TRANSPARENCY REPORT 2019 Directive 2014/26/UE, Article 22 Legislative Decree No. 35/2017, Article 28 SIAE - Società Italiana degli Autori ed Editori Viale della Letteratura, 30 — 00144 Roma, Italia 1 www.siae.it TRANSPARENCY REPORT 2019 TABLE OF CONTENTS SIAE’S CORPORATE BODIES, OFFICES AND AGENCIES 4 INTRODUCTION 6 1) Information provided according to the Annex referred to in art. 28, subparagraph 2 of the 6 Legislative Decree no.35 of March 15, 2017 a) Budget documents: Balance Sheet, Income Statement and Cash Flow Statement 6 b) Description of the activities performed throughout the accounting period 24 c) Details regarding the refusal to confer a license in accordance with art. 22, subparagraph 2 25 d) SIAE Legal and governance structure 25 e) Entities directly or indirectly owned or controlled by SIAE 28 f ) Remunerations paid to the Supervisory Board and to the Management Board 29 g) Financial information referred to in point 2 30 h) Special Relation regarding the utilization of the amounts deducted for social, cultural and 30 educational purposes 2) Financial information referred to in point 1, letter g 33 a) Financial information regarding the rights incomes – Premise 33 b) Financial information on the cost of rights management and other services provided by the 37 Company to the right-holders c) Financial information regarding the amounts due to the right-holders 44 - MUSIC REPERTORY 57 - CINEMA REPERTORY 63 - DOR-LYRIC REPERTORY (Theatre, Opera and Ballet and Radio and Television works) 69 - OLAF REPERTORY (works of Visual Arts and Literature) 75 ANNEX 1: Relations with other Collective Management Organizations 83 Indipendent Auditors’ Report 107 Report of the Board of Auditors 113 3 TRANSPARENCY REPORT 2019 SIAE’S CORPORATE BODIES, OFFICES AND AGENCIES As at the approval date of 2019 Management Report PRESIDENT Rapetti Mogol Giulio MANAGEMENT BOARD Dubini Paola Buia Claudio Purgatori Andrea Razzini Roberto SUPERVISORY BOARD Lavezzi Bruno Mario (President) Franchini Paolo (Vice President) Amore Francesco Levi Matteo Angrisano Alessandro Levi Riccardo Franco Barbagallo Angelo Lopez Luigi Bernarda Dino Minellono Cristiano Biocca Antonio Carmine Montanari Piero Romano Borgatti Gianfranco Perilli Paola Buticchi Andrea Pirazzoli Giuseppe Caccamo Giovanni Pischiutta Roberto Giacomo Cantini Fabio Massimo Ranieri Martinotti Francesco Carboni Claudio Rinaldi Giuseppe Costa Vittorio Rizzi Antonella De Martino Giuseppe Solbiati Alessandro Di Bari Romano Sorci Roberto Distefano Riccardo Sugar Filippo Nicola Flora Giovanna Trainini Maria Romana Gramitto Ricci Alfredo Verona Tonino Leonardi Piero Federico Villevieille Bideri Silvia 4 TRANSPARENCY REPORT 2019 ADVISORY COMMITTEES MUSIC SECTION CINEMA SECTION Angrisano Alessandro Barbagallo Angelo Benini Massimo Barbanente Mariangela Bernarda Dino Clemente Agostino Chiaravalle Valeriano Conforti Michele Costa Vittorio D’Aversa Marina De Martino Giuseppe Mazzotta Carlo Galletti Anna Occhipinti Alessandro Lopez Luigi Minellono Cristiano Zukar Paola DOR SECTION OPERA SECTION Amurri Valentina Battistelli Giorgio Cavosi Roberto Cannito Luciano Mattia Distefano Riccardo Corrado Pasquale Flora Giovanna Moro Laura Giovanna Longoni Gianmario Ostali Piero Meazza Alessandro Savasta Alessandro Perilli Paola Sarcinelli Stefano OLAF SECTION Casonato Laura Castagnone Prati Mariagiulia Foschini Cristina Hoepli Giovanni Ulrico Carlo Mazzoni Eleonora Vigevani Marco Enea BOARD OF AUDITORS INTERNAL AUDIT Belmonte Laura (President) Antonio Urrata Fiori Giovanni Nova Massimiliano Supplenti: De Buglio Massimo Romani Barbara MANAGING DIRECTOR Blandini Gaetano 5 TRANSPARENCY REPORT 2019 INTRODUCTION On 27 March 2017, Legislative Decree No. 35, of March 15, 2017, containing the "Implementation of Directive 2014/26/EU on the collective management of copyright and related rights and on the granting of multi- territorial licenses for rights on musical works for online use in the internal market", was published in the Official Gazette of the Italian Republic (No. 72). The decree, in particular, transposes the Community rules by establishing the requirements to ensure the proper functioning of the management of copyrights and related rights and for the granting of multi- territorial licenses by Collective Management Organizations for the online use of musical works in the internal market. Art. 28 of the decree introduced the Annual Transparency Report as a mandatory document, including the Special Report on the use of the amounts deducted for the provision of social, cultural and educational services. The Annual Transparency Report must contain at least the information required by a specific Annex to the decree. In addition to the Transparency Report, SIAE draws up and transmits to Parliament and the Supervisory Bodies an annual report on the results of the activity carried out, relating to the profiles of transparency and efficiency. *** 1) Information provided pursuant to Annex referred to in Art. 28, subparagraph 2 of Legislative Decree No. 35 of March 15, 2017 a) Balance Sheet documents: Statement of Assets and Liabilities, Profit and Loss Account and Cash Flow Statement SIAE draws up its own Annual Management Report pursuant to Book V, Title V, Chapter V, Section IX, of the Italian Civil Code (Legislative Decree No. 35/2017, Article 8, paragraph 1 letter d) point 3), as amended by Legislative Decree No. 139/2015, and the accounting standards issued by the Italian Accounting Standards Setter (OIC), updated in 2016. Moreover, starting from January 1, 2005, SIAE had already voluntarily submitted to the accounting control in accordance with the provisions of Art. 2409-ter of the Italian Civil Code (now article 37 of Legislative Decree No. 39 of January 27, 2010). The following documents were produced in the Management Report closed at 31 December 2019: - Statement of Assets and Liabilities, Profit and Loss Account and Explanatory Note; - Management Report: - Cash Flow Statement; - Separate reports relating to the “Copyright Authentication” (Ge.Vi), “Solidarity Fund” and “PER CHI CREA” (“For those who create”) Project (COPI) managements. 6 TRANSPARENCY REPORT 2019 As already mentioned, SIAE draws up the management report in accordance with current legislation. SIAE’s report is therefore structured according to a scalar form which highlights the operating result as the difference between the value and production costs (so-called A-B) and shows the result of financial management separately. However, this method of representation does not allow to highlight the real SIAE’s production cycle which differs from that of normal industrial companies. SIAE, as mentioned, is characterized by an inverted cycle that sees the revenue preceding the expenditure, making the economic parameter A-B (difference between value and production costs) of little significance. The peculiarity of generating liquidity physiologically involves the production of financial income (similarly to what happens in all international Collecting Societies). The presence of sums awaiting processing and allocation to the rights-holders, is found in the financial statements: • in the statement of assets and liabilities: among cash and cash equivalents, current assets and financial fixed assets, and on the liability side (debts) as sums intended for the distribution at the outcome of the processes for identifying the rights-holders according to the repertoire used; • in the profit and loss account: among income from financial management. The sums awaiting distribution (classified in the accounts as debts) are present in all Collecting Societies; for SIAE they represent 65% of the liabilities. Needless to say, due to the specificities of the Collecting Societies mentioned above, the financial component deriving from the use of the sums to be distributed represents a typical element of the core business (namely from ordinary operations) and the parameter "Difference between value and production costs” (so- called “operating margin”) is not significant. The Barnier Directive itself acknowledges the peculiarity of Collecting Societies to generate financial income deriving from the use of the sums pending distribution, leaving to the Associate Members the decision to distribute them or use them in deduction of management costs (as SIAE and the main foreign sister companies have always been operating). The Assembly, which met on 18 July 2019, decided to allocate the financial proceeds to cover management costs. It should also be worth thinking about the fact that SIAE is a non-profit company and, therefore, its "mission" is not to generate profits to be distributed to shareholders. It follows that revenues and income of any kind are destined for the remuneration of production factors. When operational management generates positive margins, actions are planned to benefit the membership base in terms of: - decrease in commissions (the average commission from 2009 to 2016 decreased by 1.5 percentage points) - investments to improve business efficiency (IT, reorganization, etc.) - the improvement of services provided to members and users with a view to digitalisation - simplification of processes - support to social, charity and cultural promotion initiatives. 7 TRANSPARENCY REPORT 2019 In fact, in the absence of such actions, the financial statements would record even substantial surpluses that are inconsistent with the corporate mission. Any operating surpluses go to fuel, in line with the provisions of the Articles of Association, the Reserves which constitute,