Separate and Consolidated Interim Financial Statements As at 30 June 2018
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Separate Financial Consolidated Financial Introduction Statements Statements Separate and consolidated interim financial statements as at 30 June 2018 Separate and consolidated interim financial statements as at 30 June 2018 Contents Directors’ Report 5 Interim Separate financial statements as at 30 June 2018 135 Interim Consolidated financial statements as at 30 June 2018 205 Corporate Directory 278 Directors’ Report Corporate Officers 6 Organisational Framework 7 Introduction of the Chair of the Board of Directors 8 Financial Highlights 10 Mission 12 Market scenario 12 The Rai product: offer and performance 20 Map of the Offer 20 Rai offering 22 Activities 35 Changes in the regulatory framework 111 Corporate Governance 115 Corporate Governance Report - the Control Governance Model of Rai and the Internal Control and Risk Management System 117 Other information 121 Separate Financial Consolidated Financial Introduction 6 Statements Statements Corporate Officers BOARD OF DIRECTORS Chair Up to 26 July 2018 since 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 Board Secretary Anna Rita Fortuna BOARD OF STATUTORY AUDITORS Chair Biagio Mazzotta Permanent Roberto De Martino statutory auditors Anna Maria Magro Alternate auditors M.M. Assunta Protopapa Pietro Floriddia GENERAL MANAGER Up to 26 July 2018 Mario Orfeo INDEPENDENT AUDITORS PricewaterhouseCoopers (1) Chair of the Board of Directors since 26 September 2018. Separate Financial Consolidated Financial Introduction Statements Statements 7 Organisational Framework (short form) Board of Directors Chair 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 & 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 CEO’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, Libraries, and the Public Utility Service. (4) Reporting to the Chief Technology Officer are: the CTO’s Staff, Coordination of Standardisation and Special Projects, Quality & Planning, the Research and Technological Innovation Centre, Broadcast Services and Frequency 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, Sustainability Report. (6) Includes, inter alia, Communications, External, Institutional & International Relations, Human Resources & Organisation, and Legal & Corporate Affairs. Separate Financial Consolidated Financial Introduction 8 Statements Statements Introduction of the Chair of the Board of Directors Introduction of the Chair of the Board of Directors The earnings of the Rai Group in the first half of 2018 are basically in line with those for the corresponding period of the previous year, reporting a slight loss of just under €5 million. In terms of revenue, the contraction in proceeds from licence fees, due to a lower impact of contingent items and the weakness of the advertising market had an impact. With an overall decline in revenue of approximately €25 million, tight control over spending made it possible to keep the decrease in EBIT to just under €12 million. The first half of 2018 ended with a positive net financial position of nearly €90 million (negative by approximately €60 million at 30 June 2017). The average financial position also improved considerably, amounting to a negative €42 million, thanks to lower debt at the start of the year and a better financial profile in the period. The positive results of the main economic and financial variables, quality and variety of editorial content and their strong performance also contributed. For example, as regards television – thanks also to the important contribution from specialised content – Rai has remained leader of the entire daytime share as well as the prime time segment. Without presenting a lengthy list of programmes of every kind that have featured in the first six months of Rai’s line-up on various platforms – seeking and often achieving a challenging balance between taking a universal approach and opening up to and attracting specific segments of the public – I feel I should point out how important culture – as something refined, and as a service – has become to Rai 1, in addition to the Rai channels specially dedicated to culture – Rai 5 and Rai Storia. The evening show Danza con me and the four episodes of Meraviglie – La penisola dei tesori with Alberto Angela prove how quality and excellent viewing figures go hand in hand, thanks to unique talents of an undeniable value. This is a solid strategy, that has received robust confirmation in the last few weeks, with the very recent broadcast of Ulisse – Viaggio senza ritorno with Alberto Angela, on the deportation of Jews from the ghetto in Rome by German troops on 16 October 1943. This is a magnificent example of how even difficult topics can be purposely chosen by millions of people, by bringing together narrative strength, rigorous scientific validation and contemporary language, setting in motion the valuable and fundamental part of the mission of a public service – to become a cultural and not an educational reference point for other operators. Special mention should go to TV series, which are one of the most versatile and functional macro- genres in the context of a multi-platform offering, as demonstrated by the high number of views on RaiPlay – over 40% of the total. This format is also ideal in a selective manner – for trying out new ways for viewers to watch, including box sets, complete seasons of TV series, appreciated by a younger, digital public. The gradual completion of digital platforms for Rai content is even more significant; the proprietary infrastructure, starting from the aforementioned RaiPlay, boasts two recent, new additions: RaiPlay Radio and RaiPlay Yoyo. The new portal for radio, which has been fully updated, has exciting, innovative functions. The portal features photo galleries, videos and special initiatives, plus live audio and on-demand content, for users to make the most of the offering from Radio Rai channels; the app for mobile devices is dedicated exclusively to live and on-demand audio content. RaiPlay Yoyo, a one-of-a-kind product, is a free app dedicated entirely to children, offering a safe, digital, ad-free environment with parental control. Separate Financial Consolidated Financial Introduction Statements Statements 9 Introduction of the Chair of the Board of Directors As part of this strategy, Rai has developed a unique registration process, where users sign up free of charge to RaiPlay, RaiPlay Radio and RaiPlay Yoyo digital services to access their vast assortment of on-demand content and additional services, from their own account. Registration is essential for finding out more about our users, to understand their tastes and offer best-match products for everyone – for a truly personal service; it also means the average age of users can be lowered and segments of the population resistant to consumer trends can be covered too. As part of the continual evolution which must be embedded in the strategy for shaping a latest- generation, digital, public service, technological advances and diversified distribution approaches are just as important as the products offered to users. Basically, innovation – with all its connotations and nuances – and quality, which is an essential outcome of a public service, will be the stand-out feature of Rai’s future initiatives. The international media industry is increasingly involved in concentration processes, which are creating ecosystems that integrate vertically with the production, distribution and sale of content. These processes – put in place by players, global media companies, telecommunications operators and OTTs, with a considerable financial strength and geographic penetration that is multi-territorial – are reshaping the competitive landscape. Consequently, they influence – and will increasingly influence – the strategies of traditional players, including public service providers. This trend, consolidated for several years now, is contemplated in the agreement making Rai the exclusive public service provider, where alongside traditional radio and TV content, it delivers multimedia products, and is specifically requested in this regard to promote internationally co- produced projects. In this context, the agreement on TV series reached between Rai, France Télévisions and ZDF is extremely important, targeting European projects with an international slant in order to compete abroad with over the tops. Last March, the 2018-2022 Five-Year Service Agreement stipulated with the Ministry for Economic Development was published in the Official Gazette, the Official Journal of the Italian Government. This Agreement outlines the operating scope