Reports and Financial Statements As at 31 December 2019
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Reports and Financial Statements as at 31 December 2019 Reports and Financial Statements as at 31 December 2019 Contents 7 Introduction 19 Report on Operations 185 Separate Financial Statements as at 31 December 2019 289 Consolidated Financial Statements as at 31 December 2019 393 Shareholders' resolutions 397 Corporate Directory 4 Contents Introduction 7 Corporate Officers 8 Organisational Structure 9 Letter to the Shareholders from the Chairperson of the Board of Directors 11 Financial Highlights 14 Report on Operations 19 Mission statement 20 Market scenario 20 The Rai Group 27 Television 43 Radio 107 Digital 118 Public Broadcasting Service Function 126 TV Productions 130 Technological activities 131 Transmission and distribution activities 141 Property and local sites 142 Sales activities 144 Other activities 151 Changes in the regulatory framework 159 Corporate Governance Report - the Control Model Governance of Rai and the Internal Control and Risk Management System (SCIGR) 164 Other information 169 Human Resources and Organisation 169 Intercompany Relations 175 Additional information 175 Significant events occurring after the end of the year 182 Outlook of operations 183 5 Separate Financial Statements as at 31 December 2019 185 Analysis of the results and performance of operating results, financial position and cash flows of the financial year 2019 186 Financial Statements of Rai SpA 200 Notes to the Separate Financial Statements as at 31 December 2019 205 Certification pursuant to article 154-bis of Italian Legislative Decree 58/98 278 Board of Statutory Auditors' Report 279 Independent Auditors' Report 282 Consolidated Financial Statements as at 31 December 2019 289 Analysis of the consolidated results and performance of operating results, financial position and cash flows of the financial year 2019 290 Financial statements of the Rai Group 305 Notes to the Consolidated Financial Statements as at 31 December 2019 310 Certification pursuant to article 154-bis of Italian Legislative Decree 58/98 383 Board of Statutory Auditors' Report 384 Independent Auditors' Report 386 Shareholders' resolutions 393 Corporate Directory 397 Introduction 8 Corporate Officers Board of Directors Chairman Marcello Foa Chief Executive Officer Fabrizio Salini Directors Rita Borioni Beatrice Coletti Igor De Biasio Riccardo Laganà Giampaolo Rossi Secretary Anna Rita Fortuna Board of Statutory Auditors Chairman Carmine di Nuzzo Standing auditors Giovanni Ciuffarella Maria Teresa Mazzitelli Alternative auditors Pietro Contaldi Antonella Damiotti External Auditor PricewaterhouseCoopers 9 Organisational Structure (short form) Board Chairperson of Directors of the Board Internal Audit Supervisory Body Chief Executive Officer General Management Corporate Mastheads TV channels Corporate CFO - Finance and genres and Support and Planning Property CTO-Technological Radio COO - TV production and local Infrastructures sites Rai Cinema Rai Com Rai Pubblicità Rai Way 10 11 Letter to the Shareholders from the Chairperson of the Board of Directors Dear Shareholders, The Rai Group recorded overall positive results in 2019. In terms of profit and loss, the consolidated financial statements broke even, with a slight increase in EBIT. Net financial position, although in deterioration compared to 31 December 2018, remained at sustainable levels. From an editorial point of view, Rai confirmed its leadership position in the television market (35.7% for the entire day and 36.6% for prime time, a record in almost all its production genres and different audience rating bands) and holds a significant position in the radio sector; RaiPlay has made clear progress in the digital area. Rai's overall offer, widely spread across all distribution platforms, is a quality benchmark for the whole sector and this reinforces the inherent sense of responsibility in its public service mission and is a challenge for us to constantly improve our editorial output. Rai's commitment to narrating contemporary and historical Italy, promoting national audiovisual production, supporting innovation and the international release of our works, has been of utmost importance. Rai Cinema also produced some significant results. In an era of great changes in the sector, it achieved substantial objectives both in economic terms and for the projects it carried out, which stand out for their production quantity and quality and which have led to us receiving prestigious awards in Italy and internationally. The results for Rai's dramas are equally impressive and thanks to ambitious projects that stand apart for their high-quality writing, their international profile has increased. The volume of Rai's drama offer in 2019 is equal to 80% of Italian production hours, a record that, together with Rai Cinema, confirms its undisputed public service role, as the backbone of a fundamental sector of the Italian culture industry. Quality and innovation are the hallmarks of the cultural dissemination offer, with a significantly increased share of the schedules. On Rai 1 alone, there were seven more evenings dedicated to this genre than in the previous year, and 16 more than in 2017. An evolution perfectly in line with public service obligations and welcomed by the viewing public. The Meraviglie and Ulisse series are emblematic examples of this, with Alberto Angela's ability to render the complex simple, they gained average audiences of 18.5% and even almost 30% amongst graduates, thereby paving the way for other future pilots. Another good example was the Che storia è la musica evening event by and featuring Maestro Ezio Bosso, who sadly recently died too soon, illustrating the great classical music works through theatre lectures. We would like to remember him, with gratitude and emotion, and his close collaboration relationship with Rai, with whom he made one of his final pieces of work. The information offer, a fundamental part of the public service role, is constantly evolving and characterised by a constant effort to adapt to the public's new needs and habits in an increasingly multimedia context and where there is a need for open, authoritative and abundant information. Without a doubt, in line with the valid expectations of Rai in its role as a fundamental player in forming of Italy's civil conscience, there is a commitment to providing, through our television, radio and digital channels, information and voices which are increasingly factual, dynamic, complete and open to the world. 12 Today there are a wide range of offers targeting children and young people over multiple platforms, with many services competing for time and attention, often involving children in commercial dynamics that are not age appropriate and are of dubious editorial quality. Rai offers original, distinctive and contemporary programming, respecting children's rights with educational and entertaining programmes that look to stimulate them within a safe environment and that are appropriate for each age group, with a critical spirit, imagination and good taste. As always, entertainment features prominently and, for the first time, not only on the classic generalist network, where there have also been numerous successes, but also on the web. A great challenge for Rai has been to renew the pact it has had for decades with the public, first for radio and then television, which has now been renewed and regenerated in the new digital dimension. To deal with this generational transition and to stay visible at a time where the public is moving ever faster, Rai has designed and developed a new content distribution strategy, which will increasingly involve original products, on the RaiPlay platform, together with a complete reorganisation of its offer and the creation of an innovative interface enhanced with digital experience services. Rai launched the new platform with the help of a true star of Italian entertainment, Fiorello, an eternal Peter Pan, with a specially made entertainment production, not one merely taken from television, VivaRaiPlay!. It has had 15.5 million views on the Rai domains – www.raiplay.it/programmi/vivaraiplay – and 6 million on YouTube channels, results comparable with Rai events such as Sanremo and national football team matches. This was not a one-off isolated success, RaiPlay consolidated and improved its performance in 2019, with over 676 million media views and almost 138 million unique visitors (+ 33% and + 14.5% respectively compared to 2018). Public service radio is a forerunner of media hybridisation, an example of the convergence between society's most deep-rooted forms of consumption and the expectations of an increasingly diversified and demanding audience. The evolution of production, distribution and fruition has increased the crossover of content, format and technology, in an ecosphere that fully integrates the fluid identity of the audio product and its centrality in the digital society, as can also be seen from the strong performance on the RaiPlay Radio www.raiplayradio.it website and app of the same name. Rai's international commitment should be noted, with its constant and qualified presence in the European Broadcasting Union and an increase in collaboration and partnership agreements with other public service providers around the world. Rai can count on its network of international relationships to face the sector challenges, as it also works towards boosting Italy's image. During 2019, Rai's activity was focused on the progressive implementation process of the 2019-2021 Business Plan, which