RAI GROUP Reports and financial statements 2005

Transcription

RAI GROUP Reports and financial statements 2005
RAI GROUP Reports and financial statements
at 31 December 2005
Contents
Organisational structure
4
Directors, Auditors and General Management
5
Group Profile
6
Rai: Public Service Broadcasting
7
Directors’ Report
9
The reference context
The radio and television audience
Revenues
Regulatory framework
Rai and Europe
12
12
13
14
16
Rai in 2005
TV Division
Radio Division
New Media & DTT Division
Commercial Division
Broadcasting Division
17
21
32
34
36
38
Human resources
38
Research and development
41
Intercompany relations
42
Additional information
Significant events after the balance sheet date
Outlook
Supplementary information
47
47
47
48
Proposed resolution to Shareholders
49
Parent Company Financial Statements at 31 December 2005
51
Shareholders’ Meeting Resolution
141
Consolidated Financial Statements at 31 December 2005
143
Corporate Directory
258
Rai Organisational structure
Organisational structure
Ministry of Economic
Affairs and Finance
SIAE
99.56%
0.44%
Board of
Directors
General Manager (*)
Staff Area
TV Division
Networks
- RaiUno
- RaiDue
- RaiTre
- Rai Internazionale
- Rai Notte
News and
information
programmes
- TG1
- TG2
- TG3
- TG R
- Rai Sport
- TSP
- Rai Notizie 24
- 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
for 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 Directors, Auditors and General Management
Directors, Auditors and General Management
Board of Directors
Up to 31 May 2005
As from 1 June 2005
Claudio Petruccioli (2)
Chairman
Directors
Francesco Alberoni (1)
Angelo Maria Petroni
Giorgio Rumi
Marcello Veneziani
Board Secretary
Franco Di Loreto
Giovanna Bianchi Clerici
Sandro Curzi
Gennaro Malgieri
Angelo Maria Petroni
Nino Rizzo Nervo
Carlo Rognoni
Marco Staderini
Giuliano Urbani
Board of Statutory Auditors
Chairman
Carlo Cesare Gatto
Members in office
Paolo Germani
Salvatore Randazzo
Alternate members
Domenico Mastroianni
Carlo Tixon
General Manager
As from 5 August 2005
Flavio Cattaneo
Alfredo Meocci (3)
Independent Auditors
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 of Directors.
(2) appointed on 30 July 2005 as member of the Board of Directors by the Shareholders' Meeting and appointed Chairman of the
Board of Directors by the Board Meeting of 2 August 2005. As from 3 May 2006 the Board of Directors took over the powers of
the General Manager accepting his request to be put on leave of absence (see Note 3), delegating such powers to the Chairman
for the entire period of the leave of absence.
(3) appointed during the Board Meeting of 5 August 2005. As from 3 May 2006 he requested to be put on leave of absence up to the
issue of the Lazio Regional Administrative Court’s decision regarding the suspension of the AGCOM order relating to his alleged
incompatability with the function of General Manager.
(4) this firm has also been appointed to act as Auditors of the Accounts as defined by article 2409-bis of the Civil Code, pursuant to
the resolution of the Shareholders' Meeting of 20/12/2004.
5
Rai Group profile
Group Profile
Television
3 television channels
RaiUno, RaiDue, RaiTre
- approx. 26,000 hours of nationwide broadcasting
- 78.9% service programming (92.9% for RaiTre)
- 9.2% for children and teens (7.00-22.30 time slot)
Televideo teletext service
Radio
5 radio stations
Radio1, Radio2, Radio3, Isoradio, GR Parlamento
- over 80,000 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 - RAI Futura: 6.5 hours of original programming per day
including 4.5 hours live from the studio
- RaiUtile: hours of original programming per day
3 general-topic channels, 3 free channels via satellite, 4 radio channels,
V wire radio channel
Satellite
7 free channels (2 worldwide)
Rai Sport, Rai Edu 1, Rai Edu 2, Rai Notizie 24, Rai Med, Rai Internazionale 1 and 2
5 RaiSat pay 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
- 47,000 subscribers
- 4 million videos downloaded
Internet
Rai.it Portal
- 2.2 million individual visitors per month
- 41 million page views per month
Cinema
Rai Cinema
- 50 million Euros for the co-production and acquisition of Italian films
01 Distribution (3rd Italian distributor in terms of market share)
- 17 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 license 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, as was already done for 2004, 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.
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,
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Rai Public Service Broadcasting
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 television;
• the provision of interactive digital public services;
• the observance of time limits on advertising 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 Directors' Report
Directors' Report
To our Shareholders,
The broadcasting industry in 2005 posted an increase of slightly less than 3%,
retreating in relation to the progress achieved in the preceding year.
The television audience continues to show appreciation for the service provided,
maintaining overall viewing at a fairly high level. The satellite sector, moreover, is
continually drawing more viewers.
In this environment, the parent company Rai SpA closed the year with a net
profit of 16.4 million Euros, which is after charging an exceptional cost of 35.5
million Euros relating to the programme to provide incentives for staff to resign,
decided on by the Board in December 2005. This programme is to be completed
within the first half of 2006. The above result is appreciably less than that for
2004 (113 million Euros); the latter however had benefited significantly from
non-recurring items connected with the effects of new legislation for the elimination
of fiscal distortions in company accounts.
Consolidated net profit amounts to 22.9 million Euros (82.2 million Euros in
2004), which is substantially in line with the parent company result.
Financial position continues to be thoroughly positive with the parent company’s
net position standing at 261 million Euros, as against 268 million Euros at the
end of the preceding year, after having discounted the dividend distribution to
Shareholders (79.1 million Euros).
The Group’s financial position is also positive, for 94.1 million Euros (123.7 million
Euros for the preceding year), with a positive cash flow from operating activities
(after removing the effect of the said dividend distribution) for about 50 million
Euros.
The Group’s average financial position is positive for 137.6 million Euros, which
is a significant improvement on 2004 (26 million Euros).
There were two substantial determining factors behind the developments in the
parent company’s financial position:
• on the revenues side - these were affected by the licence fee for 2005 being kept
at the same level as for the preceding year, and to the fact that advertising
revenues were practically stable, although with an increase of over 4% if the
2004 result is shorn of the additional contribution coming in from the Athens
Olympics and the European Soccer Tournament in Portugal (32 million Euros).
Public revenues went up 0.6% (8.7 million Euros) only as a result of measures
taken against licence fee evasion and, especially, the containment and recovery
of arrears;
• on the costs side - these were affected by the strategic decision taken by us to
strengthen broadcasting programmes in order to consolidate the competitive
edge of the networks and build up the distinctive functions of a content provider,
9
also within the new media platforms which are appearing on the technological
horizon, which in the near future will influence the patterns in which audiences
will receive what is broadcast.
The limited drop in resources to be used on television broadcasting - despite the
fact that in 2005 there were no costs for major sports events, contrary to the preceding
year - reflects our realisation that the outside environment is deeply and rapidly
evolving and that competitive edge is tightly linked to the availability of content.
The traditional single-platform market, dominated by analogue broadcasting, is
gradually giving way to a complex multiplatform environment, closely linked
and influenced by the development of new players, leading to growing competitive
pressure which requires greater ability in the handling of change. In the meantime,
consumers are becoming more and more sophisticated and aware of available
alternatives, and with a mounting propensity to change.
In this difficult and complex situation, Rai finds itself in a position of having an
inadequate system of resources to support required growth: on the one hand, there
is the veto imposed on raising the licence fee (in a landscape where the cost of
regulated services shows significant rate increases), and on the other, the limited
growth in advertising revenues, which is tied to the weakness in the European
economies.
This situation generates stronger commercial competition on the part of competitors,
increases the requirements of investors in terms of commercial targets, and adds
up, for our Company, with the negative effects connected with the restrictions
existing on the amount of advertising allowed, which is far heavier than for
private competitors.
During the year, we continued with the Digital Terrestrial Television project in
line with the objective - which was reached at the start of 2005 - of covering 70%
of the population for both digital bouquets.
Working with two temporary business groupings which Rai has been using to
extend coverage to 70% of the population, the two new networks were consolidated
during 2005, together with extensive work on regionalising the multiplex which
was reserved by law to the public service.
Still within the Digital Terrestrial project, operations were also launched for
switching off the analogue on to the digital system in the regions of Sardinia and
Valle d'Aosta, the first regions selected for the definitive change to the new transmission technology. This should be concluded within the first half of the current year.
Within this context - in addition to the service provided by further strengthening
the Rai Utile and Rai Doc-Futura channels and the insertion of the Sat 2000
channel into the B multiplex within the transmission band reserved to third
parties - it should be remembered that dedicated interactive applications have
been developed and planning has been concluded on an interactive platform
which is necessary to the creation and operation of the services.
10
In the early months of 2005, on the basis of the Law re-organising the radio and
television system and the consequent resolution (102/05/CONS) adopted by the
Communications Authority, Rai set up the separate accounting system, which
was approved by the same regulatory authority on 9 June 2005 (resolution
186/05/CONS).
The separation is intended to ensure:
• that the correct cost is determined for providing the general Public Service radio
and television broadcasting, covered by licence fees;
• that the public contribution received by the Rai is used exclusively in the
performance of Public Service functions.
In addition, the legislator assigned to the separate accounting system the additional
function of supporting the Minister of Communications in determining the annual
amount of the ordinary licence fee.
In accordance with the decisions of the Communications Authority, Rai prepared
the separate accounts relating to its financial statements for the year ended 31
December 2004. The separate annual 2004 accounts were then subjected to an
audit, resulting in a clean report, by an auditing firm selected by the
Communications Authority with resolution 393/05/CONS of 13 October 2005.
The separate 2004 accounts bear out that the public resources deriving, for the
most part, from the licence fee do not entirely cover the costs of the public service
in question - as envisaged under article 47(3) of the Consolidated Radio and
Television Law - that is, the costs incurred on performing the functions delegated
to Rai by the Law and the National Service Contract signed by Rai with the
Ministry of Communications, to which the law in question refers.
The separate accounts for 2004 show, in effect, a shortfall of slightly less than
300 million Euros.
The Minister of Communications - with the decree of 30 November 2005 - has decided
that the 2006 licence fee shall remain unchanged from 2005. Accordingly, for the
second year running, the licence fee has not been adjusted.
In February 2006, Rai appealed to the Lazio Regional Administrative Court for the
cancellation of the ministerial decree in order to have the licence fee adjusted in line
with inflation determined by ISTAT and also to obtain refund of the extraordinary costs
incurred by Rai in operating the Public Service, such as those spent on setting up the
digital network and the purchase of plant and the relative frequencies.
In substance, contrary to the provisions of the said article 47 of the Consolidated
Radio and Television Law and the above-mentioned resolutions of the regulatory
Authority, there is no assurance that the costs of the Public Service expected for
year 2006 (on the basis of the separate accounts for 2004) will correspond to the
amount of the licence fees established on 30 November 2005.
11
The reference context
Year 2005 turned out to be, as was the case last year, a period of significant change
in the sector, both as to technology and revenues.
The implementation of digital terrestrial technology is going along at a rapid
pace. In accordance with the relative regulations, Rai is speeding up towards the
change-over to the new technology with a view to switching off analogue
broadcasting and producing content and services which can be utilised in the
digital era.
In addition, the context is heavily influenced by the activities of satellite operators.
In terms of the market, the growing number of operators, along with increasing
competition in the sector, is tending to redistribute resources in accordance with
audience preferences and the introduction of the new technologies.
Below are a number of considerations regarding the radio and television audience,
the allocation of broadcasting revenues, developments in the regulatory framework
and the Group’s ranking both domestically and in Europe.
The radio and television audience
Again in 2005, television continued to be the medium of choice within the integrated
system of communications which has been enriched in terms of operators, modes
of access and available technologies.
The average daily television audience reached nearly 9.2 million viewers, with an
extremely slight drop (of about 70 thousand viewers) from 2004.
The prime-time audience, on the other hand, suffered a decline of over half a
million viewers, from over 25.1 million viewers in 2004 to 24.6 million in 2005.
This situation is attributable to the absence in 2005 of major sports events which
take place on a two-year basis. It was also affected by the ability of operators
on platforms other than analogue television to capture the more technologicallyadvanced viewers.
TV audience
expressed in thousands
(source: Auditel)
Full day
Radio remained essentially stable, with over 37 million listeners in an average day.
12
Revenues
The main sources of revenue for the Italian radio and television broadcasting
system, which is part of the wider integrated communications system, are licence
fees and advertising.
With regard to the Integrated Communications System, it should be noted that
the Communications Authority recently gathered the data relating to years
2004-2005 in order to determine the amount of revenues involved.
Public revenues (by which is meant only licence fees) came to 1,482.5 million
Euros in 2005 (up 8.7 million Euros) exclusively as the effect of the increase in
the actual number of subscribers compared with the preceding year.
As already mentioned, the licence fee remained unchanged at 99.6 Euros for the
second year running, a fee which continues to be the lowest in Europe.
Net investment
Millions of Euros
(source: Nielsen)
Radio and television
Press and other
For the first time after years, press advertising revenues grew more than those
for television.
Investment, only for television, rose 2.7% reaching about 4.7 billion Euros, whereas
for radio it remained stable at around 400 million Euros (+0.3%).
In 2005 the advertising market registered:
• an increase of 2.8% in overall advertising revenues, which was contrary to the
most cautious estimates made by analysts, thanks substantially to the rise in the
number of companies investing in advertising (+3%), while the average
investment remained substantially stable;
• with regard to the individual sectors, the positive trend is continuing in finance
and insurance and telecommunications, and we are seeing a certain degree of
growth for pharmaceuticals, personal objects, apparel, tourism and media and
publishing. The durable goods sector has dropped (the automotive industry has
risen, but there has been a drop for household appliances, computers and
photography). There was a decrease also in the leisure and wide consumption
components and supermarkets.
13
Rai television substantially maintained the revenue level of 2004, which is a
significant result given the absence of the major sports events which took place in the
preceding year. Rai radio, on the other hand, declined by 4.4 million Euros.
(source: Nielsen)
Share of 2005 TV revenues
Share of 2005 Radio revenues
Other operators
3.33 billion (+3.7%)
Other operators
315.8 million (+1.7%)
Rai Group
1.35 billion (+0.2%)
Rai Group
85.4 million (-4.8%)
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 market and competition regulators.
Consolidated Broadcasting Law - Legislative Decree 177 of 31 July 2005
The Consolidated Broadcasting Law was approved with a specific legislative
decree. The Law contains the general principles governing the radio and television
broadcasting system, at national, regional and local level, and adapts its structures
to the new digital technology and the current trend whereby the various sectors of
interpersonal and mass communications are converging (radio, television, emails,
publishing and the Internet in all their applications).
The Law also contains the legislative measures relating to broadcasting with all
the integrations, amendments and cancellations necessary for their coordination
or to ensure the best activation possible with due regard to constitutional principles,
and international regulations applying in the Italian system and under European
Union obligations.
The objects of the Consolidated Law are:
• regulations relating to the broadcast of television and radio programmes, and
data-programmes, even with conditional access;
• supply of interactive services;
• conditional access services to terrestrial, cable and satellite frequencies;
• the provisions of Law 112/04 relating to Public Service broadcasting, among
which the already-mentioned separate accounting is of particular importance.
14
In addition, the following have been specifically treated and defined:
• the procedures for appointing the General Manager and defining his functions,
besides what is already covered in the Rai Statutes;
• regulations guaranteeing users (in particular, for television and radio news
broadcasts, the right to have errors corrected);
• obligations and prohibitions for the protection of minors;
• restrictions on advertising alcoholic drinks, tobacco and pharmaceutical products;
• provisions regarding time limits on advertising, sponsorships, television selling,
advertising by public administrations and entities;
• sanctions which may be applied by the Communications Authority and the
Ministry of Communications.
Article 44 of the Consolidated Law: national and European productions
The Consolidated Law envisages that, starting with the service contract for
2006-2008, Rai must allocate a share of not less than 15% of revenues to the
production of European films, including those made by independent producers.
Within this share, in the service contract, a production or purchase reserve must
be set up for cartoons specifically produced for children by national or European
independent producers.
Article 45 of the Consolidated Law: service contract
The Consolidated Law lays down that the Public Service is to be performed by Rai
on the basis of a national service contract made with the Ministry and regional
service contracts, all with a three-year duration.
At present the relationship is governed by the agreement made for 2003-2005,
pursuant to article 3 of the current Concession Agreement (Presidential Decree of
28 March 1994).
As of today, completion must be reached on the guide-lines for the renewal of the
national service contract which must be issued jointly by the Ministry of
Communications and the Communications Authority.
15
Rai and Europe
Every European country has a public service broadcaster funded by a license fee
- and therefore directly by the population - with the exception of Spain where its
broadcaster, RTVE, is funded directly by the government.
The license fee varies significantly from country to country, but, as mentioned
above, the license 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
2005 at 43.6%.
BBC
(United Kingdom)
ARD/ZDF
(Germany)
France Television
(France)
RTVE
(Spain)
Rai Group
(Italy)
2
3
2
3
26
5 analogue
50 digital
36.2%*
179
3
(one regional)
12
2 national
(60 regional)
40.9%
204.4
11
-
8
6
16
5
37.2%
116
43.6%
99.6
5,651.2
4,688.7
0
962.5
17.0%
7,567.5
6,412.7
246.0
908.8
29.9%
2,667.4
1,715.4
784.3
167.8
35.7%
25.4%
Government
funding
849.5
81.7
727.4
40.4
90.4%
3,021.3
1,473.8
1,218.6
328.9
51.2%
27,264
24,411
9,287
9,369
11,554
General channels (2005)
Thematic channels (2005)
National radio stations (2005)
Average daily share (2005)
2005 license fee (in Euros)
Revenues (2004)
Details of revenues (2004)
(License fee/gov. funding; advertising; other)
Ratio of revenues other than license fees
to total revenues (2004)
Workforce (2004)
(source: e-media, Eurodata, Auditel, Nielsen)
* data relating to the period November 2004 - March 2005
16
Rai in 2005
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. During 2005 particular attention was placed on key current
events, such as the Italian political debates, the war in the Middle East, the
participation of the Italian contingent in the peace process and, above all, the death
of Pope John Paul II followed by the succession to the papacy of Benedict XVI.
Rai made the maximum effort to cover this event, with numerous live programmes
and analytical presentations, sacrificing, as was appropriate, a large part of the
advertising slots in token of its deep respect, in harmony with the sentiments of
the Italian people and all humanity.
Rai also fulfils its role as information provider through numerous 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, information on the
weather and 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 children. 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 children - is confirmation of the appreciation shown by all viewers,
and by the younger audience in particular.
The 48th 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 2005, Rai continued its commitment to promoting
topics of social, cultural and environmental interest.
The main 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 the day with programmes dedicated to the environment
(Lineaverde, Geo Magazine). Cultural events are plentiful during prime time, as
well, in the areas of medicine (Elisir), science, history and technology
(Superquark, Ulisse il piacere della Scoperta, La grande Storia, etc), and public
interest (Mi manda Raitre, Chi l’ha Visto?).
Series and films: 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 (Il cuore nel pozzo, Cefalonia),
17
biographies of important figures in Italian history (Meucci, De Gasperi, Edda),
and lesser stories (Don Matteo, etc), reaching a vast audience with their captivating
storylines and artistic quality.
Of considerable note was the series on the life of the late Pope John Paul II, the
second part of which registered one of the highest audience levels for the whole year.
Sports: Rai is the leading broadcaster of major sports events. Although in 2005
there were no major sports events which characterise the Rai networks programmes
in even years, we dedicated considerable space to commentaries and coverage of
the major events of the year.
Formula 1, the Giro d’Italia and all commentaries on soccer results (90° minuto
in the first half of the year, Quelli che il calcio etc) also met with great success.
Rai programming also reserved a great deal of space for minor sports.
The Company’s policy is aimed at ensuring that ever-increasing commitment is put
into consolidating our good results in all the above programming areas, without
ignoring the challenge of competitors in the area of entertainment. This kind of
broadcasting has not only confirmed the previous positive results but has also
improved on them.
Alongside time-tested productions (the 55th edition of the Festival di Sanremo - the
Italian Song Contest - and Miss Italia), and the success obtained on new explorations
(Rock Politik, Ballando con le Stelle), we have also seen encouraging audience levels
for the reality shows (L’isola dei Famosi, Music Farm).
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, despite the change in its hosting in
the second part of the year.
Television and radio broadcasting
Rai’s television programming is broadcast over three networks (RaiUno, RaiDue,
and RaiTre), the unencrypted satellite channels, including Rai Internazionale which
is addressed to Italians abroad, and the theme-based channels Rai Sport Satellite,
Rai Notizie 24, Rai Edu 1 and 2, and Rai Med.
Rai’s well-received product offering fully complies with the obligations defined in
the service contract made 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 agreement
(news, information and analysis, culture, sport, public interest, European film
and TV series, quality films, programming for children) reached 78.9% of total
programming (compared with the minimum threshold of 65% required by the
agreement) and 92.9% for RaiTre programming (for which the minimum threshold
is 80%).
18
This programming is also provided during the most popular time slot, 8 p.m. to
11 p.m., where Rai dedicates 70% of all programming to these genres.
Radio programming is broadcast over five national FM networks (RadioUno,
RadioDue, RadioTre, Isoradio via isofrequency, and GR Parlamento); 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.
Alongside this product offering, we also have the two wire radio channels, IV (easy
listening) and V (classical music), as well as international Italian-language
programming broadcast via shortwave radio by Rai Internazionale.
Total Rai networks
TV programming by genre
time slot: 6 a.m. - 12 p.m.
(excluding advertising)
(source Auditel)
21.1%
78.9%
10.9% Entertainment
10.2% Non-European films/series
8.0% European films and series
1.6% Art films
6.7% Sports
5.1% Science & environment
3.7% Educational
9.2% Children & teens
13.8% Public interest
1.3% Institutions
9.0% Analysis
20.5% News & information
RaiTre
TV programming by genre
time slot: 6 a.m. - 12 p.m.
(excluding advertising)
(source Auditel)
7.1%
92.9%
2.1% Entertainment
5.0% Non-European films/series
6.3% European films and series
3.1% Art films
8.0% Sports
9.9% Science & environment
8.9% Educational
9.0% Children & teens
13.0% Public interest
1.1% Institutions
10.6% Analysis
23.1% News & information
19
13% - 3,446 hours - Entertainment
31% - 8,032 hours - Music
9% - 2,476 hours - Society
14% - 3,739 hours - Culture
4% - 1,043 hours - Public interest
3% - 676 hours - Service
11% - 2,983 hours - News
15% - 3,886 hours - Information
Television analogue broadcasting
2005
Nationwide (*)
RaiUno
RiaDue
RaiTre
Via satellite
Rai Sport
Rai Notizie 24
Rai Edu 1
Rai Edu 2
Rai Med (**)
Local
- in Italian
- in German
- in Ladin
- in Slovene
- in French
International
Total
Radio broadcasting
by genre
(source: Audiradio)
Radio analogue broadcasting
%
2004
%
8,760
8,760
8,483
26,003
11.1
11.1
10.6
32.8
8,784
8,784
8,335
25,903
11.1
11.1
10.5
32.7
8,760
8,760
8,760
8,760
2,190
37,230
11.1
11.1
11.1
11.1
2.7
47.1
8,784
8,784
8,784
8,784
2,196
37,332
11.1
11.1
11.1
11.1
2.7
47.1
6,125
755
48
225
91
7,244
7.6
0.9
0.1
0.3
0.1
9.0
6,118
744
47
301
92
7,302
7.7
0.9
0.1
0.4
0.1
9.2
8,760
79,237
11.1
100.0
8,784
79,321
11.1
100.0
2005
%
2004
%
8,609
8,760
8,760
26,129
13.2
13.5
13.5
40.2
8,627
8,784
8,784
26,195
13.0
13.1
13.1
39.2
5,448
4,835
363
4,556
154
15,396
8.4
7.4
0.6
7.0
0.2
23.6
5,448
4,831
369
4,573
152
15,373
8.2
7.2
0.6
6.8
0.2
23.0
GR Parlamento (***)
Isoradio (***)
International
Total
5,110
8,760
9,729
65,124
7.8
13.5
14.9
100.0
5,124
8,784
11,300
66,776
7.7
13.1
17.0
100.0
Other:
Wire radio (IV + V)
13,140
Nationwide
RadioUno (***)
RadioDue (***)
RadioTre (***)
Local (***)
- in Italian
- in German
- in Ladin
- in Slovene
- in French
13,176
(*) figures for nationwide broadcasts differ from those on page 19 in the chart “TV programming by genre” in that they include advertising,
infomercials, and promotional content
(**) hours of programming specifically translated or subtitled in Arabic
(***) including via satellite
20
TV Division
Networks
During 2005, RaiUno confirmed its role as a network leader on the Italian
television landscape through its very detailed coverage of the event which
captured the attention of the entire world: the death of Pope John Paul II followed
by the succession to the papacy of Benedict XVI. The surveys made of the political
and religious implications of this event, together with the other purely informative
broadcasts, represented the peak of the network’s service to the public.
The year also saw RaiUno developing innovative and stimulating content, offering
the public a balanced mix of entertainment and information. Innovation, but also
tradition and history through film series, such as Meucci, Il cuore nel pozzo, and
Giovanni Paolo II, which were dedicated to personalities and historical events
which have influenced history.
Also in the field of entertainment, RaiUno offered programmes and reality shows
aimed at the channel’s typical viewers: the family.
Public interest
Entertainment
Uno mattina
Occhio alla spesa
Affari tuoi
Rock Politik
Ballando con le stelle
Sabato italiano
Ritorno al presente
L’eredità
Festa italiana
Il Ristorante
La prova del cuoco
Information
Porta a Porta
Batti e ribatti
La vita in diretta
Events
Festival di Sanremo
Miss Italia
La partita del cuore
Telethon
Culture/science/environment/society
Sports
Film/series
Superquark
Passaggio a Nord Ovest
Linea verde
Linea blu
La seconda guerra mondiale
Tutto benessere
Formula 1
90° minuto
Monday-night movies:
Harry Potter
La finestra di fronte
Il diario di Bridget Jones
Il pianista
TV series:
Sospetti 2
Il maresciallo Rocca 5
La famiglia in giallo
Provaci ancora Prof.
Gente di mare
Orgoglio 2
Il commissario Montalbano
Alongside the attention traditionally paid to young and active viewers, RaiDue in
2005 promoted a children’s audience, also to satisfy all those in general who
consider that the Public Service should be particularly sensitive to themes and
language. Starting from this angle, the Network redesigned important programme
slots and made strategic agreements, such as the one linking programming for age
groups younger than the Disney-age. Besides confirming the reality show (L’isola
dei famosi) and the serial programmes (Desperate Housewives, Cold case,
Friends), much effort was put into “restructuring” day-time broadcasts, through
the adoption of new narrative techniques and experimental language.
21
Public interest
Information
Entertainment
Non solo soldi
Medicina 33
Salute
10 minuti di
Italia sul 2
Alice
L’isola dei famosi
Music Farm
Il tornasole
Se sbagli ti mollo
CD Live
Al posto tuo
In famiglia
TV series
Children
Sports
Desperate Housewives
E.R. Medici in prima linea
Cold case
Roswell
Jag Avvocati in divisa
Incantesimo 7
Disney Club
L’albero azzurro
Art Attack
Random
Quelli che il calcio
La domenica sportiva
Voyager
Sereno Variabile
Campionati mondiali di:
atletica, nuoto, basket,
pallavolo
Tour de France
RaiTre programming balances news and information, entertainment and analyses,
responding to viewers wishing enrich their culture with the help of the media. The
vast offering of historic and geographic documentaries, the presence of programmes
of social utility (Mi manda Raitre, Chi l’ha visto?), programmes dealing with
current affairs, customs and society (Ballarò, Report), specific programming
addressed to children and the recounting of the Italian tale through serials - all
these contribute to building up RaiTre’s identity as a service and quality TV close
to the public.
Entertainment programmes such as Che tempo che fa and Parla con me met with
great success.
Social utility
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
Velisti per caso
Information
Children
Ballarò
Report
Blu notte
Telecamere
La Melevisione
Screensaver
Treddi
Il giornale del Fantabosco
GT Ragazzi
Sfide
Geo Magazine
Alle falde del Kilimangiaro
Gaia
Ulisse
Passepartout
Walter e Giada
The main objectives of Rai Internazionale are:
- to broadcast worldwide the best of Rai programmes, together with specific
programmes for Italians abroad;
- to develop the Public Service aspect in international radio and television
broadcasting, under an agreement with the Prime Minister’s Office and respond
to the requirements for news and information of the Italian community abroad.
22
In the year, this network produced 700 hours of television programmes and
12,600 hours of radio programmes in which the prevailing aspect was the promotion
of the Italian language and culture. The range of the offering on television also
saw the development of interactive spaces with viewers, alongside time-tested
broadcasting such as La grande giostra dei gol, Qui Roma, L’Italiana, Sportello
Italia, Sport Italia, Il caffè.
Finally, it should also be remembered that after lengthy litigation, the Rai
Internazionale channel was launched in Canada, permitting full-day broadcasting
covering the whole of Canada.
Notte During 2005, Rai Notte continued its path following two thematic directions: the
“memory lane” with high-quality programming taken from the Rai archives,
such as films of important Italian and international authors, documentaries,
entertainment, TV history anthologies and a social theme with surveys of a social
and cultural nature (music, publishing, art, cinema and theatre). Total programming
by Rai Notte amounted to about 2,400 hours, distributed between the three
networks, of which 1,400 were based on the “memory lane”.
News & Information
Again in 2005, TG1 news confirmed its leadership in audience share for all editions,
reaching a 31.9% share in the 8 p.m. edition during the last month of the year.
TG1 News put much effort into reporting in great detail (over 14 hours of special
editions) the most important news item of 2005: the death of Pope John Paul II.
The live broadcast on 8 April from 9 a.m. to 1 p.m. covering the Holy Father’s funeral
was followed by an average of 8.5 million viewers with a 62% audience share.
Growth in the TG1 News of 1.30 p.m. was notable and the success of Uno Mattina
(which originated in 1986) was confirmed, continuing to represent the peak
broadcast in the morning slot. We continued with the news offered in the 5 special
segments transmitted from Monday to Fridays at the end of the 8 a.m. morning
edition of TG1, with repeats in the night slot.
During 2005, the 1 p.m. edition of TG2 reached an average audience of 3.3 million
viewers, with a share of 21.2%. This edition is accompanied by good performance in
the information programmes, in particular Costume e Società, Salute and Motori, the
latter going on view on Sundays. Beside the two programmes of special segments
(Dossier and Dossier Storie), TG2 produced numerous live broadcasts on events of
general interest, such as the Calipari’s death and the Annual Report of the Governor
of the Bank of Italy. Special editions were not lacking on the death of Pope John II and
there was also a special edition on the Conclave, produced using virtual set designing.
During 2005, TG3 produced 590 hours of news and 190 hours of special segments, up
28 hours on 2004. This increased programming was realised with a staff who had
remained substantially unchanged, and were rewarded by the high level of listening time.
23
The 7 p.m. news broadcast remains fixed in its ranking of the third news programme
of the evening, after TG1 and TG5, both for audience share (15.6%) and average
number of viewers (2.37 million). Attention is focused on national politics and the
economy, accompanied by special segments such as Primo Piano, Prima Pagina,
Cifre in chiaro, Scenari besides numerous other surveys on international politics,
culture and society.
In 2005, the TGR regional news desk increased production, with over 6,500 hours
of televised regional news and 5,900 hours of radio-broadcast regional news. New
“resident editors” have been installed in various regions, demonstrating
Management’s wish to be closer to the public and their local areas. From the point
of view of programming, alongside the usual daily programmes (3 television news
and 2 radio news programmes) and the time-tested successful special national
segments (11 in all, on scientific, multimedia, environmental, art, economic and
international themes), the special programme Sopratutto has come into being,
produced jointly with the Piedmont Region and entirely dedicated to life in the
mountains. In 2005 the Rai Med satellite channel continued programming (with
the confirmation of Riva Sud, an observation post on the economy and development
of Mediterranean countries), creating ad hoc programmes for linguistic minorities
and producing the regional Settimanale programme. This closeness to the public
is evidenced by the coverage provided over the whole of Italy by a workforce of
918 persons, besides radio and TV productions and broadcasting on election
debates and public service announcements.
During 2005 Tribune Accesso e Servizi Parlamentari (TSP) over the three Rai
networks with 262 hours of television broadcasts and 34 hours of radio programming,
provided every day a description of Italian politics and government with detailed
information on the workings of the Senate and Chamber of Deputies. TSP provides
a daily service (TG Parlamento), weekly reports (Settegiorni al Parlamento, Giorni
d’Europa, TSP/Regioni, Speciale Europa presenta Euro Zone), and specific
broadcasts on the request of the Chamber of Deputies or the Senate on the occasion
of political events of particular relevance (Question-time, Speciale Parlamento).
Its activities also include presenting public service announcements and political
debates, which in 2005 included programmes on the Regional elections and the
June referendum.
Among the more important aspects of Rai Sport activities is broadcasting via the
satellite thematic channel, Rai Sport Satellite, now also visible through digital
terrestrial television, which transmitted an average of eight hours per day on
sports (live and recorded).
Alongside the traditional programmes with Domenica Sportiva, Dribbling and
Domenica Sprint and those covering Serie B, international soccer and motor
racing (90° minuto, Eurogol and Numero Uno speciale) TG Sport has opened a
news bulletin. Attention was given to events such as the Formula 1, Giro d’Italia,
Tour de France, the World Cycling Championship, the European Basketball
24
Championship, the World Swimming Championships and the World Athletics
Championships.
Particular attention was also dedicated to minor sports, the activities of the
disabled, amateur sports and the Serie B, which brought in a high audience.
Rai Notizie 24 is Rai’s non-stop news channel that broadcasts digitally. It has a
twofold objective:
multimedia transmission: this is the first channel with multiscreen and multichannel
technology, broadcasting 24 hours a day, 7 days a week with a threefold news flow
aimed at television (interactive and satellite DTT), Internet and mobile phones.
The programming includes news updates every 30 minutes with analyses of the
leading stories, weather and traffic information, and weekly topic-specific supplements;
journalistic inquiry: through important inquiries made at domestic and international
level, it ranks among the leaders in the global information network scene, having
obtained international awards such as the Hot Bird TV Awards (2003, 2004 and
2005).
In 2005 there was constant commitment on the part of Televideo to boost its
mission in teletext services.
The final results show that there has been a significant strengthening, especially
in the regional service.
In accordance with the Service Contract between the Government and Rai,
Televideo has launched an initiative to benefit the fragile segment of the public
represented by the blind and sight-impaired, including children, using Telesoftware
methods. This in addition to the establishment of a subtitling service for hearingimpaired viewers of pre-recorded television programmes (which is live for the
three news programmes).
Significant events in 2005 include:
• the issue of a new and advance version on the Internet site, which has shown itself
to be at the top of Rai’s offering on the web;
• the optimisation of teletext Televideo’s presence on the digital platform, consolidating
the first release and designing the second, which went into service in the early
days of January 2006;
• the strengthening of content provider activities for mobile telephony;
• the launching of technological designs to modernise information production
processes on the platforms served by Televideo.
Genres
Rai Cinema operates in close contact with Rai (which is its primary customer) in
the acquisition and utilisation of films, TV series and cartoons as well as their
distribution through the company 01 Distribution. Alongside these activities are
the development of Italian and European films. The company also operates
following market objectives with a view to diversifying its areas of operation,
widening the range of services offered, and enlarging clientele. The acquisition
25
and production of films represent Rai Cinema’s main commitment within the
share predetermined by the service contract made between Rai and the Ministry
of Communications. The efforts in this direction, linked to capacities in the film
industry, are aimed at setting off a constructive process whereby market-based
decisions will have a positive influence on future projects.
In its procurement policy, Rai Cinema, which has always strategically based itself
on the programming requirements of the Rai networks, always has an eye on its
reference market, that of the US, which is able to influence international television
business with its own internal trends. The recent new arrangements affecting the
important Majors, such as the new merger between CBS and Paramount, have
sparked exploratory action which will lead Rai Cinema in 2006 to make assessments,
in terms of programming, strategies, finance and diplomacy, regarding whether it
might possibly move closer to the Hollywood giants. In any event, the good
relations with Disney, Warner and the new CBS Corporation will ensure an
excellent supply of quality productions again in 2006. In the home video sector,
it has been interesting to note the consolidation of Rai Cinema’s activities through
01 Distribution, which also favours opening up to new “intermediate” productions,
that is, those which are not suitable for cinema theatres, but which are appropriate
for home video use or television programming. Finally, the acquisition of cartoons,
attention being directed to the most technologically advanced productions, and of
full rights in appropriately selected foreign titles.
In 2005, the production and development activities of Rai Cinema proceeded
energetically, as always, with the company constantly pursuing new talent and
formulas to recount today’s story and re-presenting the masters who have kept the
status of Italian films high in the world - Gianni Amelio, Marco Bellocchio,
Ermanno Olmi and Pupi Avati; Cristina Comencini, Marco Tullio Giordana and
Francesca Archibugi; Michele Soavi and Andrea Barzini. These are only a few of
the directors who worked with Rai Cinema in 2005. Films which came out include:
La Bestia nel Cuore of Cristina Comencini, designated to represent Italy at the
Oscar, which was among the five Oscar finalists for the best foreign language film,
and Pupi Avati’s La Seconda Notte di Nozze. The objective of giving new life-blood
to the field of documentaries took shape with the identification of a strong
partner, Eskimosa, a newly-formed production company of the Feltrinelli Group,
and in a renewed spirit of research for this form of expression by Rai Cinema
authors. Again in 2005, there was a rising tendency in the production of debut
works and focus on experimental cinema: All the Invisible Children, Musikanten,
Notte Prima degli Esami, above all.
01 Distribution, a subsidiary of Rai Cinema operating in the distribution of films
and home videos, achieved in 2005 the most brilliant results in its still young
history. This represents well-deserved recognition for the soundness of Rai
Cinema’s procurement policies, which in the theatre segment reached its highest
performance gaining the third position in the 2005 rankings (only following UIP
and Warner Bros), whilst it ranked top in the Italian classification. Digital support
(DVD) has practically ousted traditional videocassettes for home videos, where
26
there is a downward tendency in selling prices. Despite this, 01 Distribution
obtained excellent results, considering that it only just started operating directly
in the sector in August 2004. The change from distribution through third parties
to direct distribution and the related integration with cinema theatres, which is a
single process in Italy, avoided inefficient duplication in organisation and resulted
in a streamlined corporate structure. Year 2006 looks like being particularly
brilliant for the home video business which will make a very attractive offering
overall, allowing expectations of even better results than for 2005.
For Rai Fiction, the TV series genre in 2005 continued to be strongly liked by
the public, in particular Rai productions which clearly surpassed competitors in
terms of quantity and audience. Growing requirements for broadcasting by the
networks has, in addition, led to a constant increase in the production of TV series
and cartoons, also with a view to the development of RaiUno’s day-time slot.
The 01 Distribution numbers demonstrate the importance of the sector:
• 135 evenings of TV series, equal to 37% of prime time on an annual basis;
• 14 titles out of 15 in the top rankings of the first 15 TV series in 2005 (in terms
of audience) were Rai productions;
• 400 hours of previously unpublished TV series during prime time;
• 300 hours of cartoons co-produced by Rai Fiction.
The audience results for cartoons demonstrate the high quality level reached by
Italian productions; the success of the Internet portal raifiction.rai.it shows that
this genre has entered the new media field.
Educational In 2005 Rai Educazione’s multimedia offering (terrestrial networks, satellite
channels and the web) was effected through a series of programmes and projects,
each with its own precise identity and recognisable within an overall TV broadcasting line placing emphasis on telling by images and the declarations of the
characters. The service boosted time-tested programmes such as La Storia Siamo
Noi, a unique production in the landscape of European public services, which will
get on to the Internet in 2006, Un Mondo a Colori, on the theme of multi-ethnic
integration, and Diario di Famiglia, on family problems. Two important projects
took off: Economix, a talk show highlighting current economic issues, making
them more comprehensible, and TV Talk, a real “observation post on television”.
Broadcasting is continuing of Il Divertinglese and Explora on the thematic
channels Edu 1 and Edu 2, to which has been added the new programme Medita,
a project which was formed with the intention of providing teachers with
audio-visual and multimedia didactic material supporting textbooks.
27
TV Support
Year 2005 saw Rai Teche getting constantly closer to achieving its objective of
completing the digital catalogue of the history of television on magnetic tape,
which should occur in 2006. The following aspects were significant: the increased
use of the multimedia catalogue, and Teche’s increased contribution to the satellite
channels, sports and other outside events (+20%), Rai Trade’s activities, the home
video sector and the start-up of collaboration with the DTT channels “Rai Doc”
and “Rai Futura”. During the year, Teche provided the entire quantity monitoring
service to the Social Secretariat and launched the “Teca aperta” project which led
to the opening of 11 info points for the public in as many regional offices. There
has been an increase in the number of agreements made with universities (235)
for the use of the archives for didactic purposes and with schools of every grade
(218), as well as numerous audio and video contributions put on the web site
thanks to the strengthening of the Multimedia Catalogue and the “grabber”
system set up by Teche.
The Rai Teche archives in numbers:
• 28,115 hours of historical material and 40,650 hours of daily TV material
digitised and documented;
• 35,405 hours of historical material and 33,552 hours of daily radio material
digitised and documented;
• a total of 1,085,000 hours of accessible audio-visual material;
• 40,000 viewable photos;
• 8,907 registered users of the Multimedia Catalogue;
• 8,887,080 searches of the Multimedia Catalogue made in 2005.
Audience
As already mentioned, the television audience remained constantly above the nine
million mark for the average day. Only in prime time was there a drop attributable
mainly to the lack of major sports events and especially, considering the profound
transformation in the media landscape, to the consolidation of the Sky satellite
platform and the emergence of new platforms and digital technologies.
The analogue medium, however, still remains the “location” of the universal
Public Service.
Rai, in 2005, confirmed its role as the Public Service which brings in the audience.
This, as already mentioned, applies not only to domestic competition with private
networks but above all to the world of European public services.
Day time (7 a.m. - 2 p.m.)
Against an increase in the satellite platform and the other private analogue networks,
Rai maintains its leading position surpassing its major competitor by 1.65
percentage points over the whole day, arriving at a 43.55% audience share.
This result is to be considered extremely positive if one considers the absence of
major sports events which in the previous year had monopolised attention for a
significant period; the European Soccer Championship and the Athens Olympics.
28
Teche
RaiUno is firmly holding on to its dominant role of having the most viewed television
channel during the entire day, with a 23% audience share, outstripping the major
competing channel by 1.16 percentage points.
RaiDue reached an 11.37% share, only slightly surpassed by the competing channel
(Italia1 with an 11.47% share), whereas RaiTre remained substantially at the
2004 level, with a 9.18% share.
Full day
audience share
(Source: Auditel)
Prime time (8.30 p.m. - 10.30 p.m.)
Rai maintained its primacy over competitors with a 44.29% audience share,
which however is down 2.09 percentage points on 2004. This figure, however, still
keeps Rai ahead of its major competitor who has a 42.82% share.
In addition, Rai also won with regard to prime time ranking, for 32 weeks over 52.
RaiUno maintains the leadership over television channels with an audience share
of 23.91% compared with the 22.50% of the competing channel.
RaiDue dropped slightly (arriving at 10.63%, down 0.49 points) whereas RaiTre
remained substantially stable with a 9.75% share.
Prime time
audience share
(Source: Auditel)
29
Although on one side results were positive throughout the entire course of the year,
Rai proved that it could “bite” in the guaranteed audience periods during which
is was under observation, not only by its own public, but also by advertisers.
In the spring guaranteed period, with programming covering the events connected
with the Pope’s death and the election of a successor, the Rai networks maintained
their leadership over the competition, surpassing them by almost one percentage
point for the full day and 1.13 points during prime time, winning 9 weeks out of 14.
Finally, Rai triumphed in the autumn guaranteed period, surpassing the
competition by a good 6.2 percentage points for the full day and 5.62 points
during prime time, well winning 11 weeks out of 11.
By looking at the best performances by broadcasting category, it can be seen that
the Group is at the top of nearly all rankings:
• the most watched programme was the final evening of the 55th Festival di
Sanremo with over 13.6 million viewers and a 55.08% di share;
• 7 Rai programmes among the 10 most watched shows: Rock Politik, the second
part of the TV series John Paul II, Affari Tuoi and Affari Tuoi Sanremo, the
Formula One Grand Prix of San Marino and Il Cuore nel pozzo;
• leadership in news broadcasts with the funeral mass for the Pope, with an over
73% share on the three Rai networks and relative commentaries;
• leadership in cultural programmes, public service broadcasts, scientific and
environmental themes, programmes for children and cartoons.;
• primacy in entertainment with Rock Politik (a 49.42% share in the 27 October
episode);
• continued success in Rai TV series productions.
Alongside these programming successes, Rai’s continuing leadership in the main
television news editions is worthy of mention.
Afternoon time slots
time
edition
share
time
edition
share
TG2 - day time
TG5
TG1
TG4
21.1
25.2
29.2
7.5
7.00 p.m.
TG3
TG4
15.6
7.7
7.30 p.m.
TGR
17.1
2.00 p.m.
TGR
17.6
8.00 p.m.
2.20 p.m.
TG3
12.0
8.30 p.m.
TG1
TG5
TG2
30.4
27.7
10.7
1.00 p.m.
1.30 p.m.
30
Evening time slots
Quality and satisfaction
The IQS project (Indicatore di Qualità e Soddisfazione - Quality and Satisfaction
Indicator) began in 2000 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 levels reached in 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; (excluding periods in the year which
are not significant as a result of the large number of Italians being on the move);
• 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
Rai/Rai networks
(9 p.m. to 11 p.m.
time slot)
IQS Index by genre
Culture
TV series
Films
Entertainment
Information
Sports shows
Public interest and social
News
Cartoons
Programmes for children
7 a.m. to midnight
time slot
9 p.m. to 11 p.m.
time slot
87.8
79.2
69.8
79.3
76.5
76.1
82.9
77.3
88.7
93.2
87.5
79.3
69.7
78.1
79.5
75.8
84.4
31
Radio Division
Radio Rai again in 2005 fulfilled the objectives set in the service contract relating
to completeness, timeliness and reliability of information, carefully following
major domestic and international current events and representing all social, cultural
and political components of the country.
Extraordinary activities of strategic importance included the “Project for the
Improvement of FM frequencies” designed in 2004, which went into the operating stage.
Performance on the three objectives was constantly monitored by the Radio
Division management: plant modernisation, improvement of the signal quality,
extension of coverage in specific areas, achieved also through the acquisition of
new frequencies.
The Division also started a radio podcasting service through which the stations
feed the web site with audio files which can be downloaded on to computers: this
is an innovative function boosting Radio Rai’s image with the younger public in a
market which is difficult because of keen competition on the part of private operators.
Looking at the results of the individual stations in 2005, there were positive results
for Radio1 - especially regarding the increased commitment to European Union
matters and Third World problems; there were positive results also for Radio3 especially for the quality of its music programmes and the fidelity of its listeners.
Radio2 continued to pursue a twofold objective of improving its competitive edge with
the major commercial broadcasters and boosting fidelity with youth and adults.
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.
Aimed at young audience.
News and commentary on sporting
events.
Station dedicated to high-quality
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.
Segments for regional information.
32
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.
GR1 for general news, GR2 for
social and youth issues, GR3 for the
economy and international news.
Segments of analysis, debate, and
press reviews.
Information for people on the
move, providing frequent updates
on traffic, safety, weather, and
transport.
Segments of analysis (employment,
health, free time, and the
environment) and music.
These are a few of Radio Rai’s major broadcasts:
• Radio1: Radio anch’io, Tutto il calcio minuto per minuto, Zapping, Baobab,
Questione di soldi, Italia: istruzioni per l’uso, Con parole mie, Ho perso il trend,
Il Baco del millennio, RadioEuropa, Pianeta dimenticato, Habitat, Zona Cesarini;
• Radio2: Viva Radio2, Il ruggito del coniglio, Caterpillar, 610 - Sei uno zero,
Fabio&Fiamma, Dispenser, 28 minuti, Condor, Hit Parade Live Show, Il Cammello
di Radio2;
• Radio3: Prima Pagina, Radio3 Mondo, Fahrenheit, Hollywood Party, Radio3
Scienza, La barcaccia, Radio3 Suite, Ad alta voce, Il terzo anello, I Concerti del
Quirinale, Uomini e profeti.
Audience
Taken together, the strengthening of the major private networks, the entry of new
operators and the persistent critical state of the broadcasting infrastructure have
proved to be critical factors affecting Radio Rai’s performance in audience results:
• RadioUno maintained its position of leadership with 6,399 thousand listeners,
but dropped 11.3% on an annual basis;
• RadioDue, with 4,213 thousand listeners, remained in fourth place in terms of
average daily audience, with a decline from 2004 (-6.4%);
• RadioTre, with 1,858 thousand listeners, held tenth place, with a decline on an
annual basis from the previous year (-12.6%);
• Isoradio, with an average of 1,086 thousand users per day held fourteenth place,
but fell sharply on an annual basis from 2004 (-10.9%).
These results obviously had a consequent fall-out on the trend for advertising
revenues.
Radio audience
(figures in thousands;
source: Audiradio)
Year 2004
Year 2005
33
New Media & DTT Division
Rai Group in 2005 continued with the development of digital terrestrial television,
particular attention being paid to interactivity.
The interactive offering was in fact the driving force behind projects of great social
value and the fulcrum of important experiments on personalised services to
viewers, which were carried out with important entities such as the Revenue
Office and Banca Sanpaolo IMI. Again, on the digital platform Rai was active also
in the field of advertising, having set up the first edition of Premio I-Spot, which
is intended to promote a new form of communication via interactive advertising.
All this contributed to Rai’s re-assertion as an avant-garde company in
development and creation of the sectors in which it operates. The Nuovi Media
division also contributed, together with all of Rai’s technical departments, to the
design and creation of the Rai interactive platform, so as to provide additional
high-quality services and open out to working with external partners. Another
fundamental activity in 2005, finally, was the completion and reinforcement of
the New Media Interactive Factory which is responsible for all interactive products
broadcast by Rai.
Since 2003 the division has launched the transmission of 8 digital channels and 4
radio channels on 2 multiplexes, through implementing a digital network which
today covers more than 70% of the population.
Digital Terrestrial Television
Rai’s digital terrestrial offering is one of the broadest in the European landscape.
Taking radio and TV together, the situation is as follows:
• Multiplex A: RaiUno, RaiDue, RaiTre (simulcast with their corresponding
satellite channels), RaiUtile;
• Multiplex B: RaiSport Sat, Rai Notizie 24, RaiEdu 1, (simulcast with their
corresponding satellite channels), RaiDoc-Futura, RadioUno, RadioDue,
RadioTre, and V canale, the wire radio station.
As from June 2005, Multiplex B added to its offering with the Sat2000 channel,
with which Rai - together with the subsequent agreement with Chinese public
television - has fulfilled the legal obligation to reserve at least 40% of the
multiplex band not destined for public service to experiments made by other
companies.
The year also saw expansion in the offering made on the two RaiDoc-Futura and
RaiUtile channels.
With 730 hours of broadcasting on the theatre, classical music, art, cinema,
books, RaiDoc is the channel dedicated to cultural entertainment which provides
every evening, in prime time, programmes which it would be difficult to place in
the general networks. Besides the agreements signed with numerous Italian cultural associations and the production of documentaries, including Straulino, Trieste,
34
Einstein, Fermi (presented at the Berlin Institute of Italian Culture), the channel
worked with the Senate on the creation of two DVDs for a convention on Eduardo
De Filippo.
RaiUtile sets itself a twofold objective for the public:
• to be a source of information and provide training opportunities in connection
with services provided by the government;
• to be a public forum for civil society, business, government, schools and
universities.
The channel’s interactive component has been boosted thanks to a series of
initiatives realised with numerous public entities, among which stand out Italia
Utile, which places on digital terrestrial television a portion of the content found
on Italia.gov.it, the national portal for the Italian public, Borsa Lavoro and Cerca
impiego, on the subject of employment and training. The interactive training
service on digital is the first of its kind created in Europe.
The Division has also promoted other projects together with local and other public
authorities regarding:
• Postelink: for making post office payments and applying for certificates;
• Prodigit: in collaboration with the Rome Municipal and Provincial Administration
and the Lazio Regional Administration, which offers the public a range of services
covering the Region;
• Casper: which promotes social services for users resident in Emilia Romagna;
• T-sei: for the service of the population of the Municipality of Reggio Calabria.
To complete the picture of the interactive offering, Rai committed itself to
covering all types of products rendered possible through the incorporation of
digital techniques, such as for example TV-portal-type applications which are
always on air (Televideo Digitale, Guida, Rai Notizie 24, Rai Utile), on the
occasion of particular events (Bormio 2005, Sanremo 2005, la Giornata della
Memoria, the Local Elections) and for reality shows (Music Farm, L’Isola dei
Famosi). The most popular Rai transmissions during prime time were also made
interactive.
Coming to the objectives for 2006, the new media area will be run consistently
in a manner to qualify Rai as being the protagonist in the area of digital
terrestrial technology and cross-media and multiplatform programming.
Finally, digital terrestrial television will be developed at regional level as
prescribed by regulations.
35
Commercial Division
The development of commercial activities in the field of advertising is entrusted to
the subsidiary SIPRA, that manages Rai Group advertising on the television and
radio networks, as well as on the teletext service, the free and pay-TV satellite channels
(the theme-based RaiSat Extra channels and the channels managed by Rai
Trade), the interactive Rai Click channels, the Rai.it portal, and the cinema segment.
Trading results are to be considered positive in that having maintained the level
of advertising revenues, despite the absence of major international sports events
in the year, is a great achievement in itself, especially in a situation where there
has been no noteworthy increases in revenues.
The following chart shows advertising revenues for the year in the various segments.
.
1,098.2 Television
72.4 Radio
9.0 Other Rai
33.1 Cinema
3.2 Other
1.0 Digital
1.1 Internet
1.0 Pay Rai Trade
0.1 Pay Rai Sat
As part of the activities to sustain and develop commercial activities the following
actions have been taken:
• strengthening the presence of the Division in Lombardy (through setting up two
distinct operational units);
• creation of applications to manage the sale of interactive advertising in all forms
used on national, topic-based and teletext channels using digital techniques;
• specific applications for the Rai Futura and Rai Utile channels;
• new applications for the historical analysis of customer investment, their
positioning, seasonal trends and other key indicators.
Flanking Sipra, the Commercial Development and Coordination department
operates from within the parent company.
Its aims are:
• to identify global Group sales strategies;
• to identify new revenue opportunities in the domestic and international markets
and develop the relative business plans;
• coordinate the Group’s sales revenues plan.
36
SIPRA advertising
revenues
(millions of Euros)
The main activities in 2005 were:
• the sale of content to mobile telephony and broad band operators;
• the project for a Rai channel to be used on third-generation terminals with
UMTS technology;
• processes connected with the interaction of viewers with Rai programmes
(televoting, logos, ringer tones, participation in games etc);
• agreements for the creation of communication plans for public administration;
• agreements with local entities and institutions (the Un’idea per le Regioni project
to promote local culture, history and arts);
• research projects funded by the European Union.
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, merchandising etc) as well as developing the
management of rights related to the mobile telephony market and, at the same
time, seeking new operating methods to penetrate the domestic home video market.
It is also worth highlighting the successes seen in the area of music sales.
Of particular note in 2005 were:
• the sale of rights to sports events: excellent results were obtained in selling
cycling rights with the RCS package (Giro d’Italia, Milano-Sanremo, Giro di
Lombardia etc), and the sale of soccer matches of the Italian National Team and
Coppa Italia. Good results were also obtained through the co-distribution
agreement with SPORT FIVE for the sale abroad of the Seria A soccer championship
rights;
• thematic channels: the consolidation of the two thematic channels (46,000
subscribers to the Inter Channel and 28,000 to the Roma Channel) and the
distribution of the Inter Channel on the Telecom Internet platforms through the
Rosso Alice portal and via UMTS through H3G; the production of the first TV
web channel for local entities with Florence TV;
• home videos: benefited from co-distribution and licensing agreements. Of
particular note was the partnership with RCS regarding five sports history
series distributed with the newspaper Gazzetta dello Sport;
• music sales: good financial results deriving from arrangements with SIAE
relating to the production of sound tracks for Rai TV series; the year was
important for disc productions (the CDs for La Prova del Cuoco, Ballando con
le Stelle);
• films and TV series: increased turnover, mainly resulting from Rai TV series
aimed at the European market and a first entry into the Chinese market. The
film segment, on the other hand, showed a reduced number of new title entries.
37
Broadcasting Division
During 2005 this division produced good financial results, especially in relation to
the commercial dealings with other customers and notwithstanding the difficulties
which had characterised the business of telecommunications operators. The
typical market situation for Rai Way, which manages the Rai Group’s broadcasting
division, underwent profound changes during the year, both in the TLC segment
and in that of the broadcast operators.
The TIM-Telecom Italia merger, the transfer of Wind from Enel to the Egyptian
company Orascom and the definitive introduction of digital terrestrial television
prompted Rai Way to reassess its strategies, leading to two main guidelines relating
to the business market:
• the consolidation of its presence in the major business areas;
• the launch of development activities in new markets and new business lines.
With this in view, firstly all the commitment to its customer Rai was satisfied, the
digital terrestrial broadcasting networks were extended, and work continued on
the restructuring of the medium-wave radio network with the creation of a
unified network.
Secondly a start was made on new development initiatives thanks to the success
of the new wireless technologies (DTT, DVB-H, TETRA, Wi-Max). Finally, it
should be highlighted that commercial contacts were launched with Polish and
Egyptian operators in the sector, in anticipation of entering into partnerships for
technological development in the areas of East Europe and the Mediterranean
basin.
Human Resources
During 2005 the human resources department worked on a number of tasks,
which also stemmed from the recent re-organisation. Of these, the following are
of particular note: the performance of all the monitoring and completion activities
for the new corporate organisational model, the adaptation of the management
and administration systems (accounting and EDP) to the new situation, resulting
also from the new requirements for having to maintain separate accounting
(personnel costs and reporting), as required by the competent authorities.
With regard to compensation policies, skills analyses, relative to drawing up the
budget for all corporate human resources, were prepared during the first part of
the year, with the guide-lines being updated and brought into line with the new
organisational structure.
In addition, besides the constant analysis of the M.B.O. plan, aimed at assessing
the experiences of past years with a view to continuing to improve and perfect this
management and motivational tool, which, more than any other, is seen to be
directly linked to corporate results, the related incentives system was launched in
accordance with the Rai Group’s strategic objectives and the mission of the new
38
Coming to training, about 150 persons participated in inter-company or in-house
management or professional courses.
With regard to digital terrestrial technology, Rai together with other consortium
partners created a course series entitled “Interactive Digital Terrestrial
Technology: Interactive TV and Mobile TV”, consisting of 9 thematic seminars,
which about 400 persons attended.
As for EDP and systems areas, over 1,000 persons attended the multimedia and
classroom courses relating to the adoption of the new version of the SAP system.
For the programming area, besides the usual editions of the standard training
module on the Multimedia Catalogue (an evolved computerised filing system for
Rai audio-visual material) there were courses on the “Progetto Teca Aperta” project
which was aimed at the creation of access points to this catalogue for the public
in a number of regional offices.
Then, in order to arrive at a closer link between business and the Italian educational
system, again this year around 400 trainees were taken on from the main Italian
universities, schools and training centres, for a total of 20,000 days of training.
On the subject of safety, among the various initiatives particular attention was
given to the development and consolidation of the Prevention and Protection
Services system, the new model for which was introduced towards the end of
2004; with regard to the protection of personal data, the Data Security Planning
Document is being updated. With regard to training activities connected with
safety, these substantially regarded the active presence of first aid and fire squads
and specific training activities; coordinators of central and local prevention and
protection services also underwent training.
With regard to Industrial Relations, professional skills catch basins were set up to
ensure that the staff most used by the Company (especially journalists, programming
directors and office staff) with temporary employment contracts were provided
with specific guarantees as to their future employment under similar contracts,
and to institute at the same time a preferential recruitment source for fixed-contract
employees required in the future. In addition, a start was made on the work of the
Technical Commission which had been formed to examine the issues connected
with the reclassification of employees under the collective labour contract regarding
middle management, office employees and manual workers, in accordance
with the commitments assumed under the contract which was renewed on
23 December 2004.
It should also be underlined that following the commitments assumed under the
December 2004 contract renewal, a specific negotiation forum has been opened
with the unions to define the terms and method of application of the collective
labour contract to Rai Trade, so as to complete the extension of the contract to all
Group companies.
On the litigation side, besides following judicial developments, the department has
also had direct recourse to out-of-court settlements.
39
The Medical Service, in its two sections, the Occupational Medicine Service and
the Surgery Service, continued to integrate and harmonise its activities over the
country. Specifically, the Occupational Medicine Service carried out 4,000 health
inspections in Italy (+30% on 2004) in accordance with regulations governing
health and safety in work places. The organisation and management of preventive
vaccination covering the whole country was an important measure.
The workforce at 31 December 2005 numbered 10,138 employees, compared
with 10,064 at the beginning of the year.
A total of 145 people left the company, while new hires numbered 219, as follows:
163 were reinstated following legal action; 19 were the result of previously defined
trade union agreements and agreements on widows and orphans; 15 were due
to intra-group transfers; 20 (mainly journalists on two-year contracts) were
hired for the purposes of a targeted reconstitution of the work force or for particular
requirements and, finally, 2 were taken on under three-year contracts as journalists
at managerial level.
Finally, 70 employees on trainee contracts and two-year journalist contracts
made in 2003 were converted to permanent contracts.
Staff (RAI SpA) by position
Year 2005
Year 2004
301
335
636
1,360
1,110
2,669
1,607
549
841
145
1,064
132
9,477
10,113
25
10,138
279
335
614
1,328
1,093
2,708
1,593
526
794
150
1,048
132
9,372
9,986
78
10,064
Managers and equivalent
Managers
Journalists
Journalists
Middle management
Office workers (including medical staff)
Office workers (production)
Camera crews
Programme direction
Technicians
Workers
Creative staff
Staff on permanent contracts
Staff on trainee contracts
Total staff
With regard to labour cost aspects, in addition to the typical activities of cost
budgeting and monitoring, the Group monitoring system set up in 2004 was
standardised. It is important to note the spur given in the last part of the year to
the staff early resignation incentives plan which is to go into operation in 2006.
In conclusion, although again in 2004 there was a large number of mandatory
court-ordered reinstatements, results were lower than budget both in terms of
numbers (-37 employees) and overall cost.
40
Research and Development
The current global context of the radio and television business is seeing the
contrasting effects of increased competition on the one hand and, on the other, a
limited expansion in revenues deriving from advertising. The success of new
multimedia platforms (DTT, mobile telephony, the Internet, satellite and,
increasingly, also television on ADSL), generated by recent developments in
technology, has led to a process of change and development in the activities of the
Rai Group.
The new strategic vision contemplates:
• integration and adaptation in the television and radio production area;
• measures to perfect the infrastructure for the transmission and management of
data and signals.
All this is in line with the requirement for:
• vigorous cost containment over current activities to concentrate adequate
resources on emerging systems, in particular on digital terrestrial television and
multimedia systems;
• integration of both the production systems and the infrastructure and data
management platforms, to search for synergies and eliminate duplications, thus
generating economic benefits in terms of lower operating costs.
Additional strategic measures were targeted at the rationalisation of systems and
activities and putting into operation a firm policy to re-organise and adapt the real
estate area and its components.
Consistently with the experiences of the major European public services, Rai in
addition is assessing the feasibility of entering into partnership with primary
operators on other signal transmission platforms, with strong technological
competence in broadcasting infrastructure.
As part of the initiatives managed in 2005 by the Strategic Technologies
Department, digital terrestrial television has consolidated and improved coverage
for 70% of the population as envisaged by the law with two muliplexes and has
allowed the regionalisation of one multiplex, reconfiguring the bouquet of
programmes transmitted on a regional basis.
With a view to managing and promoting multimedia technology, the results
attained were in two main areas:
• the creation and issue of interactive content and services. The more important
initiatives included the Conditional Access system for the broadcast of Pay Per
View services based on the use of rechargeable prepaid cards, the development
of applications and management instruments for smart cards, an experimental
system for the production and broadcasting of interactive advertising messages,
and a first Services Centre unit to manage DTT content.
• experimentation on advanced technologies and innovative services. The main
projects regarded digital production and filing and high definition television
(HDTV), which had its debut in the Turin area for the more significant Olympic
events. The codification system used was the innovative MPEG-4 AVC
(Advanced Video Coding) technology which, with a greater complexity in
co-decodification, halves the band space occupied. Turin also saw the experiments
41
on the Mobile TV (DVB-H) technology for the reception on personal computers
and mobile phones of audio-visual content. On the occasion of the Olympic
Games, in fact, five transmitters covered the game sites at Bardonecchia,
Cesana, Pragelato and Sestriere.
Intercompany relations
During 2005, 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 centralised treasury management for its subsidiaries in order to ensure
the coverage of financing needs and to optimise the investment of available cash
funds.
These are the main subsidiaries within the Rai Group and their respective missions:
• Rai Cinema: handles the acquisition of broadcasting 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 exploitation of related rights.
• 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. This company is not yet operative.
• RaiNet: 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.
42
Rai Cinema (millions of Euros)
2005
2004
%
Revenues
Operating costs
Depreciation, amortisation, provisions & other net items
Net financial income (charges)
Operating profit
385.1
54.8
260.4
-5.0
70.2
293.1
36.4
223.0
-9.1
33.7
31.4
50.5
16.8
-45.1
108.3
39.8
251.6
-203.9
287.7
31.8
241.6
-199.5
284.0
25.2
4.1
2.2
1.3
60
62
2005
2004
%
93.7
92.4
0.1
0.2
44.2
43.4
0.2
112.0
112.9
-
Net profit
Equity
Net financial position
Investment
0.6
3.4
-
0.6
3.1
-
9.7
Workforce (permanent + trainee contracts)
25
25
Rai Click (millions of Euros)
2005
2004
%
Revenues
Operating costs
Operating loss
2.8
4.4
0.1
-2.0
2.4
3.8
0.1
-1.7
16.7
15.8
17.6
Net loss
Equity
Investment
-1.3
5.2
4.3
0.3
-1.0
6.5
6.2
0.3
30.0
-20.0
-30.6
-
1
1
2005
2004
%
Revenues
Operating costs
Operating profit/loss
19.9
18.9
-0.1
0.1
17.8
18.3
-0.9
11.8
3.3
-111.1
Net profit/loss
Equity
Investment
0.1
10.0
0.9
7.9
-1.1
-1.1
2.5
-109.1
-181.8
216.0
51
48
Net profit
Equity
Investment
01 Distribution (millions of Euros)
Revenues
Operating costs
Operating profit
Rai Corporation (millions of Euros)
43
NewCo Rai International (millions of Euros)
2005
2004
Revenues
Operating costs
Operating loss
0.3
-0.3
0.4
-0.4
Net loss
Equity
Investment
-0.2
0.2
-
-0.3
0.5
0.4
-
-
-
2005
2004
%
12.6
11.2
0.9
5.9
11.1
0.1
-6.5
113.6
0.9
-100.0
-113.8
Net profit/loss
Equity
Investment
0.7
4.5
1.7
0.5
-4.6
3.8
1.9
0.5
-115.2
18.4
-10.5
-
55
57
2005
2004
%
67.5
51.0
-0.1
6.2
59.0
38.2
-0.2
7.0
14.4
33.5
-50.0
-11.4
3.1
7.4
-11.5
9.0
3.4
7.3
-12.4
11.8
-8.8
1.4
-7.3
-23.7
69
71
2005
2004
%
Revenues
Operating costs
Operating profit
84.7
60.0
1.0
7.8
72.4
49.9
-1.6
8.1
17.0
20.2
-162.5
-3.7
Net profit
Equity
Investment
6.4
22.0
12.9
15.5
4.3
19.6
11.0
16.6
48.8
12.2
17.3
-6.6
90
87
RaiNet (millions of Euros)
Revenues
Operating costs
Operating profit/loss
RaiSat (millions of Euros)
Revenues
Operating costs
Operating profit
Net profit
Equity
Investment
Rai Trade (millions of Euros)
44
%
-25.0
-25.0
-33.3
-60.0
-100.0
Rai Way (millions of Euros)
2005
2004
%
Revenues
Operating costs
Operating profit
193.4
136.9
-0.4
13.4
203.5
142.8
-0.8
16.7
-5.0
-4.1
-50.0
-19.8
Net profit
Equity
Investment
5.6
91.3
-12.5
32.9
7.8
91.2
-21.8
30.0
-28.2
0.1
-42.7
9.7
706
711
2005
2004
%
1,225.7
1,204.4
1.7
16.5
1,226.5
1,193.8
1.7
28.0
-0.1
0.9
-41.1
Net profit
Equity
Investment
11.6
35.6
37.6
3.6
18.5
42.5
67.5
2.9
-37.3
-16.2
-44.3
24.1
422
428
Sipra (millions of Euros)
Revenues
Operating costs
Operating profit
45
Balances and Transactions between Rai and related parties
(thousands of Euros)
Miscellaneous trading relationships
Financial relationships
Memorandum accounts
Receivables Payables Costs (*) Revenues Receivables Payables Costs Revenues Guarantees Commitments Other
Rai Corporation
SIPRA
Rai Way
Rai Trade
Rai Click
RaiSat
RaiNet
NewCo Rai International
Rai Cinema
01 Distribution
San Marino RTV
Auditel
193
366,283
9,045
14,807
158
10,122
2,107
35
33,307
233
106
-
Audiradio
Secemie
Sacis
410
2,400
6
436,396 104,746 547,249 1,189,487
(*) including for capitalisation:
- Rai Trade
46
3,937 15,710
287
9,160
548 1,125,508
56,598 156,375
16,828
9,006 17,110
20,431
1,055
446
6,913 15,636
13,842
4,733
8,705
2,633
226
58
11,549 325,376
9,170
38
1,563
3
246
4,976
-
620
12,513
11,205
203,857
-
162
2
37,387 1,298
13
13,047 267
4,261 110
11
1,703
22
45
5
844
16
-
98
18,514
5,886
4,000
2,923
2
35,755
-
3,391
31,086
1,735
13,724
1,369
7,706
7,091
2,582
93,871
-
-
5,504
227,575 62,953 1,744
67,178
91
68,775
93,871
-
Additional information
Significant events after the balance sheet date
There have been no significant events after 31 December 2005.
Outlook
Coming to the outlook for the Company, 2006 will be a year of particular
commitment for Rai.
The Company in 2006 must engage in a series of important initiatives - some of
which are on the point of finalisation - so as to avoid accumulating technological
delays and missing opportunities for alliances which will otherwise be difficult to
repair versus other operators in the market. In substance, 2006 represents a
fundamental year to redesign the Group’s ranking in the communications market
and the various broadcasting platforms, and therefore to prove that the Public
Service can effectively take on a central role also in the new digital context, which
is leading to rapid readjustment in the balance of power within the communications
sector.
The lack of continuity in strategy must however be addressed or at least a strategy
must be formulated to meet the considerable difficulties affecting public revenue
funding, which are putting a serious brake on the initiatives that Rai in any case
is required to take in order to avoid failing in its mandatory Public Service
functions, which also apply to the area of digital technology.
Indeed, despite the fact that it has become absolutely clear the costs for the Public
Service far exceed the revenues from licence fees, the Minister of Communications
has decided - in the face of the above fact - to keep the 2006 licence fee
unchanged, as was the case also for 2005.
Accordingly, the revenues position for 2006 promises to be very critical, also
because advertising - notwithstanding the expected billings for the World Soccer
Championship in Germany and, to a much lesser extent, the Winter Olympic
Games at Turin - should register a growth rate in line with that for 2005. It should
also be noted that public administration revenues might be adversely affected by
cuts brought in under the Finance Act.
On the costs side, attention is drawn to the considerable cost of acquiring the
rights for the World Soccer Championship (the 25 best matches - including all
those of the Italian National Team - and the highlights for the remaining 39), and
for the Turin Olympic Games, for an amount of over 120 million Euros, as well
as for the part pertaining to the Champions League.
47
In this situation - taking account of the rigidity distinguishing our industrial
structure, which is also the result of regulatory or contractual restrictions
governing the Public Service - Rai has launched various actions plans in the main
business areas aimed at maintaining a state of financial equilibrium, in order to
achieve higher efficiency and/or effectiveness, as well as to ensure the generation
of new revenues to be spent on strengthening the core business and developing
new strategic projects.
In this connection, it is significant that the 2006 licence fee will at least be
increased for programmed inflation.
In a prospective situation which is not limited to 2006, Rai’s expected revenues
performance is heavily dependent on an adjustment being made to the funding
system, which is public, to enable the Company to fulfil the mission entrusted to
it by law, which is to provide general Public Service radio and television
broadcasting. This mission has been progressively broadened over the years,
embracing the task of leading the communications system into the sphere of
digital technology. This entails a consequently significant financial commitment.
Supplementary 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.
With regard to regulations relating to data privacy and security, we report that
measures of a general nature adopted by the Company are as follows:
• the adoption of an organisational model on privacy (pursuant to the Managing
Director’s Instruction on Organisation DG/0122 dated 2 December 2005);
• the revision, as already reported, of the Data Security Planning Document.
Finally, we report that the Company holds no treasury shares, either directly or
through trust companies or other third parties, and that the Company did not
purchase or dispose of such shares during the year.
48
Proposed resolution to Shareholders
The financial statements for the year ended 31 December 2005 show, as already
reported, a net profit for the year of Euro 16,379,837.86, which we propose
should be allocated as follows:
• Euro 818,991.89, or 5% of net profit for the year, to the legal reserve;
• Euro 210,587.24 to the reserve for foreign currency exchange gains pursuant to
Article 2426 (8 bis) of the Civil Code;
• Euro 15,350,258.73, the remainder, to a reserve for investment in technological
innovation.
49
Rai SpA Parent Company Financial Statements at 31 December 2005
Contents
Highlights
52
Parent Company reclassified financial statements
54
Summary of Parent Company results and financial position
55
Parent Company Balance Sheet
and Income Statement - in statutory form
69
Notes to the Parent Company Financial Statements
77
Parent Company supplementary schedules
125
Report of the Board of Statutory Auditors
131
Report of the Independent Auditors
139
141
Rai SpA Highlights
Highlights
(millions of Euros)
2500
2500
2000
2000
1500
1500
1000
1000
500
500
0
2004
2005
0
2004
2005
GOM - Operating Profit
Profit before Tax - Net Profit
500
400
200
200
100
100
4.5
54.7
16.4
300
17.7
300
122.0
113.0
371.6
397.6
500
400
2,440.9
3000
2,434.7
2,799.6
3000
Operating Costs
2,832.5
Revenues
0
0
2004
52
2005
2004
2005
Rai SpA Highlights
Equity
Net Financial Position
300
400
200
200
100
0
2004
2005
0
2004
2005
Investment
(in programmes and fixed assets)
Workforce at 31 December
(permanent and trainee contracts)
10,138
227.4
2004
2005
10000
91.8
200
10,064
11000
227.3
300
9000
58.0
100
261.3
600
268.5
400
697.3
800
500
760.0
1000
0
8000
2004
2005
Nota: I dati di Rai SpA relativi al 2003 e al 2002 sono stati elaborati come pro-forma per rendere omogeneo il confronto
con i dati del 2004, che rappresentano i risultati economico-finanziari della società risultante dalla fusione per
incorporazione, efficace dal 1 dicembre 2004, di Rai SpA in Rai Holding SpA.
53
Rai SpA Parent Company reclassified financial statements
Parent Company reclassified financial statements
Income Statements
(millions of Euros)
31.12.2005
Revenues from sales and services
Internal cost capitalisations
Total revenues
External goods and services
Personnel costs
Total operating costs
Gross Operating Margin
Amortisation of programmes
Depreciation of fixed assets
Other net income (charges)
Operating Profit
Net financial income
Value adjustments to financial assets
Profit before taxes and extraordinary items
Net exceptional income (charges)
Profit before taxes
Income taxes for the year
Net Profit for the year
2,832.5
6.0
2,838.5
(1,572.6)
(868.3)
(2,440.9)
397.6
(187.9)
(125.5)
(66.5)
17.7
70.4
0.8
88.9
(34.2)
54.7
(38.3)
16.4
31.12.2004
2,799.6
6.7
2,806.3
(1,612.1)
(822.6)
(2,434.7)
371.6
(192.3)
(130.8)
(44.1)
4.4
57.5
(4.5)
57.4
64.5
121.9
(8.9)
113.0
Change in
amount
Change %
32.9
(0.7)
32.2
39.5
(45.7)
(6.2)
26.0
4.4
5.3
(22.4)
13.3
12.9
5.3
31.5
(98.7)
(67.2)
(29.4)
(96.6)
1.2
-10.4
1.1
-2.5
5.6
0.3
7.0
-2.3
-4.1
50.8
302.3
22.4
-117.8
54.9
-153.0
-55.1
330.3
-85.5
Change in
amount
Change %
Balance Sheet (millions of Euros)
Non-current assets
Working capital
Staff severance pay provision
Net Invested Capital
Equity
Net financial debt
31.12.2005
31.12.2004
1,102.4
(299.7)
(366.7)
436.0
697.3
(261.3)
436.0
1,146.6
(309.3)
(345.8)
491.5
760.0
(268.5)
491.5
(44.2)
9.6
(20.9)
55.5
(62.7)
7.2
(55.5)
-3.9
-3.1
6.0
11.3
-8.3
-2.7
-11.3
Nota: I dati di Rai SpA relativi al 2003 sono stati elaborati come pro-forma per rendere omogeneo il
confronto con i dati del 2004, che rappresentano i risultati economico-finanziari della società risultante
dalla fusione per incorporazione, efficace dal 1 dicembre 2004, di Rai SpA in Rai Holding SpA.
54
Rai SpA Summary of Parent Company results and financial position
Summary of Parent Company results and financial
position
Parent Company Income Statement
The parent company income statement shows a net profit of 16,4 million Euros
for 2005, which is down on 2004 (113 million Euros).
The following section provides an overview of the main items of the income
statement and the reasons behind the more significant changes with respect
to 2004.
Revenues from sales and services consist of licence fees, advertising revenues and
other commercial revenues.
They totalled 2,832.5 million Euros, up 32.9 million Euros (1.2%) on 2004.
Revenues from sales and services (millions of Euros)
Licence fees
Advertising revenues
Other revenues
Total Revenues from sales and services
2005
2004
Change
in amount
Change %
1,482.5
1,121.2
228.8
2,832.5
1,473.8
1,108.0
217.8
2,799.6
8.7
13.2
11.0
32.9
0.6
1.2
5.1
1.2
Licence fees (1,482.5 million Euros). With the licence fee remaining unchanged,
these revenues show a result which is consistent with the preceding year, with
however a slight increase (8.7 million Euros or 0.6%) which is wholly attributable
to an increase in the number of paying subscribers (+76,592 subscribers), this
being a direct consequence of efforts to contain licence fee evasion. Such efforts
included action taken by the fiscal police, home inspections made by agents and
promotional campaigns involving prize schemes for subscribers.
TV subscriptions – changes
New
Renewals
Paying subscribers
Delinquent subscribers
Total registered subscribers
Delinquent subscriber ratio
Cancellations
Cancellations + delinquent positions
2005
2004
2003
Change %
2005/2004
410,191
15,312,121
15,722,312
675,716
16,398,028
4.22
334,647
1,010,363
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
-2.8
0.6
0.5
-0.2
0.5
-11.1
-4,1
55
The licence fee in Italy, which will remain unchanged in 2006, 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 2005.
Licence fees in Europe (Euros)
Iceland
Switzerland
Denmark
Norway
Austria
Sweden
Germany
389.00
292.00
274.00
240.00
238.18
214.00
204.36
Finland
United Kingdom
Eire
Belgium
France
Italy
193.95
179.00
155.00
145.49
116.00
99.60
Advertising revenues (1,121.2 million Euros) show an increase of 13.2 million
Euros (+1.2%) on the previous year despite the fact that 2004 benefited from
advertising connected with the major sports events that took place during that
year (the Olympics and the European soccer championships) bringing in about 32
million Euros of additional advertising revenues.
Advertising (millions of Euros)
Television advertising
Radio advertising
Promotions and sponsorships
Other advertising
Total
2005
2004
Change
in amount
Change %
973.9
58.7
79.9
8.7
1,121.2
950.5
61.5
87.3
8.7
1,108.0
23.4
(2.8)
(7.4)
0.0
13.2
2.5
-4.6
-8.5
0.0
1.2
Other revenues. Despite a drop of 5.2 million Euros in Special Public Broadcasting
Services, mainly as a result of lower refunds obtained for subscription handling,
other revenues show an overall increase of 11 million Euros (+5.1%) arising from
increased commercial activities in various sectors. In this connection, the following
are worthy of mention:
• services rendered by the production centres for services to third parties and
Group companies (+3.6 million Euros);
• the sale of content to mobile phone operators and the activities on the interaction
of television viewers with programmes (+2.9 million Euros);
• other services of different categories, including activities in favour of local authorities
and institutions under various types of agreements (+5.6 million Euros).
56
Other revenues (millions of Euros)
Special public broadcasting services
Sale of rights
Services to investee companies
Services to public and private entities
Production services
Telephony services
Refund of production costs
Recovery of emoluments and cost of seconded staff
Other
Total
2005
2004
Change
in amount
Change %
77.7
45.4
31.5
16.7
15.1
11.5
10.0
7.6
13.3
228.8
82.9
44.1
31.4
11.1
11.5
8.6
10.2
6.5
11.5
217.8
(5.2)
1.3
0.1
5.6
3.6
2.9
(0.2)
1.1
1.8
11.0
-6.3
2.9
0.3
50.5
31.3
33.7
-2.0
16.9
15.7
5.1
As shown in the following table, the relative weights of the three components in
total revenues from sales and services show no significant differences from the
actual figures for the preceding year.
% of revenues
Licence fees
Advertising
Other revenues
Total
2005
2004
52.3
39.6
8.1
100.0
52.6
39.6
7.8
100.0
These relate to the capitalisation of costs using internal resources for the production
of plant or programmes carried under non-current assets. They total 6 million
Euros, mostly regarding investment in fixed assets.
Internal cost capitalisations (millions of Euros)
Capitalisation of costs for programmes
Capitalisation of costs for plant
Total
2005
2004
Change
in amount
Change %
0.4
5.6
6.0
0.8
5.9
6.7
(0.4)
(0.3)
(0.7)
-50.0
-5.1
-10.4
Operating costs
Operating costs total 2,440.9 million Euros, a decrease of 6.2 million Euros, or
about 0.3%, on 2004.
They include internal costs (personnel) and external costs involved in the Company’s
ordinary operations, with the exception of those associated with financial operations.
A breakdown follows.
57
Cost of goods and external services. This caption 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 caption shows a decrease of 39.5 million
Euros (-2.5%) from the previous year as a result of savings on not having to
acquire rights to major sports events, which were partly offset by the additional cost
of acquiring film viewing rights from Rai Cinema.
Cost of goods and external services (millions of Euros)
Materials purchased
External services:
Freelance services
Services for acquisition and production of programmes
Signal broadcasting and transport - Rai Way
General services (postage, transport, maintenance,
cleaning, plant operation, archive services, etc)
Allowances, travel and transfers
Other
Use of third-party assets:
Acquisition of viewing rights from Rai Cinema
Filming rights
Usage rights
Leases and rentals
Other
Change in inventories
Concession fee
Total
2005
2004
Change
in amount
Change %
23.3
21.9
1.4
6.4
131.8
240.6
156.2
126.2
233.5
165.0
5.6
7.1
(8.8)
4.4
3.0
-5.3
149.4
33.1
86.9
798.0
153.4
34.7
76.0
788.8
(4.0)
(1.6)
10.9
9.2
-2.6
-4.6
14.3
1.2
325.2
203.5
116.2
67.2
10.2
722.3
0.7
28.3
1,572.6
264.9
317.9
113.7
65.5
11.8
773.8
0.4
27.2
1,612.1
60.3
(114.4)
2.5
1.7
(1.6)
(51.5)
0.3
1.1
(39.5)
22.8
-36.0
2.2
2.6
-13.6
-6.7
75.0
4.0
-2.5
Personnel costs . These come to 868.3 million Euros compared with 822.6 million
Euros at 31 December 2004.
Personnel costs (millions of Euros)
Wages and salaries
Social security contributions
Staff severance pay
Pension and similar costs
Other
Total
2005
2004
Change
in amount
Change %
627.4
164.0
44.9
13.5
18.5
868.3
592.0
163.0
42.2
11.6
13.8
822.6
35.4
1.0
2.7
1.9
4.7
45.7
6.0
0.6
6.4
16.4
34.1
5.6
The increase of 45.7 million Euros in personnel costs in 2005 over 2004 is partly
attributable to the impact of changes in the previous year (+8.4 million Euros for
movements in personnel, contract renewals, automatic increases and payroll
58
policy) and partly to changes in the year (+29.5 million Euros) mainly deriving
from contract renewals for 16.3 million Euros and partly from the cost of increasing
provisions for labour disputes (up 4.6 million Euros on the preceding year), the
remainder relating to minor items.
Staff at 31 December 2005 (permanent contracts, trainees and two-year journalist
contracts) totalled 10,138, an increase of 74 on end-2004.
Number of personnel at year-end (in units)
Permanent employees
Trainees and under two-year journalist contracts
Total
2005
2004
Change
in amount
Change %
10,113
25
10,138
9,986
78
10,064
127
(53)
74
1.3
-67.9
0.7
The average number of employees, including those on fixed-term contracts, came
to 11,732, an increase of 65 on the previous year.
A total of 601 employees took advantage of the benefits indicated under Law
243/2004, postponing their retirement and seniority pension rights.
The gross operating margin, as a consequence of the above, is positive for 397.6
million Euros, up 26 million Euros or about 7% on the preceding year.
Investment and amortisation of programmes
Investment in programming, which is in line with the preceding year’s figure,
amounts to 227.3 million Euros. In its makeup, the TV series segment has been
strengthened, with investment rising by about 4.3 million Euros (+2.13%), to the
detriment of investment in the Documentaries segment which shows a drop of 4.4
million Euros (-30.3%). Investment in other segments remains stable.
59
Investment in programmes (millions of Euros)
TV series
Documentaries
Other programmes
Total
2005
2004
206.1
10.1
11.1
227.3
201.8
14.5
11.1
227.4
Change
in amount
4.3
(4.4)
0.0
(0.1)
Change %
2.1
-30.3
0.0
0.0
Amortisation for the period, which is calculated on the basis of the criteria
described in accounting policies section of the notes to the parent company
financial statements, was charged for completed programmes with rights available
by the end of 2005.
The fall in amortisation of Documentaries, 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
Documentaries
Other programmes
Total
2005
2004
Change
in amount
Change %
168.4
10.5
9.0
187.9
170.3
15.2
6.7
192.2
(1.9)
(4.7)
2.3
(4.3)
-1.1
-30.9
34.3
-2.2
Fixed asset investment and depreciation
Compared with the preceding year, 2005 shows an overall slowdown in fixed asset
investment due mostly to the suspension, at least for the time being, in the acquisition
of frequencies required to launch and widen the digital terrestrial network.
Fixed asset investment (millions of Euros)
Property, plant and equipment
Other assets - improvements etc
Total
2005
2004
Change
in amount
Change %
56.2
1.8
58.0
54.4
37.4
91.8
1.8
(35.6)
(33.8)
3.3
-95.2
-36.8
Depreciation for the year, calculated on assets in service at 31 December using the
rates indicated in the notes to the parent company financial statements, is substantially
in line with the preceding year.
Depreciation on fixed assets (millions of Euros)
Property, plant and equipment
Other assets - improvements etc
Total
60
2005
2004
Change
in amount
Change %
119.9
5.6
125.5
125.4
5.4
130.8
(5.5)
0.2
(5.3)
-4.4
3.7
-4.1
Other net charges
Other net charges amount to 66.5 million Euros (44.1 million Euros at 31
December 2004). The caption represents the balance of income and charges not
directly related to the company’s core business. More specifically, they consist of
prior-year income and expense items, provisions for write-downs and risks, indirect
taxes, municipal property tax, the cost of prize competitions and other charges.
As in previous years, in order to take account of risks connected with not being
able to transmit or re-broadcast repeat-use programmes, capitalised programmes
have been written down by 22 million Euros, compared with a write-down of 39
million Euros in 2004.
Operating Profit
The results described above for operating revenues and costs led to a rise in
operating profit, from 4.5 million Euros in 2004 to 17.7 million Euros in 2005,
increasing 13.2 million Euros.
Net financial income shows a gain of 70.4 million Euros (57.5 million Euros in 2004)
as a result of the improvement in the results of Group companies (+4 million Euros)
and net income from financial transactions (+8.9 million Euros).
Income from equity investments. This comprises dividends received in the year in
respect of profits for the previous year. Despite the drop in Rai Cinema’s results, the
caption has increased by 4 million Euros on 2004 due mostly to higher dividends
from Sipra and Rai Way.
61
Income from equity investments (millions of Euros)
2005
2004
Change
in amount
Change %
29.8
18.5
5.6
4.0
2.8
60.7
44.5
8.2
0
2.3
1.7
56.7
(14.7)
10.3
5.6
1.7
1.1
4.0
-33.0
125.6
==
73.9
64.7
7.1
Dividends
- Rai Cinema
- Sipra
- Rai Way
- Rai Trade
- Rai Sat
Total
Net financial charges on financial transactions amount to 9.7 million Euros.
They comprise net interest income or expense with banks and Group companies
and net foreign exchange losses.
Net financial income (millions of Euros)
2005
2004
Change
in amount
Change %
2.7
(1.7)
4.4
-258.8
4.7
2.3
9.7
3.7
(1.2)
0.8
1.0
3.5
8.9
27.0
-291.7
1,112.5
Net interest income (expense) with third parties
Net interest income from subsidiaries
and associated companies
Net exchange gains (losses)
Total
Net financial income has improved thanks to an improved financial situation, the
average position increasing steeply (+153 million Euros), as well as to the positive
effects of the handling of exchange rate risks and the hedges taken out in preceding
years on sports events contracts.
Bank debt was limited to brief overdraft periods, during which use was made of
hot cash credit lines at an average rate of 2.4%. Deposits earned rates close on 2%.
This was achieved by employing temporary excess cash in risk-free operations with
leading banks. The deposit and borrowing rates obtained were among the most
competitive applied by banks to prime customers.
This caption reflects value adjustments and re-adjustments on holdings in
subsidiaries and associated companies deriving from their results for the year.
Value adjustments to financial assets (millions of Euros)
Newco Rai International
Rai Corporation
RaiNet
Other companies
Total
62
2005
2004
Change
in amount
Change %
(0.2)
0.0
0.7
0.3
0.8
(0.5)
(0.4)
(4.6)
1.0
(4.5)
0.3
0.4
5.3
(0.7)
5.3
-60.0
-100.0
-115.2
-70.0
-117.8
Exceptional income and (charges) - net
Net exceptional income and charges amount to 34.2 million Euros, mainly (for
35.5 million Euros) as a result of the costs incurred on the development of an
incentive plan for the early resignation of staff that will be applied in the first six
months of 2006, with the aim of containing future years’ personnel costs.
Exceptional income and charges (millions of Euros)
Exceptional income
Gains on the elimination of fiscal distortions
in the accounts
Prior year taxes
Other
Exceptional charges
Prior year taxes
Restructuring charges
Total
2005
2004
Change
in amount
Change %
0.0
1.3
0.0
1.3
63.4
1.3
0.4
65.1
(63.4)
0.0
(0.4)
(63.8)
-100.0
0.0
-100.0
-98.0
0.0
(35.5)
(35.5)
(34.2)
(0.6)
0.0
(0.6)
64.5
0.6
(35.5)
(34.9)
(98.7)
-100.0
==
5816.7
-153.0
Income taxes
These total 38.3 million Euros. They comprise the balance between current taxes
and deferred tax charges and credits as detailed in the table below.
Deferred tax credits relate for the most part to an assessment made of the future
tax-deductibility of provisions so far disallowed for tax purposes in the current
and past years.
Income taxes (millions of Euros)
IRPEG/IRES
IRAP
Deferred tax charges
Deferred tax credits
Total
2005
2004
11.0
43.0
0.1
(15.8)
38.3
0.0
40.0
29.3
(60.4)
8.9
63
Parent Company Balance Sheet
Non-current assets
Non-current assets (millions of Euros)
31.12.2005
31.12.2004
Change
in amount
Change %
469.5
272.6
304.1
56.2
1,102.4
533.9
255.1
295.0
62.6
1,146.6
(64.4)
17.5
9.1
(6.4)
(44.2)
-12.1
6.9
3.1
-10.2
-3.9
Fixed assets
Programmes
Equity investments
Other non-current assets
Total
Fixed assets amount to 469.5 million Euros, of which 55.3% relates to industrial
land and buildings.
Fixed assets (millions of Euros)
31.12.2005
Land and buildings
Plant and machinery
Industrial and sales equipment
Other assets
Assets under construction and payments on account
Total
259.5
129.7
5.1
29.6
45.6
469.5
31.12.2004
Change
in amount
Change %
303.8
152.2
5.4
29.4
43.1
533.9
(44.3)
(22.5)
(0.3)
0.2
2.5
(64.4)
-14.6
-14.8
-5.6
0.7
5.8
-12.1
The decrease of 64.4 million Euros with respect to 2004 is the balance of new
investment (56.2 million Euros), eliminations (0.7 million Euros) and depreciation
(119.9 million Euros).
The investment in Programmes is mainly represented by programming for the
TV series (250 million Euros) which accounted for most investment during the
year (206.1 million Euros).
The change with respect to the previous year (+17.5 million Euros) is the net
result of the following factors:
• Investment for 227.3 million Euros;
• Depreciation for 187.9 million Euros;
• Write-down of programmes for 22 million Euros, for the above reasons.
Programmes (millions of Euros)
TV series
Documentaries
Other
Total
64
31.12.2005
31.12.2004
Change
in amount
Change %
250.0
0.5
22.1
272.6
234.2
0.9
20.0
255.1
15.8
(0.4)
2.1
17.5
6.7
-44.4
10.5
6.9
The increase of 9.1 million Euros in Equity investments is mainly the result of the
share capital increase in Rai Corporation (+8.3 million Euros), the remainder
relating to revaluations and minor items.
Other non-current assets show a decrease of 6.4 million Euros for depreciation
charged in the year on the digital terrestrial network (3.2 million Euros) and the
refund of tax advances on the provision for staff severance pay (3 million Euros),
the remainder relating to minor items.
Working capital
The change from 2004 (+9.6 million Euros) is mostly due to normal developments
in the business.
Working capital (millions of Euros)
Inventories
Trade receivables
Other assets
Trade payables
Provisions for risks and charges
Other liabilities
Total
31.12.2005
31.12.2004
Change
in amount
Change %
1.7
635.8
320.0
(622.5)
(474.5)
(160.2)
(299.7)
2.5
581.5
232.3
(553.0)
(426.6)
(146.0)
(309.3)
(0.8)
54.3
87.7
(69.5)
(47.9)
(14.2)
9.6
-32.0
9.3
37.8
12.6
11.2
9.7
-3.1
The major changes include:
The increase in Trade receivables (+54.3 million Euros) mainly due to growth
in the volume of revenues for services rendered to third parties and, above all, to
greater advertising revenues in the last quarter.
Other assets show an increase of 87.7 million Euros resulting from advance
payments made to acquire rights for the 2006 and 2010 World Cup and other
sports events, as well as higher Group VAT credits.
The rise in Trade payables (+69.5 million Euros) is due for the most part to
normal developments in the payments cycle and to recording invoices still to be
received relating to 2005.
The Provisions for risks and charges, which show an increase of about 48
million Euros, relate entirely to personnel matters. They relate to the costs on the
development of a project for giving staff incentives to resign (35.5 million Euros)
and the possible payment of premiums on the year’s results (24.5 million Euros),
partly compensated by minor charges to the provisions.
65
The overall risk situation to which the Company is exposed has not undergone any
significant change in the year. We therefore confirm that the coverage level
represented by the provisions made continues to be sufficient to meet future risks
and charges.
It should be noted that Trade receivables comprise, net of the relative write-downs,
accounts receivable from subsidiaries, mainly Sipra for 366.3 million Euros
(345.6 million Euros in 2004) and receivables under agreements with Ministries
for 135.4 million Euros (139.1 in 2004).
The year-end net financial position is positive even though it has fallen slightly
from the previous year (261.3 million Euros, compared with 268.6 million Euros
in 2004). An analysis follows:
Net financial position (millions of Euros)
Net amounts due to banks and other lenders
medium/long-term
short-term
cash and cash equivalents
Net financial position with investee companies
payables
receivables
Current securities
31.12.2005
31.12.2004
Change
(1.2)
(0.3)
98.2
96.7
(3.5)
(13.2)
143.3
126.6
2.3
12.9
(45.1)
(29.9)
(63.0)
227.6
164.6
0.0
261.3
(92.7)
234.7
142.0
0.0
268.6
29.7
(7.1)
22.6
0.0
(7.3)
Overall cash flow, which was practically nil, was impacted by the payment to the
Shareholder of a dividend of 79 million Euros, which in fact was the equivalent
of resources generated by operations, net of investments made. Cash movements
were substantially regular for collections, with on-account payments on licence
fees being made regularly by the Ministry of Economic Affairs and Finance which,
taken together with the positive balance at the beginning of the year, led to an
improvement of over 150 million Euros in the net average financial position (323
million Euros as against 170 million Euros for 2004).
Group companies present an increase in funding requirements, which is entirely
covered by intercompany indebtedness, thanks to the workings of cash-pooling
arrangements.
66
The Company uses appropriate computerised and statistical instruments to check
financial risks and the efficacy of hedges set up. In addition, a financial policy is
being set up to regulate control over financial risks in accordance with best international practice and new accounting principles.
Specifically:
• The exchange risk, which is significant as regards currency exposure generated
by the acquisition of sports events rights as well as for financing the American
associate Rai Corporation, is primarily connected with the requirement for US
currency, estimated at about 100 million dollars per year.
The importance of this matter makes it necessary for the parent company to
exercise constant monitoring, within the sphere of its administrative service, also
on behalf of Group companies as well as, on the basis of a specific mandate, for
Rai Cinema.
Within the objective of observing the exchange rate used in drawing up budgets
and economic plans, hedging strategies are created gradually, using financial
derivative instruments - such as forward purchases, swaps, and options structures
- addressed exclusively to hedge requirements arising from commercial agreements,
some of which cover several years that have already been signed. Such operations,
therefore, are never in the nature of a financial speculation.
• To cover the short and medium/long-term rate risk, appropriate hedging
transactions have been entered into to ensure equilibrium in the income
statement, even if, at the moment, there are only two hedging operations in
place covering the short-term infra-annual requirement. In effect, the Group’s
financial position does not contain significant long-term exposures, but sees
short periods of operational liquidity alternating with limited overdraft positions,
especially over the collection time for licence fee instalments.
• The credit risk on cash deployment is extremely limited in that use is made
only of deposits and investment instruments with leading banks.
• Coming to the liquidity risk it should be noted that short-term credit lines, in
the range of 500 million Euros, ensure elasticity in cash requirements on the
basis of current management policies throughout the course of the year.
67
Rai SpA Stato Patrimoniale e Conto Economico
Rai SpA
Parent Company Balance Sheet and Income Statement
in statutory form
69
Rai SpA Parent Company Balance Sheet and Income Statement
Balance Sheet - Assets
A) SUBSCRIBED CAPITAL UNPAID
B) NON-CURRENT ASSETS
I. INTANGIBLE ASSETS
3.- Industrial patents and intellectual property rights
4.- Concessions, licences, trademarks and similar rights
6.- Intangible assets under development and payments on account
7.- Other intangible assets
TOTAL INTANGIBLE ASSETS
II. FIXED ASSETS
1.- Land and buildings
2.- Plant and machinery
3.- Industrial and sales equipment
4.- Other fixed assets
5.- Fixed assets under construction and payments on account
TOTAL FIXED ASSETS
III. FINANCIAL ASSETS
1.- Equity investments in
a)subsidiaries
b)associated companies
d)other companies
2.- Receivables
d)other
due within 1 year
due after 1 year
3.- Other securities
TOTAL NON-CURRENT FINANCIAL ASSETS
TOTAL NON-CURRENT ASSETS
70
(in Euros)
31.12.2005
-
31.12.2004
-
182,340,061
29,232,638
91,147,048
7,362,442
310,082,189
153,739,572
32,475,125
102,452,721
7,688,643
296,356,061
259,508,234
129,698,295
5,070,871
29,658,718
45,596,169
469,532,287
303,734,700
152,223,716
5,417,611
29,410,215
43,119,562
533,905,804
302,320,399
1,129,162
668,045
304,117,606
293,511,025
824,486
670,187
295,005,698
2,918,107
12,190,728
15,108,835
3,554,751
322,781,192
1,102,395,668
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. RECEIVABLES
1.- customers
2.- subsidiaries
3.- associated companies
4.bis - tax receivables
4.ter - deferred tax assets
5.- other
TOTAL RECEIVABLES
III. CURRENT FINANCIAL ASSETS
6.- other securities
TOTAL CURRENT FINANCIAL ASSETS
IV. CASH AND CASH EQUIVALENTS
1.- Bank and post office deposits
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
31.12.2005
31.12.2004
1,414,941
293,581
1,708,522
2,076,427
396,226
2,472,653
199,635,496
663,052,501
106,168
43,690,505
73,687,123
186,371,232
1,166,543,025
190,137,101
625,429,409
127,703
29,430,522
62,831,699
122,882,375
1,030,838,809
-
-
97,905,265
6,072
257,975
98,169,312
1,266,420,859
143,015,163
800
255,292
143,271,255
1,176,582,717
16,908,868
17,720,617
16,908,868
2,385,725,395
17,720,617
2,340,930,415
71
Balance Sheet - Liabilities and Equity
31.12.2005
31.12.2004
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
VIII.PROFITS BROUGHT FORWARD
IX. NET PROFIT FOR THE YEAR
TOTAL EQUITY
242,518,100
6,158,066
394,997,443
37,266,353
16,379,838
697,319,800
242,518,100
509,578
394,519,904
9,501,456
112,969,764
760,018,802
B) PROVISIONS FOR RISKS AND CHARGES
1.- pension and similar liabilities
2.- current and deferred taxes
3.- other
TOTAL PROVISIONS FOR RISKS AND CHARGES
150,731,711
31,784,839
292,013,742
474,530,292
154,458,507
31,698,296
240,439,203
426,596,006
C) PROVISION FOR STAFF SEVERANCE PAY
366,663,395
345,783,970
1,392,183
-
15,376,323
1,204,720
23,338,753
494,538,964
165,255,272
2,406,887
65,155,871
17,179,909
445,569,777
180,742,419
2,464,694
30,932,165
35,519,710
55,787,355
843,394,995
39,633,396
74,164,690
807,268,093
3,816,913
3,816,913
2,385,725,395
1,263,544
1,263,544
2,340,930,415
D) PAYABLES
4.- Due to banks
due within one year
due after one year
5.- Due to other lenders
due within one year
due after one year
6.- Advances
7.- Suppliers
9.- Subsidiaries
10.- Associated companies
11.- Parent companies
12.- Taxes payable
13.- Social security institutions
due within one year
due after one year
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
(in Euros)
Memorandum Accounts
(in Euros)
31.12.2005
31.12.2004
63,275,715
2,582,285
269,000
66,127,000
72,017,302
2,582,285
269,000
74,868,587
Total unsecured guarentees granted
3,390,693
3,390,693
69,517,693
3,303,722
3,303,722
78,172,309
2.- Secured guarantees granted
b) for own commitments other than payables
c) for debt recorded in the balance sheet
Total secured guarantees granted
3,536,000
50,561,130
54,097,130
3,536,000
50,561,130
54,097,130
93,871,124
93,518,356
236,598,705
454,084,652
161,011,731
386,799,526
1.- Unsecured guarantees granted
a) Sureties:
- in favour of subsidiaries
- in favour of associated companies
- in favour of others
c) Other:
- in favour of subsidiaries
3.- Purchase and sales commitments
4.- Other
73
Income Statement
A) PRODUCTION VALUE
1.- Revenues from sales and services
2.- Changes in inventories of work in progress, semifinished and finished goods
4.- Internal cost capitalisations
5.- Other production-related income
a) operating grants
b) gains on disposal of assets
c) other
TOTAL PRODUCTION VALUE
B) PRODUCTION COSTS
6.- Purchases of raw materials, supplies, consumables and merchandise
7.- Cost of services
8.- Use of third-party assets
9.- Personnel costs
a) wages and salaries
b) social security contributions
c) staff severance pay
d) pensions and similar costs
e) other costs
10.- Amortisation, depreciation and writedowns
a) amortisation of intangible assets
b) depreciation of fixed assets
c) other non-current asset 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
Miscellaneous operating costs
a) asset disposal losses
b) concession fee
c) other
TOTAL PRODUCTION COSTS
Operating profit
74
(in Euros)
31.12.2005
31.12.2004
2,776,008,888
(102,644)
6,077,272
2,744,262,667
(19,975)
6,735,579
840,760
124,431
91,723,354
92,688,545
2,874,672,061
685,848
1,631,097
129,281,850
131,598,795
2,882,577,066
(23,266,406)
(798,077,399)
(722,265,540)
(21,917,568)
(788,831,088)
(773,761,346)
(627,392,723)
(163,959,754)
(44,891,282)
(13,514,647)
(18,522,639)
(868,281,045)
(592,012,167)
(162,975,206)
(42,173,325)
(11,640,137)
(13,817,382)
(822,618,217)
(193,494,306)
(119,885,798)
(22,020,701)
(1,982,941)
(337,383,746)
(211,624,418)
(125,373,802)
(40,932,023)
(377,930,243)
(661,486)
(15,712,396)
(8,339,832)
(387,921)
(6,007,394)
(8,863,451)
(599,503)
(28,312,725)
(54,079,271)
(82,991,499)
(2,856,979,349)
(1,446,221)
(27,166,841)
(49,220,072)
(77,833,134)
(2,878,150,362)
17,692,712
4,426,704
Income Statement
cont.
C) FINANCIAL INCOME AND CHARGES
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) from non-current receivables
. other
b) from non-current securities other than equity investments
c) from current securities other than equity investments
d) financial income other than the above
. interest and commissions from subsidiaries
. interest and commissions from others and miscellaneous income
17.- Interest and other financial charges
a) interest and commissions payable to subsidiaries
b) interest and commission payable to associated companies
d) interest and commission payable to others and miscellaneous charges
17 bis.- Foreign exchange gains and losses - net
TOTAL FINANCIAL INCOME AND CHARGES - NET
D) VALUE ADJUSTMENTS TO FINANCIAL ASSETS
18.- Revaluations
a) of equity investments
19.- Write-downs
TOTAL VALUE ADJUSTMENTS TO FINANCIAL ASSETS - NET
E) EXCEPTIONAL INCOME AND CHARGES
20.- Exceptional income
a) asset disposal gains
b) out-of-period gains and reversal of non-existent liabilities
c) other
21.- Exceptional charges
a) asset disposal losses
b) prior-year taxes
c) other
TOTAL EXCEPTIONAL INCOME AND CHARGES - NET
Profit before taxes
22.- Current taxes for the year and deferred tax charges and credits
23.- Net profit for the year
(in Euros)
31.12.2005
31.12.2004
60,738,338
27,642
60,765,980
56,752,137
56,752,137
414,996
414,996
460,644
460,644
85,233
-
492,414
-
6,440,290
3,998,490
10,438,780
10,939,009
5,152,738
2,365,569
7,518,307
8,471,365
(1,728,438)
(15,639)
(1,778,766)
(3,522,843)
2,205,181
70,387,327
1,039,373
1,039,373
(234,195)
(234,195)
805,178
1,325,424
1,325,424
(35,500,000)
(35,500,000)
(34,174,576)
(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
(605,920)
(17,892)
(623,812)
64,483,031
54,710,641
121,925,873
(38,330,803)
16,379,838
(8,956,109)
112,969,764
75
Rai SpA Nota integrativa
Rai SpA
Notes to the Parent Company Financial Statements
77
Rai SpA Notes to the Parent Company Financial Statements
1) Activity of the company
Following the entry into force of Law 112 of 3 May 2004 (“Regulations establishing
principles for the organization 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 of Rai - Radiotelevisione Italiana
SpA into Rai Holding SpA. The latter had been established in January 2001 to hold
an equity stake of 99.55% in the share capital of Rai - Radiotelevisione italiana SpA.
As a result of the merger, Rai Holding SpA changed its name to Rai Radiotelevisione
italiana SpA, and the Board of Directors of the absorbed company became the
Board of Directors of the surviving company.
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 organization of the radio
and television system and Rai Radiotelevisione italiana SpA, as well as granting
enabling authority to the Government to issue a consolidated radio and television
law”). With Law 177 of 31 July 2005 approval was given to the Consolidated Law
governing Radio and Television, incorporating additional clauses, amendments and
cancellations necessary for the co-ordination of the services or their proper functioning.
In the Consolidated Law the provisions of Law 112/04 were incorporated, relating
to the radio and television general public service and, in consequence, articles 3 and
5 of Law 206/93 which had not been repealed by Law 112/04.
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 into force.
78
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 expired 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 parent company financial statements at 31 December 2005 are prepared in
conformity with the relevant provisions of the Italian Civil Code. They are
supplemented with reclassified statements showing the balance sheet and income
statement in vertical form, and cash flows.
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 detailed Schedules are stated in thousands of Euros.
In order to ensure the full comparability of the figures in the 2005 financial
statements with those of the previous year, a number of items in the balance sheet
and income statement for 2004 have been reclassified.
Rai’s financial statements have been audited by PricewaterhouseCoopers, which
has also been engaged to conduct the audit procedures under Article 2409 bis of
the Civil Code, in accordance with the resolution of the Shareholders’ Meeting of
20 December 2004.
79
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 seq. of the Civil Code. Such policies are substantially
unchanged from those applied in the preceding year.
a) Industrial patents and intellectual property rights:
the acquisition and production 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 recorded on the following bases:
1) costs for repeat-use television productions are capitalised under intangible
assets and, if such productions are usable at year-end, are carried under
industrial patents and intellectual property rights and amortised on a
straight-line basis over the period of their estimated useful life. If such
programmes are not yet usable at year-end, the costs are carried 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 transmission or re-broadcasting is at risk.
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:
- News, light entertainment 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 held in suspense up to the year in which the event
takes place.
- Documentaries. Costs are charged against income in a single amount at the
time the programmes are ready for broadcasting or the rights are usable.
b) Software licences are carried with industrial patents and intellectual property
rights and are amortized over three yeas as from the year they enter service.
80
c) Costs incurred for the construction of the digital terrestrial network are
capitalised under intangible assets and amortized on a 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) Deferred charges are carried under other intangible assets net of accumulated
amortisation. They regard improvements to leased or licensed property.
Amortisation for leasehold improvements is determined on the basis of the
shorter of the residual duration of the related contracts and the estimated
period of benefit of the costs, calculated using amortisation rates which reflect
the rate of economic or physical deterioration of the relative assets.
f) Fixed assets - which are shown net of accumulated depreciation - are recorded
at cost, increased by internal personnel costs incurred in preparing them to
enter service, and revalued pursuant to laws.
The costs of fixed assets as determined above are depreciated in accordance
with Article 2426 (2) of the Civil Code
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
permanent impairment in value. The value of companies with negative
shareholders’ equity is set at zero and Rai’s share of the deficit is provided for
under the provisions for risks and charges.
h) Fixed-income securities carried as non-current financial assets are valued at
purchase cost. Positive or negative differences between purchase cost and
redemption value are taken to the income statement in the amount accruing for
the year.
i) Non-current assets which, at the balance sheet date, have suffered a permanent
impairment in value, are carried at the lower value. Should the reasons for the
writedown made in previous years no longer apply, the assets are revalued
within the limits of the amount of the writedown.
j) Other securities carried under current financial assets are valued at the lower
of purchase cost - determined as the weighted average cost - and estimated
realisable value, which is given by market value.
k) Inventories of raw materials, supplies and consumables are valued at cost,
which is determined on the basis of weighted average cost, written down taking
account of market trends and estimated non-use due to obsolescence and slow
turnover. Inventories of merchandise for resale (relating to periodicals and book
publishing) 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.
l) Accrued income and prepaid expenses, and accrued expenses and deferred
income, are recorded on an accruals basis.
81
m) Provisions for pension and similar liabilities, which comprise the provision
for supplementary staff severance pay, the social security benefits provision
and the company supplementary pension fund, are made in accordance with
collective bargaining agreements. The Company supplementary pension fund
is valued on the basis of an actuarial appraisal.
n) The provision for taxes includes probable tax liabilities arising out of the
settlement of tax disputes and includes deferred tax liabilities calculated on
timing differences which have resulted in lower current taxes. Deferred tax
assets arising from charges which are tax-deductible on a deferred basis are
taken up under Current Assets caption 4 ter – Deferred tax assets if there is
reasonable certainty that they will be recovered in the future (the basis
underlying their being recognised as assets).
o) Other provisions for risks and charges 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 set up on a
case-by-case basis in relation to specific risk positions and their amount is
determined on the basis of reasonable estimates of the liability that such
positions could generate.
p) The provision for staff severance pay is determined in conformity with
applicable law and labour contracts. It reflects the accrued entitlement of all
employees at the balance-sheet date net of advances already paid.
q) Payables are shown at nominal value; receivables are carried at estimated
realisable value, i.e. net of the bad debts provision as determined on the basis
of a case-by-case 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, which are valued at the rate applying to the
financial instrument - are recorded at the exchange rates applying 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 or expense. Any net gain is taken to a specific non-distributable
reserve until the gain is realised.
s) Payments on account include advances made by customers for services that
have not yet been performed.
t) Costs and revenues are taken to the income statement on a consistently applied
accruals basis.
u) Dividends are taken to income in the year in which they are received.
v) Income taxes are recorded on the basis of an estimate of taxable income in
conformity with applicable regulations, taking account of deferred tax positions.
The tax liability to be settled on making the tax declaration is carried under
taxes payable, together with liabilities in respect of taxes already assessed and
due that are not involved in a dispute with the tax authorities.
82
w)In order to hedge interest rate and exchange rate risk, the Company uses
derivative contracts to hedge net exposures arising from specific transactions.
Interest differences to be collected or paid on interest rate swaps are taken to
the income statement 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 taken to accrued
income and prepaid expenses, or accrued expenses and deferred income, as the
case may be. Derivative contracts hedging exchange rate risks are used to cover
contractual commitments in foreign currencies and entail adjusting the value of
the underlying item. The premium or discount arising from the difference
between the spot and future exchange rates for hedging transactions is taken to
the income statement loss over the duration of the contract.
If the market value of derivatives contracts that do not fully qualify for hedge
accounting is lower than the value of the underlying financial instrument, a
specific risk provision is set up for the difference.
x) Collections are recorded by bank transaction date; for payments account is
likewise taken of the instruction date.
83
4) Parent Company Balance Sheet
Assets
Non-current Assets
Intangible assets
This caption includes the cost of non-physical factors of production with lasting
utility, net of amortisation. In short, they include ownership or concession rights,
or deferred costs whose utility extends to future years.
Industrial patents and intellectual property rights. This caption records the
costs of television programmes available for use.
As indicated in schedule 1, they amount to 182,340 thousand Euros, which has
risen by 28,600 thousand Euros during the year.
The increase if the difference between new assets for 238,491 thousand Euros (of
which 81,113 thousand Euros was transferred from intangible assets under
development and payments on account in respect of rights that became available
during the year), a writedown against the risk of non-transmission and/or
repeatability of certain programmes amounting to 22,021 thousand Euros and
the amortisation charge for the year of 187,870 thousand Euros.
84
Intangible assets (thousands of Euros)
Schedule 1
31.12.2004 (a)
Changes during the year
Cost
Amortis.
Book
value
Increases
and
capitalisat.
Reclassificat.
(b)
452,694
(43,142)
409,552
(255,812)
(255,812)
196,882
(43,142)
153,740
157,378
157,378
81,113
81,113
Concessions, licences, trademarks and similar rights
Digital terrestrial
117
35,637
35,754
(39)
(3,240)
(3,279)
78
32,397
32,475
11
11
-
Int. assets under development and payments on account:
programmes
(c)
101,339
capitalisation of leasehold improvements
1,114
102,453
-
101,339
1,114
102,453
69,985
1,742
71,727
(81,113)
(1,943)
(83,056)
(26,306)
(285,397)
7,688
296,356
229,116
1,943
-
Industrial patents and
intellectual property rights:
programmes
provision for programmes being amortised
Other intangible assets
(a)
(b)
(c)
(d)
(d)
(22,021)
(22,021)
23
23 (e)
31.12.2005
Amortis.
Cost
Amortis.
Book
value
(217,459)
29,589
(187,870)
691,185
(65,163)
626,022
(473,271)
29,589
(443,682)
217,914
(35,574)
182,340
(13)
(3,240)
(3,253)
128
35,637
35,765
(52)
(6,480)
(6,532)
76
29,157
29,233
-
90,211
936
91,147
-
90,211
936
91,147
36,062
788,996
(28,700)
(478,914)
7,362
310,082
102 (e)
(2,371)
(21,896)
(193,494)
Includes only amounts not fully amortised at 31 December 2004, with the exception of “Other”, which includes fully amortised leasehold improvement costs relating to unexpired lease contracts
(see note (d))
Book values:
. not fully amortised
452,694
(255,812)
196,882
496,494
(278,580)
. fully amortised
221,736
(221,736)
194,691
(194,691)
674,430
(477,548) 196,882
691,185
(473,271)
217,914
217,914
Costs for intellectual property rights under development at 31 December 2004 that are not reclassified under intangible assets beign amortised by end-2005. They relate to rights accruing subsequent
31 December 2005 or still to be defined, as well as to internally produced programmes not yet completed at that date. They relate in any event to the cost of programmes expected to be used in the future.
Book values:
. not fully amortised
leasehold improvements
31,038
(23,350)
7,688
32,083
(24,721)
7,362
31,038
(23,350)
7,688
32,083
(24,721)
7,362
. fully amortised
leasehold improvements relating to
unexpired lease contracts
leasehold improvements relating to
expired lease contracts
(e)
33,994
581,753
Writedowns,
eliminations
and disposals
Changes in respect of reclassifications from
fixed assets, including the followings costs:
under development
being amortised
. amortisation
2,956
33,994
(2,956)
(26,306)
7,688
1,895
33,978
(1,895)
(26,616)
7,362
8
34,002
(8)
(26,314)
7,688
2,084
36,062
(2,084)
(28,700)
7,362
23
125
(23)
125
The total value of these items at 31 December 2005, before the writedown,
comprises the following:
• rights to television programmes owned or held under unlimited-term licences
amounting to 152,968 thousand Euros (at 31 December 2004: 156,656 thousand
Euros).
• rights to third-party television programmes held under fixed-term licences totalling
64,946 thousand Euros (at 31 December 2004: 40,226 thousand Euros).
Investment in television programmes in 2005 totalled 227,363 thousand Euros,
including 69,985 thousand Euros for investment in television programmes that
were not yet available at 31 December 2005, which are carried under intangible
assets under development and payments on account.
85
Analysing investments by type, at 31 December 2005, 206,112 thousand Euros
has been invested in fiction programmes (series, miniseries, TV movies, soap operas,
etc), 10,118 thousand Euros in documentaries, 11,081 thousand Euros in cartoons
and comedy programmes and about 52 thousand Euros in other categories.
Concessions, licences, trademarks and similar rights. These items, which are
stated net of accumulated amortisation, include costs incurred for the acquisition
of licences for digital terrestrial frequencies, and own trademarks (for example,
the Rai logo). They total 29,233 thousand Euros, of which 29,157 thousand
Euros relate to digital terrestrial frequencies.
Intangible assets under development and payments on account. These
amount to 91,147 thousand Euros, including:
• 90,211 thousand Euros for the cost of television programmes which are not yet
available, and therefore not subject to amortisation; compared with the figure at
31 December 2004, this has shown a net decrease of 11,128 thousand Euros, as
shown in schedule 1. Specifically, the said decrease is equal to the balance
between increases for new assets (69,985 thousand Euros), and decreases for
items transferred to Industrial patents and intellectual property rights in that
they relate to productions and/or acquisitions which have become usable during
2005 (81,113 thousand Euros);
• 936 thousand Euros in respect of improvements under way on property under
leasehold or concession.
For televisions programmes that have not yet become available, the total of
90,211 thousand Euros includes:
• 79,755 thousand Euros in respect of television programmes owned by the Company
that were not ready at 31 December 2005 or for which usage rights began after
31 December 2005 (at 31 December 2004: 76,262 thousand Euros).
• 10,456 thousand Euros regarding third-party television programmes held on
fixed-term licence beginning after 31 December 2005 (at 31 December 2004:
25,077 thousand Euros).
Other intangible assets. The amount of 7,362 thousand Euros regards costs - net
of amortisation - incurred for improvements on property held leasehold or under
concession.
86
Fixed assets
These comprise the cost and related revaluations of tangible fixed 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 standard depreciation and writedowns for lasting
value impairments if any.
Standard depreciation rates are listed below:
• Buildings and light structures
- offices in industrial buildings
- other industrial buildings and roads
- light structures
• Plant and machinery
- General and radio plant
- Transmission and television plant
- Recording plant and fitted vehicles
• Industrial and sales equipment
• Other assets:
- Fittings
- Office furniture and equipment
- Electronic office equipment
- Transport vehicles
- Motor cars, motor vehicles and the like
3%
6%
10%
12.5%
19%
25%
19%
19%
12%
20%
20%
25%
Fixed assets at 31 December 2005 amount to 469,532 thousand Euros, an overall
net decrease of 64,374 thousand Euros on 31 December 2004 comprising:
additions of 56,211 thousand Euros and decreases of 120,585 thousand Euros, as
detailed in schedule 2.
Fixed assets and accumulated depreciation (thousands of Euros)
Schedule 2
31.12.2004
Cost
Revaluations
Writedowns
Accumulated
depreciat.
Book
value
Land and buildings
415,336
Plant and machinery
1,093,171
Industrial and sales
equipment
91,617
Other fixed assets
137,709
Fixed assets under constructions
and payments on account
43,119
1,780,952
613,102
26,325
(36,529)
-
(688,174)
(967,272)
303,735
152,224
5,002
3,087
-
(91,201)
(111,386)
5,418
29,410
1,675
6,039
346
921
43,119
647,516 (36,529) (1,858,033) 533,906
23,051
56,211
(20,479)
-
(a) including
. Costs - fixed assets
. Revaluations - fixed assets
. Depreciation - fixed assets
31.12.2005
Additions ReclassifiNet Standard
Cost Revaluand
cations eliminations depreciat.
ations
capitalisaand transfers
tions
(a)
4,580
2,756
(13) (51,549) 422,492 613,070
20,866
16,456
(311) (59,537) 1,115,510 26,107
(58)
(223)
(2,311)
(6,489)
93,249
141,050
4,984
3,082
Writedowns
Accumulated
depreciat.
Book
value
(36,529) (739,525) 259,508
- (1,011,919) 129,698
-
(93,162)
(114,473)
5,071
29,659
(94)
45,596
- 45,596
(699) (119,886) 1,817,897 647,243 (36,529) (1,959,079) 469,532
19,266
273
(18,840)
699
It should be noted that new assets recorded, which reflect investment made in the
year, comprise 5,473 thousand Euros for the capitalisation of the cost of internal
personnel engaged on the construction of buildings, plant and machinery.
87
As regards disclosure of finance lease transactions it should be noted that since
2004 only the building located in Aosta was acquired under this type of contract,
to serve as the regional headquarters for the Valle d’Aosta. We present hereunder
the statements required under article 2427 (22) of the Civil Code, referred to in
Document 1 of the Organismo Italiano di Contabilità (Italian Accounting Board),
showing the effects on the balance sheet and the income statement of the treatment
of financial leases using the accounting method generally followed in Italy, whereby
lease instalments are expensed as incurred.
Balance sheet effect (thousands of Euros)
a) Outstanding contracts
Assets held under financial leases
at end of previous year
Income statement effect (thousands of Euros)
5,901
+ Assets acquired under financial leases during the year
- Assets under financial leases acquired through
end-lease purchase option during the year
- Depreciation for the year
-
+ Implicit debt arising during the year
- Repayment of principal and exercise
of purchase option during the year
Implicit debt in respect of financial
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
-141
Depreciation charge on
outstanding contracts
-360
Value adjustments/re-adjustments to
assets held under financial leases
Effect on profit before taxes
198
5,541
b) Assets acquired through end-lease purchase option
c) Liabilities:
Implicit debt in respect of financial leases
at end of previous year
699
Financial charges on financial lease
transactions
-
-360
+/- Value adjustments / re-adjustments
Assets held under financial leases
at the end of the year
-
Instalment payments in respect of
financial leases charged against income
-
Tax effect
-82
Effect on net profit for the year of
accounting for financial leases using the
international accounting method
116
-5,856
558
-5,298
243
-101
142
The gross value of revaluations recorded with fixed assets is reported below,
listed according to the applicable by regulations:
• 63,945 thousand Euros in implementation of Law 576 of 2 December 1975 and
Law 72 of 19 March 1983, whose purchase cost was 82,762 thousand Euros.
This comprises property acquired by 31 December 1946, whose gross value of
430 thousand Euros includes the revaluation made pursuant to Law 74 of 11
February 1952;
• 58,025 thousand Euros gross in implementation of Law 413 of 30 December 1991;
• 525,273 thousand Euros in implementation of Decree Law 263 of 29 April
1994, whose effects were ratified by Law 650 of 23 December 1996.
88
Non-current financial assets
These represent the cost of durable financial investments and related revaluations,
net of any writedowns described in the comments on the individual items.
Equity investments: these are recorded using the criteria described at point g) in
the section “Accounting policies”. They amount to 304,118 thousand Euros and
include investments in shares or other forms of equity in companies, including
consortiums. They are reported in the balance sheet under separate headings
arranged as to decreasing levels of ownership.
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.
Non-current Financial Assets - Equity Investments (thousands of Euros)
Schedule 3
31.12.2004
Cost Revaluat.
Subsidiaries
Rai 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 liquidation
Sipra SpA
Total
999
200,098
105
391
47,893
2,451
5,165
70,238
103
11,114
338,557
Associated companies
Audiradio Srl
10
Auditel Srl
10
San Marino RTV SpA
258
Secemie
851
Total
1,129
(a) net of reconstitution of share capital
Book
value
Acquisitions
Subscriptions
(548)
451
- 200,098
105
(391)
- (44,107)
3,786
2,451
5,165
70,238
103
11,114
- (45,046) 293,511
-
-
Writedowns
(a)
(305)
(305)
31.12.2005
Disposals Reclassificat. Writedowns Lost coverage
(-) and share
Writebacks
capital
(+) reconstitution
Cost Revaluat.
8,321
8,321
-
-
(222)
710
488
999
- 200,098
105
8,712
47,893
2,451
5,165
70,238
103
11,114
- 346,878
-
-
-
305
305
-
10
10
258
546
824
10
10
258
851
1,129
Non-current Financial Assets - Equity Investments (thousands of Euros)
Book
value
(770)
(391)
- (43,397)
- (44,558)
229
200,098
105
8,321
4,496
2,451
5,165
70,238
103
11,114
302,320
-
-
10
10
258
851
1,129
Schedule 4
31.12.2004
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
Total
Writedowns
(a)
Changes in the year
Cost
Writedowns
(a)
Book
value
Acquisitions
Subscriptions
10
21
324
52
478
(10)
(21)
(50)
(149)
324
2
329
-
-
26
911
(11)
(241)
15
670
-
-
31.12.2005
Disposals Writedowns
(-)
Writeback
(+)
Cost
Writedowns
(a)
Book
value
(1)
10
10
21
324
52
478
(10)
(21)
(51)
(139)
324
1
339
(11)
(2)
26
911
(22)
(243)
4
668
(a) net of reconstitution of share capital
89
Schedule 5 shows the list of subsidiaries and associated companies pursuant to
article 2427 point 5 of the Civil Code.
List of holdings in subsidiaries and associated companies (thousands of Euros)
Name
Registered
office
Share capital
(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 liquidation
Sipra SpA
Rome
Rome
Milan
New York (USA)
Milan
Rome
Rome
Rome
Rome
Turin
Audiradio Srl
Auditel Srl
San Marino RTV SpA
Secemie
Milan
Milan
S. Marino (Republic of San Marino)
Ecully (France)
Schedule 5
Equity of
investee
(1)
1,000
200,000
177
424 (2)
5,160
2,585
8,000
70,176
102
10,000
230
251,587
5,242
8,518 (3)
4,500
7,414
21,960
91,280
1,984
35,564
234
300
516
3,829
834
946
5,559
5,530
Net profit
(loss)
%
holding
(%)
Pertinent
share in equity
of investee
Book
value
11,596
99.900%
99.997678%
59.940%
100.000%
99.900%
94.900%
100.000%
99.99926%
100.000%
100.000%
229
251,581
3,142
8,518
4,496
7,036
21,960
91,279
1,984
35,564
229
200,098
105
8,321
4,496
2,451
5,165
70,238
103
11,114
302,320
79
238
168
3,009
33.330%
33.000%
50.000%
21.650%
227
218
2,780
1,197
10
10
258
851
1,129
(222)
39,847
(1,284)
59 (4)
710
3,072
6,399
5,635
(1) appearing in the 31.12.2005 balance sheet
(2) USD
500,000 at the 31.12.2005 exchange rate of Euro 0.84767
(3) USD 10,048,994 at the 31.12.2005 exchange rate of Euro 0.84767
(4) USD
69,112 at the 31.12.2005 exchange rate of Euro 0.84767
The following section discusses the more significant developments in investee
companies and the consequent impact on the Rai parent company financial
statements.
Equity investments in subsidiaries
• NewCo Rai International SpA (99.9% Rai): the share capital of 1,000 thousand
Euros is represented by 200,000 shares with a par value of Euro 5 each. At 31
December 2005 the value of the holding, 451 thousand Euros, which was already
net of a writedown of 548 thousand Euros made at 31 December 2004, was
further reduced by 222 thousand Euros to cover the loss incurred by the company
in 2005. The company is not operational.
• Rai Cinema SpA (99.997678% Rai): the share capital, which amounts to 200,000
thousand Euros, is composed of 38,759,690 shares with a par value of Euro 5.16
each. During 2005, the company paid a dividend of 29,845 thousand Euros,
which Rai recorded under income from equity investments in the amount pertaining to it, 29,844 thousand Euros. Year 2005 closed with a net profit of 39,847
thousand Euros.
• Rai Click SpA (59.94% Rai): share capital is 177 thousand Euros, represented by
340,000 shares with a par value of Euro 0.52 each. The company closed the year
with a loss of 1,284 thousand Euros, which was fully covered by the Share
premium account.
90
• Rai Corporation (100% Rai): the investment, represented by 50,000 shares of par
value of $10 each, has a gross carrying value of 391 thousand Euros, equal to
$500,000 at the exchange rate at which share capital was reconstituted following
coverage of the loss for 1996 in 1997. In 2005, Rai paid in 8,321 thousand Euros
on account of share capital. Year 2005 closed with a profit of $69,112 (equal to
59 thousand Euros at the US$/Euro exchange rate at 31 December 2005). As a
result of the above the Company’s equity, which was negative for $20 thousand at
31 December 2004, passed to $10,049 thousand. Accordingly, the provision for
risks and charges set up in the preceding year was therefore absorbed against the
Company’s capital deficit.
• RaiNet SpA (99.9% Rai): the share capital amounts to 5,160 thousand Euros
represented by 1,000,000 shares of par value of Euro 5.16 each. At 31 December
2005 the value of the holding, 3,786 thousand Euros which had already been
written down at 31 December 2004 by 44,107 thousand Euros, was revalued by
710 thousand Euros in view of the profit earned by the company in 2005.
• RaiSat SpA (94.9% Rai): the share capital amounts to 2,585 thousand Euros
represented by 500,000 shares of par value of Euro 5.17 each. The company
closed the year with a net profit of 3,072 thousand Euros. In 2005 it paid a
dividend of 2,970 thousand Euros, of which 2,818 thousand Euros pertained to
Rai, which was taken to income from equity investments.
• Rai Trade SpA (100% Rai): the share capital amounts to 8,000 thousand Euros
represented by 100,000 shares of par value of Euro 80 each. The company closed
the year with a net profit of 6,399 thousand Euros. During 2005 it paid a dividend
5,576 thousand Euros of 2005 from the net profit for 2004, which was taken to
income from equity investments.
• Rai Way SpA (99.99926% Rai): the share capital amounts to 70,176 thousand
Euros represented by 13,600,000 shares of par value Euro 5.16 each. The
company closed 2005 with a net profit of 5,635 thousand Euros. During 2005 it
paid a dividend of 5,576 thousand Euros from the net profit for 2004, which was
taken to income from equity investments.
• Sacis SpA in liquidation (100% Rai): the share capital amounts to 102 thousand
Euros represented by 200,000 shares of par value of Euro 0.51 each. The
company, which has been in liquidation since 23 January 1998, reported a net
profit of immaterial amount.
• Sipra SpA (100% Rai): the share capital amounts to 10,000 thousand Euros
represented by 10,000 shares of par value Euro 100 each. The company closed
2005 with a net profit of 11,596 thousand Euros. During 2005 it paid a dividend
of 18,500 thousand Euros from the net profit for 2004, which was taken to income
from equity investments.
91
Equity investments in associated companies
• Audiradio Srl (33.33% Rai): the company closed the year with a net profit of 79
thousand Euros. Share capital amounts to 234,000 Euros consisting of 234,000
equity shares of nominal value Euro 1 each.
• Auditel Srl (33% Rai): the company closed the year with a net profit of 238
thousand Euros. Share capital amounts to 300,000 Euros, consisting of 300,000
equity shares of nominal value Euro 1 each.
• San Marino Rtv SpA (50% Rai): this company was established in 1991 by Rai and
E.RA.S. - Ente di Radiodiffusione Sammarinese, each with an equal holding in
the company. It was set up 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. It closed 2005 with a net profit of 168 thousand
Euros. Share capital is 516 thousand Euros represented by 1,000 shares of par
value Euro 516.46 each.
• Secemie Société Anonyme (21.65% Rai): year 2005 closed with a net profit of
3,009 thousand Euros, which led to the holding being revalued. Share capital is
represented by 255,293 shares of par value Euro 15 each.
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, 10
thousand Euros, has been 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 Euros was fully written down since, under the bylaws
of the consortium, withdrawal does not entitle members to reimbursement of their
contribution.
• Finsiel – Consulenza e applicazioni informatiche SpA (0.916% Rai): the value
of the investment has remained unchanged with respect to the previous year, at
324 thousand Euros. Share capital is represented by 1,161,324 shares of par value
Euro 51.65 each.
• International Multimedia University Umbria SpA (1.533% Rai): carried at 52
thousand Euros, it has been written down by a total of 50 thousand Euros as a
result of prior-year losses in proportion to Rai’s interest. Share capital is
represented by 12,000 shares of par value Euro 11.00 each.
• Istituto Enciclopedia Treccani SpA (0.83% Rai): the investment is carried at 339
thousand Euros; it has been revalued by 10 thousand Euros as a results of the profit
92
earned by the company. Share capital is represented by 750,000 shares of par
value Euro 51.65 each.
• Italia Cinema Srl in liquidation (5% Rai): the company was placed in liquidation
with the resolution of the Extraordinary General Meeting of Shareholders held on
30 January 2004, with immediate effect. The investment, which was carried at 15
thousand Euros at 31 December 2004, already written down by 11 thousand
Euros, has been written down for a further 11 thousand Euros as a consequence
of its losses.
Receivables: these amount to 15,109 thousand Euros (at 31 December 2004:
17,798 thousand Euros). Of the total, 13,714 thousand Euros is for prepaid tax on
the provision for staff severance pay disbursed pursuant to Law 140/97 (of which
393 thousand Euros is in respect of the revaluation of the provision for the period),
106 thousand Euros for loans to employees, 1,153 thousand Euros for guarantee
deposits and 136 thousand Euros for other receivables. Schedule 12 details their
distribution by maturity.
As to the geographic distribution of receivables, they relate almost exclusively to
Italian residents.
Non-current Financial Assets - Receivables (thousands of Euros)
Schedule 6
31.12.2004
31.12.2005
Nominal
value
Bad debts
provisions
(a)
Book
value
Disbursements
Reclassifications
Refunds
Writedowns
(-)
Value readjustments
(+)(a)
362
1,079
249
(179)
(249)
183
1,079
-
49
89
-
-
(126)
(15)
-
-
16,309
227
18,226
(428)
16,309
227
17,798
138
-
(2,988)
(91)
(3,220)
Due from others:
- employees
- guarantee deposits
- Ponteco
- tax prepayments on provision for
severance pay - Law 140/97
- other
(a) including default interest
(b) interest income accrued during the year
393 (b)
393
-
Nominal Bad debts
value provisions
(a)
Book
value
285
1,153
249
(179)
(249)
106
1,153
-
13,714
136
15,537
(428)
13,714
136
15,109
-
-
Other securities: these are carried at 3,555 thousand Euros and relate entirely to
securities pledged as collateral; details thereof are given in schedule 7.
Non-current Financial Assets - Other Securities (thousands of Euros)
Schedule 7
31.12.2004
Cost
Fixed-Income securities:
- B.T.P.
- C.C.T.
(a) issue and trading discounts
32
3,560
3,592
Revaluations
(a)
Writedowns
(a)
..
4
4
..
(34)
(34)
4
(34)
Book Acquisit. Redempt.
value
32
3,530
3,562
-
-
31.12.2005
Revalu- Writedowns
ations
(-)
(a) Writebacks
(+)
(a)
Cost
Revaluations
Writedowns
(a)
(a)
-
..
32
(7) 3,560
(7) 3,592
..
4
4
..
(41)
(41
-
(7)
4
(41)
Book
value
32
3,523
3,555
93
Current Assets
Inventories
Inventories amount to 1,709 thousand Euros net of writedowns (at 31 December
2004: 2,472 thousand Euros). As shown in schedule 8, they comprise:
• Raw materials, supplies and consumables: these amount to 1,415 thousand
Euros net of the inventory provision totalling 15,385 thousand Euros. They
consist of supplies and spare parts for maintenance and the operation of
equipment, considered as consumables since they are not directly incorporated
into products.
• Finished goods and merchandise: these consist entirely of inventories associated
with the book and periodicals publishing business, amounting to 294 thousand
Euros net of writedowns of 913 thousand Euros to bring them into line with
estimated realisable value.
Inventories (thousands of Euros)
Schedule 8
31.12.2004
Raw materials, supplies and consumables
Inventory provision
Finished products
31.12.2005
Increases (+)
Decreases (-)
Balance of
provisions
made (-) and
released (+)
17,461
(15,385)
2,076
(661)
(661)
-
16,800
(15,385)
1,415
396
2,472
(102)
(763)
-
294
1,709
Receivables
Receivables total 1,166,543 thousand Euros, an increase of 135,704 thousand Euros
on 31 December 2004 as can be seen in schedule 9 which gives a breakdown of
receivables, and schedules 12 and 13 which show their distribution by maturity,
type and by currency.
94
Current Assets - Receivables (thousands of Euros)
Schedule 9
31.12.2004
Balance of new
positions (+)
repayments (-)
31.12.2005
Balance of
provisions
made (-) and
released/used (+)
Customers
. government and other public entities for public broadcasting services
. license fee receivables
. other receivables
144,733
(2,290)
-
142,443
5,035
961
-
5,996
51,790
11,818
-
63,608
less
. bad debts provision
(11,421)
-
(991)
(12,412)
190,137
10,489
(991)
199,635
Subsidiaries
. NewCo Rai International SpA
29
6
-
35
. 01 Distribution
44
189
-
233
215,019
22,145
-
237,164
131
27
-
158
. Rai Cinema SpA
. Rai Click SpA
. Rai Corporation
1,133
(940)
-
193
. RaiNet SpA
1,236
871
-
2,107
. RaiSat SpA
18,886
2,441
-
21,327
. Rai Trade
15,829
(1,034)
-
14,795
. Rai Way SpA
27,498
(6,735)
-
20,763
. Sipra SpA
345,624
20,654
-
366,278
625,429
37,624
-
663,053
. San Marino RTV
128
(22)
-
106
128
(22)
-
106
Tax credits
29,431
14,260
-
43,691
Deferred tax assets
62,832
10,855
-
73,687
6,421
Others
. personnel
6,870
(449)
-
42
10
-
52
. European Union for subsidies and grants
533
88
-
621
. agencies, companies, entities and others
117,208
63,619
-
180,827
. correspondents
less
. bad debts provision
Total
(1,771)
-
221
(1,550)
122,882
63,268
221
186,371
1,030,839
136,474
(770)
1,166,543
Their geographical distribution is summarized in the following table:
customers
subsidiaries
associated companies
tax credits
deferred tax assets
advances for sports events
other receivables
Total
Italy
195,529
662,860
43,691
73,687
292
17,559
993,618
EU countries Other countries
2,314
9,390
1,181
12,885
1,792
193
106
157,564
385
160,040
Total
199,635
663,053
106
43,691
73,687
167,246
19,125
1,166,543
Receivables from customers: these relate to trade receivables, excluding those
from subsidiaries and associated companies, which are carried under separate
headings. They total 199,635 thousand Euros, with a nominal value of 212,047
thousand Euros which has been written down by 12,412 thousand Euros to bring
them to estimated realisable value. Compared with 31 December 2004, there has
been a decrease of 9,498 thousand Euros.
95
Details of the caption are provided hereunder:
- receivables for public broadcasting services to central government and other
public entities: as shown in the following table, these amount to a nominal
142,443 thousand Euros, down 2,290 thousand Euros on 31 December 2004
resulting from new invoices issued or amounts accrued for 2005 less collections.
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 worldwide
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
Total Prime Minister’s Office
Ministries:
- Economy and Finance: reimbursement of expenses for management
of television licence fee collection
Regions:
- Autonomous Region of Valle d’Aosta: management of equipment
for reception of programmes from the French-speaking area
Total
2005
2004
1,549
35,412
1,549
35,432
18,466
6,365
1,910
19,301
6,365
1,953
14,962
1,754
80,418
14,962
1,710
81,272
55,921
57,874
6,104
142,443
5,587
144,733
The following should be noted in connection with the above receivables:
• Prime Minister’s Office: receivables for short-wave broadcasting, programmes
for the worldwide promotion of the Italian language and culture, and broadcasts
in Slovenian, French, German and Ladin. These relate to services rendered in
2005 for 59,040 thousand Euros and in 2004 for 18,075 thousand Euros;
• Ministry for the Economy and Finance: the receivable of 55,921 thousand
Euros, which is in respect of the management of ordinary licence fee operations,
relates to 2005 for 18,168 thousand Euros, 2004 for 22,463 thousand Euros,
2003 for 6,602 thousand Euros and 2000 for 8,688 thousand Euros;
• Autonomous Region of Valle d’Aosta: the receivable of 6,104 thousand relates to
the reimbursement of costs incurred for the operation of equipment for reception
of French-language programmes for the years from 1994 to 2005.
- Receivables for licence fees: these amount to 5,996 thousand Euros, in respect of
licence fees already paid by subscribers but not yet transferred to Rai.
- Other receivables: these amount to nominal value 63,608 thousand Euros, up
11,818 thousand Euros on 31 December 2004. They relate to the sale of rights,
technical assistance to third parties, etc.
• Receivables from subsidiaries: these are shown at 663,053 thousand Euros (at
31 December 2004, 625,429 thousand Euros). They represent the year-end balance
of transactions with subsidiaries, as shown in schedule 9. They include financial
receivables of 227,575 thousand Euros (234,768 thousand Euros at 31 December
2004) and other receivables of 435,478 thousand Euros (390,661 thousand
Euros at 31 December 2004).
96
• Receivables from associated companies: these total 106 thousand Euros (128
thousand Euros at 31 December 2004). They represent the balance of receivables
from associated companies, as detailed in schedule 9.
• Tax receivables: these are carried at nominal value of 43,691 thousand Euros (at
31 December 2004: 29,431 thousand Euros). They comprise 33,963 thousand
Euros for the balance of Group VAT credits, 5,476 thousand Euros for tax refunds
requested, 4,231 thousand Euros for the credit balance on direct taxes, with the
remainder relating to minor items.
• Deferred tax assets: these amount to 73,687 thousand Euros, comprising a credit
of 72,500 thousand Euros arising on items deducible for tax purposes on a
deferred basis, as explained in the section on “Income taxes”, in addition to which
there are items transferred from Group companies participating in the consolidated
taxation arrangement. Details of deferred tax assets, including the movements in
2005, are provided in the following table:
(thousand Euros)
Situation at 31 December 2004:
Estimated recovery of taxed provisions
Statutory accounts/fiscal difference
on amortisation of programmes
Negative amount taxable
Deferred tax assets coming
from Group companies
Deferred tax assets at start of year
Movements in the year:
Total movements in the year
Situation at 31 December 2005:
Deferred tax assets at year-end
Amount of
IRES
timing
differences
IRES
33%
(*)
Amount of
IRAP
timing
differences
IRAP
4.885%
(average)
(*)
Total
134,689
44,448
99,040
4,836
49,284
16,955
14,222
5,595
4,693
16,955
=
828
=
6,423
4,693
=
165,866
2,432
57,168
=
115,995
=
5,664
2,432
62,832
59,375
19,592
(11,124)
(541)
19,051
(5,963)
(14,222)
(1,968)
(4,692)
(5,963)
=
(291)
=
(2,259)
(4,692)
=
39,190
(1,245)
11,687
=
(17,087)
=
(832)
(1,245)
10,855
194,064
64,041
87,916
4,295
68,336
10,992
=
3,627
=
10,992
=
537
=
4,164
=
=
205,056
1,187
68,855
=
98,908
=
4,832
1,187
73,687
(*) Deferred tax assets on timing differences have been considered only in the case and to the extent where there is reasonable certainty that, at the time
such differences will reverse, there will be sufficient taxable income to ensure their recovery.
• Receivables from others: these, net of writedowns of 1,550 thousand Euros,
amount to 186,371 thousand Euros (at 31 December 2004: 122,882 thousand
Euros), reflect other types of receivables as described below:
- suppliers debit balances for advances on sports events filming rights, carried at
nominal value of 167,246 thousand Euros;
- suppliers debit balances for miscellaneous advances carried at nominal value of
6,512 thousand Euros;
97
- receivables from social security institutions for advances made on contributions
due for collaboration on art projects, carried at nominal value of 2,873 thousand
Euros;
- receivables from personnel carried at nominal 6,421 thousand Euros. They are
entirely composed of advances of various types, mainly for travel expenses
(3,784 thousand Euros) and production expenses (1,141 thousand Euros).
- receivables from correspondents, which amount to nominal 52 thousand Euros,
comprising advances paid to correspondents abroad for operations at foreign
bureaus.
- receivables from the European Union for subsidies and grants for nominal 621
thousand Euros, consisting entirely of receivables for research projects.
- Other receivables, carried at nominal 4,196 thousand Euros.
Cash and cash equivalents
These are listed in schedule 10. They comprise:
• Bank and post office deposits: these amount to 97,905 thousand Euros (at 31
December 2004: 143,015 thousand Euros). They represent sight or short-term
balances on deposit or current account with banks, financial institutions and
the Post Office.
• Cheques: these amount to 6 thousand Euros.
• Cash and cash equivalents on hand: these amount to 258 thousand Euros (at 31
December 2004: 255 thousand Euros) and include liquid funds in the form
of cash and equivalent instruments (duty stamps, cashier’s cheques or
bank-guaranteed cheques, etc) held by the company at 31 December 2005.
Cash and cash equivalents (thousands of Euros)
Schedule 10
Bank and post office deposits
Cheques
Cash and cash equivalents on hand
31.12.2004
Net
movements
31.12.2005
143,015
1
255
143,271
(45,110)
5
3
(45,102)
97.905
6
258
98.169
Schedule 13 gives a breakdown of the caption by currency.
Accrued income and prepaid expenses
Accrued income and prepaid expenses total 16,909 thousand Euros. They are
98
Accrued income and prepaid expenses (thousands of Euros)
Schedule 11
31.12.2004
Other prepaid expenses:
. sports event filming rights
. Rai Way services costs
. other Rai Way costs
. hire costs
. association dues
. rent
. commissions on guarantee policies
. insurance and accident prevention
. maintenance and repairs
. software licenses
. programme production exclusives
. various production services
. EDP
. other
11,906
491
2,953
44
246
15
260
70
539
860
137
31
128
17,680
Accrued income:
. interest income
Total
31.12.2005
Net
movements
(3,073 )
66
238
585
19
767
161
82
(9 )
(240 )
491
103
11
(799)
8,833
557
238
3,538
63
1,013
176
260
152
530
620
628
134
139
16,881
41
(13 )
28
17,721
(812)
16,909
Receivables and accrued income by maturity and type (thousands of Euros)
due
within
1 year
31.12.2005
due within
from 2 to
5 years
Schedule 12
due
after
5 years
Total
due
within
1 year
31.12.2004
due within
due
from 2 to
after
5 years
5 years
Total
FINANCIAL RECEIVABLES
Non-current financial receivables due from:
subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
parent companies
-
-
-
-
-
-
-
-
2,918
11,614
577
15,109
2,945
11,584
3,269
17,798
2,918
11,614
577
15,109
2,945
11,584
3,269
17,798
others
Current receivables
Other financial receivables due from:
subsidiaries
227,575
-
-
227,575
234,768
-
-
234,768
-
-
-
-
-
-
-
-
parent companies
-
-
-
-
-
-
-
-
227,575
-
-
227,575
234,768
-
-
234,768
customers
199,635
-
-
199,635
190,137
-
-
190,137
subsidiaries
435,478
-
-
435,478
390,661
-
-
390,661
106
-
-
106
128
-
-
128
others
NON-FINANCIAL RECEIVABLES
Trade receivables due from:
others:
- government and other public
entities for subsidies and grants
621
-
-
621
533
-
-
533
635,840
-
-
635,840
581,459
-
-
581,459
Tax receivables
43,691
43,691
-
-
43,691
43,691
29,431
29,431
-
-
29,431
29,431
Deferred tax assets
73,687
73,687
-
-
73,687
73,687
62,832
62,832
-
-
62,832
62,832
Miscellaneous receivables
other
Accrued income
Total
185,750
-
-
185,750
122,349
-
-
122,349
185,750
-
-
185,750
122,349
-
-
122,349
28
-
-
28
41
-
-
41
1,169,489
11.614
577
1,181,680
1,033,825
11,584
3,269
1,048,678
99
Receivables, cash and equivalents and accrued income in foreign currency or exposed to exchange rate risk (thousands of Euros)
31.12.2005
In foreign
currency or
In Euros
31.12.2004
In foreign
currency or
In Euros
Total
15,536
15,536
1
1
(428)
(428)
15,109
15,109
18,225
18,225
1
1
(428)
(428)
17,798
17,798
211,660
662,860
106
43,691
73,687
387
193
-
(12,412)
-
199,635
663,053
106
43,691
73,687
200,796
625,402
128
29,431
62,832
762
27
-
(11,421)
-
190,137
625,429
128
29,431
62,832
621
187,195
1,179,820
105
685
621
(1,550)
185,750
(13,962) 1,166,543
533
124,073
1,043,195
47
836
533
(1,771)
122,349
(13,192) 1,030,839
97,705
6
258
97,969
200
200
142,565
1
255
142,821
450
450
Accrued income
28
-
1,293,353
886
exposed to
exchange rate risk
Bad
debts
provision
Bank and post office deposits
Cheques
Cash and cash equivalents on hand
Total
Total
exposed to
exchange rate risk
Non-current financial receivables due from:
subsidiaries
parent companies
others
Current receivables due from:
customers
subsidiaries
parent companies
tax receivables
deferred tax assets
others:
- government and other public
entities for subsidies and grants
- miscellaneous
Bad
debts
Schedule 13
-
97,905
6
258
98,169
-
28
41
-
(14,390) 1,279,849
1,204,282
1,287
provision
-
143,015
1
255
143,271
-
41
(13,620) 1,191,949
Liabilities and Equity
Shareholders’ Equity
Shareholders’ equity totals 697,320 thousand Euros.
The components of Shareholders’ equity and the effects of operations carried out
in 2005 and previous years are shown in schedule 14.
Shareholders’ Equity (thousands of Euros)
Schedule 14
31.12.2003
Share capital (a)
241,447
Legal reserve
510
Other reserves:
. reserve for capital grants
. reserve for taxed capital grants
. reserve for capital grants reserve under
Art. 55 Presidential Decree 917/86
. other extraordinary reserves
. merger surplus
. non-distributable reserve arising
from exchange valuation gains
Profits brought forward
9,669
Dividend distribution resolved at
Shareholders’ Meeting of 31/5/2005
Net profit (loss) for the year
(168)
251,458
(a) number of ordinary shares
par value
100
Rai Reclassific.
contribution
on merger
Net
profit
for the
year
-
(500,000)
(14,082)
1,071
-
242,518
510
-
2,527
8,389
(1,265)
1,265
-
-
(9,654)
-
1,262
-
(1,262)
1,262
-
-
-
1,262
9,364
74,025
-
-
23,487
-
-
(97,512)
384,965
(1,071)
9,364
383,894
-
-
-
-
9,364
383,894
-
-
(168)
-
-
-
9,501
-
478
27,765
-
-
478
37,266
24,723
631,874
-
(24,555)
-
112,970
112,970
(236,283)
-
112,970
760,019
-
79,079 (79,079)
(112,970)
- (79,079)
16,380
16,380
16,380
697,320
242,518,100
1 Euro
Profit
allocation
Profit
distribut.
-
5,648
-
Net 31.12.2005
profit
for the
year
242,518
6,158
500,000
12,846
241,447,000 100,000,000
1 Euro
5 Euro
Merger
eliminat.
Share 31.12.2004 Reclassific.
capital
increase
Profits
allocation/
loss
coverage
1,236
242,518,100
1 Euro
The Group consolidated financial statements at 31 December 2005 show equity,
including minority interests, of 794,9 million Euros, which comprises the
consolidated net profit for the year of 22.9 million Euros.
The reconciliation between the two amounts of shareholders’ equity is presented
on page 190 of the notes to the consolidated financial statements.
The following notes provide additional detail on the individual components of
equity.
Share capital
At 31 December 2005 share capital was represented by 242,518,100 ordinary
shares of par value Euro 1 each owned by the Ministry of the Economy and
Finance (241,447,000 shares, equal to 99.5583% of the share capital) and SIAE,
the Italian Association of Authors and Publishers (1,071,100 shares, equal to
0.4417% of share capital).
Legal Reserve
The legal reserve amounts to 6,158 thousand Euros.
Other reserves
Other reserves total 394,998 thousand Euros, comprising:
• 383,894 thousand Euros, in respect of the merger surplus;
• 9,364 thousand Euros, in respect of the remainder of the reserve for capital grants
under Article 55 of Presidential Decree 917 of 22 December 1986 (point 3);
• 1,262 thousand Euros in respect of the taxable reserve for capital contributions;
• 478 thousand Euros, in respect of the exchange valuation gains reserve.
These amount to 37,266 thousand Euros representing the balance of unallocated
profits.
101
The following table presents the components of shareholders’ equity showing their
origin, possible uses and availability for distribution, as well as uses made in the
previous three years:
Details
Amount
(thousands
of Euros)
Possible
uses
Amount
available
Summary of
uses in
previous three
years
- Share capital
242,518
- Reserves:
- Legal reserve
6,158
- Reserve for capital grant
1,262
- Reserve under Art. 55 of Presidential
Decree 17/86
9,364
- Merger surplus
383,894
- Exchange valuation gains reserve
478
- Profits brought forward
37,266
- Net profit for the year
16,380
Total
Non-distributable portion:
- 5% of 2005 profits transferred to legal reserve
- increase in 2005 in the exchange valuation gains reserve
Distributable portion
-
-
-
2
1-2-3
1,262
-
9,364
383,894
37,266
16,380
448,166
-
1-2-3
1-2
1
1-2
1-2
-
4
3
2
3
3
-819
-210
447,137
Key
1: for share capital increases - 2: for loss coverage - 3: for distribution to shareholders - 4: subject
to IRES tax if used for purpose other than loss coverage
Net profit for the year
Net profit for the year amounts to 16,379,837.86 Euros.
These amount to 474,531 thousand Euros, up 47,935 thousand Euros on 31
December 2004. The composition of these items and details of the increase are
shown in schedule 15.
102
Provisions for risks and charges (thousands of Euros)
Provision for pension and similar liabilities:
- supplementary seniority benefits
- social security benefits
- supplementary company pension fund
Provision for taxes
Other:
- litigation
Schedule 15
31.12.2004
Provisions
made
Charges to
Released to
provision income statement
Reclassifications
31.12.2005
4,827
4,940
132
(189)
(57)
1
1,095
23
(71)
-
(68)
979
148,424
7,728
(11,294)
-
68
144,926
154,459
7,883
(11,554)
(57)
1
150,732
31,698
87
-
-
31,785
-
111,370
29,782 (a)
(29,782)
-
-
111,370
-
35,500 (b)
-
-
-
35,500
4,214
27,070 (c)
-
-
-
31,284
- litigation with social security institutions
31,000
-
-
-
-
31,000
- renovation and restructuring of properties
26,516
-
(940)
-
-
25,576
- recourse risks from associated companies
22,450
695 (d)
(4,145)
-
-
19,000
- lease disputes
5,920
456 (e)
(133)
-
-
6,243
- charges for assets under development construction
5,500
-
-
(250)
-
5,250
- Education Ministry agreement
5,579
-
-
(3,399)
-
2,180
19,626
8,340 (f)
(6,999)
(1,685)
-
19,282
8,264
193 (g)
(20)
(3,108)
-
5,329
- corporate restructuring - staff resignation incentives
- accrued costs
- miscellaneous:
. for liabilities
. for risks
Totale
(a) contra-account: item B9 e) Other personnel costs - 15,413
item B12 Provision for risks - 14,368
(b) contra-account: item E 21 c) Exceptional charges
(c) contra-account: item B9 Personnel costs
(d) contra-account: item B 12 Provisions for risks
(e) contra-account: item B 12 Provisions for risks
(f) contra-account: item B 13 Other provisions
240,439
102,036
(42,019)
(8,442)
-
292,014
426,596
110,006
(53,573)
(8,499) (h)
1
474,531
(g) contra-account: item B 12 Provisions for risks
(h) contra-accounts: item A 5 c) Other production-related income - 8,386
item D 18 a) Revaluations of equity investments - 15
item C 16 d) interest and commission from others - 98
The following notes provide additional information on the individual provisions.
Provision for pension and similar liabilities: this amounts to 150,732 thousand
Euros and comprises the supplementary seniority benefits provision, the social
security benefits provision and the company supplementary pension fund.
• the provision for supplementary seniority benefits amounts to 4,827 thousand
Euros (at 31 December 2004: 4,940 thousand Euros). 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,
or changes in category, the amounts accrued are released.
• the provision for social security benefits amounts to 979 thousand Euros (at 31
December 2004: 1,095 thousand Euros). It includes amounts accrued until 31
December 1988 and supplementary amounts allocated in subsequent periods in
order to protect the real value of the provision for eligible employees in accordance
with the terms of the national collective bargaining agreement.
Since 1 January 1989 social security contributions by Rai and withholdings
from employees have been paid into the CRAIPI (supplementary retirement
fund for Rai employees) and the FIPDRAI (supplementary retirement fund for
Rai managers)), associations that are responsible for managing retirement funds
103
under the agreements between Rai and labour unions. Upon retirement, the
funds accumulated by Rai, CRAIPI and FIPDRAI are paid out unless employees
opt, at the time they obtain the pension rights, to obtain equivalent life annuities.
In this case, the Rai, FIPDRAI and CRAIPI funds remain with the associations
to finance the said life annuities.
• the supplementary company pension fund amounts to 144,926 thousand Euros
(31 December 2004: 148,424 thousand Euros). It includes:
- 135,024 thousand Euros in respect of supplementary pension benefits currently
being paid (at 31 December 2004: 138,415 thousand Euros), consisting of funds
accrued for employees who have opted for the supplementary pension plan under
the union agreements, which are kept at an adequate level to ensure the said
benefits, with respect to actuarial reserves.
- 9,902 thousand Euros (at 31 December 2004: 10,009 thousand Euros) in
respect of pensions that will be paid to eligible managerial staff still in service in
the event that some of these opt for the supplementary pension plan. Benefits
are calculated on the basis of pay earned, seniority and financial and demographic
parameters normally used in similar cases.
Provision for taxes: this amounts to 31,785 thousand Euros (at 31 December
2004: 31,698 thousand Euros) comprising:
- 30,415 thousand Euros for deferred tax liabilities in respect of year-end fiscal
amortisation and depreciation which will reverse in the future;
- 984 thousand Euros for deferred tax liabilities on capital gains recorded in 2005;
- 89 thousand Euros for deferred tax liabilities in respect of the “neutralisation” for
tax purposes of foreign exchange valuation gains;
- 297 thousand Euros in respect of disputed taxes assessed in an audit of the 1975
financial year and related penalties.
The present provision will be used in future years on an accruals basis.
Other provisions: 292,014 thousand Euros (at 31 December 2004: 240,439
thousand Euros). They include provisions for costs or losses whose existence is
certain but whose amount cannot be exactly determined or which are probable and
whose amount can be reasonably estimated.
The main items are detailed in schedule 15.
As regards pending litigation with employees and third parties, the amount carried
in the provisions for liabilities and risks is the best estimate of the likely liability
based on the most up-to-date information available.
104
Provision for staff severance pay
The provision totals 366,663 thousand Euros (at 31 December 2004: 345,784
thousand Euros). The provision is calculated on a case-by-case basis level in
accordance with the provisions of Article 2120 of the Civil Code - and is shown
net of advances paid pursuant to paragraph 6 of the same article - and takes
account of all non-occasional pay components.
The composition of the provision and changes during the year are shown in
schedule 16.
Provision for staff severance pay (thousands of Euros)
Schedule 16
Balance at 31.12.2004
345,784
Changes during the year:
. new provisions charged to income statement
44,891
. charges for severance pay disbursed
(18,299)
. personnel transfers
. other changes
160
(5,873)
20,879
366,663
Payables
Payables amount to 843,394 thousand Euros, up 36,126 thousand Euros on 31
December 2004. More specifically, financial debt to banks and other lenders totals
1,392 thousand Euros, with a net decrease of 15,189 thousand Euros on 31
December 2004.
A breakdown of the caption is given in schedule 17. Schedule 19 shows secured and
unsecured debt, while schedules 21 and 22 show the composition of payables by
maturity, type and currency.
The greater part of payables (about 92%) relates to Italian residents, for an amount
of about 776 million Euros on a total of 843 million Euros.
105
Payables (thousands of Euros)
Schedule 17
31.12.2004
Balance of new
positions (+) and
repayments (-)
Due to banks
16,581
(15,189)
1,392
Advances
17,180
6,159
23,339
Suppliers
445,570
48,968
494,538
Due to other lenders
Subsidiaries
(a)
(b)
-
-
-
180,742
(15,487)
165,255
2,465
(58)
2,407
Taxes payable
30,932
34,224
65,156
Social security institutions
39,633
(4,113)
35,520
Other payables
74,165
(18,378)
55,787
807,268
36,126
843,394
(a) including:
- Newco Rai International
480
(209)
271
- Rai Cinema
4,737
6,812
- Rai Click
6,845
(1,529)
5,316
- Rai Corporation
1,425
2,673
4,098
11,549
- Rai Trade
19,665
2,351
22,016
- Rai Way
59,585
(2,986)
56,599
- RaiNet
5,021
1,415
6,436
- RaiSat
4,444
2,469
6,913
- Sacis in liquidation
5,579
(69)
5,510
72,961
(26,414)
46,547
180,742
(15,487)
165,255
- Sipra
(b) including:
- Audiradio
- San Marino RTV
1
(1)
-
2,464
(57)
2,407
2,465
(58)
2,407
The following notes provide additional information on the individual items.
Due to banks: these amount to 1,392 thousand Euros (at 31 December 2004:
16,581 thousand Euros) comprising:
• 1,205 thousand Euros in respect of secured debt bearing a concessionary interest
rate, of which Euro 1,205 thousand falls due within one following year. The funds
are to finance the construction of the Cosenza headquarters and expand the Bari
headquarters. The loans are secured by mortgages, liens and guarantees
amounting to 25,281 thousand Euros, 25,281 thousand Euros and 6,064
thousand Euros respectively;
• 187 thousand Euros in respect of current account overdrafts with a number of
banks.
Advances: these amount to 23,339 thousand Euros (17,180 thousand Euros at 31
December 2004). Details follow:
• 20,881 thousand Euros for licence fees received from the Ministry of the Economy
and Finance in excess of the amount pertaining to the year;
• 538 thousand Euros for payments in respect of licences to use programmes; the
costs associated with the programmes are still carried under intangible assets
under development;
106
31.12.2005
• 1,272 thousand Euros (US$ 1,500 thousand) for an advance from the company
Dallah Al Baraka regarding pre-emption rights valid for 3 years 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;
• other advances amounting to 648 thousand Euros.
Accounts payable to suppliers: these reflect trade payables excluding those with
subsidiaries and associated companies, which are carried under separate balance
sheet headings. They total 494,538 thousand Euros (at 31 December 2004:
445,570 thousand Euros), up 48,968 thousand Euros on the previous year.
Accounts payable to subsidiaries: these amount to 165,255 thousand Euros
(180,742 thousand Euros at 31 December 2004), as detailed in schedule 17. They
include financial debt for 62,109 thousand Euros (91,837 thousand Euros at 31
December 2004) and other payables of 103,146 thousand Euros (88,905
thousand Euros at 31 December 2004).
Accounts payable to associated companies: these amount to 2,407 thousand
Euros (2,465 thousand Euros at 31 December 2004), as detailed in schedule 17.
They include financial debt for 844 thousand Euros (896 thousand Euros at 31
December 2004) and other payables of 1,563 thousand Euros (1,569 thousand
Euros at 31 December 2004).
Taxes payable: these amount to 65,156 thousand Euros (at 31 December 2004:
30,932 thousand Euros), up 34,224 thousand Euros on the preceding year.
Details follow:
- IRAP
- IRES from taxation arrangements
on consolidated basis
- Suspended VAT
- Tax withholdings on earnings of employees
and free-lance workers to be paid over
- Other withholdings and “substitute” taxes
Total
2005
2004
4,549
-
27,857
3,131
881
1,811
28,865
754
65,156
27,966
274
30,932
107
Accounts payable to social security institutions: these amount to 35,520
thousand Euros (at 31 December 2004: 39,633 thousand Euros). They reflect
contributions due on remuneration paid to employees and consultants, to be
paid over to the institutions at the scheduled dates. Details follow:
- INPGI
- ENPALS
- INPS
- Contributions on assessed remuneration
- Other
Total
2005
2004
10,547
12,661
3,177
6,787
2,348
35,520
10,234
11,728
3,309
11,918
2,444
39,633
Other payables: these amount to 55,787 thousand Euros, (at 31 December 2004:
74,165 thousand Euros), down 18,378 thousand Euros on the preceding year.
Details follow:
- Employees in respect of assessed remuneration
- Others for assessed pertinent remuneration
- CRAIPI
- FCPGI
- Other
Total
108
2005
2004
34,445
8,186
5,798
2,457
4,901
55,787
58,442
7,170
2,098
2,390
4,065
74,165
Accrued expenses and deferred income
This caption totals 3,817 thousand Euros. Details and a comparison with the
previous year are provided in schedule 18.
Accrued expenses and deferred income (thousands of Euros)
Schedule 18
Accrued expenses
. transmission and related rights on own productions
. special subscriptions
. Rete Blu, terrestrial digital services
. Agreement to upgrade the Auditorium of the Naples production department
. teletext
. SanpaoloImi for the T-banking service
. real estate investments
. other
Deferred income:
. commitment fees on credit lines
. interest on interest rate collars
Total
31.12.2004
Net
movements
31.12.2005
402
470
157
36
158
1,223
183
403
816
806
25
117
40
82
2,472
585
873
816
806
182
117
76
240
3,695
39
2
41
1,264
81
81
2,553
39
83
122
3,817
Payables and accrued liabilities secured against company assets, or unsecured (thousands of Euros)
31.12.2005
Payables
Bonds, other than convertible
Convertible bonds
Due to banks
Advances
Suppliers
Debt securities
Subsidiaries
Parent companies
Taxes payable
Other payables
Total payables
Accrued expenses
Total
(a)
Schedule 19
31.12.2004
Secured against
company
assets
Unsecured
Total
Secured against
company
assets
Unsecured
Total
1,205
1,205
-
187
23,339
494,538
165,255
2,407
65,156
35,520
55,787
842,189
122
1,392
23,339
494,538
165,255
2,407
65,156
35,520
55,787
843,394
122
3,526
3,526
-
13,055
17,180
445,570
180,742
2,465
30,932
39,633
74,165
803,742
41
16,581
17,180
445,570
180,742
2,465
30,932
39,633
74,165
807,268
41
1,205
842,311
843,516
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.
109
Payables and accrued expenses by maturity and type (thousands of Euros)
within
1 year
Schedule 20
31.12.2005
Amounts due
within
after
from 2 to
5 years
5 years
Total
within
1 year
31.12.2004
Amounts due
within
after
from 2 to
5 years
5 years
Total
FINANCIAL DEBT
Medium/long-term debt
Convertible bonds
Due to banks
Suppliers
Bills payable
Subsidiaries
Parent companies
Taxes payable
Other payables
Current payables
Other financial debt
Due to banks
Suppliers
Bills payable
Subsidiaries
Parent companies
Other payables
1,205
1,205
-
-
1,205
1,205
2,321
2,321
1,205
1,205
-
3,526
3,526
187
123
62,109
844
63,263
-
-
187
123
62,109
844
63,263
13,055
174
91,837
896
105,962
-
-
13,055
174
91,837
896
105,962
494,415
103,146
1,563
599,124
-
-
494,415
103,146
1,563
599,124
445,396
88,905
1,569
535,870
-
-
445,396
88,905
1,569
535,870
65,156
35,520
-
-
65,156
35,520
30,932
39,633
-
30,932
39,633
55,787
156,463
-
-
55,787
156,463
74,165
144,730
-
-
74,165
144,730
790,088
NON-FINANCIAL DEBT
Trade payables
Suppliers
Bills payable
Subsidiaries
Parent companies
Miscellaneous payables
Taxes payable
Other payables:
- concession fee
- miscellaneous
Total payables
(a)
Accrued expenses
Total
(a) does not include Advances
820,055
-
-
820,055
788,883
1,205
-
122
-
-
122
41
-
-
41
820,177
-
-
820,177
788,924
1,205
-
790,129
Payables and accrued expenses in foreign currency or exposed to exchange rate risk (thousands of Euros)
31.12.2005
In foreign currency
In Euros
or exposed to
exchange rate risk
Payables
Convertible bonds
Due to banks
Suppliers
Bills payable
Subsidiaries
Parent companies
Taxes payable
Other payables
Total payables
(a)
Accrued expenses
Total
(a) does not include Advances
110
11,643
4,098
10
15,751
15,751
1,392
482,895
161,157
2,407
65,156
35,520
55,777
804,304
122
804,426
Schedule 21
31.12.2004
Total In foreign currency In Euros
or exposed to
exchange rate risk
1,392
494,538
165,255
2,407
65,156
35,520
55,787
820,055
122
820,177
10,458
1,425
21
11,904
11,904
16,581
435,112
179,317
2,465
30,932
39,633
74,144
778,184
41
778,225
Total
16,581
445,570
180,742
2,465
30,932
39,633
74,165
790,088
41
790,129
5) Memorandum accounts
Memorandum accounts are recorded at 454,085 thousand Euros. A breakdown by
type is provided in the table included in the parent company balance sheet and they
are analysed in detail in schedules 22, 23 and 24.
Secured guarantees granted (thousands of Euros)
Schedule 22
Secured guarantees on behalf of others
Secured guarantees granted for own commitments other than payables
Assets pledged as collateral:
- fixed-income securities
Mortgages
Other secured guarantees
Secured guarantees for debt recorded in the balance sheet
Mortgages on:
- land and buildings:
. industrial
Other secured guarantees
Total
31.12.2005
31.12.2004
-
-
3,536
3,536
3,536
3,536
25,281
25,281
50,562
25,281
25,281
50,562
54,098
54,098
Purchase and sales commitments (thousands of Euros)
Schedule 23
Purchase commitments
Sales commitments
Derivative financial contracts on behalf of Rai Cinema:
- future currency purchases
- swaps acquired in foreign currency
- options strategies acquired in foreign currencies (collars)
- call options
Total
31.12.2005
31.12.2004
-
-
13,452
31,169
48,498
752
93,871
16,567
34,377
42,574
93,518
93,871
93,518
Other memorandum accounts (thousands of Euros)
Secured guarantees received
Assets pledged as collateral:
- passbook savings accounts
Unsecured guarantees received
Sureties:
- Banca di Credito di Trieste covering loan granted to Ponteco
- Miscellaneous banks and insurance companies covering advances to suppliers
for the purchase of goods and services
- Banca Intesa covering agreement to provide the signal for the transmission and broadcast
of the terrestrial digital signal made with the company Rete Blu
- Banco di Brescia covering agreement with the City of San Remo for filming
the Italian Song Festival
- Banca Antonveneta covering Fondazione Nord-Est lease agreement
- Sundry banks and insurance companies covering full performance of contracts
for the production of radio/television programmes
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 agreed by us
Leased assets
(a) covering obligations of others
(b) covering receivables
Schedule 24
31.12.2005
31.12.2004
2
2
2
2
(b)
249
249
(a)
14,803
14,235
(a)
4,038
-
(a)
(b)
100
5
203
5
(a)
115,776
95,736
(a)(b)
516
135,487
753
111,181
6,501
7,375
(a)
111
Other memorandum accounts (thousands of Euros)
Schedule 24 (cont.)
31.12.2005
Third party assets under development
Third party assets held under free loan for use, custody, leased or for similar reasons
Assets with third parties under development awaiting assignment
Assets with third parties under free loan for use, custody, leased or for similar reasons
Guarantees granted by other parties for obligations of the company:
Against debt:
- Various entities for guaranteeing advance paid by Ministry of Foreign Affairs for
agreement to extend Rai Uno TV to Tunisia
- BANCA DI ROMA for guarantee issued to Lega Nazionale Professionist for radio
and television rights relating to sports events
- Cofiri SpA for guaranteeing loan received from SANPAOLO IMI for the construction of the Cosenza
headquarters and expansion of the Bari headquarters
- SANPAOLO IMI for guarantee granted to Registry Office of Tax Authorities to covering pending disputes
- Banca Popolare di Novara for guarantee granted for purchase of the Saxa Rubra property complex
Against other obligations:
- Various banks for guarantee granted to the Republic of Egypt covering temporary exports of technical equipment
- Banca di Roma for guarantee granted to tax authorities covering VAT credit refund
- Banca Intesa - Ambroveneto for guarantee granted to port authorities of Venice covering land lease
- Various banks for guarantees granted to tax authorities covering prize competitions
- Various entities for sureties granted to Ferrovie dello Stato and the regional governments of Lazio
and Piedmont covering the teletext agreement
- SANPAOLO IMI for guarantee granted to Valeco SpA covering obligations in respect of waste disposal
agreement with the Autonomous Region of Valle d'Aosta
- Zurigo Assicurazioni for guarantee granted to the City of San Remo covering obligations assumed
under the agreement relating to the Italian Song Festival
- SANPAOLO IMI Turin for guarantee granted to the Ministry for Finance covering radio and television
advertising and promotion of the National Lotteries
- SANPAOLO IMI for guarantee granted to Customs and Excise Department
- SANPAOLO IMI for guarantee granted to the mountain community of Triangolo Lariano covering
construction of television repeater station
- SANPAOLO IMI for guarantee granted to Fiorentina Gas SpA covering payment of gas supplies
- SANPAOLO IMI for guarantee granted to Eliodoro Stradella covering lease contract
- SANPAOLO IMI for guarantee granted to Eurowatt Commerce SA covering payment
of electricity supplies to CPTV Saxa Rubra
- Banca Popolare di Novara for guarantee granted to Fondazione Ugo Bordoni covering
creation of the T-Government project
- Banca Popolare di Novara for guarantee granted to the Collector in Chief of the Roma II
Customs Office covering temporary imports by RAI
- Banca Popolare di Novara for guarantee granted to Enipower Trading SpA
- Banca Intesa - Cariplo for guarantee granted to the City of Turin
- Banca Intesa - Cariplo for guarantee granted to Enel Trade covering electricity supplies
- Banca Intesa - Cariplo for guarantee granted to Five Energy s.r.l. covering electricity supplies
- SANPAOLO IMI for guarantee granted to FIFA covering payments of rights relating to 2010
world soccer championship
- Various banks for guarantee granted to the City of Milan covering use of sites for signal transmission
Other:
- Attachment of bank deposits by third parties
- Bankruptcy proceedings for cancelled receivables
- Bank deposits with Banca di Roma e Banca Intesa - Comit in favour of third parties
- Tied amounts with various banks resulting from attachments
- Tied amounts with various post office resulting from attachments
- Cashier's cheques in favour of employees with Banca di Roma to avoid attachment of works of art at Viale Mazzini
Total
112
31.12.2004
-
-
..
3,126
1,396
..
6,191
914
108
2,533
50,400
-
6,064
104
-
8,385
104
10,800
20
21
21
4,581
21
21
3,942
190
190
1
1
500
500
181
19
181
19
2
77
8
2
77
8
50
-
150
-
55
320
6
697
-
292
6
697
43
17,500
5
81,080
5
27,827
20
7,048
2
1,380
55
502
9,007
236,599
20
6,276
2
1,169
55
7,522
161,012
The terms of the hedge contract covering the specific own commitments or those
taken on by the subsidiary Rai Cinema relating to fair value are summarised in
schedule 25.
At 31 December 2005 there were no commitments of particular significance for the
purchase or sale of goods and services in addition to those taken on in the normal
course of business that would require specific information to be given for a better
understanding of the Company’s financial position.
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 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 Euros.
Given that Rai feels that the Authority’s decision is unfounded both in procedure
and in substance, we have appealed the decision at the Administrative Court of the
Region of Lazio, requesting that the decision be suspended pending the appeal and
that the resolution be struck down.
The Court, with its judgment handed down on 23 November 2005 accepted the
appeal and, as a result, annulled the sanctions levied by the Authority. The
Authority has appealed against this decision at the Council of State, requesting it be
suspended. The hearing to discuss the matter has been set for October 2006.
As already indicated in the Directors' Report at 31 December 2004, given the merits
of Rai’s appeal, which is also supported by the opinion of qualified external counsel,
we believe that it is highly probable that Court will allow our appeal and
accordingly, consistently with the approach followed at 31 December 2004, we
have made no provision in the financial statements as the prerequisites for such a
provision have not been met.
The Communications Authority, with resolution no. 221/06/CONS of 27 April
2006 served on Rai on 3 May 2006, applied administrative sanctions on the
Company for about 14.4 million Euros, equal to 0.5% of its turnover, for the
alleged infringement of article 2(9) of Law 481 of 14 November 1995 (alleged incompatibility of Mr Alfredo Meocci with the office of Rai General Manager), ordering the Company to pay said amount within 30 days of the date of the notice being served.
113
On 12 May 2006 Rai lodged an appeal at the Lazio Regional Administrative
Court against this decision, petitioning its annulment on grounds of infringement
of the law and excess use of powers, and suspension of its effects.
At the present state of proceedings, the chance of a favourable decision being issued
is at least equal to an unfavourable one being issued and accordingly, on these
premises and in accordance with correct accounting principles, no provision has
been made in the 31 December 2005 financial statements.
Fair value of derivatives
Schedule 25
Derivative financial instruments for hedges
on exchange rates (1):
- futures purchased and swaps
- options structures (zero cost)
- call options purchased
on interest rates (2)
- interest rate swaps
- swaptions structures
Hedges for the account of Rai Cinema
on exchange rates:
- futures purchased and swaps
- options structures (zero cost)
- call options purchased
Notional
31.12.2005
thousands of US$
Fair value at
31.12.2005
thousands of Euros
6,400
84,980
13,500
104,880
499
3,490
244
4,233
see note (3)
-397
-654
-1,051
56,501
60,150
990
117,641
1,860
1,493
80
3,433
(4)
(1) All transactions are entered into to hedge signed commercial contracts denominated in US dollars
(2) The transactions relate to hedging medium and short-term debt envisaged in the plan; in relation to the variability of the underlying items they are valued at fair value, and
covered by a specific provision for risks
(3) The annual average notional for the transactions is as follows:
- Interest Rate Swaps: 30,000 Euros for year 2006, 15,000 Euros for years 2007-2008
- Swaptions with expiry date: 30,000 Euros at 28.12.2006
(4) The transactions are entered into for the account of Rai Cinema, exercising the service mandate, to cover underlying commercial contracts of this company denominated in US
dollars
6) Parent Company income statement
Production value
Revenues from sales and services: revenues amount to 2,766,009 thousand
Euros. They basically include revenues pertaining to the year from licence fees and
advertising. A breakdown into major components is given in schedule 26. As can be
seen from the distribution of revenues by geographic area, they almost all originate
in Italy.
114
Revenues from sales and services (thousands of Euros)
Revenues from sales
Revenues from services:
- License fees
- private subscriptions
- special subscriptions
- Advertising
- television
- radio
- other
- Promotion
- television
- radio
- Sponsorships
- television
- radio
- Special services under agreements
- Other services
- sale of transmission rights and distribution of programmes
- teletext services
- production services
- telephone services
- television broadcasting services through digital terrestrial techniques
- miscellaneous
Total
Schedule 26
Year 2005
Year 2004
1,443
1,743
1,435,235
47,298
1,482,533
1,428,061
45,763
1,473,824
973,867
58,744
8,698
1,041,309
950,455
61,504
8,710
1,020,669
37,734
6,510
44,244
47,598
6,264
53,862
35,624
53
35,677
77,725
33,304
126
33,430
82,940
45,168
2,251
15,094
11,444
2,212
16,909
93,078
43,674
2,440
11,529
8,610
11,542
77,795
2,774,566
2,742,520
2,776,009
2,744,263
Changes in inventories of work in progress, semifinished and finished goods:
the change of 103 thousand Euros is entirely attributable to the decrease in the value
of inventories associated with the book publishing and periodicals business.
Internal cost capitalisations: the amount of 6,077 thousand Euros represents
internal costs associated with non-current assets, which were capitalised under the
specific asset captions. Details are shown in schedule 27.
Internal cost capitalisations (thousands of Euros)
Intangible assets
Fixed assets
Schedule 27
Year 2005
Year 2004
604
5,473
6,077
1,135
5,601
6,736
Other production-related income: this amounts to 92,688 thousand Euros, as
Other production-related income (thousands of Euros)
Schedule 28
Year 2005
Year 2004
Operating grants
841
686
Gains on disposals
124
1,631
26,216
6,674
21,028
8,386
25,029
4,153
31,599
38,905
15,236
8,820
4,310
1,053
91,723
15,205
8,756
4,617
1,018
129,282
92,688
131,599
Other
Recovery and reimbursement of expenses
Prior-year license fees
Other out-of period etc gains
Provisions released
Other income from equity investments:
- Rai Way service contract
- Rai Cinema service contract
- other
Miscellaneous
Total
115
Production costs
This caption comprises costs and shortfalls related to ordinary activities, excluding
financial operations. The costs shown here are do not include those relating to fixed
and intangible assets, which are recorded under the respective asset accounts.
Purchases of raw materials, supplies, consumables and merchandise: these
total 23,266 thousand Euros, which includes purchases of technical materials for
inventory - excluding items used in the construction of plant, which are allocated
directly to fixed assets - production materials (sets, costumes, etc) and miscellaneous
operating materials (fuel, office supplies, printed documents, etc), net of discounts
and allowances, as shown in schedule 29.
Purchases of raw materials, supplies, consumables and merchandise (thousands of Euros)
Schedule 29
Year 2005
Technical materials for inventory
Miscellaneous production materials
Miscellaneous non-production materials
Other materials
Discounts, allowances and premiums on purchases of goods
Total
5,309
4,861
11,018
2,091
(13)
23,266
Year 2004
5,484
4,853
9,884
1,708
(11)
21,918
Cost of services: this amounts to 798,077 thousand Euros. It comprises costs for
freelance workers and other external services, net of discounts and allowances, as
shown in schedule 30. Among other things, it includes emoluments, remuneration
for special functions, attendance fees and reimbursement of expenses paid to
Directors for 1,293 thousand Euros and to Statutory Auditors for 198 thousand
Euros.
Cost of services (thousands of Euros)
Schedule 30
Year 2005
Year 2004
Freelance services
131,765
126,249
Services for the acquisition and production of programmes
170,895
161,495
Ancillary services for the acquisition and production of programmes
69,692
72,023
Allowances, travel expenses and transfer of personnel
23,686
26,179
Ancillary personnel service costs
19,819
18,931
Maintenance and repairs
16,075
16,294
Documentation and information services
46,812
51,001
Insurance and accident prevention
18,077
17,382
9,497
10,536
General services
86,608
85,778
Supply services
15,385
14,706
156,185
165,018
Advertising and promotion
Signal broadcasting and transport
under service contract and other Rai Way costs
Other
Total
33,581
23,239
798,077
788,831
Use of third-party assets: this amounts to 722,266 thousand Euros. It comprises
costs for rents, leases, usage rights and filming rights, as detailed in schedule 31.
116
Use of third party assets (thousands of Euros)
Schedule 31
Year 2005
Year 2004
699
66,540
110,009
203,526
403
325,244
9,648
6,197
722,266
172
65,338
106,239
319,336
408
264,930
9,829
7,510
773,762
Lease instalments
Rent and hire costs
Usage rights
Filming rights
Acquisition of viewing rights from Rai Sat
Acquisition of viewing rights from Rai Cinema
Acquisition of viewing rights to serious music and theatrical events from Rai Trade
Other rights
Total
Personnel costs: these amount to 868,282 thousand Euros. The breakdown is
shown directly on the face of the income statement. The average number of
employees on the payroll in 2005 was 11,732, including employees on fixed-term
contracts and trainees, as detailed in schedule 32.
Average number of employees
Schedule 32
at 31.12.2005
Staff on
permanent
contracts
(average)
Staff on
fixed-term
contracts
(average)
- Managers
at 31.12.2004
Total
Staff on
permanent
contracts
(average)
Staff on
fixed-term
contracts
(average)
Total
279
-
279
284
-
284
- Junior management and supervisors
1,106
-
1,106
1,074
-
1,074
- Journalists
1,682
312
1,994
1,667
313
1,980
- Office staff, production employees,
camera staff, film directors' staff,
technical staff and workers
- Conductors, musical directors and
choir staff
6,875
1,326
8,201
6,823
1,347
8,170
132
7
139
134
12
146
13
-
13
13
-
13
10,087
1,645
11,732
9,995
1,672
11,667
- Medical staff
Total
Amortisation, depreciation and writedowns: these amount 337,384 thousand
Euros. The breakdown is shown directly on the face of the income statement, with
further details being provided in schedules 33, 34, 35 and 36. They include a
writedown of capitalised programmes amounting to 22,021 thousand Euros, which
was made to take account of the risk that certain programmes may not be
transmitted or re-broadcast.
Amortisation of intangible assets (thousands of Euros)
Industrial patents and intellectual property rights
Capitalised loan costs
Amortisation of digital terrestrial
Other
Total
Schedule 33
Year 2005
Year 2004
187,870
13
3,240
2,371
193,494
206,227
11
3,240
2,146
211,624
Depreciation of fixed assets (thousands of Euros)
Schedule 34
Year 2005
Year 2004
Land and buildings
51,549
52,595
Plant and machinery
59,537
62,948
Industrial and sales equipment
2,311
3,037
Other assets
6,489
6,794
119,886
125,374
Total
117
Other non-current assets writedowns (thousands of Euros)
Intangible assets under development
Programmes being amortised
Total
Schedule 35
Year 2005
Year 2004
22,021
22,021
1,932
39,000
40,932
Writedowns of current receivables and cash and cash equivalents (thousands of Euros)
Receivables
- trade
- non-trade
Total
Schedule 36
Year 2005
Year 2004
1,983
1,983
-
Changes in inventories of raw materials, supplies, consumables and
merchandise: these amount to 661 thousand Euros, representing the decrease in
net inventories carried under current assets at 31 December 2005 with respect to
the previous year.
Provisions for risks: risk provisions amount to 15,712 thousand Euros. The
most significant items are detailed in schedule 15.
Other provisions: amount to 8,340 thousand Euros. The main items are shown
in schedule 15.
Miscellaneous operating costs: these amount to 82,991 thousand Euros. There
composition is shown directly on the face of the income statement. Further
information is provided in schedule 37.
Miscellaneous operating costs (thousands of Euros)
Asset disposal losses:
Fixed assets
- land and buildings
- plant and machinery
- industrial and sales equipment
- other assets
- fixed assets under construction
118
Schedule 37
Year 2005
Year 2004
59
288
21
163
69
239
153
27
174
853
600
1,446
Concession fee
28,313
27,167
Other costs:
- gifts, prize contests and entertainment expenses
- association dues
- indirect taxes, duties and similar for the year
- indirect taxes, duties and similar for previous years
- contribution to the Authority - Min. Decr. 16/07/99
- payment of uninsured damages, fines and penalties
- newspapers, books, periodicals, specific documentation and publications
- prior-year charges and reversal of non-existent assets
- revaluation charges for pension fund liabilities
- other
13,401
2,983
8,828
24
1,784
370
2,746
13,955
6,599
3,388
11,726
3,077
8,433
144
1,297
297
2,534
11,695
8,423
1,594
54,078
49,220
Total
82,991
77,833
Financial income and charges
Income from equity investments: this amounts to 60,766 thousand Euros,
representing dividends distributed in 2005 by investee companies, as shown in
schedule 38.
Financial income from equity investments (thousands of Euros)
Dividends from subsidiaries:
- Rai Cinema
- Sipra
- Rai Way
- Rai Trade
- RaiSat
Dividends from other companies:
- FINSIEL
Total
Schedule 38
Year 2005
Year 2004
29,844
18,500
5,576
4,000
2,818
60,738
44,548
8,200
2,300
1,704
56,752
28
-
60,766
56,752
Other financial income: comprises the following:
• from non-current receivables: this amounts to 415 thousand Euros, as shown in
schedule 39.
Other financial income on non-current receivables (thousands of Euros)
Schedule 39
Year 2005
Year 2004
Other:
- Tax advanced on staff severance pay (Law 140/97)
- Miscellaneous
393
22
443
18
Total
415
461
• From non-current securities other than equity investments: this amounts to 85
thousand Euros and relates to interest receivable on securities.
• Financial income other than the above: this amounts to 10,439 thousand Euros
and mainly relates to interest on current receivables as shown directly on the face
of the income statement and detailed even further in schedule 40.
Other financial income on current receivables other than the above (thousands of Euros)
Interest and commission from subsidiaries
Interest and commission from others and miscellaneous income:
- interest from banks, Post Office current accounts and other financial institutions
- income from repurchase agreements
- default interest on customer receivables
- use of provisions for risks on foreign currency hedging transactions
- interest from others
Total
Schedule 40
Year 2005
Year 2004
6,440
5,153
3,698
38
98
165
3,999
2,093
73
199
2,365
10,439
7,518
119
Interest and other financial charges: these amount to 3,523 thousand Euros.
They relate to interest expense, commissions expense for financial services received
and other charges in respect of financial operations, as shown directly on the face of
the income statement and in further detail in schedule 41.
Interest and other financial charges (thousands of Euros)
Interest and commissions payable to subsidiaries
Interest and commissions payable to associated companies
Interest and commissions payable to others and miscellaneous charges
- interest and commission payable to banks and other financial institutions
- interest payable to other lenders
- interest to suppliers
- interest expense on interest rate hedges
- provision made for risks on interest rate hedges
- other interest expense and miscellaneous charges
Total
Schedule 41
Year 2005
Year 2004
1,728
1,472
16
22
1,228
326
207
18
1,779
2,692
71
63
918
1,150
105
4,999
3,523
6,493
Foreign exchange gains and losses: these show a net gain of 2,205 thousand
Euros, representing the balance of foreign exchange charges and premiums on
foreign currency hedge transactions as well as the effect of translating the value of
payables and receivables in foreign currencies at year-end exchange rates. Greater
detail is provided in schedule 42.
Foreign exchange gains and losses (thousands of Euros)
Schedule 42
Year 2005
Year 2004
Realised foreign exchange gains (losses)
Unrealised foreign exchange gains (losses)
1,517
688
(1,677)
478
Total
2,205
(1,199)
Revaluations: these amount to 1,039 thousand Euros. They reflect the recovery of
losses incurred by associated companies in previous years.
Writedowns: these total 234 thousand Euros. They comprise writedowns of
non-current financial assets following losses incurred for the year.
120
Exceptional income and charges
Exceptional items comprise income of 1,325 thousand Euros and exceptional
charges of 35,500 thousand Euros. A breakdown is given in schedule 43. The most
significant component, of 35,500 thousand Euros, relates to the costs connected
with the staff voluntary resignation incentives project approved by the Board of
Directors on 6 December 2005.
Exceptional income (thousands of Euros)
Schedule 43
Year 2005
Gain on sale of ENEL bonds
Out-of-period gains and reversal of non-existent liabilities
Gain on elimination of fiscal distortions in the accounts
Total
Year 2004
-
435
1,325
1,319
-
63,353
1,325
65,107
Year 2005
Year 2004
-
606
Exceptional charges (thousands of Euros)
Prior year taxes
Restructuring costs
35,500
-
Other
-
18
Total
35,500
624
Current income taxes for the year, and deferred tax charges and
credits
These amount to 38,331 thousand Euros. They represent the total tax charge for the
year, made up as follows:
- IRES tax
- IRAP tax
Total
Current
Deferred
tax charges
(11,000)
(43,000)
(54,000)
(84)
(3)
(87)
Deferred
tax credits
Total
16,588
5,504
(832) (43,835)
15,756 (38,331)
121
The following table shows the origin and effects of deferred tax items during the
year.
Deferred tax assets
Changes in the year:
Taxed provisions recovered
Difference between statutory and fiscal
amortisation for programmes
Negative taxable income
Definition of tax regularisation arrangement
for 2004
Effect on 2005 income
Deferred tax liabilities
Changes in the year:
Capital gains
Gains on equity investments
Neutralisation of exchange rate valuations
Accelerated depreciation for tax purposes
Effect on 2005 income
Timing
differences
for IRES tax
IRES
rate
33%
(*)
Timing
differences
for IRAP tax
59,375
19,593
(11,124)
(541) 19,052
(5,963) (1,968)
(14,222) (4,693)
39,190 12,932
(5,963)
=
(17,087)
(291) (2,259)
= (4,693)
(832) 12,100
=
3,656
39,190 16,588
=
(17,087)
= 3,656
(832) 15,756
1,367
71
(268)
(1,424)
(254)
451
23
(88)
(470)
(84)
1,367
=
=
(1,424)
(57)
IRAP rate
4.885%
(average)
(*)
67
=
=
(70)
(3)
Total
518
23
(88)
(540)
(87)
(*) Deferred tax assets arising from timing differences are recognised only if, and to the extent, that it is reasonably
certain that at the time the timing differences reverse the Company will have sufficient taxable income to ensure the
related tax benefit.
The following table gives the reconciliation between the statutory profit for the year
and taxable income for IRES and IRAP purposes.
Profit before taxes
- Movement in taxed provisions
- Difference between statutory and taxpurpose amortisation and depreciation:
- programmes
- fixed assets
- Deductible portion of dividends
- Writedown of equity investments
- Group portion of investee companies’ prior year losses
- Reversal of previous writedowns of equity investments
- Municipal property tax
- Prior years losses
- Other changes - increase
- Other changes - decrease
Taxable amount
IRES
IRAP
54,711
Operating profit
17,693
50,609
- Movement in taxed provisions
- Difference between statutory and taxpurpose amortisation and depreciation:
- programmes
- fixed assets
- Non-current asset writedowns
- Writedown of receivables
- Personnel costs
- Other changes - increase
- Other changes - decrease
(40,539)
(5,963)
(2,562)
22,021
1,983
868,281
32,227
(13,141)
- Altre variazioni in diminuzione
Taxable amount
-3.109
880,000
(5,963)
(2,562)
(60,565)
234
(2,701)
(1,024)
3,360
(9,670)
12,897
(6,326)
33,000
On the taxable amount, current taxes of 11,000 thousand Euros have been calculated
for IRES purposes; and for IRAP, 43,000 thousand Euros.
122
7) Net profit for the year
The year closed with a net profit of Euro 16,379,837.86.
8) Other information
For significant events subsequent to the year-end and related-party transactions,
reference should be made to the information given in the Directors' Report.
123
Rai SpA
Parent Company supplementary schedules
125
Rai SpA Parent Company supplementary schedules
Parent Company balance sheet reclassified in vertical form
A. NON-CURRENT ASSETS
Intangible assets
Fixed assets
Financial assets
B. WORKING CAPITAL
Inventories
Trade receivables
Other assets
Trade payables
Other liabilities
C. INVESTED CAPITAL
net of current liabilities
(A+B)
D. PROVISION FOR STAFF SEVERANCE PAY
E. INVESTED CAPITAL
net of current liabilities and provision for staff severance pay
(C-D)
31.12.2005
31.12.2004
310,082
469,532
322,782
1,102,396
296,356
533,906
316,365
1,146,627
1,709
635,840
320,037
(622,464 )
(474,531 )
(160,280 )
(299,689)
2,473
581,459
232,332
(553,049)
(426,596)
(145,994)
(309,375)
802,707
837,252
366,663
345,784
436,044
491,468
242,518
438,422
16,380
697,320
242,518
404,531
112,970
760,019
1,205
3,526
financed by:
F. EQUITY
Share capital paid up
Reserves and profits brought forward
G. NET MEDIUM/LONG-TERM FINANCIAL DEBT
H. NET SHORT-TERM DEBT (NET CASH FUNDS)
. net short-term debt
. cash and short-term financial receivables
I. TOTAL NET FINANCIAL DEBT
L. TOTAL, AS IN E
126
(G+H)
(F+I)
63,263
(325,744 )
(262,481)
105,962
(378,039)
(272,077)
(261,276)
(268,551)
436,044
491,468
Parent Company income statement reclassified in vertical form
31.12.2005
31.12.2004
A. REVENUES
Changes in inventories of work in progress,
semifinished and finished goods
2,832,485
2,799,573
(103)
6,077
(20)
6,735
B. VALUE OF “TYPICAL” PRODUCTION
Cost of materials and external services
2,838,459
(1,572,583)
2,806,288
(1,612,065)
C. VALUE ADDED
Personnel costs
1,265,876
(868,281)
1,194,223
(822,618)
397,595
(187,870)
(125,510)
(24,004)
(24,052)
(18,465)
371,605
(192,252)
(130,771)
(40,932)
(14,871)
11,648
D. GROSS OPERATING MARGIN
Depreciation fixed assets
Other value adjustments
Miscellaneous income and charges - net
E. OPERATING PROFIT
17,694
70,387
805
4,427
57,532
(4,516)
F. PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXES
Exceptional income and charges - net
88,886
(34,175)
57,443
64,483
G. PROFIT BEFORE TAXES
54,711
(38,331)
121,926
(8,956)
H. NET PROFIT FOR THE YEAR
16,380
112,970
127
Parent Company cash flow statement
A. NET OPENING CASH FUNDS
(NET OPENING SHORT-TERM FINANCIAL DEBT)
B. CASH FLOW FROM OPERATING ACTIVITIES
Amortisation and depreciation
(Gains) losses on disposal of non-current assets
(Revaluations) writedowns of non-current assets
Change in working capital
Net change in staff severance pay provision
C. CASH FLOW FROM INVESTING ACTIVITIES
Investment in non-current assets:
. intangible assets
. fixed assets
. financial assets
Sale proceeds, or reimbursement value,
of non-current assets
D. CASH FLOW FROM FINANCING ACTIVITIES
New loans
Contributions by Shareholders
Capital grants
Loan repayments
Equity repayments
E. PROFITS DISTRIBUTIONS
F. CASH FLOW FOR THE YEAR
G. NET CLOSING CASH FUNDS
(NET CLOSING SHORT-TERM FINANCIAL DEBT)
128
(B+C+D+E)
(A+F)
31.12.2005
31.12.2004
272,077
256,012
16,380
313,380
476
20,829
(9,671)
20,879
362,273
112,970
323,023
(620)
21,420
(7,217)
19,881
469,457
(229,116)
(56,211)
(8,459)
(264,867)
(54,442)
(88,064)
3,317
(290,469)
15,583
(391,790)
(2,321)
(2,321)
(61,602)
(61,602)
(79,079)
-
(9,596)
16,065
262,481
272,077
Parent Company statement of changes in Shareholders’ Equity
in the years ended 31 December 2004 and 31 December 2005
Share
capital
Legal
reserve
Restricted
reserve for
gains on
foreign currency
valuations
241,447
510
Changes in 2004
Allocation of loss for 2003 (2)
Rai
500,000 14,082
Elimination
(3) (500,000) (14,082)
Share capital increase (3)
1,071
Net profit for 2004
242,518
510
Changes in 2005
Allocation of profit
(4)
Net profit for 2005
242,518
(1) Breakdown:
Capital grants pursuant to Art. 55/917
Reserve for capital grants
(2)
(3)
(4)
(5)
5,648
6,158
-
Other
reserves
(1)
Profits
(losses)
brought
forward
Net profit
for the
year
Merger
surplus
Total
-
9,669
(168)
-
251,458
0
117,792
(107,166)
(168)
-
168
-
10,626
9,501
112,970
112,970
478
478
10,626
27,765
37,266
384,965
(1,071)
383,894
(112,970)
16,380
16,380 383,894
631,874
(236,283)
0
112,970
760,019
(79,079) (5)
16,380
697,320
9,364
1,262
10,626
Pursuant to resolution of Shareholders' Annual General Meeting of 16/6/2004
As indicated in merger instrument deposited on 1/12/2004
Pursuant to resolution of Shareholders' Annual General Meeting of 31/5/2005
Dividend resolved by Shareholders' Annual General Meeting of 31/5/2005 and distributed in July 2005
129
Rai SpA
on the Parent Company Financial Statements
131
Rai SpA Report of the Board of Statutory Auditors
Report of the Board of Statutory Auditors on the Parent Company
Financial Statements
To the Shareholders
As a first point, we wish to remind you that - in order to implement the provisions
of article 21 of Law 112/04 of 1 December 2004 regarding the merger of RAI
SpA into RAI Holding - the Board of Directors of the absorbed company RAI SpA
which had been appointed on 18 March 2003 pursuant to Law 206/93 and was
composed of four members after the resignation of the Chairman, Mrs Annunziata,
took on the same position in the company resulting from the merger. This Board
remained in office up to 31 May 2005, when pursuant to the said Law 112/04 a
new Board of Directors was appointed with eight members which as from 30 July
was increased to nine with the appointment of Mr Petruccioli who in the ensuing
Board Meeting of 2 August was elected Chairman. On 5 August following, also the
new General Manager Mr Meocci was appointed, to replace Mr Cattaneo.
The parent company financial statements of RAI SpA at 31.12.2005,
which were delivered to us within the term specified by article 2429 (1) of the
Civil Code and are submitted for your approval, are expressed in Euro units, without
cents; the figures therein have been rounded off pursuant to the instructions contained
in Circular no. 106/e issued by the Revenue Office on 21 December 2001.
These financial statements consist of the parent company balance sheet, income
statement and notes to the financial statements and are accompanied by the
Directors' Report.
A summary of the parent company balance sheet showing the main
aggregates is presented hereunder:
(millions of Euros)
ASSETS
Non-current assets
1,102.4
Current assets
1,266.4
16.9
2,385.7
LIABILITIES AND EQUITY
Equity
697.3
474.5
366.7
Payables
843.4
3.8
2,385.7
132
MEMORANDUM ACCOUNTS
Guarantee given: unsecured
69.5
secured
54.1
Purchase and sales commitments
Other
93.9
236.6
454.1
The parent company income statement is summarised hereunder:
(millions of Euros)
Production value
2,874.7
Production costs
2,857.0
Operating profit
17.7
70.4
0.8
-34.2
Income taxes
-38.3
16.4
We confirm, also on the basis of meetings held with the Independent
Auditors PricewaterhouseCoopers S.p.A. (hereinafter “PwC”), that the parent
company financial statements in question have been drawn up, in all their components
(balance sheet, income statement and notes to the financial statements), in
accordance with the provisions of law.
The parent company balance sheet and income statement, summarised above,
present comparative figures for 2004, pursuant to article 2423 ter (5) of the Civil
Code.
The notes to the parent company financial statements contain a
description of the accounting policies adopted and provide, with the supplementary
schedules presented, the other disclosures required under article 2427 of the Civil
Code; in accordance with the various regulations, information is given, inter alia,
on revaluations made to fixed assets still carried in the balance sheet. It should be
noted amounts are shown in thousands of Euros in the notes to the financial
statements and detailed schedules; the only exception being for the results for the
year, which are shown with cents.
Pursuant to article 2429 (3) of the Civil Code, complete copies of the latest
financial statements of subsidiaries have been deposited at the Company’s
registered office together with the reports of the relative Boards of Statutory
133
Auditors and Independent Auditors, as well as a summary statement of the key
data of the latest financial statements of associated companies.
The reports of the Boards of Statutory Auditors and Independent Auditors are
positive, each in their own right.
We also report that in the notes to the financial statements, the Board of
Directors has described how the Lazio Regional Administrative Court with its
decision handed down on 23 November 2005 accepted the reasons put forward by
the Company for the cancellation of the Communications Authority’s ruling whereby
the Authority, after having ascertained and declared that RAI had not complied
with the formal reprimand established by resolution n° 226/03/CONS of 27 June
2003 (existence of dominant positions in the television sector), levied on 9 March
2005 a sanction of 20.6 million Euros on RAI. The Authority has lodged an appeal
with the Council of State which will be heard in coming October. In this connection,
as was the case also last year, no provision for possible risks has been made in the
financial statements. This approach is shared also by the Independent Auditors.
In addition, the Communications Authority, with resolution no. 221/06/CONS
of 27 April 2006 served on RAI on 3 May 2006, applied a sanction on the Company
for 14.4 million Euros, for the alleged infringement of article 2 (9) of Law 481/95
regarding the alleged incompatibility of Mr Alfredo Meocci with the office of RAI
General Manager. The Board of Directors decided to make an appeal against this
decision to the Lazio Regional Administrative Court, which was lodged on 12 May
2006, petitioning its annulment on grounds of infringement of the law and excess use
of powers, and suspension of its effects. With regard to the assessment of the risks
connected with these issues, it should be noted that at the present state of proceedings,
the chance of a favourable decision being issued is at least equal to an unfavourable one
being issued and accordingly, on these premises and in accordance with correct
accounting principles, the Board of Directors has made no provision in the 31
December 2005 financial statements; this is because, in situations of the kind, the
requirement is for adequate disclosure to be made in the notes to the financial
statements. Also PwC is in agreement with the decision taken.
Mr Meocci, following the said resolution of the Communications Authority,
has taken leave of absence as from 3 May and up to the time of the Lazio Regional
Administrative Court’s ruling; his powers have in the meantime been delegated by
the Board to the Chairman.
The Directors, in accordance with article 2428 of the Civil Code, have
described in the Directors’ Report the Company’s situation and activities, which
are performed also through subsidiaries.
The Directors' Report also gives information on research and development
activities and the outlook for the Company.
Finally, three tables showing the balance sheet and income statement in vertical
form and the cash flow statement have been presented to provide an effective tool
for a better understanding of the financial statements.
In addition, the Board of Directors has reported that, in the early months
of 2005, RAI in accordance with the provisions of Law 112/04 (the Gasparri Law)
134
and the consequent resolution no. 102/05/CONS passed by the Communications
Authority, has prepared the Separate Accounting Model, which was approved by
the Authority on 9 June 2005. This model is intended, inter alia, to identify the
cost of providing the radio and television Public Service which must be covered by
the licence fee, and to assist the Minister of Communications in determining the
amount of the ordinary licence fee. As established by the Authority, RAI has
applied the Separate Accounting Model to the 31 December 2004 financial
statements and has had it audited by the auditing firm Deloitte & Touche which
was chosen by the Authority.
From this exercise it has emerged that the public revenues deriving from the
licence fee do not cover, as established by article 47 of the Consolidated
Broadcasting Law which incorporated Law 112/04, the costs of the Public Service
as established by Law and the Service Contract, and that there is a deficit of slightly
under 300 million Euros.
The licence fee, under the Minister of Communications Decree of 30 November
2005 was nevertheless left unchanged from that for 2005, which in turn was the
same as for 2004.
RAI has appealed to the Lazio Regional Administrative Court for the
cancellation of the ministerial decree in order to have the licence fee adjusted
in line with inflation determined by ISTAT, as well as to obtain refund of the
costs borne by RAI in the performance of the Public Service, thus seeking, as
established in the Consolidated Broadcasting Law, to have such costs correspond
to the licence fee revenues.
With regard to matters falling within the sphere of the Board of
Statutory Auditors, we report that, in connection with valuation and accounting
aspects, there have been no “exceptional cases” during the year which would
entail making derogations from standard accounting principles as permitted
under article 2423 (4) of the Civil Code. We concur on the valuation methods
reported for the individual financial statement components, which have remained
substantially unchanged from 2004, and are in accordance with the general
principles indicated in article 2423 bis of the Civil Code and with the more
specific provisions contained in the following article 2426.
In addition, we report that:
• there are no formation, start-up and similar costs nor research, development and
advertising deferred costs carried with intangible assets in the balance sheet;
• results for 2005, in accordance with the provisions of the new company law,
have suffered no charges for accelerated depreciation and amortisation; such
charges are made off-books only for fiscal purposes;
• deferred tax assets have been recorded on taxed provisions made in preceding
years in accordance with a reliable detailed plan for their recovery;
• deferred tax liabilities have been recorded on depreciation and amortisation
charges for the year made off-books, as referred to above, only for fiscal purposes.
RAI already as from tax year 2004 has opted to be taxed on a Group
consolidated accounts basis, pursuant to article 117 of the Consolidated
Income Tax Law as amended by Legislative Decree no. 344/2003.
135
With regard to the activities of this Board of Statutory Auditors
during 2005, we inform you that we carried out 41 audit visits, some of
which were at Regional and foreign Correspondent Offices. Specifically, considering
that the function of the Audit of the Accounts was assigned for 2004-2006
to the auditing firm PwC by the Shareholders' Meeting held on 20.12.2004,
this Board , in view of the duties brought in by the new regulations, also programmed,
in addition to the normal already existing contacts, specific meetings with
PwC and the various Company department managers to obtain information
on the Company’s organisational structure, internal control system and the
administrative and accounting system.
During our meetings with the auditing firm PwC, no “censurable actions”
were reported to us pursuant to article 2408 of the Civil Code.
In 2005 the Board of Statutory Auditors attended all the meetings of the
Board of Directors (43 in number) during which we obtained information from
them on the general performance of the business and its outlook, as well as on
operations of greater significance, in terms of size and characteristics. We can
reasonably consider that the actions taken by the Company were not in contrast
with the Law or the Company Bylaws and do not appear to be manifestly
imprudent, rash or in contrast with resolutions passed by Shareholders' Meetings
or such as to compromise the Company’s assets or financial position.
We report in addition that the Board of Directors, in its meeting of 25
October 2005, delegated powers of enquiry to its members, pursuant to article 26
of the Company Bylaws. For this purpose, two Committees of Enquiry were set
up within the Board of Directors for Administration and Organisation respectively
to which “particular functions” were assigned aimed especially at enquiry into
problems regarding the strategies obtaining in the two areas mentioned and the
preservation of the powers accorded to the General Manager under the Law.
The Board of Statutory Auditors, for its part, issued during the year the
opinions pursuant to article 2389 (3) of the Civil Code relating to the so-called
“special assignments” conferred by the Board of Directors on its members.
We also report that in 2005 six Shareholders' Meetings were held, which
were attended by the Board of Statutory Auditors.
In the light of all the matters described and considered above, we express
our favour for the approval of the parent company financial statements at 31
December 2005 as drawn up by the Board of Directors. We also agree with the
proposal made by the Board of Directors to allocate the net profit for the year of
Euro 16,379,837.86 as follows: Euro 818,991.89 (equal to one twentieth of the
net profit) to the legal reserve; Euro 210,587.24 to the reserve for foreign currency
exchange gains pursuant to Article 2426 (8 bis) of the Civil Code; and Euro
15,350,258.73, the remainder, to a reserve for investment in technological innovation.
We consider it useful, for information purposes, to supplement the report
with information on the following aspects.
The above-mentioned audit visits of the Board of Statutory Auditors were
made also at the Correspondent Offices at New York and Madrid, as well as at
Palermo at the Sicilian regional office; no critical matters of substance emerged
from these visits.
136
Specifically, using as is our custom information obtained from the Internal
Audit Department and from contacts with the Independent Auditors PwC, we
directed our attention to the status of corporate procedures and internal control,
both within RAI S.p.A. and the Group.
As for RAI S.p.A., we have no observations to make on the administrative
and accounting procedures for drawing up the parent company and consolidated
financial statements, whereas procedures for updating and completing the overall
system of procedures have not yet been completed, even though we have taken
note of the commitment put into this area by the Company. A number of important
objectives have been fulfilled in the area, such as:
- the new procedure for the procurement of goods and services was formalised in
early 2006;
- completion was reached on mapping risk areas in RAI and subsidiaries both in
general terms and in respect of the specific area relating to Law 231/2001;
- work has continued on the introduction of the provisions of Law 231/2001 leading
up in October last to the formulation of the Organisational Model and the
appointment of the members of the Oversight Committee, which is composed of
one Director, the Manager of the Legal Office and an outside expert. The Board
of Statutory Auditors has not failed to draw the Company’s attention to the
necessity of completing the project stage indicated in the said law so as to allow
the Oversight Committee to commence activities systematically and also to allow
the same measures to be extended on a timely basis to all Group companies.
The general situation of procedures continues, however, to be marked by:
the
inadequacy
of a number of procedures which do no meet present requirements
•
(protection of personal data, control over programming, etc);
• the persistence, in certain departments, of practices which are not entirely compatible
with the new organisational structure and at the same time are divergent
amongst one other, despite having being set up for the same purposes (use of
transport vehicles, procedures for incurring production expenses, etc).
Accordingly, the Board of Statutory Auditors has made repeated
recommendations for the procedures manual to be completed and updated, in
that the necessity to have an internal controls system covering all aspects has
become more stringent given the lapse of time from the introduction of the new
Finally, we wish to comment briefly on the Internal Auditing Department
which in the latter part of 2004 was shorn of the Inspections segment which was
passed on to the Human Resources Department in accordance with the reorganisation
made in the year.
In 2005, therefore, the Department was engaged particularly in activities
peculiar to its own specific function, in the systematic audit of the various
corporate areas. In order to attain this objective definitively, we consider that it
would be opportune to assess the necessity of introducing possible new measures
to re-establish a balance in favour of the typical activities of the Department
being applied throughout the whole Group; the adequacy of the number of its
staff should also be examined.
137
With regard to relations between RAI and its subsidiaries, there still
remains the necessity in non-accounting procedures areas of rendering common
reference points more effective, so that subsidiaries can draw up their operational
regulations using a uniform base. This situation leads us to stress that guide-lines
should be drawn up to be followed by each Group company in the preparation of
its major operational procedures, so as to develop a more effective internal
control system at Group level.
THE BOARD OF STATUTORY AUDITORS
Dr. Carlo Cesare GATTO
Prof. Paolo GERMANI
Prof. Salvatore RANDAZZO
Rome, 31 May 2006
138
Rai SpA Report of the Independent Auditors
on the Parent Company Financial Statements
139
Rai SpA Shareholders’ Meeting Resolution
RAI – Annual General Meeting of Shareholders
held on 28 June 2006
RAI Parent Company Financial Statements – Year 2005
The Annual General Meeting of Shareholders of RAI:
- having examined the proposal presented by the Board of Directors in connection
with the RAI parent company financial statements for 2005, comprising the parent
company balance sheet, income statement and notes to the financial statements,
accompanied by the Directors' Report;
- having taken note of the Report of the Statutory Auditors, in which they express
their favour for the approval of the financial statements;
- having also taken note of the Audit Report of PricewaterhouseCoopers,
which contains no exceptions;
resolved that
- the parent company Financial Statements at 31 December 2005, showing a net
profit for the year of Euro 16,379,837.86, be approved;
- the net profit for the year of Euro 16,379,837.86 be allocated as follows:
- Euro 818,991.89 (or 5% of net profit for the year) to the legal reserve;
- Euro 210,587.24 to the reserve for foreign currency exchange gains pursuant
to Article 2426 (8 bis) of the Civil Code;
with the remainder, Euro 15,350,258.73, being transferred to a reserve for
investment in technological innovation.
141
Rai SpA Consolidated Financial Statements at 31 December 2005
Contents
Highlights
144
Reclassified consolidated financial statements
146
Summary of consolidated results and financial position
147
Consolidated Balance Sheet and Income Statement
- in statutory form
157
Notes to the Consolidated Financial Statements
165
Consolidated supplementary schedules
191
197
201
Appendices
Financial Statements of Subsidiaries
Financial Statements of Associated Companies (summary schedules)
203
203
253
Rai Group Highlights
Highlights
(millions of Euros))
3000
3000
2500
2500
2000
2000
1500
1500
1000
1000
500
500
0
2004
2005
0
2004
2005
GOM - Operating Profit
Profit before Tax - Net Profit
150
835.7
1000
100
600
82.2
700
105.7
125
85.1
745.7
900
800
2,263.6
3500
2,284.3
3,021.3
3500
Operating Costs
3,091.0
Revenues
75
500
400
100
132.2
89.5
200
25
0
0
2004
144
22.9
50
300
2005
2004
2005
Rai Group Highlights
Net Financial Position
1000
300
794.9
851.1
Equity
800
250
200
150
123.7
600
94.1
400
100
200
50
0
2005
2004
Investment
(in programmes and fixed assets)
800
12000
11000
525.8
525.6
600
2005
Workforce at 31 December
(permanent and trainee contracts)
11,554
2004
11,617
0
10000
400
103.8
200
134.4
9000
8000
7000
0
2004
2005
2004
2005
145
Rai Group Reclassified consolidated financial statements
Reclassified consolidated financial statements
Consolidated Income Statement (millions of Euros)
Total revenues
External goods and services
Personnel costs
Total operating costs
Depreciation of fixed assets
Other net income (charges)
Operating Profit
Profit before taxes and exceptional items
Net exceptional income (expense)
Profit before taxes
including: portion pertaining to minority interests
31.12.2005
31.12.2004
Change
in amount
Change %
3,091.0
3,021.3
69.7
2.3
0.3
8.0
3,099.3
(1,291.9)
(971.7)
(2,263.6)
835.7
(454.6)
(168.0)
(80.9)
132.2
7.4
0.0
139.6
(33.9)
105.7
(82.8)
22.9
(0.3)
0.3
8.4
3,030.0
(1,362.1)
(922.2)
(2.284,3)
745.7
(417.3)
(176.1)
(62.8)
89.5
(7.5)
1.0
83.0
2.1
85.1
(2.9)
82.2
(0.2)
0.0
(0.4)
69.3
70.2
(49.5)
20.7
90.0
(37.3)
8.1
(18.1)
42.7
14.9
(1.0)
56.6
(36.0)
20.6
(79.9)
(59.3)
(0.1)
0.0
-4.8
2.3
-5.2
5.4
-0.9
12.1
8.9
-4.6
28.8
47.7
-198.7
-100.0
68.2
-1714.3
24.2
2755.2
-72.1
Consolidated company Balance Sheet (millions of Euros)
31.12.2005
Non-current assets
Working capital
Staff severance pay provision
Net Invested Capital
Equity
Net financial debt
146
1,560.9
(452.0)
(408.1)
700.8
794.9
(94.1)
700.8
31.12.2004
1,585.6
(473.4)
(384.8)
727.4
851.1
(123.7)
727.4
Change
in amount
(24.7)
21.4
(23.3)
(26.6)
(56.2)
29.6
(26.6)
Change %
-1.6
-4.5
6.1
-3.7
-6.6
-23.9
-3.7
Rai Group Summary of consolidated results and financial position
Summary of consolidated results and financial position
Consolidated Income Statement
The Rai Group closed year 2005 with a consolidated net profit of 22.9 million
Euros, down 59.3 million Euros on the preceding year.
The following section provides an overview of the main items of the income
statement and the reasons behind the more significant changes with respect to
2004.
Revenues sales and services
Revenues sales and services (millions of Euros)
Licence fees
Other revenues
Total revenues from sales and services
2005
2004
Change
in amount
Change %
1,482.5
1,217.6
390.9
3,091.0
1,473.8
1,218.6
328.9
3,021.3
8.7
(1.0)
62.0
69.7
0.6
-0.1
18.9
2.3
Revenues from sales and services comprise licence fees, advertising revenues and
other items of a commercial nature, totalling 3,091 million Euros, up 69.7 million
Euros on 2004 (+2.3%).
As indicated in the following table, the incidence of the three components on total
revenues from sales and services is substantially in line with 2004.
% incidence on total revenues
Licence fees
Other revenues
Total
2005
2004
48.0%
39.4%
12.6%
100.0
48.8
40.3
10.9
100.0
Licence fees amount to 1,482.5 million Euros. With the amount of the licence fee
remaining unchanged, they show a result which is consistent with 2004, compared with
which there is a slight increase (8.7 million Euros or 0.6%) which is wholly attributable to an increase in the number of paying subscribers, this being a direct consequence
of efforts expended to contain licence fee evasion.
Advertising revenues (1,217.6 million Euros) are substantially in line with the
preceding year, despite the fact that the latter benefited from the business brought
in by major sports events (European Soccer Championship and the Olympics).
147
Advertising (millions of Euros)
Television advertising
Radio advertising
Promotions and sponsorships
Other advertising
Total
2005
2004
Change
in amount
Change %
1,015.7
65.0
89.9
47.0
1,217.6
1,003.6
68.8
99.9
46.3
1,218.6
12.1
(3.8)
(10.0)
0.7
(1.0)
1.2
-5.5
-10.0
1.5
-0.1
Other revenues amount to 390.9 million Euros, up 62 million Euros (+18.9%) due
mainly to higher revenues from film distribution and home video sales made by
01 Distribution (+35.8 million Euros) and the sale of rights by Rai Trade (+12.4
million Euros).
They comprise revenues from:
• special services under the service agreement (77.7 million Euros), sales and
other services (84 million Euros) performed by the parent company;
• sales and services performed by Rai Trade (64.5 million Euros), RaiSat
(48.6 million Euros) and Rai Way (34.9 million Euros);
• film distribution and home video sales performed by 01 Distribution
(58.1 million Euros);
• other kinds of sales and services amounting to 23.1 million Euros.
A breakdown by individual company of revenues from sales and services, net of
intercompany transactions, is given in the following table.
Revenues - by company (millions of Euros)
2005
%
2004
%
Rai
Rai Cinema
RaiNet
RaiSat
Rai Trade
Rai Way
SIPRA
01 Distribution
Other companies
1,644.4
9.8
1.1
51.8
65.2
34.9
1,222.9
58.1
2.8
53.2
0.3
0.0
1.7
2.1
1.1
39.6
1.9
0.1
1,628.0
6.8
0.1
47.8
52.4
37.6
1,223.9
22.3
2.4
53.9
0.2
0.0
1.6
1.7
1.2
40.5
0.7
0.1
Total
3,091.0
100.0
3,021.3
100.0
Operating costs
These comprise costs for materials and external services and personnel costs. They
total 2,263.6 million Euros, down 20.7 million Euros, or 0.9%, on 2004.
Operating costs (millions of Euros)
Cost of goods and services
Personnel costs
Total
148
2005
2004
Change
in amount
Change %
1,291.9
971.7
2,263.6
1,362.1
922.2
2,284.3
(70.2)
49.5
(20.7)
-5.2
5.4
-0.9
Cost of goods and services. This caption includes external costs (purchase and
production of immediate-use programmes, general services, freelances, consultants,
etc), costs for the use of third-party assets (filming rights, particularly for sports
events, copyright, leases and rentals, etc), purchases of materials and, finally, the
concession fee.
The cost of goods and services totals 1,291.9 million Euros, down 70.2 million
Euros on the preceding year, or 5.2%, due mostly to there being no filming rights
costs for major sports events as was the case in 2004.
Cost of goods and external services (millions of Euros)
2005
2004
Change
in amount
Change %
32.2
30.3
1.9
6.3
150.3
258.3
140.2
233.0
10.1
25.3
7.2
10.9
215.7
50.2
105.4
779.9
207.2
51.4
104.6
736.4
8.5
(1.2)
0.8
43.5
4.1
-2.3
0.8
5.9
203.8
128.0
119.1
450.9
28.3
0.6
1,291.9
328.3
115.6
124.2
568.1
27.2
0.1
1,362.1
(124.5)
12.4
(5.1)
(117.2)
1.1
0.5
(70.2)
-37.9
10.7
-4.1
-20.6
4.0
500.0
-5.2
Materials purchased
External services
Freelance services
Services for acquisition and production of programmes
General services (postage, transport, maintenance,
cleaning, plant operation, archive services, etc)
Allowances, travel and transfers
Other
Use of third-party assets
Filming rights
Usage rights
Leases and rentals
Concession fee
Other
Total
A breakdown by individual group company of the cost of goods and services, net
of intercompany transactions, is given in the following table.
Cost of goods and services by group company (millions of Euros)
2005
%
2004
%
Rai
Rai Way
Sipra
Rai Trade
01 Distribution
RaiSat
Rai Cinema
RaiNet
1,034.5
73.3
48.6
37.5
39.2
29.3
11.8
4.6
80.1
5.7
3.8
2.9
3.0
2.3
0.9
0.4
1,141.8
80.1
49.8
27.5
19.4
19.9
8.4
4.0
83.8
5.9
3.7
2.0
1.4
1.5
0.6
0.3
Other companies
Total
13.1
1,291.9
1.0
100.0
11.2
1,362.1
0.8
100.0
149
Personnel costs. These come to 971.7 million Euros compared with 922.2 million
Euros at 31 December 2004.
The increase over the preceding year (+49.5 million Euros, or 5.4%) is due to normal growth and changes from the preceding year (career development and two-year
adjustments) and from the effects of the renewal of the collective labour contract for
office employees and manual workers, on which agreement was reached in December
last year, as well as to the necessity of making provision for possible charges under
labour disputes.
A breakdown by individual group company of personnel costs is given in the
following table.
Personnel costs by group company (millions of Euros)
2005
%
2004
%
Rai
Rai Way
Sipra
RaiSat
Rai Trade
Rai Cinema
RaiNet
868.1
47.1
26.7
7.3
6.2
5.1
4.0
89.3
4.8
2.7
0.8
0.6
0.5
0.4
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
Other companies
Total
7.2
971.7
0.7
100.0
5.6
922.2
0.6
100.0
The average number of employees, including those on fixed-term contracts who
numbered 1,762, came to 13,326, an increase of 77 on the previous year.
Staff at 31 December 2005 numbered 11,617, including 49 engagements under
trainee or two-year journalist contracts.
The difference between Revenues and Operating Costs is positive for 835.7 million
Euros, an improvement of 90 million Euros on the preceding year.
Capital investment and amortisation and depreciation
An analysis by type and company of capital investment made by group companies
during 2005 is shown in the following table:
Capital investment (millions of Euros)
Fixed assets
Rai
Rai Cinema
RaiSat
Rai Trade
Rai Way
Sipra
Other companies
Total
150
Programmes
Other
Total
2005
2004
2005
2004
2005
2004
2005
2004
56.2
0.0
0.1
0.7
32.2
2.1
3.4
94.7
60.5
0.0
0.1
0.3
29.6
1.4
1.2
93.1
226.8
281.4
8.2
9.4
0.0
0.0
0.0
525.8
227.5
277.3
11.1
9.7
0.0
0.0
0.0
525.6
1.7
0.2
0.0
0.3
0.7
1.6
4.6
9.1
37.4
0.5
0.0
0.3
0.2
1.5
1.4
41.3
284.7
281.6
8.3
10.4
32.9
3.7
8.0
629.6
325.4
277.8
11.2
10.3
29.8
2.9
2.6
660.0
Overall, there has been a decline of 30.4 million Euros in the volume of investment,
which is due for the most part to the suspension, at least for the time being, in the
acquisition of frequencies, which were being acquired in the preceding year, for the
launching of the digital terrestrial network, whereas other types of investment have
remained substantially in line with the past.
Amortisation and depreciation have increased over the past year by 29.2 million
Euros, due for the most part to the amortisation of Rai Cinema rights relating to
investment for the year and to prior years’ investment.
Amortisation and depreciation (millions of Euros)
Fixed assets
Programmes
Total
2005
2004
Change
in amount
Change %
159.0
454.6
9.0
622.6
167.4
417.3
8.7
593.4
(8.4)
37.3
0.3
29.2
-5.0
8.9
3.4
4.9
Other net charges
These amount to 80.9 million Euros (62.8 million Euros in 2004), comprising
provisions for writedowns and risks and cost/income items not directly related to
typical activities. Specifically, the caption includes out-of-period and miscellaneous
income and charges, provisions for writedowns and risks, indirect taxes, local
property tax and other miscellaneous charges.
As in previous years, in order to take account of risks connected with being the
possibility of not being able to use, transmit or re-broadcast repeat-use programmes,
such programmes have been written down by 28.3 million Euros in the financial
statements of the parent company and Rai Cinema (57.3 million in 2004).
151
Operating Profit
The performance in operating revenues and costs described above led to a rise of
132.2 million Euros in operating profit, up 47.7% on the preceding year.
Financial income and (charges) - net
Financial income and (charges) - net (millions of Euros)
2005
Income from equity investments
Interest income (expense) - net
Exchange losses - net
Other financial income - net
Total
0.6
2.9
4.0
(0.1)
7.4
2004
Change
in amount
Change %
0.2
(0.7)
(7.0)
0.0
(7.5)
0.4
3.6
11.0
(0.1)
14.9
200.0
-514.3
-157.1
==
-198.7
In 2005 there was a turn-around in the net result for interest income and charges,
which in 2004 was a net loss for 7.5 million Euros, whereas 2005 showed a net
gain of 7.4 million Euros. This result is due to the improvement in the Group’s
average financial position (+137.6 million Euros) and to exchange differences,
which reflect the effects of exchange risk hedging transactions entered into in
preceding years on broadcasting rights denominated in US dollars.
Bank debt was limited to brief overdraft periods, during which use was made of
hot cash credit lines at an average rate of 2.4%.
Deposits earned rates close on 2%. This was achieved by employing temporary
excess cash in risk-free operations with leading banks. The deposit and borrowing
rates obtained were among the most competitive applied by banks to prime
customers.
Direct taxes
These amount to 82.8 million Euros, up 79.9 million Euros on the preceding year.
They comprise:
• Current taxes for 92.6 million Euros, the greater part of which are charged in
the financial statements of the parent company (54 million Euros), Rai Cinema
(22.5 million Euros) and Sipra (7.8 million Euros);
• Deferred tax charges for 4.7 million Euros, recorded mainly in the financial
statements of Rai Way in connection with accelerated depreciation;
• Deferred tax credits for 14.5 million Euros; these have been valued prudently
and are deemed to be recoverable with reasonable certainty. They relate mainly
to provisions disallowed for tax purposes in the financial statements of the
parent company and Rai Cinema.
152
Consolidated Balance Sheet
Non-current assets
These total 1,560.9 million Euros, down 24.7 million Euros on 31 December 2004.
Non-current assets (millions of Euros)
Fixed assets
Programmes
Non-current financial assets:
- Equity investments
- Receivables
- Other
Total
2005
2004
Change
in amount
Change %
643.3
841.7
708.7
799.1
(65.4)
42.6
-9.2
5.3
7.2
17.2
3.6
28.0
47.9
1,560.9
6.4
20.1
3.5
30.0
47.8
1,585.6
0.8
(2.9)
0.1
(2.0)
0.1
(24.7)
12.5
-14.4
2.9
-6.7
0.2
-1.6
Fixed assets amount to 643.3 million Euros, down 65.4 million Euros which is the
balance between new assets for 93.6 million Euros (net of eliminations for 1.1 million Euros) and depreciation for 159 million Euros.
Programmes amount to 841.7 million Euros, up di 42.6 million Euros on the
preceding year due to the combined effect of new investment for 525.5 million
Euros (net of eliminations for 0.3 million Euros), depreciation for 454.6 million
Euros and writedowns for 28.3 million Euros, the reasons for which have already
been given.
Programmes (millions of Euros)
TV series
Film rights
Other rights
Total
2005
2004
Change
in amount
Change %
356.3
436.6
48.8
841.7
330.7
419.3
49.1
799.1
25.6
17.3
(0.3)
42.6
7.7
4.1
-0.6
5.3
Working capital
There has been an increase of 21.4 million Euros on the preceding year, due
mostly to normal developments in the business.
153
Working capital (millions of Euros)
Inventories
Trade receivables
Other assets
Trade payables
Other liabilities
Total
2005
2004
Change
in amount
Change %
5.1
639.6
368.6
(780.7)
(499.7)
(184.9)
(452.0)
6.1
577.2
286.8
(716.3)
(448.0)
(179.2)
(473.4)
(1.0)
62.4
81.8
(64.4)
(51.7)
(5.7)
21.4
-16.4
10.8
28.5
9.0
11.5
3.2
-4.5
The major changes include:
• Trade receivables (+62.4 million Euros) due to the increase in the volume of
trading and advertising revenues in the last two months of the year.
• Other assets (+81.8 million Euros) largely due to the payment of advances for
the acquisition of rights in the 2006 and 2010 World Championships and other
sports events.
• Trade payables (+64.4 million Euros) due to normal developments in the
payments cycle and the recording of costs for which the relative invoices have
not yet been received.
• Provisions for risks and charges (+51.7 million Euros) mainly for provisions
made for staff bonuses on the year’s results and the recording, in the parent
company financial statements, of the cost of a voluntary staff resignation
incentives plan.
There having been no significant changes in the risk situation, the coverage
level represented by provisions already booked continues to be sufficient to meet
future risks and charges.
The year-end net financial position is positive for 94.1 million Euros, even
though it has dropped from the previous year (123.7 million Euros). An analysis
follows:
Net financial position (millions of Euros)
Net amounts due to banks and other lenders
- medium/long-term
- short-term
- cash and cash equivalents
Other financial (debt) receivables
Total
154
2005
2004
Change
in amount
Change %
(1.2)
(0.5)
102.4
100.7
(6.6)
94.1
(3.9)
(13.1)
147.3
130.3
(6.6)
123.7
2.7
12.6
(44.9)
(29.6)
0.0
(29.6)
-69.2
-96.2
-30.5
-22.7
0.0
-23.9
Overall cash flow, which was negative for about 30 million Euros, was impacted
by the payment to the Shareholder of a dividend of 79.1 million Euros, whereas
cash flow from operating actives was positive and could cover the year’s
requirements.
Cash movements were substantially regular for collections by the parent company
and group companies, with on-account payments on licence fees being made
regularly by the Ministry of Economic Affairs and Finance which, taken together
with the positive balance at the beginning of the year, led to an improvement in
the net average financial position of over 137.6 million Euros (163.6 million
Euros as against 26 million Euros for 2004).
Available cash at 31 December was employed in the banking system in short-term
transactions, with maturity dates being related to cash cycles, which in the first
quarter of the year saw greater used being made of credit lines.
The Rai Group uses appropriate computerised and statistical instruments to check
financial risks and the efficacy of hedges set up. In addition, a financial policy
is being set up to regulate control over financial risks in accordance with best
international practice and the new accounting principles.
The exchange rate risk is important, in the Rai Group’s financial statements, in
relation to exposure in foreign currency generated by purchases from foreign
suppliers (Rai Cinema for film and television rights and Rai SpA for sports events
rights) denominated in dollars or Swiss francs, besides the activities of Rai
Corporation.
The situation is important mainly for the US currency, which has a requirement
in the order of 230 million Euros. The exchange rate risk is therefore continually
monitored at the parent company.
Within the objective of respecting the exchange rate used in budgets and economic
plans for the valuation of foreign currency commitments, hedging strategies are
created gradually, using financial derivative instruments - such as the forward
purchases, swaps, and options structures - addressed exclusively to hedge
requirements arising from commercial agreements, some of which cover several
years and have already been signed. Such operations, therefore, are never in the
nature of a financial speculation.
The parent company constantly monitors the short-term and medium/long-term
rate risk, entering into hedge transactions to ensure equilibrium in the income
statement. In this connection, there are at the moment only two hedging operations
in place covering the short-term infra-annual requirement. In effect, the Group’s
financial position does not contain significant long-term exposures, but sees short
periods of operational liquidity alternating with limited overdraft positions,
especially over the collection time for the four licence fee instalments.
155
The credit risk on cash deployment is extremely limited in that use is made only
of deposits and investment instruments with leading banks.
Short-term credit lines, in the range of 500 million Euros, ensure elasticity in
cash requirements throughout the course of the year, on the basis of current
management policies.
Reconciliation between Parent Company and Consolidated Financial
Statements
The difference between the results in the parent company financial statements,
which show a net profit for the year of 16.4 million Euros and those in the
consolidated financial statements which show a net profit of 22.9 million Euros
is due mostly to the elimination from 2005 results of dividends paid by
Group companies out of profits for the prior year.
Similarly, Group consolidated equity is 97.6 million Euros higher than that
appearing in the parent company financial statements owing to the difference
arising on the elimination of the book value of equity investments carried in the
parent company financial statements and the incorporation of the values of the
subsidiary’s equities, which is partly compensated by the effects of other minor
consolidation adjustments.
Reconciliation between parent company and consolidated financial statements (in milioni di Euro)
In parent company financial statements
Elimination of the book value of equity investments
against the respective equities of subsidiaries,
and of profits against dividends distributed
Adjusting book value of associated companies
on to equity method
Elimination of fiscal distortions (entries recorded for
purely fiscal purposes)
Deferred taxes
Other consolidation adjustments
In consolidated financial statements
156
Equity
2005
2004
2005
2004
16.4
113.0
697.3
760.0
4.6
7.8
124.1
119.6
0.5
0.1
5.3
4.7
0.0
0.0
1.4
22.9
(61.2)
23.9
(1.4)
82.2
0.0
6.7
(38.5)
794.9
0.0
6.7
(39.9)
851.1
Rai Group
Consolidated Balance Sheet and Income Statement
in statutory form
157
Rai Group Consolidated Balance Sheet and Income Statement
Consolidated Balance Sheet - Assets
1.- Formation, start-up and similar costs
II. FIXED ASSETS
TOTAL FIXED ASSETS
a) non-consolidated subsidiaries
b) associated companies
d) other companies
2.- Receivables
d) other
due within one year
due after one year
3.- Other securities
158
(millions of Euros)
31.12.2005
-
31.12.2004
-
..
649.2
29.4
196.4
14.6
889.6
..
577.0
32.7
225.9
11.3
846.9
314.0
218.9
7.7
33.9
68.8
643.3
359.6
245.1
8.4
32.9
62.7
708.7
2.0
4.5
0.7
7.2
2.0
3.7
0.7
6.4
3.0
14.2
17.2
3.0
17.1
20.1
3.6
28.0
1,560.9
3.5
30.0
1,585.6
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
II. RECEIVABLES
1.- Customers
due within one year
due after one year
4.bis - Tax receivables
4.ter - Deferred tax assets
recoverable within one year
recoverable after one year
5.- Other
due within one year
due after one year
TOTAL RECEIVABLES
2.- Cheques
TOTAL ASSETS
31.12.2005
31.12.2004
3.7
0.1
4.2
0.8
1.3
..
5.1
1.0
0.1
6.1
638.8
..
0.1
44.3
576.5
..
0.1
37.7
93.4
1.2
84.6
1.3
208.4
1.0
987.2
143.9
844.1
-
-
102.1
..
0.3
102.4
1,094.7
147.0
..
0.3
147.3
997.5
21.0
19.9
21.0
2,676.6
19.9
2,603.0
159
Consolidated Balance Sheet - Liabilities and Equity
31.12.2005
31.12.2004
242.5
526.7
23.2
792.4
242.5
523.2
82.4
848.1
2.8
(0.3 )
794.9
3.2
(0.2)
851.1
1.- Pension and similar liabilities
2.- Current and deferred taxes
3.- Other
152.4
44.6
302.7
499.7
156.0
39.9
252.1
448.0
408,1
384.8
1.7
-
15.6
1.3
31.7
2.1
27.2
1.2
740.7
4.7
5.5
2.4
72.2
39.7
681.1
5.3
5.6
2.5
42.4
44.8
67.4
0.3
968.4
87.7
0.1
914.8
5.5
5.5
2,676.6
4.3
4.3
2,603.0
A) EQUITY
I. PARENT COMPANY
1.- Share capital
3.- Reserves and profits brought forward
II. MINORITY INTERESTS
1.- Share capital, reserves and profits brought forward
2.- Loss for the year
TOTAL EQUITY
D) PAYABLES
4.- Due to banks
due within one year
due after one year
6.- Advances
due within one year
due after one year
7.- Suppliers
due within one year
due after one year
9.- Unconsolidated subsidiaries
12.- Taxes payable
14.- Other payables
due within one year
due after one year
TOTAL PAYABLES
b) accrued expenses and other deferred income
160
(millions of Euros)
Memorandum Accounts
(millions of Euros)
31.12.2005
31.12.2004
2.6
63.5
66.1
2.6
72.3
74.9
c) Other:
Total unsecured guarantees granted
3.4
69.5
3.3
78.2
2.- Secured guarantees granted
b) for own commitments other than payables
c) for debt recorded in the balance sheet
Total secured guarantees granted
3.5
50.6
54.1
3.5
50.6
54.1
93.3
26.1
119.4
73.2
4.9
78.1
1.0
220.1
88.6
6.6
0.1
6.2
9.0
331.6
574.6
1.3
172.5
36.0
7.4
0.1
8.6
7.5
233.4
443.8
1.- Unsecured guarantees granted
a) Sureties:
a) purchase commitments
b) sales commitments
Total purchase and sales commitments
4.- Other memorandum accounts
a) Secured guarantees received
b) Unsecured guarantees received
c) Guarantees granted by others for Group obligations
d) Leased assets
e) Third-party asses held by us
f) Corporate assets held by third parties
g) Other
Total other Memorandum Accounts
161
(millions of Euros)
31.12.2005
A) PRODUCTION VALUE
3.- Changes in contract work in process
a) operating grants
c) miscellaneous
B) PRODUCTION COSTS
6.- Cost of raw materials, supplies, consumables and merchandise
9.- Personnel costs
d) pension and similar liabilities
e) other costs
11.- Changes in inventories of raw materials, supplies, consumables and merchandise
12.- Provisions for risks
13.- Other provisions
14.- Miscellaneous operating costs
Operating profit
162
31.12.2004
3,061.6
0.3
(0.7)
8.0
2,991.9
0.3
..
8.4
2.7
0.1
80.9
83.7
3,152.9
3.6
3.1
113.4
120.1
3,120.7
(32.2)
(779.9)
(450.9)
(30.3)
(736.4)
(568.1)
(700.6)
(185.9)
(50.3)
(14.9)
(20.0)
(971.7)
(662.2)
(184.6)
(47.2)
(12.8)
(15.4)
(922.2)
(463.6)
(159.0)
(28.3)
(4.2)
(655.1)
(441.9)
(167.4)
(57.3)
(1.8)
(668.4)
(0.6)
(16.2)
(10.1)
(104.0)
(3,020.7)
(0.2)
(7.5)
(10.8)
(87.3)
(3,031.2)
132.2
89.5
cont.
(millions of Euros)
31.12.2005
d) other income from equity investments
. other
b) from non-current securities other than equity investments
. interest and commission income from unconsolidated subsidiaries
. interest and commission income from others and miscellaneous income
b) interest and commissions payable to associated companies
d) interest and commissions payable to others and miscellaneous charges
17 bis.-Foreign exchange gains and losses - net
18.- Revaluations
19.- Writedowns
b) of current financial assets
a) asset disposal gains
c) other
b) prior-year taxes
c) out-of-period losses and reversal of non-existent assets
d) other
Profit before taxes
including:
- pertaining to parent company
- pertaining to minority interests (loss)
31.12.2004
..
0.6
0.6
0.2
0.2
0.4
0.5
0.1
0.5
..
4.8
5.3
4.3
5.3
..
(2.5)
(2.5)
4.0
7.4
..
(6.0)
(6.0)
(7.0)
(7.5)
0.3
1.2
..
(0.3)
(0.3)
..
(0.2)
..
(0.2)
1.0
1.8
1.8
0.4
3.3
..
3.7
(0.2)
(35.5)
(35.7)
(33.9)
105.7
(0.8)
..
(0.8)
(1.6)
2.1
85.1
(82.8)
22.9
(2.9)
82.2
23.2
(0.3)
82.4
(0.2)
163
Rai SpA Nota integrativa
Rai Group
Notes to Consolidated Financial Statements
165
Rai Group Notes to Consolidated Financial Statements
The Rai Group consolidated financial statements have been prepared in accordance
with the provisions of the Italian Civil Code. The following documents are annexed
to the consolidated financial statements: reclassified consolidated balance sheet in
vertical form; reclassified consolidated profit and loss account in vertical form; the
consolidated cash flow statement; the consolidated statement of Shareholders’
equity.
In order to render the 2005 consolidated financial statements fully comparable with
those of the preceding year, certain minor items in the 2004 consolidated balance
sheet and income statement have been reclassified.
The consolidated balance sheet, income statement, notes and related appendices are
expressed in millions of Euros.
The consolidated financial statements reporting date is 31 December 2005, which is the
year-end date for all consolidated companies.
The financial statements of consolidated companies are those approved by the
relevant boards of directors. They have been changed, where necessary, to apply
accounting standards consistently.
The consolidated financial statements and the accounts of the individual
consolidated companies, except for those of Rai Corporation Canada due to its
small relevance, have been audited by:
• Pricewaterhouse Coopers S.p.A. as main auditors, who have audited the
financial statements of Rai, Sipra, RaiNet, Rai Way, Rai Click, Rai Cinema, Rai
Corporation, Rai Trade, 01 Distribution, NewCo Rai International S.p.A. and the
consolidated financial statements;
• Deloitte & Touche S.p.A. who have audited the financial statements of RaiSat.
The reconciliation between the parent company and Group net profit and equity for
the years 2005 and 2004 presented on page 190.
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 voting rights at ordinary
Shareholders’ meetings are included in the scope of consolidation.
The following companies are consolidated on a line-by-line basis (figures for share
capital are at 31 December 2005):
• Rai Cinema SpA; registered office in Rome, Piazza Adriana 12, share capital
Euro 200,000,000.40; shareholders: Rai 99.997678%, Rai Trade 0.002322%.
166
• Rai Click SpA; registered office in Milan, Corso Sempione 27, share capital
Euro 176,800; shareholders: Rai 59.94%, Rai Trade 0.06%, e-Bismedia 40%.
• Rai Corporation - Italian Radio TV System; registered office in New York, 32
Avenue of the Americas; share capital US$ 500,000; shareholder: Rai 100%.
• Rai Corporation Canada - Italian Radio TV System; registered office in
Toronto (Ontario) M5 3K4 - 1235 Bay Street - Suite 4000, share capital Can$
1,394; shareholder: Rai Corporation 100%.
• NewCo Rai International SpA; registered office in Rome, Viale Mazzini 14,
share capital Euro 1,000,000; shareholders: Rai 99.9%, Rai Trade 0.1%.
• RaiNet SpA; registered office in Milan, Corso Sempione 27, share capital Euro
5,160,000; shareholders: Rai 99.9%, Rai Trade 0.1%.
• RaiSat SpA; registered office in Rome, Viale Mazzini 14, share capital Euro
2,585,000; shareholders: Rai 94.9%, Rai Trade 0.1%, R.C.S. Mediagroup 5%.
• Rai Trade SpA; registered office in Rome, Via Umberto Novaro 18, share
capital Euro 8,000,000; shareholder: Rai 100%.
• Rai Way SpA; registered office in Rome, Via Teulada 66, share capital Euro
70,176,000; shareholders: Rai 99.99926%, Rai Trade 0.00074%.
• Sipra SpA; registered office in Turin, Corso Unione Sovietica 612/3D, share
capital Euro 10,000,000; shareholder: Rai 100%.
• 01 Distribution Srl; registered office in Rome, Piazza Adriana 12; share
capital Euro 516,456; shareholder: Rai Cinema 100%.
The following companies are recorded on the equity method:
• Audiradio Srl; registered office in Milan, Largo Toscanini 1, share capital Euro
234,000; shareholders: Rai 33.33%, third parties 66.67%.
• Auditel Srl; registered office in Milan, Largo Toscanini 1; share capital Euro
300,000; shareholders: Rai 33%, third parties 67%.
• Sacis SpA - in liquidation; registered office in Rome, Via Umberto Novaro 18;
share capital Euro 102,000; shareholder: Rai 100%.
• San Marino RTV SpA; registered office in Republic of San Marino, Via Kennedy
13; share capital Euro 516,460; shareholders: Rai 50%, E.Ra.S. 50%.
• Secemie - Societé Anonyme; registered office in Lyon Ecully (France), 58
Chemin des Mouilles; share capital Euro 3,829,395; shareholders: Rai 21.65%,
third parties 78.35%.
167
2) Consolidation principles and foreign currency translation
methods
These can be summarised as follows:
a) The book values of equity investments in consolidated companies and the
corresponding portion of their net equities have been eliminated against the
total incorporation of the assets, liabilities, costs and revenues of such companies
(regardless of percentage of ownership); minority interests’ share in equity
(including in the results for the year) are shown in specific accounts carried
under equity. Any differences emerging have been taken directly to consolidated
equity.
b) Payables and receivables, expense and income, dividends and other transactions
made between consolidated companies have been eliminated.
c) Financial statements denominated in foreign currency have been translated into
Euros using the current exchange rate method, i.e. applying to individual items
of the balance sheet and income statement the exchange rates in force at 31
December 2005 (Euro/US$: 1.17970; Euro/Can$: 1.37250), whereas equity
items have been valued at the historical rate; differences arising from the change from the preceding year in the exchange rate used are taken to consolidated
equity reserves.
d) For consolidation purposes, the financial statements of consolidated companies
have been brought into line with the accounting principles and methods
described hereunder.
168
3) Accounting principles
Before commenting on the individual components of the consolidated financial
statements, a description is given hereunder of the main accounting principles and
valuation methods adopted, which are those applying to a going concern and are
in accordance with the provisions of article 2423 et seq. of the Civil Code. They
are substantially unchanged from the preceding year. There are no exceptional
cases requiring departure from the provisions of article 2423-bis et seq. of the
Civil Code.
a) Industrial patent and intellectual property rights:
The acquisition and production 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 recorded on the following bases:
1) costs for repeat-use television productions are capitalised under
intangible assets and, if such productions are usable at year-end, are
carried under industrial patents and intellectual property rights and
amortised on a straight-line basis over the period of their estimated
useful life. If such programmes are not yet usable at year-end, the costs
are carried 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 led
to the useful life of repeat-use programmes being estimated as follows:
- three years for TV series productions or in general for all non-film
productions;
- five years for TV free rights relating to films acquired by Rai Cinema, except
for products for which the whole range of rights have been acquired (film,
television, home video etc) whose useful life is estimated at seven years.
These costs for these programmes is amortised on the straight-line method.
Costs for licences lasting less than three/five/seven years are amortised over the
period of the licence.
In addition, a provision is set up to write down programmes which are
affected by risks relating to their exploitation, transmission or repeat-use.
169
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:
- news, light entertainment 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 held in suspense up to the year in which the event
takes place;
- documentaries, serious music and theatre. Costs are charged against income
in a single amount at the time the programmes are ready for broadcasting or
the rights are usable;
b) Software licences are carried with industrial patents and intellectual property
rights and are amortized over three years as from the year they enter service.
c) Costs incurred for the construction of the digital terrestrial network are capitalised
under intangible assets and amortized on a 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) Deferred costs are carried under other intangible assets net of accumulated
amortisation. They regard improvements to leased or licensed property.
Amortisation for leasehold improvements is determined on the basis of the
shorter of the residual duration of the related contracts and the estimated
period of benefit of the costs, calculated using amortisation rates which reflect
the rate of economic or physical deterioration of the relative assets.
f) Fixed assets - which are shown net of accumulated depreciation - are recorded at
cost, increased by internal personnel costs incurred in preparing them to enter
service, and revalued pursuant to laws.
The costs of fixed assets as determined above are depreciated in accordance with
Article 2426 (2) of the Civil Code.
Ordinary maintenance costs are expensed in the year in which they are incurred.
Accumulated depreciation, which is offset against the value of the relative fixed
assets, is recorded in the consolidated financial statements on the straight-line
method over the years, consistently applying standard rates; such rates, which
take account of the estimated useful lives of the assets, are summarised
hereunder:
170
buildings and light constructions
from 3% to 10%
plant and machinery
from 12% to 25%
industrial and sales equipment
from 10% to 19%
other fixed assets
from 10% to 33%
Fixed assets whose value at the balance sheet date is permanently under the
value as determined above are written down to such lower value.
g) Equity investments in non-consolidated companies and associated companies
are carried at equity; equity interests below 20% and interests in consortia are
shown at cost adjusted for any permanent impairment in value. In the event of
investee companies with negative equity (deficit), the investments are written
down in full and an additional amount is set up in the provisions for liabilities
and charges for the portion of the deficit pertaining to the Group. Adjustments
made for impairment losses are subsequently reversed if the losses are later
retrieved through profits earned by the relative companies.
h) Fixed-income securities carried as non-current financial assets are valued at
purchase cost. Positive or negative differences between purchase cost and
redemption value are taken to profit and loss in the amount accruing for the
year.
i) Other securities carried under current financial assets are valued at the lower
of purchase cost - determined as the weighted average cost - and estimated
realisable value, which is given by market value.
j) Inventories of raw materials, supplies and consumables are valued at cost,
which is determined on the basis of weighted average cost, written down taking
account of estimated non-use due to obsolescence and slow turnover.
Inventories of merchandise for resale (books, DVDs etc) 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) Accrued income and prepaid expenses and accrued expenses and deferred
income are recorded on an accruals basis.
l) Provisions for pension and similar liabilities, which comprise the supplementary
staff severance pay, the social security benefits provision and the company
supplementary pension fund, are made in accordance with collective bargaining
agreements. The corporate supplementary pension fund is valued on the basis
of an actuarial appraisal.
171
m)The provision for taxes includes probable tax liabilities arising out of the
settlement of tax disputes and deferred tax liabilities calculated on timing
differences which have resulted in lower current taxes. Deferred tax assets
arising from charges which are tax-deductible on a deferred basis and from
losses for tax purposes are taken up under Current Assets caption 4 ter Deferred tax assets if there is reasonable certainty that they will be recovered
in the future (the basis underlying their being recognised as assets).
n) Other provisions for risks and charges 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 set up on a
case-by-case basis in relation to specific risk positions and their amount is
determined on the basis of reasonable estimates of the liability that such
positions could generate.
o) The provision for staff severance pay is determined in conformity with
applicable law and labour contracts. It reflects the accrued entitlement of all
employees at the balance-sheet date net of advances already paid.
p) Payables are shown at nominal value; receivables are carried at estimated
realisable value, i.e. net of the bad debts provision as determined on the basis of
a case-by-case assessment of the solvency of the individual debtors.
q) Payables and receivables denominated in currencies other than the Euro - with
the exception of hedged positions - are recorded at the exchange rates applying
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 or expense. Any net gain is taken to a specific
non-distributable reserve until such gain is realised.
r) Payments on account include advances made by customers for services that have
not yet been performed.
s) Costs and revenues are taken to the consolidated income statement on a
consistent accruals basis.
t) Dividends are taken to income in the year in which they are received.
u) Income taxes for the year are recorded on the basis of estimated taxable
income, pursuant to regulations, taking account also of deferred taxation. The
liability for taxes to be paid at the time of lodging the tax return is carried with
taxes payable, together with tax bills on the tax roll which are not subject to
dispute. The tax charge in the consolidated financial statements reflects the tax
charges in the individual financial statements of consolidated companies,
which have been aligned on the basis of uniform accounting policies and
prepared on a prudent basis using the accruals method of accounting. All tax
effects on consolidation adjustments resulting in timing differences on Group
profits have been recorded as deferred tax assets or liabilities.
172
v) In order to hedge interest rate and exchange rate risk, derivative contracts have
been used to hedge net exposures arising from specific transactions. Interest
differences to be collected or paid on interest rate swaps are taken to the
consolidated income statement 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 taken to
accrued income and prepaid expenses, or accrued expenses and deferred
income, as the case may be. Derivative contracts hedging exchange rate risks
are used to cover contractual commitments in foreign currencies and entail
adjusting the value of the underlying item. The premium or discount arising
from the difference between the spot and future exchange rates for hedging
transactions is taken to the consolidated income statement over the duration of
the contract.
If the market value of derivatives contracts that do not fully qualify for hedge
accounting is lower than the value of the underlying financial instrument, a
specific risk provision is set up for the difference.
w) Collections are recorded by bank transaction date; for payments account is taken
of the instruction date.
4) Consolidated Balance Sheet
Assets
Non-current assets
Intangible assets
These total 889.6 million Euros, with a net increase of 42.7 million Euros on the
preceding year representing the net effect of new investment (534.9 million
Euros), the amortisation charge for the year (463.6 million Euros), and writedowns
and eliminations for 28.6 million Euros.
• Formation, start-up and similar costs. This caption is not material (see
schedule 1).
173
• Industrial patents and intellectual property rights. These are carried
mainly in the financial statements of the parent company and Rai Cinema. For
the most part the comprise the cost of television programmes and films which
are ready for use, net of accumulated amortisation and writedowns and
eliminating any value increases deriving from intercompany services.
As is shown in more detail in schedule 1, the balance of 649.2 million Euros
shows a net increase on 2004 of 72.2 million Euros. This increase is the
difference between new assets for 556.1 million Euros (of which 160.2 million
Euros was transferred from intangible assets under development), a writedown
of 28.2 million Euros made to take account of the risk that certain programmes
might not turn out to be usable and for the risk of non-transmission and/or
repeatability, and the amortisation charge for the year of 455.7 million Euros.
• Concessions, licences, trademarks and similar rights. Amounting to 29.4
milion Euros, these items include costs for 29.1 million Euros incurred by Rai
on the acquisition of licences for digital terrestrial frequencies, the remainder
relating to miscellaneous costs incurred by other Group companies.
• Intangible assets under development and payments on account. This
caption totals 196.4 million Euros, consisting mainly of the cost of programmes
(194.1 million Euros) which at year-end were not yet available for transmission
or were under future transmission rights.
Also included are:
- software and other costs which are not yet available for exploitation (1.4 million
Euros).
- property leasehold improvements (0.9 million Euros).
A breakdown of the caption, with details of the decrease from the preceding year,
is given in schedule 1.
Intangible assets (millions of Euros)
Schedule 1
31.12.2004
Formation, start-up and similar costs
Industrial patents and intellectual
property rights:
programmes
other
Concessions, licences, trademarks
and similar rights
Intangible assets under development
and payments on account:
programmes
other
Other intangible assets
Total
174
Changes in the year
31.12.2005
Book
value
Additions
and
capitalisations
Reclassifications
Writedowns
Eliminations Amortisation
Book
value
··
0.0
0.0
0.0
0.0
0.0
··
576.2
0.8
577.0
395.2
0.7
395.9
159.0
1.2
160.2
-28.2
0.0
-28.2
0.0
0.0
0.0
-454.6
-1.1
-455.7
647.6
1.6
649.2
32.7
0.0
0.0
0.0
0.0
-3.3
29.4
222.9
3.0
225.9
130.6
2.4
133.0
-159.0
-3.1
-162.1
-0.1
0.0
-0.1
-0.3
0.0
-0.3
-
194.1
2.3
196.4
11.3
846.9
6.0
534.9
1.9
0.0
0.0
-28.3
0.0
-0.3
-4.6
-463.6
14.6
889.6
• Other intangible assets. The amount of 14.6 million Euros, which is net of
accumulated amortisation, relates mainly to costs incurred on adapting and
improving leased properties (12.9 million Euros) and capital outlays in software
analyses and programmes (1.6 million Euros).
Fixed assets
These represent the cost, less accumulated depreciation and writedowns, plus
revaluations, of tangible fixed assets lasting for several years.
The balance of 643.3 million Euros shows a decrease of 65.4 million Euros on
2004, which is the net effect of new assets for 94.7 million Euros (including 6.1
million Euros for internal cost capitalisations), depreciation for 159.0 million
Euros, and disposals and other decreases for 1.1 million Euros.
A breakdown of the caption is given in schedule 2.
Fixed assets and accumulated depreciation (millions of Euros)
Schedule 2
31.12.2004
Cost
Land and buildings
Plant and machinery
Industrial and sales
equipment
Other fixed assets
Fixed assets under
construction and
payments on account
Total
Revaluat. Writedowns
Changes in the year
Accumulated
depreciation
Book
value
480.7
1,327.7
634.2
26.3
-36.5
-
-718.8
-1,108.9
359.6
245.1
Additions
and
reclassifications
10.3
66.3
98.9
156.4
5.0
3.1
-
-95.5
-126.6
8.4
32.9
62.7
2,126.4
668.6
-36.5
-2,049.8
62.7
708.7
31.12.2005
Net Standard Writedowns
eliminat. depreciat.
Cost Revaluat. Writedowns Accumulated Book
depreciation value
0.0
-0.7
-55.9
-91.8
-
490.7
1,377.3
634.1
26.1
-36.5
-
2.9
9.0
-0.1
-0.2
-3.5
-7.8
-
101.3
159.5
5.0
3.1
-
6.2
94.7
-0.1
-1.1
-159.0
68.8
- 2,197.6
668.3
-36.5
-774.3 314.0
-1,184.5 218.9
-98.6
-128.7
7.7
33.9
- 68.8
-2,186.1 643.3
These total 28.0 million Euros, comprising:
• Equity investments in unconsolidated subsidiaries. This caption shows the
value of equity in Sacis in liquidation (2.0 million Euros).
• Equity investments in associated companies. These relate to non-consolidated
companies in which interests of over 20% are held. Details follow:
175
(millions of Euros)
Audiradio
Auditel
San Marino
Secemie
Gross amount
Writedowns
Secemie
Net amount
Percentage holding
Book value
31.12.2005
31.12.2004
31.12.2005
31.12.2004
33.33%
33 %
50 %
21.65%
33.33%
33 %
50 %
21.65%
0.3
0.3
2.7
1.2
4.5
0.3
0.2
2.7
0.8
4.0
(0.0)
4.5
(0.3)
3.7
Equity investments in associated companies are all held by Rai.
• Equity investments in other companies. These amount to 0.7 million Euros,
as follows:
(millions of Euros)
Finsiel
International Multimedia University
Istituto Treccani
Other
Gross amount
Writedown provisions
Net amount
31.12.2005
31.12.2004
0.3
0.1
0.5
..
0.9
(0.2)
0.7
0.3
0.1
0.5
..
0.9
(0.2)
0.7
• Receivables from others. These amount to 17.2 million Euros (at 31 December
2004: 20.1 million Euros), comprising:
- tax advanced on staff severance pay (14.9 million Euros) paid in accordance
with Law 140/97 and inclusive of year-end revaluation.
- Guarantee deposits of 2.0 million Euros.
- Loans given to employees of 0.2 million Euros.
• Other securities. These amount to di 3.6 million Euros (at 31 December 2004:
3.5 million Euros), entirely relating to collateral securities.
176
Current Assets
Inventories
Taken together, inventories, net of adjustments, fell by 1.0 million Euros from 6.1
million Euros at 31 December 2004 to 5.1 million Euros.
Raw materials, supplies and consumables, amounting to 3.7 million Euros net of
writedowns of 15.4 million Euros relate almost entirely to supplies and spare parts
to maintain and operate fixed assets used in the business.
Contract work in process amounts to 0.1 million Euros, most of which is carried
in Rai Way’s financial statements, relating to costs incurred on developing the
Isoradio network.
Finished goods and merchandise amounts to 1.3 million Euros, mostly relating to
inventories of books, home video distribution equipment and inventories of
merchandise acquired in exchange for advertising.
Receivables
• Customers. These amount to 638.8 million Euros, net of the bad debts provision
of 58.5 million Euros (at 31 December 2004: 576.5 million Euros and 64.6 million
Euros respectively). They include the following main items, at nominal value:
- 352.2 million Euros due from Sipra customers for advertising services sold;
- 142.4 million Euros for services rendered by Rai to the Government and other
public entities under specific agreements;
- 57.2 million Euros due from Rai Trade customers for the sale of rights;
- 25.9 million Euros due from RaiSat customers for the sale of channels;.
- 22.5 million Euros due from cinemas and direct home video customers carried
in the financial statements of 01 Distribution.
• Associated companies. These are carried at 0.1 million Euros, which is
unchanged from the prior year. They represent accounts receivable from the
company San Marino which are carried in the parent company financial
statements.
• Tax receivables. These are carried at 44.3 million Euros (at 31 December 2004:
37.7 million Euros), relating for the most part to receivables recorded in the parent
company financial statements (43.7 million Euros).
• Deferred tax assets. These total 94.6 million Euros (at 31 December 2004: 85.9
million Euros), comprising deferred tax assets recorded by the individual
consolidated companies (87.8 million Euros) and deferred tax assets from
consolidation adjustments (6.8 million Euros). They relate mainly to:
177
- 73.7 million Euros taken up by the parent company in connection with items
which are allowable on a deferred basis for tax purposes (72.5 million Euros) and
items transferred from consolidated companies under the consolidated taxation
mechanism;
- 7.9 million Euros for deferred tax assets taken up by Rai Cinema.
• Other receivables. These total 209.4 million Euros (at 31 December 2004:
143.9 million Euros). They include the following more significant items (at
nominal value):
- advances on sports event filming rights (167.2 million Euros).
- Receivables from personnel (7.0 million Euros), mainly in respect of advances on
travel expenses and advances on production expenses.
- Receivables from social security institutions (2.9 million Euros).
The bad debts provision totals 1.6 million Euros.
Details by maturity and type are given in schedule 3.
Receivables and accrued income by maturity and type (millions of Euros)
Schedule 3
31.12.2005
due
within
1 year
31.12.2004
Amounts due
due within
due
from 2 to
after
5 years
5 years
Total
due
within
1 year
Amounts due
due within
due
from 2 to
after
5 years
5 years
Total
Non-current financial receivables due from
non-consolidated subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
parent companies
-
-
-
-
-
-
-
-
3.0
12.8
1.4
17.2
3.0
12.6
4.5
20.1
3.0
12.8
1.4
17.2
3.0
12.6
4.5
20.1
others
Current receivables
Other financial receivables due from
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
parent companies
-
-
-
-
-
-
-
-
others
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
638.8
..
-
638.8
576.5
..
-
576.5
-
-
-
-
-
-
-
-
0.1
-
-
0.1
0.1
-
-
0.1
-
-
-
-
-
-
-
-
0.6
639.5
-
-
0.6
639.5
0.5
577.1
-
-
0.5
577.1
37.7
Trade receivables due from
customers
parent companies
others:
- government and other public entities
for subsidies and grants
Miscellaneous receivables
Tax receivables
44.3
-
-
44.3
37.7
-
-
Deferred tax assets
93.4
1.2
-
94.6
84.6
1.3
-
85.9
207.8
345.5
1.0
2.2
-
208.8
347.7
143.4
265.7
1.3
-
143.4
267.0
Other
Accrued income
Total
178
0.2
-
-
0.2
..
-
-
..
988.2
15.0
1.4
1,004.6
845.8
13.9
4.5
864.2
This caption has no balance.
These amount to 102.4 million Euros (at 31 December 2004: 147.3 million
Euros) relating mostly to the parent company which manages central treasury services.
These total 21.0 million Euros (at 31 December 2004: 19.9 million Euros), relating
almost exclusively to prepaid expenses recorded (i) by the parent company Rai,
mostly in respect of portions of costs of sports event filming rights common to two
or more years; (ii) by Sipra for costs incurred on distributing advertising to
theatres which do not pertain to the year; (iii) and by Rai Cinema to defer costs
incurred on film and home video distribution pertaining to the subsequent year.
Liabilities and Equity
Equity
Equity amounts to 794.9 million Euros, down 56.2 million Euros mainly due to
the difference between the consolidated net profit for the year (22.9 million
Euros) and the dividend declared by the parent company (79.1 million Euros).
The share capital of Rai, fully paid-up and subscribed, consists of 242,518,100
ordinary shares of par value Euro 1 each, owned by the Italian Ministry of
Economy and Finance (241,447,000 shares, amounting to 99.5583% of share
capital) and SIAE, Società Italiana Autori Editori (1,071,100 shares, amounting
to 0.4417% of share capital).
Equity attributable to minority interests is shown separately on specific lines in
the consolidated financial statements; it mainly relates to Rai Click and, to a
lesser extent, to RaiSat.
Changes in individual items from 31 December 2004 shown in the schedule
presented on page 195.
179
Details of provisions for risks and charges are given in schedule 4.
Provisions for risks and charges (millions of Euros)
Schedule 4
31.12.2004
Provision for pension and similar liabilities
Provisions
made
Charges
to
provision
Released
to income
statement
Reclassifications
31.12.2005
156.0
8.1
-11.6
-0.1
-
152.4
39.9
15.5
-10.3
-0.5
-
44.6
117.7
31.2
-30.6
-0.1
-
118.2
-
35.5
-
-
-
35.5
5.3
29.4
-
-
-
34.7
- litigation with social security institutions
31.0
-
-
-
-
31.0
- renovation and restructuring of properties
26.5
-
-0.9
-
-
25.6
7.6
0.5
-0.6
-
-
7.5
. programmes
3.7
-
-
-
-
3.7
. fixed assets
1.8
-
-
-0.2
-
1.6
5.6
-
-
-3.4
-
2.2
. for risks
27.3
2.1
-9.6
-3.2
-
16.6
. for liabilities
25.6
9.3
-7.1
-1.7
-
26.1
252.1
108.0
-48.8
-8.6
0.0
302.7
448.0
131.6
-70.7
-9.2
0.0
499.7
Provision for taxes
Other:
- litigation
- corporate restructuring - staff resignation incentives
- accrued costs
- lease disputes
- charges for assets under development/construction
which may not be usable
- Education Ministry agreement
- miscellaneous:
Total
• Provision for pension and similar liabilities. This amounts to 152.4 million
Euros (at 31 December 2004: 156.0 million Euros) and comprises the supplementary
seniority benefits provision, the social security benefits provision and the corporate
supplementary pension fund.
- The provision for supplementary seniority benefits amounts to 5.2 million Euros
(at 31 December 2004: 5.4 million Euros). It represents the liability in respect of
indemnities in lieu of notice towards Rai and Rai Way 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, or changes in category, the amounts accrued are released.
- The provision for social security benefits amounts to 1.0 million Euros (at 31
December 2004: 1.1 million Euros). 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 Rai eligible employees in accordance
with the provisions of the national collective bargaining agreement.
- The corporate supplementary pension fund, amounting to 146.2 million Euros
(at 31 December 2004: 149.5 million Euros) includes the additional sums
accrued to Rai and Rai Way retired employees who had opted for the company
supplementary pension fund envisaged under the union agreements, which are
kept at an adequate level to ensure the said benefits, with respect to actuarial
reserves. It also includes the provision for Rai and Rai Cinema eligible managerial
staff still in service in the event that some of these opt for the supplementary
pension plan. Benefits are calculated on the basis of pay earned, seniority and
financial and demographic parameters normally used in similar cases.
180
• Provision for taxes. This amounts to 44.6 million Euros (at 31 December 2004:
39.9 million Euros) relating to provisions set up in the financial statements of the
individual companies, particularly the parent company Rai (31.8 million Euros)
and Rai Way (11.9 million Euros).
• Other provisions. These amount to 302.7 million Euros (at 31 December 2004:
252.1 million Euros). They include provisions for costs or losses whose existence is
certain but whose amount cannot be exactly determined or which are probable
and whose amount can be reasonably estimated. They have risen by 50.6 million
Euros, as detailed in schedule 4.
As regards pending litigation with employees and third parties, the amount carried
in the provisions for liabilities and risks is the best estimate of the likely liability
based on the most up-to-date information available.
This rose by 23.3 million Euros (from 384.8 million Euros at 31 December 2004
to 408.1 million Euros at 31 December 2005) due to the difference between
payments of 20.0 million Euros, accruals of 50.3 million Euros and other decreases
of 7.0 million Euros.
Payables
Payables have increased by a total of 53.6 million Euros (from 914.8 million Euros
to 968.4 million Euros).
Details by maturity and type are given in schedule 5.
The following should be noted in connection with the more important items:
• Due to banks. Amounts due to banks equal 1.7 million Euros (at 31 December
2004: 16.9 million Euros), comprising:
- short-term debt carried by RaiSat (0.3 million Euros) and Rai (0.2 million
Euros) for current accounts overdrafts with various banks.
- Medium/long-term debt carried by Rai for 1.2 million Euros representing a
concessionary rate loan obtained to finance the construction of the Cosenza
headquarters and expand the Bari headquarters, which is secured by mortgages,
special liens and guarantees.
181
• Advances. These total 33.8 million Euros (at 31 December 2004: 28.4 million
Euros). They relate to the following advances:
- Rai: 20.9 million Euros for portions of TV licence fees collected from the Ministry
of Economy and Finance in excess of the amounts due for the year; 0.5 million
Euros for advances on the sale of usage rights for programmes; 1.3 million Euros
for an advance paid by Dallah Al Baraka in connection with a right of
pre-emption in the event of sale of the shares in NewCo Rai International or in
the event that a business partner is sought to broadcast the Rai International TV
channel; and 0.6 million Euros for miscellaneous advances;
- Rai Trade: 4.6 million Euros for advances on sale contracts;
- Sipra: 3.4 million Euros for advertising services already invoiced but not yet
performed;
- Rai Corporation: 2.2 million Euros relating to an advance received as partial
repayment of the expense incurred on upgrading and improving the new offices
and notional rent for premises in New York, due to putting the rent payments on
to a fixed-amount basis over the entire duration of the contract regardless of the
actual timing of the outlays.
- Rai Cinema: 0.3 million Euros for portions of payments under licence contracts
for usage rights relating to programmes running after the year-end.
• Suppliers. These amount to 745.4 million Euros. There was an overall increase
of 59.0 million Euros over 31 December 2004.
• Non-consolidated subsidiaries. The amount of 5.5 million Euros (at 31
December 2004: 5.6 million Euros) is in respect of balances of the parent
company with Sacis relating almost entirely to the financial current account.
• Associated companies. The amount of 2.4 million Euros (at 31 December 2004:
2.5 million Euros) is in respect of balances of the parent company with San
Marino RTV.
• Taxes payable. These amount to 72.2 million Euros (at 31 December 2004: 42.4
million Euros). They relate mainly to direct taxes for the year, net of any advances
made, and withholdings from the remuneration of employees on the payroll and
consultants.
• Social security institutions. These amount to 39.7 million Euros (at 31
December 2004: 44.8 million Euros). They reflect contributions due on
remuneration paid to employees and consultants, to be paid over to the institutions
at the scheduled dates.
• Other payables. Totalling 67.7 million Euros (at 31 December 2004: 87.8 million
Euros), these comprise 40.9 million Euros due to employees and 26.8 million Euros
due to various entities, companies and organisations.
182
Payables and accrued expenses by maturity and type (millions of Euros)
Schedule 5
31.12.2005
due
within
1 year
Medium/long term financial debt
Bonds
Convertible bonds
Shareholder loans
Due to banks
Suppliers
Debt securities
Non-consolidated subsidiaries
Parent companies
Taxes payable
Other payables
Current payables
Other financial debt
Shareholder loans
Due to banks
Suppliers
Debt securities
Parent companies
Other payables
Trade payables
Advances
Suppliers
Debt securities
Parent companies
Miscellaneous payables
Taxes payable
Other payables:
- concession fee
- miscellaneous
Total payables
Accrued expenses
Total
31.12.2004
Amounts due
due within
due
from 2 to
after
5 years
5 years
Total
due
within
1 year
Amounts due
due within
due
from 2 to
after
5 years
5 years
Total
1.2
1.2
-
-
1.2
1.2
2.6
2.6
1.3
1.3
-
3.9
3.9
0.5
0.1
5.5
0.8
0.2
7.1
-
-
0.5
0.1
5.5
0.8
0.2
7.1
13.0
0.2
5.6
0.9
19.7
-
-
13.0
0.2
5.6
0.9
19.7
31.7
740.6
..
1.6
773.9
0.3
4.7
5.0
1.8
1.8
33.8
745.3
..
1.6
780.7
27.2
680.9
..
1.6
709.7
0.2
5.3
5.5
1.0
1.0
28.4
686.2
..
1.6
716.2
72.2
39.7
-
-
72.2
39.7
42.4
44.8
-
-
42.4
44.8
-
67.2
179.1
0.3
0.3
-
67.5
179.4
87.7
174.9
0.1
0.1
-
87.8
175.0
961.3
5.3
1.8
968.4
906.9
6.9
1.0
914.8
0.1
-
-
0.1
..
-
-
-
961.4
5.3
1.8
968.5
906.9
6.9
1.0
914.8
These relate almost entirely to deferred income of 5.4 million Euros (at 31
December 2004: 4.3 million Euros).
183
5) Memorandum accounts
Memorandum accounts are recorded at 574.6 million Euros (at 31 December 2004:
443.8 million Euros). A breakdown is given directly on the face of the consolidated
balance sheet.
At 31 December 2005 there were no commitments of particular significance for
the purchase or sale of goods and services in addition to those taken on in the
normal course of business that would require specific information to be given for
a better understanding of the Group’s financial position.
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 19982000) 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 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 Euros.
Given that Rai feels that the Authority’s decision is unfounded both in procedure
and in substance, we have appealed the decision at the Administrative Court of
the Region of Lazio, requesting that the decision be suspended pending the appeal
and that the resolution be struck down.
The Court, with its judgment handed down on 23 November 2005 accepted the
appeal and, as a result, annulled the sanctions levied by the Authority. The
Authority has appealed against this decision at the Council of State, requesting it
be suspended. The hearing to discuss the matter has been set for October 2006.
As already indicated in the Directors' Report at 31 December 2004, given the
merits of Rai’s appeal, which is also supported by the opinion of qualified
external counsel, we believe that it is highly probable that Court will allow our
appeal and accordingly, consistently with the approach followed at 31 December
2004, we have made no provision in the financial statements as the prerequisites
for such a provision have not been met.
The Communications Authority, with resolution no. 221/06/CONS of 27 April
2006 served on Rai on 3 May 2006, applied administrative sanctions on the
Company for about 14.4 million Euros, equal to 0.5% of its turnover, for the
alleged infringement of article 2 (9) of Law 481 of 14 November 1995 (alleged
incompatibility of Mr Alfredo Meocci with the office of Rai General Manager),
184
ordering the Company to pay said amount within 30 days of the date of the
notice being served.
On 12 May 2006 Rai lodged an appeal at the Lazio Regional Administrative Court
against this decision, petitioning its annulment on grounds of infringement of the
law and excess use of powers, and suspension of its effects.
At the present state of proceedings, the chance of a favourable decision being
issued is at least equal to an unfavourable one being issued and accordingly, on
these premises and in accordance with correct accounting principles, no provision
has been made in the 31 December 2005 financial statements.
6) Consolidated income statement
Production value
• Revenues from sales and services. These amount to 3,061.6 million Euros,
up 69.7 million Euros on 31 December 2004, mainly represented by:
- Revenues from TV licence fees (1,482.5 million Euros).
- Gross revenues from advertising (1,217.6 million Euros).
- Revenues from special services under agreements with the Government (77.7
million Euros).
- Revenues from the sale of audio-visual rights, music events and theme channel offerings (64.3 million Euros).
- Revenues from theatre and home video distribution (64.2 million Euros).
- Revenues from the sale of satellite channels to SKY (48.2 million Euros).
- Revenues from the hosting of systems and equipment (23.9 million Euros).
- Revenues from signal broadcasting, lease of circuits, radio links and connections
(10.8 million Euros).
• Changes in inventories of work in progress, semifinished and finished
goods. These amount to 0,3 million Euros and relate mainly to the increase in
Rai Cinema inventories of videotapes and DVDs for sale.
• Increase in contract work in process. This amounts to 0.7 million Euros and
relates almost entirely to the amount carried in the financial statements of Rai
Way in connection with the construction of the Isoradio network.
• Internal cost capitalisations. The amount of 8.0 million Euros relates to internal
cost capitalisations for plant construction (6.1 million Euros) and the production of
programmes (1.9 million Euros).
• Other revenues and income. These amount to 83.7 million Euros, comprising:
- Operating grants: amounting to 2.7 million Euros in respect of:
- 2.3 million Euros for grants issued by the European Union to Rai for 0.8 million
Euros and to 01 Distribution for 1.5 million Euros;
- 0.3 million Euros for operating grants issued to Rai Cinema by the Ministry
of Cultural Heritage under Law 1213 of 4 November 1965;
- 0.1 million Euros issued to Rai Way under Law 488/92.
185
- Gains on disposal of assets: for 0.1 million Euros relating to the sale of fixed
assets, mainly of the parent company.
- Miscellaneous: These amount to 80.9 million Euros. They relate to out-of-period
gains (35.6 million Euros), expense recoveries (22.8 million Euros), the reversal
of provisions set up in preceding years (17.9 million Euros) and real estate and
other revenues (4.6 million Euros).
Production costs
These total 3,020.7 million Euros, down 10.5 million Euros on the preceding year.
Details follow:
• Cost of raw materials, supplies, consumables and merchandise. These
amount to 32.2 million Euros and include, net of discounts and rebates, purchases
of operating materials (20.5 million Euros). technical materials (6.5 million Euros)
and production materials (5.2 million Euros).
• Cost of services. These total 779.9 million Euros (736.4 million Euros at 31
December 2004), as follows:
- Services for the purchase and production of programmes (258.3 million Euros).
- General services for postage, copying and translation, cleaning, plant operation,
archive services etc (215.7 million Euros).
- Consultants (150.3 million Euros).
- Travel, transfer and related allowances to employees (50.2 million Euros).
- Other external services (105.4 million Euros).
They also include fees and reimbursement of expenses paid by the parent company
to directors (Euro 1.3 million) and statutory auditors (Euro 0.2 million). Three
statutory auditors of the parent company were statutory auditors of other subsidiaries
for a number of months, receiving compensation which is not deemed to be
significant.
• Use of third-party assets. These amount to 450.9 million Euros (568.1 million
Euros at 31 December 2004) relating to the following costs:
- filming rights (203.8 million Euros).
- usage rights (128.0 million Euros).
- rent expense and hiring costs (119.1 million Euros).
• Personnel costs. These total 971.7 million Euros (at 31 December 2004: 922.2
million Euros), comprising 0.9 million Euros for incentives for staff to resign (at 31
December 2004: 0.7 million Euros). Average employees on permanent and
fixed-term contracts, including trainee contracts, numbered 13,326, up 77 on
31 December 2004. Schedule 6 provides a break-down of average employees by
category and company.
186
Average workforce (persons)
Schedule 6
On permanent
contracts
By Company
Rai
2005
On fixed-term
contracts
Total
2004
On permanent On fixed-term
contracts
contracts
Total
10,087
1,645
11,732
9,995
1,672
11,667
60
2
62
63
1
64
1
0
1
1
0
1
Rai Corporation
49
0
49
46
0
46
RaiNet
55
14
69
60
15
75
RaiSat
70
50
120
68
46
114
Rai Cinema
Rai Click
Rai Trade
89
7
96
86
5
91
Rai Way
707
22
729
718
13
731
Sipra
419
20
439
424
15
439
27
2
29
19
2
21
11,564
1,762
13,326
11,480
1,769
13,249
01 Distribution
Total
By category
Managers
354
1
355
362
0
362
Journalists
1,691
313
2,004
1,676
315
1,991
1,321
Middle managers
1,356
0
1,356
1,321
0
Office staff
6,862
1,307
8,169
6,838
1,308
8,146
Workers
1,156
134
1,290
1,136
134
1,270
132
7
139
134
12
146
13
11,564
0
1,762
13
13,326
13
11,480
0
1,769
13
13,249
Musical directors and choir staff
Medical staff
Total
• Amortisation, depreciation and write-downs. These total 655.1 million Euros
(at 31 December 2004: 668.4 million Euros) of which 463.6 million Euros is for
amortisation of intangible assets and 159.0 million Euros for depreciation of fixed
assets, as shown in schedules 1 and 2. They also include programmes written
down for 28.3 million Euros to reflect the risks that some productions might not
be used, broadcast or repeated.
• Changes in inventories of raw materials, supplies, consumables and
merchandise. The amount of 0.6 million Euros reflects the decrease from 31
December 2004 to 31 December 2005 in the value of inventories carried with
working assets.
• Provisions for risks. These are carried at 16.2 million Euros (at 31 December
2004: 7.5 million Euros). They relate to provisions made by the parent company
15.0 million Euros), Rai Trade (0.4 million Euros), Sipra (0.3 million Euros) and
Rai Way (0.3 million Euros), and to a lesser extent by other Group companies.
• Other provisions. These amount to 10.1 million Euros (at 31 December 2004:
10.8 million Euros). They relate to provisions set up by Rai (8.3 million Euros),
Rai Way (1.7 million Euros) and Sipra (0.1 million Euros).
• Miscellaneous operating costs. These amount to 104,0 million Euros (at 31
December 2004: 87,3 million Euros). Details thereof are shown in schedule 7.
They relate mostly to costs incurred by the parent company (81.7 million Euros).
187
Miscellaneous operating costs (millions of Euros)
Schedule 7
Year
2005
Year
2004
0.9
-
1.7
0.4
28.3
27.2
16.8
14.7
4.1
9.5
6.6
23.1
104.0
12.9
13.2
4.1
9.0
8.5
10.3
87.3
Asset disposal losses:
- on fixed assets
- on intangible assets
Concession fee
Other costs:
- prior-year charges
- gifts, prize contests and entertainment expenses
- local property tax
- miscellaneous indirect taxes
- former employees' pension fund
- other
Total
A breakdown of this caption is given directly on the face of the consolidated income
statement.
More specifically:
- Income from equity investments amounting to 0.6 million Euros (0.2 million
Euros at 31 December 2004) relates to the gain on valuation on the equity
method of holdings in associated companies.
- Other financial income, amounting to 5.3 million Euros (5.3 million Euros at 31
December 2004), is detailed in schedule 8.
- Interest and other financial expense, amounting to 2.5 million Euros (6.0 million
Euros at 31 December 2004) is detailed in schedule 9.
- Net exchange gains and losses amount to 4.0 million Euros (-7.0 million Euros
at 31 December 2004).
Other financial income (millions of Euros)
Schedule 8
Year
2005
Year
2004
From non-current receivables
0.4
0.5
From non-current securities other than equity investments
0.1
0.5
Income other than the above:
- interest and commissions from non-consolidated subsidiaries
- bank interest
188
..
-
3.8
2.1
- interest earned on customer accounts receivable
0.6
0.7
- other
0.4
1.5
Total
5.3
5.3
Interest and other financial charges (millions of Euros)
Schedule 9
Interest and commissions payable to associated companies
Bank interest:
- on short-term accounts
- on medium/long-term accounts
Interest and commissions payable to others and miscellaneous expense:
- interest on suppliers accounts payable
- interest expense, premiums and amounts set up in the provision for risks on interest rate hedging transactions
Year
2005
Year
2004
..
..
0.6
0.8
0.2
1.8
0.5
0.1
0.2
2.4
- interest payable on amounts due to other lenders
0.1
0.2
- other charges
0.9
0.7
2.5
6.0
Total
Revaluations. These amount to 0.3 million Euros and relate to the recovery of prior
years’ losses of associated companies charged in the financial statements of the parent
company.
Writedowns. These total 0.3 million Euros, relating mainly to the provision for
minimum guarantees set up in respect of non-recovery of advances paid to acquire
rights.
Exception income and charges
These show a net charge of 33.9 million Euros, consisting mainly of:
- Charges recorded in the financial statements of the parent company connected
with the staff voluntary resignation incentives project approved by the Board of
Directors on 6 December 2005 (35.5 million Euros);
- The gain on the reversal of an excessive tax provision made in the preceding year
(1.4 million Euros);
- The recovery of VAT on the bankruptcy of Sipra customers (0.4 million Euros);
- Prior-year taxes (0.2 million Euros).
These amount to 82.8 million Euros, comprising current taxes for the year charged
in the financial statements of the individual companies and deferred taxes on
consolidation adjustments. Details are given in the following table:
Current taxes
Deferred tax credits
Deferred tax charges
Total
Charged in the financial
statements of the
individual companies
Deriving from
consolidation
adjustments
Total
92.6
-14.3
4.6
82.9
-0.2
0.1
-0.1
92.6
-14.5
4.7
82.8
189
7) Net profit for the year
Consolidated net profit for the year amounts to 22.9 million Euros, comprising a
net profit of 23.2 million Euros pertaining to the Group and a loss of 0.3 million
Euros pertaining to minority interests.
8) Reconciliation between Parent Company and Consolidated
Financial Statements at 31 December 2005 and
31 December 2004
The following table shows the reconciliation between the net profit for the year
and Shareholders’ equity as appearing in the parent company and consolidated
financial statements, including the portion pertaining to minority interests:
Reconciliation between parent company and consolidated financial statements (millions of Euros)
In parent company financial statements
2004
2005
2004
16.4
113.0
697.3
760.0
Elimination of the book value of equity investments against the
equities of the respective subsidiaries,
and of profits against dividends distributed
4.6
7.8
124.1
119.6
Adjusting book value of associated companies on to
equity method
0.5
0.1
5.3
4.7
Elimination of fiscal distortions (entries recorded
for purely fiscal purposes)
0.0
(61.2)
0.0
0.0
Deferred taxes
0.0
23.9
6.7
6.7
Other consolidation adjustments
1.4
(1.4)
(38.5)
(39.9)
22.9
82.2
794.9
851.1
In consolidated financial statements
190
Equity
2005
Rai Group
Consolidated supplementary schedules
191
Rai Group Consolidated supplementary schedules
Consolidated balance sheet reclassified in vertical form
A. NON-CURRENT ASSETS - NET
Intangible assets
Fixed assets
Financial assets
B. WORKING CAPITAL
Inventories
Trade receivables
Other assets
Trade payables
Other liabilities
C. INVESTED CAPITAL
net of current liabilities
31.12.2005
31.12.2004
889.6
643.3
28.0
1,560.9
846.9
708.7
30.0
1,585.6
5.1
639.6
368.6
(780.7 )
(499.7 )
(184.9 )
(452.0)
(A+B)
D. PROVISION FOR STAFF SEVERANCE PAY
E. INVESTED CAPITAL
net of current liabilities and provision for staff severance pay
(millions of Euros)
(C-D)
6.1
577.2
286.8
(716.3)
(448.0)
(179.2)
( 473.4)
1,108.9
1,112.2
408.1
384.8
700.8
727.4
792.4
2.5
794.9
848.1
3.0
851.1
1.2
3.9
financed by:
F. EQUITY
Pertaining to parent company
Pertaining to minority interests
G. NET MEDIUM/LONG-TERM FINANCIAL DEBT
H. NET SHORT-TERM DEBT (NET CASH FUNDS)
. net short-term debt
. cash and short-term financial receivables
I. TOTAL, AS IN E
192
(G+H)
(F+G+H)
7.1
(102.4 )
(95.3)
(94.1)
700.8
19.7
( 147.3)
( 127.6)
( 123.7)
727.4
Consolidated income statement reclassified in vertical form
A. REVENUES
B. VALUE OF “TYPICAL” PRODUCTION
Cost of materials and external services
C. VALUE ADDED
Personnel costs
D. GROSS OPERATING MARGIN
Depreciation fixed assets
Other value adjustments
Miscellaneous income and charges - net
E. OPERATING PROFIT
F. PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXES
Exceptional income and charges - net
G. PROFIT BEFORE TAXES
H. NET PROFIT FOR THE YEAR
- pertaining to parent company
- pertaining to minority interests
(millions of Euros)
31.12.2005
31.12.2004
3,091.0
3,021.3
0.3
8.0
0.3
8.4
3,099.3
3,030.0
(1,291.9 )
(1,362.1)
1,807.4
1,667.9
(971.7 )
(922.2)
835.7
745.7
(454.6 )
(168.0 )
(32.5 )
(26.3 )
(22.1 )
(417.3)
(176.1)
(59.1)
(18.3)
14.6
132.2
89.5
7.4
..
139.6
(33.9 )
105.7
(7.5)
1.0
83.0
2.1
85.1
(82.8 )
(2.9)
22.9
23.2
(0.3 )
82.2
82.4
(0.2)
193
Consolidated cash flow statement
(millions of Euros)
A. NET OPENING CASH FUNDS
(NET OPENING SHORT-TERM FINANCIAL DEBT)
B. CASH FLOW FROM OPERATING ACTIVITIES
Amortisation and depreciation
(Gains) losses on disposal of non-current assets
(Revaluations) writedowns of non-current assets
Change in working capital
Net change in staff severance pay provision
C. CASH FLOW FROM INVESTING ACTIVITIES
Investment in non-current assets:
. intangible assets
. fixed assets
. financial assets
Sale proceeds, or reimbursement value, of non-current assets
Other changes
D. CASH FLOW FROM FINANCING ACTIVITIES
New loans
Contributions by shareholders
Capital grants
Loan repayments
Equity repayments
E. PROFIT DISTRIBUTIONS
F. CASH FLOW FOR THE YEAR
G. NET CLOSING CASH FUNDS
(NET CLOSING SHORT-TERM FINANCIAL DEBT)
194
(B+C+D+E)
(A+F)
31.12.2005
31.12.2004
127.6
117.3
22.9
622.6
0.8
27.4
(21.4 )
23.3
675.6
82.2
593.4
(1.4)
76.3
(44.2)
22.0
728.3
(534.9 )
(94.7 )
(0.6 )
4.1
0.0
(626.1)
(566.9)
(93.1)
(1.9)
23.7
(0.1)
(638.3)
0.0
0.0
0.0
(2.6 )
0.0
(2.6)
0.1
0.0
0.0
(79.7)
0.0
(79.6)
(79.2)
(0.1)
(32.3)
95.3
10.3
127.6
Consolidated statement of changes in Shareholders’ Equity
(for 2004 and 2005)
(millions of Euros)
Balance
31.12.2004
Transfer
of results
Dividends
Equity:
Pertaining to Group:
Share capital
Legal reserve
Capital grants provision
Capital grants reserve
Unrealised exchange gains reserve
Merger surplus
Other reserves
242.5
0.5
9.5
1.3
9.4
0.0
383.9
118.6
82.4
-30.5
-3.3
-79.1
Total equity pertaining to Group
848.1
0.0
-79.1
3.2
-0.2
-0.3
0.3
-0.1
3.0
0.0
-0.1
851.1
0.0
-79.2
Pertaining to minority interests
Share capital and reserves
Net profit (loss) for the year
Total equity pertaining to minority interests
Total Equity
Translation
differences
and other
movements
Net profit
Balance
for 31.12.2005
the year
23.2
242.5
6.1
37.2
1.3
9.4
0.5
383.9
88.3
23.2
23.2
792.4
-0.3
2.8
-0.3
-0.1
-0.3
2.5
0.1
22.9
794.9
5.6
27.7
0.5
0.2
0.2
-0.1
195
Rai Group
on the Consolidated Financial Statements
197
Rai Group Report of the Board of Statutory Auditors
Report of the Board of Statutory Auditors on the Consolidated Financial
Statements
To the Shareholders
The consolidated financial statements of the Rai Group at 31 December 2005,
which has been made available for your inspection, are expressed in millions of
Euros and consist of consolidated balance sheet, income statement and notes to the
financial statements; they are also accompanied by a Directors' Report.
A summary of the consolidated balance sheet showing the main
aggregates is presented hereunder:
(millions of Euros)
ASSETS
Non-current assets
1,560.9
Current assets
1,094.7
21.0
2,676.6
LIABILITIES AND EQUITY
Equity
794.9
499.7
408.1
Payables
968.4
5.5
2,676.6
MEMORANDUM ACCOUNTS
Guarantee given: unsecured
secured
69.5
54.1
Purchase and sales commitments
119.4
Other
331.6
574.6
198
The consolidated income statement is summarised hereunder:
(millions of Euros)
Production value
3,152.9
Production costs
3,020.7
Operating profit
132.2
7.4
….
-33.9
Income taxes
-82.8
22.9
The consolidated balance sheet and income statement, summarised above,
present comparative figures for 2004.
The notes to the consolidated financial statements describe the scope of
the consolidation and the valuation methods applied and provide, with the
supplementary schedules presented, the other disclosures required under article 38
of Legislative Decree no. 127/1991.
The scope of the consolidation has remained unchanged from 2004. The company
San Marino TV (Equity: 5,559 thousand Euros) which is held 50% continues to be
recorded on the equity method, as was the case in 2004.
With regard to the Directors' Report, considering the significant “weight”
of the parent company as compared with that of all consolidated subsidiaries taken
together, the Directors' Report on the parent company, which is supplemented by
specific information, also covers the Group as well.
In such Report, the Directors describe, as already mentioned, the overall
situation of the companies included in the consolidated financial statements, as
well as the overall business performance and developments and those in the various
sectors. Information is provided on research and development activities and the
outlook for the Group.
Finally, three tables showing the consolidated balance sheet and income
statement in vertical form and the consolidated cash flow statement have been
presented to provide an effective tool for a better understanding of the consolidated financial statements.
With regard to matters falling within the sphere of the Board of
Statutory Auditors, we report that, also on the basis of contacts with the
Independent Auditors PwC, the consolidated financial statements have been drawn
up, in all three of their components, in compliance with statutory requirements and
correspond to the accounting records of the parent company and the information
transmitted by the various companies included in the scope of consolidation.
199
With regard to accounting matters, we draw your attention to the following:
there
have been no “exceptional cases” during the year which would entail
•
making derogations from standard accounting principles as permitted under
article 29 (4) of Legislative Decree no. 127/1991;
• assets and liabilities, and revenues and costs, have been valued on a uniform
basis, which is substantially unchanged from the preceding year;
• deferred tax assets have been recorded for fiscal benefits obtainable in future
years on provisions set up in preceding years which were disallowed for tax
purposes;
• deferred tax liabilities have been recorded on accelerated depreciation and
amortisation which has been taken off-books only in the tax return.
With respect to the effects of the resolution passed by the Communications
Authority regarding the incompatibility of Mr Meocci with the function of General
Manager, reference should be made to the information contained in the report on the
parent company financial statements.
In conclusion, as a result of all the matters described above, in our opinion
the consolidated financial statements of the Rai Group at 31 December 2005 and
the accompanying Directors' Report have been drawn up in accordance with the
provisions of Legislative Decree no. 127/1991 to which reference on several
occasions has been made in this report.
THE BOARD OF STATUTORY AUDITORS
Dr. Carlo Cesare GATTO
Prof. Paolo GERMANI
Prof. Salvatore RANDAZZO
Rome, 31 May 2006
200
Rai Group Report of the Independent Auditors
on the Consolidated Financial Statements
201
Rai Group
Appendices
Financial Statements of Subsidiaries
Contents
Rai Cinema S.p.A.
205
01 Distribution S.r.l.
209
Rai Click S.p.A.
213
Rai Corporation S.p.A. - Italian Radio TV System
217
Rai Corporation Canada - Italian Radio TV System
221
NewCo Rai International S.p.A.
225
RaiNet S.p.A.
229
RaiSat S.p.A.
233
Rai Trade S.p.A.
237
Rai Way S.p.A.
241
Sipra S.p.A. - Società Italiana Pubblicità per Azioni
245
Sacis S.p.A. - Commerciale Iniziative Spettacolo
249
203
Rai Group Appendices - Financial Statements of Subsidiaries
Rai Cinema S.p.A.
Name:
Rai Cinema S.p.A.
Date of incorporation:
1 December 1999
Objects:
The company’s objects are 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:
Euro 200,000,000.40
38,759,690 shares of par value Euro 5.16 each
Rai 99.99767%, Rai Trade 0.002322%.
Ownership:
Employees:
01 Distribution S.r.l. 100%
60 on permanent contracts
1 on a fixed-term contract
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Board of Statutory
Auditors:
Chairman:
Statutory Auditors
in office:
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
205
Rai Cinema S.p.A.
II. FIXED ASSETS
TOTAL FIXED ASSETS
a) subsidiaries
2.- Receivables
d) other
due after one year
C) CURRENT ASSETS
I. INVENTORIES
a) finished goods
TOTAL INVENTORIES
II. RECEIVABLES
1.Customers
2.Subsidiaries
4.Parent company
5.Other
TOTAL RECEIVABLES
TOTAL ASSETS
206
(in Euros)
31.12.2005
31.12.2004
-
-
466,907,577
103,492,934
592,172
570,992,683
422,018,742
120,410,046
872,717
543,301,505
12,215
192,360
204,575
17,301
239,965
257,266
516,456
516,456
516,456
516,456
261,421
261,421
777,877
571,975,135
280,148
280,148
796,604
544,355,375
928,980
928,980
625,298
625,298
9,693,899
22,511,353
11,548,725
11,083
7,896,084
2,232,212
53,893,356
4,514,283
16,608,704
4,736,913
7,344,654
10,671,829
1,053,276
44,929,659
-
-
54,822,336
45,554,957
3,197,069
3,197,069
629,994,540
1,974,109
1,974,109
591,884,441
Rai Cinema S.p.A.
(in Euros)
31.12.2005
31.12.2004
200,000,000
4,871,443
6,868,518
39,846,933
251,586,894
200,000,000
3,282,571
2
6,524,913
31,777,438
241,584,924
3.- Other
708,626
5,903
2,447,382
3,161,911
521,928
6,778
917,656
1,446,362
1,488,895
1,498,798
D) PAYABLES
6.- Advances
7.- Suppliers
9.- Subsidiaries
11.- Parent company
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
281,000
121,581,196
10,817,354
237,164,045
3,333,961
156,309
278,949
373,612,814
356,475
115,793,409
14,060,281
215,018,630
1,263,530
255,408
549,726
347,297,459
144,026
144,026
629,994,540
56,898
56,898
591,884,441
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
VIII.PROFITS BROUGHT FORWARD
TOTAL EQUITY
Memorandum Accounts
(in Euros)
31.12.2005
31.12.2004
1,008,000
1,008,000
Unsecured guarantees received
. Guarantees on film productions
65,050,440
51,764,582
Our assets held by third parties
. On rent or similar
. Other items
TOTAL MEMORANDUM ACCOUNTS
935,846
25,823
67,020,109
635,408
25,823
53,433,813
4.- Other memorandum accounts
Secured guarantees received
. Third parties for collateral securities and other assets
207
Rai Cinema S.p.A.
Income Statement
(in Euros)
31.12.2005
A) PRODUCTION VALUE
a) operating grants
c) miscellaneous
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
a) disposal losses
c) other
Operating profit
. other
d) income other than the above
c) interest and commissions payable to parent company
c) other
b) prior-year taxes
c) other - roundings-off
Profit before taxes
208
31.12.2004
383,067,997
303,683
289,702,726
349,308
265,453
3,156,742
3,422,195
386,793,875
1,606,255
1,383,787
5,503,615
8,493,657
298,545,691
(3,811,906)
(44,589,070)
(1,250,128)
(1,514,073)
(28,966,107)
(1,216,779)
(3,500,208)
(1,016,946)
(256,751)
(310,678)
(37,808)
(5,122,391)
(3,385,550)
(993,119)
(245,947)
(98,239)
(27,985)
(4,750,840)
(253,991,693)
(67,573)
(6,032,417)
(260,091,683)
(210,150,017)
(66,649)
(16,084,689)
(379,048)
(226,680,403)
(186,288)
(155,520)
(1,586,252)
(1,586,252)
(316,637,718)
(390,039)
(1,130,605)
(1,520,644)
(264,804,366)
70,156,157
33,741,325
11,773
11,773
6,761
6,761
78,432
78,432
78,849
78,849
(5,911,046)
(44,396)
(5,955,442)
892,664
(4,972,573)
-
2
2
(61,784)
(61,784)
(61,782)
65,121,802
(25,274,869)
39,846,933
(4,706,281)
(35,219)
(4,741,500)
(4,473,286)
(9,129,176)
-
22,954
22,954
(19,541)
(97)
(19,638)
3,316
24,615,465
7,161,973
31,777,438
Name:
27 June 2001
Objects:
The company’s objects are the purchase and the distribution in cinemas
and through home videos 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:
Euro 516,456.00
Rai Cinema S.p.A. 100%
Employees:
1 on a fixed-term contract
Board of Directors:
Chairman:
Managing Director:
General Manager:
Directors:
Carlo Macchitella
(position vacant)
Filippo Roviglioni
Adriano Coni
Filippo Roviglioni
Board Secretary:
(position vacant)
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Antonio Falsetti
Alternate
Statutory Auditors:
Marco Buttarelli
Enrico Laghi
Mario De Gennaro
Mauro Japino
209
II. FIXED ASSETS
TOTAL FIXED ASSETS
2.- Receivables
d) other
C) CURRENT ASSETS
II. RECEIVABLES
1.Customers
4.Parent company
- recoverable within one year
- recoverable after one year
5.Other
TOTAL RECEIVABLES
TOTAL ASSETS
210
(in Euros)
31.12.2005
31.12.2004
-
-
27,123
27,123
816
31,628
32,444
5,452
14,151
4,018
23,621
701
1,036
1,737
18,849
18,849
69,593
9,828
9,828
44,009
22,464,670
10,817,354
11,787,066
14,060,281
8,083
14,684
1,656,657
34,961,448
19,572
885,759
26,752,678
-
-
3,447,633
1,744
3,449,377
38,410,825
3,083,353
1,143
3,084,496
29,837,174
38,480,418
188,878
188,878
30,070,061
(in Euros)
31.12.2005
31.12.2004
516,456
2,169
41,193
9,612
569,430
516,456
1,366
25,941
16,054
559,817
17,865
17,865
-
190,211
130,500
D) PAYABLES
7.- Suppliers
11.- Parent company
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
14,535,632
22,744,193
105,949
108,700
208,438
37,702,912
11,565,320
16,652,902
882,565
101,280
177,677
29,379,744
38,480,418
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES - extraordinary reserve
TOTAL EQUITY
-
Memorandum Accounts
4.- Other
Others' guarantees covering our obligations
30,070,061
(in Euros)
31.12.2005
31.12.2004
175,000
175,000
-
211
Income Statement
A) PRODUCTION VALUE
a) operating grants
c) miscellaneous
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
Operating profit
. other
d) nterest and commissions payable to others and miscellaneous charges
17 bis.- Foreign exchange gains and losses - net
c) other
b) prior-year taxes
c) other
Profit before taxes
212
(in Euros)
31.12.2005
31.12.2004
61,579,123
26,263,369
1,481,741
30,606,348
32,088,089
93,667,212
309,316
17,658,822
17,968,138
44,231,507
(77,511)
(89,336,252)
(1,036,561)
(61,982)
(41,107,692)
(769,947)
(1,449,632)
(461,494)
(72,647)
(15,694)
(1,999,467)
(1,084,842)
(327,790)
(55,370)
(5,311)
(1,473,313)
(5,321)
(2,472)
(112,275)
(120,068)
(5,321)
(7,567)
(12,888)
(888,858)
(93,458,717)
(614,316)
(44,040,138)
208,495
191,369
75,406
75,406
37,694
37,694
(20,152)
(20,152)
(2,861)
52,393
(13,575)
(13,575)
2,563
26,682
-
-
41,792
41,792
1
1
(2,370)
(2,370)
39,422
(9,222)
(9,222)
(9,221)
300,310
(290,698)
9,612
208,830
(192,776)
16,054
Rai Click S.p.A.
Name:
Rai Click S.p.A.
11 September 2000
Objects:
The company’s objects are the creation, distribution, broadcasting and
sale of audiovisual and multimedia products, both interactive and
non-interactive, through broadband Internet protocol networks.
Share capital:
Euro 176,800
340,000 shares of par value Euro 0.52 each
Rai 59.94%, Rai Trade 0.06%, e-Biscom 40%.
Employees:
1 on permanent contract
Board of Directors:
Chairman:
Managing Director:
General Manager:
Directors:
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Alternate
Statutory Auditors:
Franco Iseppi
Franco Iseppi
(position vacant)
Paolo Agostinelli
Stanislao Argenti
Mario Rossetti
Roberto Sergio
Vittorio Terrenghi
Alessandro Bolognesi
Antonio D’Urso
Tullio Piccolini
213
Rai Click S.p.A.
31.12.2005
31.12.2004
-
-
288,368
7,516
13,357
309,241
230,752
18,250
12,672
261,674
-
-
7,064,133
479
7,064,612
8,255,733
394
8,256,127
-
-
7,064,612
8,256,127
TOTAL ASSETS
64,519
7,438,372
66,571
8,584,372
II. FIXED ASSETS
C) CURRENT ASSETS
I. INVENTORIES
II. RECEIVABLES
. due within one year
. due after one year
TOTAL RECEIVABLES
214
(in Euros)
Rai Click S.p.A.
(in Euros)
31.12.2005
A) EQUITY
I. SHARE CAPITAL
II. SHARE PREMIUM ACCOUNT
IX. LOSS FOR THE YEAR
TOTAL EQUITY
176,800
6,349,646
(1,284,099 )
5,242,347
31.12.2004
176,800
7,374,452
(1,024,806)
6,526,446
12,000
18,850
5,316
5,193
D) PAYABLES
1,979,405
1,728,334
199,304
7,438,372
305,549
8,584,372
Memorandum Accounts
4.- Other
. Unsecured guarantees received
(in Euros)
31.12.2005
31.12.2004
1,368,645
1,368,645
1,092,132
1,092,132
215
Rai Click S.p.A.
Income Statement
31.12.2005
31.12.2004
2,810,653
24,869
2,835,522
2,381,986
33,896
2,415,882
(8,697)
(4,324,628)
(4,113)
(8,877)
(3,732,021)
(6,521)
(54,686)
(15,206)
(3,557)
(1,630)
(75,079)
(49,833)
(13,659)
(3,336)
(814)
(67,642)
(244,267)
(10,734)
(77,242)
(332,243)
(252,958)
(10,733)
(7,334)
(271,025)
(3,150)
(57,764)
(4,805,674)
(22,057)
(4,108,143)
Operating loss
(1,970,152)
(1,692,261)
A) PRODUCTION VALUE
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
. interest and commissions from parent company
110,457
5,303
115,760
129,791
11,969
141,760
(274)
(274)
115,486
(3)
(3)
141,757
-
-
-
-
Profit before taxes
216
(in Euros)
(1,854,666)
570,567
(1,284,099)
(1,550,504)
525,698
(1,024,806)
Rai Corporation S.p.A. - Italian Radio TV System
Name:
Rai Corporation – Italian Radio TV System
20 January 1960
Objects:
The company operates in North America in the production, distribution
and sale of radio and TV programmes. It is engaged in the development
of international co-productions and provides support to Group
companies.
Share capital:
US$ 500,000
50,000 shares of par value US$ 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
217
Rai Corporation S.p.A.
II. FIXED ASSETS
5.- Assets under construction and payments on account
TOTAL FIXED ASSETS
a) subsidiaries
2.- Receivables
d) other
C) CURRENT ASSETS
I. INVENTORIES
TOTAL INVENTORIES
II. RECEIVABLES
1.Customers
4.Parent company
5.Other
TOTAL RECEIVABLES
TOTAL ASSETS
218
(in US dollars)
31.12.2005
31.12.2004
-
-
5,525,112
5,525,112
1,187,016
1,187,016
3,055,800
979,622
4,035,422
106,589
191,589
1,019,996
1,318,174
1,000
1,000
34,663
387,121
421,784
422,784
9,983,318
27,985
359,133
387,118
388,118
2,893,308
-
9,925
9,925
136,656
4,834,945
48,465
574,641
5,594,707
154,242
1,940,769
18,685
1,500,597
3,614,293
-
-
690,005
690,005
6,284,712
372,546
372,546
3,996,764
16,268,030
6,890,072
A) EQUITY
I. SHARE CAPITAL
VII. OTHER RESERVES
VIII. PROFITS (LOSSES) BROUGHT FORWARD
IX. NET PROFIT (LOSS) FOR THE YEAR
TOTAL EQUITY
3.- Other
(in US dollars)
31.12.2005
31.12.2004
500,000
10,000,000
(520,118 )
69,112
10,048,994
500,000
558,230
(1,078,348)
(20,118)
-
40,000
40,000
1,910,794
1,868,309
D) PAYABLES
6.- Advances
7.- Suppliers
9.- Subsidiaries
11.- Parent companies
12.- Taxes payable
14. Other payables
TOTAL PAYABLES
51,409
2,512,801
902,776
1,000
233,387
39,376
567,493
4,308,242
88,725
1,669,049
1,273,562
1,000
1,543,044
24,498
402,003
5,001,881
16,268,030
6,890,072
Memorandum Accounts
4.- Other
. patronage letter
. letter of credit
. leasing of photocopy and fax machines
. leasing of motor vehicles
. assets on a free-on-loan basis (*)
(in US dollars)
31.12.2005
31.12.2004
18,598,367
17,070,347
2,000,000
2,000,000
76,681
18,513
26
22,693,587
2,500,000
2,000,000
6,359
26
21,576,732
(*) 26 paintings of notional unit value of $1, owned by Rai and held at the Montevideo office
219
Income Statement
(in US dollars)
31.12.2005
A) PRODUCTION VALUE
B) PRODUCTION COSTS
9.- Personnel costs
c) writedowns of current receivables
Operating profit (loss)
17bis.- Foreign exchange gains and losses - net
220
19,893,390
308,995
20,202,385
31.12.2004
17,675,239
86,982
17,762,221
(291,275)
(9,359,274)
(3,221,958)
(255,666)
(9,056,296)
(3,430,186)
(4,656,919)
(1,306,638)
(102,661)
(6,066,218)
(4,239,557)
(1,228,986)
(54,744)
(5,523,287)
(195,586)
(524,298)
(36,878)
(756,762)
(28,040)
(112,407)
(801)
(141,248)
(9,925)
(349,477)
(20,054,889)
(4,264)
(40,000)
(199,785)
(18,650,732)
147,496
(888,511)
2,668
30,911
33,579
30,230
5,930
36,160
(115,292)
(16,920)
(132,212)
282
(98,351)
(2,213)
(17,413)
(19,626)
(765)
15,769
-
-
38,772
-
b) out-of-period gains etc
b) prior-year taxes
38,772
Profit (loss) before taxes
23.- Net profit (loss) for the year
87,917
(18,805)
69,112
(833)
(833)
(873,575)
(204,773)
(1,078,348)
Rai Corporation Canada - Italian Radio TV System
Name:
Rai Corporation Canada – Italian Radio TV System
18 February 1987
Objects:
The company is wholly owned by Rai Corporation and its objects are the
distribution in Canada of programmes produced by Rai for foreign
viewing; it performs representation functions for Rai Corporation and
assists this company in the production of radio and TV programmes
in Canada.
Share capital:
Can$ 1,394
1,000 shares of par value Can$ 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
221
Rai Corporation Canada
II. FIXED ASSETS
C) CURRENT ASSETS
I. INVENTORIES
II. RECEIVABLES
TOTAL ASSETS
222
(in Canadian dollars)
31.12.2005
31.12.2004
1,394
1,394
-
-
-
-
1,394
1,394
31.12.2005
31.12.2004
1,394
1,394
1,394
1,394
-
-
-
-
D) PAYABLES
-
-
1,394
1,394
A) EQUITY
I. SHARE CAPITAL
TOTAL EQUITY
223
Income Statement
31.12.2005
224
31.12.2004
A) PRODUCTION VALUE
-
-
B) PRODUCTION COSTS
-
-
Operating profit
-
-
-
-
-
-
-
-
Profit before taxes
-
-
Name:
28 February 2003
Objects:
The company’s objects are 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 present-day or future
technology, directly or through other Italian or foreign enterprises, for this
purpose preparing and signing all necessary and appropriate deeds,
negotiations, 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 public service TV broadcasting, or its subsidiaries.
Share capital:
Euro 1,000,000
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:
Statutory Auditors
in office:
Alternate
Statutory Auditors:
(position vacant)
Roberto Chionne
Massimo Magliaro
(position vacant)
Deborah Bergamini
Pierluigi Malesani
Pietro Pilello
Demetrio Arena
Domenico De Leo
Antonio Falsetti
Enrico Laghi
225
II. FIXED ASSETS
226
(in Euros)
31.12.2005
31.12.2004
-
-
7,828
7,828
7,828
7,828
C) CURRENT ASSETS
I. INVENTORIES
II. RECEIVABLES
TOTAL RECEIVABLES
-
-
296,768
304
297,072
496,064
12,378
508,442
297,072
508,442
TOTAL ASSETS
304,900
516,270
(in Euros)
31.12.2005
A) EQUITY
I. SHARE CAPITAL
VIII. LOSSES BROUGHT FORWARD
IX. LOSS FOR THE YEAR
TOTAL EQUITY
1,000,000
(548,040 )
(221,933 )
230,027
31.12.2004
1,000,000
(291,833)
(256,207)
451,960
-
-
-
-
74,873
64,310
304,900
516,270
D) PAYABLES
227
Income Statement
(in Euros)
31.12.2005
A) PRODUCTION VALUE
-
B) PRODUCTION COSTS
(304,182)
(23,399)
(4,422)
(332,003)
(369,407)
(19,668)
(7,939)
(397,014)
Operating loss
(332,003)
(397,014)
Loss before taxes
228
-
31.12.2004
5,210
6,530
5,210
(48)
6,482
(326,793)
104,860
(221,933)
(390,532)
134,325
(256,207)
RaiNet S.p.A.
Name:
RaiNet S.p.A.
23 June 1999
Objects:
The company’s objects are 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 parties’ products and
services of the kind 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:
Euro 5,160,000
Rai 99.9%, Rai Trade 0.1%.
Employees:
11 on fixed-term contracts
Board of Directors:
Chairman:
Vice Chairman
Managing Director:
Directors:
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Alternate
Statutory Auditors:
Giampaolo Rossi
Luca Balestrieri
Alberto Contri
Fabio Belli
Michele Lo Foco
Roberto Nepote
Roberto Sergio
Roberto Chionne
Antonio Falsetti
Enrico Laghi
Francesco Mariani
Maria Eugenia Palombo
229
RaiNet S.p.A.
II. FIXED ASSETS
TOTAL FIXED ASSETS
2.- Receivables
d) other
C) CURRENT ASSETS
I. INVENTORIES
II. RECEIVABLES
1.- Customers
4.- Parent company
5.- Other
TOTAL RECEIVABLES
d) accrued income and other prepaid expenses
TOTAL ASSETS
230
(in Euros)
31.12.2005
31.12.2004
-
-
133,340
133,340
143,858
143,858
67,685
14,943
790,433
873,061
30,374
13,966
953,274
997,614
413
413
1,006,814
413
413
1,141,885
-
-
3,151,968
6,435,702
13,915
9,601,585
3,995,624
5,020,922
15,035
9,031,581
-
-
9,601,585
9,031,581
102,765
102,765
10,711,164
188,354
188,354
10,361,820
RaiNet S.p.A.
(in Euros)
31.12.2005
31.12.2004
5,160,000
4,569
5,160,000
4,569
1
(1,374,610 )
710,296
4,500,256
4,000,000
2
(773,026)
(4,601,584)
3,789,961
3.- Other
693,725
693,725
1,640,966
1,640,966
613,772
684,151
1,988,918
2,106,955
384,682
149,658
211,181
4,841,394
1,954,902
1,236,375
124,109
240,428
625,161
4,180,975
62,017
62,017
10,711,164
65,767
65,767
10,361,820
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
. Shareholders' payments on account of share capital
. Euro rounding-off reserve
VIII.LOSSES BROUGHT FORWARD
TOTAL EQUITY
D) PAYABLES
7.- Suppliers
11.- Parent company
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
Memorandum Accounts
4.- Other
(in Euros)
31.12.2005
31.12.2004
7,706,070
7,260,883
231
RaiNet S.p.A.
Income Statement
(in Euros)
31.12.2005
A) PRODUCTION VALUE
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
Operating profit (loss)
d) income other than the aboveinterest and commissions from parent companies
c) other
c) other
Profit (loss) before taxes
232
12,445,931
638,787
13,084,718
31.12.2004
5,740,444
213,837
5,954,281
(60,036)
(7,166,463)
(36,047)
(48,555)
(6.680,182)
(30,475)
(2,822,453)
(810,464)
(200,892)
(36,473)
(113,149)
(3,983,431)
(3,226,286)
(847,629)
(207,165)
(36,205)
(13,382)
(4,330,667)
(131,781)
(532,303)
(200,000)
(864,084)
(93,396)
(481,146)
(574,542)
(8,000)
(90,806)
(12,208,867)
(717,000)
(49,544)
(12,430,965)
875,851
(6,476,684)
21,832
75,678
(2,488)
(2,488)
(12)
19,332
(286)
(286)
6
75,398
-
-
-
2
2
895,183
(184,887)
710,296
(300)
(298)
(6,401,584)
1,800,000
(4,601,584)
RaiSat S.p.A.
Name:
RaiSat S.p.A.
29 July 1998
Objects:
The company’s objects are the creation of TV and audio theme channels,
events, on-line multimedia products, also by means of purchase from
third parties production services and rights on audiovisual products
(movies, cartoons, entertainment, documentaries, news, sports events,
cultural events, music events, etc) and their inclusion in programmes to be
distributed on free and pay channels.
Share capital:
Euro 2,585,000
Rai 94.9%, Rai Trade 0.1%, minority interests 5.0%
Employees:
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Carlo Sartori
Marco Conti
Gianluca Veronesi
(position vacant)
Pasquale D’Alessandro
Carlo Nardello
Barbara Poggiali
Roberto Sergio
Board Secretary:
Giuseppe De Palma
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Paolo Germani
Alternate
Statutory Auditors:
Maurizio De Crescenzo
Rocco Nostro
Paolo Ugo Tramontozzi
Fabio Diozzi
233
RaiSat S.p.A.
31.12.2005
31.12.2004
-
-
7,663,353
116,131
26,321
7,805,805
8,656,306
141,714
118,155
8,916,175
134,406
46,184
81,946
262,536
130,186
62,523
192,709
11,505
11,505
8,079,846
15,043
15,043
9,123,927
-
-
31,430,003
6,913,182
77,820
29,238,236
4,444,232
-
401,036
45,355
1,490,026
40,357,422
688,767
81,207
765,573
35,218,015
-
-
1,075
1,075
40,358,497
1,440
1,440
35,219,455
TOTAL ASSETS
557,357
557,357
48,995,700
281,576
281,576
44,624,958
II. FIXED ASSETS
TOTAL FIXED ASSETS
2.- Receivables
d) other
C) CURRENT ASSETS
I. INVENTORIES
II. RECEIVABLES
1.Customers
4.Parent company
. recoverable within one year
. recoverable after one year
5.Other
TOTAL RECEIVABLES
234
(in Euros)
RaiSat S.p.A.
(in Euros)
31.12.2005
31.12.2004
2,585,000
639,187
1,117,607
3,072,480
7,414,274
2,585,000
469,904
870,795
3,385,655
7,311,354
3.- Other
PROVISIONS FOR RISKS AND CHARGES
7,022
956,093
963,115
7,022
1,770,469
1,777,491
1,117,451
1,109,657
D) PAYABLES
4.- Due to banks
7.- Suppliers
11.- Parent company
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
267,747
16,854,906
21,332,756
303,476
274,952
467,023
39,500,860
1,953
14,201,141
18,893,247
492,682
353,853
452,495
34,395,371
48,995,700
31,085
31,085
44,624,958
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
Memorandum Accounts
4.- Other
(in Euros)
31.12.2005
31.12.2004
3,787,579
1,460,768
5,248,347
3,893,315
1,460,768
5,354,083
235
RaiSat S.p.A.
Income Statement
A) PRODUCTION VALUE
c) miscellaneous
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
Operating profit
. interest and commissions from parent companies
c) interest and commissions payable to parent companies
b) prior-year taxes
Profit before taxes
236
(in Euros)
31.12.2005
31.12.2004
67,075,399
57,850,142
1,006,317
1,006,317
68,081,716
1,265,254
1,265,254
59,115,396
(319,535)
(31,300,465)
(12,167,415)
(314,991)
(23,143,024)
(8,388,373)
(4,909,779)
(1,955,735)
(317,002)
(56,164)
(22,504)
(7,261,184)
(4,172,470)
(1,813,851)
(280,091)
(38,505)
(25,000)
(6,329,917)
(9,927,655)
(77,639)
(60,351)
(10,065,645)
(12,432,899)
(72,775)
(147,211)
(12,652,885)
(799,548)
(61,913,792)
(500,000)
(773,284)
(52,102,474)
6,167,924
7,012,922
10,973
-
(105,031)
(6,313)
(111,344)
(15,195)
(115,566)
(196,529)
(8,377)
(204,906)
(5,494)
(210,400)
-
-
27,094
27,094
-
27,094
6,079,452
(3,006,972)
3,072,480
(129,605)
(129,605)
(129,605)
6,672,917
(3,287,262)
3,385,655
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
Objects:
The company’s objects are the production and exchange, in Italy and
abroad, of goods and services in connection with radio and TV
programmes and their recording on any support material, audiovisual
products with any content (e.g.: sports, movies, TV series, etc) and
relevant usage rights; setting up 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 the relative products and the
relative resultant and merchandising rights; the control and supervision of
advertising on Rai networks.
Share capital:
Euro 8,000,000
100,000 shares of par value Euro 80 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:
Roberto Di Russo
Alba Calia
Nicola Cona
(position vacant)
Paolo Francia
Claudio Imbriani
Antonio Marano
Renato Parascandolo
Board Secretary:
Monica Monti
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Carlo Cesare Gatto
Alternate
Statutory Auditors:
Francesco Poddighe
Giovanni Battista Provenzano
Giancarlo Consani
Alberto Morelli
237
Rai Trade S.p.A.
5.- Goodwill
II. FIXED ASSETS
TOTAL FIXED ASSETS
d) other companies
2.- Receivables
c) parent company
d) Other
C) CURRENT ASSETS
I. INVENTORIES
a) finished goods
b) merchandise
TOTAL INVENTORIES
II. RECEIVABLES
1.Customers
4.Parent company
. recoverable within one year
. recoverable after one year
5.Other
TOTAL RECEIVABLES
238
(in Euros)
31.12.2005
31.12.2004
-
-
1,068,729
15,162
12,405
358,320
218,126
1,672,742
741,365
79,887
27,566
1,425,150
181,987
2,455,955
682,218
466,567
1,148,785
1,026,220
314,464
1,340,684
31,946
31,173
40,000
73,333
-
26,781
26,781
172,060
2,993,587
4,200
43,782
47,982
79,155
3.875,794
48,019
18,928
71,505
516
120,040
516
19,444
45,800,128
49,710
22,016,197
268,667
52,584,540
32,000
19,664,983
-
1,765,275
1,148,378
2,255,370
1,152,452
2,510,280
950,000
74,508,635
2,496,338
78,185,683
2.- Cheques
-
-
8,520
8,520
74,637,195
480
5,428
5,908
78,211,035
TOTAL ASSETS
113,426
113,426
77,744,208
86,209
86,209
82.173,038
Rai Trade S.p.A.
(in Euros)
31.12.2005
31.12.2004
8,000,000
1,600,000
5,960,981
(1)
6,399,041
21,960,021
8,000,000
1,407,814
5,892,061
1
4,261,106
19,560,982
3.- Other
147,684
2,717,899
2,865,583
193
11,075,090
11,075,283
1,802,312
1,676,782
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
- Roundings-off reserve
TOTAL EQUITY
D) PAYABLES
4.- Due to banks
6.- Advances
7.- Suppliers
11.- Parent company
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
3,869
4,648,788
27,277,207
14,794,788
324,097
265,653
229,119
95,566
5,836,058
24,038,744
15,767,176
667,303
246,020
3,527,326
274,564
51,116,292
2,903,678
76,327
49,859,991
77,744,208
82,173,038
Memorandum Accounts
3.- Purchases and sales commitments
4.- Other
(in Euros)
31.12.2005
31.12.2004
55,885,705
14,033,593
69,919,298
17,439,788
19,436,295
36,876,083
239
Rai Trade S.p.A.
Income Statement
A) PRODUCTION VALUE
3.- Changes in inventory of contract work in process
c) miscellaneous
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
Operating profit
. other
18.- Revaluations
19.- Write-downs
b) of current financial assets
b) prior-year taxes
d) other
. roundings-off
240
Profit before taxes
(in Euros)
31.12.2005
31.12.2004
84,506,849
71,505
29,091
71,610,821
7,049
12,573,584
97,181,029
3,934,858
75,552,728
(232,442)
(42,290,975)
(11,290,815)
(114,325)
(33,194,963)
(10,831,745)
(4,380,411)
(1,402,041)
(316,735)
(101,025)
(13,116)
(6,213,328)
(4,061,795)
(1,279,156)
(284,766)
(131,690)
(18,755)
(5,776,162)
(14,680,680)
(461,879)
(465,006)
(856,881)
(16,464,446)
(14,031,628)
(740,140)
(462,907)
(434,210)
(15,668,885)
(356,953)
(12,553,785)
(89,402,744)
(1,883,548)
(67,469,628)
7,778,285
8,083,100
3,704
3,704
3,577
3,577
733
1,127
266,625
47,126
314,484
77,955
88,249
167,331
(48,650)
(323,973)
(372,623)
1,006,437
952,002
773
(382,723)
(381,950)
4,772
4,772
(1)
(1)
4,771
8,353,108
(1,954,067)
6,399,041
(102,454)
(44,079)
(146,533)
(1,592,494)
(1,568,119)
(30,906)
(30,906)
62,594
62,594
(18,621)
(744,820)
(1)
(763,442)
(700,848)
5,783,227
(1,522,121)
4,261,106
Rai Way S.p.A.
Name:
Rai Way S.p.A.
29 July 1999
Objects:
The company’s objects are 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, infrastructure maintenance, network management
and maintenance and relevant microwave or fibre transmission services.
Share capital:
Euro 70,176,000
Rai 99.9992%, Rai Trade 0.00074%.
Employees:
Board of Directors:
Chairman:
Vice Chairman:
Managing Director:
General Manager:
Directors:
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Alternate
Statutory Auditors:
Pietro Gaffuri
Roberto Caravaggi
Stefano Ciccotti
(position vacant)
Marcello Di Tondo
Cesare Bossetti
Benito Benassi
Giulio Andreani
Lanfranco Duò
Paolo Ugo Tramontozzi
Giuseppe Maria Altadonna
Fabio Piccoli
241
Rai Way S.p.A.
II. FIXED ASSETS
TOTAL FIXED ASSETS
2.- Receivables
d) other
C) CURRENT ASSETS
I. INVENTORIES
TOTAL INVENTORIES
II. RECEIVABLES
1.Customers
4.Parent companies
5.Other
TOTAL RECEIVABLES
TOTAL ASSETS
242
(in Euros)
31.12.2005
31.12.2004
-
-
1,042,322
1,426,156
111,379
2,579,857
6,031
129,040
2,157,211
127,776
2,420,058
46,141,581
85,733,926
2,493,871
83,179
23,228,146
157,680,703
48,832,092
91,533,256
3,001,915
79,055
18,797,780
162,244,098
1,096,313
1,096,313
161,356,873
1,182,651
1,182,651
165,846,807
2,262,276
75,012
2,337,288
2,115,815
776,956
2,892,771
7,427,683
56,598,453
122,426
1,980,135
1,520,748
67,649.445
8,048,538
59,584,617
14,189
535,839
1,548,302
69,731,485
-
-
69,986,733
72,624,256
508,385
508,385
231,851,991
794,982
794,982
239,266,045
Rai Way S.p.A.
(in Euros)
31.12.2005
31.12.2004
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
including the Reserve for Accelerated Depreciation
TOTAL EQUITY
70,176,000
1,636,612
13,832,409
9,360,000
5,635,197
91,280,218
70,176,000
1,247,612
12,017,566
9,360,000
7,779,843
91,221,021
3.- Other
995,336
11,896,794
17,866,942
30,759,072
999,113
7,024,100
15,207,587
23,230,800
24,967,474
23,073,088
D) PAYABLES
6.- Advances
7.- Suppliers
11.- Parent company
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
55,473,141
20,762,543
1,625,863
1,651,043
3,492,913
83,005,503
773,607
61,834,651
27,498,091
1,973,166
2,024,295
4,934,473
99,038,283
1,839,724
1,839,724
231,851,991
2,702,853
2,702,853
239,266,045
TOTAL EQUITY
Memorandum Accounts
4.- Other
(in Euros)
31.12.2005
31.12.2004
43,300,000
34,837,092
78,137,092
43,300,000
24,284,924
67,584,924
243
Rai Way S.p.A.
Income Statement
(in Euros)
31.12.2005
A) PRODUCTION VALUE
3.- Changes in contract work in process
a) operating grants
c) miscellaneous
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
Operating profit
. other
b) prior-year taxes
Profit before taxes
244
31.12.2004
192,955,391
(701,944)
528,826
202,336,724
10,291
579,269
140,078
34
2,756,917
195,679,302
989,623
17,406
3,145,540
207,078,853
(3,701,891)
(44,030,436)
(42,209,650)
(3,317,520)
(42,910,986)
(51,514,377)
(34,123,827)
(9,227,942)
(2,633,115)
(911,920)
(231,100)
(47,127,904)
(32,394,082)
(9,172,454)
(2,445,063)
(847,219)
(430,641)
(45,289,459)
(592,093)
(36,737,183)
(184,000)
(37,513,276)
(1,225,950)
(39,006,875)
(186,000)
(40,418,825)
146,460
(302,743)
(1,693,695)
(5,845,314)
(182,278,449)
275,381
(315,000)
(1,799,000)
(5,131,456)
(190,421,242)
13,400,853
16,657,611
25,225
12,660
37,885
43,469
18,954
62,423
(310,108)
(28,893)
(339,001)
(85,200)
(386,316)
-
(135,942)
(135,942)
(135,942)
12,878,595
(7,243,398)
5,635,197
(199,249)
(745,020)
(944,269)
120,799
(761,047)
-
886,181
(4,454)
(4,454)
881,727
16,778,291
(8,998,448)
7,779,843
Sipra - Società Italiana Pubblicità per Azioni
Name:
Sipra - Società Italiana Pubblicità per Azioni
9 April 1926
Objects:
The company’s objects are the acquisition and exploitation of any kind of
advertising, specifically advertising through radio 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, financial,
securities or real estate transactions, in order to pursue the company’s
objects.
Share capital:
Euro 10,000,000
100,000 shares of par value Euro 100 each
Rai 100%
Employees:
Board of Directors:
Chairman:
Managing Director:
General Manager:
Directors:
Raffaele Ranucci
Mario Antonio Bianchi
Maurizio Braccialarghe
Fabio Belli
Giuliana Del Bufalo
Ugo Zanello
Board Secretary:
Laura Paschetto
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Salvatore Randazzo
Alternate
Statutory Auditors:
Carlo Dominici
Giuseppe Ferrazza
Augusto Giovannelli
Giuseppe Peri
245
Sipra S.p.A.
II. FIXED ASSETS
TOTAL FIXED ASSETS
2.- Receivables
d) other
C) CURRENT ASSETS
I. INVENTORIES
b) merchandise
TOTAL INVENTORIES
II. RECEIVABLES
1.Customers
4.Parent companies
5.Other
TOTAL RECEIVABLES
246
(in Euros)
31.12.2005
31.12.2004
-
-
1.595,212
1,595,212
1,487,115
1,487,115
29,730,781
1,754,515
31,485,296
29,881,919
1,707,945
31,589,864
341,519
341,519
33,422,027
445,667
445,667
33,522,646
44,067
44,067
89,093
89,093
341,863,143
46,547,229
32,804
841,709
12,483,283
401,768,168
306,282,804
72,960,651
886,912
876,545
13,558,738
394,565,650
-
-
144,762
54,031
198,793
402,011,028
597,930
100,185
698,115
395,352,858
TOTAL ASSETS
2,001,736
2,001,736
437,434,791
1,047,997
1,047,997
429,923,501
Sipra S.p.A.
Balance Sheet- Liabilities and Equity
(in Euros)
31.12.2005
31.12.2004
10,000,000
1,113,870
2,000,000
10,853,296
11,596,381
35,563,547
10,000,000
1,113,870
2,000,000
10,815,690
18,537,606
42,467,166
3.- Other
568,130
4,980,579
5,548,709
1,153,169
4,590,408
5,743,577
9,623,487
9,498,321
D) PAYABLES
6.- Advances
7.- Suppliers
11.- Parent company
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
3,413,528
11,174,755
366,277,886
894,750
1,578,854
2,903,282
386,243,055
3,067,152
11,519,573
345,623,530
6,042,177
1,925,578
3,592,948
371,770,958
455,993
455,993
437,434,791
443,479
443,479
429,923,501
A) EQUITY
I. SHARE CAPITAL
II. SHARE PREMIUM ACCOUNT
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
Memorandum Accounts
4.- Other
- Guarantees received in favour of third parties
- Guarantees received in our favour
- Mortgage guarantee received from third parties
(in Euros)
31.12.2005
31.12.2004
660,171
997,068
31,315,226
1,074,856
32,390,082
33,050,253
33,590,705
2,542,422
268,969
36,402,096
37,399,164
247
Sipra S.p.A.
Income Statement
(in Euros)
31.12.2005
A) PRODUCTION VALUE
b) realisation gains and reversal of excess liabilities
c) other
B) PRODUCTION COSTS
9.- Personnel costs
e) other costs
Operating profit
. other
c) other
b) prior-year taxes
c) out-of-period losses etc
Profit before taxes
248
31.12.2004
1,219,922,607
1,220,054,141
7,337
7,101,102
1,227,031,046
9,560
8,200,332
1,228,264,033
(4,617,523)
(1,170,957,927)
(2,160,515)
(4,579,694)
(1,159,580,187)
(1,966,655)
(18,057,424)
(5,931,648)
(1,464,541)
(1,203,207)
(26,656,820)
(18,735,424)
(6,284,870)
(1,481,442)
(1,086,061)
(27,587,797)
(1,511,154)
(2,220,417)
(3,731,571)
(1,484,619)
(2,002,826)
(3,487,445)
(45,026)
(311,321)
(127,217)
(1,888,595)
(1,210,496,515)
(42,424)
(547,931)
(101,893)
(2,406,537)
(1,200,300,563)
16,534,531
27,963,470
9,017
11,597
1,298,427
538,258
1,845,702
1,141,100
713,508
1,866,205
(14,131)
(112,720)
(126,851)
(539)
1,718,312
-
(19,014)
(118,904)
(137,918)
(306)
1,727,981
-
595,493
595,493
(4,143)
(4,143)
591,350
18,844,193
(7,247.812)
11,596,381
1,113,670
1,036,027
2,149,697
(1,500)
(8,527)
(10,027)
2,139,670
31,831,121
(13,293,515)
18,537,606
Sacis S.p.A. - Commerciale Iniziative Spettacolo
(in liquidation – resolution of 23 January 1998)
Name:
Sacis S.p.A. Commerciale Iniziative Spettacolo
4 June 1955
Objects:
The company’s objects are to engage in activities pertinent to show
business.
Share capital:
Euro 102,000
Rai 100%
Employees:
None
Liquidator:
Eugenio Quaglia
Board of
Statutory Auditors:
Chairman:
Statutory Auditors
in office:
Roberto Ascoli
Alternate
Statutory Auditors:
Michele Giura
Francesco Mariani
Paolo Saraceno
Pier Giorgio Tomassetti
249
Sacis S.p.A.
II. FIXED ASSETS
2.- Receivables
d) other
C) CURRENT ASSETS
I. INVENTORIES
II. RECEIVABLES
1.Customers
4.Parent company
5.Other
TOTAL RECEIVABLES
250
(in Euros)
31.12.2005
31.12.2004
-
-
-
-
36,152
36,152
36,152
36,152
36,152
36,152
-
-
13,252
5,510,262
43,591
1,446
5,568,551
19,742
5,579,183
51,654
2,119
5,652,698
-
-
226
226
5,568,777
554
248
802
5,653,500
TOTAL ASSETS
5,604,929
5,689,652
Sacis S.p.A.
(in Euros)
31.12.2005
31.12.2004
A) EQUITY
I. SHARE CAPITAL
IV. LEGAL RESERVE
VII. OTHER RESERVES
TOTAL EQUITY
102,000
20,400
1,861,225
77
1,983,702
102,000
20,400
1,914,146
(52,921)
1,983,625
3.- Other
1,115
3,350,611
3,351,726
1,115
3,398,111
3,399,226
C) TOTAL PROVISIONS FOR RISKS AND CHARGES
-
-
267,713
888
900
269,501
103
305,794
904
306,801
5,604,929
5,689,652
D) PAYABLES
4.- Due to banks
7.- Suppliers
12.- Taxes payable
14.- Other payables
TOTAL PAYABLES
Memorandum Accounts
4.- Other
(in Euros)
31.12.2005
31.12.2004
1,529
1,529
2,496
2,496
251
Sacis S.p.A.
Income Statement
(in Euros)
31.12.2005
A) PRODUCTION VALUE
c) miscellaneous
25,532
42,103
47,505
73,037
151,578
193,681
B) PRODUCTION COSTS
(4)
(123,329)
(32,401)
(22,865)
(178,599)
(6)
(197,745)
(31,709)
(22,270)
(251,730)
Operating profit
(105,562)
(58,049)
c) other
Profit before taxes
252
31.12.2004
1
1
(526)
(526)
65
(460)
-
111,241
111,241
(5,142)
(5,142)
106,099
77
77
7
7
(787)
(787)
(663)
(1,443)
-
7,156
7,156
(585)
(585)
6,571
(52,921)
(52,921)
Rai Group
Appendices
Financial Statements of Associated Companies
(summary schedules)
253
Rai Group Appendices - Financial Statements of Associated Companies
Audiradio S.r.l.
22 March 1996
Objects:
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:
Euro 234,000
Owned by:
Rai 33.33%; third parties 66.67%
Auditel S.r.l.
254
3 July 1984
Objects:
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:
Euro 300,000
Owned by:
Rai 33%; third parties 67%
Secemie - Societé Anonyme
30 June 1992
Objects:
Satellite broadcasting of multi-language news bulletins.
Share capital:
Euro 3,829,395 (255,293 shares of par value Euro 15 each)
Owned by:
Rai 21.65%; third parties 78.35%
San Marino RTV - S.p.A.
8 August 1991
Objects:
The company objects are 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 business.
Share capital:
Euro 516,460
Rai 50%; ERAS 50%
Ownership:
Servizi Contabili e Fiscali - S.C.F. S.r.l. 95%
255
Associated companies 2005 summary financial statements
Balance Sheets at 31.12.2005 ASSETS
SUBSCRIBED CAPITAL UNPAID
AUDIRADIO
AUDITEL
SAN MARINO RTV
SECEMIE
-
-
-
-
-
NON-CURRENT ASSETS
Intangible assets
10,688
360
54,140
Fixed assets
6,976
11,222
310,607
-
Financial assets
7,443
7,727
12,139
3,670,123
CURRENT ASSETS
Inventories
Receivables
Current financial assets
ACCRUED INCOME AND PREPAID EXPENSES
-
-
9,909
90,427
1,058,073
4,785,104
-
-
-
922,791
2,740,114
2,994,889
1,532,993
162,104
1,152,072
7,609
5,650
46,819
-
2,863,257
4,077,921
6,751,711
5,907,090
AUDIRADIO
AUDITEL
SAN MARINO RTV
SECEMIE
755,543
78,528
708,859
237,552
5,390,805
167,796
2,520,567
3,009,372
PROVISIONS FOR RISKS AND CHARGES
-
-
220,000
17,050
PROVISION FOR STAFF SEVERANCE PAY
35,421
347,555
115,501
-
1,985,133
2,761,483
855,738
360,101
8,632
22,472
1,871
-
2,863,257
4,077,921
6,751,711
5,907,090
TOTAL
Balance Sheets at 31.12.2005 LIABILITIES AND EQUITY
SHARE CAPITAL
Share capital, reserves and shareholders' contributions
on account of share capital
PAYABLES
ACCRUED EXPENSES AND DEFERRED INCOME
256
INCOME STATEMENTS 2005
AUDIRADIO
AUDITEL
SAN MARINO RTV
SECEMIE
PRODUCTION VALUE
2,569,166
13,199,393
4,620,252
17,163,932
PRODUCTION COSTS
(2,454,513)
(12,821,615)
(4,521,610)
(11,537,316)
38,478
56,456
69,154
(3,711,514)
-
-
-
-
FINANCIAL INCOME AND CHARGES
VALUE ADJUSTMENTS TO FINANCIAL ASSETS
EXCEPTIONAL INCOME AND CHARGES
NET PROFIT FOR THE YEAR
(1)
1
-
(215,481)
(74,602)
(196,683)
-
(83,600)
78,528
237,552
167,796
1,616,021
257
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
Loc. Grande Charriere, 70
11020 Saint Christophe (AO)
Veneto
Palazzo Labia
Campo San Geremia, 275
30131 Venice
Bolzano
Piazza Mazzini, 23
39100 Bolzano
Emilia Romagna
Viale della Fiera, 13
40127 Bologna
Marche
Piazza della Repubblica, 1
60131 Ancona
Abruzzo
Via de Amicis, 29
65123 Pescara
Calabria
Via G. Marconi
87100 Cosenza
Puglia
Via Dalmazia, 104
70121 Bari
Sardinia
Viale Bonaria, 124
09100 Cagliari
258
Liguria
Corso Europa, 125
16132 Genoa
Trento
Via F.lli Perini, 141
38100 Trento
Friuli Venezia Giulia
Via Fabio Severo, 7
34133 Trieste
Tuscany
Largo Alcide De Gasperi, 1
50136 Florence
Umbria
Via Masi, 2
06121 Perugia
Molise
Viale Principe di Piemonte, 59
86100 Campobasso
Basilicata
Via dell’Edilizia, 2
85100 Potenza
Sicily
Viale Strasburgo, 19
90146 Palermo
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
[email protected]
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. 001.212.468.2500
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
[email protected]
RaiSat SpA
Viale Mazzini, 14
00195 - Rome
Tel. 06.68889068
Rai Trade SpA
Via Umberto Novaro, 18
00195 - Rome
Tel. 06.374981
[email protected]
Rai Way SpA
Via Teulada, 66
00195 - Rome
Tel. 800.111.555
[email protected]
Sipra SpA
Corso Unione Sovietica, 612/3D
10135 - Turin
Tel. 011.3915111
[email protected]
01 Distribution srl
Piazza Adriana, 12
00193 - Rome
Tel. 06.684701
259
Rai Radiotelevisione italiana SpA
Parent Company:
Company name:
Share capital:
Registered office:
Rai - Radiotelevisione italiana SpA
242,518,100.00 Euros fully paid
Viale Giuseppe Mazzini, 14 - 00195 Rome
Produced by Rai SpA Administration Department
Consulting and Editing Ergon Comunicazione
Finito di stampare nel mese di giugno 2005

RAI GROUP Reports and financial statements 2005

Transcription

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