 21 December 2001. The notes to the financial
statements and the related schedules are stated in thousands of Euros.
In order to provide a more complete picture of operations during the year, the
detailed schedules in the notes to the financial statements report the effects of the
merger and, in the annex, the figures for the balance sheet and the income statement
at 31 December 2004 are compared with the situation both before and after the
merger.
In order to ensure the full comparability of the figures in the 2004 financial
statements with those of the previous year, a number of items in the balance sheet
and income statement for 2003 have been reclassified.
RAI’s financial statements have been audited by PricewaterhouseCoopers, which
has also been engaged to conduct the accounting controls envisaged under Article
2409 bis of the Civil Code, in accordance with the resolution of the Shareholders’
Meeting of 20 December 2004.
87
3) Accounting policies
Before examining the individual items, we first provide an overview of the main
accounting policies used in drafting the financial statements, which were adopted
from the perspective of the company as a going concern and comply with the
provisions of Articles 2423 et seqq. of the Civil Code.
They are substantially unchanged from the previous year but have been updated
with the amendments to the Civil Code introduced with Legislative Decree 6 of
17 January 2003 “concerning the reform of the regulations governing joint-stock
and cooperative companies”. The main economic effects of the changes
regard the elimination of tax distortions with the repeal of paragraph 2 of
Article 2426 of the Civil Code, which had allowed companies to make recognise
certain writedowns and provisions exclusively for tax purposes. These effects
are described below in the comments to tangible assets and extraordinary income
and expense.
a) Industrial patent and intellectual property rights:
The purchase and development costs of programmes, composed of external
costs that can be allocated directly to each project and the cost of internal
resources used to create programmes, are recognised on the following basis:
1) costs for repeat-use TV productions are capitalised under intangible
assets and, if such productions are usable at year-end, are carried under
industrial patent and intellectual property rights and amortised on a
straight-line basis over the period of their estimated useful life. If
such programmes are not usable at year-end, the costs are recognised
under intangible assets under development and payments on account.
The objective difficulty of establishing an appropriate correlation
between advertising revenues and licence fees and the amortisation of the
rights, which is further complicated by the many ways in which they can
been used, has prompted RAI to designate three years as the useful life of
repeat-use programmes, the same as the previous year.
Accordingly, all capitalised costs regarding repeat-use rights owned by
the company or held under licence for a period of at least three years are
amortised over three years. Costs in respect of rights held under licence
for less than three years are amortized on a straight-line basis over the
period in which they are available.
In addition, an impairment provision has been established for programmes
for which broadcasting or re-broadcasting is at risk, taking account of
audience forecasts.
2) Costs in respect of immediate-use television programmes are expensed
in a single year, which is normally that in which they are used. More
specifically:
88
- immediate-use programmes developed in-house (light entertainment,
documentaries, etc.). Costs are expensed in the year in which they are
incurred.
- News and all radio programming. Costs are expensed in the year in which
they are incurred, which is normally the year in which the programmes are
broadcast.
- Sports events. Costs are expensed in the year in which the event takes place.
- Immediate-use programmes purchased. Costs are expensed in full at the
time the rights become usable, which is normally the year in which the
programmes are broadcast.
b) Software licences are posted under industrial patent and intellectual
property rights and are amortized over three years as from the year they
enter service.
c) Costs incurred for the development of the digital terrestrial network are capitalised
under intangible assets and amortized on the straight-line basis over the forecast
period of use as from the date the service is activated.
d) Trademarks are amortized over ten years as from the year they enter service.
e) Costs benefiting several years are carried under other intangible assets net
of accumulated amortisation. They regard improvements to leased or licenced
property. Amortisation for leasehold improvements is determined on the
basis of the shorter of the residual duration of the related contracts and the
estimated useful life of the costs, calculated using applicable amortisation
rates, which in any case reflect the rate of economic or physical deterioration.
f) Tangible assets – which are carried net of accumulated depreciation – are
recognised at cost, increased by internal personnel costs incurred in preparing
them to enter service, and revalued pursuant to Laws 74 of 11 February 1952,
576 of 2 December 1975, 72 of 19 March 1983 and, for real estate only, 413
of 30 December 1991. The value of some assets has also been increased in
application of the last paragraph of Article 4 of Law 823 of 19 December 1973.
The value of a number of properties was revalued in 1993 pursuant to Decree
Law 263 of 29 April 1994, the effects of which were ratified by Law 650 of 23
December 1996.
The costs of tangible assets as determined above are depreciated in accordance
with Article 2426 point 2 of the Civil Code. Assets whose value as of the balance
sheet date was less than that calculated using the above policies are carried at
the lower value.
In line with our earlier discussion of the issues associated with the elimination
of tax distortions, in 2004 excess accelerated depreciation was reversed and
recognised under extraordinary income, with the calculation of the related
deferred tax liabilities.
89
Ordinary maintenance costs are expensed in the year in which they are
incurred.
g) Equity investments are carried at purchase cost written down in the event of
impairment losses. The value of companies with negative shareholders’
equity is set at zero and RAI’s share of the negative amount is accrued to
provisions for liabilities and risks. Writedowns for impairments are
subsequently reversed if the company earns sufficient profits to offset the
losses.
h) Fixed-income securities carried as non-current financial assets are recognised
at purchase cost. Positive or negative differences between purchase cost and
redemption value are recognised in income in the amount accruing for the
period.
i) Current securities are posted at the lower of purchase cost – determined as
the weighted average cost – and expected realisable value, which is given by
market value.
j) Closing inventories of raw materials, supplies and consumables are recognised
at cost, which is determined on the basis of weighted average cost, written
down for obsolescence and slow turnover. Closing inventories of merchandise
for resale are carried at the lower of purchase cost, which is determined on the
basis of weighted average cost, and estimated realisable value as determined by
market prices.
k) Accruals and deferrals are recorded on an accruals basis.
l) Capital grants are recognised in specific equity items net of taxes.
m)Pensions and similar liabilities, which include the seniority benefits provision,
the social security benefits provision and the company supplementary pension
fund, are recognised in accordance with collective bargaining agreements. The
company supplementary pension fund is measured on the basis of an actuarial
appraisal.
n) The provision for taxes includes potential tax liabilities arising out of the
settlement of tax disputes and deferred tax liabilities in respect of positive
income components on which tax is deferred. Deferred tax assets regard
negative income components whose deduction for tax purposes is deferred
and tax losses. They are recognised under item 4c) of current assets
“Deferred tax assets” when their future reversal is reasonably certain.
o) Other provisions for liabilities and risks include provisions to cover losses or
liabilities whose existence is certain or probable but whose amount or date of
occurrence is uncertain at the balance-sheet date. They are allocated against
specific risk positions and their amount is determined on the basis of reasonable
estimates of the liability that such positions could generate.
90
p) Staff severance pay is determined in conformity with applicable law and labour
contracts. It reflects the accrued entitlement of employees at the balance-sheet
date net of advances paid.
q) Payables are posted at nominal value; receivables are carried at estimated
realisable value, i.e. net of the provision for doubtful accounts as determined
on the basis of an analytical assessment of the solvency of the individual debtors.
r) Payables and receivables denominated in currencies other than the Euro – with
the exception of hedged positions – are recognised at the exchange rates
prevailing at the balance-sheet date. Gains and losses on the translation of
individual positions at the balance-sheet date are taken to the income statement
as components of financial income and expense. Any net gain is posted to a
special non-distributable reserve until such gain is realised.
s) Payments on account include advances made by customers for goods and
services that have not yet been performed.
t) Costs and revenues are taken to the income statement on a uniform accruals
basis.
u) Dividends are recognised in income in the year in which they are received.
v) Income taxes are posted on the basis of an estimate of taxable income in
conformity with applicable regulations, taking account of deferred tax
liabilities. The tax liability to be settled is posted under tax payables, together
with liabilities in respect of taxes already due that are not involved in a
dispute with the tax authorities.
w)In order to hedge interest rate and exchange rate risk, the company uses
derivatives to cover specific net exposures. Interest differences to receive or pay
on interest rate swaps are taken to income on an accruals basis over the
duration of the contract. Accrued interest differences that have not been
settled at the end of the year or which have been settled before they actually
accrue are posted under accruals and deferrals. Derivatives hedging exchange
rate risk are used to cover contractual commitments denominated in foreign
currencies.
If the market value of derivatives contracts that do not fully qualify for hedge
accounting is significantly lower than the value of the underlying financial
instrument, a provision is recognised in respect of the difference.
x) Receipts and payments are recorded by transaction date.
91
4) Balance Sheet
Assets
Non-Current Assets
Intangible Assets
This item includes the cost of non-physical factors of production with lasting
utility, net of amortisation. In short, it includes ownership or concession rights or
costs whose utility extends to future years.
Industrial patent and intellectual property rights. The item records the costs
of television programmes available for use.
As indicated in Schedule 1, the item came to 153,740 thousand Euro, which
included 188,993 thousand Euro from the contribution of RAI SpA to the merger
with RAI Holding; the overall figure shows a net decrease of 35,253 thousand
Euro on the previous year.
The result was the balance of new assets totalling 227,232 thousand Euro (of
which 68,709 Euro transferred from assets under development and payments on
account in respect of rights that became available during the year), a writedown
against the risk of non-broadcasting and/or repeatability of certain programmes
amounting to 43,142 thousand Euro (of which 4,142 thousand Euro in respect of
a reclassification from provisions for liabilities and risks) and the amortisation
charge for the period of 219,343 thousand Euro.
92
Intangible assets (thousands of euros)
Schedule 1
31.12.2003
Rai
Holding
Industrial patent and intellectual property rights:
programmes
(b)
Provision for programmes being amortised
(d)
Cost
Amortis.
Book
value
188,993
188,993
158,523
158,523
68,709
(4,142)
64,567
(39,000)
(39,000)
(219,343)
(219,343)
674,430
(43,142)
631,288
(477,548)
(477,548)
196,882
(43,142)
153,740
-
114
114
(28)
(28)
86
86
3
35,637
35,640
-
-
(11)
(3,240)
(3,251)
117
35,637
35,754
(39)
(3,240)
(3,279)
78
32,397
32,475
-
89,927
1,212
91,139
-
89,927
1,212
91,139
82,053
1,767
83,820
(68,709)
(1,868)
(70,577)
-
101,339
1,114
102,453
-
101,339
1,114
102,453
-
32,049
570,500
(24,165)
(282,398)
7,884
288,102
277,983
1,868
(4,142)
82 (e)
(2,146)
(40,847) (224,740)
34,002
803,497
(26,314)
(507,141)
7,688
296,356
452,694
221,736
674,430
(255,812)
(221,736)
(477,548)
196,882
196,882
Costs for intellectual property rights under development at 31 December 2003 that are not reclassified under intangible assets by end-2004 related to rights accruing subsequent
31 December 2004 or still to be defined, in addition to internally originated programmes completed at that date. They in any case relate to the cost of programmes
expected to be used in the future.
Book values:
. not fully amortised
leasehold improvements
25,303
(17,419)
7,884
31,038
(23,350)
25,303
(17,419)
7,884
31,038
(23,350)
7,688
7,688
(1,932)
3 (e)
(1,929)
Includes only amounts not fully amortised at 31 December 2003, with the exception of “Other”, which includes fully amortised leasehold improvement
costs relating to unexpired lease contracts (see note (d)
Book value:
. not fully amortised
447,198
(258,205) 188,993
. fully amortised
261,703
(261,703)
- 708,901
(519,908) 188,993
. fully amortised
leasehold improvements relating to
unexpired lease contracts
leasehold improvements relating to
expired lease contracts
(e)
Amortis.
(258,205)
(258,205)
Other intangible assets (d)
(c)
Writedowns,
elimination
and disposals
447,198
447,198
Asset under development and payments on account
programmes
(c)
capitalisation of leasehold improvements
(b)
31.12.2004
Reclassific.
-
Concessions, licences, trademarks and similar rights
Digital terrestrial
(a)
Changes during the year
Rai contibution to merger
Increases and
Cost (a)
Amortis.(a)
Total (a) capitalisation
Changes in respect of reclassifications
from tangible assets, of which:
. costs:
under development
in amortisation
. amortisation
-
6,746
32,049
(6,746)
(24,165)
7,884
2,956
33,994
(2,956)
(26,306)
7,688
-
32,049
(24,165)
7,884
8
34,002
(8)
(26,314)
7,688
3
85
(3)
85
The total value of the item at 31 December 2004, gross of the writedown, breaks
down as:
• rights to television programmes owned or held under indefinite licences amounting
to 156,656 thousand Euro (at 31 December 2003: 142,334 thousand Euro in
the financial statements of RAI SpA).
• rights to third-party television programmes held under fixed-term licences
totalling 40,226 thousand Euro (at 31 December 2003: 46,659 thousand Euro
in the financial statements of RAI SpA).
Investments in television programmes in 2004 totalled 240,576 thousand Euro,
including 82,053 thousand Euro for investments in televisions programmes that
were not yet available at 31 December 2004, which are carried under assets under
development and payments on account.
93
Analysing investments by type, at 31 December 2004, 201,838 thousand Euro
had been invested in TV drama (series, miniseries, TV movies, soap operas, etc.),
10,885 thousand Euro in light entertainment programmes, 16,764 thousand Euro
in specials and cultural programmes, 11,019 thousand Euro in cartoons and
comedy programmes and about 70 thousand in other categories.
Concessions, licences, trademarks and similar rights. The item, which is
stated net of amortisation, includes costs incurred for the acquisition of licences
for digital terrestrial frequencies, the creation and registration of the RAI logo and
ownership of the TV Radiocorriere periodical, which is carried at the symbolic
amount of one cent. The item totalled 32,475 thousand Euro, of which 32,397
thousand Euro in respect of the digital terrestrial frequencies.
Assets under development and payments on account. The item came to
102,453 thousand Euro, of which:
• 1,114 thousand Euro in respect of leasehold improvements under way;
• 101,339 thousand Euro in respect of television programmes that are not yet
available and are therefore not yet being amortised. Compared with the amount
posted by the pre-merger RAI SpA at 31 December 2003, the item shows a net
increase of 11,412 thousand Euro, as detailed in schedule 1. The rise is the
balance between new assets under development totalling 82,053 thousand
Euro, transfers of 68,709 thousand Euro to industrial patent and intellectual
property rights in respect of productions or acquisitions that became available
during the year, and writeoffs of 1,932 thousand Euro.
For televisions programmes that have not yet become available, the total of
101,339 thousand Euro includes:
• 76,262 thousand Euro in respect of television programmes owned by the
company that were not ready at 31 December 2004 or for which usage rights
began after 31 December 2004 (at 31 December 2003: 79,002 thousand Euro
for RAI SpA).
• 25,077 thousand Euro regarding third-party television programmes held on
fixed-term licence beginning after 31 December 2004 (at 31 December 2003:
10,925 thousand Euro in the financial statements of RAI SpA).
Other intangible assets. The amount of 7,688 thousand Euro regards costs – net
of amortisation – incurred for leasehold improvements.
94
Tangible Assets
This heading reports the costs and related revaluations of physical assets with an
economic life of two or more years that are owned by the company and used in
operations. They are carried net of ordinary depreciation and writedowns for
lasting value impairments.
Ordinary depreciation rates are summarised below:
• Buildings and light structures
• Plant and machinery
• Industrial and commercial equipment
• Other assets:
- Fittings
- Office furniture and equipment
- Electronic office equipment
- Motor vehicles
3% 6%
12.5% 15.5% 19%
20%
10%
25%
19%
19%
12%
20%
25%
Tangible assets (at the time of the merger these were all owned by the old RAI
SpA) amounted to 533,906 thousand Euro at 31 December 2004, a net decrease
of 49,210 thousand Euro on 31 December 2003: increases totalled 114,563
thousand Euro, while decreases came to 163,773 thousand Euro, as detailed in
schedule 2.
Tangible assets and accumulated depreciation (thousands of euros)
31.12.2003
Rai
Holding
Land and buildings
Plant and machinery
Other tangible assets
Assets under construction and
payments on account
(a) of which accelerated depreciation
(b) of which:
. Costs - tangible assets
. Revaluations - tangible assets
. Depreciation - tangible assets
Schedule 2
Cost
31.12.2004
Rai contribution to merger
Elimin. Increases Reclassif.
Net Writedowns Ordinary
Revaluat.
Accumul.
Total
of tax
and
eliminations
of land deprec.
depreciation
distortions capitalisat.
and transfers
and
(a)
(a) (b) buildings
412,165
- 1,058,673
90,523
133,170
614,012
26,455
5,020
3,093
(642,862) 383,315
(960,189) 124,939
(91,069)
4,474
(110,300) 25,963
4,802
49,947
2,261
3,111
2,763 2,388
24,230 16,268
1,685
76
7,338
63
(409)
(212)
(42)
(271)
44,425
- 1,738,956
- 44,425
648,580 (1,804,420) 583,116 60,121
18,426 (18,795)
54,442
-
(936)
(1,870)
(248,612)
-
(36,529)
-
Cost Revaluat.
(52,595) 378,807 613,102
(62,948) 1,093,171 26,325
(3,037)
91,617
5,002
(6,794) 137,709
3,087
Accumul.
depreciation
(a)
Book
value
(688,174) 303,735
(967,272) 152,224
(91,201) 5,418
(111,386) 29,410
43,119
- 43,119
(36,529) (125,374) 1,744,423 647,516 (1,858,033) 533,906
-
12,446
1,064
(11,640)
1,870
More specifically:
• as indicated in the section “Accounting policies” for the elimination of tax
distortions, we eliminated accelerated depreciation charged to income in previous
years. The operation gave rise to extraordinary income of 60,121 thousand Euro,
an increase in non-deductible ordinary depreciation amounting to 15,761
thousand Euro and the recognition of deferred tax liabilities of 16,728 thousand
Euro;
95
• in previous years a provision was recognised against a building in Turin in via
Cernaia and one in Rome in Viale Mazzini, both of which have structural
problems. While waiting for the buildings to come onto the market for disposal,
part of the provision (36,529 thousand Euro) was used to reduce the
carrying value of the buildings. As part of the operation, an independent
appraisal was requested, which confirmed the permanent impairment of the
buildings’ value.
New assets, which reflect investments during the period, include 5,601 thousand
Euro in capitalised internal personnel costs for work on property, plant and
machinery.
As regards the disclosure of finance lease transactions pursuant to Article 2427 no.
22 of the Civil Code, we report that in 2004 a building was acquired under a
finance lease in Aosta to serve as the regional headquarters for the Valle d’Aosta.
As specified in Document 1 of the Organismo Italiano di Contabilità (Italian
Accounting Board), the following table shows the effects on the balance sheet and
the income statement of the treatment of the transaction using the balance sheet
method.
Balance sheet effect (thousands of euros)
a) Outstanding contracts
Assets held under finance leases at end
of previous year
+ Assets acquired under finance leases during the year
- Assets under finance leases acquired through
end-lease purchase option during the year
- Depreciation
+/- Writedowns/writebacks
Income statement effect (thousands of euros)
5,991
Instalment payments in respect of finance
leases charged to income
172
Financial expense on finance
lease transactions
-37
Depreciation charge on outstanding
contracts
-90
-90
-
Writedowns of assets held under finance
leases
Assets held under finance leases at the end of the year 5,901
Effect on profit before taxes
b) Assets acquired through
end-lease purchase option
Tax effect
Effect on net profit of recognizing
leases as finance leases
c) Liabilities
Implicit debt in respect of finance leases at end
of previous year
+ Implicit debt arising during the year
- Repayment of principal and exercise
of purchase option during the year
Implicit debt in respect of finance
leases at the end of the year
d) Total gross effect at end of
the year (a+b+c)
e) Tax effect
f) Effect on equity
-
45
- 19
26
-5,991
135
-5,856
45
- 19
26
The following section reports the gross value of revaluations posted under
96
tangible assets, grouped by the law authorizing the revaluation:
• 64,185 thousand Euro in implementation of Law 576 of 2 December 1975 and
Law 72 of 19 March 1983, whose purchase cost came to 83,509 thousand Euro.
The items include property acquired by 31 December 1946, whose gross value
of 430 thousand Euro includes the revaluation carried out pursuant to Law 74
of 11 February 1952.
• 58,027 thousand Euro in implementation of Law 413 of 30 December 1991.
• 525,304 thousand Euro in implementation of Decree Law 263 of 29 April
1994, whose effects were ratified by Law 650 of 23 December 1996.
Financial Assets
This heading reports the cost of long-term financial investments and associated
revaluations, net of any writedowns described in the comments to the individual
items.
Equity investments: these are recognised using the criteria described at point g)
in the section “Accounting policies”. They amounted to 295,006 thousand Euro
and include investments in shares or other forms of equity in companies, including
consortiums. They are reported in the balance sheet under separate headings
representing decreasing levels of control.
The components of the value of equity investments, their distribution among the
individual investee companies and transactions during the period are detailed in
schedules 3 and 4.
Financial assets-equity investments (thousands of euros)
Schedule 3
31.12.2003
Rai Holding
Cost
Subsidiaries
RAI RADIOTELEVISIONE ITALIANA SpA
NEWCO RAI INTERNATIONAL SpA
RAI CINEMA SpA
RAI CLICK SpA
RAI CORPORATION
RAINET SpA
RAISAT SpA
RAI TRADE SpA
RAI WAY SpA
SACIS SpA in liquidazione
SIPRA SpA
Associates
AUDIRADIO Srl
AUDITEL Srl
SAN MARINO RTV SpA
SECEMIE
Cost
236,283 (b)
999
- 116,198
105
391
43,893
2,451
5,165
70,238
103
11,114
236,283 250,657
-
10
10
258
851
1,129
Writedowns Elimination
(a) in merger
(39,506)
(39,506)
(851)
(851)
31.12.2004
Total
Acquisitions
Subscriptions
(236,283) (236,283)
999
- 116,198
105
391
4,387
2,451
5,165
70,238
103
11,114
(236,283) (25,132)
83,900
4,000
87,900
-
-
-
-
10
10
258
278
Disposals Writedowns
(-)
Writebacks
(+)
Cost
(548)
999
- 200,098
105
(391)
391
(4,601)
47,893
2,451
5,165
70,238
103
11,114
(5,540) 338,557
546
546
10
10
258
851
1,129
Writedowns
(a)
Book
value
(548)
451
- 200,098
105
(391)
(44,107)
3,786
2,451
5,165
70,238
103
11,114
(45,046) 293,511
(305)
(305)
10
10
258
546
824
(a) net of reconstitution of share capital
(b) carrying value is equal to book value
97
Financial assets-equity investments (thousands of euros)
Schedule 4
31.12.2003
Rai Holding
Cost
Other companies
CFI
CONSORZIO NETTUNO
FINSIEL SpA
INT. MULTIMEDIA UNIVERSITY UMBRIA SpA
IST. ENCICLOPEDIA TRECCANI SpA
ITALIA CINEMA Srl
in liquidation since 30/01/2004
Cost
Writedowns
Total
(a)
31.12.2004
Acquisitions
Subscriptions
Disposals
Writedowns
(-)
Writebacks (+)
Cost
Writedowns
(a)
Book
value
-
10
21
324
52
478
(10)
(21)
(42)
-
324
10
478
-
-
(8)
(149)
10
21
324
52
478
(10)
(21)
(50)
(149)
324
2
329
-
26
911
(8)
(81)
18
830
-
-
(3)
(160)
26
911
(11)
(241)
15
670
(a) net of reconstitution of share capital
Schedule 5 shows the list of subsidiaries and associated companies pursuant to
2427 point 5 of the Civil Code.
List of equity investments in subsidiaries and associated companies (thousands of euros)
Name
Registered
office
Share
capital
Equity
of investee
(1)
Schedule 5
Net profit
(loss)
(1)
Subsidiaries
NEWCO RAI INTERNATIONAL SpA
RAI CINEMA SpA
RAI CLICK SpA
RAI CORPORATION
RAINET SpA
RAISAT SpA
RAI TRADE SpA
RAI WAY SpA
SACIS SpA in liquidazione
SIPRA SpA
Rome
Rome
Milan
New York (USA)
Milan
Rome
Rome
Rome
Rome
Turin
1,000
200,000
177
367 (2)
5,160
2,585
8,000
70,176
102
10,000
452
241,585
6,526
(15) (3)
3,790
7,311
19,561
91,221
1,984
42,467
(256)
31,777
(1,025)
(792) (4)
(4,602)
3,386
4,261
7,780
(53)
18,538
Associated companies
AUDIRADIO srl
AUDITEL srl
SAN MARINO RTV SpA
SECEMIE
Milan
Milan
S. Marino (RSM)
Ecully (F)
234
300
516
3,829
756
709
5,391
2,521
73
48
347
1,616
%
holding
99.900%
99.997678%
59.940%
100.000%
99.900%
94.900%
100.000%
99.99926%
100.000%
100.000%
33.330%
33.000%
50.000%
21.650%
(1) financial statements at 31.12.2004
(2) $
500,000 at exchange rate at 31.12.2004 of Euro 0.73416
(3) $
(20,118) at exchange rate at 31.12.2004 of Euro 0.73416
(4) $ (1,078,348) at exchange rate at 31.12.2004 of Euro 0.73416
(5) the negative equity is covered by a provision of the same amount
The following section discusses the most significant developments in investees and
the consequent impact on RAI’s financial statements:
Equity investments in subsidiaries
• NewCo Rai International SpA (99.9% RAI): the share capital of 1,000 thousand
Euro is represented by 200,000 shares with a par value of 5 Euro each. As per the
Board resolution of 13 May 2004, the remaining seven-tenths of capital previously
posted under “Payables to subsidiaries” was paid in with value date at 21 June
2004. The investment was written down by 548 thousand Euro against the losses
recorded in 2004 and previous years. The company is not operational.
98
Corresponding
amount of equity
in investee
451
241,579
3,912
(15) (5)
3,786
6,938
19,561
91,220
1,984
42,467
252
234
2,696
546
Book
value
451
200,098
105
3,786
2,451
5,165
70,238
103
11,114
293,511
10
10
258
546
824
• Rai Cinema SpA (99.997678% RAI): a capital increase of 83,900 thousand Euro
was carried out during the year and fully subscribed by RAI. Share capital, which
amounts to 200,000 thousand Euro, is composed of 38,759,690 shares with a par
value of 5.16 Euro each. During 2004, the company paid a total dividend of
44,550 thousand Euro, which RAI recognised under income from equity
investments in the amount accruing to it, equal to 44,548 thousand Euro. Last
year closed with a net profit of 31,777 thousand Euro.
• Rai Click SpA (59.94% RAI): share capital is equal to 176,800 Euro and is
represented by 340,000 shares with a par value of 0.52 Euro each. The company
ended the year with a loss of 1,025 thousand Euro, which was amply covered by
the share premium account.
• Rai Corporation (100% RAI): the investment, which is composed of 50,000
shares with a par value of 10 US Dollars, has a gross carrying value of 391 thousand
Euro, equal to 500,000 US Dollars at the exchange rate at which share capital
was reconstituted following coverage of the loss for 1996 in 1997. Last year ended
with a loss of 1,078,348 US Dollars (equal to 792 thousand Euro at the
US Dollars/Euro exchange rate at 31 December 2004), which resulted in negative
equity in the amount of 20,118 thousand US Dollars (equal to 14,770 thousand
Euro at the year-end exchange rate). The investment was therefore fully written
down and a provision equal to the amount exceeding the carrying value was
recognised under provisions for liabilities and risks.
• Rai Net SpA (99.9% RAI): share capital amounts to 5,160 thousand Euro and is
represented by 1,000,000 shares with a par value of 5.16 each. In 2004 RAI
made capital contributions totalling 4,000 thousand Euro. At 31 December 2004
the equity investment had a value of 47,984 thousand Euro. After having been
written down at 31 December 2003 by 39,507 thousand Euro, it was written
down by a further 4,601 thousand Euro in order to cover the loss posted in 2004.
• Raisat SpA (94.9% RAI): the company closed the year with a net profit of 3,386
thousand Euro. In 2004 it paid a dividend of 1,795 thousand Euro, of which
1,704 thousand Euro to RAI, which was recognised under income from equity
investments. Share capital is represented by 500,000 shares with a par value of
5.17 Euro each.
• Rai Trade SpA (100% RAI): the company ended 2004 with a net profit of 4,261
thousand Euro. During the year it paid a dividend of 2,300 thousand Euro from
the net profit for 2003, which was recognised under income from equity
investments. Share capital is represented by 100,000 shares with a par value of
80 Euro each.
• Rai Way SpA (99.99926% RAI): the company closed the year with a net profit of
7,780 thousand Euro. Share capital is represented by 13,600,000 shares with a
par value of 5.16 Euro each.
• SACIS SpA in liquidation (100% RAI): the company, which has been in
liquidation since 23 January 1998, reported a loss of 53 thousand Euro, easily
99
covered by other reserves. Share capital is represented by 200,000 shares with a
par value of 0.51 Euro each.
• Sipra SpA (100% RAI): the company ended 2004 with a net profit of 18,538
thousand Euro. It paid a dividend of 8,200 thousand Euro from net profit for
2003, which was recognised under income from equity investments. Share capital
is represented by 100,000 shares with a par value of 100 Euro each.
Equity investments in associated companies
• Audiradio Srl (33.33% RAI): the company ended the year with a net profit of 73
thousand Euro. Capital amounts to 234,000 Euro and is composed of 234,000
equity parts with a nominal value of 1 Euro each.
• Auditel Srl (33% RAI): the company closed 2004 with a net profit of 48 thousand
Euro. Capital amounts to 300,000 Euro and is composed of 300,000 equity parts
with a nominal value of 1 Euro each.
• San Marino Rtv SpA (50% RAI): the joint venture, which was established in 1991
by RAI and E.RA.S. - Ente di Radiodiffusione Sammarinese - pursuant to Law 99
of 9 April 1990 ratifying the collaboration treaty between the Republic of Italy
and the Republic of San Marino concerning radio and television, closed the year
with a net profit of 347 thousand Euro. Share capital is represented by 1,000
shares with a par value of 516.46 Euro each.
• Secemie Société Anonyme (21.65% RAI): share capital is represented by 255,293
shares with a par value of 15 Euro each. 2004 ended with a net profit of 1,616
thousand Euro, with the consequent release of the provision made against losses
exceeding carrying value and the revaluation of the equity investment. The change
in the percentage stake in the company with respect to the previous year was due to
the entry of a new shareholder.
Equity investments in other companies
• C.F.I – Consorzio per la Formazione Internazionale: the investment, which was
carried at the value of the share in the consortium paid in upon joining,
equal to 10 thousand Euro, was fully written down since, under the bylaws of the
consortium, withdrawal does not entitle members to reimbursement of their
contribution.
• Consorzio Nettuno – Consorzio per la realizzazione di università a distanza: the
investment of 21 thousand Euro was fully written down since, under the bylaws of
the consortium, withdrawal does not entitle members to reimbursement of their
contribution.
100
• Finsiel – Consulenza e applicazioni informatiche SpA (0.916% RAI): the value of
the investment was unchanged with respect to the previous year at 324 thousand
Euro. Share capital is represented by 1,161,324 shares with a par value of 51.65
Euro each.
• International Multimedia University Umbria SpA (1.533% RAI): carried at 52
thousand Euro, it was written down by 50 thousand Euro as a result of losses at
30 April 2004 in proportion to RAI’s interest. With a resolution of 30 June 2004
share capital was reduced and is now represented by 12,000 shares with a par
value of 11.00 Euro each.
• Istituto Enciclopedia Treccani SpA (0.83% RAI): the investment is carried at 329
thousand Euro net of the writedowns made to cover RAI’s share of losses in
previous years. Share capital is represented by 750,000 shares with a par value of
51.65 Euro each.
• Italia Cinema Srl in liquidation (5% RAI): the company was placed in
liquidation with the resolution of the Extraordinary General Meeting of 30
January 2004 with immediate effect. The investment is carried at 15 thousand
Euro, net of the writedown made as a consequence of losses in previous years.
Receivables: this item came to 17,798 thousand Euro (at 31 December 2003 it
amounted to 20,379 thousand Euro in the financial statements of the pre-merger
RAI SpA). Of the total, 16,309 thousand Euro regards prepaid tax on staff severance
pay disbursed pursuant to Law 140/97 (of which 443 thousand Euro in respect of
the revaluation for the period), 183 thousand Euro regards loans to employees,
1,079 thousand Euro is made up of security deposits and 227 thousand Euro
regards other receivables. Schedule 12 details their distribution by maturity. The
geographical distribution of the receivables shows that they almost exclusively
regard Italian residents.
Financial assets - receivables (thousands of euros)
Schedule 6
31.12.2003
Rai Holding
Due from others:
- employees
- security deposits
- Ponteco
- tax prepayments on severance pay - Law 140/97
- other
(a) of which default interest
(b) interest income accrued during the year
-
Nominal
Provisions
Total
value for doubtful
accounts (a)
383
1,051
249
18,807
317
20,807
(179)
(249)
(428)
-
204
1,051
0
18,807
317
20,379
31.12.2004
Disbursement Reclassif. Repayments
81
83
164
-
(102)
(55)
(2,941)
(90)
(3,188)
Writedowns Nominal Provisions
(-)
value for doubtful
Writebacks (+) a
accounts (a)
443 (b)
443
-
362
1,079
249
16,309
227
18,226
Book
value
(179)
183
- 1,079
(249)
- 16,309
227
(428) 17,798
-
Other securities: these are carried at 3,562 thousand Euro and are entirely
composed of securities pledged as collateral; schedule 7 details their composition.
101
Financial assets - other securities (thoudands of euros)
Schedule 7
31.12.2003
Rai Holding
Cost
Fixed-income securities:
- Enel bonds
- B.T.P.
- C.C.T.
9,990
9,990
31.12.2004
Cost Revaluations Writedowns Total Acquisit. Redemptions Revaluat.
(a)
(a)
(a)
32
3,560
3,592
(a) issue and trading discounts
..
4
4
0
..
32
(27) 3,537
(27) 3,569
4
(27)
-
(9,990)
(9,990)
Writedowns
(-)
Writebacks (+)
(a)
-
..
32
(7) 3,560
(7) 3,592
..
4
4
..
32
(34) 3,530
(34) 3,562
-
(7)
4
(34)
Current Assets
Inventories
Inventories amounted to 2,472 thousand Euro net of writedowns (at 31 December
2003 they came to 2,880 thousand Euro for RAI SpA). As detailed in schedule 8,
they break down as:
• Raw materials, supplies and consumables: the item amounted to 2,076 thousand
Euro net of accumulated depreciation totalling 15,385 thousand Euro. It is
entirely composed of stocks and spare parts for maintenance and the operation of
equipment, considered on the same basis as consumables since it is not directly
incorporated in products.
• Finished goods and merchandise: this consists entirely of inventories associated
with the book publishing and periodicals business, which amounted to 396
thousand Euro net of writedowns of 1,457 thousand Euro to bring the item into
line with estimated realisable value.
Inventories (thousands of euros)
Schedule 8
31.12.2003
31.12.2004
Rai Holding
Rai
contribution
to merger
Increases (+)
Decreases (-)
Balance of
accruals (-)
uses (+)
of provision
Total
Raw materials, supplies and consumables
Provision for inventory writedown
-
17,849
(15,385)
2,464
(388)
(388)
-
17,461
(15,385)
2,076
Finished products
-
416
2,880
(20)
(408)
-
396
2,472
Receivables
The item totalled 1,030,839 thousand Euro, an increase of 1,026,441 thousand
Euro on 31 December 2003, of which 1,078,387 Euro from the merger of RAI SpA
into RAI Holding.
102
Cost Revalutat. Writedowns Book
(a)
(a) value
Schedule 9 details the components of the item, while schedules 12 and 13 show
their distribution by maturity and type and by currency.
Current assets - receivables (thousands of euros)
Schedule 9
31.12.2003
Rai Holding
Rai Elimination
Total
for merger
31.12.2004
New
positions (+)
repayments (-)
accruals
(-)
uses (+)
of provision
Total
144,733
Customers
. government and other public entities
for public broadcasting services
-
142,813
-
142,813
1,920
-
. licence fee receivables
-
62,861
-
62,861
(57,826)
-
5,035
. other receivables
-
60,309
-
60,309
(8,519)
-
51,790
less
. provision for doubtful accounts
Subsidiaries
. RAI RADIOTELEVISIONE ITALIANA SpA
-
(17,018)
-
(17,018)
-
5,597
(11,421)
-
248,965
-
248,965
(64,425)
5,597
190,137
149
-
. NEWCO RAI INTERNATIONAL SpA
-
22
(149)
-
(149)
-
-
-
22
7
-
29
. 01 DISTRIBUTION
-
-
-
. RAI CINEMA SpA
-
212,381
-
-
44
-
44
212,381
2,638
-
215,019
. RAI CLICK SpA
-
113
-
. RAI CORPORATION
-
102
-
113
18
-
131
102
1,031
-
1,133
. RAI NET SpA
-
1,180
-
1,180
56
-
1,236
. RAISAT SpA
-
8,128
-
8,128
10,758
-
18,886
. RAI TRADE
-
13,815
-
13,815
2,014
-
15,829
. RAI WAY SpA
-
31,708
-
31,708
(4,210)
-
27,498
. SIPRA SpA
-
333,066
-
333,066
12,558
-
345,624
149
600,515
(149)
600,366
24,914
-
625,429
. AUDIRADIO
-
..
-
..
-
-
-
. AUDITEL
-
1
-
1
(1)
-
-
. SAN MARINO RTV
-
123
-
123
5
-
128
. SECEMIE
Tax receivables
-
7
-
7
(7)
-
-
-
131
-
131
(3)
-
128
324
36,538
-
36,538
(7,431)
-
29,431
Deferred tax assets
-
-
-
-
62,832
-
62,832
Others
. personnel
-
7,930
-
7,930
(1,060)
-
6,870
. correspondents
-
91
-
91
(49)
-
42
3,920
-
-
-
(3,920)
-
-
. European Union for subsidies and grants
-
645
-
645
(112)
-
533
. agencies, companies, entities and others
5
184,824
-
184,824
(67,621)
-
117,208
. repurchase agreements
less
. provision for doubtful accounts
-
(1,103)
-
(1,103)
-
(668)
(1,771)
3,925
192,387
-
192,387
(72,762)
(668)
122,882
4,398
1,078,536
(149) 1,078,387
(56,875)
4,929
1,030,839
Their geographical distribution is summarised in the following table:
customers
subsidiaries
associated companies
tax receivables
deferred tax assets
advances for sports events
other receivables
Total
Italy
182,762
624,296
29,431
62,832
21,184
920,505
EU countries Other countries
6,688
128
7,929
553
15,298
687
1,133
93,202
14
95,036
Total
190,137
625,429
128
29,431
62,832
101,131
21,751
1,030,839
103
Customers: the item records trade receivables, excluding those vis-à-vis
subsidiaries and associated companies, which are posted under separate headings.
The item totalled 190,137 thousand Euro, with a nominal value of 201,558
thousand Euro written down by 11,421 thousand Euro to estimated realisable
value. Compared with 31 December 2003, when the heading included only the
financial statements of the pre-merger RAI SpA, the figure represents a decrease of
58,828 thousand Euro.
More specifically, the item breaks down as follows:
• receivables for public broadcasting services to central government and other
public entities: as shown in the following table, these amounted to a nominal
144,733 thousand Euro. The figures show an increase of 142,813 thousand Euro
in respect of the merger and 1,920 thousand Euro as the balance of the increase in
invoices issued and accrued items for 2004 and the decrease for collections. The
comparative figures are those of the pre-merger RAI SpA:
Prime Minister s Office:
- Operating grant to be transferred to San Marino RTV
- International short-wave broadcasting
- Radio and television programmes for foreign stations
for the promotion of the Italian language and culture
- Broadcasting from Trieste in Slovenian
- Radio and television broadcasts in French for the
Autonomous Region of Valle d’Aosta
- Radio and television broadcasts in German for the Province of Bolzano
and radio broadcasts in Ladin for the Val Badia, Val Gardena and Val di Fassa
- Extension of the RaiUno signal to Tunisia and subsequent maintenance
Ministries:
- Economy and Finance: reimbursement of expenses for management of
licence fee collection
Regions:
- Autonomous Region of Valle d’Aosta: management of equipment for
reception of programmes from the French-speaking area
Total
2003
2004
1,549
35,590
1,549
35,432
19,280
6,365
19,301
6,365
1,954
1,953
14,962
1,786
14,962
1,710
56,257
57,874
5,070
142,813
5,587
144,733
The above items concern:
• Prime Minister’s Office: receivables for short-wave broadcasting, programmes for
the promotion of the Italian language and culture, and broadcasts in Slovenian,
French, German and Ladin for a total of 59,959 thousand Euro. The item
regards services rendered in 2004.
• Ministry for the Economy and Finance: the receivable of 57,874 thousand Euro in
respect of the management of ordinary licence fee operations regards the period
from 1998 to 2004.
• Autonomous Region of Valle d’Aosta: the receivable of 5,587 thousand Euro
regards the reimbursement of costs incurred for the operation of equipment for
reception of French-language programmes for the period from 1994 to 2004.
104
- Receivables for licence fees: the item reports licence fees already paid by subscribers
but not yet transferred to RAI. They have a nominal value of 5,035 thousand Euro,
entirely regarding previous years.
- Other receivables: these had a nominal value of 51,790 thousand Euro, a decrease
of 8,519 thousand Euro on 31 December 2003 (pre-merger RAI SpA). They regard
services other than those detailed above (sale of rights, technical assistance, etc.).
• Subsidiaries: the item totalled 625,429 thousand Euro (at 31 December
2003, 149 thousand Euro, plus the effects of the merger, which amount to
600,366 thousand Euro). It is the year-end balance of transactions with
subsidiaries, as specified in Schedule 9. The item includes financial receivables
of 234,768 thousand Euro (225,639 thousand Euro at 31 December
2003) and trade receivables of 390,661 thousand Euro (374,876 Euro at 31
December 2003).
• Associated companies: the item totalled 128 thousand Euro (at 31 December
2003, 131 thousand Euro as reported by the pre-merger RAI SpA). It represents
the balance of receivables from associated companies, as detailed in
Schedule 9.
• Tax receivables: the nominal value of the item came to 29,431 thousand Euro at
year-end (at 31 December 2003: 324 thousand Euro in the financial statements of
the pre-merger RAI Holding and 36,538 thousand Euro in those of RAI SpA). It is
composed of 13,455 thousand Euro in respect of the credit balance for direct
taxes, 10,625 thousand Euro for the Group’s VAT balance and 5,135 thousand
Euro in respect of receivables for tax rebates, with the remainder accounted for by
minor items.
• Deferred tax assets: the item totalled 62,832 thousand Euro and represents the
claim in respect of items with deferred tax deductibility, as detailed in the section
“income taxes”, amounting to 60,400 thousand Euro and assets transferred from
Group companies participating in the consolidated taxation mechanism.
• Others: the item came to 122,882 thousand Euro (at 31 December 2003:
3,925 thousand Euro in the financial statements of the pre-merger RAI
Holding and 192,387 Euro in those of RAI SpA). Net of writedowns of
1,771 thousand Euro, other receivables break down as follows:
- receivables from personnel amounted to a nominal 6,870 thousand Euro. They
are entirely composed of advances of various types, mainly for travel expenses
(3,916 thousand Euro) and production expenses (1,571 thousand).
- receivables from correspondents, which amounted to a nominal 42 thousand
Euro, are composed of advances paid to correspondents abroad for operations at
foreign bureaus.
105
- receivables from the European Union for subsidies and grants amounted to a
nominal 533 thousand Euro and consist entirely of receivables for research
projects.
- receivables from agencies, companies, entities and others totalled 117,208
thousand Euro. They mainly regard advances on filming rights to sports events
(101,131 thousand Euro), sundry advances to suppliers (4,869 thousand Euro)
and advances to social security institutes in respect of contributions for artistic
projects (5,363 thousand Euro).
Cash and cash equivalents
The item is described in schedule 10. It breaks down as follows:
• Cash at banks and post offices: these amounted to 143,015 thousand Euro (at 31
December 2003: 611 thousand Euro as well as 113,306 Euro posted by the
pre-merger RAI SpA). They represent sight or short-term balances on deposit or
current accounts with banks, financial institutions and the Post Office.
• Cheques: they totalled 1 thousand Euro.
• Cash and cash equivalents on hand: this came to 255 thousand Euro (at 31
December 2003: 270 thousand Euro at the pre-merger RAI SpA and 1 thousand
Euro at RAI Holding) and include liquid funds in the form of cash and equivalent
instruments (stamps, cashier’s cheques or bank-guaranteed cheques, etc.) held by
the company at 31 December 2004.
Cash and cash equivalents (thousands of euros)
Schedule 10
31.12.2003
Cash at banks and post offices
Cheques
Cash and cash equivalents on hand
31.12.2004
Rai Holding
Rai contribution
to merger
Balance
Total
611
1
612
113,306
3
270
113,579
29,098
(2)
(16)
29,080
143,015
1
255
143,271
Schedule 13 details the breakdown of the item by currency.
Accrued income and prepaid expenses
Accrued income and prepaid expenses total 17,721 thousand Euro. They are
detailed in Schedule 11.
106
Accrued income and prepaid expenses (thousands of euros)
Schedule 11
31.12.2003
31.12.2004
Rai Holding
Rai contribution
to merger
Balance
Total
22
22
11,818
610
3,623
44
122
21
26
107
49
81
1,100
624
18,225
88
(119)
(670)
124
(6)
(26)
131
21
458
(240)
(328)
(567)
11,906
491
2,953
44
246
15
260
70
539
860
296
17,680
Other prepaid expenses:
. sports event filming rights
. Rai Way service costs
. hire costs
. association dues
. rent
. commissions on sureties
. commissions on interest rate collars
. insurance
. maintenance and repairs
. software licences
. programme production exclusive
. other
Accrued income:
. interest income
Total
253
33
(245)
41
275
18,258
(812)
17,721
Receivables and accrued income by maturity and type (thousands of euros)
Schedule 12
31.12.2003 - Rai Holding and Rai
within
one
year
Amount falling due
after
after
2 to 5
more than
years
5 years
31.12.2004
Total
within
one
year
Amount falling due
after
after
2 to 5
more than
years
5 years
Total
Non-current financial receivables
Subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Parent companies
Others
-
-
-
-
-
-
-
-
2,324
9,154
8,901
20,379
2,945
11,584
3,269
17,798
2,324
9,154
8,901
20,379
2,945
11,584
3,269
17,798
Current receivables
Other financial receivables due from
Subsidiaries
225,639
-
-
225,639
234,768
-
-
234,768
-
-
-
-
-
-
-
-
Parent companies
-
-
-
-
-
-
-
-
Others:
- repurchase agreements
3,920
-
-
3,920
-
-
-
-
229,559
-
-
229,559
234,768
-
-
234,768
Trade receivables
Customers
248,965
-
-
248,965
190,137
-
-
190,137
Subsidiaries
374,876
-
-
374,876
390,661
-
-
390,661
131
-
-
131
128
-
-
128
Others:
- government and other public certities
for subsidies and grants
Tax receivables
Deferred tax assets
Sundry receivables
Other receivables
Accrued income
Total
645
-
-
645
533
-
-
533
624,617
-
-
624,617
581,459
-
-
581,459
36,862
-
-
36,862
29,431
-
-
29,431
36,862
-
-
36,862
29,431
-
-
29,431
-
-
-
-
62,832
-
-
62,832
-
-
-
-
62,832
-
-
62,832
191,747
-
-
191,747
122,349
-
-
122,349
191,747
-
-
191,747
122,349
-
-
122,349
286
-
-
286
41
-
-
41
1,085,395
9,154
8,901
1,103,450
1,033,825
11,584
3,269
1,048,678
107
Receivables, cash and equivalents and accrued income in foreign currency or exposed to exchange rate risk (thousands of euros)
In euros
31.12.2003 - Rai Holding and Rai
In foreign
Provision
currency or
for
exposed to
doubtful
exchange
accounts
Total
In euros
31.12.2004
In foreign
Provision
currency or
for
exposed to
doubtful
exchange
accounts
rate risk
Non-current receivables
subsidiaries
parent companies
others
Current receivables
customers
subsidiaries
parent companies
tax receivables
deferred tax assets
others:
- government and other public entities
for subsidies and grants
- repurchase agreements
- other
Cash held at banks and post offices
Cheques
Cash and cash equivalents on hand
Total
rate risk
20,806
20,806
1
1
(428)
(428)
20,379
20,379
18,225
18,225
1
1
(428)
(428)
17,798
17,798
263,905
600,413
131
36,862
-
2,078
102
-
(17,018)
-
248,965
600,515
131
36,862
-
200,796
625,402
128
29,431
62,832
762
27
-
(11,421)
-
190,137
625,429
128
29,431
62,832
645
3,920
192,737
1,098,613
113
2,293
645
3,920
(1,103)
191,747
(18,121) 1,082,785
533
124,073
1,043,195
47
836
533
(1,771)
122,349
(13,192) 1,030,839
112,922
3
271
113,196
995
995
-
113,917
3
271
114,191
142,565
1
255
142,821
450
450
-
143,015
1
255
143,271
286
-
-
286
41
-
-
41
1,232,901
3,289
(18,549) 1,217,641
1,204,282
1,287
Accrued income
Total
Schedule 13
-
(13,620) 1,191,949
Liabilities and Equity
Equity
The components of shareholders’ equity and the effects of transactions carried out
in the current and previous financial years are shown in Schedule 14.
Equity (thousands of euros)
Schedule 14
31.12.2002 Changes during the year 31.12.2003
Rai Allocation of
Holding profit/coverage
of loss
Share capital (a)
Legal reserve
Other reserves:
. reserve for capital grants
. reserve for taxed capital grants
. reserve for capital grants
under Art. 55 Pres. Decr. 917/86
. other extraordinary reserves
. goodwill on merger
Retained earnings
(a) no. of ordinary shares
par value
Net
profit
(loss)
Rai
Holding
Rai
contribution
to merger
Reclassificat.
Allocation of
profit/coverage
of loss
241,447
510
-
-
241,447
510
500,000
12,846
-
1,236
-
-
-
-
2,527
8,389
(1,265)
1,265
-
9,679
(10)
251,626
(10)
10
-
(168)
(168)
9,669
(168)
251,458
9,364
74,025
24,723
631,874
-
23,487
(168)
(24,555)
-
241,447,000
1 euro
Net
profit
(loss)
Capital
increase
Total
- (500,000)
- (14,082)
1,071
-
242,518
510
(9,654)
-
1,262
-
- (97,512)
- 384,965
112,970
112,970 (236,283)
(1,071)
-
9,364
383,894
9,501
112,970
760,019
-
241,447,000 100,000,000
1 euro
5 euro
As noted elsewhere, in 2004 RAI eliminated tax distortions from its accounts.
108
31.12.2004
Eliminat.
for
merger
242,518,100
1 euro
The effects of the operation are shown in the following pro forma figures in
respect of the merger of RAI Holding and RAI:
Pro forma
Financial Statements
2002
Amounts before elimination of tax distortions
Tax distortions gross of deferred taxes:
- Accelerated depreciation
- Reversal of accelerated depreciation
- Provision for doubtful accounts
- Exchange rate variation provision
Total gross distortions
Related deferred taxes
Amounts after elimination of tax distortions
2003
Financial
Statements
2004
Capital
and
reserves
Net profit
for the
year
Capital
and
reserves
Net profit
for the
year
622,494
24,555
647,049
72,986
44,851
259
45,110
-18,326
649,278
34,590
-19,320
3,100
-127
18,243
-5,043
37,755
60,121
3,100
123
63,353
-23,369
687,033
60,121
3,100
132
63,353
- 23,369
112,970
The consolidated Group financial statements at 31 December 2004 show equity
gross of minority interests of 851.1 million Euro, including a consolidated net
profit of 82.2 million Euro.
The following notes provide additional detail on the individual components of
equity.
Share Capital
At 31 December 2004 share capital was represented by 242,518,100 ordinary
shares with a par value of 1 Euro owned by the Ministry for Economy Affairs and
Finance (241,447,000 shares, equal to 99.5583% of share capital) and the SIAE
(Italian Association of Authors and Publishers) (1,071,100 shares, equal to
0.4417% of share capital).
Legal reserve
The reserve amounted to 510 thousand Euro.
Other reserves
Other reserves totalled 394,520 thousand Euro. They break down as follows:
• 9,364 thousand Euro in respect of the remainder of the reserve for capital
grants under Article 55 of Presidential Decree 917 of 22 December 1986 (point
3), which represented the portion of tax-suspended contributions received in
1996 (81 thousand Euro), 1995 (9,014 thousand Euro) and 1991 (269
thousand Euro), for which no distribution is planned.
109
• 1,262 thousand Euro (of which 9,015 thousand Euro received in 1995 and
1,800 thousand Euro in 2000) in respect of the taxable reserve for capital
contributions; the provisions for the related current and deferred taxes are
posted as specific items in the balance sheet.
• 383,894 thousand Euro in reserves in respect of goodwill arising on merger.
Retained earnings
The item came to 9,501 thousand Euro and is composed of residual undistributed
net profit on the balance sheet of RAI Holding at the time of the merger.
The following table shows the components of shareholders’ equity with their possible
uses and availability, as well as any uses made in the previous three years:
Description type
- Share capital
- Reserves:
- Legal reserve
- Reserve for capital grants
- Reserve for capital grants under
Art. 55 Pres. Decr. 917/86
- Reserve for goodwill on merger
- Retained earnings
- Net profit for the period
Total
Unavailable share
- 5% net profit for period
- foreign exchange gains
Available share
Amount
Possible
uses
Amount
available
Uses in
previous
three years
242,518
-
-
-
510
1,262
9,364
2
1-2-3-4
1-2-3-4
1,262
9,364
-
383,894
9,501
112,970
1-2-3
1-2-3
1-2-3
383,894
9,501
112,970
516,991
-
-6
- 478
516,507
Key:
1: capital increase - 2: coverage of losses - 3: distribution to shareholders - 4: subject to IRES if used
for purpose other than coverage of losses
Net profit for the year
Net profit came to 112,969,764.00 Euro.
The heading totalled 426,596 thousand Euro, a net decrease of 52,746 thousand
Euro with respect to the figure at 31 December 2003 for the pre-merger RAI SpA.
The composition of these items and the breakdown of the decrease are shown in
schedule 15.
110
Provisions for liabilities and risks (thousands of euros)
31.12.2003
Rai
Holding
Schedule 15
Rai
contribution
to merger
Accrued
Taxes
Used
on
directly
revaluation
Transferred
to income
statement
Reclassified
31.12.2004
Total
4,940
Pensions and similar liabilities:
- supplementary seniority benefits
-
5,089
151
-
(258)
(42)
-
- social security benefits
-
1,195
31
(3)
(61)
-
(67)
1,095
- supplementary company pension fund
-
150,725
8,934
-
(11,302)
-
67
148,424
-
157,009
9,116
(3)
(11,621)
(42)
-
154,459
Taxes
-
2,342
29,356
-
-
-
-
31,698
Other provisions:
- litigation
-
121,877
-
(19,366)
(6,108)
-
111,370
- pension litigation
-
31,000
-
-
-
-
-
31,000
- reclamation and renovation of property
-
63,879
-
-
(834)
-
(36,529)
26,516
- withdrawal risk-associated companies
-
24,381
-
-
(884)
(1,047)
-
22,450
- lease disputes
-
5,333
614 (b)
-
(27)
-
-
5,920
- Education Ministry agreement
-
4,303
1,276 (c)
-
-
-
-
5,579
- charges for assets under development/construction
-
6,000
-
-
-
(500)
-
5,500
- accrued costs
-
3,923
307 (d)
-
(16)
-
-
4,214
- risks on programmes
-
18,117
-
-
-
(13,975)
(4,142)
19,626
- sundry:
. liabilities
. risks
(a) contra-items: item
item
(b) contra-item: item
(c) contra-item: item
(d) contra-item: item
(e) contra-items: item
item
(f) contra-items: item
item
B 9 e) Other personnel costs - 10,808
B 12 Provision for risks - 4,159
B 12 Provision for risks
B 13 Other provisions
B 9 Personnel costs
D 19 Writedowns of assets - 15
B 13 Other provisions - 7,587
B 12 Provision for risks - 1,234
C 17 Other financial expense - 1,149
14,967 (a)
-
32,890
7,602 (e)
-
(4,908)
(15,958)
-
-
8,288
2,383 (f)
-
(347)
(2,060)
-
8,264
-
319,991
27,149
-
(26,382)
(39,648)
(40,671)
240,439
-
479,342
65,621
(3)
(38,003)
(39,690) (g)
(40,671)
426,596
(g) contra-item: item A 5 c) Other revenue sand income - 38,905
item D 18 a) Revaluations of equity investments - 652
item E 20 c) Other extraordinary income - 133
The following notes provide additional details on the individual provisions.
Pensions and similar liabilities: the item totalled 154,459 thousand Euro and
is composed of the supplementary seniority benefits provision, the social security
benefits provision and the company supplementary pension fund.
• the provision for supplementary seniority benefits amounted to 4,940 thousand
Euro at year-end (at 31 December 2003 it came to 5,089 thousand Euro for the
pre-merger RAI SpA). It represents the liability in respect of indemnities in lieu
of notice towards employees hired before 1978 who have reached the compulsory
retirement age. The amount is revalued each year for consumer price inflation.
In the event of early termination of employment the amounts accrued are released.
• the provision for social security benefits totalled 1,095 thousand Euro (at
31 December 2003 it came to 1,195 thousand Euro for the pre-merger RAI
SpA). It includes amounts accrued until 31 December 1988 and supplementary
amounts allocated in subsequent periods in order to protect the real value of the
fund for eligible employees in accordance with the provisions of the national
collective bargaining agreement.
111
Since 1 January 1989 social security contributions by RAI and withholdings
from employees have been paid into the CRAIPI (supplementary pension fund
for RAI employees) and the FIPDRAI (supplementary pension fund for RAI
management), associations that are responsible for managing pensions funds
under the agreements between RAI and labour unions. Upon retirement, the
pension funds accumulated by RAI, CRAIPI and FIPDRAI are paid out unless
employees opt for the company supplementary pension plan. In this case, the
FIPDRAI and CRAIPI funds remain with the associations to finance supplementary
pension benefits, which are calculated on the basis of assessed returns. Funds
accrued by RAI are used to finance residual pension payments up to the
amounts agreed in labour agreements.
• the company supplementary pension fund totalled 148,424 thousand Euro at 31
December 2004 (at 31 December 2003 it came to 150,725 thousand Euro for the
pre-merger RAI SpA). It includes:
- 138,415 thousand Euro in respect of supplementary pension benefits currently
being paid (at 31 December 2003: 139,750 thousand Euro), drawn on the funds
accrued for employees who opt for the supplementary pension plan, which is
kept in line with actuarial reserves in order to ensure sufficient benefits for plan
participants and their survivors.
- 10,009 thousand Euro in respect of pensions that will be paid to employees still
in service in the event some of such employees opt for the supplementary pension
plan (at 31 December 2003: 10,975 thousand for the pre-merger RAI SpA).
Benefits are calculated on the basis employees’ compensation, seniority and
financial and demographic parameters normally used in similar cases.
Taxes: the provision for taxes totalled 31,698 thousand Euro (at 31 December
2003: 2,342 thousand Euro for the pre-merger RAI SpA) and is composed of:
- 13,148 thousand Euro for deferred taxes in respect of amortisation and
depreciation accrued during the year;
- 16,728 thousand Euro for deferred taxes in respect of non-deductible depreciation
that will be recognised in future years following the elimination of tax distortions
related to accelerated depreciation booked in previous years;
- 1,525 thousand Euro for deferred taxes on capital gains recognised in the years up
to 2004;
- 297 thousand Euro in respect of taxes assessed in an audit of the 1975 financial
year and related penalties.
The current provision will be used in future years on an accruals basis.
Other provisions: 240,439 thousand Euro (at 31 December 2003: 319,991
thousand Euro, all of which in the financial statements of the pre-merger RAI SpA).
The item includes accruals for costs or losses whose existence is certain but whose
amount cannot be determined or which are probable and whose amount can be
reasonably estimated. The main items are detailed in schedule 15. The most
significant changes with respect to the previous year regard:
112
- the provision for liabilities in respect of structural works on a number of company
properties decreased by 37,363 thousand Euro, of which 36,529 thousand Euro
were used to write down the value of the buildings in Rome in Viale Mazzini and
in Turin in Via Cernaia, as discussed in the section on tangible assets;
- the provision for the risk of that programmes might not be transmitted or
re-broadcast decreased to nil following use of 13,975 thousand Euro.
The remainder (4,142 thousand Euro) was reclassified to a specific programme
impairment provision.
As regards pending litigation with employees and third parties, the allocation
to provisions for liabilities and risks is the best estimate of the likely liability based
on the most up-to-date information available.
Staff severance pay
The provision totalled 345,784 thousand Euro (at 31 December 2003: 325,903
thousand Euro, of which 25 thousand Euro for RAI Holding and 325,878
thousand Euro for the pre-merger RAI SpA). The provision is calculated at the
individual level in accordance with the provisions of Article 2120 of the Civil Code
– net of advances paid pursuant to paragraph 6 of that article – and take account
of all non-occasional components of compensation. The composition of the item
and changes during the period are shown in Schedule 16.
Staff severance pay (thousands of euros)
Schedule 16
Rai Holding - balance at 31 December 2003
25
Changes during the year:
. RAI contribution to merger
325,878
. accruals to income
42,173
. utilization for severance pay
(17,109)
. personnel transfers
. other changes
275
(5,458)
345,759
Balance at 31 December 2004
345,784
Payables
Payables amounted to 807,268 thousand Euro, a decrease of 74,484 thousand
Euro on the total of those recognised at 31 December 2003 by RAI Holding (74
thousand Euro) and RAI SpA (881,678 thousand Euro net of eliminations made
in the merger). More specifically, financial debt to banks and other lenders
amounted to 16,581 thousand Euro, a net decrease of 43,800 thousand Euro on
the figures reported by the pre-merger RAI SpA at end-2003.
The composition of the heading is given in Schedule 17. Schedule 20 shows
secured debt, while schedules 21 and 22 detail the composition of the item by
maturity, type and currency.
113
More than 95% of the item regards Italian residents, or about 770 million Euro
out of a total of 807 million Euro.
Payables (thousands of euros)
Schedule 17
31.12.2003
Rai
Holding
Rai
Elimination
Total Balance of new
for merger
positions (+) and
repayments (-)
Total
Due to banks
-
60,381
-
60,381
(43,800)
Due to other lenders
-
5,215
-
5,215
(5,215)
-
Advances
-
3,101
-
3,101
14,079
17,180
17
477,422
-
477,422
(45,430)
432,009
-
163,874
-
163,874
16,868
180,742
2,465
Trade payables
Subsidiaries
(a)
(b)
Parent companies
Taxes payable
16,581
-
2,960
-
2,960
(495)
-
149
(149)
-
-
-
37
36,038
-
36,038
(5,143)
30,932
Social security institutions
10
38,240
-
38,240
1,383
39,633
Other payables
10
94,447
-
94,447
(6,731)
87,726
74
881,827
(149)
881,678
(74,484)
807,268
(a) of which:
- NEWCO RAI INTERNATIONAL
-
752
-
752
(272)
480
- RAI CINEMA
-
11,936
-
11,936
(7,199)
4,737
- RAI CLICK
-
639
-
639
6,206
6,845
- RAI CORPORATION
-
1,990
-
1,990
(565)
1,425
- RAI TRADE
-
8,411
-
8,411
11,254
19,665
- RAI WAY
-
52,503
-
52,503
7,082
59,585
- RAINET
-
5,191
-
5,191
(170)
5,021
- RAISAT
-
1,801
-
1,801
2,643
4,444
- SACIS
-
5,713
-
5,713
(134)
5,579
- SIPRA
-
74,938
-
74,938
(1,977)
72,961
-
163,874
-
163,874
16,868
180,742
-
-
-
-
1
1
-
2,960
-
2,960
(496)
2,464
(b) of which:
- AUDIRADIO
- SAN MARINO RTV
The following notes provide additional information on the individual items.
Due to banks: this totalled 16,581 thousand Euro (at 31 December 2003: 60,381
thousand Euro for the pre-merger RAI SpA alone) and is composed of:
• 3,526 thousand Euro in respect of secured debt paying a subsidized interest rate,
of which 1,205 thousand Euro falling due after the following year. The funds are
to finance the construction of the Cosenza headquarters and expand the Bari
headquarters. The loans are secured by mortgages, priority liens and bank
guarantees amounting to 25,281 thousand Euro, 25,281 thousand Euro and
8,384 thousand Euro respectively;
• 13,055 thousand Euro in respect of the debtor balance on current accounts with a
number of banks.
The decrease in the exposure to banks reflects the positive cash flow generated by
the nearly total recovery of prior receivables for licence fees from the Ministry for
Economic Affairs and Finance and the increase in advertising revenues.
114
31.12.2004
Due to other lenders: the residual debt to Cofiri S.p.A. was fully discharged during
the year (at 31 December 2003: 5,215 thousand Euro).
Advances: the item came to 17,180 thousand Euro (3,101 thousand Euro at 31
December 2003 for the pre-merger RAI SpA). Details are provided in Schedule 18.
The amount breaks down as follows:
• payments in respect of licences to use programmes amounting to 1,328 thousand
Euro; the costs associated with the programmes are recognised under assets under
development;
• an advance from the company Dallah Al Baraka in the amount of 1,101 thousand
Euro (1,500 thousand Dollars) regarding pre-emption rights valid as from August
2003, in the event of:
- the sale of shares in NewCo Rai International;
- a search for commercial partners for the transmission of the Rai International TV
channel;
• licence fees received from the Ministry for Economic Affairs and Finance in excess
of accrued amount totalling 14,027 thousand Euro;
other advances amounting to 724 thousand Euro.
Advances by customer (thousands of euros)
Schedule 18
31.12.2003
Ministry for Economic Affairs and Finance for license fees
Other
31.12.2004
Rai Holding
Rai contribution
to merger
Balance
Total
-
3,101
3,101
14,027
52
14,079
14,027
3,153
17,180
Suppliers: the item records trade payables excluding those vis-à-vis subsidiaries,
associated companies and parent companies, which are carried under specific
balance-sheet headings. Trade payables totalled 432,009 thousand Euro (at 31
December 2003: 477,422 thousand Euro for the pre-merger RAI SpA and 17
thousand Euro for RAI Holding), a decrease of 45,430 thousand Euro on the
previous year.
Subsidiaries: the item amounted to 180,742 thousand Euro (163,874 thousand
Euro at 31 December 2003 for RAI SpA) and is detailed in Schedule 17. It includes
financial debt of 91,837 thousand Euro (81,961 thousand Euro at 31 December
2003) and trade payables of 88,905 thousand Euro (81,913 thousand Euro at 31
December 2003).
Associated companies: these came to 2,465 thousand Euro (2,960 thousand
Euro at 31 December 2003 for RAI SpA) and are broken down by company in
Schedule 17. They include financial debt of 896 thousand Euro (1,385 thousand
Euro at 31 December 2003) and trade payables of 1,569 thousand Euro (1,575
thousand Euro at 31 December 2003).
115
Tax liabilities: the item totalled 30,932 thousand Euro (at 31 December 2003:
36,038 thousand Euro for the pre-merger RAI SpA and 37 thousand Euro for RAI
Holding), a decrease of 5,143 thousand Euro on 2003.
2003
2004
IRAP
3,045
IRES from consolidated taxation mechanism
Group VAT
Suspended VAT
4,712
Withholdings on earnings of employees and
27,849
self-employed persons to be transferred to tax authorities
- Other withholdings
371
- Liability in respect of tax regularisation scheme
135
36,075
881
1,811
27,996
-
274
30,932
Social security: this item came to 39,633 thousand Euro (at 31 December 2003:
38,240 thousand Euro for the pre-merger RAI SpA and 10 thousand Euro for
RAI Holding). It reflects contributions due on compensation paid to employees
and self-employed workers, to be paid to the institutions in compliance with the
ordinary deadlines. They break down as follows:
-
INPGI
ENPALS
INPS
Contributions on accrued compensation
Other
2003
10,072
12,803
3,425
10,074
1,876
38,250
2004
10,234
11,728
3,309
11,918
2,444
39,633
Other payables: these amounted to 87,726 thousand Euro (at 31 December
2003: 94,447 thousand Euro for the pre-merger RAI SpA and 10 thousand Euro
for RAI Holding), a net decrease of 6,731 thousand Euro with respect to the
figures for 31 December 2003 in the financial statements of RAI Holding and the
pre-merger RAI SpA:
-
116
Employees in respect of accrued compensation
Other for accrued liabilities
CRAIPI
FCPGI
Other
2003
49,875
33,110
2,920
2,300
6,252
94,457
2004
57,471
21,703
2,098
2,390
4,064
87,726
Accrued expenses and deferred income
The item totalled 1,264 thousand Euro. Further details and a comparison with the
previous year are provided in Schedule 19.
Accrued expenses and deferred income (thousands of euros)
Schedule 19
31.12.2003
31.12.2004
Rai Holding
Rai contribution
to merger
Balance
Total
-
25
898
364
237
88
122
1,734
(25)
(496)
106
(80)
(52)
36
(511)
402
470
157
36
158
1,223
-
16
7
23
23
(5)
18
39
2
41
-
1,757
(493)
1,264
Prepaid expenses:
. commissions on interest rate collars
. transmission and related rights on own productions
. special subscriptions
. teletext
. real estate investments
. other
Deferred income:
. commitment fee on credit lines
. other
Total
Payables and prepaid expenses secured against company assets (thousands of euros)
31.12.2003
Rai Holding + Rai
Secured by
Unsecured
company
assets
Payables
Bonds
Convertible bonds
Due to banks (a)
Advances
Suppliers
Bills payable
Subsidiaries
Parent companies
Taxes payable
Other payables
Total payables
Accrued expenses
Total
5,735
5,735
54,646
5,215
3,101
477,439
163,874
2,960
36,075
38,250
94,457
876,017
Schedule 20
31.12.2004
Total
Secured by
company
assets
Unsecured
Total
60,381
5,215
3,101
477,439
163,874
2,960
36,075
38,250
94,457
881,752
3,526
3,526
13,055
17,180
432,009
180,742
2,465
30,932
39,633
87,726
803,742
16,581
17,180
432,009
180,742
2,465
30,932
39,633
87,726
807,268
-
23
23
-
41
41
5,735
876,040
881,775
3,526
803,783
807,309
(a) mortgages on the buildings of the Cosenza regional headquarters;
special lien on plant and machinery of the Cosenza regional headquarters.
117
Payables and accrued expenses by maturity and type (thousands of euros)
Schedule 21
31.12.2003
31.12.2004
Rai Holding + Rai
within
1 year
Medium/long-term debt
Bonds
Convertible bonds
Due to banks
Suppliers
Bills payable
Subsidiaries
Parent companies
Taxes payables
Other payables
Short-term payables
Other financial debt
Due to banks
Suppliers
Bills payable
Subsidiaries
Parent companies
Other payables
Trade payables
Suppliers
Bills payable
Subsidiaries
Parent companies
Sundry payables
Taxes payables
Other payables:
- concession fee
- sundry
Total payables
(a)
Accrued expenses
Total
Amounts falling due
after 2 after more than
to 5 years
5 years
Total
within
1 year
after 2
to 5 years
Amounts falling due
after more than
5 years
Total
56,387
5,215
61,602
3,526
3,526
-
59,913
5,215
65,128
2,321
2,321
1,205
1,205
-
3,526
3,526
468
3,923
81,961
1,385
87,737
-
-
468
3,923
81,961
1,385
87,737
13,055
174
91,837
896
105,962
-
-
13,055
174
91,837
896
105,962
473,516
81,913
1,575
557,004
-
-
473,516
81,913
1,575
557,004
431,835
88,905
1,569
522,309
-
-
431,835
88,905
1,569
522,309
36,075
38,250
-
-
36,075
38,250
30,932
39,633
-
30,932
39,633
94,457
168,782
-
-
94,457
168,782
87,726
158,291
-
-
87,726
158,291
875,125
3,526
-
878,651
788,883
1,205
-
790,088
23
-
-
23
41
-
-
41
875,148
3,526
-
878,674
788,924
1,205
-
790,129
(a) does not include advances
Payables and accrued expenses in foreign currency or exposed to exchange rate risk (thousands of euros)
31.12.2003
Rai Holding + Rai
In foreign currency
In euros
or exposed to
exchange rate risk
Payables
Bonds
Convertible bonds
Due to banks
Suppliers
Bills payable
Subsidiaries
Parent companies
Tax liabilities
Other payables
Total payables
(a)
Accrued expenses
Total
(a) does not include advances
118
46,915
2,616
49,531
49,531
60,381
5,215
430,524
161,258
2,960
36,075
38,250
94,457
829,120
23
829,143
Schedule 22
31.12.2004
Total
In foreign currency
or exposed to
exchange rate risk
In euros
Total
60,381
5,215
477,439
163,874
2,960
36,075
38,250
94,457
878,651
23
878,674
10,458
1,425
21
11,904
11,904
16,581
421,551
179,317
2,465
30,932
39,633
87,705
778,184
41
778,225
16,581
432,009
180,742
2,465
30,932
39,633
87,726
790,088
41
790,129
5) Memorandum accounts
Memorandum accounts came to 464,063 thousand Euro. They are broken down by type
in the table annexed to the balance sheet and analysed in detail in schedules 23, 24 and 25.
Secured guarantees (thousands of euros)
Schedule 23
31.12.2003
Secured guarantees on behalf of others
Secured guarantees for commitments other than payables
Assets pledged as collateral:
- fixed-income securities
Mortgages
Other secured guarantees
Secured guarantees for recognised payables
Mortgages on:
- land and buildings:
. industrial
Other secured guarantees
Total
31.12.2004
Rai Holding
Rai
Rai
-
-
-
-
3,536
3,536
3,536
3,536
-
34,473
34,473
68,946
25,281
25,281
50,562
-
72,482
54,098
Commitments to purchase and sell (thousands of euros)
Schedule 24
31.12.2003
Rai Holding
Rai
31.12.2004
Rai
-
Commitments to purchase
- Sale of options: $ 5,000,000 collar with SANPAOLO IMI (put leg) for RAI CINEMA to hedge Warner Bros contract
-
4,293
- Sale of options: $ 4,500,000 collar with SANPAOLO IMI (put leg) for RAI CINEMA to hedge Buena Vista contract
-
3,863
-
- Sale of options: $ 4,940,000 collar with Merril Lynch (put leg) for RAI CINEMA to hedge Buena Vista and Fintage contract
-
4,705
-
- Sale of options: $ 5,950,000 collar with Banca di Roma (put leg) for RAI CINEMA to hedge Fintage contract
-
5,122
-
- Sale of options: $ 6,000,000 collar with Banca di Roma (put leg) for RAI CINEMA to hedge Buena Vista contract
-
5,514
-
- Sale of options: $ 6,000,000 collar with Morgan Stanley (put leg) for RAI CINEMA to hedge Warner Bros contract
-
-
5,000
1,639
- Sale of options: $ 2,000,000 collar with Goldman Sachs (put leg) for RAI CINEMA to hedge Fintage contract
-
-
- Sale of options: $ 4,500,000 collar with Goldman Sachs (put leg) for RAI CINEMA to hedge Warner Bros contract
-
3,750
-
- Sale of options: $ 16,041,250 collar with Goldman Sachs (put legt) for RAI CINEMA to hedge Warner Bros contract
-
-
13,236
- Forward foreign exchange purchases: $ 12,237,500 with Goldman Sachs for RAI CINEMA to hedge Buena Vista contract
-
10,766
-
- Forward foreign exchange purchases: $ 6,500,000 with Goldman Sachs for RAI CINEMA to hedge Buena Vista contract
-
-
5,696
- Forward foreign exchange purchases: $ 4,400,000 with Goldman Sachs for RAI CINEMA to hedge Fintage contract
-
-
3,651
- Forward foreign exchange purchases: $ 14,175,750 with Goldman Sachs for RAI CINEMA to hedge Warner Bros contract
-
-
11,790
- Forward foreign exchange purchases: $ 3,800,000 with Morgan Stanley for RAI CINEMA to hedge Buena Vista contract
-
3,423
-
- Forward foreign exchange purchases: $ 19,600,000 with Morgan Stanley for RAI CINEMA to hedge Warner Bros contract
-
-
16,071
- Forward foreign exchange purchases: $ 8,600,000 with SANPAOLO IMI for RAI CINEMA to hedge Warner Bros contract
-
7,438
-
- Forward foreign exchange purchases: $ 26,067,000 with SANPAOLO IMI for RAI CINEMA to hedge Warner Bros contract
-
-
21,688
- Forward foreign exchange purchases: $ 3,590,000 with SANPAOLO IMI for RAI CINEMA to hedge Studio Canal contract
-
3,083
-
- Forward foreign exchange purchases: $ 4,500,000 with SANPAOLO IMI for RAI CINEMA to hedge Buena Vista contract
-
3,940
-
- Forward foreign exchange purchases: $ 2,000,000 with Banca di Roma for RAI CINEMA to hedge Warner Bros contract
-
1,674
-
- Forward foreign exchange purchases: $ 8,000,000 with Banca di Roma for RAI CINEMA to hedge Warner Bros contract
-
-
6,610
- Forward foreign exchange purchases: $ 2,900,000 with Banca di Roma for RAI CINEMA to hedge Buena Vista contract
-
2,548
-
- Forward foreign exchange purchases: $ 2,900,000 with Banca di Roma for RAI CINEMA to hedge Fintage contract
-
-
2,394
- Forward foreign exchange purchases: $ 4,000,000 with Merril Lynch for RAI CINEMA to hedge Buena Vista contract
-
3,509
-
- Forward foreign exchange purchases: $ 1,800,000 with Merril Lynch for RAI CINEMA to hedge Fintage contract
-
1,588
-
- Forward foreign exchange purchases: $ 1,800,000 with Merril Lynch for RAI CINEMA to hedge Fintage contract
-
-
1,583
- Forward foreign exchange purchases: $ 2,000,000 with Lehman Brothers for RAI CINEMA to hedge Warner Bros contract
-
1,674
-
- Forward foreign exchange purchases: $ 5,000,000 with Lehman Brothers for RAI CINEMA to hedge Warner Bros contract
-
-
4,022
Total hedges of RAI CINEMA contracts
-
66,890
93,380
- Acquisition of digital terrestrial frequencies
-
21,675
-
-
88,565
93,380
119
Other memorandum accounts (thousands of euros)
Schedule 25
31.12.2003
31.12.2004
Rai Holding
Rai
Rai
-
2
2
2
2
-
249
249
-
15,180
14,235
-
103
5
203
5
-
68,642
95,736
-
983
85,162
753
111,181
Assets leased out
-
-
-
Assets leased
-
-
7,375
Secured guarantees received
Assets pledged as collateral:
- passbook savings accounts
(a)
Unsecured guarantees received
Bank guarantees:
- Banca di Credito di Trieste to secure loan granted to Ponteco
(b)
- Sundry banks and insurance companies to secure advance to suppliers for
the purchase of goods and services
(a)
- Banco di Brescia to secure agreement with the City of San Remo for
transmission of the Italian Song Festival
(a)
- Banca Antonveneta to secure Fondazione Nord-Est lease
(b)
- Sundry banks and insurance companies to secure full performance of
contracts for the production of radio/television programmes
(a)
Other:
- E.RAS. comfort letters issued on behalf of San Marino RTV in respect of loan granted by
Cassa Risparmio di Parma e Piacenza and for credit line granted by us
(a)(b)
(a) securing obligations of others
(b) securing receivables
Third party assets under development
-
-
-
Third party assets held under free loan for use, custody, leased or similar reasons
-
..
..
Assets held with third parties under development awaiting assignment
-
10,455
6,191
Assets held with third parties under free loan for use, custody, leased or similar reasons
-
824
914
-
2,532
2,532
-
380
-
-
10,593
8,385
Guarantees granted by other parties for obligations of the company:
Against payables:
- Sundry entities for surety guaranteeing advance paid by Ministry of Foreign Affairs for
agreement to extend RAI Uno TV to Tunisia
- SANPAOLO IMI for surety granted to Autostrada dei Fiori guaranteeing agreement for
transmission of Isoradio service
- Cofiri SpA for surety guaranteeing loan from SANPAOLO IMI for the construction of
the Cosenza headquarters and expansion of the Bari headquarters
- SANPAOLO IMI for surety granted to registry office of tax authorities to guarantee
pending disputes
- Banca Popolare di Novara for surety granted for purchases of Saxa Rubra properties
-
104
104
-
10,800
10,800
Against other obligations:
- Sundry banks for surety granted to the Republic of Egypt to guarantee temporary exports
of technical equipment
- Banca di Roma for surety granted to tax authorities against VAT receivable
-
85
-
-
21
21
- Banca Intesa - Ambroveneto for surety granted to port authorities of Venice to guarantee
lease of land
- Sundry banks for sureties granted to tax authorities to guarantee prize competitions
-
21
21
-
4,173
3,942
-
26
-
-
190
190
-
1
1
- SANPAOLO IMI for sureties granted to the customs authorities of Turin and Rome to
guarantee payment of customs duties on import
- Sundry entities for sureties granted to State Railways and the regional governments of
Lazio and Piedmont to guarantee teletext agreement
- SANPAOLO IMI for surety granted to Valeco SpA to guarantee obligations in respect of
waste disposal agreement of the Autonomous Region of Valle d’Aosta
120
Other memorandum accounts (thousands of euros)
Schedule 25 cont.
31.12.2003
- Zurigo Assicurazioni for surety granted to City of San Remo to guarantee obligations in
respect of agreement regarding the Italian Song Festival
- SANPAOLO IMI for surety granted to Alpicase for the disposal of the Aosta headquarters
- SANPAOLO IMI of Turin for surety granted to Ministry of Finance for radio and television
advertising and promotion of national lotteries
- SANPAOLO IMI for surety granted to Customs and Tax Office
- SANPAOLO IMI for surety granted to the mountain community of Triangolo Lariano to
guarantee construction of television repeater station
- SANPAOLO IMI for surety granted to Fiorentina Gas SpA to guarantee payment of gas supplies
31.12.2004
Rai Holding
Rai
Rai
-
516
179
500
-
-
181
19
181
19
-
2
77
2
77
8
- SANPAOLO IMI for surety granted to Eliodoro Stradella to guarantee lease contract
-
8
- SANPAOLO IMI for surety granted to Edison Energia SpA to guarantee payment of electricity supplies
-
212
-
- Banca Popolare di Novara for surety granted to Enipower Trading SpA
-
-
292
- Banca Intesa - Cariplo for surety granted to the City of Turin
-
6
6
- Banca Intesa - Cariplo for surety granted to Enel Trade to guarantee electricity supplies
-
697
697
43
- Banca Intesa - Cariplo for surety granted to Five Energy s.r.l. to guarantee electricity supplies
-
43
- UniCredit Banca - Credito Italiano for surety granted to Consorzio Zona Palombare di Ancona
-
127
-
- Sundry banks for surety granted to the City of Milan to guarantee use of sites for signal transmission
-
-
5
-
30,993
27,826
Other:
- Attachment of bank deposits by third parties
-
20
20
- Bankruptcy proceedings for cancelled receivables
-
6,276
6,276
- Gifts and entertainment expenses - deductible share (Art. 74 para 2 Pres. Decr. 917/1986)
-
1,551
1,668
- Bank deposits at Banca di Roma and Banca Intesa - Comit in favour of third parties
-
2
2
- Tied amounts at sundry banks as a result of attachments
-
1,607
1,169
- Tied amounts at sundry post office as a result of attachments
-
-
55
- Claim on Associazione Fonografici Italiani assigned by Nuova Fonit Cetra SpA
-
652
652
-
5,836
-
-
7,168
-
-
1,735
-
-
3,750
-
-
-
13,346
-
-
1,666
-
-
5,000
-
4,424
-
-
3,863
-
- Purchase of options: $ 6,500,000 collar with Banca di Roma (call leg)
for RAI CINEMA to hedge Fintage contract
- Purchase of options: $ 7,800,000 collar with Banca di Roma (call leg)
for RAI CINEMA to hedge Buena Vista contract
- Purchase of options: $ 1,900,000 collar with Banca di Roma
for RAI CINEMA to hedge cancelled and contingencies
- Purchase of options: $ 4,500,000 collar with Goldman Sachs (call leg)
for RAI CINEMA to hedge Warner Bros contract
for RAI CINEMA to hedge Fintage contract
- Purchase of options: $ 6,000,000 collar with Morgan Stanley (call leg)
- Purchase of options: $ 5,000,000 collar with SANPAOLO IMI (call leg)
- Purchase of options: $ 4,500,000 collar with SANPAOLO IMI (call leg)
for RAI CINEMA to hedge Buena Vista contract
- Purchase of options: $ 4,940,000 collar with Merril Lynch (call leg)
-
4,358
-
- Dear Cinestudi - call option on leased property
for RAI CINEMA to hedge Buena Vista and Fintage contract
-
48,426
48,426
- Usage rights to Teatro dal Verme
-
..
..
- Writedowns of equity investments - deductible share
-
10,351
6,642
-
100,022
84,925
-
227,458
238,414
Total
Hedges are in place to cover the exchange rate and interest rate risk associated
with specific commitments of the company or the RAI Cinema subsidiary.
121
The foreign exchange transactions carried out for RAI are intended to hedge purchases
in US Dollars of rights to sports events expiring in the first half of 2005. The total
notional value at 31 December was 20,150 thousand US Dollars. The transactions
make it possible to buy dollars forward at an average exchange rate of 1.30 US
Dollars. The memorandum accounts show the hedges undertaken by the parent
company, under an agreement of 13 December 2002, in respect of foreign currency
commitments taken on by RAI Cinema.
Interest rates hedges, which are in place for the period between 2004 and 2008 to
cover 30,000 thousand Euro on short-term credit facilities with interest rates of
between 2.6% and 4.7%, have been prudentially valued and a specific risk
provision established.
At 31 December 2004 there were no other commitments entered into as part of
normal operations for the purchase or sale of goods and services on which
specific information would be necessary to gain a better understanding of the
company’s balance sheet and financial situation.
6) Income Statement
Value of production
Revenues from sales and services: revenues came to 2,744,263 thousand Euro.
They basically include accrued revenues in respect of TV licence fees and advertising.
A breakdown of the main components is given in Schedule 26. The distribution of
revenues by geographical area shows that they are almost entirely of national origin.
Revenues from sales and services (thousands of euros)
Schedule 26
2003
Revenues from sales
Revenues from services:
- Licence fees
. private subscriptions
. special subscriptions
- Advertising
. television
. radio
. other
- Promotions
. television
. radio
- Sponsorships
. television
. radio
- Special services under agreements
- Other services
. sale of broadcasting rights and distribution pf programmes
. teletext services
. production services
. telecommunications services
. other
Total
122
2004
Rai Holding
Rai
Total
Total
-
2,191
2,191
1,743
-
1,388,322
43,657
1,431,979
1,388,322
43,657
1,431,979
1,428,061
45,763
1,473,824
-
858,760
58,332
8,357
925,449
858,760
58,332
8,357
925,449
950,455
61,504
8,710
1,020,669
-
51,076
5,363
56,439
51,076
5,363
56,439
47,598
6,264
53,862
-
23,296
109
23,405
23,296
109
23,405
33,304
126
33,430
-
82,519
82,519
82,940
-
40,325
2,898
14,770
2,867
10,196
71,056
2,590,847
2,593,038
40,325
2,898
14,770
2,867
10,196
71,056
2,590,847
2,593,038
43,674
2,440
11,529
8,610
11,542
77,795
2,742,520
2,744,263
Changes in inventories of work in progress, semifinished and finished goods:
the change of 20 thousand Euro is entirely attributable to the decrease in the value
of stock associated with the book publishing and periodicals business.
Capitalisation of internal development/construction costs: the amount of
8,694 thousand Euro represents internal costs associated with non-current assets,
which were capitalised under the specific asset items. Details are shown in
Schedule 27.
Capitalisation of internal development/construction costs (thousands of euros)
Schedule 27
2003
2004
Rai Holding
Rai
Total
Total
-
4,390
5,706
10,096
4,390
5,706
10,096
3,094
5,600
8,694
Intangible
Tangible
Other revenues and income: this item came to 131,599 thousand Euro; it breaks
down as shown in Schedule 28.
Other revenues and income (thousands of euros)
Schedule 28
2003
Rai Holding
Rai
2004
Elimination
for merger
Total
Total
Operating grants
-
483
-
483
686
Gains on disposals
-
806
-
806
1,631
-
27,057
30,132
30,233
18,198
-
27,057
30,132
30,233
18,198
25,029
4,153
31,599
38,905
239
239
14,927
7,586
4,190
1,210
133,533
(239)
(239)
14,927
7,586
4,190
1,210
133,533
15,205
8,756
4,617
1,018
129,282
239
134,822
(239)
134,822
131,599
Other
Recovery and reimbursement of expenses
Prior-year income in respect of licence fees
Other prior-year items
Release of provisions to income
Other income from equity investments:
- Rai Way service contract
- Rai Cinema service contract
- other
Other
Total
Production costs
This heading reports costs and losses related to ordinary operations, excluding those
associated with financial operations. The costs detailed here are shown net of those
related to tangible and intangible assets, which form part of the values recognised
for the assets.
Cost of raw materials, supplies, consumables and merchandise: the item
totalled 21,918 thousand Euro, which includes purchases of technical materials
for stocks – excluding those used in the construction of plant, which are allocated
directly to tangible assets – production materials (sets, costumes, etc.) and
sundry operating materials (fuel, office supplies, printing, etc.), net of discounts
and rebates, as shown in Schedule 29.
123
Production costs of raw materials, supplies, consumables and merchandise (thousands of euros)
Schedule 29
2003
2004
Rai Holding
Rai
Total
Total
-
6,011
5,518
11,486
1,595
(43)
24,567
6,011
5,518
11,486
1,595
(43)
24,567
5,484
4,853
9,884
1,708
(11)
21,918
Technical materials for stocks
Sundry production materials
Sundry non-production materials
Other materials
Discounts, rebates and premiums on purchases
Cost of services: the item came to 779,119 thousand Euro. It regards costs in
respect of freelance workers and other external services, net of discounts and rebates,
as shown in Schedule 30. Among other things, it includes compensation, remuneration
for special duties, attendance fees and reimbursement of expenses paid to directors
in the amount of 1,130 thousand Euro and to members of the Board of Auditors in
the amount of 310 thousand Euro.
Cost of services (thousands of euros)
Schedule 30
2003
Freelance services
2004
Rai Holding
Rai
Elimination
for merger
Total
Total
429
117,061
(239)
117,251
126,249
Services for the purchase and production of programmes
-
113,006
-
113,006
151,783
Ancillary services for the purchase and production of programmes
-
61,872
-
61,872
72,023
Allowances, travel expenses and transfer of personnel
1
22,977
-
22,978
26,179
Ancillary personnel services
4
19,148
-
19,152
18,931
Maintenance and repairs
1
16,930
-
16,931
16,294
Documentation and information services
-
25,673
-
25,673
25,976
Insurance
-
17,261
-
17,261
17,382
Advertising and promotion
General services
Supply services
-
10,408
-
10,408
10,536
49
108,346
-
108,395
110,803
-
13,570
14,706
165,018
-
13,570
Signal broadcasting and transport
under services contract and other RAI WAY costs
-
160,786
-
160,786
Other
2
22,450
-
22,452
23,239
486
709,488
(239)
709,735
779,119
Rent, leasing and similar costs: this item came to 772,316 thousand Euro and
include costs in respect of rentals, leases, usage rights and filming rights, as detailed
in Schedule 31.
Rent, leasing and similar costs (thousands of euros)
Schedule 31
2003
Lease payments
Rent expenses and hiring costs
Usage rights
Filming rights
Acquisition of viewing rights from RAI SAT
Acquisition of viewing rights from RAI CINEMA
Acquisition of viewing rights to major music and theatrical events from RAI TRADE
Other rights
124
2004
Rai Holding
Rai
Total
Total
29
29
62,204
100,613
200,719
554
286,767
10,258
7,367
668,482
62,233
100,613
200,719
554
286,767
10,258
7,367
668,511
172
65,338
106,239
317,891
408
264,930
9,829
7,509
772,316
Personnel costs: personnel costs totalled 822,618 thousand Euro and break down
as reported in the income statement. The average number of employees in 2004 was
11,667, including employees on fixed-term contracts and trainees, as detailed in
Schedule 32.
Average number of employees
Schedule 32
At 31 December 2003
At 31 December 2004
Rai Holding
Rai
Personnel
Personnel
Personnel
on permanent on permanent
on fixedcontract
contract term contract
(average
(average
(average
number)
number)
number)
Total
Personnel
on permanent
contract
(average
number)
Personnel
on fixedterm contract
(average
number)
Total
- Senior management
-
291
-
291
284
-
284
- Junior management and middle management
1
1,047
-
1,048
1,074
-
1,074
- Journalists
-
1,659
308
1,967
1,667
313
1,980
- Office staff, production employees,
camera staff, directors’ staff,
technical staff and workers
- Conductors, musical directors
and choir staff
2
6,778(a)
1,338
8,118
6,823(a)
1,347
8,170
-
133
21
154
134
12
146
- Medical staff
-
14
1
15
13
-
13
3
9,922
1,668
11,593
9,995
1,672
11,667
-
53
(a) of which trainees:
35
Amortisation, depreciation and writedowns: the item totalled 391,046
thousand Euro in 2004. It breaks down as shown in the income statement, with
further details provided in Schedules 33, 34, 35 and 36. It includes a writedown
of capitalised programmes amounting to 39,000 thousand Euro, which was
made to take account of the risks that certain programmes may not be
broadcasted or repeated.
Amortisation of intangible assets (thousands of euros)
Schedule 33
2003
2004
Rai Holding
Rai
Total
Total
-
233,484
11
50
1,978
235,523
233,484
11
50
1,978
235,523
219,343
11
3,240
2,146
224,740
Industrial patent and intellectual property rights
Capitalised loan costs
Amortisation of digital terrestrial network
Other intangible assets
Depreciation of tangible assets (thousands of euros)
Schedule 34
2003
Rai Holding
Rai
Ordinary
depreciation
2004
Accelerated
depreciation
Total
Ordinary
depreciation
Accelerated
depreciation
Total
Land and buildings
-
52,533
-
52,533
52,595
-
52,595
Plant and machinery
-
49,045
33,140
82,185
62,948
-
62,948
-
2,192
960
3,152
3,037
-
3,037
-
4,696
491
5,187
6,794
-
6,794
-
108,466
34,591 143,057
125,374
-
125,374
125
Other writedowns of non-current assets (thousands of euros)
Schedule 35
2003
Intangible assets under development
Programmes being amortised
2004
Rai Holding
Rai
Total
Total
-
1,699
1,699
1,699
1,699
1,932
39,000
40,932
Writedowns of current receivables and cash and cash equivalents (thousands of euros)
Schedule 36
2003
Receivables
- trade
- non-trade
2004
Rai Holding
Rai
Total
Total
-
4,299
..
4,299
4,299
..
4,299
-
Changes in inventories of raw materials, supplies, consumables and
merchandise: the item amounted to 388 thousand Euro and shows the decrease
in net inventories carried under current assets at 31 December 2004 with respect
to the previous year.
Provisions for risks: risk provisions amounted to 6,007 thousand Euro. The most
significant items are detailed in Schedule 15.
Other provisions: amounted to 8,863 thousand Euro. The main items are shown
in Schedule 15.
Sundry operating costs: the item totalled 77,833 thousand Euro and breaks
down as reported in the income statement. Further information is provided in
Schedule 37.
Sundry operating costs (thousands of euros)
Schedule 37
2003
Losses on disposal of assets:
Land and buildings
- plant and buildings
- plant and machinery
- industrial and commercial equipment
- other assets
- assets under construction
Intangible assets
- assets being amortised
- assets under development
Concession fee
Other costs:
- gifts, prize contests and entertainment expenses
- association dues
- indirect taxes, duties and similar for the year
- indirect taxes, duties and similar for the previous year
- authority contribution - Min. Decr. 16/07/99
- uninsured damages, fines and penalties
- newspaper, books, periodicals, specific documentation and publications
- prior-year charges and non-existent assets
- revaluation of pension fund liabilities
- sundry
Total
126
2004
Rai Holding
Rai
Total
Total
-
122
55
52
24
2,829
122
55
52
24
2,829
239
153
27
174
853
-
3,082
3,082
1,446
-
5
1
6
3,088
5
1
6
3,088
1,446
-
25,667
25,667
27,167
44
44
44
6,510
2,967
8,395
29
1,283
1,004
2,873
9,990
17,604
1,390
52,045
80,800
6,510
2,967
8,395
29
1,283
1,004
2,873
9,990
17,604
1,434
52,089
80,844
11,726
3,077
8,433
144
1,297
297
2,534
11,695
8,423
1,594
49,220
77,833
Financial income and expense
Income from equity investments: this item came to 56,752 thousand Euro and is
composed of dividends received in 2004 from investee companies, as shown in
Schedule 38.
Financial income from equity investments (thousands of euros)
Schedule 38
2003
2004
Rai Holding
Rai
Total
Total
-
10,000
1,594
2,000
13,594
10,000
1,594
2,000
13,594
44,548
8,200
1,704
2,300
56,752
-
1,798
1,798
-
-
15
8,658
8,673
24,065
15
8,658
8,673
24,065
56,752
Dividends from subsidiaries:
- RAI CINEMA
- SIPRA
- RAISAT
- RAI TRADE
Dividends from other companies:
- FINSIEL
Other income:
- gain on sale of equity investments
- tax credit on dividends
Total
Other financial income: breaks down as follows:
• non-current receivables: the item totalled 461 thousand Euro, as shown in
Schedule 39.
Other financial income on non-current receivables (thousands of euros)
Schedule 39
2003
Other:
- Tax advances on staff severance pay (Law 140/97)
- Other
Total
2004
Rai Holding
Rai
Total
Total
-
583
29
612
583
29
612
443
18
461
• non-current securities other than equity investments: this amounted to 492
thousand Euro and regards accrued interest on securities.
• other income: the item came to 7,518 thousand Euro and mainly reports interest
on current receivables as broken down in the income statement and detailed even
further in Schedule 40.
Financial income on other current receivables (thousands of euros)
Schedule 40
2003
Interest and commission income from subsidiaries
Interest and commission income from others and sundry income
- interest fron banks, Post Office current accounts and other financial institutions
- income from repurchase agreements
- default interest on customer receivables
- use of provision for doubtful accounts for default interest
- interest income from others
Total
2004
Rai Holding
Rai
Total
Total
-
6,791
6,791
5,153
23
220
1,012
3
..
844
535
2,394
9,185
1,035
223
..
844
535
2,637
9,428
2,093
73
243
243
199
2,365
7,518
127
Interest and other financial expense: the item totalled 6,493 thousand Euro and
includes interest expense, commission expense for financial services received and
other charges in respect of financial operations, as shown in the income statement
and in further detail in Schedule 41.
Interest and other financial expense (thousands of euros)
Schedule 41
2003
2004
Rai Holding
Rai
Total
Total
Interest and commission expense to subsidiaries
-
1,261
1,261
1,472
Interest and commission expense to associated companies
-
88
88
22
Interest and commission expense to others and sundry expense:
- interest and commission expense to banks and other financial institutions
- interest to other lenders
- charges on repurchase agreements
- interest to suppliers
- interest expense on interest rate hedges
- accrual to risk provision for interest rate hedges
- other interest and sundry expense
5
-
4,761
2,879
..
257
1,314
8
4,766
2,879
257
1,314
8
2,692
71
63
918
1,150
105
5
9,220
9,225
4,999
Total
5
10,569
10,574
6,493
Exchange gains and losses: the item shows a loss of 1,199 thousand Euro,
comprising foreign exchange charges and premiums on foreign currency hedges
as well as the effect of translating the value of payables and receivables denominated
in currencies other than the Euro at the exchange rates prevailing at the end of the
year. Greater detail is provided in Schedule 42.
Exchange gains and losses (thousands of euros)
Schedule 42
2003
2004
Rai Holding
Rai
Total
Total
-
(2,699)
(2,699)
(1,677)
Realised exchange gains (losses)
Unrealised exchange gains (losses)
-
-
-
Total
-
(2,699)
(2,699)
478
(1,199)
Revaluations: the item totalled 1,198 thousand Euro and reflects the recouping of
losses posted in previous years by associated companies.
Writedowns: writedowns came to 5,714 thousand Euro. The item includes
writedowns of financial assets following losses for the period. The largest
component regards the writedown of RAI Net, which amounted to 4,601 thousand
Euro.
128
Extraordinary income and expense
Extraordinary items include income of 65,107 thousand Euro and expense of 624
thousand Euro. The breakdown is given in Schedule 43. The most significant
component, equal to 63,353 thousand Euro, is attributable to the reversal of items
recognised in previous years in application of tax rules solely for the purpose of
obtaining the related tax benefits: a total of 60,121 thousand Euro regarded the
reversal to income of accelerated depreciation, 3,100 thousand Euro regarded the
adjustment of the provision for doubtful customer accounts and 132 thousand Euro
regarded the elimination of the exchange rate variation provision.
Extraordinary income (thousands of euros)
Schedule 43
2003
2004
Rai Holding
Rai
Total
Gain on disposal of RAI WAY sites
-
821
821
Total
-
Gain on sale of programmes to RAI CINEMA
-
326
326
-
Gain on disposal of ENEL bonds
-
-
-
435
Prior-year income and non-existent liabilities
-
1,044
1,044
1,319
Release of provision for public land rights for participation in regularisation scheme
-
11,770
11,770
-
Income from elimination of tax distortions
-
-
-
63,353
Total
-
13,961
13,961
65,107
Extraordinary expense (thousands of euros)
2003
2004
Rai Holding
Rai
Total
Total
Loss on disposal of RAI WAY sites
-
22
22
-
Loss on sale of programmes to RAI CINEMA
-
244
244
-
Prior-years taxes
-
2,417
2,417
606
Expense for tax regularisation scheme
-
135
135
-
Other
1
-
1
18
Total
1
2,818
2,819
624
Income taxes for the year: current taxes, deferred tax assets and
liabilities
The item amounted to 8,956 thousand Euro and breaks down as follows:
- IRES
- IRAP
Current
Deferred tax
liabilities
Deferred tax
assets
Total
-40,000
-40,000
-25,567
-3,789
-29,356
54,543
5,857
60,400
28,976
-37,932
-8,956
129
The following table shows the sources and effects of deferred tax items during the
period.
Amount of
temporary differences
Deferred tax assets at start of year
Changes during year:
Taxed provisions
Negative taxable income
Change in deferred tax assets
Deferred tax assets at end of year
Deferred tax liabilities at start of year
Changes during year:
- Capital grants
- Capital gains
- Gains on equity investments
- Accumulated accelerated depreciation
IRES 33%
(*)
IRAP 4,885%
(avg.) (*)
-
320,110
16,955
14,222
44,255
5,595
4,693
54,543
5,029
828
5,857
60,400
60,400
2,342
3,965
71
78,859
Change in deferred tax liabilities
Deferred tax liabilities at end of year
-417
-16
-23
26,023
25,567
-62
-2
3,853
3,789
29,356
31,698
(*) Deferred tax assets arising in respect of temporary differences are recognised only to the extent that it is
reasonably certain that at the time the assets are reversed the company will have sufficient taxable income to
ensure a tax benefit.
The following tables reconciles statutory results and taxable income for IRES and
IRAP purposes.
Balance before taxes
- Change in taxed provisions
- Difference in statutory/tax amortisation of programmes
- Deductible share of dividends
- Accelerated depreciation
- Extraordinary income from elimination of tax distortions
- Reversal of depreciation from elimination of tax distortions
- Writedowns of investees
- Local property tax
- Other increases
- Other decreases
Taxable income
IRES
121,926
2,243
-20,958
-56,227
-34,704
-60,121
15,966
5,714
3,421
18,532
-10,012
-14,220
IRAP
Difference between value and cost of production
- Labour costs
822,618
- Writedowns of non-current assets
40,932
- Provisions for risks
6,007
- Provisions for liabilities
8,863
- Anticipated depreciation
-34,704
- Reversal of depreciation from elimination of tax distortions 15,966
- Use/release of taxed provisions
-55,732
- Difference in statutory/tax amortisation of programmes
-20,958
- Occasional workers
13,000
- Income from secondment of personnel and
reimbursed compensation
-5,208
- Workers on continuous collaboration contracts
6,617
- Compulsory insurance
-3,599
- Other increases
23,290
- Other decreases
-3,109
Taxable income
818,410
Deferred tax assets in respect of the loss for IRES purposes amounted to 4,693
thousand Euro, while the current IRAP liability amounted to 40,000 thousand
Euro.
130
4,427
7) Net profit
The year ended with a net profit of 112,969,764.00 Euro.
8) Other information
Significant events following the end of the year and related-party transactions are
discussed in the report on operations.
131
Rai SpA
Supplemental Schedules
133
Rai SpA Supplemental Schedules
Analysis of balance sheet
31.12.2003
A. NON-CURRENT ASSETS
Intangible assets
Tangible assets
Financial assets
B. WORKING CAPITAL
Inventories
Trade receivables
Other assets
Trade payables
Other liabilities
C. CAPITAL EMPLOYED
less current liabilities
Rai
246,273
246,273
269,984
583,116
236,207
1,089,307
149
605
(17 )
(57 )
680
(A+B)
D. STAFF SEVERANCE PAY
E. CAPITAL EMPLOYED
less current liabilities and
staff severance pay
Rai Holding
(C-D)
2,881
624,617
246,538
(560,238)
(461,225)
(170,482)
(317,909)
31.12.2004
Elimination
(236,283)
(236,283)
(149)
149
(236,283)
Pro forma
269,984
583,116
246,197
1,099,297
296,356
533,906
316,365
1,146,627
2,881
624,617
247,143
(560,106 )
(461,225 )
(170,539 )
(317,229)
2,473
581,459
232,332
(539,488)
(426,596)
(159,555)
(309,375)
782,068
837,252
325,903
345,784
246,953
771,398
25
325,878
246,928
445,520
(236,283)
456,165
491,468
241,447
10,180
(168 )
251,459
500,000
107,150
24,723
631,873
(498,929)
262,646
(236,283)
242,518
379,976
24,555
647,049
242,518
404,531
112,970
760,019
3,526
-
financed by:
F. EQUITY
Share capital paid up
Retained earnings (losses carried forward)
Net profit (loss) for the period
G. MEDIUM/LONG-TERM DEBT
-
H. NET SHORT-TERM DEBT (NET LIQUIDITY)
. short-term debt
. cash and short-term financial credit
134
I. TOTAL DEBT
(G+H)
L. TOTAL, AS IN E
(F+I)
65,128
-
65,128
(4,531 )
(4,531)
87,737
(339,218)
(251,481)
-
87,737
(343,749 )
(256,012)
105,962
(378,039)
(272,077)
(4,531)
(186,353)
-
(190,884)
(268,551)
456,165
491,468
246,928
445,520
(236,283)
Analysis of income statement
31.12.2003
Rai Holding
Rai
A. REVENUES
Changes in inventories of work in progress,
semifinished and finished goods
239
B. VALUE OF NORMAL PRODUCTION
Cost of materials and external services
239
(515 )
2,657,291
(1,427,609)
C. VALUE ADDED
Personnel costs
(276)
(311 )
1,229,682
(793,742)
D. GROSS OPERATING MARGIN
Depreciation
Other adjustments
Accruals to provisions for liabilities and risks
Net sundry income and expense
(587)
(44 )
E. OPERATING PROFIT/(LOSS)
-
2,648,490
(1,295)
10,096
31.12.2004
Elimination
(239)
-
Pro forma
2,648,490
2,799,573
(1,295 )
10,096
(20)
8,694
2,657,291
(1,427,885 )
2,808,247
(1,600,908)
-
1,229,406
(794,053 )
1,207,339
(822,618)
435,940
(208,478)
(110,506)
(5,998)
(28,320)
(769)
-
435,353
(208,478 )
(110,506 )
(5,998 )
(28,320 )
(813 )
384,721
(205,368)
(130,771)
(1,932)
(14,871)
(27,352)
(631)
477
-
81,869
20,761
(7,790)
-
81,238
21,238
(7,790 )
4,427
57,532
(4,516)
F. PROFIT/(LOSS) BEFORE EXTRAORDINARY
ITEMS AND TAXES
Accelerated depreciation
(154)
(1 )
94,840
(34,591)
11,143
-
94,686
(34,591 )
11,142
57,443
64,483
G. PROFIT/(LOSS) BEFORE TAXES
(155)
(13 )
71,392
(46,669)
-
71,237
(46,682 )
121,926
(8,956)
H. NET PROFIT/(LOSS) FOR THE PERIOD
(168)
24,723
-
24,555
112,970
(239)
239
135
Cashflow statement
31.12.2003
Rai Holding
A. OPENING NET LIQUIDITY
(OPENING NET SHORT-TERM DEBT)
14,923
B. CASH FLOW FROM/(FOR) OPERATING
ACTIVITIES
Amortisation and depreciation
(Gains) losses on disposal of assets
(Revaluations) writedowns of non-current assets
Change in working capital
Net change in staff severance pay
C. CASH FLOW FROM/(FOR) INVESTING
ACTIVITIES
Investments in non-current assets:
. intangible assets
. tangible assets
. financial assets
Sale proceeds, or reimbursement
of non-current assets
D. CASH FLOW FROM/(FOR) FINANCING
ACTIVITIES
New financing
Shareholder grants
Capital grants
Loan repayments
Equity repayments
F. CASH FLOW FOR THE YEAR
G. CLOSING NET LIQUIDITY
(CLOSING SHORT-TERM DEBT)
136
Pro forma
161,620
-
176,543
256,012
24,723
353,575
1,401
26,070
20,056
24,061
449,886
-
24,555
353,575
1,401
26,070
19,819
24,064
449,484
112,970
336,139
(620)
21,420
(7,217)
19,881
482,573
(9,990)
(233,230)
(70,157)
(8,250)
-
(233,230 )
(70,157 )
(18,240 )
(277,983)
(54,442)
(88,064)
(9,990)
13,448
(298,189)
-
13,448
(308,179)
15,583
(404,906)
(61,836)
(61,836)
-
(61,836 )
(61,836)
(61,602)
(61,602)
(168)
(237)
3
(402)
-
E. ALLOCATION OF PROFITS
31.12.2004
Rai Elimination
-
-
-
-
-
(B+C+D+E)
(10,392)
89,861
-
79,469
16,065
(A+F)
4,531
251,481
-
256,012
272,077
Changes in equity in the years ending
31 December 2003 and 31 December 2004
Share
capital
Legal
reserve
241,447
510
-
9,679
Movements in 2003
Allocation of loss for 2002 (2)
Loss for 2003
Balance at 31 Dec. 2003
241,447
510
-
(10)
9,669
Movements in 2004
Allocation of loss for 2003 (3)
Rai
Elimination (4)
Capital increase (4)
Net profit for 2004
500,000
(500,000)
1,071
242,518
14,082
(14,082)
117,792
(107,166)
(168)
-
168
-
510
10,626
9,501
112,970
112,970
(1) Breakdown:
Capital grants pursuant to Art. 55/917
Reserve for capital grants
Other
Retained Net profit
reserves
earnings
(loss)
(1) (losses carried
for the
forward)
year
Goodwill
on merger
Total
pro forma
(10)
-
251,626
10
(168)
(168)
-
(168)
251,458
384,965
(1,071)
383,894
631,874
(236,283)
0
112,970
760,019
9,364
1,262
10,626
(2) Pursuant to shareholders’ resolution of 26/6/2003
(3) Pursuant to shareholders’ resolution of 16/6/2004
(4) As indicated in merger deed lodged on 1/12/2004
137
Rai SpA
Report of the Board
of Statutory Auditors
139
Rai SpA Report of the Board of Statutory Auditors
Dear Shareholders,
following the entry into force of Law no. 112 of 3 May 2004 “Basic principles on
the structure of the radio-TV broadcasting system and of RAI-Radiotelevisione
Italiana S.p.A. and delegation to the Government to issue a unified radio-TV
broadcasting code”, the structure of the Concession-Holder for the Public Service
must be reformed. In this context, with reference to the provisions of Article 21,
the procedure for the merger by take-over of RAI S.p.A. into RAI Holding SpA,
which took the name of “RAI-Radiotelevisione Italiana S.p.A.”, was completed on
17 November 2004, with effective date 1 December, i.e. after the merger deed was
lodged with the Register of Enterprises.
Under Article 21 again, the Board of Directors of the acquired company is
the Board of Directors of the company resulting from the merger. Failing specific
provisions in the same law, the Board of Statutory Auditors is composed of the
members in office at the acquiring company RAI Holding, as permitted by the
Italian Civil Code: this Board was confirmed by the Shareholders in the Meeting
of 20 December 2004.
To that end, it must be noted that two of the Statutory Auditors of RAI
Holding were also Statutory Auditors of the acquired company; so actually only
the Chairman of the Board has changed.
The post-merger By-laws of the “new” RAI have been prepared in
accordance with the provisions introduced by Legislative Decree 6/2003 on the
Italian Corporate Law reform. As part of the reform, the audit control is duty of
the auditors, as prescribed by Article 2409 bis and ff. and as transposed into
Article 30.6 of the By-laws.
As stated in the Merger Deed, the merger effects were backdated to
1 January 2004 for accounting and tax purposes only. Therefore, the financial
statements at 31 December 2004, which were submitted to you for approval, are
the financial statements for the entire year 2004 of RAI-Radiotelevisione Italiana,
the company resulting from the merger of 17 November. These financial statements
were denominated in euros, without decimals; rounding-offs have been made in
accordance with circular no. 106/e issued by the Italian Tax Receipt Agency on
21 December 2001.
These financial statements include the Balance Sheet, the Income
Statement and the Notes. They are also accompanied by a Directors’ Report on
Operations.
140
Below are the key figures for the Balance Sheet:
(in millions of euros)
ASSETS
Non-current assets
1,146.6
Current assets
1,176.6
17.7
2,340.9
LIABILITIES AND EQUITY
Equity
760.-
426.6
Staff severance pay
345.8
Payables
807.3
1.2
2,340.9
MEMORANDUM ACCOUNTS
Guarantees given: unsecured
78.2
secured
54.1
Purchase and sale commitments
93.4
Other memorandum accounts
238.4
464.1
The main figures of the Income Statement are provided below:
Value of production
2,884.5
Production costs
2,880.1
4.4
57.5
-4.5
64.5
Income taxes
-8.9
Net profit/(loss) for the year
113.-
Based on our several contacts with auditors “PricewaterhouseCoopers
S.p.A.” (hereinafter PWC) – we state that the all the three parts of the financial
statements (Balance Sheet, Income Statement and Notes) have been prepared in
accordance with applicable laws.
141
The Balance Sheet and the Income Statement summarised above are
compared with the key figures taken from the financial statements 2003, as
required under Article 2423 ter (paragraph five) of the Italian Civil Code.
More specifically, for a proper like-for-like comparison, the Balance Sheet
and the Income Statement at 31 December 2004 have also been compared with the
“pro-forma” financial statements at 31 December 2003 resulting from the merger
of RAI Radiotelevisione Italiana into RAI Holding. More specifically, to give a more
complete overview of the effects of the transactions made in the year, the schedules
in the Notes provide the effects of the merger. In the schedules of the Balance
Sheet and of the Income Statement, the figures for the financial statements at
31 December 2004 are compared with both pre-merger and post-merger figures.
The Notes describe the accounting policies adopted. Some schedules
provide additional information required to be given under Article 2427 of the
Italian Civil Code. Indications are also provided of revaluations made on tangible
assets posted, and the regulatory provisions requiring this are also indicated.
Amounts in the Notes and the schedules are in thousands of euros; the only
exception is the net profit for the year, which has two decimal figures.
Copies of the full latest financial statements of subsidiaries, with reports of
the relevant Board of Directors and the Auditors’ Report, and a table summarising
the key figures for the latest financial statements of the associated companies are
lodged with the Company’s offices, as required by Article 2429 (paragraph three) of
the Italian Civil Code.
The reports of the Board of Statutory Auditors and the Auditors’ Report give
positive opinions.
As required by Article 2428 of the Italian Civil Code, the Directors provide
information on the condition of the Company and the activities performed, also
through subsidiaries.
The Directors’ Report also discloses information on R&D activities,
post-balance sheet events and business outlook.
There are other three schedules which help reading the financial statements:
the analysis of balance sheet, analysis of income statement and the cash flow
statement.
As regards the Board of Statutory Auditors (also in consideration of the
report of the Board of Statutory Auditors of the acquired company), there were no
exceptional cases in the year for which derogations under Article 2423, paragraph
four of the Italian Civil Code, were required.
We approve the accounting policies listed for individual items. These are essentially
unchanged from those adopted for the financial statements 2003, but are updated
and include the changes introduced by Legislative Decree no. 6/2003 (Corporate
Law Reform) to the Italian Civil Code. The accounting policies adopted are in line
with the general principles indicated in Article 2423 of the Italian Civil Code and
the more specific requirements of Article 2426.
142
From the accounting standpoint, we need to point out that the application
of the new rules of Corporate Law have led to the elimination of tax-driven entries.
The main effects were:
• reversal of prior years’ accumulated anticipated amortisation and depreciation to
extraordinary income in the Income Statement;
• accrual of ordinary amortisation and depreciation in connection with the above
said recovery of anticipated amortisation and depreciation;
• accrual of deferred tax liabilities due to the difference between the above said
recovery of anticipated amortisation and depreciation and the new ordinary
amortisation and depreciation charges.
With regard to the properties located in Rome, Viale Mazzini and Turin,
Via Cernaia, which are currently available for sale, a portion of the provision
accrued in prior years to cover structural problems in these properties directly
decreased their book value. This was supported by a special expert’s report which
confirmed an impairment loss of 36.5 million Euro, equal to the portion of provision
that was used; accordingly there were no effects on the Income Statement.
From the accounting standpoint it must also be said that:
• there are no start-up, expansion and similar costs, and research, development and
advertising costs benefiting several years in the balance sheet;
• the net profit or loss for the year 2004 – unlike that for the prior year – does not
include anticipated amortisation and depreciation, in line with the new rules on
corporate law: the prior years’ accumulated anticipated amortisation and
depreciation, as said above, were posted as extraordinary items to the Income
Statement;
• deferred tax assets have been calculated on the taxed provisions accrued in prior
years according to a detailed reliable recovery plan;
• deferred tax liabilities have been calculated for the anticipated amortisation and
depreciation charges for the year indicated in the income tax return.
RAI has opted for the procedure under Article 117 of the Income Tax Code,
as amended by Legislative Decree 344/2003, i.e. the consolidation tax mechanism.
Post-balance-sheet events include the ascertainment and statement by the
Italian Communications Regulatory Authority on 9 March 2005 that RAI has not
responded to the formal warning issued by resolution no. 226/03/CONS of 27 June
2003. Fines were for some 20 million Euro.
To that regard, in the Report on Operations the Board of Directors state that
the Communications Regulatory Authority’s resolution is to be deemed unlawful due
to procedural and substantial flaws. Therefore, RAI has filed an appeal against this
resolution with the Lazio Regional Tribunal, and has requested a stay of execution
and the quashing of the resolution. The financial statements report no provision for
risks from potential liabilities. This determination is supported by the opinions
expressed by authoritative independent counsellors and by the Legal and Corporate
Affairs Department.
.................
143
With regard to the work of the Board of Statutory Auditors in 2004, 4
reviews were carried out at RAI Holding; from 1 December 2004 3 reviews were
made in the “new” RAI-Radiotelevisione Italiana, where, as mentioned above, the
same Statutory Auditors remained in office. At 30 November 2004, the Board of
Statutory Auditors of the acquired company, two members of which were already
members of the present Board of Statutory Auditors, had held 37 meetings. The
Shareholders in the Meeting of 20 December 2004 resolved that, as required by the
new Italian Corporate Law, auditors PWC, also appointed as independent auditors
for the 2004-2006 period, be in charge of the audit control for the same period, with
effective date 1 October 2004.
Starting December 2004, in consideration of the duties envisaged by the
new rules, the Board of Statutory Auditors commenced and planned also meetings
with the audit controller and with the heads of individual departments in order to
obtain the information required to fairly assess the adequacy of the organisation
structure, the internal control system and the administrative and accounting system.
During the year the Statutory Auditors have issued their opinions in
pursuance of Article 2389 paragraph 3 of the Italian Civil Code on the offices of
members of the Board of Directors and on the appointment of the independent
auditors as audit controllers, as prescribed by Article 2409 quater of the Italian
Civil Code.
The Statutory Auditors have attended all the meetings of the Board of
Directors of the acquiring company (5 meetings) and of the acquired company (39
meetings). The Board of Directors has given proxies to its members for limited
periods of time and for special subjects, as required by Article 2 (paragraph four) of
Law no. 206/1993 and Article 18 (last paragraph) of the pre-merger By-laws.
These proxies, which aimed at expanding on strategic issues, were exercised without
prejudice to the powers and the privileges conferred by the Law and the By-Laws to
the Chairman, the Board and the General Director.
During the meetings of the Board of Directors, we have been provided by the
Directors with information on the general performance and business outlook, and
on the major transactions by size or characteristics made by the Company. We can
provide reasonable assurance that the actions implemented comply with the Laws
and the Company’s by-laws, that they are not overtly imprudent, reckless or in
conflict with the Shareholders’ Meetings’ resolutions, and that they do not
undermine the company’s assets.
These Shareholders’ Meetings were held with the attendance of the Board of
Statutory Auditors:
RAI Holding - 2
RAI-Radiotelevisione Italiana (before merger) - 3
RAI-Radiotelevisione Italiana (after merger) - 1 on 20 December 2004
.................
144
The independent auditors reported no illicit events, as referred to in Article
2408 of the Italian Civil Code.
In light of the foregoing, we give our favourable opinion for the approval of
the financial statements at 31 December 2004 as prepared by the Directors. We also
put forward – on the Directors’ initiative – that the net profit for the year of
112,969,764,000 Euro be allocated as follows: 5,648,488.20 Euro (the twentieth
part of the net profit for the year) to the “Legal Reserve”; 477,544.51 Euro to the
reserve for exchange gains pursuant to Article 2426, paragraph 8 bis of the Italian
Civil Code; the remainder will be allocated as the Shareholders may resolve.
.................
The disclosures below are reported for information purposes.
The two meetings of the Board of Statutory Auditors of RAI Radiotelevisione
Italiana (before and after the merger), which lasted for more than one day, were held
at the Correspondence offices in Brussels and London.
In some instances, during our work we found some deficiencies and critical
factors at the administrative level. We have reported them to the Top Management
or the relevant functions for review and adoption of suitable corrective measures.
As usual, also using the information obtained from the Internal Auditing
Department and through the contacts with independent auditors PWC, we dwelled
on the status of the procedures and the internal control of both RAI S.p.A. and its
Group.
For RAI S.p.A., we have no remarks to make on the system of administrative
and accounting procedures, also with reference to the preparation of the statutory
and the consolidated financial statements. However, the overall process for updating
and completing this system is not fully adequate. In 2004 the Company has
dedicated many efforts to fill the existing gaps. In this context, some important goals
were achieved. More specifically:
- preparation and officialisation of the “process book”;
- determination of the upgrading for the operating rules governing two important
company sectors: goods and services procurement and control of some editorial
issues of TV programmes;
- setting up of a quarterly reporting process for RAI S.p.A. and the Group as part of
the rolling forecast system;
- the continuation of the implementation of the “Progetto 231” in RAI and its
subsidiaries; this led to the definition of a model, even though it has not been
formalised yet. Regarding the “Progetto 231”, the Board of Statutory Auditors has
called the attention of the Company on the need for completing the project
procedure;
- introduction of the Code of Ethics of the RAI Group, as part of the Progetto 231.
The Code is a very important point of reference for conduct issues. In October
2004 all employees were given a copy of the overview of the Code.
145
In general, the procedure system is still marked by:
• absence of some procedures and non-compliance of some other procedures with
the current operating requirements, which are being introduced or adjusted in the
new organisation structure; this new structure at least requires a review of
operating processes;
• in some company areas, persistence of practices that are not compliant with the
new organisation structure;
• inaccurate adoption of prescriptions for the protection of IT assets and for the
process and product editorial control.
The Board has repeatedly suggested that the set of procedures be completed
and updated within reasonable times.
Whilst considering the vastness and complexity of the problems connected
with the effects of the recent re-organisation, this must be completed as soon as
possible, because a full and exhaustive internal control system is also required for
privatisation, as set forth in said Law 112/2004.
It must also be noted that, as part of the actions and efforts made to make
the corporate governance system more efficient (e.g.: centralisation of management
control), a new unit “Norms and Methodologies” was formed for preparing norms
and procedures for the administrative area.
146
Also with a view to privatisation, below are some considerations on the
Internal Auditing Department.
Later in 2004 the Department lost the Inspectorate office, which has now
become a unit of the Human Resources Department, as part of the above said reorganisation. In 2004, as part of the duties of the Inspectorate office, at the request
of the Top Management the IA Department’s operations focussed on finding those
responsible, if any, of situations or events of questionable regularity.
Now that the office has passed to the HR department, from 2005 the IA
Department’s activity can focus on controls as a priority, checking all the company’s
units in rotation and methodically. To achieve this goal, it should be valued if it is
necessary to introduce new measures to balance the IA’s normal operations and to
consider the adequacy of the number of staff.
As regards the relations between RAI and the investees, non-accounting
procedures still lack common points of reference, so that subsidiaries can all have
the same background for establishing their own operating rules. It is advisable to
complete some “guidelines” with which each single Group company should comply
in preparing procedures for the key management processes.
These “guidelines” should provide a consistent set of procedures, based on
which a higher-level internal control system can be developed at Group level.
THE BOARD OF STATUORY AUDITORS
Mr Carlo Cesare GATTO
Prof Paolo GERMANI
Prof Salvatore RANDAZZO
Rome, 12 April 2005
147
Rai SpA Report of the independent Auditors
148
Rai SpA Report of the independent Auditors
149
Rai SpA Shareholders Meeting Resolution
Shareholders’ Meeting Resolution
RAI – Shareholders’ Meeting
held on 31 May 2005
RAI s Financial Statements — FY 2004
The Shareholders of RAI in the General Ordinary Meeting
- having reviewed the proposal of the Board of Directors regarding the Financial
Statements of RAI for FY 2004: Balance Sheet, Income Statement and Notes,
accompanied by the Directors’ Report on Operations;
- having taken note of the Report of the Statutory Auditors, which put forward the
approval of these financial statements;
- and having taken note of the Auditors’ Report of PricewaterhouseCoopers,
where no exceptions are noted;
resolved that
- the Company’s Financial Statements at 31 December 2004 be approved, with a
net profit for the year of 112,969,764.00 Euro;
- the net profit for the year of 112,969,764.00 Euro be allocated as follows:
- 5,648,488.20 Euro (5% of net profit) to the Legal Reserve;
- 477,544.51 Euro as reserve for exchange gains pursuant to Article 2426,
paragraph 8 bis of the Italian Civil Code;
- 70% (seventy per cent) to the Shareholders as dividend;
- the remainder be brought forward.
151
RAI SpA Consolidated financial statements at 31 December 2004
Contents
Highlights 2004
154
156
Financial review
157
Statutory Balance Sheet and Income Statement
167
175
Supplemental schedules
201
207
211
Annexes
Financial statements of subsidiaries
Financial statements of associated Companies (summary schedules)
213
213
263
Rai Group Highlights
Highlights
154
(millions of euros)
Rai Group Highlights
155
Rai Group Reclassified financial statements
Income Statement (millions of euros)
31.12.2004
31.12.2003
Change
% change
3,021.3
Changes in inventories
0.3
10.4
Total revenues
3,032.0
Cost of goods and external services
-1,351.0
Personnel costs
-922.2
Total operating costs
-2,273.2
758.8
-430.4
Depreciation
-176.1
Other income (expense), net
-62.8
89.5
Financial income, net
-7.5
1.0
Profit/(loss) before extraordinary items
83.0
Extraordinary income (expense), net
2.1
Profit/(loss) before taxes
85.1
-2.9
82.2
Of which minority interests
-0.2
2,841.2
0.1
10.8
2,852.1
-1,156.9
-888.2
-2,045.1
807.0
-407.0
-173.9
-47.1
179.0
-13.1
-1.7
164.2
14.2
178.4
-96.5
81.9
-0.4
180.1
0.2
-0.4
179.9
-194.1
-34.0
-228.1
-48.2
-23.4
-2.2
-15.7
-89.5
5.6
2.7
-81.2
-12.1
-93.3
93.6
0.3
0.2
6.3
200.0
-3.7
6.3
16.8
3.8
11.2
-6.0
5.7
1.3
33.3
-50.0
-42.7
-158.8
-49.5
-85.2
-52.3
-97.0
0.4
31.12.2004
31.12.2003
Change
% change
1,585.6
-473.4
-384.8
727.4
851.1
-123.7
727.4
1,632.2
-534.1
-362.8
735.3
769.0
-33.7
735.3
-46.6
60.7
-22.0
-7.9
82.1
-90.0
-7.9
-2.9
-11.4
6.1
-1.1
10.7
267.1
-1.1
Balance Sheet (millions of euros)
Non-current assets
Working capital
Staff severance pay
Capital employed, net
Equity
Net debt (net liquidity)
156
Rai Group Financial review
Financial review
Income Statement
The Balance Sheet 2004 reveals a consolidated net profit of 82.2 million Euro,
in line with the net profit for 2003 (81.9 million Euro).
Below is a summary of the main items of the Income Statement. The major
differences from the prior-earlier period are explained.
Revenues from sales and services (millions of euros)
Licence fees
Advertising revenues
Other revenues
Total revenues from sales and services
2004
2003
Change
%
1,473.8
1,218.6
328.9
3,021.3
1,432.0
1,094.1
315.1
2,841.2
41.8
124.5
13.8
180.1
2.9
11.4
4.4
6.3
These amounted to 3,021.3 million Euro, up 180.1 million Euro from 2003
(+6.3%) and include licence fees, advertising and other commercial revenues.
As shown in the table below, advertising accounted for a larger amount of total
revenues from sales and services as compared with licence fees; commercial
revenues have not changed materially.
Revenues (%)
Licence fees
Advertising
Other revenues
2004
2003
48.8
40.3
10.9
100.0
50.4
38.5
11.1
100.0
Licence fees. These amounted to 1,473.8 million Euro, up 41.8 million Euro
from the prior year (+2.9%), due to the 2.5 Euro rise in the individual licence fee
(+2.6%) from 1 January 2004 and, to a lesser extent, to the growth in the
number of paying subscribers.
Advertising (1,218.6 million Euro) rose 124.5 million Euro (+11.4%) from the
prior year due to the recovery in the advertising market (up 7.3) and great sports
events during the year.
157
Advertising (millions of euros)
TV advertising
Radio advertising
Promotions and sponsorships
Other advertising
Total Advertising
2004
2003
Change
%
1,003.6
68.8
99.9
46.3
1,218.6
895.7
64.4
89.8
44.2
1,094.1
107.9
4.4
10.1
2.1
124.5
12.0
6.8
11.2
4.8
11.4
Other revenues amounted to 328.9 million Euro, up 13.8 million Euro (+4.4%)
and mainly relate to revenues from:
• special services under agreements (82.9 million Euro), distribution and services
(31.8 million Euro) rendered by the Parent Company;
• distribution and services rendered by Rai Trade (52.1 million Euro), Rai Sat
(44.9 million Euro) and Rai Way (37.6 million Euro);
• distribution in theatres and for home video carried out by 01 Distribution (22.3
million Euro).
Below is a breakdown of revenues from sales and services by company. Amounts
are not inclusive of infragroup transactions.
Revenues by company (millions of euros)
Rai
Rai Cinema
RaNet
RaiSat
Rai Trade
Rai Way
SIPRA
01 Distribution
Other companies
2004
%
2003
%
1,628.0
6.8
0.1
47.8
52.4
37.6
1,223.9
22.3
2.4
3,021.3
53.9
0.2
1.6
1.7
1.2
40.5
0.7
0.1
100.0
1,583.2
4.9
0.1
46.1
47.7
35.9
1,101.2
21.0
1.1
2,841.2
55.7
0.2
1.6
1.7
1.3
38.8
0.7
100.0
Operating costs
These include the cost of raw materials and external services, and personnel costs.
They amounted to 2,273.2 million Euro, up 228.1 million Euro (11.2%) from the
prior year.
Operating costs (millions of euros)
Purchase of goods and services
Personnel costs
Total
158
2004
2003
Change
%
1,351.0
922.2
2,273.2
1,156.9
888.2
2,045.1
194.1
34.0
228.1
16.8
3.8
11.2
Cost of goods and external services. These include external costs (purchase and
production of immediate-use programmes, general services, freelance work,
consulting, etc.), costs for use of third party assets (filming rights, specifically
sports events, copyrights, leases and rents, etc.) cost for the purchase of materials,
and the cost of concession fees.
"Cost of goods and external services" totalled 1,351 million Euro, an increase of
194.1 million Euro (16.8%) over the prior year, mostly due to the cost of filming
rights in connection with great sports events during the year (almost 130 million
Euro for the Athens Olympics and the European Soccer Championships), and, to
a lesser extent, to the increase in expenses incurred to improve the offering of
programmes of the Parent Company.
Cost of goods and external services (millions of euros)
Purchase of materials
External services
Freelance work
Services for purchase and production of programmes
General services (postage, copying and translation
cleaning, lease of plants, archive services, etc.)
Daily, travel and subsistence allowance
Other
Rent, leasing and similar costs
Filming rights
Usage rights
Leases and rentals
Concession fee
Other
Total
2004
2003
Change
%
30.3
33.5
-3.2
-9.6
140.2
232.1
125.3
187.0
14.9
45.1
11.9
24.1
207.2
51.4
104.6
735.5
202.7
47.5
102.7
665.2
4.5
3.9
1.9
70.3
2.2
8.2
1.9
10.6
318.1
115.6
124.2
557.9
27.2
0.1
1,351.0
200.8
109.5
122.0
432.3
25.7
0.2
1,156.9
117.3
6.1
2.2
125.6
1.5
-0.1
194.1
58.4
5.6
1.8
29.1
5.8
-50.0
16.8
Below is a breakdown of cost of purchase of goods or services by company.
Amounts are not inclusive of infragroup transactions.
Purchase of goods and external services (millions of euros)
Rai
Rai Way
SIPRA
Rai Trade
01 Distribution
RaiSat
Rai Cinema
RaiNet
Other companies
2004
%
2003
%
1,130.7
80.1
49.8
27.5
19.4
19.9
8.4
4.0
83.7
5.9
3.7
2.0
1.4
1.5
0.6
0.3
947.8
82.4
46.6
25.2
18.7
14.7
7.8
3.1
81.9
7.1
4.0
2.2
1.6
1.3
0.7
0.3
11.2
0.8
10.6
0.9
1,351.0
100.0
1,156.9
100.0
159
Personnel costs - These amounted to 922.2 million Euro from 888.2 million
Euro at 31 December 2003. The increase from 2003 (+34 million Euro, up 3.8%)
is due to the persistence of changes in the prior year - specifically due to the
deferred effects of contracts made, and the need to make sufficient provisions to
cover labour disputes.
Below is a breakdown of personnel costs by company.
Personnel costs by company (millions of euros)
Rai
Rai Way
SIPRA
RaiSat
Rai Trade
Rai Cinema
RaiNet
Other companies
2004
%
2003
%
822.5
45.3
27.6
6.3
5.8
4.8
4.3
89.2
4.9
3.0
0.7
0.6
0.5
0.5
793.6
43.8
24.9
5.3
5.4
5.2
4.2
89.3
4.9
2.8
0.6
0.6
0.6
0.5
5.6
0.6
5.8
0.7
922.2
100.0
888.2
100.0
Average workforce, including employees on a fixed-term contract, was 13,249
employees, of which 1,769 were on a fixed-term contract, an increase of 92 from
the prior year. Employees at 31 December were 11,554, of which 101 were
employed on a trainee contract.
Gross Operating Margin was positive and amounted to 758.8 million Euro, a
decrease of 48.2 million Euro from the prior year.
However, if the Gross Operating Margin was shown net of the cost of great sports
events for the year, excluding major revenues from advertising related to these
events (estimated to account for 100 million Euro), then it would increase by
more than 50 million Euro from 2003.
160
Investment, amortisation and depreciation
Group investment during 2004 is shown below by type and company:
Investment (millions of euros)
Property, plant
& equipment
Rai
Rai Cinema
RaiSat
Rai Trade
Rai Way
SIPRA
Other companies
Programmes
Other (*)
Total
2004
2003
2004
2003
2004
2003
2004
2003
60.5
0.1
0.3
29.6
1.4
1.2
93.1
70.1
0.1
0.2
29.3
0.4
0.1
100.2
240.6
277.3
11.1
9.7
538.7
231.5
280.1
10.1
8.9
530.6
37.4
0.5
0.3
0.2
1.5
1.4
41.3
1.2
0.2
0.4
0.1
1.2
1.4
0.3
4.8
338.5
277.8
11.2
10.3
29.8
2.9
2.6
673.1
302.8
280.4
10.5
9.2
30.5
1.8
0.4
635.6
(*) Other mainly relates to other technical investments in intangible assets. The figure for 2004 of Rai SpA essentially includes
the concession obtained in connection with the frequencies for the Digital Terrestrial Network
Investment in programmes amounted to 538.7 million Euro, an increase of 8.1
million Euro from the prior year, entirely due to greater investment made by the
Parent Company mostly in the TV series segments.
During the year, the development of the digital terrestrial network continued and
required investment in property, plant and equipment of 11.4 million Euro out of
total investments of 93.1 million Euro.
Other includes the costs incurred by the Parent Company (more than 32 million
Euro) to purchase frequencies to develop the digital terrestrial network.
Amortisation and depreciation (millions of euros)
Programmes
Total
2004
2003
Change
%
167.4
430.4
8.7
606.5
167.4
407.0
6.5
580.9
23.4
2.2
25.6
5.7
33.8
4.4
Amortisation of programmes, which was calculated in accordance with the
accounting principles stated above, rose from the prior year by 23.4 million Euro,
mostly due to the amortisation of RAI Cinema’s rights to cover investment for the
year and the validity of rights related to investment made in prior years.
161
Other net expense
Other net expense, amounting to 62.8 million Euro (+15.7 million Euro from
2003) relates to costs/revenues which are not directly related to the Group’s core
business.
More specifically, these include out-of-period gains and losses, provisions for
writedowns of liabilities and risks, indirect taxes, ICI (local property tax) and
other charges.
Other net expense include writedowns of 55.5 million Euro, reported in the
financial statements of the Parent Company and Rai Cinema, to reflect the risks
of possible use, broadcasting or re-broadcasting of repeat-use programmes, in
accordance with prior years’ policies.
The performance of operating revenues and costs has brought an Operating Profit
of 89.5 million Euro, down 50% from the prior year.
As with Gross Operating Margin, the exclusion of net expense incurred to
broadcast great sports events would improve Operating Profit by 10 million Euro.
Net financial expense
Average net debt is positive after seven years (+26 million Euro from -201 million
Euro in 2003), due to the collection of all unpaid TV licence fees and positive
cash-flow operations.
Net financial expense (millions of euros)
Income from equity investments
Net interest expense due to banks and other lenders
Net exchange losses
Other net financial income
Total
2004
2003
Change
%
0.2
- 0.7
- 7.0
- 7.5
2.0
- 7.0
- 9.2
1.1
- 13.1
-1.8
6.3
2.2
- 1.1
5.6
-90.0
- 90.0
- 23.9
- 100.0
- 42.7
Financial income/expense significantly improved (-7.5 million Euro from -13.1
million Euro in 2003), due to lower net interest expense and a smaller effect of
exchange differences on the purchase of foreign currency rights.
The average cost of bank debt is of small relevance, thanks to short overdraft
periods (3.9% and 2.5% on short-term overdraft). Amounts deposited with banks
yield an almost 2% rate by using temporary cash surplus held at leading banks
in riskless transactions. Lending and borrowing rate spreads are the banks’ best
spreads for major clients.
162
Deferred tax assets have been recognised in the financial statements of Group
companies in accordance with the indications in Document no. 1 of Organismo
Italiano di Contabilità (the Italian Standard Setter). This has decreased income
taxes for the year from 96.5 million Euro in 2003 to 2.9 million Euro in 2004.
This amount relates to:
• Current taxes (65.4 million Euro), which for the most part were posted by the
Parent Company (IRAP of 40 million Euro) and SIPRA (12.5 million Euro);
• Deferred tax liabilities (10.9 million Euro) due to tax anticipated depreciation
recognised mainly posted by RAI (6.0 million Euro) and Rai Way (4.3 million
Euro);
• Deferred tax assets (73.4 million Euro), valued in accordance with the prudence
principle and considered to be recoverable with reasonable certainty, due to
negative taxable income realised and add-backs made by the Parent Company
(60.4 million Euro) and Rai Cinema (9.0 million Euro).
Balance Sheet
Non-current assets
These amounted to 1,585.6 million Euro, down 46.6 million Euro over 2003.
Non-current assets (millions of euros)
Tangible assets
Programmes
Financial assets:
- Equity investments
- Receivables
- Other financial assets
2004
2003
Change
%
708.7
799.1
821.7
752.9
-113.0
46.2
-13.7
6.1
6.4
20.1
3.5
30.0
47.8
1,585.6
5.8
23.1
13.6
42.5
15.1
1,632.2
0.6
-3.0
-10.1
-12.5
32.7
-46.6
10.3
-13.0
-74.3
-29.4
216.5
-2.9
Tangible assets amounted to 708.7 million Euro, down 113 million Euro due to:
• investments (90.9 million Euro, net of eliminations of 2.2 million Euro), of which
11.4 million Euro relate to the construction of digital terrestrial broadcasting
networks;
• depreciation of 167.4 million Euro;
• writedowns of 36.5 million Euro relating to the adjustment of the property report
value for the properties located in Turin, via Cernaia and Rome, viale Mazzini.
Given that a special provision had been accrued in prior years to cover structural
problems in these properties, and these properties are now available for sale, a
part of this provision (36.5 million Euro) was prudently used so as to decrease the
163
carrying value of the properties. An independent expert’s report has been
demanded to support this writedown. The expert’s report has confirmed the
impairment loss of these properties.
Programmes amounted to 799.1 million Euro, up 24.5 million Euro from 2003.
Net investments (532.1 million Euro) are essentially in line with those for 2003
(528.8 million Euro). During 2004, the value of non-current programmes was
written down by 61.3 million Euro to reflect the risks of possible use, broadcasting
and/or re-runs of repeat-use programmes, partly in light of TV ratings forecasts.
The decrease in Financial assets is due to the sale of bonds purchased in June 2003
(10 million Euro).
The increase in Other non-current assets, amounting to 47.8 million Euro from
15.1 million Euro, is mainly due to the purchase of frequencies to develop the
digital terrestrial network (32.4 million Euro).
Working capital
This rose by 60.7 million Euro over 2003, due to normal business development.
Working capital (millions of euros)
Inventories
Trade receivables
Other assets
Trade payables
Other liabilities
2004
2003
Change
%
6.1
568.3
286.8
-702.7
-439.1
-192.8
-473.4
5.9
581.3
297.0
-736.1
-490.4
-191.8
-534.1
0.2
-13.0
-10.2
33.4
51.3
-1.0
60.7
3.4
-2.2
-3.4
-4.5
-10.5
0.5
-11.4
The change in Provisions for liabilities and risks is due to the writedown of the
properties located in Turin, via Cernaia, and Rome, Viale Mazzini, which was
discussed above, and to usual changes during the year. As there were no relevant
changes in risky situations, the coverage offered by the provisions made is still
sufficient to cover future liabilities and risks.
164
Equity
Group net profit in 2004 of 82.2 million Euro brought an increase in Equity from
769 million Euro in 2003 to 851.1 million Euro in 2004.
Year-end net debt is positive and greatly improved from the prior year (123.7
million Euro from 33.7 million Euro on the prior year). Below is a breakdown:
Net financial position (millions of euros)
Banks and other lenders, net
- medium/long-term
- short-term
- cash and cash equivalents
Liquidity used
Other financial (payables) receivables
Average financial position
2004
2003
Change
%
-3.9
-13.1
147.3
130.3
-6.6
123.7
26.0
-83.6
-0.4
117.4
33.4
11.3
-11.0
33.7
-201.0
79.7
-12.7
29.9
96.9
-11.3
4.4
90.0
227.0
-95.3
3,175.0
20.3
74.4
-100.0
- 40.0
267.1
-112.9
Cash-flow amounted to 90 million Euro due to the collection of all TV licence
fees due to the Ministry of Finance and the good work of management, with
unleveraged broadcasting of the 2004 great sports events (Athens Olympics and
European Soccer-championships), and the start of the digital project.
The medium/long-term loan of the original amount of 300 billion lire made in
1997 was fully repaid.
165
Comparison between statutory and consolidated financial statements
The difference between the Parent Company’s net profit (113 million Euro) and
the consolidated net profit (82.2 million Euro) is mainly due to the elimination of
extraordinary income recognised in the Parent Company’s accounts to reverse 'tax
distortions' (mainly consisting of anticipated amortisation) amounting to 37
million Euro, net of income taxes, and the inclusion of the balances of Group
companies, which is partly offset by the reversal of dividends paid out by the
Parent Company on 2003 profits (7.8 million Euro).
Reconciliation between RAI and consolidated financial statements (millions of euros)
Net profit (loss)
Rai financial statements
Elimination of the value of equity investments against
Net Equities and profits against dividends distributed
Adjustment of value of associated companies
to the Equity method
Elimination of ‘tax distortions’
Deferred/Prepaid taxes
Other consolidation adjustments
Consolidated financial statements
166
Equity
2004
2003
2004
2003
113.0
24.5
760.0
647.1
7.8
49.1
119.6
111.8
0.1
- 61.2
23.9
- 1.4
82.2
0.1
15.0
- 5.7
- 1.1
81.9
4.7
6.7
- 39.9
851.1
4.6
61.2
- 17.2
- 38.5
769.0
Rai Group
Consolidated Balance Sheet and Income Statement
statements according
to the Italian Civil Code
167
Rai Group Consolidated Balance Sheet and Income Statement
Consolidated Balance Sheet - Assets
1.- Start-up, expansion and similar costs
II. TANGIBLE ASSETS
a) unconsolidated subsidiaries
b) associated companies
d) other companies
2.- Receivables
d) others
168
(millions of euros)
31.12.2004
31.12.2003
-
-
..
577.0
32.7
225.9
11.3
846.9
0.4
600.4
0.4
177.9
10.6
789.7
359.6
245.1
8.4
32.9
62.7
708.7
437.5
251.7
9.9
32.8
89.8
821.7
2.0
3.7
0.7
6.4
2.0
3.0
0.8
5.8
3.0
17.1
20.1
2.3
20.8
23.1
3.5
30.0
1.585.6
13.6
42.5
1.653.9
Rai Group Consolidated
Balance
Sheet ande Income
Statement
Rai SpA Stato
Patrimoniale
Conto Economico
(millions of euros)
C) CURRENT ASSETS
I. INVENTORIES
3.- Contract work in process
a) finished goods
b) merchandise
TOTAL INVENTORIES
1.- Customers
4.bis - Tax receivables
4.ter - Deferred tax assets
5.- Others
2.- Cheques
TOTAL ASSETS
31.12.2004
31.12.2003
4.2
0.8
4.3
0.8
1.0
0.1
6.1
0.7
0.1
5.9
567.6
..
0.1
37.7
580.4
0.1
0.1
52.3
84.6
1.3
143.9
835.2
9.6
1.2
225.1
868.8
-
-
147.0
..
0.3
147.3
988.6
117.1
..
0.3
117.4
992.1
19.9
20.8
19.9
2,594.1
20.8
2,666.8
169
Consolidated Balance Sheet - Liabilities and equity
31.12.2004
31.12.2003
242.5
523.2
82.4
848.1
241.5
438.5
82.3
762.3
3.2
(0.2 )
851.1
7.1
(0.4)
769.0
156.0
39.9
243.2
439.1
159.0
29.0
324.1
512.1
384.8
362.8
15.6
1.3
-
73.4
3.8
6.8
27.2
1.2
16.4
-
667.5
5.3
5.6
2.5
42.4
44.8
722.0
..
5.7
3.0
41.2
42.2
101.3
0.1
914.8
106.0
0.2
1,020.7
4.3
4.3
2,594.1
2.2
2.2
2,666.8
A) EQUITY
I. PARENT COMPANY
1.- Share capital
3.- Reserves and retained earnings (losses carried forward)
II. MINORITY INTERESTS
1.- Share capital, reserves and retained earnings (losses carried forward)
TOTAL EQUITY
D) PAYABLES
4.- Due to banks
6.- Advances
7.- Suppliers
9.- Unconsolidated subsidiaries
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
b) accrued expenses and other deferred income
170
(millions of euros)
Memorandum accounts
(millions of euros)
31.12.2004
31.12.2003
2.6
72.3
74.9
2.6
108.7
111.3
- others
3.3
78.2
2.0
113.3
3.5
50.6
54.1
3.5
69.0
72.5
a) Purchase
b) Sale
Total purchase and sale commitments
73.2
4.9
78.1
121.2
17.9
139.1
1.3
172.5
36.0
7.4
0.1
8.6
64.9
290.8
501.2
1.3
139.4
39.6
..
0.1
13.5
68.9
262.8
587.7
a) Bank guarantees:
- others
a) Secured guarantees received
b) Unsecured guarantees received
c) Other parties’ guarantees given for Group commitments
d) Leased assets
e) Third parties’ assets held at the company
f) Company’s assets held at third parties
g) Other
Total other memorandum accounts
171
Consolidated Income Statement
(millions of euros)
31.12.2004
3.- Changes in contract work in process
a) operating grants
c) sundry revenues and income
B) PRODUCTION COSTS
6.- Cost of raw materials, supplies, consumables and merchandise
7.- Cost of services
9.- Personnel costs
e) other costs
a) amortisation
b) depreciation
c) other writedowns
11.- Changes in inventories of raw materials, supplies, consumables and merchandise
172
31.12.2003
2,991.9
0.3
..
10.4
2,810.1
0.1
(0.1)
10.8
3.6
3.1
113.4
120.1
3,122.7
1.2
0.8
113.6
115.6
2,936.5
(30.3)
(735.5)
(557.9)
(33.5)
(665.2)
(432.3)
(662.2)
(184.6)
(47.2)
(12.8)
(15.4)
(922.2)
(635.3)
(178.9)
(46.7)
(16.8)
(10.5)
(888.2)
(455.0)
(167.4)
(57.3)
(1.8)
(681.5)
(438.5)
(167.4)
(1.8)
(7.6)
(615.3)
(0.2)
(7.5)
(10.8)
(87.3)
(3,033.2)
(0.2)
(7.4)
(26.9)
(88.5)
(2,757.5)
89.5
179.0
Consolidated Income Statement
cont.
(millions of euros)
31.12.2004
. others
b) non-current securities other than equity investments
. interest and commission income from unconsolidated subsidiaries
a) interest and commission expense to unconsolidated subsidiaries
d) interest and commission expense to others and sundry expense
17 bis.-Exchange gains and losses
18.- Revaluations
19.- Writedowns
b) current financial assets
c) other extraordinary income
b) prior-year taxes
c) prior-year losses and non-existent liabilities
d) other extraordinary expense
of which:
- Parent Company
- minority interests
31.12.2003
0.2
0.2
1.8
0.2
2.0
0.5
0.7
0.5
-
0.1
0.1
4.3
5.3
..
8.4
9.3
..
(6.0)
(6.0)
(7.0)
(7.5)
1.2
..
(0.1)
(15.1)
(15.2)
(9.2)
(13.1)
-
(0.2)
..
(0.2)
1.0
(1.2)
(0.5)
(1.7)
(1.7)
0.4
3.3
..
3.7
4.5
12.6
17.1
(0.8)
..
(0.8)
(1.6)
2.1
(2.5)
(0.4)
(2.9)
14.2
85.1
178.4
(2.9)
82.2
(96.5)
81.9
82.4
(0.2)
82.3
(0.4)
173
Rai SpA Nota integrativa
Rai Group
Notes to the consolidated
financial statements
175
Rai Group Notes to the consolidated financial statements
The RAI Group consolidated financial statements were prepared in accordance
with the provisions of the Italian Civil Code. These reclassification statements
have been prepared: analysis of income statement, analysis of balance sheet, cash
flow statement and changes in equity.
For ease of comparison, some small items of 2003 Balance Sheet and Income
Statement have been reclassified.
The Balance Sheet, Income Statement, Notes and relevant appendices are
expressed in millions of euros.
The consolidated financial statements reporting date is 31 December 2004, which
is the year-end date of all consolidated companies.
The financial statements of consolidated companies are those approved by the
relevant boards of directors and have been changed, where necessary, to ensure
that accounting standards are adopted consistently.
The consolidated financial statements and the accounts of individual consolidated
companies, except for those of NewCo RAI International S.p.A. due to its small
relevance, have been audited by:
• Pricewaterhouse Coopers S.p.A. as main auditors; they audited the financial
statements of Rai, Sipra, RaiNet, Rai Way, Rai Click, Rai Cinema, Rai Trade, 01
Distribution and the consolidated financial statements;
• Deloitte & Touche S.p.A., they audited the financial statements of Rai
Corporation and RaiSat;
• Nick De Luca, they audited the financial statements of Rai Corporation Canada.
The reconciliation between RAI and Group net profit and equity for the years 2004
and 2003 is on page 200.
1) Scope of consolidation
RAI and all Italian and foreign companies (excluding companies in liquidation)
in which RAI holds directly or indirectly the majority of votes at an ordinary
shareholders’ meeting are included in the scope of consolidation.
As, starting from FY 2004, San Marino RTV has been consolidated on the equity
method, the effects of the consolidation of San Marino RTV on the line-by-line
basis in the financial statements 2003 have not been considered for ease of
comparison, and no changes in the Parent Company’s Net Profit and Equity were
reported accordingly.
176
These companies are consolidated on a line-by-line basis (figures for the share
capital are at 31 December 2004):
• Rai Cinema S.p.A.; registered offices in Rome, Piazza Adriana 12, share
capital 200,000,000.40 Euro; shareholders: Rai 99.997678%, Rai Trade
0.002322%.
• Rai Click S.p.A.; registered offices in Milan, Corso Sempione 27, share
capital 176,800 Euro; shareholders: Rai 59.94%, Rai Trade 0.06%, e-Bismedia
40%.
• Rai Corporation - Italian Radio TV System; registered offices in New York,
1350 Avenue of the Americas; share capital USD 500,000; shareholders: Rai
100%.
• Rai Corporation Canada - Italian Radio TV System; registered offices in
Toronto (ONTARIO) M5 3K4 - 1235 Bay Street - Suite 4000, share capital
Canadian dollars 1,394; shareholders: Rai Corporation 100%.
• NewCo Rai International S.p.A.; registered offices in Rome, Viale Mazzini 14,
share capital 1,000,000 Euro; shareholders: Rai 99.9%, Rai Trade 0.1%.
• RaiNet S.p.A.; registered offices in Milan, Corso Sempione 27, share capital
5,160,000 Euro; shareholders: Rai 99.9%, Rai Trade 0.1%.
• RaiSat S.p.A.; registered offices in Rome, Viale Mazzini 14, share capital
2,585,000 Euro; shareholders: Rai 94.9%, Rai Trade 0.1%, R.C.S. Mediagroup 5%.
• Rai Trade S.p.A.; registered offices in Rome, Via Umberto Novaro 18, share
capital 8,000,000 Euro; shareholders: Rai 100%.
• Rai Way S.p.A.; registered offices in Rome, Via Teulada 66, share capital
70,176,000 Euro; shareholders: Rai 99.99926%, Rai Trade 0.00074%.
• Sipra S.p.A.; registered offices in Turin, Corso Unione Sovietica 612/3D, share
capital 10,000,000 Euro; shareholders: Rai 100%.
• 01 Distribution S.r.l.; registered offices in Rome, Piazza Adriana 12; share
capital 516,456 Euro; interests held by: RAI Cinema 100%.
These companies are valued on the equity method:
• Audiradio S.r.l.; registered offices in Milan, Largo Toscanini 1, share capital
234,000 Euro; interests held by: Rai 33.33%, minority interests 66.67%.
• Auditel S.r.l.; registered offices in Milan, Largo Toscanini 1, share capital
300,000 Euro; interests held by: Rai 33% minority interests 67%.
177
• Sacis S.p.A. - in liquidation; registered offices in Rome, Via Umberto Novaro
18, share capital 102,000 Euro; shareholders: Rai 100%.
• San Marino RTV S.p.A.; registered offices in the Republic of San Marino, Via
Kennedy 13; share capital 516,460 Euro; shareholders: Rai 50%, E.Ra.S. 50%.
• Secemie - Societé Anonyme; registered offices in Lione Ecully (France), 58
Chemin des Mouilles; share capital 3,829,395 Euro; shareholders: Rai 21.65%,
minority interests 78.35%.
2) Consolidation principles and translation principles
These can be summarised as follows:
a) The book values of equity investments in consolidated companies and their net
equities have been eliminated against the total recognition of assets, liabilities,
costs and revenues of investees (regardless of percentage of ownership) by the
global consolidation method, with indication of equity and net profit or loss for
the year attributable to minority interests. Any differences were carried under
consolidated equity.
b) Payables and receivables, expense and income, dividends and other transactions
made between and among consolidated companies have been eliminated.
c) Financial statements denominated in foreign currency have been translated
into Euros by the current exchange method, i.e. applying to individual items of
the balance sheet and the income statement the exchange rates in force at 31
December 2004 (Euro/USD: 1.36210; Euro/Canadian Dollar: 1.64160),
whereas equity items have been valued on the historical rate; exchange
differences in equity items from the prior year have been carried under
consolidated equity.
d) The basis of presentation of financial statements of consolidated companies is
the same for all of these companies and has been made consistent during
consolidation.
178
3) Accounting policies
Below is a description of the main accounting policies used, which are in accordance
with the going concern assumption and in accordance with the provisions of
Articles 2423 et segg. of the Italian Civil Code. The accounting policies used are
essentially the same as those applied in the prior years, but include updates made
under Legislative Decree No. 6 of 17 January 2003 "Organic reform of joint-stock
and cooperative companies, in pursuance of Law No. 366 of 3 October 2001".
There are no exceptions requiring departure from the provisions of Articles 2423bis et segg. of the Italian Civil Code.
a) Industrial patent and intellectual property rights:
Purchase and development costs for programmes have been valued as follows.
These costs include external costs directly related to each developed programme
and the costs of internal resources used to develop each programme:
1) costs relating to repeat-use TV productions are capitalised as intangible
assets. Where these productions are available and usable at year-end, their
cost is carried as industrial patent and intellectual property rights, and is
amortised on a straight-line basis over their estimated useful lives. If these
repeat-use productions are not usable yet at year-end, their cost is carried
under intangible assets under development and payments on account.
Since it is objectively difficult to identify which factors allow to establish a
proper relation between revenues from advertising and TV licence fees and
the amortisation of rights, and given that it is not possible to establish how
and how many times a programme can be used, the useful lives of repeat-use
programmes is estimated as shown below:
- three years for TV series or, generally, for all products other than cinema;
- five years for free TV rights on cinema products purchased by RAI Cinema,
with the exception of products for which full rights are purchased (theatres,
television, home video, etc.), whose useful lives is estimated to be seven years.
The costs of these programmes are amortised on a straight-line basis.
Costs relating to rights under concession for terms shorter than
three/five/seven years are amortised over the period of actual use.
A provision has been set up to cover programmes with risk of being used,
broadcasted or re-broadcasted, also in consideration of expected ratings.
2) The cost of television productions to be used immediately is recognised in the
income statement of one year only, which usually is the year when these
productions are used. More specifically:
- immediate-use programmes developed in-house (light entertainment,
documentaries, etc.). Costs are expensed as incurred.
179
- News and all radio programming. Costs are expensed as incurred,
usually when they are broadcast.
- Sports events. Costs are deferred until the year in which the event takes place.
- Immediate-use programmes purchased. Costs are expensed as rights
become usable, usually when these programmes are broadcast.
b) Software licences, carried under industrial patent and intellectual property rights,
are amortised over three years starting from the year they are effective.
c) Costs for developing the digital terrestrial network are carried under intangible
assets and are amortised on the straight-line basis over the asset’s estimated
useful life starting from the date the service is activated.
d) Trademarks are amortised over ten years starting from the year they become
effective
e) Costs benefiting several years are recognised as intangible assets, net of
accumulated amortisation. They relate to improvements made to leased or
licenced properties. The amortisation charge of the costs of works to upgrade
and improve these properties is calculated at the shorter of the residual life of the
underlying contracts and the estimated residual useful life of the costs incurred,
according to tax rates which capture the wear and tear of these assets.
f) Tangible assets, net of accumulated depreciation, are carried at cost, inclusive of
personnel costs incurred for their preparation and adjusted upward to reflect
statutory revaluations.
Ordinary maintenance costs are expensed as incurred.
Accumulated depreciation, which decreases the value of non-current assets,
represents the sums accrued in the consolidated accounts over the years in
consideration of depreciation rates which are consistent over the years.
Depreciation rates, which reflect the estimated useful lives of the assets, are shown
below:
buildings and light constructions
3% - 6% - 10%
plant and machinery
12.5% -15.5% - 19%
20% - 25%
industrial and commercial equipment
12% - 19%
other tangible assets
10% - 12% - 15% - 19%
20% - 25% - 30% - 33%
Tangible assets which at year-end are impaired and whose value is lower than the
value determined as described above, are stated at such lower value.
180
g) Equity investments in unconsolidated subsidiaries and associated companies
are valued on the equity method; equity investments below 20% and interests
in consortia are shown at the adjusted cost in case of impairment losses.
In the event of investees with negative net equity (deficit), the equity
investment is written down in full and an additional amount is accrued to
the provisions for liabilities and risks. Adjustments made as a result of
impairment losses are reversed if these losses are later retrieved through
profits earned by investees.
h) Fixed-income securities are shown under financial assets at purchase cost. The
(positive or negative) difference between purchase cost and redemption value for
the year is recognised as income.
i) Current securities are valued at purchase cost, calculated by the average
weighted method or market redemption value, whichever is lower.
j) Closing inventories of raw materials, supplies and consumables are valued at
cost, calculated by the average weighted method as written down to reflect
obsolete or slow-moving items. Closing inventories of merchandise for resale
are valued at purchase cost, calculated by the average weighted method or
market redemption value, whichever is lower.
k) Accruals and deferrals are recognised on an accrual basis.
l) Capital grants are recognised, net of taxes, in specific equity reserves.
m)Pensions and similar liabilities, including the seniority benefits provision, the
social security benefits provision and the company supplementary pension
fund, are accrued in accordance with collective labour agreements. Rai’s
company supplementary pension fund is valued on the basis of actuarial
principles.
n) The provision for taxes includes potential tax liabilities arising from the
settlement of disputed items and deferred taxes calculated on income whose
taxation is deferred. Deferred tax assets arising from costs whose taxation is
deferred and from taxable losses are recognised as Deferred Tax Assets
(4 ter) in Current Assets. For calculation and reporting purposes, it has
been considered that the recovery of these losses is reasonably certain in the
future.
o) Other provisions for liabilities and risks relate to accruals made to cover known
losses or liabilities whose existence is certain or probable, but whose amount or
date are unknown yet. They are accrued to cover specific liabilities and are
quantified based on reasonable estimates of the liabilities incurred.
p) Staff severance pay is calculated in accordance with applicable laws and
employment contracts. It relates to liabilities accrued to all employees at
year-end, net of advances.
181
q) Payables are shown at nominal value; receivables are carried at estimated realisable
value, net of the provision for doubtful accounts, calculated according to an
analytical assessment of the solvency of the individual debtors.
r) Payables and receivables denominated in foreign currencies - with the
exception of those secured by hedging contracts - are recognised at the
year-end exchange rate. Gains and losses arising from the translation of
each payable and receivable at the year-end exchange rate are recognised in
the income statement as financial income and expense. Net exchange gains, if
any, are taken to a special non-distributable reserve until they are realised.
s) Advances relates to advances from clients for goods and services which have
not been provided yet.
t) Costs and revenues are recognised in the income statement in accordance with
the matching principle and the accrual method of accounting.
u) Dividends from investees with equity investments below 20% are recognised
when received.
v) Income taxes for the year are recognised based on an estimate of taxable
income in accordance with applicable laws, taking account of items whose
taxation is deferred. Taxes due as stated in the income tax return are recognised
as tax payables, together with tax liabilities ascertained and not disputed. The
tax liability recognised in Group consolidated financial statements includes
individual tax liabilities of consolidated companies calculated in accordance
with consistent principles, the matching principle, the accrual method and the
principle of prudence. Deferred tax assets and liabilities resulting from
adjustments to Group net profit have been recognised during consolidation.
w) To hedge against interest rate risk and exchange rate risk, derivative contracts
have been made to hedge specific transactions. Net amounts to be paid or
received on interest rate swaps are recognised in the income statement over the
term of the contract as accrued. Interest rate differences accrued and not paid
out or received at year-end or received earlier than they are accrued are
recognised as "Accrued income and prepaid expenses" or “Accrued expenses
and deferred income”. Derivative contracts hedging against exchange rate risk
hedge contractual obligations in foreign currency.
Where there are contracts which do not fulfil the necessary accounting
requirements and cannot be defined as “hedging contracts”, if the market
value is significantly lower than the value of this financial instrument, the
difference is accrued to a specific provision for risks.
x) Receipts and payments are recorded by the transaction date.
182
4) Balance Sheet
Assets
Non-current Assets
Intangible Assets
These amounted to 846.9 million Euro, a net increase of 57.2 million Euro from the
prior year, due to the balance between new investments (580 million Euro),
amortisation charge for the year (455 million Euro), writedowns and eliminations
(67.9 million Euro) and other items increasing the total amount of intangibles
(0.1 million Euro).
• Start-up, expansion and similar costs. These are nil because the expenses
incurred to start up and expand some Group companies have been fully
amortised during the year (see Schedule 1).
• Industrial patent and intellectual property rights. These, mostly posted by
the Parent Company and Rai Cinema, are net of accumulated amortisation,
writedowns and increases in value due to infra-group services rendered. They
mainly relate to costs of TV and cinema products available for use.
As detailed in Schedule 1, the total amount (577 million Euro) reveals a net
decrease of 23.4 million Euro from 2003. More precisely, this is the difference
between new postings of 486.5 million Euro, writedowns made to reflect the risks
that some productions cannot be used, broadcasted and repeated (61.3 million
Euro), amortisation charge for the year (446.9 million Euro), disposals and
eliminations during the year (1.7 million Euro).
• Concessions, licences, trademarks and similar rights. Amounting to 32.7
million Euro, these include costs incurred by Rai to purchase the licence for
frequencies of the digital terrestrial network (32.4 million Euro) and the residual
costs incurred by other Group companies.
• Assets under development and payments on account. Amounting to 225.9
million Euro, these mainly include the cost of programmes (222.9 million Euro)
which at year-end were not yet available for broadcasting or to which future rights
were attached.
These also include:
- costs benefiting several years for leased properties (1.2 million Euro).
- software and other costs for assets whose useful lives have not begun yet (1.8
million Euro).
183
A breakdown of this item and the decrease from the prior year are provided in
Schedule 1.
Intangible assets (millions of euros)
Schedule 1
31.12.2003
31.12.2004
Book
value
Capitalised
Reclassified
Writedowns
0.4
0.0
0.0
0.0
0.0
-0.4
-
599.8
0.6
600.4
363.0
0.4
363.4
122.7
0.4
123.1
-61.3
0.0
-61.3
-1.7
0.0
-1.7
-446.3
-0.6
-446.9
576.2
0.8
577.0
0.4
35.6
0.0
0.0
0.0
-3.3
32.7
programmes
other
174.8
3.1
177.9
175.7
2.7
178.4
-122.7
-2.8
-125.5
0.0
0.0
0.0
-4.9
0.0
-4.9
-
222.9
3.0
225.9
Other intangible assets
10.6
789.7
2.6
580.0
2.5
0.1
0.0
-61.3
0.0
-6.6
-4.4
-455.0
11.3
846.9
Start-up, expansion and similar costs
Eliminat. Amortisation
Book
value
Industrial patent and intellectual
property rights
programmes
other
Concessions, licences, trademarks
and similar rights
Assets under development and
payments on
• Other intangible assets. The amount of 11.3 million Euro, net of accumulated
amortisation, mainly relates to costs incurred to upgrade and improve leased
properties (9.7 million Euro) and cost of investments in software analyses and
programmes (1.5 million Euro).
184
Tangible Assets
These include, net of the accumulated depreciation, the costs and related
revaluations of tangible long-lived business-operating assets.
These amounted to 708.7 million Euro, down by 113 million Euro from 2003.
The decrease is the result of new postings (93.1 million Euro, of which 6.2
million Euro relates to the capitalisation of internal development costs),
depreciation for the year (167.4 million Euro), disposals and other items (2.2
million Euro), as well as the reduction of the book value of the properties located
in Turin, Via Cernaia, and Rome, viale Mazzini, (36.5 million Euro). Given that
a special provision had been accrued in prior years to cover structural problems
in these properties, and these properties are now available for sale, a part of this
provision (36.5 million Euro) was prudently used so as to decrease the carrying
value of the properties. An independent expert’s report has been demanded to
support this transaction.The expert’s report has confirmed the impairment loss of
these properties.
A breakdown of this item is provided in Schedule 2.
Tangible assets and accumulated depreciation (millions of euros)
Schedule 2
31.12.2003
Cost Revaluations Accumulat.
depreciation
Land and buildings
Plant and machinery
Industrial and commercial
equipment
Assets under construction and
payments on account
Book Investment
Net
value and reclass. eliminations
31.12.2004
Ordinary Writedowns
depreciation
Cost Revaluations
Accumulat.
depreciation
Book
value
467.3
1,242.5
635.0
26.5
-664.8
-1,017.3
437.5
251.7
15.5
91.3
-0.4
-0.3
-56.5
-97.6
-36.5
-
444.2
1,327.7
634.2
26.3
-718.8
-1.108.9
359.6
245.1
97.1
150.0
5.0
3.1
-92.2
-120.3
9.9
32.8
2.9
9.4
-0.1
-0.3
-4.3
-9.0
-
98.9
156.4
5.0
3.1
-95.5
-126.6
8.4
32.9
89.8
2,046.7
669.6
-1,894.6
89.8
821.7
-26.0
93.1
-1.1
-2.2
-167.4
-36.5
62.7
2,090.0
668.5
-2,049.8
62.7
708.7
Financial Assets
These amounted to 30.0 million Euro and include:
• Equity investments in unconsolidated subsidiaries. These include the
Equity of SACIS in liquidation (2.0 million Euro).
• Equity investments in associated companies. These include unconsolidated
companies with interests up 20%; specifically:
185
(millions of euros)
Audiradio
Auditel
San Marino
Secemie
Gross amount
Writedowns
Secemie
Net amount
Ownership %
Book value
31.12.03
31.12.04
31.12.03
31.12.04
33.33%
33 %
50 %
25.32%
33.33%
33%
50%
21.65%
0.2
0.2
2.6
0.8
3.8
0.3
0.2
2.7
0.8
4.0
- 0.8
3.0
- 0.3
3.7
Equity investments in associated companies are all included in RAI’s equity
investments.
• Equity investments in other companies. These amounted to 0.7 million Euro
and include:
(millions of euros)
Finsiel
International Multimedia University
Istituto Treccani
Other
Gross amount
Writedowns
Net amount
31.12.03
31.12.04
0.3
0.1
0.5
..
0.9
-0.1
0.8
0.3
0.1
0.5
..
0.9
-0.2
0.7
• Receivables from others. These amounted to 20.1 million Euro (at 31 December
2003: 23.1 million Euro) and mainly include:
- tax advance on staff severance pay (17.7 million Euro) paid in accordance with
Law 140/97 and inclusive of year-end revaluation.
- Guarantee deposits of 2.0 million Euro.
- Loans given to employees of 0.4 million Euro.
• Other securities. These amounted to 3.5 million Euro (at 31 December 2003:
13.6 million Euro) and include securities given by way of guarantee only. The
decrease from the prior year is mostly due to the sale of non-current securities of
10.0 million Euro.
186
Current Assets
Inventories
Overall, inventories, net of adjustments, rose by 0.2 million Euro from 5.9 million
Euro at 31 December 2003 to 6.1 million Euro.
Raw materials, supplies and consumables (4.2 million Euro, net of writedowns of
15.4 million Euro) mostly include stock and spare parts to maintain and operate
tangible business-operating assets.
Contract work in process amounted to 0.8 million Euro, mostly posted by Rai Way
in relation to the costs incurred to develop the Isoradio network.
Finished goods and merchandise amounted to 1.1 million Euro and mainly include
inventories of books, home video distribution and inventories of merchandise
acquired in exchange for advertising.
Receivables
• Customers. These amounted to 567.6 million Euro, net of the provision for
doubtful accounts of 73.5 million Euro (at 31 December 2003 they were 580.5
million Euro and 80.4 million Euro respectively). The main items include
(nominal value):
- 315.7 million Euro from Sipra’s customers for advertising services sold.
- 144.7 million Euro for services rendered by RAI to the Government and other
public entities under specific agreements.
- 63.7 million Euro from Rai Trade’s customers for the sale of rights.
• Associated companies. These amounted to 0.1 million Euro, unchanged from
the prior year. They include the amounts receivable from San Marino which are
posted by the Parent Company.
• Tax receivables. These amounted to 37.7 million Euro (nominal value) (at 31
December 2003: 52.3 million Euro) and mainly include receivables posted by the
Parent Company (29.4 million Euro), Rai Cinema (7.3 million Euro) and Sipra
(0.9 million Euro).
• Deferred tax assets. They amounted to 85.9 million Euro (at 31 December
2003: 10.8 million Euro) and include deferred tax assets posted individually
by consolidated companies (79.2 million Euro) and deferred tax assets from
consolidation adjustments (6.7 million Euro).
The main accounts are:
- 62.8 million Euro posted by the Parent Company for items whose taxation is
deferred (60.4 million Euro) and items transferred by Group companies and
187
included in the tax consolidated accounts;
- 10.7 million Euro for prepaid taxes posted by Rai Cinema.
• Others. These amounted to 143.9 million Euro (at 31 December 2003: 225.1
million Euro). The main items include (nominal value):
- advances on sports event filming rights (101.1 million Euro).
- Receivables from personnel (7.4 million Euro), mainly due to advances of travel
expenses and advances on production expenses.
- Receivables from social security institutions (5.4 million Euro).
The provision for doubtful accounts amounted to 2.0 million Euro.
These items are broken down by maturity and type in Schedule 3.
Receivables and accrued income by maturity and type (millions of euros)
Schedule 3
31.12.2003
within
one year
31.12.2004
Amounts falling due
after 2 to
after more
5 years
than 5 years
Total
within
one year
Amounts falling due
after 2 to
after more
5 years
than 5 years
Total
Unconsolidated subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Parent Companies
Others
-
-
-
-
-
-
-
-
2.3
10.5
10.3
23.1
3.0
12.6
4.5
20.1
2.3
10.5
10.3
23.1
3.0
12.6
4.5
20.1
Current receivables
Other financial receivables
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Parent Companies
Others
Trade receivables
Customers
Parent Companies
-
-
-
-
-
-
-
-
11.3
-
-
11.3
-
-
-
-
11.3
-
-
11.3
-
-
-
-
580.4
0.1
-
580.5
567.6
..
-
567.6
-
-
-
-
-
-
-
-
0.1
-
-
0.1
0.1
-
-
0.1
-
-
-
-
-
-
-
-
Others:
- Government and other public
entities for subsidies and grants
0.7
-
-
0.7
0.5
-
-
0.5
581.2
0.1
-
581.3
568.2
-
-
568.2
52.3
-
-
52.3
37.7
-
-
37.7
9.6
1.2
-
10.8
84.6
1.3
-
85.9
213.1
-
-
213.1
143.4
-
-
143.4
275.0
1.2
-
276.2
265.7
1.3
-
267.0
0.1
-
-
0.1
..
-
-
..
869.9
11.8
10.3
892.0
836.9
13.9
4.5
855.3
Sundry receivables
Tax receivables
Deferred tax assets
Other receivables
Accrued income
Total
188
Current financial Assets
These amounted to nil.
These amounted to 147.3 million Euro (at 31 December 2003: 117.4 million
Euro) and mostly relate to the Parent Company, which manages central treasury
services.
These amounted to 19.9 million Euro (at 31 December 2003: 20.8 million Euro)
and mostly include prepaid expenses (i) posted by RAI as portions of costs of
sports events filming rights common to two or more years which are deferred to
future years, (ii) posted by SIPRA as costs incurred to distribute advertising to
theatres which do not pertain to the year and are deferred, (iii) and posted by the
other Group companies.
Liabilities and Equity
Equity
Equity rose by 82.1 million Euro (from 769.0 million Euro to 851.1 million
Euro), mainly due to the net profit for the year (82.2 million Euro).
The share capital of RAI, fully paid-up and subscribed, is divided into
242,518,100 ordinary shares with a par value of 1 Euro, owned by the Italian
Ministry of Economy and Finance (241,447,000 shares held, amounting to
99.5583% of share capital) and SIAE, Società Italiana Autori Editori (1,071,100
shares held, amounting to 0.4417% of share capital).
Equity attributable to minority interests is reported in specific items and mainly
relates to Rai Click and, to a lesser extent, to Rai Sat.
Changes in individual items from 31 December 2003 are broken down in the
schedule on page 205.
189
A breakdown of this item is provided in Schedule 4.
Provisions for liabilities and risks (in millions of euros)
Schedule 4
31.12.2003
Pensions and similar liabilities:
Taxes
Other provisions:
- litigation
Accrued
Used
directly
159.0
9.2
-11.8
29.0
36.1
-2.2
Transferred
to the income
statement
Reclassified
31.12.2004
-0.4
-
156.0
-23.0
-
39.9
117.7
129.8
15.8
-20.4
-7.5
-
- reclamation and renovation of property
63.9
-
-0.9
-
-36.5
26.5
- social security disputes
31.0
-
-
-
-
31.0
- liabilities on programmes
0.0
21.6
-
-
-15.8
-5.8
- lease disputes
6.7
1.1
-0.2
-
-
7.6
- Education Ministry agreement
4.3
1.3
-
-
-
5.6
- charges for assets under development/construction
6.0
-
-
-0.5
-
5.5
- accrued costs
5.1
0.3
..
-0.1
-
5.3
17.6
3.8
-0.9
-2.1
-
18.4
38.1
8.5
-5.1
-15.9
-
25.6
324.1
30.8
-27.5
-41.9
-42.3
243.2
512.1
76.1
-41.5
-65.3
-42.3
439.1
- sundry:
. liabilities
. risks
• Pensions and similar liabilities. These amounted to 156.0 million Euro (at
31 December 2003: 159.0 million) and include the supplementary seniority benefits
provision, the social security benefits provision and the company supplementary
pension fund.
- The provision for supplementary seniority benefits (5.4 million Euro, at 31
December 2003 it was 5.5 million Euro) includes the amounts due to employees
hired up until 1978 when the employment is terminated owing to age limits.
These amounts are proportionate to the pay in lieu of notice accrued individually
at 31 December of each year, revalued according to the consumer price index
for households of manual and office workers. In the case of early termination
or novation of the employment contract, the sums accrued are paid out.
- The provision for social security benefits, amounting to 1.1 million Euro (at 31
December 2003: 1.2 million Euro), includes the sums accrued and withheld
until 31 December 1988 and the additions to those sums accrued in subsequent
years, in order to maintain the real value of the provision, in accordance with
the national collective bargaining agreement, to the employees entitled to it.
- The company supplementary pension fund, amounting to 149.5 million Euro
(at 31 December 2003: 152.3 million Euro) includes the sums accrued to the
retired employees who had chosen the company supplementary pension fund,
and the sums to be accrued to working employees who choose the company
supplementary fund.
• Taxes. It amounted to 39.9 million Euro (at 31 December 2003: 29.0 million
Euro) and includes the sums accrued by individual companies, mostly by RAI
190
• Other provisions. These amounted to 243.2 million Euro (at 31 December
2003: 324.1 million Euro) and include sums set aside to cover liabilities or
losses that are certain but whose amount is not known yet, or that are likely but
whose amount cannot be reasonably estimated. Other provisions decreased by
80.9 million Euro, as shown in Schedule 4.
Regarding ongoing disputes with employees and third parties, the provisions for
liabilities and risks reflect the best estimate of probable liabilities based on the
latest available information.
Staff severance pay
This rose by 22.0 million Euro (from 362.8 million Euro at 31 December 2003 to
384.8 million Euro at 31 December 2004) due to payments of 18.5 million Euro,
accruals of 47.2 million Euro and other items of 6.7 million Euro.
Payables
They fell by 105.9 million Euro (from 1,020.7 million Euro to 914.8 million Euro).
Schedule 5 provides a breakdown of payables by maturity and type.
The following should be noted regarding the most significant items:
• Due to banks. These decreased by 60.3 million Euro from 2003, due to the
collection of all TV licence fees receivable and the increase in revenue from
advertising. They amounted to 16.9 million Euro (at 31 December 2003: 77.2
million Euro) and mainly include payables posted by RAI which are broken
down as follows:
- short-term payables (13.1 million Euro) relates to the negative balance of some
bank accounts held with some credit institutions.
- Medium/long-term payables of RAI amounting to 3.5 million Euro and relating
to a soft loan to fund the construction of the offices in Cosenza and the extension
of the offices in Bari; the loan is mortgaged and secured by special priority liens
and bank guarantees.
- Medium/long-term payables of Rai Trade amounting to 0.3 million Euro, which
mostly relates to loans issued by B.N.L. - Sezione di Credito Cinematografico e
Teatrale for national productions.
• Due to other lenders. In 2004 this item amounted to nil (6.8 million Euro at 31
December 2003). During the year the residual debt to Cofiri S.p.A. was fully paid
off.
191
• Advances. These amounted to 28.4 million Euro (at 31 December 2003: 16.4
million Euro), net of infra-group eliminations and consolidation adjustments, and
include advances paid by:
- RAI: 14.0 million Euro of parts of excess TV licence fees collected by the Ministry
for Economic Affairs and Finance with respect to those due for the year; 1.3
million Euro of advances on the sale of usage rights for programmes; 1,1 million
Euro of the advance paid by Dallah Albaraka in connection with a right of
pre-emption in the event of sale of the shares in Newco Rai International or in
case a business partner is sought to broadcast channel TV Rai International; 0.7
million Euro of sundry advances.
- Rai Trade: 5.8 million Euro of advances on sale contracts.
- Rai Way: 0.8 million Euro relating to advances from the Ministry of Productive
Activities in connection with subsidized loans under Law 488/92.
- Sipra: 3.1 million Euro of advertising services already invoiced but not
rendered yet.
- Rai Cinema: 0.3 million Euro of sums for contracts for the licence of usage rights
for programmes with effective date later than year-end.
- Rai Corporation: 1.3 million Euro relating to the advance received as partial
repayment of the expenses incurred for the upgrading and improvement works
to the new offices.
• Suppliers. These amounted to 672.8 million Euro. They decreased by 49.2
million Euro from 31 December 2003.
• Unconsolidated subsidiaries. They amounted to 5.6 million Euro (at 31
December 2003: 5.7 million Euro) and relate to the transactions made by the
Parent Company with SACIS, mostly associated with the balance of the current
account.
• Associated companies. They amounted to 2.5 million Euro (at 31 December
2003. 3,0 million Euro) and relate to the transactions made by the Parent
Company with San Marino RTV (0.9 million Euro) due to the balance of the
current account.
• Tax liabilities. Amounting to 42.4 million Euro (at 31 December 2003:
41.2 million Euro), these mainly relate to amounts withheld to employees
and self-employed workers, and direct taxes for the year, net of advances paid.
• Social security institutions. Amounting to 44.8 million Euro (at 31 December
2003: 42.2 million Euro), these relate to employees’ and self-employed workers’
contributions due to social security institutions within the statutory deadlines.
• Other payables. They amounted to 101.4 million Euro (at 31 December 2003:
106.2 million Euro) and include amounts due to employees (67.1 million Euro)
and amounts due to sundry entities and companies (34.3 million Euro).
192
Payables and accrued expenses by maturity and type (millions of euros)
Schedule 5
31.12.2003
within
one year
Medium/long-term payables
Bonds
Convertible bonds
Shareholders’ loans
Due to banks
Suppliers
Bills payable
Parent companies
Tax payables
Other payables
Short-term payables
Shareholders’loans
Other financial payables
Due to banks
Suppliers
Bills payable
Parent companies
Other payables:
- unpaid share capital subscriptions
Trade payables
Advances
Suppliers
Bills payable
Parent companies
Sundry payables
Tax liabilities
Other payables:
- concession fee
- sundry
Total payables
Accrued expenses
Total
31.12.2004
Amounts falling due
after 2 to
after more
5 years
than 5 years
73.0
6.8
79.8
3.8
3.8
-
Amounts falling due
after 2 to
after more
5 years than 5 years
Total
within
one year
76.8
6.8
83.6
2.6
2.6
1.3
1.3
-
Total
3.9
3.9
-
-
-
-
-
-
-
-
0.4
3.9
5.7
1.4
-
-
-
0.4
3.9
5.7
1.4
-
13.0
0.2
5.6
0.9
-
-
-
13.0
0.2
5.6
0.9
-
11.4
-
-
11.4
19.7
-
-
19.7
16.4
718.1
..
1.6
736.1
..
-
-
16.4
718.1
..
1.6
736.1
27.2
667.3
..
1.6
696.1
0.2
5.3
5.5
1.0
1.0
28.4
672.6
..
1.6
702.6
41.2
42.2
-
-
41.2
42.2
42.4
44.8
-
42.4
44.8
106.0
189.4
0.2
0.2
-
106.2
189.6
101.3
188.5
0.1
0.1
-
101.4
188.6
1,016.7
4.0
-
1,020.7
906.9
6.9
1.0
914.8
..
-
-
..
..
-
-
..
1,016.7
4.0
-
1,020.7
906.9
6.9
1.0
914.8
193
These mainly include deferred income of 4.2 million Euro (at 31 December 2003:
2.2 million Euro).
5) Memorandum accounts
These amounted to 501.2 million Euro (at 31 December 2003: 587.7 million
Euro) and are broken down as shown in the Income Statement.
To that regard, there are contracts hedging exchange rate and interest rate risks
in connection with specific commitments. Foreign exchange transactions serve the
purpose of hedging US Dollar purchases of sport and theatre contracts expiring in
the years 2005-2008, and relate to a total notional amount (at 31 December
2004) of USD132.6 million, which allows the forward sale of US Dollars at an
average USD/Euro exchange rate of approximately 1.22.
Transactions hedging interest and exchange rate risks for the years 2004-2008
amounting to 30.0 million Euro on short-term lines, with rates ranging between
2.6% and 4.7%, have been prudently valued and recognised in a specific
provision for risks.
At 31 December 2003 there are no significant commitments to purchase or sell
goods and services other than those undertaken in the ordinary course of business
and which, if known, would give a better valuation of the financial situation of the
company.
6) Income Statement
Value of production
• Revenues from sales and services. These amounted to 2,991.9 million Euro,
up 181.8 million Euro from 31 December 2003, and mainly include:
- Revenues from TV licence fees (1,473.8 million Euro).
- Revenues from advertising, gross (1,218.6 million Euro).
- Revenues from special services under agreements with the Government (82.9
million Euro).
- Revenues from sale of viewing rights, music events and theme channel offerings
- Revenues from the sale of satellite channels to SKY (47.6 million Euro).
194
- Revenues from theatre and home video distribution (26.3 million Euro).
- Revenues from the hosting of systems and equipment (23.0 million Euro).
- Revenues from signal broadcasting, lease of circuits, radio links and connections
• Changes in inventories of work in progress, semifinished and finished
goods. These amounted to 0.3 million Euro and relate to the decrease in
inventories of videotapes and DVD for sale of Rai Cinema.
• Changes in contract work in process. The amount is irrelevant.
• Capitalisation of internal development/construction costs. This amounted
to 10.4 million Euro and relates to the capitalisation of internal costs for the
construction of plant (6.2 million Euro) and the development of programmes (4.2
million Euro).
• Other revenues and income. They amounted to 120.1 million Euro and break
down as follows:
- Operating grants: they amounted to 3.6 million Euro and relate to:
- 1.6 million Euro of operating grants given to Rai Cinema by the Ministry of
Cultural Heritage under Law 1213 of 4 November 1965
- 1.0 million Euro, attributable to Rai Way, of grants given under Law 488/92.
- 1.0 million Euro of grants given by the European Community posted by RAI
(0.7 million Euro) and 01 Distribution (0.3 million Euro).
- Gains on disposal of assets: these amounted to 3.1 million Euro and relate to
the sale of intangible assets (1.4 million Euro) and tangible assets (1.7 million
Euro).
- Sundry revenues and income: they amounted to 113.4 million Euro and relate
to expenses recovered (22.4 million Euro), out-of-period gains (42.3 million
Euro), the inclusion of prior years’ provisions (45.3 million Euro), and income
from real estate investments and other items (3.4 million Euro).
195
Production costs
They amounted to 3,033.2 million Euro, up 275.7 million Euro from the prior year,
and break down as follows.
• Cost of raw materials, supplies, consumables and merchandise. These
amounted to 30.3 million Euro and include, net of discounts and rebates,
purchases of operating materials (18.4 million Euro), technical materials (6.9
million Euro) and production materials (5.0 million Euro).
• Cost of services. These amounted to 735.5 million Euro (665.2 million at
31 December 2003) and are broken down as follows:
- Freelance work (140.2 million Euro).
- Services for purchase and production of programmes (232.1 million Euro).
- Travel, transfer and related allowances to employees (51.4 million Euro).
- Maintenance, repairs and transport (49.9 million Euro).
- Data processing and information and documentation services (54.7 million
Euro).
- General services including promotion, advertising and publicity, consulting
services, third party shares of sales, supply services, postage, insurance, security
and prevention (207.2 million Euro).
These also include fees and reimbursement of expenses paid by the Parent
Company to directors (1.1 million Euro) and statutory auditors (0.3 million
Euro). Three statutory auditors of the Parent Company were statutory auditors
of other subsidiaries for a few months, receiving compensation deemed not
significant.
• Rent, leasing and similar costs. They amounted to 557.9 million Euro (432.3
million Euro at 31 December 2003) and include:
- rent expenses and hiring costs (124.2 million Euro);
- usage rights (107.5 million Euro).
- sports event filming rights (128.6 million Euro);
- other filming rights (189.5 million Euro);
- other rights (8.1 million Euro).
• Personnel costs. These amounted to 922.2 million Euro (at 31 December
2003: 888.2 million Euro) and include early retirement benefits 0.7 million
Euro (at 31 December 2003: 1.0 million Euro). Average employees on
permanent and fixed-term contract, including trainees, amounted to 13,249
people, an increase of 92 employees from 31 December 2003. Schedule 6
provides a break-down of average employees by category and company.
196
Average workforce (employees)
Schedule 6
permanent
contract
By Company
RAI HOLDING
2003
fixed-term
contract
Total
permanent
contract
2004
fixed-term
contract
Total
3
0
3
0
0
0
9,922
1,668
11,590
9,995
1,672
11,667
64
0
64
63
1
64
2
0
2
1
0
1
Rai Corporation
45
0
45
46
0
46
RaiNet
60
14
74
60
15
75
RaiSat
61
42
103
68
46
114
RAI
Rai Cinema
Rai Click
Rai Trade
86
4
90
86
5
91
Rai Way
726
5
731
718
13
731
01 Distribution
Sipra
By category
Senior management
Journalists
12
6
18
19
2
21
425
12
437
424
15
439
11,406
1,751
13,157
11,480
1,769
13,249
366
0
366
362
0
362
1,668
314
1,982
1,676
315
1,991
Junior management
1,280
0
1,280
1,321
0
1,321
Office staff
6,797
1,277
8,074
6,838
1,308
8,146
Workers
1,148
138
1,286
1,136
134
1,270
133
21
154
134
12
146
14
1
15
13
0
13
11,406
1,751
13,157
11,480
1,769
13,249
Musical directors and choir staff
Medical staff
of which trainees
101
61
• Amortisation, depreciation and writedowns. These amounted to 681.5
million Euro (at 31 December 2003: 615.3 million Euro) and relate to
amortisation (455.0 million Euro) and depreciation (167.4 million Euro) as
shown in Schedules 1 and 2. These also include programmes written down
(55.5 million Euro) to reflect the risks that some production cannot be
used, broadcasted and repeated.
• Changes in inventories of raw materials, supplies, consumables and
merchandise. These amounted to 0.2 million Euro and relate to the decrease in
the value of net inventories posted among current assets at 31 December 2004
compared with 31 December 2003.
• Provisions for risks. These amounted to 7.5 million Euro (at 31 December
2003: 7.4 million Euro) and mainly include provisions accrued by the Parent
Company (6.0 million Euro), Sipra (0.5 million Euro), Rai Sat (0.5 million
Euro), Rai Way (0.3 million Euro) and, to a lesser extent, other Group
companies.
• Other provisions. These amounted to 10.8 million Euro (at 31 December 2003:
26.9 million Euro) and mainly include provisions accrued by RAI (8.9 million
Euro), Rai Way (1.8 million Euro) and Sipra (0,1 million Euro).
• Sundry operating costs. These amounted to 87.3 million Euro (at 31 December
2003: 88.5 million Euro). They are broken down as shown in Schedule 7 and
mostly consist of costs posted by the Parent Company (76.0 million Euro).
197
Sundry operating costs (millions of euros)
Schedule 7
Reporting period
01.01-31.12.03
Reporting period
01.01-31.12.04
- tangible assets
- intangible assets
3.5
..
1.7
0.4
Losses on current receivables
1.1
0.7
25.7
27.2
4.0
8.5
11.1
17.7
16.9
88.5
4.1
9.0
12.9
8.5
22.
87.3
Losses on disposal of assets:
Concession fee
Other costs:
- ICI (local property tax)
- other indirect taxes and duties
- prior-year charges
- former employees pension fund
- sundry
These are broken down as shown in the Income Statement.
More specifically:
- Income from equity investments (0.2 million Euro, at 31 December 2003 it was
2.0 million Euro) relate to the valuation on the equity method of equity
investments in associated companies.
- Other financial income (5.3 million Euro, it was 9.3 million Euro at 31
December 2003) is broken down as shown in Schedule 8;
- Interest and other financial expense (6.0 million Euro, it was 15.2 million Euro
at 31 December 2003) is broken down as shown in Schedule 9.
- Exchange gains and losses amounted to 7.0 million Euro (9.2 million Euro at 31
December 2003).
Other financial income (millions of euros)
Schedule 8
Reporting period
01.01-31.12.03
Reporting period
01.01-31.12.04
0.7
0.5
Non-current securities other than equity investments
0.1
0.5
Current securities other than equity investments
0.1
-
Income other than the above:
- interest and commission income from unconsolidated subsidiaries
198
..
-
- interest income from amounts due from banks
1.4
2.1
- interest income from amounts due from customers
5.2
0.7
- sundry
1.8
1.5
9.3
5.3
Interest and other financial expense (millions of euros)
Schedule 9
Reporting period
01.01-31.12.03
Interest and commission expense to unconsolidated subsidiaries
Reporting period
01.01-31.12.04
..
-
Interest and commission expense to associated companies
0.1
..
Interest expense on amounts due to banks:
- short-term
3.7
0.8
0.9
1.8
0.3
0.1
- medium/long-term
Interest and commission expense to others and sundry expense:
- interest expense to amounts due to suppliers
- interest expense on amounts due to other lenders
3.8
0.2
- accrued to the provision for doubtful accounts over due interest
4.0
0.0
- interest expense, premiums and amounts accrued to the provision for interest rate hedging transactions
1.3
2.4
- other expense
1.1
0.7
15.2
6.0
Revaluations. They amounted to 1.2 million Euro and relate to the recovery of prior
years’ losses of associated companies posted by the Parent Company.
Writedowns. These amounted to 0.2 million Euro and mainly relate to equity
investments in unconsolidated companies and consortia.
These amounted to 2.1 million Euro and mainly relate to:
- Prior-year income from an excess provision for prior years’ taxes (2.2 million Euro).
- Recovery of VAT on bankruptcy procedures for customers of Sipra (1.0 million Euro).
- Prior-years taxes (0.8 million Euro).
- Participation in regularisation scheme of Rai Trade (0.8 million Euro).
These amounted to 2.9 million Euro and include the direct taxes for the year posted
by each single company and the theoretical taxes arising from consolidation
adjustments. They are broken down as follows:
Direct taxes
Deferred tax assets
Deferred liabilities
Total
Posted by individual
Companies
Consolidation
adjustments
Total
65.4
-73.3
34.7
26.8
-0.1
-23.8
-23.9
65.4
-73.4
10.9
2.9
199
7) Net profit /loss for the year
The net profit for the year amounted to 82.2 million Euro and include net profit
of 82.4 million Euro attributable to the Group and a net loss of 0.2 million Euro
attributable to minority interests.
8) Reconciliation between RAI and consolidated financial
statements at 31 December 2004 and 31 December 2003
Below is a break down of the reconciliation between Parent Company and
consolidated net profit/loss for the year and equity, including the share of
minority interests:
Reconciliation between RAI and consolidated financial statements (millions of euros)
Net profit (loss)
Rai financial statements
2004
2003
2004
2003
113.0
24.5
760.0
647.1
Elimination of the value of equity investments against
Net Equities and profits against dividends distributed
7.8
49.1
119.6
111.8
Adjustment of value of associated companies to the Equity method
0.1
0.1
4.7
4.6
-61.2
15.0
-
61.2
Elimination of ‘tax distortions’
Deferred/tax assets and liabilities
23.9
-5.7
6.7
-17.2
Other consolidation adjustments
-1.4
-1.1
-39.9
-38.5
82.2
81.9
851.1
769.0
Consolidated financial statements
200
Equity
Rai Group
Supplemental Schedules
201
Rai Group Supplemental Schedules
Analysis of consolidated balance sheet
(millions of euros)
A. NON-CURRENT ASSETS, NET
Intangible assets
Tangible assets
Financial assets
B. WORKING CAPITAL
Inventories
Trade receivables
Other assets
Trade payables
Other liabilities
C. CAPITAL EMPLOYED
less current liabilities
31.12.2003
846.9
708.7
30.0
1,585.6
768.0
821.7
42.5
1,632.2
6.1
568.3
286.8
(702.7 )
(439.1 )
(192.8 )
(473.4)
(A+B)
D. STAFF SEVERANCE PAY
E. CAPITAL EMPLOYED
less current liabilities and staff severance pay
31.12.2004
(C-D)
5.9
581.3
297.0
(736.1)
(490.4)
(191.8)
(534.1)
1,112.2
1,098.1
384.8
362.8
727.4
735.3
848.1
3.0
851.1
762.3
6.7
769.0
3.9
83.6
financed by:
F. EQUITY
Parent Company
Minority interests
G. MEDIUM/LONG-TERM DEBT
H. NET SHORT-TERM DEBT (NET LIQUIDITY)
. short-term debt
. cash and short-term financial credit
I. TOTAL, AS IN E
202
(G+H)
(F+G+H)
19.7
(147.3 )
(127.6)
(123.7)
727.4
11.4
(128.7)
(117.3)
(33.7)
735.3
Analysis of consolidated income statement
(millions of euros)
31.12.2004
31.12.2003
A. REVENUES
Changes in inventories of work in progress, semifinished and finished goods
3,021.3
0.3
10.4
2,841.2
0.1
10.8
B. VALUE OF NORMAL PRODUCTION
Cost of raw materials and external services
3,032.0
(1,351.0 )
2,852.1
(1,156.9)
C. VALUE ADDED
Personnel costs
1,681.0
(922.2 )
1,695.2
(888.2)
758.8
807.0
(430.4 )
(176.1 )
(3.7 )
(18.3 )
(40.8 )
(407.0)
(173.9)
(9.4)
(31.9)
(5.8)
89.5
179.0
D. GROSS OPERATING MARGIN
Depreciation
Other adjustments
Accruals to provisions for liabilities and risks
Net sundry income and expense
E. OPERATING PROFIT /(LOSS)
F. PROFIT/(LOSS) BEFORE EXTRAORDINARY ITEMS AND TAXES
G. PROFIT /(LOSS) BEFORE TAXES
H. NET PROFIT/(LOSS) FOR THE YEAR
of which:
- Parent Company
- Minority interests
(7.5 )
1.0
(13.1)
(1.7)
83.0
164.2
2.1
14.2
85.1
178.4
(2.9 )
(96.5)
82.2
81.9
82.4
(0.2 )
82.3
(0.4)
203
Cash flow statement
(millions of euros)
A. OPENING NET LIQUIDITY
(OPENING NET SHORT-TERM DEBT)
B. CASH FLOW FROM/(FOR) OPERATING ACTIVITIES
Amortisation and depreciation
(Gains) losses on disposal of assets
(Revaluations) writedowns of non-current assets
Change in working capital
Net change in staff severance pay
C. CASH FLOW FROM/(FOR) INVESTING ACTIVITIES
Investments in non-current assets:
. intangible assets
. tangible assets
. financial assets
Sale proceeds, or reimbursement of non-current assets
Other changes
D. CASH FLOW FROM/(FOR) FINANCING ACTIVITIES
New financing
Shareholder grants
Capital grants
Loan repayments
Equity repayments
E. ALLOCATION OF PROFITS
F. CASH FLOW FOR THE YEAR
G. CLOSING NET LIQUIDITY
(CLOSING SHORT-TERM DEBT)
204
31.12.2004
31.12.2003
117.3
28.2
82.2
606.5
(1.4 )
76.3
(44.2 )
22.0
741.4
81.9
580.9
2.7
24.0
90.9
26.0
806.4
(580.0 )
(93.1 )
(1.9 )
23.7
(0.1 )
(651.4)
(535.4)
(100.2)
(12.2)
10.8
(0.5)
(637.5)
0.1
0.0
0.0
(79.7 )
0.0
(79.6)
0.6
0.0
0.0
(80.3)
0.0
(79.7)
(0.1)
(0.1)
(B+C+D+E)
10.3
89.1
(A+F)
127.6
117.3
Changes in consolidated equity
(years 2003-2004)
(millions of euros)
Balance
Amount Dividends Translation Movement Net profit
Balance
31.12.2003 transferred
paid differences
after
(loss) 31.12.2004
out
merger for the year
Equity:
Group:
Share capital
Legal reserve
Retained earnings/(losses carried forward)
Capital grants provision
Capital grants reserve
Goodwill on merger
Other reserves
241.5
0.5
9.7
0.0
0.0
0.0
428.3
82.3
82.5
-82.3
Total Group equity
762.3
0.0
7.1
-0.5
-0.4
0.5
-0.1
6.7
0.0
-0.1
0.0
769.0
0.0
-0.1
0.0
Minority interests:
Capital and reserves attributable
to minority interests
Net profit/(loss) attributable
to minority interests
Total minority interests equity
Total Equity
1.0
82.4
242.5
0.5
9.5
1.3
9.4
383.9
118.6
82.4
82.4
848.1
-0.2
1.3
9.4
383.9
-392.2
0.0
0.0
3.4
-3.4
3.2
-0.2
-0.2
-3.4
-0.2
3.0
0.0
82.2
851.1
205
Rai Group
Report of the
Board of Statutory Auditors
207
Rai Group Report of the Board of Statutory Auditors
Report of the Board of Statutory Auditors on the consolidated financial
statements
Dear Shareholders,
the consolidated financial statements of the RAI Group at 31 December 2004 –
which are available for disclosure to you – have been prepared in millions of euros
and include the Consolidated Balance Sheet, the Consolidated Income Statement
and the Notes. They are also accompanied by a Directors’ Report on Operations.
Below are the key figures of the Consolidated Balance Sheet:
ASSETS
Non-current assets
1,585.6
Current assets
988.6
19.9
2,594.1
LIABILITIES AND EQUITY
Equity
851.1
439.1
Staff severance pay
384.8
Payables
914.8
4.3
2,594.1
MEMORANDUM ACCOUNTS
Guarantees given: unsecured
secured
Purchase and sale commitments
Other memorandum accounts
78.2
54.1
78.1
290.8
501.2
The main figures of the Consolidated Income Statement are provided below:
208
Value of production
3,122.7
Production costs
3,033.2
89.5
-7.5
1.-
2.1
Income taxes
-2.9
Net profit/(loss) for the year
82.2
The Consolidated Balance Sheet and the Consolidated Income Statement
summarised above are compared with the key figures taken from the consolidated
financial statements 2003 of RAI Holding adjusted to reflect the effects of the change
in the consolidation principle applied to San Marino RTV, as is described below.
The Notes disclose the scope of consolidation and the consolidation
principles applied. Some schedules provide the additional information required to
be given under Article 38 of Legislative Decree no. 127/1991.
As regards the scope of consolidation, San Marino TV (equity: 5,390
thousand Euro), a 50% investee, was consolidated by the equity method, unlike it
was consolidated until 2003 (full consolidation method). The change in the
consolidation method does not affect the consolidated net profit or loss for the year
or the equity attributable to it.
As regards the Report on Operations, given the considerable “weight” of the
Parent Company over the consolidated companies taken as a whole, the Directors’
Report on the Parent Company’s operations also specifically covers Group
operations.
As earlier mentioned, the Report on Operations describe the overall condition
of consolidated companies and the overall performance broken down by sector. The
Report on Operations also contains disclosures on R&D activities, post-balance-sheet
events and business outlook.
Other schedules helping in understanding the consolidated financial
statements are the analysis of consolidated balance sheet, analysis of consolidated
income statement and the cash flow statement.
As far as the Board of Statutory Auditors is concerned, also based on
contacts with independent auditors “PricewaterhouseCoopers S.p.A.”, we state that
all the three parts of the financial statements at issue have been prepared in
accordance with the provisions of the Italian Civil Code; they match with the
Holding Company’s accounting records and the information forwarded by other
consolidated companies.
From the accounting standpoint:
• there are no “exceptional cases” requiring the application of departures as
permitted by Article 29 (paragraph four) of Legislative Decree no. 127/1991;
• assets and liabilities have been valued on a like-for-like basis, applying accounting
policies that are substantially unchanged from those adopted in the prior year and
updated to reflect the provisions of Legislative Decree No. 6/2003 (Italian
Corporate Law Reform);
• deferred tax assets have been recognised for achieving tax benefits in future years
on provisions accrued in prior years and added back;
• deferred tax liabilities have been recognised because of the recognition of
anticipated amortisation and depreciation in the income tax return.
As regards the effects of the resolution of the Italian Communications
Regulatory Authority, reference should be made to our report on the statutory
financial statements.
209
All in all, in light of the foregoing, we believe that the consolidated financial
statements of the RAI Group at 31 December 2004 and the accompanying Report
on Operations have been prepared in accordance with the requirements of
Legislative Decree no. 127/1991.
THE BOARD OF STATUTORY AUDITORS
Mr Carlo Cesare GATTO
Prof Paolo GERMANI
Prof Salvatore RANDAZZO
Rome, 12 April 2005
210
Rai Group Report of the independent Auditors
211
Rai Group
Schedules
Financial Statements of subsidiaries
Contents
Rai Cinema S.p.A.
215
01 Distribution S.r.l.
219
Rai Click S.p.A.
223
Rai Corporation S.p.A. - Italian Radio TV System
227
Rai Corporation Canada - Italian Radio TV System
231
NewCo Rai International S.p.A.
235
RaiNet S.p.A.
239
RaiSat S.p.A.
243
Rai Trade S.p.A.
247
Rai Way S.p.A.
251
Sipra S.p.A. - Societ Italiana Pubblicit per Azioni
255
Sacis S.p.A. - Commerciale Iniziative Spettacolo (in liquidation)
259
213
Rai Group Schedules - Financial Statements of subsidiaries
Rai Cinema S.p.A.
Name:
Rai Cinema S.p.A.
Date of incorporation:
1 December 1999
Purpose:
The company’s purpose is the purchase, in Italy and abroad, of usage
rights on audiovisual, cinema TV and multimedia products, depending on
the production requirements of RAI and its associated companies; the
provision to RAI and its associated companies of the above said rights
and the organisation, administration and management of rights
according to RAI’s information, research and broadcasting requirements;
distribution, marketing and sale of rights in Italy and abroad; the production
of audiovisual works for the cinema, TV and video communication
markets; the construction, organisation and management of distribution
circuits, cinemas and multiplex cinemas.
Share capital:
200,000,000.40 Euro
38,759,690 shares with a par value of 5.16 Euro each
Rai 99.997678 %; Rai Trade 0.002322%
Ownership:
Employees:
01 Distribution S.r.l. 100%
62 on permanent contract
1 on fixed-term contract
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Franco Scaglia
Roberto De Anna
Giancarlo Leone
Carlo Macchitella
Fabio Belli
Claudio Cappon
Alessio Gorla
Guido Paglia
Marco Tani
Giuseppe De Rosa
Giuseppe Maria Liberto
Lanfranco Duò
Fabio Piccoli
Financial Statements 2004 Approved by the Shareholders in the Meeting of 31 March 2005
215
Rai Cinema S.p.A.
II. TANGIBLE ASSETS
a) subsidiaries
2.- Receivables
d) others
C) CURRENT ASSETS
I. INVENTORIES
a) finished goods
TOTAL INVENTORIES
1.- Customers
2.- Subsidiaries
4.- Parent Company
5.- Others
TOTAL ASSETS
216
(Euro)
31.12.2004
31.12.2003
-
-
422,018,742
120,410,046
872,717
543,301,505
2,066
406,850,457
84,482,899
674,886
492,010,308
17,301
239,965
257,266
22,387
261,803
284,189
516,456
516,456
516,456
516,456
280,148
280,148
796,604
544,355,375
283,314
280,314
799,770
493,094,267
625,298
625,298
275,990
275,990
4,514,283
16,608,704
4,736,913
7,344,654
10,671,829
1,053,276
44,929,659
5,934,348
14,513,657
11,935,813
9,633,635
1,653,578
1,340,826
45,011,857
-
-
45,554,957
45,287,847
1,974,109
1,974,109
591,884,441
859,952
859,952
539,242,065
Rai Cinema S.p.A.
Balance Sheet - Liabilities and Equity
(Euro)
31.12.2004
31.12.2003
200,000,000
3,282,571
2
6,524,913
31,777,438
241,584,924
116,100,000
919,556
6,177,633
47,260,295
170,457,484
1.- pensions and similar liabilities
2.- current and deferred taxes
3.- other provisions
521,928
6,778
917,656
1,446,362
879,132
4,435,782
5,314,914
1,498,798
1,394,155
D) PAYABLES
6.- Suppliers
7.- Advances
9.- Subsidiaries
11.- Parent Company
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
356,475
115,793,409
14,060,281
215,018,630
1,263,530
255,408
549,726
347,297,459
469,162
134,541,337
9,933,544
212,381,143
1,775,749
238,303
428,664
359,767,902
56,898
56,898
591,884,441
2,307,610
2,307,610
539,242,065
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
Memorandum accounts
Secured guarantees received
. Securities on deposit
Unsecured guarantees received
. Bank guarantees
Assets held at third party’s on a free-on-loan basis or deposited
. Lease or similar
. Other
TOTAL MEMORANDUM ACCOUNTS
(Euro)
31.12.2004
31.12.2003
1,008,000
1,059,645
51,764,582
48,089,379
635,408
25,823
53,433,813
289,264
49,438,288
217
Rai Cinema S.p.A.
Income Statement
(Euro)
31.12.2004
a) operating grants
c) sundry revenues and income
B) PRODUCTION COSTS
6.- Cost of raw materials, supplies and consumables
9.- Personnel costs
b) social security
e) other costs
a) amortisation
b) depreciation
c) other writedowns
c) other
. sundry
c) interest and commission expense to Parent Company
c) sundry
b) prior-years taxes
c) sundry – rounding-offs
22.- Income taxes for the year: current, deferred tax and liabilities
218
31.12.2003
289,702,726
349,308
307,258,212
185,750
1,606,255
1,383,787
5,503,615
8,493,657
298,545,691
665,780
3,142,676
3,808,456
311,252,418
(1,514,073)
(28,966,107)
(1,216,779)
(1,321,786)
(24,456,851)
(1,259,307)
(3,385,550)
(993,119)
(245,947)
(98,239)
(27,985)
(4,750,840)
(3,237,642)
(942,892)
(239,109)
(754,486)
(21,941)
(5,196,070)
(210,150,017)
(66,649)
(16,084,689)
(379,048)
(226,680,403)
(182,396,509)
(63,096)
(310,478)
(182,770,083)
(155,520)
(2,705,835)
(390,039)
(1,130,605)
(1,520,644)
(264,804,366)
(1,621,288)
(1,621,288)
(219,331,220)
33,741,325
91,921,198
6,761
6,761
7,437
7,437
78,849
78,849
15,261
15,261
(4,706,281)
(35,219)
(4,741,500)
(4,473,286)
(9,129,176)
(5,894,871)
(100,306)
(5,995,177)
(5,724,308)
(11,696,787)
-
-
22,954
22,954
-
(19,541)
(97)
(19,638)
3,316
24,615,465
7,161,973
31,777,438
(3,692)
(2)
(3,694)
(3,694)
80,220,717
(32,960,422)
47,260,295
Name:
27 June 2001
Purpose:
The company’s purpose is the purchase and the distribution in cinemas
and “home video” in Italy of TV and/or cinema movies and/or advertising
films; the exploitation of any rights arising out of TV and/or cinema
and/or advertising productions in which the company has an interest
and/or operating role; the purchase and exploitation of licensing,
merchandising and music rights.
Share capital:
516,456.00 Euro
Rai Cinema S.p.A. 100%
Employees:
Board of Directors:
Chairman:
Managing Director:
General Manager:
Directors:
Secretary:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Carlo Macchitella
(none)
Filippo Roviglioni
Adriano Coni
Filippo Roviglioni
(none)
Ruggiero Panico Cafari
Antonio Falsetti
(retired on 19 April 2004)
(substitute from 19 April 2004)
Marco Buttarelli
Enrico Laghi
Antonio Deidda
219
31.12.2004
31.12.2003
-
-
816
31,628
32,444
1,632
36,132
37,764
701
1,036
1,737
525
525
9,828
9,828
44,009
7,922
7,922
46,211
C) CURRENT ASSETS
1.- Customers
4.- Parent Company
5.- Others
11,787,066
14,060,281
19,572
885,759
26,752,678
7,530,436
10,053,467
154,774
9,769
13,810
17,762,256
-
-
3,083,353
1,143
3,084,496
29,837,174
2,776,778
33
2,776,811
20,539,067
188,878
188,878
30,070,061
393
393
20,585,671
II. TANGIBLE ASSETS
2.- Receivables
d) others
TOTAL ASSETS
220
(Euro)
(Euro)
31.12.2004
31.12.2003
516,456
1,366
25,941
16,054
559,817
516,456
755
14,338
12,214
543,763
-
-
130,500
75,362
D) PAYABLES
7.- Suppliers
11.- Parent Company
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
11,565,320
16,652,902
882,565
101,280
177,677
29,379,744
7,718,749
11,923,657
172,023
54,823
97,294
19,966,546
30,070,061
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
-
20,585,671
221
Income Statement
a) operating grants
c) sundry
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
e) other costs
10.- Amortisation, depreciation and write-downs
a) amortisation
b) depreciation
. sundry
17 bis.- Exchange gains and losses
c) sundry
21.- Extraordinary expenses
c) sundry
222
(Euro)
31.12.2004
31.12.2003
26,263,369
21,688,575
309,316
17,658,822
17,968,138
44,231,507
4,958
15,970,816
15,975,774
37,664,349
(61,982)
(41,107,692)
(769,947)
(36,970)
(36,002,724)
(388,735)
(1,084,842)
(327,790)
(55,370)
(5,311)
(1,473,313)
(853,713)
(216,096)
(36,388)
(441)
(1,106,638)
(5,321)
(7,567)
(12,888)
(5,321)
(1,149)
(11,261)
(17,731)
(614,316)
(44,040,138)
(28,961)
(37,581,759)
191,369
82,590
37,694
37,694
43,247
43,247
(13,575)
(13,575)
2,563
26,682
(41)
(41)
3,645
46,851
-
-
-
22,568
22,568
(9,221)
(9,221)
(9,221)
(7,315)
(7,315)
15,253
208,830
(192,776)
16,054
144,694
(132,480)
12,214
Rai Click S.p.A.
Name:
Rai Click S.p.A.
11 September 2000
Purpose:
The company’s purpose is the creation, distribution, broadcasting and
sale of audiovisual and multimedia products, both interactive and
non-interactive, through broadband Internet protocol networks.
Share capital:
176,800 Euro
340,000 shares with a par value of 0.52 Euro each
Rai 59.94%, Rai Trade 0.06%, e-Bismedia 40%
Employees:
Board of Directors:
Chairman:
Managing Director:
General Manager:
Directors:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Franco Iseppi
Franco Iseppi
(none)
Paolo Agostinelli
Stanislao Argenti
Mario Rossetti
Roberto Sergio
Vittorio Terrenghi
Alessandro Bolognesi
Antonio D’Urso
Tullio Piccolini
223
Rai Click S.p.A.
31.12.2004
31.12.2003
-
-
230,752
18,250
12,672
261,674
238,067
28,983
3,390
270,440
-
-
8,256,127
8,256,127
8,403,999
8,403,999
-
-
8,256,127
8,403,999
TOTAL ASSETS
66,571
8,584,372
78,824
8,753,263
II. TANGIBLE ASSETS
C) CURRENT ASSETS
I. INVENTORIES
.amounts falling due within one year
224
(Euro)
Rai Click S.p.A.
(Euro)
31.12.2004
A) EQUITY
I. SHARE CAPITAL
II. SHARE PREMIUM RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
176,800
7,374,452
(1,024,806 )
6,526,446
31.12.2003
176,800
9,697,276
(2)
(2,322,824)
7,551,250
18,850
18,850
5,193
23,083
D) PAYABLES
. amounts falling due within one year
TOTAL PAYABLES
1,728,334
1,728,334
1,158,580
1,158,580
E) ACCRUED LIABILITIES AND DEFERRED INCOME
305,549
8,584,372
1,500
8,753,263
Memorandum accounts
. Bank guarantees for Group VAT receivables
(Euro)
31.12.2004
31.12.2003
1,092,132
1,092,132
767,669
767,669
225
Rai Click S.p.A.
Income Statement
31.12.2004
31.12.2003
2,381,986
33,896
2,415,882
816,695
337,920
1,154,615
(8,877)
(3,732,021)
(6,521)
(4,708)
(2,753,317)
(10,054)
(49,833)
(13,659)
(3,336)
(814)
(67,642)
(277,976)
(35,926)
(10,051)
(1,594)
(325,547)
(252,958)
(10,733)
(7,334)
(271,025)
(516,578)
(10,298)
(1,724)
(528,600)
(22,057)
(4,108,143)
(18,850)
(40,659)
(3,681,735)
(1,692,261)
(2,527,120)
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
e) other costs
a) amortisation
b) depreciation
c) other writedowns
. interest and commission income from Parent Company
129,791
11,969
141,760
17,846
192,810
210,656
(3)
(3)
141,757
(64)
(4,496)
(4,560)
206,096
-
c) sundry
-
226
(Euro)
(1,550,504)
525,698
(1,024,806)
-
(1,800)
(1,800)
(2,322,824)
(2,322,824)
Rai Corporation - Italian Radio TV System
Name:
Rai Corporation – Italian Radio TV System
20 January 1960
Purpose:
The company operates in North America in the sector of the production,
distribution and sale of radio and TV programmes. It undertakes actions
to develop international co-productions and provides support to Group
companies.
Share capital:
500,000 US Dollars
50,000 shares with a par value of USD 10 each
Rai 100%
Ownership:
Rai Corporation Canada 100%
Employees:
Board of Directors:
Chairman:
General Manager:
Directors:
Mario Bona
Guido Corso
Filippo Bertolino
Rubens Esposito
227
Rai Corporation
31.12.2004
31.12.2003
-
-
1,187,016
1,187,016
37,387
37,387
106,589
191,589
1,019,996
1,318,174
139,813
88,389
228,202
1,000
1,000
387,118
388,118
2,893,308
314,881
315,881
581,470
9,925
9,925
14,189
14,189
154,242
1,940,769
18,685
1,500,597
3,614,293
164,965
2,512,730
198,389
187,726
3,063,810
-
-
372,546
372,546
3,996,764
282,726
282,726
3,360,725
TOTAL ASSETS
6,890,072
3,942,195
II. TANGIBLE ASSETS
a) subsidiaries
2.- Receivables
d) others
C) CURRENT ASSETS
I. INVENTORIES
1.- Raw materials, supplies and consumable stores
TOTAL INVENTORIES
1.- Customers
4.- Parent Company
5.- Others
228
(in US dollars)
Rai Corporation
(in US dollars)
31.12.2004
A) EQUITY
I. SHARE CAPITAL
VIII. RETAINED EARNINGS (LOSSES CARRIED FORWARD)
TOTAL EQUITY
3.- Other provisions for liabilities and risks
500,000
558,230
(1,078,348 )
(20,118)
31.12.2003
500,000
573,799
(15,569)
1,058,230
40,000
40,000
-
1,868,309
1,817,889
D) PAYABLES
6.- Advances
7.- Suppliers
9.- Subsidiaries
11.- Parent Company
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
1,757,774
1,273,562
1,000
1,543,044
24,498
402,003
5,001,881
529,183
1,000
127,766
34,524
373,603
1,066,076
6,890,072
3,942,195
Memorandum accounts
. patronage letter
. letter of credit
. leasing of motor vehicles
. leasing of editing room
. assets on a free-on-loan basis (*)
(in US dollars)
31.12.2004
31.12.2003
17,070,347
2,844,591
2,500,000
2,000,000
6,359
26
21,576,732
2,500,000
16,513
36,050
26
5,397,180
(*) n. 26 paintings of the unit value of $1, owned by RAI and held at the Montevideo office.
229
Rai Corporation
Income Statement
(in US dollars)
31.12.2004
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
a) amortisation
b) depreciation
c) writedown of current receivables
c) interest and commission expense to Parent Comapny
d) interest and commission expense to other and sundry expense
17bis.- Exchange gains and losses
D) VALUE ADJUSTMENTS FINANCIAL ASSETS
21.- Extraordinary charges
b) prior years taxes
230
17,675,239
86,982
17,762,221
31.12.2003
17,353,349
183,757
17,537,106
(255,666)
(9,056,296)
(3,430,186)
(231,275)
(7,869,368)
(3,704,410)
(4,239,557)
(1,228,986)
(54,744)
(5,523,287)
(3,892,244)
(1,131,480)
(173,451)
(5,197,175)
(28,040)
(112,407)
(801)
(141,248)
(41,476)
(97,535)
(113,766)
(252,777)
(4,264)
(40,000)
(199,785)
(18,650,732)
(6,776)
(203,320)
(17,465,101)
(888,511)
72,005
30,230
5,930
36,160
39,907
5,873
45,780
(2,213)
(17,413)
(765)
(20,391)
15,769
(206)
(18,539)
3,968
(14,777)
31,003
-
-
(833)
(833)
(14,632)
(14,632)
(873,575)
(204,773)
(1,078,348)
88,376
(103,945)
(15,569)
Rai Corporation Canada - Italian Radio TV System
Name:
Rai Corporation Canada – Italian Radio TV System
18 February 1987
Purpose:
The company is wholly owned by Rai Corporation and its purpose is the
distribution in Canada of programmes produced abroad by RAI, it has
representation duties on behalf of Rai Corporation, helps Rai Corporation
in the production of radio and TV programmes in Canada.
Share capital:
CAD 1,394
1,000 shares with a par value of CAD 1.394 each
Rai Corporation 100%
Employees:
none
Board of Directors:
Chairman:
Directors:
General Manager:
Mario Bona
Arnalda Bartoli
Gino Bucchino
Guido Corso
Anthony Maniaci
Guido Corso
231
Rai Corporation Canada
II. TANGIBLE ASSETS
C) CURRENT ASSETS
I. INVENTORIES
TOTAL ASSETS
232
(in Canadian dollars)
31.12.2004
31.12.2003
1,394
1,394
-
-
-
-
1,394
1,394
31.12.2004
31.12.2003
1,394
1,394
1,394
1,394
-
-
-
-
A) EQUITY
I. SHARE CAPITAL
TOTAL EQUITY
D) PAYABLES
1,394
1,394
233
Income Statement
31.12.2004
234
31.12.2003
-
-
B) PRODUCTION COSTS
-
-
-
-
-
-
-
-
-
-
-
-
Name:
28 February 2003
Purpose:
The company’s purpose is the production, co-production, total or partial
purchase in any form or manner of radio and TV programmes, and the
broadcasting and distribution abroad of these programmes, with any
means, standard mode and system permitted by the present-day or future
technology, directly or through other Italian or foreign enterprises,
performing and making all necessary acts, contracts and agreements with
Italian and foreign legal and natural persons, public and private entities,
in particular with RAI – Radiotelevisione Italiana S.p.A. which is the
concession-holder of the TV public broadcasting, or its subsidiaries.
Share capital:
1,000,000 Euro
Rai 99.9 %; Rai Trade 0.1%
Employees:
none
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Franco Scaglia (retired on 6 May 2004)
(none)
Roberto Chionne
Massimo Magliaro
(none)
Deborah Bergamini
Pierluigi Malesani
Pietro Pilello
Demetrio Arena
Domenico De Leo
Antonio Falsetti
Enrico Laghi
235
II. TANGIBLE ASSETS
236
(Euro)
31.12.2004
31.12.2003
-
700,000
7,828
7,828
7,828
7,828
C) CURRENT ASSETS
I. INVENTORIES
-
-
508,442
508,442
55,382
55,382
508,442
55,382
TOTAL ASSETS
516,270
763,210
(Euro)
31.12.2004
A) EQUITY
I. SHARE CAPITAL
II. LEGAL RESERVE
VII. OTHER RESERVES
VIII. RETAINED EARNINGS (LOSSES CARRIED FORWARD)
TOTAL EQUITY
1,000,000
(291,833 )
(256,207 )
451,960
31.12.2003
1,000,000
(291,833)
708,167
-
-
-
-
64,310
55,043
516,270
763,210
D) PAYABLES
237
Income Statement
(Euro)
31.12.2004
31.12.2003
-
B) PRODUCTION COSTS
(369,407)
(19,668)
(7,939)
(397,014)
(83)
(268,413)
(27,047)
(373)
(295,916)
(397,014)
(295,916)
C) FINANCIAL INCOME AND EXPENSES
238
-
6,530
4,083
(48)
6,482
4,083
(390,532)
134,325
(256,207)
(291,833)
(291,833)
RaiNet S.p.A.
Name:
RaiNet S.p.A.
23 June 1999
Purpose:
The company’s purpose is the production, distribution and sale of
interactive and multimedia products and services for any media platform,
making no distinction as to the distribution means, directed to private
customers, business customers, the public administration and other
authorities; the organisation and sale of third party’s products and
services as stated above; the organisation, production and distribution of
any kind of product and service that is economically relevant to the
development of the Internet and of other interactive services.
Share capital:
5,160,000 Euro
Rai 99.9%; Rai Trade 0.1%
Employees:
Board of Directors:
Chairman:
Vice Chairman
Managing Director:
General Manager:
Directors:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Giampaolo Rossi
Luca Balestrieri
Alberto Contri
(none)
Fabio Belli
Michele Lo Foco
Roberto Nepote
Roberto Sergio
Roberto Chionne
Antonio Falsetti
Enrico Laghi
Francesco Mariani
Maria Eugenia Palombo
239
RaiNet S.p.A.
II. TANGIBLE ASSETS
2.- Receivables
d)others
. amounts falling due after one year
C) CURRENT ASSETS
I. INVENTORIES
1.- customers
4.- Parent Company
5.- others
TOTAL ASSETS
240
(Euro)
31.12.2004
31.12.2003
-
-
143,858
143,858
2,036
77,725
79,761
30,374
13,966
953,274
997,614
70,851
5,932
1,061,984
1,138,767
413
413
1,141,885
516
516
1,219,044
-
-
3,995,624
5,020,922
15,035
9,031,581
2,566,193
5,191,726
230,043
7,987,962
-
-
9,031,581
7,987,962
188,354
10,361,820
5,902
9,212,908
RaiNet S.p.A.
(Euro)
31.12.2004
31.12.2003
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES – CAPITAL PAYMENTS
Euro rounding-off reserve
TOTAL EQUITY
5,160,000
4,569
4,000,000
2
(773,026 )
(4,601,584 )
3,789,961
5,160,000
4,569
5,822,191
(1)
(6,595,217)
4,391,542
1,640,966
1,640,966
1,163,889
1,163,889
684,151
600,847
D) PAYABLES
6.- Advances
7.- Suppliers
11.- Parent Company
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
1,954,902
1,236,375
124,109
240,428
625,161
4,180,975
23,750
1,029,919
1,180,330
138,224
214,887
396,715
2,983,825
65,767
65,767
10,361,820
72,805
72,805
9,212,908
Memorandum accounts
(Euro)
31.12.2004
31.12.2003
7,260,883
6,875,832
241
RaiNet S.p.A.
Income Statement
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
e) other costs
a) amortisation
b) depreciation
c) other
interest and commission income from Parent Company
a) interest and commission expense to Parent Companies
b) interest and commission expense to others and sundry expense
20.- Extraordinary income from rounding-offs
c) sundry
242
(Euro)
31.12.2004
31.12.2003
5,740,444
213,837
5,954,281
4,624,511
368,010
4,992,521
(48,555)
(6,680,182)
(30,475)
(28,441)
(5,751,568)
(35,524)
(3,226,286)
(847,629)
(207,165)
(36,205)
(13,382)
(4,330,667)
(3,080,360)
(826,802)
(206,285)
(34,545)
(56,637)
(4,204,629)
(93,396)
(481,146)
(574,542)
(463,289)
(432,596)
(895,885)
(717,000)
(661,968)
(49,544)
(12,430,965)
(101,307)
(11,679,322)
(6,476,684)
(6,686,801)
75,678
99,664
(286)
(286)
6
75,398
(59)
(7,177)
(7,236)
54
92,482
-
-
2
2
(300)
(298)
(900)
(898)
(6,401,584)
1,800,000
(4,601,584)
(6,595,217)
(6,595,217)
RaiSat - S.p.A.
Name:
RaiSat S.p.A.
29 July 1998
Purpose:
The company’s purpose is the creation of TV and theme channels, events,
on-line multimedia products, also by means of purchase from third parties
of production services and rights on audiovisual products (movies, cartoons,
entertainment, documentaries, news, sports events, cultural events, music
events, etc.) and their inclusion in schedules to be distributed on free and
pay channels.
Share capital:
2,585,000 Euro
Rai 94.9%, Rai Trade 0.1%, minority interests 5.0%
Employees:
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Carlo Sartori
Marco Conti
Gianluca Veronesi
(none)
Pasquale D’Alessandro
Carlo Nardello
Barbara Poggiali
Roberto Sergio
Paolo Germani
Maurizio De Crescenzo
Rocco Nostro
Paolo Ugo Tramontozzi
Fabio Diozzi
243
RaiSat - S.p.A.
31.12.2004
31.12.2003
-
-
8,656,306
141,714
118,155
8,916,175
1,258
9,202,930
157,353
286,481
9,648,022
130,186
62,523
192,709
133,110
78,753
211,863
15,043
15,043
9,123,927
15,043
15,043
9,874,928
-
-
29,238,236
4,444,232
-
16,091,305
1,800,743
536,252
688,767
81,207
635,190
44,110
765,573
35,218,015
331,723
19,439,323
-
-
1,440
1,440
35,219,455
769
769
19,440,092
TOTAL ASSETS
281,576
281,576
44,624,958
699,223
699,223
30,014,243
II. TANGIBLE ASSETS
2.- Receivables
d) others
C) CURRENT ASSETS
I. INVENTORIES
II.CURRENT RECEIVABLES
1.- Customers
4.- Parent Company
5.- Others
244
(Euro)
RaiSat - S.p.A.
(Euro)
31.12.2004
31.12.2003
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
2,585,000
469,904
870,795
3,385,655
7,311,354
2,585,000
367,550
721,563
2,047,074
5,721,187
3.- other provisions for liabilities and risks
7,022
1,770,469
1,777,491
7,022
1,270,469
1,277,491
1,109,657
943,316
D) PAYABLES
4.- Due to banks
7.- Suppliers
11.- Parent Company
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
1,953
14,201,141
18,893,247
492,682
353,853
452,495
34,395,371
58,098
12,726,636
8,118,430
507,674
261,089
400,322
22,072,249
31,085
31,085
44,624,958
30,014,243
Memorandum accounts
(Euro)
31.12.2004
31.12.2003
3,893,315
1,460,768
5,354,083
3,172,921
1,460,768
4,633,689
245
RaiSat - S.p.A.
Income Statement
c) sundry
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
e) other costs
a) amortisation
b) depreciation
. interest and commission income from Parent Companies
c) interest and commission expense to Parent Companies
c) sundry
246
(Euro)
31.12.2004
31.12.2003
57,850,142
46,204,341
1,265,254
1,265,254
59,115,396
1,912,700
1,912,700
48,117,041
(314,991)
(23,143,024)
(8,388,373)
(260,490)
(18,213,316)
(7,067,529)
(4,172,470)
(1,813,851)
(280,091)
(38,505)
(25,000)
(6,329,917)
(3,557,403)
(1,412,012)
(220,530)
(26,510)
(5,216,455)
(12,432,899)
(72,775)
(147,211)
(12,652,885)
(12,080,143)
(68,863)
(12,149,006)
(500,000)
(773,284)
(52,102,474)
(200,000)
(384,812)
(43,491,608)
7,012,922
4,625,433
-
234
36,336
36,570
(196,529)
(8,377)
(204,906)
(5,494)
(210,400)
-
(298,510)
(7,019)
(305,529)
(17,799)
(286,758)
-
(129,605)
(129,605)
(267,402)
(267,402)
6,672,917
(3,287,262)
3,385,655
4,071,273
(2,024,199)
2,047,074
Rai Trade S.p.A.
Name:
Rai Trade S.p.A.
27 June 1997
formerly NUOVA ERI - Edizioni RAI-Radiotelevisione Italiana S.p.A.
incorporated on 23 July 1987
Purpose:
The company’s purpose is the production and exchange, in Italy and
abroad, of goods and services in connection with radio and TV
programmes and their recording on any material support, audiovisual
products with any content (e.g.: sports, movies, drama, etc…) and
relevant usage rights; the planting and operation, in Italy and abroad, of
publishing, printing, journalist industries (with the exception of newspapers
in compliance with the provisions of Articles 18 and 19 of Law 416 of 6
August 1981 as subsequently amended), book, music, audiovisual,
record industries and industries producing goods and services with any
other technology as the media development may bring; the sale
(wholesale, retail sale and by mail) of relevant products and relevant
resulting and merchandising rights; the control and supervision of
advertising on RAI’s channels.
Share capital:
8,000,000 Euro
100,000 shares with a par value of 80 Euro each
Rai 100%
Ownership:
Immobiliare Editori Giornali S.r.l. 1.75%
Rai Cinema S.p.A.0.002322%.
RaiNet S.p.A. 0.1%
Rai Way S.p.A. 0.00074%
RaiSat S.p.A. 0.1%
Rai Click S.p.A. 0.06%
NewCo Rai International S.p.A. 0.1%
Employees:
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Secretary:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Roberto Di Russo
Alba Calia
Nicola Cona
(none)
Paolo Francia
Claudio Imbriani
Antonio Marano
Renato Parascandolo
Monica Monti
Carlo Cesare Gatto
Francesco Poddighe
Giovanni Battista Provenzano
Giancarlo Consani
Alberto Morelli
247
Rai Trade S.p.A.
5.- Goodwill
II. TANGIBLE ASSETS
d) other companies
2.- Receivables
d) others
C) CURRENT ASSETS
I. INVENTORIES
TOTAL INVENTORIES
1.- Customers
4.- Parent Company
5.- Others
248
(Euro)
31.12.2004
31.12.2003
-
-
741,365
79,887
27,566
1,425,150
181,987
2,455,955
1,467,315
47,413
55,133
548,901
85,384
2,204,146
1,026,220
314,464
1,340,684
1,493,035
316,913
1,809,948
31,173
31,173
4,200
43,782
47,982
79,155
3.875,794
41,951
151,701
193,652
224,825
4,238,919
18,928
516
19,444
11,879
516
12,395
52,584,540
32,000
19,664,983
-
57,346,272
54,692
8,410,857
2,152,598
2,255,370
1,152,452
1,045,905
1,188,266
2,496,338
78,185,683
3,191,650
73,390,240
2.- Cheques
-
-
480
5,428
5,908
78,211,035
30,728
4,115
34,843
73,437,478
TOTAL ASSETS
86,209
86,209
82,173,038
78,695
78,695
77,755,092
Rai Trade S.p.A.
(Euro)
31.12.2004
31.12.2003
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
- Rounding-off reserves
TOTAL EQUITY
8,000,000
1,407,814
5,892,061
1
4,261,106
19,560,982
8,000,000
1,281,696
5,795,831
2,522,348
17,599,875
193
11,075,090
11,075,283
174,912
12,226,584
12,401,496
1,676,782
1,615,748
due within one year
due after one year
229,119
95,566
5,836,058
24,038,744
15,767,176
667,303
246,020
41,864
250,738
7,216,240
21,738,214
13,810,138
149,292
224,591
due within one year
due after one year
2,903,678
76,327
49,859,991
2,542,459
164,437
46,137,973
82,173,038
77,755,092
D) PAYABLES
4.- Due to banks
. amounts falling
. amounts falling
6.- Advances
7.- Suppliers
11.- Parent Company
12.- Tax payables
14.- Other payables
. amounts falling
. amounts falling
TOTAL PAYABLES
Memorandum accounts
(Euro)
31.12.2004
31.12.2003
17,439,788
19,436,295
36,876,083
42,488,917
29,011,917
71,500,834
249
Rai Trade S.p.A.
Income Statement
(Euro)
31.12.2004
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
e) other costs
a) amortisation
b) depreciation
c) other writedowns
a) non-current accounts receivable
. others
19.- Writedowns
a) of equity investments
b) of current financial assets
c) prior-year losses
d) sundry
. sundry – rounding-offs
250
31.12.2003
71,610,821
7,049
3,934,858
75,552,728
66,038,916
(21,006)
3,193,533
69,211,443
(114,325)
(42,021,112)
(2,005,596)
(815,747)
(38,706,890)
(1,658,699)
(4,061,795)
(1,279,156)
(284,766)
(131,690)
(18,755)
(5,776,162)
(3,728,981)
(1,213,193)
(276,590)
(132,455)
(18,803)
(5,370,022)
(14,031,628)
(740,140)
(462,907)
(434,210)
(15,668,885)
(13,195,373)
(753,614)
(117,288)
(809,813)
(14,876,088)
(1,883,548)
(67,469,628)
(1,708,006)
(63,135,452)
8,083,100
6,075,991
3,577
3,577
1,680
865
2,545
1,127
1,669
77,955
88,249
167,331
35,947
3,033,037
3,070,653
(102,454)
(44,079)
(146,533)
(1,592,494)
(1,568,119)
(83,649)
(3,045,723)
(3,129,372)
(723,370)
(779,544)
(30,906)
(30,906)
(985)
(545,085)
(546,070)
62,594
62,594
288,564
288,564
(18,621)
(744,820)
(1)
(763,442)
(700,848)
5,783,227
(1,522,121)
4,261,106
(1,800)
(2)
(1,802)
286,762
5,037,139
(2,514,791)
2,522,348
Rai Way S.p.A.
Name:
Rai Way S.p.A.
29 July 1999
Purpose:
The company’s purpose is the design, development and maintenance of
software and telecommunications networks, and the installation,
implementation and management of these networks; the development
and management of a business, distribution and assistance network
aiming at the transmission, distribution and broadcasting of any kind of
telecommunications services in the territory of the Republic of Italy, of San
Marino and the Vatican City of signals, sound and video programmes of
RAI and its subsidiaries.
The company’s purpose also includes the provision of wireless equipment
and relevant services to wireless operators, including the leasing of
sites/antennas and co-leases, built-to-suit services, network programming
and design, site research and purchase, site design and construction,
network optimisation, equipment maintenance, network management
and maintenance and relevant microwave or fibre transmission services.
Share capital:
70,176,000 Euro
Rai 99.9992%, Rai Trade 0.00074%.
Employees:
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Pietro Gaffuri
Roberto Caravaggi
Stefano Ciccotti
(none)
Marcello Di Tondo
Luigi Rocchi
Cesare Bossetti
Benito Benassi
Giulio Andreani
Lanfranco Duò
Paolo Ugo Tramontozzi
Giuseppe Maria Altadonna
Fabio Piccoli
251
Rai Way S.p.A.
5.- Goodwill
II. TANGIBLE ASSETS
2.- Receivables
d) others
C) CURRENT ASSETS
I. INVENTORIES
TOTAL INVENTORIES
1.- Customers
4.- Parent Companies
5.- Others
TOTAL ASSETS
252
(Euro)
31.12.2004
31.12.2003
-
-
6,031
129,040
2,157,211
127,776
2,420,058
396,789
26,749
698,570
1,937,428
150,077
3,209,613
48,832,092
91,533,256
3,001,915
79,055
18,797,780
162,244,098
48,309,961
75,112,213
3,067,411
82,273
45,335,484
171,907,342
1,182,651
1,182,651
165,846,807
1,468,732
1,468,732
176,585,687
2,115,815
776,956
2,892,771
1,840,435
766,664
2,607,099
8,048,538
59,584,617
14,189
535,839
1,548,302
69,731,485
7,694,396
52,503,224
1,947,452
455,746
2,405,792
65,006,610
-
-
72,624,256
67,613,709
794,982
794,982
239,266,045
1,081,613
1,081,613
245,281,009
Rai Way S.p.A.
(Euro)
31.12.2004
31.12.2003
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
of which anticipated depreciation reserve
TOTAL EQUITY
70,176,000
1,247,612
12,017,566
9,360,000
7,779,843
91,221,021
70,176,000
990,612
7,151,993
4,495,000
5,122,573
83,441,178
999,113
7,024,100
15,207,587
23,230,800
968,013
3,696,591
14,679,455
19,344,059
23,073,088
21,706,169
-
16,488,814
773,607
61,834,651
27,498,091
1,973,166
2,024,295
4,934,473
99,038,283
1,587,178
2,683,149
60,194,690
31,708,136
1,506,190
1,762,988
4,151,638
120,082,783
2,702,853
2,702,853
239,266,045
706,820
706,820
245,281,009
D) PAYABLES
4.- Due to banks
6.- Advances
7.- Suppliers
11.- Parent Company
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
Memorandum Accounts
(valori in Euro)
31.12.2004
31.12.2003
43,300,000
24,284,924
67,584,924
69,000,000
58,746,744
127,746,744
253
Rai Way S.p.A.
Income Statement
(Euro)
31.12.2004
a) operating grants
c) sundry
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
e) other costs
a) amortisation
b) depreciation
. sundry
c) sundry
254
31.12.2003
202,336,724
10,291
579,269
197,956,055
(72,661)
658,868
989,623
17,406
3,145,540
207,078,853
10,026
3,896,208
202,448,496
(3,317,520)
(42,910,986)
(51,514,377)
(3,582,867)
(42,756,997)
(53,193,102)
(32,394,082)
(9,172,454)
(2,445,063)
(847,219)
(430,641)
(45,289,459)
(31,214,397)
(8,996,163)
(2,418,535)
(822,448)
(261,710)
(43,713,253)
(1,225,950)
(39,006,875)
(186,000)
(40,418,825)
(1,490,469)
(37,701,141)
(195,000)
(39,386,610)
275,381
(315,000)
(1,799,000)
(5,131,456)
(190,421,242)
495,925
(535,774)
(1,540,842)
(4,133,317)
(188,346,837)
16,657,611
14,101,659
43,469
18,954
62,423
33,184
721,254
754,438
(199,249)
(745,020)
(944,269)
120,799
(761,047)
(558,067)
(2,635,832)
(3,193,899)
(56,969)
(2,496,430)
-
-
886,181
1,540,235
(4,454)
(4,454)
881,727
16,778,291
(8,998,448)
7,779,843
(20,047)
(1,200)
(21,247)
1,518,988
13,124,217
(8,001,644)
5,122,573
Sipra - Societ Italiana Pubblicit per Azioni
Name:
Sipra – Società Italiana Pubblicità per Azioni
9 April 1926
Purpose:
The company’s purpose is the acquisition and exploitation of any kind of
advertising, specifically advertising through radio and TV broadcasting
stations; the acquisition of control or a share, both directly or indirectly, in
the exploitation of any radio electric application.
The company may also acquire, grant and sell equity investments in
similar companies, in accordance with Article 2361 of the Italian Civil
Code and the limitations imposed by Law 103 of 14 April 1975, in any
company provided that the Board of Directors believes it is in the interest
of the Company. It may perform any commercial, industrial and financial,
movable and immovable transaction in order to pursue the company’s
purpose.
Share capital:
10,000,000 Euro
100,000 shares with a par value of 100 Euro each
Rai 100%
Employees:
Board of Directors:
Chairman:
Managing Director:
General Manager:
Directors:
Secretary:
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Alternate Statutory
Auditors:
Raffaele Ranucci
Mario Antonio Bianchi
Maurizio Braccialarghe
Fabio Belli
Giuliana Del Bufalo
Ugo Zanello
Laura Paschetto
Salvatore Randazzo
Carlo Dominici
Giuseppe Ferrazza
Augusto Giovannelli
Giuseppe Peri
Financial Statements 2004 Approved by the Shareholders in the Meeting of 19 April 2005
255
Sipra
II. TANGIBLE ASSETS
2.- Receivables
d) others
C) CURRENT ASSETS
I. INVENTORIES
b) merchandise
TOTAL INVENTORIES
1.- Customers
4.- Parent Companies
5.- Others
256
(Euro)
31.12.2004
31.12.2003
-
-
1,487,115
1,487,115
1,469,567
1,469,567
29,881,919
1,707,945
31,589,864
31,521,260
640,015
32,161,275
445,667
445,667
33,522,646
542,472
542,472
34,173,314
89,093
89,093
131,517
131,517
306,282,804
72,960,651
886,912
876,545
13,558,738
394,565,650
273,879,010
74,938,044
1,046,426
585,920
13,432,351
363,881,751
-
-
597,930
100,185
698,115
395,352,858
98,941
41,264
140,205
364,153,473
TOTAL ASSETS
1,047,997
1,047,997
429,923,501
1,036,099
1,036,099
399,362,886
Sipra
(Euro)
31.12.2004
31.12.2003
10,000,000
1,113,870
2,000,000
10,815,690
18,537,606
42,467,166
10,000,000
1,113,870
2,000,000
10,758,437
8,257,253
32,129,560
2.- current and deferred taxes
1,153,169
4,590,408
5,743,577
54,043
4,129,046
4,183,089
9,498,321
9,074,088
D) PAYABLES
6.- Advances
7.- Suppliers
11.- Parent Company
12.- Tax payables
13.- Social security institutions
14.- Other payables
TOTAL PAYABLES
3,067,152
11,519,573
345,623,530
6,042,177
1,925,578
3,592,948
371,770,958
3,047,129
12,391,743
333,066,037
800,172
1,217,533
3,014,399
353,537,013
443,479
443,479
429,923,501
439,136
439,136
399,362,886
A) EQUITY
I. SHARE CAPITAL
II. SHARE PREMIUM RESERVE
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
Memorandum Accounts
- Bank guarantees received in the interest of third parties
- Bank guarantees received
- Mortgage from third parties
(Euro)
31.12.2004
31.12.2003
997,068
518,734
33,590,705
2,542,422
268,969
36,402,096
37,399,164
24,823,418
2,346,636
268,969
27,439,023
27,957,757
257
Sipra
Income Statement
(Euro)
31.12.2004
B) PRODUCTION COSTS
9.- Personnel costs
b) social security
e) other costs
a) amortisation
b) depreciation
. sundry
b) prior-year income
c) extraordinary income
b) prior-year taxes
c) prior-year losses
258
31.12.2003
1,220,054,141
8,209,892
1,228,264,033
1,096,886,652
7,178,443
1,104,065,095
(4,579,694)
(1,159,580,187)
(1,966,655)
(4,359,515)
(1,053,808,865)
(1,841,569)
(18,735,424)
(6,284,870)
(1,481,442)
(1,086,061)
(27,587,797)
(16,743,177)
(5,684,374)
(1,417,076)
(1,070,414)
(24,915,041)
(1,484,619)
(2,002,826)
(3,487,445)
(1,450,357)
(2,356,254)
(1,431,000)
(5,237,611)
(42,424)
(547,931)
(101,893)
(2,406,537)
(1,200,300,563)
(35,618)
(760,140)
(110,933)
(2,276,547)
(1,093,345,839)
27,963,470
10,719,256
11,597
16,086
1,141,100
713,508
1,854,608
1,067,130
1,493,653
2,560,783
(19,014)
(118,904)
(137,918)
(306)
1,727,981
(18,390)
(76,490)
(94,880)
(200)
2,481,789
-
-
1,113,670
1,036,027
2,178,472
-
(1,500)
(8,527)
(10,027)
2,139,670
31,831,121
(13,293,515)
18,537,606
(16,846)
(40,689)
(57,535)
2,120,937
15,321,982
(7,064,729)
8,257,253
Sacis S.p.A. - Commerciale Iniziative Spettacolo
(in liquidation — resolution of 23 January 1998)
Name:
Sacis S.p.A. Commerciale Iniziative Spettacolo
Purpose:
04 June 1955
The company’s purpose is to be active in the show business.
Share capital:
102,000 Euro
Rai 100%
Employees:
none
Liquidator:
Eugenio Quaglia
Board of Statutory
Auditors:
Chairman:
Permanent Statutory
Auditors:
Roberto Ascoli
Alternate Statutory
Auditors:
Michele Giura
Francesco Mariani
Paolo Saraceno
Pier Giorgio Tomassetti
259
Sacis
II. TANGIBLE ASSETS
2.- Receivables
d) others
C) CURRENT ASSETS
I. INVENTORIES
1.- Customers
4.- Parent Company
5.- Others
260
(Euro)
31.12.2004
31.12.2003
-
-
-
-
36,152
36,152
36,152
36,152
36,152
36,152
-
-
19,742
5,579,183
51,654
2,119
5,652,698
19,021
5,712,641
63,497
1,659
5,796,818
-
-
554
248
802
5,653,500
645
104
749
5,797,567
TOTAL ASSETS
5,689,652
5,833,719
Sacis
(Euro)
31.12.2004
31.12.2003
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
102,000
20,400
1,914,146
(52,921 )
1,983,625
102,000
20,400
1,953,687
(39,541)
2,036,546
1,115
3,398,111
3,399,226
1,115
3,527,591
3,528,706
-
-
103
305,794
904
306,801
90
260,703
6,993
681
268,467
5,689,652
5,833,719
D) PAYABLES
4.- Due to banks
7.- Suppliers
12.- Tax payables
14.- Other payables
TOTAL PAYABLES
Memorandum Accounts
a) purchase commitments
(Euro)
31.12.2004
31.12.2003
2,496
2,496
29,955
9,296
39,251
261
Sacis
Income Statement
(Euro)
31.12.2004
c) sundry
B) PRODUCTION COSTS
c) sundry
262
31.12.2003
42,103
24,968
151,578
193,681
80,828
105,796
(6)
(197,745)
(31,709)
(22,270)
(251,730)
(132,918)
(31,455)
(7,747)
(25,010)
(197,130)
(58,049)
(91,334)
7
7
(787)
(787)
(663)
(1,443)
10,211
10,211
(798)
(798)
657
10,070
-
-
7,156
7,156
52,736
52,736
(585)
(585)
6,571
(52,921)
(52,921)
(11,013)
(11,013)
41,723
(39,541)
(39,541)
Rai Group
Schedules
Financial Statements of Associated Companies
(key figures)
263
Rai Group Schedules - Financial Statements of Associated Companies
Audiradio S.r.l.
22 March 1996
Purpose:
Objective and impartial surveys using the most suitable and modern
means and systematic diffusion of national, regional and sub-regional
data regarding radio audiences in Italy for advertising purposes.
Share capital:
234,000 Euro
Owned by:
RAI 33.33%; minority interests 66.67%
Auditel S.r.l.
3 July 1984
Purpose:
Objective and impartial surveys using the most suitable and modern
means and systematic diffusion of national, regional and sub-regional
data regarding TV audiences in Italy for advertising purposes.
Share capital:
300,000 Euro
Owned by:
RAI 33%; minority interests 67%
264
Secemie - Soci t Anonyme
30 June 1992
Purpose:
Satellite broadcasting of multi-language news bulletins
Share capital:
3,829,395 Euro (255,293 shares with a par value of 15 Euro each)
Owned by:
RAI 21.65%; minority interests 78.35%
Financial Statements 2004 Approved by the Shareholders Board on 10 May 2005
San Marino RTV - S.p.A.
8 August 1991
Purpose:
The company uses the concession for the radio and TV broadcasting of
the Republic of San Marino, specifically: the installation and technical
operation of radio and TV broadcasting facilities; the exclusive operation
of the radio broadcasting services in the Republic of San Marino,
considering the public interest of the same; the performance of activities
in the production and marketing of radio and TV programmes, organisation
of shows and sports events, cultural events and activities, including the
development of relationships with the State, with other entities and
Companies operating in these sectors; any other activity that is considered
useful to ensure that the radio and TV broadcasting company is managed
in a cost-efficient manner, provided that any such activity is connected or
related to the company management.
Share capital:
516,460 Euro
RAI 50%; ERAS 50%
Owned by:
Servizi Contabili e Fiscali – S.C.F. S.r.l. 95%
265
Summary of financial statements 2004 of Associated companies
Balance Sheet at 31 December 2004 ASSETS
SUBSCRIBED CAPITAL UNPAID
AUDIRADIO
AUDITEL
SAN MARINO RTV
SECEMIE
-
-
-
-
-
NON-CURRENT ASSETS
Intangible assets
3,046
240
61,544
Tangible assets
4,047
14,435
378,629
-
Financial assets
7,272
7,649
10,640
763,269
CURRENT ASSETS
Inventories
Current receivables
Current financial assets
ACCRUED INCOME AND PREPAID EXPENSES
TOTAL ASSETS
Balance Sheet at 31 December 2004 LIABILITIES AND EQUITY
-
-
9,511
1,006,030
84,197
867,802
6,421,908
1,294,269
-
-
-
552,159
2,468,156
1,713,149
116,010
23,551
1,621
6,156
49,156
-
2,568,339
2,609,431
7,047,398
3,639,278
AUDIRADIO
AUDITEL
SAN MARINO RTV
SECEMIE
682,181
660,883
5,043,899
904,545
73,363
47,981
346,906
1,616,021
-
-
180,000
2,050
26,125
309,258
113,503
-
1,777,113
1,569,679
1,354,340
1,116,662
9,557
21,630
8,750
-
2,568,339
2,609,431
7,047,398
3,639,278
EQUITY
Share capital, reserves and shareholders’ capital payments
PROVISIONS FOR LIABILITIES AND RISKS
STAFF SEVERANCE PAY
PAYABLES
ACCRUED EXPENSES AND DEFERRED INCOME
266
INCOME STATEMENT 2004
VALUE OF PRODUCTION
PRODUCTION COSTS
FINANCIAL INCOME AND EXPENSE
VALUE ADJUSTMENTS TO FINANCIAL ASSETS
EXTRAORDINARY INCOME AND EXPENSE
NET PROFIT (LOSS) FOR THE YEAR
AUDIRADIO
AUDITEL
SAN MARINO RTV
SECEMIE
2,267,216
11,408,741
4,753,730
17,163,932
(2,165,108)
(11,310,849)
(4,475,071)
(11,537,316)
30,795
39,418
68,247
(3,711,514)
-
-
-
-
-
(3,943)
-
(215,481)
(59,540)
(85,386)
-
(83,600)
73,363
47,981
346,906
1,616,021
267
Rai Radiotelevisione italiana SpA
Parent Company:
Company name:
Share capital:
Registered office:
Rai - Radiotelevisione italiana SpA
242,518,100.00 Euro fully paid-up
Viale Giuseppe Mazzini, 14 - 00195 Rome
Produced by Rai SpA Administration Department
Consulting and Editing Ergon Comunicazione
Printed in October 2005

RAI GROUP Reports and financial statements 2004

Transcription

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