Reports and Financial Statements As at 31 December 2018
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Separate Financial Consolidated Financial Introduction Statements Statements I Reports and Financial Statements as at 31 December 2018 Reports and Financial Statements as at 31 December 2018 Contents Introduction 5 Separate financial statements as at 31 December 2018 13 Consolidated Financial Statements as at 31 December 2018 289 Corporate Directory 402 Introduction Corporate Officers 6 Organisational Structure 7 Letter from the Chairperson of the Board of Directors 8 Financial Highlights 10 Separate Financial Consolidated Financial Introduction 6 Statements Statements Corporate Officers BOARD OF DIRECTORS Chairperson until 26 July 2018 as of 27 July 2018 Monica Maggioni Marcello Foa (1) Chief Executive Fabrizio Salini Officer Directors Rita Borioni Rita Borioni Arturo Diaconale Beatrice Coletti Marco Fortis Igor De Biasio Carlo Freccero Riccardo Laganà Guelfo Guelfi Giampaolo Rossi Giancarlo Mazzuca Franco Siddi Secretary Anna Rita Fortuna BOARD OF STATUTORY AUDITORS Chairperson Biagio Mazzotta Standing auditors Roberto De Martino Anna Maria Magro Alternate auditors M.M. Assunta Protopapa Pietro Floriddia GENERAL MANAGER until 26 July 2018 Mario Orfeo EXTERNAL AUDITOR PricewaterhouseCoopers (1) Assumed the office of Chairperson of the Board of Directors as 26 September 2018. Separate Financial Consolidated Financial Introduction Statements Statements 7 Organisational Structure (summary) Board of Directors Chairperson of the Board Supervisory Internal Board Audit Chief Executive Officer (1) Editorial Area (2) Chief Digital Officer (3) Chief Technology (4) Officer Chief Financial Officer (5) Finance and Planning Chief Operations Officer Corporate TV Production & Support(6) Subsidiaries Rai Cinema Rai Com Rai Pubblicità Rai Way (1) Includes, inter alia, Governance and the Corporate Secretariat, covering the Chief Executive Officer’s Staff and the Board & Corporate Secretary. (2) Includes: the Editorial Board for Information Programmes, Editorial Coordination for Television Scheduling, Mastheads, TV Channels and Genres, Creative Division, and Radio. (3) Reporting to the Chief Digital Officer are: Digital, Teche and Public Service. (4) Reporting to the Chief Technology Officer are: CTO’s staff, Coordination of Standardization Activities and Special Projects, Quality and Planning, Technological Innovation and Testing Research Centre, Broadcast Services and Frequencies Management, Platforms and Distribution, ICT, Safety & Security, Real Estate Assets and Services. (5) Reporting to the Chief Financial Officer are: Strategic Planning & Management Control, Administration & Finance, TV Licence Fees, Tax Affairs, Methodological Legal Support, and PMO. (6) Includes, inter alia, Communications, External, Institutional & International Relations, Human Resources & Organisation, and Legal & Corporate Affairs. The structure depicts the organisational configuration in effect as at 31 December 2018 and therefore does not reflect the changes in the structure introduced in early 2019 that, among the other measures, include the establishment of the role of Corporate General Manager. Separate Financial Consolidated Financial Introduction 8 Statements Statements Letter to the Shareholders from the Chairperson of the Board of Directors Letter to the Shareholders from the Chairperson of the Board of Directors Dear Shareholders, Rai ended the year 2018 with positive results all in all. In terms of profit and loss, the reduction in the different sources of revenue was offset by an attentive and widespread rationalisation of operating costs that resulted in a break-even result. Net financial position deteriorated compared to 31 December 2017 but remained at sustainable levels. From the editorial viewpoint, Rai continued its leadership of the domestic television market and its prominent position in the radio sector. In line with the strategic indications of the 2016-2018 Business Plan, Rai also made further steps forward to strengthen its presence in the digital environment. Rai’s production output achieved important goals in 2018, demonstrating an ability not to simply placate the audience’s existing tastes, but also to encourage viewers towards higher and more sophisticated levels of quality. In the television sector, the success of TV series continued and, like in past years, monopolised the rankings of the most watched titles. However, even more importantly, it attained the highest ever level on the Qualitel index, which reached an average value of 8.1/10. Rai’s domestic offering is successful because it is competitive and influential internationally, which translates into strong and identifiably Italian projects in terms of content, settings, events and, overall, the celebration of the universal value of the stories and passions that fuel them. TV series also proved to be the content most viewed by the audience of regular Internet users in the Rai Play platform area. Quality, innovation and high audience scores were also a feature of cultural programming. On Rai 1 alone there were 9 dedicated prime time evenings more than the previous year. Worthy of special mention was Alberto Angela’s programme Meraviglie that posted a 23.4% share and an average of 5.6 million viewers per episode. Ulisse enjoyed similar success, with a share of nearly 20% and an audience of almost 4 million. Rai’s news offering – the key element of its role in Public Service and as custodian of the country’s cultural identity – was authoritative and securely anchored in the values of pluralism and impartiality. Also considering the legitimate expectations surrounding Rai as the essential player in forming the country’s civil conscience, we are without doubt seeking to provide increasingly factual, reliable, complete and polyphonic information that is open to the world. We have catered increasingly for younger children, inspired by the ambition of being their first media space for fun and knowledge. Our established and targeted offering is designed to accompany them, with a constant eye on innovation, as they discover themselves and the world around them, helping them to understand that they matter, that difficulties can be overcome, that others can be friends, and that choices and actions produce consequences. We are seeking to deliver this through an increasingly integrated linear and non-linear offer. An identical approach applies to our offering for older children, with a special commitment to helping boys and girls grow up as citizens, to developing understanding and a critical spirit, to rejecting discrimination and to promoting confidence in their abilities. The breadth, quality and variety of Rai’s editorial offer has seen it retain its leadership in the television market with 36.3% share over the entire day and 37.5% on prime time. Rai also retained its place at the top also of audience ratings for specialised stations, with a 7.1% share over the entire day. In 2018, Rai Play consolidated and improved its performance, and recorded almost 123 million unique browsers, with 11% growth over the previous year, reaching 529 million views (+15.4%). Rai radio stations achieved 11.05% of the market share. Without a doubt the most important major event in terms of governance and regulation was approval of the Service Contract. On 7 March 2018, the first five-year Service Contract with the Ministry of Economic Development was published in the Official Gazette. The specific rights and obligations of Rai referring to the period 2018-2022 were identified in this document. Separate Financial Consolidated Financial Introduction Statements Statements 9 Letter to the Shareholders from the Chairperson of the Board of Directors Rai will have many new commitments to meet and these will make a big impact on its offering and industrial profile. As required, these commitments were described in detail, point by point, in specific operational projects and were adopted in the 2019-2021 Business Plan approved by the Board of Directors during its 6 March 2019 meeting. Said document contains the Television Offer Editorial Plan, the Information Plan, the Project for creating stations dedicated to the Foreign and English language offering, the Institutional Information Plan and the Linguistic Minority Protection Plan. Within the time span of the Plan, Rai should complete its switch-over from Broadcaster to Public Service Media by focusing on intercepting users – especially those under 35 that are not particularly fond of the TV as a medium of reference – on the platforms they choose by combining the principles of universality and authoritativeness with the innovation of styles, languages and digital stations. The shifting of users’ consumer habits to IP and mobile platforms and to non-linear use models is becoming increasingly evident, starting from the most dynamic users. Millennials consider the web and social media as the main means of accessing news, which is therefore becoming more and more digital native, multi-format and multi-platform in order to adapt to more complex media journeys. With the switch-over to online, the creative ability to generate strongly identifiable content becomes an important competitive differential, to the detriment of the ability of mere aggregators / distributors to package content. The media digitalisation process has caused a radical change in the competitive scenario, with the entry of large Internet players that have enormous financial resources to invest in content and with traditional players’ searching for scale. In 2018 alone, three large M&A transactions