Separate Financial Consolidated Financial Introduction Statements Statements I Separate and Consolidated Interim Financial Statements as at 30 June 2019 Separate and Consolidated Interim Financial Statements as at 30 June 2019 Contents Introduction 5 Interim Separate Financial Statements as at 30 June 2019 13 Interim Consolidated Financial Statements as at 30 June 2019 215 Corporate Directory 288 Introduction Corporate Officers 6 Organisational Structure 7 Introduction from the Chairman of the Board of Directors 8 Financial Highlights 10 Separate Financial Consolidated Financial Introduction 6 Statements Statements Corporate Officers Corporate Officers BOARD OF DIRECTORS Chairman Marcello Foa Chief Executive Fabrizio Salini Officer Directors Rita Borioni Beatrice Coletti Igor De Biasio Riccardo Laganà Giampaolo Rossi Board Secretary Anna Rita Fortuna BOARD OF STATUTORY AUDITORS Chairman until 4 July 2019 as of 5 July 2019 Biagio Mazzotta Carmine di Nuzzo Statutory auditors Roberto De Martino Giovanni Ciuffarella Anna Maria Magro Maria Teresa Mazzitelli Alternative auditors M.M. Assunta Protopapa Pietro Contaldi Pietro Floriddia Antonella Damiotti EXTERNAL AUDITOR PricewaterhouseCoopers Separate Financial Consolidated Financial Introduction Statements Statements 7 Organisational Structure Organisational Structure (short form) Board Chairperson of Directors of the Board Board of Statutory Auditors Internal Supervisory Audit Board Chief Executive Officer(1) General Management Corporate Mastheads TV channels Corporate CFO - Finance and genres and Support and Planning Radio COO - TV production CFO - Technological Property and Infrastructure local sites Rai Cinema Rai Com Rai Pubblicità Rai Way (1) Among others, the Staff Departments of the Chief Executive Officer and Corporate General Manager, International Relations (functionally reporting to the Chairman of the Board), Institutional Relations, Communication, Marketing and Research report to the Chief Executive Officer. Separate Financial Consolidated Financial Introduction 8 Statements Statements Introduction from the Chairman of the Board of Directors Introduction from the Chairman of the Board of Directors In the first half of 2019, the Rai Group posted a slight profit (€3.3 million), improving on the loss of just under €5 million in the same period of the previous year. As regards revenues, the slight downturn in advertising revenues due to the continuing weakness of the relative market, was offset by the growth in revenues from licence fees, and basically from fees collected by enforcement order relative to the 2004-2014 period. Other revenues also increased, mainly due to the portion recognised by the State for the performance of obligations under the Service Agreement, including obligations for the development of digital programming, determined by Law no. 145 of 30 December 2018 for the years 2019 and 2020. The overall increase in revenues, partially offset by higher costs mainly related to sports events, led to an improvement in EBIT of €17.2 million. At 30 June 2019, the net financial position was negative by €239.1 million (€+89.2 million at 30 June 2018), improving by €47.4 million compared to 31 December 2018. Last March, the Board of Directors approved the 2019-2021 Industrial Plan, in relation to which decisions from the Ministry of Economic Development are pending. The plan – in compliance with requirements and commitments set out in the Service Agreement entered into with the Ministry – meets the ambitious goal of managing Rai’s switch-over from a Public Service media company to a digital driver, putting users and content at the centre and filling the digital gap on new platforms. This renewed central focus will create, as part of a major polyphonic composition, that extensive assortment of ideas that make the Public Service unique in the communications industry. In this scenario, it is indispensable to improve understanding of the public’s needs, covering individual users – who are very often TV viewers and radio listeners that are still not frequent Internet users as we would like, with their specific nature, and also capturing in particular the habits and interests of young generations who, in the evolution of the media ecosystem, do not use the TV as a reference point. On these occasions, it is hard to resist the temptation of mentioning the many programmes that have achieved significant results in terms of ratings and appreciation, and recognition of the quality of the editorial content. But to do this would be to diverge from the chief importance of overall production and the production of individual channels, with some programmes that have a vital role as schedule “highlights”, making it possible to try out new formats which would otherwise be hard to achieve. We shall therefore refer to just two select exceptions, concerning programmes that reflect the attention only a Public Service can guarantee on unusual, complex issues, free of charge and targeting a wide-ranging audience. The matches of the Women’s World Cup in France, initially broadcast on Rai 2 and then, for the first time ever, on the flagship channel, demonstrating Rai’s ability to capture the mood of the country, winning it’s heart we hope for this sport. Another perfect example of the Public Service is the programme broadcast during the prime time slot on Rai 3 Che storia è la musica: with over three hours of classical music to recount the history of music through the narrative capacity and talent of the orchestra conductor Ezio Bosso. This TV experiment brought together the spoken word and music, featuring a powerful narrator and guests from many different worlds, proving that a mix of timbres, expressions and genres is always a winner. The fact that over a million viewers loved listening to Beethoven’s Fifth and Seventh Symphonies is a clear sign that culture and wonder deserve to be broadcast on the general prime time TV of a Public Service, which we are committed to doing. We do not accept the concept of viewer numbers versus quality of content, which is often taken on board too easily. Separate Financial Consolidated Financial Introduction Statements Statements 9 Introduction from the Chairman of the Board of Directors In this context, the awards received by Rai at the Diversity Media Awards in the prestigious “Best TV programme”(for Ballando con le stelle) and “Best Italian TV series” (for L’amica geniale) categories have been a source of great satisfaction. This recognition reflects Rai’s ability to promote inclusion, to make the public aware of issues that are fundamental for the progress of society, to handle topics that are sometimes highly controversial, while respecting people and different sensibilities. Rai has made a particular commitment, on an industrial and creative level, to radio, at the forefront of the media mix, and an example of how the habits of more traditional segments of society can be blended with the expectations of a platform that is increasingly diverse and demanding. Rai has also driven the process to forge a new alliance – PER-Player Editori Radio – with radio publishers for a unique platform dedicated to online content distribution on all operating systems and on all mobile and domestic devices – an app to easily access digital media, thus helping to reduce the digital divide. This alliance is open to all publishers, focussing on inclusion and pluralism, which are two of the cornerstones of the concept of a Public Service. The recent award to Il Traditore (The Traitor), the fantastic film by Marco Bellocchio, co-produced with Rai Cinema, with an unprecedented look at Tommaso Buscetta, the mafia’s first great “confessor” reflects Rai’s commitment to the film industry. This film, which Le Monde described as “magnificent, the greatest and most intelligent gangster film after Martin Scorsese’s Casino”, has in fact been selected to represent Italy in the International Feature Film category at the Oscars. I would like to end on a poignant note, remembering two great champions of culture who have recently passed away, and who were fundamental in the history of the Public Service. Franco Zeffirelli, who created great films and operas, including the memorableJesus of Nazareth, co-produced with Rai, and of a quality and recognition that made it an international success; and Andrea Camilleri – who brought to Rai an instinct and culture for deep-rooted stories, starting from the unmistakeable “Sicilianess” he belonged to and which conveyed a quality and values that could become universal – embracing the idea of culture that of course is the culture of a Public Service. Andrea Camilleri was a vibrant source, with a vital and dynamic wealth of stories, and for all of us he was the much loved author of Il Commissario Montalbano. Separate Financial Consolidated Financial Introduction 10 Statements Statements Financial Highlights Financial Highlights Rai SpA INCOME STATEMENT (€/million) June 2019 June 2018 Change External revenue 1,277.7 1,221.1 56.6 External costs (726.3) (681.1) (45.2) HR expenses (472.4) (473.4) 1.0 EBITDA 79.0 66.6 12.4 Pre-tax profit/(loss) 0.0 (7.0) 7.0 Profit/(loss) for the period 14.0 14.1 (0.1) CAPITAL STRUCTURE (€/million) 30.06.2019 31.12.2018 Change Equity 753.2 767.6 (14.4) Net financial debt excluding liabilities for operating leases 75.3 286.0 (210.7) Liabilities for operating leases 54.9 0.0 54.9 Net financial debt 130.2 286.0 (155.8) Total financial position 883.4 1,053.6 (170.2) INVESTMENTS (€/million) June 2019 June 2018 Change Investments