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financial statements
Notes to the Consolidated Financial Statements
1) Introduction
The Rai Group consolidated financial statements have been prepared in accordance with the provisions of the Italian Civil Code and Legislative Decree 127 of 9 April 1991. The following documents are annexed to the consolidated financial statements: the reclassified statements comprised of tables for the analysis of the balance sheet and income statement, and of cash flows.
In order to render the consolidated financial statements at 31 December 2009 fully comparable with those of the previous year, certain items have been reclassified.
The consolidated balance sheet, income statement, notes and related schedules are expressed in millions of euros..
The consolidated financial statements reporting date is 31 December 2009, which is the year-end date for all consolidated companies.
The financial statements of consolidated companies are those approved by their Shareholders and have been adjusted, where necessary, to apply accounting standards consistently.
The consolidated financial statements and the accounts of the individual consolidated companies, except for those of Rai Corporation Canada due to its small relevance, have been audited by PricewaterhouseCoopers SpA.
The reconciliation between Rai and Group results and equity for 2009 and 2008 is presented on page 256.
2) Scope of consolidation
Rai and all Italian and foreign companies (excluding companies in liquidation) in which the Parent Company Rai holds - directly or indirectly - the majority of voting rights at ordinary Shareholders�� meetings are included in the scope of consolidation.
The following companies are consolidated on a line-by-line basis (figures for share capital are at 31 December 2009):
• Rai Cinema SpA; registered office in Rome, Piazza Adriana 12, share capital euro 200,000,000.40; shareholders: Rai
99.997678%, Rai Trade 0.002322%.
• Rai Corporation - Italian Radio TV System; registered office in New York, 32 Avenue of the Americas; share capital 500,000 US$; shareholders: Rai 100%.
• Rai Corporation - Italian Radio TV System; registered office in Woodbridge (Ontario) L4H 4V9 Canada �V 80 Carlauren Road - Suite 23, share capital 1,394 Canadian dollars; shareholders: Rai Corporation 100%.
• Newco Rai International SpA; registered office in Rome, Piazza Adriana 14, share capital 1,300,000 euros; shareholders: Rai 99.954%, Rai Trade 0.046%.
• RaiNet SpA; registered office in Milan, Corso Sempione 27, share capital 5,160,000 euros; shareholders: Rai 99.9%, Rai Trade 0.1%.
• RaiSat SpA; rregistered office in Rome, Viale Mazzini 14, share capital 2,585,000 euros; shareholders: Rai 94.9%, Rai Trade 0.1%, R.C.S. Mediagroup 5%.
• Rai Trade SpA;registered office in Rome, Via Umberto Novaro 18, share capital 8,000,000 euros; shareholders: Rai 100%.
• Rai Way SpA; registered office in Rome, Via Teulada 66, share capital 70,176,000 euros; shareholders Rai 99.99926%,
Rai Trade 0.00074%.
• Sipra SpA; registered office in Turin, Corso Bernardino Telesio 25, share capital 10,000,000 euros; shareholders: Rai
100%.
• 01 Distribution Srl; registered office in Rome, Piazza Adriana 12, share capital 516,456 euros; shareholders: RAI Cinema 100%.
With the deed of merger dated 12 October 2009, backdated to 1 January 2009, Rai Click was merged by incorporation into Rai.
Also in 2010, Rai purchased the shares held in RaiSat from RCS MediaGroup and Rai Trade, becoming the owner of 100%
of the company��s equity.
The following companies are recorded using the equity method:
• Audiradio Srl; registered office in Milan, Largo Toscanini 1, share capital 258,000 euros; shareholders: Rai 30.23%, others 69.77%.
• Auditel Srl; registered office in Milan, Largo Toscanini 1, share capital 300,000 euros; shareholders: Rai 33%, others 67%.
• Sacis SpA registered office in Rome, Via Umberto Novaro 18, share capital 102,000 euros; shareholders: Rai 100%.
• San Marino RTV SpA; reregistered office in the Republic of San Marino, Viale Kennedy 13; share capital 516,460 euros; shareholders: Rai 50%, E.Ra.S. 50%.
• Euronews registered office in Lione Ecully (France), 60 Chemin des Mouilles; share capital 3,630,585 euros; shareholders: Rai 22.84%, others 77.16%.
• Tivu' Srl; registered office in Rome, Via di Villa Patrizi 8, share capital 1,000,000 euros; shareholders: Rai 48.25%, others 51.75%.
3) Consolidation principles and foreign currency translation methods
These can be summarised as follows:
a) The book values of equity investments in consolidated companies and the corresponding portion of their net equities have
been eliminated against the total incorporation of the assets, liabilities, costs and revenues of such companies (regardless
of percentage of ownership); minority interests�� shares in equity (and the results for the year) are shown in specific items.
Any differences emerging have been taken directly to consolidated equity.
b) Payables and receivables, expense and income, dividends and other transactions made between consolidated companies have been eliminated.
c) Financial statements denominated in foreign currency have been translated into euros, applying to each individual asset and liability item on the balance sheet the exchange rate in force at 31 December 2009 (Euro/US$: 1.44060; euro/Can$: 1.51280), while the items on the income statement have been subject to application of the average exchange rate for 2009 (euro/US$: 1.39327; euro/Can$: 1.58519) and equity items have been valued at the historical rate. Differences arising from the change in the exchange rate used in relation to equity items compared with the previous year are taken to a special consolidated equity reserve.
d) For consolidation purposes, the financial statements of consolidated companies have been brought into line with the accounting policies and methods described hereunder.
4) Accounting principles
Before examining the individual items, we have provided an overview of the main accounting policies used, which were adopted from the perspective of the Company as a going concern and comply with the provisions of Articles 2423 et seq. of the Civil Code and Legislative Decree 127 of 9 April 1991. Such policies are substantially unchanged from those applied in the previous year.
a) Industrial patents and intellectual property rights:
The acquisition and production costs of programmes, composed of external costs that can be allocated directly to
each project and the cost of internal resources used to create programmes, are recorded according to the following
criteria:
1) costs for repeat-use television productions are capitalised under intangible assets and, if such productions are usable
at year-end, are carried under industrial patents and intellectual property rights and amortised on a straight-line basis
over the period of their estimated useful life. If such programmes are not yet usable at year-end, the costs are carried
under intangible assets under development and payments on account..
The objective difficulty of establishing an appropriate correlation between advertising revenues and licence fees and
the amortisation of the rights, which is further complicated by the many ways in which they can been used, has led to
the useful life of repeat-use programmes being estimated as follows:
�E three years for TV series productions or in general for all non-film productions;
�E four years for football library exploitation rights;
�E five years for free TV rights acquired by Rai Cinema, except for products for which the whole range of rights has
been acquired (film, television, home video etc) the useful life of which is estimated at seven years.
Costs for concession rights with a shorter duration are amortised over the period they are available.
In addition, an impairment provision has been established for programmes for which transmission, re-broadcasting or commercial exploitation is at risk.
2) Costs for immediate-use television programmes are expensed in a single year, which is normally that in which they are
used. More specifically:
�E News, light entertainment and all radio programming. Costs are expensed in the year in which they are incurred,
which is normally the year in which the programmes are broadcast.
�E Sports events. Costs are booked to the year in which the event takes place.
�E Documentaries, classical music and drama. Costs are charged against income in a single amount at the time the
programmes are ready for broadcasting or the rights are usable.
b) Software licences are carried with industrial patents and intellectual property rights net of amortisation and are amortised over three years from the year they enter service.
c) Costs incurred for the construction of the digital terrestrial network are capitalised under intangible assets net of amortisation and amortised on a straight-line basis over the forecast period of use from the date the service is activated.
d) Trademarks are amortised substantially over ten years from the year they enter service.
e) Deferred charges are carried under other intangible assets net of accumulated amortisation. They regard improvements to leased or licensed property and accessory charges on loans. Amortisation for leasehold improvements is determined on the basis of the shorter of the residual duration of the related contracts and the estimated period of benefit of the costs, calculated using amortisation rates which reflect the rate of economic deterioration of the relative assets. Accessory charges on loans are amortised in relation to the duration of the loan.
f) Tangible assets �V which are shown net of accumulated depreciation �V are recorded at cost, increased by internal personnel
costs incurred in preparing them to enter service, increased following revaluations pursuant to laws
The costs of tangible assets as determined above are amortised in accordance with Article 2426 (2) of the Civil Code.
Ordinary maintenance costs are expensed in the year in which they are incurred.
g) Financial leases have been booked by recording the asset and relative debt in the consolidated balance sheet in amounts which, at the beginning of the contract, are equal to the normal value of the leased asset. Depreciation of such leased assets is calculated on a straight line basis at 6% per annum. Leasing instalments are split between the portion representing financial charges, which are taken to the income statement as such, and the principal portion, which is taken as a reduction to the relative debt.
h) Equity investments in non-consolidated subsidiaries and associated companies are carried at equity; equity investments below 20% and interests in consortia are shown at cost adjusted for any permanent impairment in value. In the event of investee companies with negative equity (in deficit), the investments are written down in full and an additional amount is set up in the provisions for risks and charges for the portion of the deficit pertaining to the Group. Adjustments for permanent impairment are reversed in the event that such impairment is subsequently recovered due to sufficient operating earnings by the investee company.
i) Fixed-income securities carried as non-current financial assets are valued at purchase cost. Positive or negative differences between purchase cost and redemption value are taken to income in the amount accruing for the year.
j) Non-current assets which, at the balance sheet date, have suffered a permanent impairment in value, are carried at the lower value. Should the reasons for the writedown made in previous years no longer apply, the assets are revalued within the limits of the amount of the writedown.
k) Other securities carried under current financial assets are valued at the lower of purchase cost �V determined as the weighted average cost �V and estimated realisable value, which is given by market value.
l) Inventories of raw materials, supplies and consumables (technical materials) are valued at purchase cost, which is determined on the basis of weighted average cost, written down taking account of market trends and estimated non-use due to obsolescence and slow turnover. Inventories of items for resale (books, DVDs, etc.) are carried at the lower of purchase cost, which is determined on the basis of weighted average cost, and estimated realisable value as determined by market prices.
m) Accrued income and prepaid expenses, and accrued expenses and deferred income, are recorded on an accruals basis for the individual entries.
n) Provisions for pension and similar liabilities, which comprise the provision for supplementary staff severance pay, the social security benefits provision and the company supplementary pension fund, are made in accordance with collective bargaining agreements. The Company supplementary pension fund is valued on the basis of an actuarial appraisal.
o) The provision for taxes includes probable tax liabilities arising out of the settlement of tax disputes and includes deferred tax liabilities calculated on timing differences which have resulted in lower current taxes. Deferred tax assets arising from charges which are tax-deductible on a deferred basis and from tax losses are taken up under Current Assets caption 4 ter (��Deferred tax assets��) if there is reasonable certainty that they will be recovered in the future.
p) Other provisions for risks and charges include provisions to cover specific losses or liabilities, the existence of which is certain or probable, but the amount or date of occurrence of which is uncertain. They are set up on a case-by-case basis in relation to specific risk positions and their amount is determined on the basis of reasonable estimates of the liability that such positions could generate.
q) The provision for staff severance pay is determined in conformity to applicable law and labour contracts. It reflects the accrued entitlement of all employees at the balance-sheet date net of advances already paid.
r) Payables are shown at nominal value; receivables are carried at estimated realisable value, net of the provision for bad debts as determined on the basis of a case-by-case assessment of the solvency risks of the individual debtors.
s) Payables and receivables denominated in currencies other than the Euro �V with the exception of hedged positions, which are valued at the rate applying to the financial instrument �V are recorded at the exchange rates applying at the balance sheet date. Profits and losses ensuing from such conversion are taken to the income statement as components of financial income or expense. Any net profit is taken to a specific non-distributable reserve until the profit is realised.
t) Payments on account include advances paid by customers for services that have not yet been performed.
u) Costs and revenues are taken to the income statement on a consistently applied accruals basis.
v) Dividends are taken to income in the year in which they are received.
w) Income taxes are recorded on the basis of an estimate of taxable income in conformity with applicable regulations, taking
account of deferred tax positions. The tax liability to be settled on presentation of the tax declaration is carried under taxes
payable, together with liabilities relating to taxes already assessed and due. The tax charge in the Group��s consolidated
financial statements reflects the tax charges in the individual financial statements of consolidated companies, which have
been aligned on the basis of uniform accounting policies and prepared on a prudent basis.
Companies consolidated using the line-by-line method with the exception of Rai Trade, Rai Corporation and Rai Corporation
Canada, have opted to be taxed on a Group consolidated basis and have transferred to the Parent Company the duty
of attending to all requirements regarding the settlement and payment of IRES tax. The procedure for the consolidation of
the Group��s taxable amounts is regulated by a specific agreement between the Parent Company and the subsidiaries. The
fundamental standards that regulate this agreement are neutrality (absence of negative effects on the single companies),
proportionality in the use of losses and their integral remuneration on the basis of the rate of IRES in force at the time of
effective use, offsetting the incomes booked.
x) During consolidation, the tax effects on consolidation adjustments resulting in timing differences on the Group��s result have been recorded as prepaid taxes and deferred taxes.
y) In order to hedge interest rate and exchange rate risk, the Company uses derivative contracts to hedge specific transactions.
Interest differentials to be collected or paid on interest rate swaps are taken to the income statement on an accruals
basis over the duration of the contract. Accrued interest differentials that have not been settled at the end of the year
or which have been settled before they actually accrue are taken to accrued income and prepaid expenses, or accrued
expenses and deferred income, as the case may be. Derivative contracts hedging exchange rate risks are used to cover
contractual commitments in foreign currencies and entail adjusting the value of the underlying item. The premium or
discount arising from the differential between the spot and future exchange rates for hedging transactions carried out via
future acquisition of value and premiums paid in relation to options is taken to the income statement over the duration of
the contract.
If the market value of derivatives contracts that do not fully qualify for hedge accounting is negative, a specific risk provision
is set up for this value.
z) Collections are recorded by bank transaction date; for payments account is likewise taken of the instruction date.
5) Consolidated Balance Sheet
Assets
NON-CURRENT ASSETS
Intangible Assets
This caption includes the cost of non-physical factors of production with lasting utility, net of amortisation and writedowns in
the event of permanent impairment of value.
These total 1,013.4 million euros, with a net increase of 21.1 million euros on the preceding year, represented by the balance
between new investment (569.4 million euros), the amortisation charge for the year (551.7 million euros), and writedowns
and eliminations for 38.7 million euros, as well as other decreases for 0.1 million euros.
Formation, start-up and expansion costs. These disclose an insignificant value (at 31 December 2008: 0.1 million euros)
booked to the financial statements of NewCo Rai International (see Schedule 1).
Industrial patents and intellectual property rights. As shown in Schedule 1, these amount to 688.6 million euros, as follows:
�E 686.5 million euros for the cost of television programmes and films available for use, booked mainly to the financial
statements of the Parent Company and Rai Cinema, showing a net decrease of 54.4 million euros compared to the figure
relating to 31 December 2008. This decrease is represented by the difference between new assets for 519.0 million euros
(of which 152.5 million euros transferred from intangible assets under development and payments on account for rights
that became available during the year), a writedown against the risk of non-transmission, repeatability and commercial
exploitation of certain programmes amounting to 33.2 million euros and the amortisation charge for the year of 540.3
million euros;
�E 2.1 million euros for software rights, showing a net increase of 1.4 million euros compared to the figure relating to 31
December 2008. Specifically, the aforementioned increase is represented by the difference between new assets for 2.6
million euros (of which 0.5 million euros transferred from Intangible assets under development and payments on account
for rights that became available for use during the year) and the amortisation charge for the year of 1.2 million euros.
As regards television and film products available for use, at 31 December 2009 the item total, gross of writedowns, was split
between:
• rights to television programmes owned or held under unlimited-term licences amounting to 253.7 million euros;
• rights to television programmes held under fixed-term licences amounting to 478.5 million euros.
Overall investment in television programmes made in 2009 amounts to 554.8 million euros, including 188.3 million euros in
programmes which were not yet available at 31 December 2009, which are carried under Intangible assets under development
and payments on account.
Analysing investments by type, at 31 December 2009, 333.5 million euros had been invested in fiction programmes (series,
miniseries, TV movies, soap operas etc), 140.4 million euros in films, 25.0 million euros in cartoons and comedy programmes,
15.5 million euros in football libraries, 11.8 million euros in documentaries, 8.2 million euros in classical music
and drama and 20.4 million euros in other categories.
Concessions, licences, trademarks and similar rights. These items, which are stated net of accumulated amortisation,
include costs incurred on the acquisition of licences for digital terrestrial frequencies, and own trademarks. Overall, these
amount to 21.5 million euros, of which 21.3 million euros with reference to digital network frequencies (see Schedule 1).
Intangible assets under development and payments on account. These amount to 251.1 million euros, including:
• 276.3 million euros for the cost of television programmes and films which are not yet available, and therefore not subject
to amortisation; compared with the figure at 31 December 2008, this has shown a net increase of 30.4 million euros, as
shown in Schedule 1. Specifically, the aforementioned increase is equal to the balance between increases for new assets
(188.3 million euros), decreases for items transferred to Industrial patents and intellectual property rights in that they relate
to productions and/or acquisitions which have become usable during the period in question (152.5 million euros) and
eliminations for 5.4 million euros;
• 6.3 million euros for software programs and analysis, showing a net increase of 3.2 million euros compared to the figure
relating to 31 December 2008. The aforementioned increase is equal to the balance between increases for new assets
(3.7 million euros), decreases for items transferred to Industrial patents and intellectual property rights in that they relate
to products that became usable during the year (0.5 million euros);
• 1.4 million euros refer to alterations and improvements under way on property under leasehold or concession (31
December 2008: 1.6 million euros);
• 1.2 euros for the cost of purchasing option rights on commercial exploitation agreements regarding football libraries
booked to the Parent Company��s financial statements (zero at 31 December 2008);
• 0.1 million euros for other deferred charges (at 31 December 2008: 0.5 million euros).
For television programmes and films that have not yet become available, the total of 276.3 thousand euros includes:
• 162.1 million euros for television programmes owned by the Company that were not ready at 31 December 2009 or for
which usage rights began after 31 December 2009;
• 114.2 million euros regarding third-party television programmes held on fixed-term licence beginning after 31 December
2009.
Other intangible assets. The amount of 18.0 million euros includes:
• 14.1 million euros for costs incurred, net of accumulated amortisation, on alterations and improvements to property under
leasehold or concession (at 31 December 2008: 14.7 million euros);
• 1.9 million euros relating to investments in software programs and analyses (at 31 December 2008: 1.6 million euros);
• 1.1 million euros for costs incurred during the year, net of accumulated amortisation, on stand-by loans with a duration
of three years, to be broken down throughout the loan period (zero at 31 December 2008);
• 0.1 million euros for the purchase of a right to the first negotiation and option on the broadcasting of football matches
granted by a leading football team, net of amortisation calculated over the concession period (at 31 December 2008: 0,2
million euros);
• 0.8 million euros relating to other deferred charges (at 31 December 2008: 0.2 million euros).
Tangible Assets
These comprise the costs and related revaluations of tangible fixed assets with a useful life of several years that are owned
by the Group and used in operations. They are carried net of standard depreciation and writedowns for lasting value impairments
if any.
The standard depreciation rates applied are listed below:
buildings and light structures from 3% to 10%
plant and machinery from 12.50% to 25%
industrial and sales equipment from 14.30% to 19%
other assets: from 12% to 33.33%
At 31 December 2009, Tangible assets amount to 581.2 million euros and show, overall, a net decrease of 26.1 million euros
compared with 2008, comprised of the balance between new assets for 138.1 million euros, amortisation for 111.2 million
euros and disposals and other decrementing entries for 0.8 million euros, as specified in Schedule 2.
It should be noted that new assets recorded, which reflect investments made in the year, comprise 7.7 million euros for the
capitalisation of the cost of internal personnel engaged in the construction of buildings, plant and machinery.
The gross value of revaluations recorded under Tangible non-current assets is reported below, listed according to the applicable
regulations:
• 0.2 million euros gross in implementation of Law 823 of 19 December 1973;;
• 60.3 million euros gross in implementation of law 576 of 2 December 1975 and law 72 of 19 March 1983;;
• 62.7 million euros gross in implementation of Law 413 of 30 December 1991;
• 534.8 million euros gross in implementation of Law 650 of 23 December 1996.
Non-current financial assets
These represent the cost of durable financial investments and related revaluations, net of any writedowns described in the
comments on the individual items.
These total 22.8 million euros and are comprised as follows:
• Equity investments in non-consolidated subsidiaries. These disclose the equity value of Sacis in liquidation (4.6 million
euros).
• Equity investments in associated companies. These relate to companies not falling within the scope of the consolidation
in which interests of over 20% are held and over which a dominant influence is not exercised. Details follow:
Equity investments in the associated companies are all held in the Rai portfolio.
• Equity investments in other companies. These total 0.8 million euros and are comprised as follows:
• Receivables - other. These amount to 5.7 million euros (at 31 December 2008: 6.0 million euro) and are comprised
as follows:
�V advances paid in relation to mandates for the sale of rights for 3.0 million euros;
�V guarantee deposits of 2.2 million euros;
�V loans granted to employees of 0.5 million euros;
The composition of these items is shown in Schedule 3. Schedule 6 details their distribution by maturity and Schedule 7 by
geographic area.
• Other securities. These amount to 3.8 million euros (at 31 December 2008: 3.8 million euros) and are entirely comprised
of collateral securities.
The composition of the item is shown in Schedule 3.
CURRENT ASSETS
Inventories
Inventories amount to 5.0 million euros net of the inventory provision (at 31 December 2008: 5.2 million euros). As shown
in Schedule 4, they comprise:
•Raw materials, supplies and consumables: these amount to 2.1 million euros net of the inventory provision for 15.4 million
euros. They consist almost entirely of supplies and spare parts for maintenance and the operation of equipment, considered
as consumables since they are not directly incorporated into products.
•Contract work in progress: this amounts to 0.7 million euros, most of which is carried in Rai Way��s financial statements,
relating to costs incurred on developing the Isoradio network.
•Finished goods and merchandise: these amount to 2.2 million euros net of the inventory provision of 1.0 million euros,
mostly relating linked to the books and periodicals business, home video distribution and inventories of items acquired in
exchange for advertising.
Receivables
Receivablesw total 999.4 million euros, showing a decrease of 168.1 million euros on 31 December 2008, as can be seen in Schedule 5, which gives a breakdown of receivables, and in Schedules 6 and 8 which show their distribution by maturity, type and by currency. Their distribution by geographic area is shown in Schedule 7.
Receivables from customers. These disclose trade receivables. They total 779.6 million euros, with a nominal value of
848.5 million euros which has been written down by 68.9 million euros to bring them to their estimated realisable value and
compared with 31 December 2008 they show an increase of 185.5 million euros.
Details of the caption are divided into:
• receivables from Sipra customers for advertising services sold: exposed for a nominal value of 319.9 million euros, they
show a 9.3 million euros increase on 31 December 2008;
• receivables for services rendered by Rai to the Government under specific agreements: as shown in the following table,
these amount to a nominal 184.2 million euros, up 73.3 million euros on 31 December 2008, equivalent to the balance
between the increase in invoices issued and for amounts accrued for 2009 less collections.
• net receivables for licence fees: these amount to 23.8 million euros, up 3.8 million euros on 31 December 2008, representing
licence fees not yet transferred to Rai;
• other receivables: these amount to a nominal value of 320.6 million euros, up 108.0 million euros compared with 31
December 2008, and represent, among the most significant entries, receivables from customers of Rai for the sale of rights,
technical assistance to third parties and others for 198.6 million euros, receivables from Rai Trade for the sale of rights for
59.2 million euros, film companies and home video customers booked to the financial statements of 01 Distribution for
24.5 million euros and receivables from customers of Rai Cinema for 15.4 million euros.
Receivables from associated companies. These amount to 0.3 million euros (at 31 December 2008: 0.1 million euro),
and represent the balance of trade receivables from the companies Audiradio, Auditel, San Marino RTV and Tivu which are
carried in the Parent Company financial statements.
Tax receivables. These are carried at nominal value of 54.0 million euros (at 31 December 2008: 36.7 million euros). They
relate for the most part to receivables recorded in the Parent Company financial statements (53.2 million euros), to Group VAT
(44.3 million euros), IRAP credit (2.6 million euros) and tax reimbursements requested (6.3 million euros).
Deferred tax assets. These represent the amount receivable from entries subject to deduction of deferred tax assets. They
total 37.4 million euros (at 31 December 2008: 21.0 million euros) comprising deferred tax assets recorded by the individual
companies (35.4 million euros) and deferred tax assets from consolidation adjustments (2.0 million euros). They are up 16.4
million euros as detailed in Schedule 9. They relate mainly to:
• 30.0 million euros taken up by the Parent Company in connection with items which are allowable on a deferred basis for
tax purposes (30.0 million euros) and items transferred from group companies under the consolidated taxation mechanism
(insignificant amount in million euros);
• 1.4 million euros for prepaid tax assets taken up by Rai Cinema;
• 1.2 million euros for prepaid tax assets taken up by Rai Trade;
• 1.5 million euros for prepaid tax assets taken up by Rai Way;
• 1.3 million euros for prepaid tax assets taken up by Sipra.
Receivables from others. These amount to 128.1 million euros (at 31 December 2008: 179.4 million euros). Net of writedowns
of 1.4 million euros, they reflect the value of other types of receivable as described below:
• advances to suppliers on sports events filming rights, carried at nominal value of 87.6 million euros;
• advances to welfare and social security institutions on contributions payable for artistic activities and for advance payments
of severance pay, carried at nominal value of 9.0 million euros;
• receivables from personnel carried at nominal 7.0 million euros. They are entirely composed of advances of various types,
mainly for travel expenses and production expenses;
• miscellaneous advances to suppliers carried at nominal value of 12.8 thousand euros;
• receivables from others, carried at nominal value of 13.1 thousand euros.
Cash and cash equivalents
These amount to 20.8 million euros (at 31 December 2008: 32.7 million euros) relating mostly to the Parent Company which
manages central treasury services. They comprise the following:
• Bank and post office deposits: these amount to 20.4 million euros (at 31 December 2008: 32.3 million euros). They
represent sight or short-term balances on deposit or current account with banks, financial institutions and the Post Office.
• Cash and cash equivalents on hand: these amount to 0.4 million euros (at 31 December 2008: 0.4 million euros) and
include liquid funds in the form of cash and equivalent instruments (duty stamps, cashier��s cheques or bank-guaranteed
cheques etc) held by the Company at 31 December 2009.
Schedule 8 gives a breakdown of cash and cash equivalents by currency.
Accrued income and prepaid expenses
These total 43.9 million euros (at 31 December 2008: 40.2 million euros) and consist of prepaid expenses for 43.8 million
euros and accrued income for 0.1 million euros.
The most relevant items are represented by prepaid expenses on:
• sports events filming rights for 28.7 million euros;
• rentals for 3.0 million euros;
• software licences for 2.1 million euros;
• services for acquisition and production of programmes for 1.5 million euros:
• insurance and accident prevention for 1.0 million euros;
• rentals for 0.9 million euros;
• maintenance and repairs for 0.5 million euros;
• other prepaid expenses for 6.1 million euros.
Schedule 6 gives details as to the periods to which these items relate.
Liabilities
Shareholders�� equity
Shareholders�� equity amounts to 631.8 million euros, down 61.0 million euros on 31 December 2008 mainly due to the loss
for the year (61.8 million euros).
The components of Shareholders�� equity and the effects of operations carried out in 2007 and the previous year are shown
in Schedule 10.
Share Capital
At 31 December 2009, Rai��s fully paid-in and subscribed share capital was represented by 242,518,100 ordinary shares of par value 1 euro each, owned by the Ministry of the Economy and Finance (241,447,000 shares, equal to 99.5583% of the share capital) and SIAE, the Italian Association of Authors and Publishers (1,071,100 shares, equal to 0.4417% of share capital).
Legal Reserve
This is booked to the Parent Company financial statements for 7.0 million euros.
Other reserves
Other reserves total 443.8 million euros. This combination of items comprises:
• 327.5 million euros, of merger surplus;
• 116.3 million euros of other reserves.
Group loss for the year
This amounts to 62.1 million euros.
Share capital and reserves pertaining to minority interests
The portion of third-party capital and reserves equating to 0.3 million euros refers to RaiSat.
Net profit for the year pertaining to minority interests
Booked for 0.3 million euros, this refers to amounts due to minorities calculated on the results of RaiSat.
Provisions for risks and charges
These amount to 413.2 million euros, down 31.9 million euros net on 31 December 2008. The composition of these items and details of the aforementioned increase are shown in Schedule 11. The notes which follow provide additional information on the individual provisions.
Provision for pension and similar costs: TThese amount to 153.9 million euros (at 31 December 2008: 155.2 million
euros) and comprise the supplementary seniority benefits provision, the retirement benefits provision and the company supplementary
pension fund.
• The provision for supplementary seniority benefits amounts to 2.1 million euros (at 31 December 2008: 2.5 million euros). It
represents the sums owed in respect of indemnities in lieu of notice towards employees of Rai, Rai Way and Rai Cinema hired
before 1978 who have reached the compulsory retirement age. The amount is revalued each year in consideration of consumer
price inflation. In the event of early termination of employment, or changes in category, the amounts accrued are released.
• The provision for retirement benefits amounts to 0.3 million euros (at 31 December 2008: 0.4 million euros), includes amounts
accrued until 31 December 1988 and supplementary amounts allocated in subsequent periods in order to protect the real
value of the provision for eligible Rai employees in accordance with the terms of the national collective labour agreement.
• The provision for supplementary seniority benefits amounts to 151.5 million euros (at 31 December 2008: 152.3 million
euros). This includes the expense for supplementary pension benefits currently being paid, consisting of funds accrued for
Rai and Rai Way employees who have opted for the supplementary pension plan under the trade union agreements, which
are kept at an adequate level to ensure said benefits, with respect to actuarial reserves. It also includes the expense for
supplementary pensions that will be paid to eligible Rai and Rai Cinema managerial staff still in service in the event that
some of these opt for the supplementary pension plan calculated on the basis of pay earned, seniority and financial and
demographic parameters normally used in similar cases.
Provision for current and deferred taxes. This amounts to 14.5 million euros (at 31 December 2008: 28.2 million euros)
represented by provisions booked to the financial statements of the individual companies, particularly Rai (12.6 million euros),
Rai Way (1.0 million euros) and Sipra (0.4 million euros) and those resulting from consolidation adjustments (0.5 million
euros). They are down 13.7 million euros as detailed in Schedule 12.
Other provisions. These amount to 244.8 million euros (at 31 December 2008: 261.7 million euros). They include provisions
for costs or losses the existence of which is certain but the amount of which cannot be exactly determined, or which are
probable and the amount of which can be reasonably estimated. They are up 16.9 million euros as detailed in Schedule 11.
The release of the fund for costs matured is due to the application of the renewal of the national labour contract for journalism.
As regards pending litigation with employees and third parties, the amount carried in the provisions for liabilities and risks is
the best estimate of the likely liability based on the most up-to-date information available.
Provision for staff severance pay
The provision totals 358.2 million euros (at 31 December 2008: 371.8 million euros). The provision for staff severance pay is
determined at individual level in conformity to the provisions of art. 2120 of the Italian Civil Code, complemented by Budget
Law 2007 (Law 296 of 27 December 2006), which established the entry into force of the new legislation on pension funds
(Legislative Decree 252 of 5 December 2005) as 1 January 2007.
By effect of the new legislation, provisions for staff severance pay converge into pension funds other than those inside the
company, unless employees ask to maintain the severance pay within the company: In this case, the provisions are paid into a
reserve managed by the INPS, which will transfer to the company all the benefits disbursed by the latter in the event of payment
of advances or termination of the employment contract, as envisaged by Article 2120 of the Civil Code.
The composition of the provision and changes during the year are shown in Schedule 13.
Payables
Payables amount to 1,227.0 million euros, up 270.2 million euros on 31 December 2008. More specifically, financial debt
payable to banks totals 163.7 million euros, with a net increase of 161.3 million euros on the figure disclosed in the 2008
financial statements. No payables covered by collateral in the form of company assets were recorded.
A breakdown of the caption is given in Schedule 14, while Schedules 15 and 16 show the composition of payables by maturity,
type and currency.
With regard to geographic distribution, the greater part of payables (about 84%) relates to Italian residents, for an amount of
about 1,033.8 million euros on a total of 1,227.0 million euros..
The notes indicated hereunder provide further details on the contents of the individual items.
Due to banks. These amount to 163.7 million euros (at 31 December 2008: 2.4 million euros), representing current account
overdrafts with certain banks.
Due to other lenders. They total 2.7 million euros (at 31 December 2008: 3.4 million euros), and represent the balance of
the amount due to the leasing company in connection with the financial lease over the building in Aosta housing the regional
office.
Advances. These amount to 8.4 million euros (at 31 December 2008: 6.9 million euros) relating entirely to miscellaneous
advances.
Suppliers. They total 797.7 million euros (at 31 December 2008: 714.5 million euros) and show an increase of 83.2 million
euros with respect to the figure disclosed for the previous year. They consist of 0.1 million euros in financial debts (unchanged
from 31 December 2008) and 797.6 million euros in commercial debts (at 31 December 2008: 714.4 million euros).
Due to non-consolidated subsidiaries. These amount to 5.1 million euros (at 31 December 2008: 5.1 million euros) and
concern Parent Company balances with Sacis relating almost entirely to the balance of the financial current account.
Associated companies. These amount to 5.5 million euros (at 31 December 2008: 3.3 million euros) and concern
Parent Company balances with San Marino RTV for 4.8 million euros and with Tivu for 0.7 million euros. They consist of 0.1
million euros in financial debts (unchanged from 31 December 2008) and 5.4 million euros in other debts (at 31 December
2008: 3.2 million euros).
Tax payables. These amount to 70.8 million euros (at 31 December 2008: 68.1 million euros) and show an increase of 2.7 million euros with respect to the figure disclosed for the previous year. They consist of:
Welfare and social security institutions.. These payables amount to 55.6 million euros (at 31 December 2008: 48.5 million euros). They reflect contributions due on remuneration paid to employees and free-lance workers, to be paid over to the institutions at the scheduled dates. They consist of:
Other payables. TThese amount to 117.5 million euros (at 31 December 2008: 104.6 million euros). They show a net increase of 12.9 million euros, as follows:
They consist of 0.6 million euros in financial debts (at 31 December 2008: 0.5 million euros) and other debts of 116.9 thousand euros (at 31 December 2008: 104.1 million euros).
Accrued expenses and deferred income
These total 56.3 million euros (at 31 December 2008: 53.8 million euros) and consist of prepaid expenses for 56.1 million
euros and accrued income for 0.2 million euros.
The caption contains the entire amount contributed of 49.3 million euros, net of the amount already booked to the income
statement, disbursed by the Ministry for Communications during 2007, 2008 and 2009, in support of initiatives to accelerate
the switch-over to the digital terrestrial platform, consisting of operations on systems and adaptation of the site infrastructures
to extend areas covered by the digital signal and improve reception and the quality of service perceived by the user.
The task of making the necessary investments is entrusted to the subsidiary Rai Way SpA, which is also responsible for the design,
installation, construction, maintenance, implementation, development and operation of the telecommunications networks.
The contribution is disclosed in the income statement of each year in relation to amortisation booked by the subsidiary, taking
into account the relationship between the amount of contributions collected and the overall investments envisaged for the
accomplishment of the projects related to it.
Schedule 15 gives details as to the periods to which these items relate.
6) Memorandum accounts
These amount to 768.4 million euros (at 31 December 2008: 664.7 million euros), formed as indicated in consolidated balance
sheet and analysed in Schedules 17 and 18.
Conditions in the hedging contracts covering specific Group commitments and the relative fair values are summarised in Schedule 19.
On the whole, hedging contracts entered into are, in observance of the Group Policy, of a reasonable amount in relation to
the overall entity of the commitments subject to such risks.
The purchase commitments also include the DEAR property complex, with a value of 49.4 million euros, deriving from the
exercise of the option right envisaged in the lease agreements.
The final transfer agreement, scheduled for 5 June 2008, was not signed due to the lack of cooperation by the other party,
which failed to turn up for the appointment with the Notary Public, denying Rai the right to become owner of the property and
generating legal action in which it applied for the declaration of non-existence of the obligation to transfer ownership of the
asset.
In emphasising the fact that the option right had been validly exercised, Rai made the purchase price available to the other
party and took legal action of its own to acquire acknowledgement of its rights.
In addition to the details provided in the memorandum accounts, the amount receivable by the Parent Company from the
subsidiary Sipra, 2.2 million euros, has been attached in favour of I.N.P.G.I..
At 31 December 2009 there were no further commitments of particular significance for the purchase or sale of goods and
services with respect to those taken on in the normal course of business that would require specific information to be given for
a better understanding of the Company��s financial position.
7) Income statement
Production value
Revenues from sales and services. These have been booked for 3,134.1 million euros, down 32.7 million euros on 31
December 2008, and mainly include revenues pertaining to the year, net of transactions between group companies, from
licence fees and advertising. A breakdown into major components is given in Schedule 20.
licence fees and advertising. A breakdown into major components is given in Schedule 20.
As can be seen from the distribution of revenues by geographic area, they are almost all of national origin.
Changes in inventories of work in progress, semi-finished and finished goods. These amount to 0.2 million euros (at
31 December 2008: insignificant value) and refer mainly to DVD inventories.
Changes in work contracts in progress. Booked for an insignificant figure (at 31 December 2008: 0.6 million euros).
Internal cost capitalisations. The amount of 30.4 million euros (at 31 December 2008: 32.8 million euros) represents the
total of internal costs associated with non-current assets, which were capitalised under the specific asset captions. Details are
shown in Schedule 21.
Other production-related income. This totals 102.6 million euros (at 31 December 2008: 141.6 million euros), as detailed in Schedule 22.
Production costs
This caption comprises costs and capital losses, related to ordinary activities, excluding financial operations. The costs shown
here do not include those relating to fixed and intangible assets, which are recorded under the respective asset accounts.
Raw materials, supplies, consumables and merchandise. These total 29.5 million euros (at 31 December 2008: 33.7
million euros), which includes purchases of technical materials for inventory �V excluding items used in the construction of plant,
which are allocated directly to fixed assets �V production materials (sets, costumes etc) and miscellaneous operating materials
(fuel, office supplies, printed documents etc), net of discounts and allowances, as shown in Schedule 23.
Services. This totals 776.5 million euros (at 31 December 2008: 826.8 million euros) and comprises costs for freelance
workers and other external services, net of discounts and allowances, as shown in Schedule 24. Among other things, they
include emoluments, remuneration for special functions, attendance fees and reimbursement of expenses paid by the Parent
Company to Directors for 2.4 million euros and to Statutory Auditors for 0.2 million euros.
One Director and one Statutory Auditor on the Parent Company��s payroll also performed similar roles for other subsidiaries
at the same time, perceiving emoluments for a total of 0.2 million euros and 0.1 million euros respectively.
Use of third-party assets. These amount to 638.9 million euros (at 31 December 2008: 608.4 million euros) and express costs for rents, leases, usage rights and filming rights, as detailed in Schedule 25.
Personnel costs.. Employee-related costs amount to 1,009.6 million euros (at 31 December 2008: 1,009.6 million euros), broken down as indicated in the income statement. The average number of employees on the payroll in 2009 was 13,352, including employees on fixed-term contracts, work-introduction and apprenticeship contracts (at 31 December 2008: 13,236), distributed by category and by company, as shown in Schedule 26.
Amortisation, depreciation and writedowns. These total 712.8 million euros (at 31 December 2008: 699.9 million
euros), of which 551.7 million euros relates to amortisation of intangible assets and 111.2 million euros to depreciation of
fixed assets, as detailed in Schedules 1 and 2. They include a writedown of programmes amounting to 33.2 million euros,
which was made to take account of the risk that certain programmes may not be transmitted or re-broadcast, as well as the
commercial exploitation of certain rights.
Changes in inventories of raw materials, supplies, consumables and merchandise. These are carried at nominal value
of 0.1 million euros (at 31 December 2008: insignificant) and represent the decrease in net inventories carried under current
assets at 31 December 2009 with respect to the previous year.
Provisions for risks. These amount to 23.4 million euros (at 31 December 2008: 18.2 million euros). They indicate allocations
to provisions for risks. The most significant items are detailed in Schedule 11 and relate mainly to provisions made by
the Parent Company (21.1 million euros).
Other provisions. These amount to 3.8 million euros (at 31 December 2008: 2.4 million euros). The most significant items
are shown in Schedule 11 and relate mainly to provisions booked to the financial statements of Rai (1.7 million euros) and
Rai Way (2.0 million euros).
Miscellaneous operating costs. These amount to 107.8 million euros (at 31 December 2008: 108.3 million euros). Their
distribution is shown directly in the income statement and further information is provided in Schedule 27. For the most part
they refer to costs disclosed in the Parent Company financial statements (95.8 million euros).
Financial income and charges
Other financial income. This totals 1.1 million euros (at 31 December 2008: 3.6 million euros) and is divided as shown in
Schedule 28.
Interest and other financial charges. These amount to 5.1 million euros (at 31 December 2008: 5.3 million euros) and include interest expense, costs for commission on financial services received and other financial operating expenses, as detailed in Schedule 29.
Foreign exchange gains and losses. These show a loss of total 0.5 million euros (at 31 December 2008: a loss of 5.2 million euros). This item comprises both foreign exchange charges and premiums on foreign currency hedge transactions as well as the effect of translating the value of payables and receivables in foreign currencies at year-end exchange rates or the rate in force at the time of the hedge in the case of exchange risk hedges, as detailed in Schedule 30.
Value adjustments to financial assets
Revaluations. These amount to 0.5 million euros (at 31 December 2008: 3.0 million euros), determined by the booking of
investments in associated companies at equity.
Writedowns. The provision totals 0.3 million euros (at 31 December 2008: 1.0 million euros). They comprise writedowns of
non-current financial assets following losses incurred for the year.
Exceptional income and charges
Exceptional items comprise income of 6.9 million euros and expense of 6.8 million euros, as detailed in Schedule 31.
Current income taxes for the year, and deferred tax assets and liabilities
The amount of 22.1 million euros is comprised of current and deferred taxes for the year disclosed in the financial statements
of the individual companies, and of theoretic taxes resulting from consolidation adjustments. The breakdown of the item is
shown in the following table:
8) Result for the year
The year closed with a loss of 61.8 million euros pertaining almost exclusively to the Group.
9) Reconciliation between Rai��s statutory and consolidated financial
statements at 31 December 2009 and 31 December 2008
The following table shows the reconciliation between the result for the year and Shareholders�� equity as appearing in the Parent
Company and consolidated financial statements, including the portion pertaining to minority interests:
10) Additional disclosures
As regards disclosures on related parties, no relevant operations took place within the Group outside of normal market conditions.
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