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Notes to the Parent Company financial statements

1) Activity of the company

RAI-Radiotelevisione Italiana SpA (hereinafter Rai) is exclusively assigned the public service broadcasting of radio and television programmes.

The company may enlist the aid of subsidiaries for activities relating to the performance of the pertinent services.
Rai is also allowed to perform commercial and publishing activities connected to the dissemination of pictures, sound and data, as well as other related activities, either directly or through associated companies, as long as these activities do not influence the best pursuit of the public services for which it holds the concession and contribute to balanced company operation.

Rai’s operations must be conducted in compliance with the applicable regulations in force contained in Law 103 of 14 April 1975 (“New regulations governing radio and television broadcasting”), Law 223 of 6 August 1990 (“Regulation of the public and private radio and television system”), the “Measures governing the concession holder for the public radio and television broadcasting service” issued with Law 206 of 25 June 1993 and subsequent amendments, Law 249 of 31 July 1997 on the “Establishment of the Communications Authority and regulations governing telecommunications and the radio and television system” and Law 112 of 3 May 2004 (“Regulations establishing principles for the organization of the radio and television system and RAI-Radiotelevisione Italiana SpA, as well as granting authority to the Government to issue a consolidated radio and television law”).
With Legislative Decree 177 of 31 July 2005 approval was given to the” Consolidated Law governing Radio and Television”, which was amended and renamed “Consolidated Broadcasting Law” by Legislative Decree 44 of 15 March 2010, incorporating additional clauses, amendments and cancellations necessary for the co-ordination of the services or their proper implementation. The Consolidated Law also contains the provisions of Law 112/04, relating to the radio and television general public service and, consequently, articles 3 and 5 of Law 206/93 not repealed by Law 112/04.

The general public radio and television service concession is assigned to Rai until 6 May 2016, on the basis of Consolidated Law governing audio-visual and radio media services, issued with article 49 of the Legislative Decree 177 of 31 July 2005. Article 45 of the same Consolidated Law envisages that the general public radio and television service be provided by the concession holder on the basis of a National Service Agreement lasting three years, entered into with the Italian Ministry of Communications, identifying the rights and obligations of the concession holder.

The new service agreement for 2010-2012 was entered into between the Ministry of Economic Development and Rai on 6 April 2011 and was approved with ministerial decree of 27 April 2011, published in Official Gazette of 27 June 2011.
The rationale underlying the above regulatory framework lies in the public interest functions entrusted to the concession holder. Under these regulations, Rai has special institutional characteristics and operating constraints, in addition to the specific obligations undertaken with the Service Contract.

2) Introduction

The Parent Company financial statements at 31 December 2011 are prepared in accordance with to the relevant provisions of the Italian Civil Code. They are supplemented with annexes featuring the reclassified statements comprised of tables for the analysis of the balance sheet and income statement, and of cash flows.

The financial statements are expressed in euros, without decimals; the Notes to the financial statements and the related detailed Schedules are stated in thousands of euros.

With regard to the merger by incorporation of Rai Trade SpA, which took place during the year, detailed schedules 41 and 42 have been drawn up.

Rai’s financial statements have been audited by PricewaterhouseCoopers SpA.

3) Accounting policies

Before examining the individual items, we have provided an overview of the main accounting policies used in drafting the financial statements, 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. Such policies are unchanged from those applied in the preceding year. There are no exceptional cases requiring derogation from the requirements under Article 2423-bis et seq. of the Civil Code.

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 prompted Rai to designate three years as the useful life of repeat-use programmes, represented by TV series, cartoons and comedies, and four years for that of library exploitation rights for sports events.
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:

• 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.
• Sports events. Costs are booked to the year in which the event takes place.
• 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 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 fixed assets – which are shown net of accumulated depreciation – are recorded at cost, increased by internal personnel costs incurred in preparing them to enter service, and revaluations pursuant to laws. The costs of non-current assets as determined above are depreciated in accordance with Article 2426 (2) of the Civil Code. Ordinary maintenance costs are expensed in the year in which they are incurred.

g) Equity investments are carried at purchase cost adjusted in the event of permanent impairment in value. The value of companies with negative shareholders’ equity is set at zero and Rai’s share of the deficit is specifically provided for under the provisions for risks and charges. Adjustments for permanent impairment are reversed in the event that such impairment is subsequently recovered due to sufficient operating earnings by the investee company.

h) 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.

i) 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.

j) Other securities carried under current financial assets are valued at the lower of purchase cost – determined as the weighted average cost – and estimated realisable value, which is given by market value.

k) 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 nonuse due to obsolescence and slow turnover. Inventories of items for resale 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.

l) Accrued income and prepaid expenses, and accrued expenses and deferred income, are recorded on an accruals basis for the individual entries.

m) 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.

n) 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.

o) 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.

p) The provision for staff severance pay is determined in conformity with applicable law and labour contracts. It reflects the accrued entitlement of all employees at the balance-sheet date net of advances already paid.

q) 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.

r) Payables and receivables denominated in currencies other than the Euro – with the exception of hedged positions, which are valued at the rate applying to the financial instrument – 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.

s) Payments on account include advances paid by customers for services that have not yet been performed.

t) Costs and revenues are taken to the income statement on a consistently applied accruals basis.

u) Dividends are taken to income in the year in which they are received.

v) 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 Company has opted for the Group to be taxed on a consolidated basis and accordingly, as the consolidating entity, attends to all requirements connected with the settlement of IRES tax for all companies within the consolidated taxation arrangement.
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.

w) In order to hedge interest rate and exchange rate risk, the Company uses derivative contracts to hedge net exposures arising from 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.

x) Collections are recorded by bank transaction date; for payments account is likewise taken of the instruction date.

Parent Company 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.



Industrial patents and intellectual property rights. As indicated in Schedule 1, they amount to 222,443 thousand euros, as follows:
• 219,359 thousand euros for the cost of television programmes available for use, and compared with the figure as at 31 December 2010, shows a net increase of 380 thousand euros.
This aforementioned increase is represented by the balance between the increase determined by the merger by incorporation of Rai Trade SpA (123 thousand euros), new assets for 285,236 thousand euros (of which 125,850 thousand euros transferred from non-current assets under development and payments on account for rights that became available during the year), sales (3,486 thousand euros), a writedown against the risk of non-transmission, repeatability or exploitation of certain programmes (28,566 thousand euros) and the amortisation charge for the year (252,927 thousand euros);
• 3,084 thousand euros refer to software licences, 1,822 thousand euros as at 31 December 2010, with a net increase of 1,262 thousand euros.
This value represents the balance between the increase determined by the merger by incorporation of Rai Trade SpA (74 thousand euros), new assets for 3,485 thousand euros (of which 5 thousand euros transferred from Non-current assets under development and payments on account for products that became available for use during the year), and the amortisation charge for the year (2,297 thousand euros).

As regards television programmes available for use, the overall sum, gross of the writedown, is broken down between:
• rights to television programmes owned or held under unlimited-term licences amounting to 230,898 thousand euros (at 31 December 2010: 218,500 thousand euros);
• rights to television programmes owned or held under fixed-term licences amounting to 27,616 thousand euros (at 31 December 2010: 36,474 thousand euros).

Overall investments in television programmes made in 2011 amount to 268,411 thousand euros, including 109,025 thousand euros in programmes which are not yet available at 31 December 2010, which are carried under non-current assets under development and payments on account.

Analysing investments by type, at 31 December 2011, 205,355 thousand euros was invested in fiction programmes (series, miniseries, TV movies, soap operas etc.), 13,083 thousand euros in documentaries, 14,064 thousand euros in cartoons and comedy programmes, 24,200 thousand euros in football libraries and 11,709 thousand euros in other categories.

Concessions, licences, trademarks and similar rights. The item, which is stated net of accumulated amortisation, includes costs incurred on the acquisition of licences for digital terrestrial frequencies, and own trademarks. They total 14,677 thousand euros, of which 14,576 thousand euros relating to digital network frequencies.

Non-current assets under development and payments on account. The item amounts to 184,711 thousand euros, including:
• 181,105 thousand euros for the cost of television programmes which are not yet available, and therefore not subject to amortisation, and compared with the figure as at 31 December 2010, showing a net reduction of 16,627 thousand euros, as indicated in Schedule 1. Specifically, the aforementioned decrease is represented by the balance between the increase determined by the merger by incorporation of Rai Trade SpA (816 thousand euros), increases for new assets (109,025 thousand euros) and reductions for items transferred to Industrial patents and intellectual property rights in that they relate to productions and/or purchases which became usable during the year (125,850 thousand euros) and eliminations for programmes that were not made or were unusable (618 thousand euros);
• 1,205 thousand euros refer to software licences and, compared with the figure as at 31 December 2010, show a net increase of 314 thousand euros. The aforementioned increase is equal to the balance between increases for new assets (319 thousand euros) and reductions for items transferred to Industrial patents and intellectual property rights in that they relate to products that became usable during the year (5 thousand euros);
• 351 thousand euros refer to alterations and improvements underway on property under leasehold or concession and, compared with the figure as at 31 December 2010, show a net reduction of 1,267 thousand euros;
• 2,050 thousand euros refer to the cost to purchase options on agreements for the commercial exploitation of products held in football libraries and, compared with the figure as at 31 December 2010, show a net increase of 200 thousand euros.

For television programmes that have not yet become available, the total of 181,105 thousand euros includes:
• 122,229 thousand euros for television programmes owned by the Company that were not ready at 31 December 2011 or for which usage rights began after 31 December 2011 (at 31 December 2010: 151,957 thousand euros). These comprise costs of 9,039 thousand euros relating to the production of a long-running fiction series which has been interrupted for the moment following production problems with the company responsible for production;
• 58,876 thousand euros regarding third-party television programmes held on fixed-term licence beginning after 31 December 2011 (at 31 December 2010: 45,775 thousand euros).

Other intangible assets. The amount of 11,724 thousand euros includes:
• 9,610 thousand euros for costs incurred, net of accumulated amortisation, on alterations and improvements to property under leasehold or concession (at 31 December 2010: 9,818 thousand euros);
• 2,114 thousand euros for costs incurred, net of accumulated amortisation, on long-term loan agreements to be distributed throughout their duration (at 31 December 2010: 623 thousand euros);

The amount relating to the purchase of a right to the first negotiation and option on the broadcasting of football matches, net of amortisation calculated over the concession period (at 31 December 2010: 50 thousand euros) has been zeroed.

Tangible assets

These comprise the costs and related revaluations of non-current tangible assets with an economic life of several years that are owned by the Company and used in operations. They are carried net of standard depreciation and writedowns for lasting value impairments if any.

The annual standard depreciation rates applied are listed below:

• Buildings and light structures
- offices in industrial buildings	3%
- other industrial buildings and roads	6%
- light structures	10%
• Plant and machinery
- general and radio technical plant	12,5%
- transmission and television plant	19%
- recording plant and fitted vehicles	25%
• Industrial and sales equipment	19%
• Other assets:
- standard equipment	19%
- office furniture and equipment	12%
- electronic office equipment	20%
- transport vehicles	20%
- motor cars, motor vehicles and the like	25%

Tangible assets at 31 December 2011 amount to 362,584 thousand euros, showing an overall net increase of 40,869 thousand euros on 31 December 2010. The aforementioned increase represents the balance between increases determined by the merger by incorporation of Rai Trade SpA) (819 thousand euros) and new assets for 102,885 thousand euros, and reductions of 62,835 thousand euros, as detailed in Schedule 2.



It should be noted that new tangible assets recorded, which reflect investments made in the year, comprise 4,048 thousand euros for the capitalisation of the cost of internal personnel engaged in the construction of buildings, plant and machinery.

As regards disclosure of financial lease transactions it should be noted that since 2004 only the building located in Aosta was acquired under this type of contract, to serve as the regional headquarters for Valle d’Aosta. The statements required under article 2427 (22) of the Civil Code, showing the effects on the balance sheet and the income statement of the so-called financial method, are presented hereunder.



The gross value of revaluations recorded under non-current tangible assets is reported below, listed according to the applicable regulations:

• 36,514 thousand euros gross in implementation of Law 576 of 2 December 1975 and Law 72 of 19 March 1983, the purchase cost of which was 45,250 thousand euros. This comprises property acquired by 31 December 1946, the gross value of which, amounting to 424 thousand euros, includes revaluation pursuant to Law 74 of 11 February 1952;
• 52,298 thousand euros gross in implementation of Law 413 of 30 December 1991;
• 485,458 thousand euros gross in implementation of Decree Law 263 of 29 April 1994, the effects of which were ratified by Law 650 of 23 December 1996.

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.

Equity investments: these amount to 299,768 thousand euros and include investments in shares or other forms of equity in companies, including consortiums. They are reported in the balance sheet under separate headings arranged by decreasing levels of ownership.

The components of the value of equity investments, their distribution among the individual investee companies and transactions during the period are detailed in Schedules 3. Schedule 4 shows the list of investments in subsidiaries and associated companies pursuant to article 2427, item 5, of the Civil Code.





The following section discusses the more significant developments in investee companies and the consequent impact on the Rai financial statements:

Equity investments in subsidiaries

• Rai World SpA (100% Rai): the share capital of 1,300 thousand euros is represented by 1,300,000 shares with a par value of 1 euro each. The company closed 2011 with a profit of 940 thousand euros and released part of the writedown provision to align the value of the investment to the company shareholders equity. Due to the merger by incorporation of Rai Trade into Rai, the latter acquired 100% ownership of the subsidiary.

• Rai Cinema SpA (100% Rai): the share capital of 200,000 thousand euros is represented by 38,759,690 shares with a par value of 5.16 euros each. During 2011, the company paid a dividend for 2010 of 55,426 thousand euros, which Rai recorded under Income from equity investments. 2011 ended with a net profit of 17,960 thousand euros. Due to the merger by incorporation of Rai Trade into Rai, the latter acquired 100% ownership of the subsidiary.

• Rai Corporation (100% Rai): the share capital of 500,000 thousand US$ is represented by 50,000 shares with a par value of 10 US$ each. The investment is carried at a gross value of 8,713 thousand euros, in that this includes the payment on account of share capital in US$ 10,000,000 which was made during 2005. On 29 November 2011, Rai’s Board of Directors resolved the closure of the company. Consequently, at 31 December 2011 the value of the holding, already written down at 31 December 2010 for 2,042 thousand euros, was further written down for 5,015 thousand euros to adjust it to the equity held in the company, at the exchange rate in force on 31 December 2011. The value of the company’s equity considers the charges envisaged for the closure of the company.

• RaiNet SpA (100% Rai): the share capital of 5,160 thousand euros is represented by 1,000,000 shares with a par value of 5.16 euros each. At 31 December 2011 the gross value of the holding, 47,900 thousand euros which had been written down at 31 December 2010 by 39,369 thousand euros, was revalued by 1,720 thousand euros in view of the profit earned by the company in 2011. By resolution of 28-29 July 2010, Rai’s Board of Directors approved the insourcing of the activities of RaiNet in Rai. The merger project was approved on 25 January 2011 by RaiNet’s Board of Directors and on 27 January 2011 by Rai’s Board of the Directors. By resolution of 23-24 November 2011, Rai’s Board of Directors confirmed the intention to go ahead with the merger by incorporation.

• Rai Trade SpA (100% Rai) With the deed of merger dated 23 February 2011, the resolution of the Board of Directors of Rai, passed in the meeting held on 1 December 2010, and the resolution of the Extraordinary Shareholders’ Meeting of Rai Trade SpA, passed on 29 November 2010, were implemented, proceeding with the merger of the two companies by incorporation of Rai Trade SpA into Rai-Radiotelevisione Italiana SpA on the basis of the respective financial statements as at 30 June 2010, effective in economic and fiscal terms from 1 January 2011.

• Rai Way SpA (100% Rai): the share capital of 70,176 thousand euros is represented by 13,600,000 shares with a par value of 5.16 euros each. The company ended 2011 with a profit of 16,883 thousand euros. During 2011, the company paid a dividend for 2010 of 20,672 thousand euros, which Rai recorded under Income from equity investments.
Due to the merger by incorporation of Rai Trade into Rai, the latter acquired 100% ownership of the subsidiary.

• Sipra SpA (100% Rai): the share capital of 10,000 thousand euros is represented by 100,000 shares with a par value of 100 euros each. The company ended 2011 with a profit of 6,162 thousand euros. During 2011 it paid a dividend of 4,000 thousand euros on the result for 2010, which was taken to Income from equity investments.

Equity investments in associated companies

• Audiradio Srl in liquidation (27% Rai): the share capital of 258 thousand euros is represented by 258,000 shares with a par value of 1 euro each. In January 2011, Rai sold part of its shares in compliance with the resolution passed by Rai’s Board of Directors on 17 November 2010. Consequently, the share owned fell from 30.23% to 27%. The company Shareholders’ Meeting held on 11 July 2011 resolved the early closure of the company. On 1 December 2011, the Shareholders’ Meeting approved the company financial statements as at 31 December 2010, which highlight a 4,262 thousand euro reduction in shareholders’ equity. During the same Meeting the shareholders resolved the settlement of the company losses, waiving their accounts receivable. This implied a 1,419 thousand euro increase of the gross value of the investment and the simultaneous writedown of this amount. The shareholding was valued with reference to the latest financial situation available, as at 30.09.2011, and to the subsequent determinations approved by the Shareholders in the Meeting held on 1 December 2011.

• Auditel Srl (33% Rai): the company’s last approved financial statements date back to 31 December 2010. On said date, the share capital amounted to 300 thousand euros and consisted of 300,000 shares with a par value of 1 euro each.

• San Marino Rtv SpA (50% Rai): this company was established in 1991 by Rai and E.RA.S. - Ente di Radiodiffusione Sammarinese with an equal holding in the company. It was set up pursuant to Law 99 of 9 April 1990 ratifying the collaboration treaty between the Republic of Italy and the Republic of San Marino concerning radio and television. It closed 2011 with a loss of 368 thousand euros. The share capital of 516 thousand euros is represented by 1,000 shares with a par value of 516.46 euros each.

• Euronews - Société Anonyme (21.54% Rai) : The share capital of 3,849 thousand euros is represented by 256,574 shares with a par value of 15 euros each. On 25 February 2011, the capital increase was resolved and subscribed by a single shareholder. Consequently the percentage owned by Rai fell from 22.84% to 21.54%. The company ended 2011 with a profit of 1,309 thousand euros.

• Tivù Srl (48.16% Rai): the company ended 2011 with a profit of 1,655 thousand euros. The share capital of 1,002 thousand euros was subscribed by Rai and by R.T.I. – Reti Televisive Italiane SpA – with equal holdings of 48.16%, by TI Media – Telecom Italia Media SpA – with a share of 3.5% and by two associations – FRT and Aeranti Corallo – each with a 0.09% share.

Equity investments in other companies

• Almaviva – The Italian Innovation Company SpA (1.201% Rai): the value of the holding is unchanged from 2010, amounting to 324 thousand euros. The share capital is represented by 107,567,301 ordinary shares with a par value of 1.00 euro each.

• Banca di Credito Cooperativo di Roma S.c.p.a. (variable capital company; insignificant percentage held by Rai): carried at a value of 1 thousand euros, equivalent to that paid on 16 January 2009 for the purchase of 100 shares.

• C.F.I – Consorzio per la Formazione Internazionale (consortium for international education): the investment, which was carried at the value of the share in the consortium paid in upon joining, 30 thousand euros, has been fully written off since, under the bylaws of the consortium, withdrawal does not entitle members to reimbursement of their contribution.

• Consorzio Nettuno – Consorzio per la realizzazione di università a distanza (consortium for the distance learning university): the investment of 21 thousand euros has been fully written off since, under the bylaws of the consortium, withdrawal does not entitle members to reimbursement of their contribution.

• Consorzio Valle d’Aosta Digitale in liquidation – Consortium for the switchover from analogue to DTT in the Valle d’Aosta region. The company, was put into liquidation by deed of 23 December 2010. The investment of 7 thousand euros has been fully written off since, under the bylaws of the consortium, withdrawal does not entitle members to reimbursement of their contribution.

• International Multimedia University Umbria SpA (1.533% Rai): the investment has been fully written off since there is no longer any certainty that the amounts paid in can be recovered.

• Immobiliare Editori Giornali Srl (1.75% Rai): due to the merger by incorporation of Rai Trade into Rai, the latter acquired the value of the holding disclosed in the subsidiary’s financial statements as at 31 December 2010. The investment consists of 23,815 pay shares and of 4,306 free share for a total of 28,121 shares with a par value of 0.51 euro each, out of a total of 1,608,000 shares making up the Share Capital of 1.75%.

• Istituto Enciclopedia Treccani SpA (0.83% Rai): the company Shareholders’ Meeting held on 28 April 2011 resolved the stock split by reducing the par value of the shares and increasing the share capital from 38,735,500 euros to 43,000,000 euros, offered by option to shareholders, which Rai subscribed. Following these resolutions, Rai became owner of 358,191 shares with a par value of 1 euro each and a script of 0.25 euro. The investment is carried at a gross value of 513 thousand euros, written down on 31 December 2010 by 53 thousand euros and revalued by 15 thousand euros thanks to the profit made by the company in 2011. The share capital is represented by 43,000,000 shares with a par value of 1.00 euro each.

Receivables

Receivables total 8,440 thousand euros, showing an increase of 3,240 thousand euros on 31 December 2010, net of a provision for bad debts amounting to 12,364 thousand euros, as can be seen in Schedule 5. In relation to this provision for bad debts, 11,936 thousand euros are allocated against the risk of failure to achieve commercial recovery of the advance payments made as the guaranteed minimum. Schedule 9 details their distribution by maturity and Schedule 10 by geographic area.

Receivables from subsidiaries: these consist of 11 thousand euros in guaranteed minimum towards Rai Cinema SpA relating to mandates for the sale of rights.

Receivables from others: disclosed for 8,429 thousand euros, they consist of 6,492 thousand euros of guaranteed minimums relating to mandates for the sale of rights and other commercial initiatives, 1,566 thousand euros of cautionary deposits and 371 thousand euros of loans disbursed to employees.



Other securities: these are carried at 3,737 thousand euros and relate entirely to securities pledged as collateral; details thereof are given in Schedule 6.

Current assets

Inventories

Inventories amount to 1,366 thousand euros net of the inventory provision (at 31 December 2010: 926 thousand euros). As shown in Schedule 7, they comprise:

• Raw materials, supplies and consumables: these amount to 587 thousand euros net of the inventory provision for 13,660 thousand euros. They consist entirely of supplies and spare parts for maintenance and the operation of equipment, considered as consumables since they are not directly incorporated into products.
• Finished products and merchandise: these consist of inventories associated with the book and periodicals publishing business, amounting to 279 thousand euros net of a writedown of 578 thousand euros to bring them into line with their estimated realisable value, and by inventories associated with the commercial activity, amounting to 500 thousand euros net of a writedown of 133 thousand euros to bring them into line with their estimated realisable value.



Receivables

Receivables total 1,291,629 thousand euros, showing an increase of 253,403 thousand euros on 31 December 2010, as can be seen in Schedule 8, which gives a breakdown of receivables, components of value and the contribution deriving from the merger with Rai Trade SpA, and in Schedules 9 and 11 which show their distribution by maturity, type and by currency. Their distribution by geographic area is shown in Schedule 10.







Receivables from customers: these relate to trade receivables, excluding those from subsidiaries and associated companies, which are carried under separate headings. They total 351,883 thousand euros, with a nominal value of 377,030 thousand euros which has been written down by 25,147 thousand euros to bring them to their estimated realisable value and compared with 31 December 2010 they show an increase of 68,652 thousand euros.

Details of the caption are divided into:

• Receivables for public broadcasting services to central government and other public entities: as shown in the following table, these amount to a nominal 107,087 thousand euros, up 23,326 thousand euros on 31 December 2010, equivalent to the balance between the increase in invoices issued and for amounts accrued for 2011 less collections.



The following should be noted in connection with the above receivables:
– Prime Minister’s Office: receivables deriving from the television, radio and multimedia offering for broadcasting abroad refer to services rendered in 2010 for 25,000 euros and in 2011 for 20,192 thousand euros; receivables from broadcasts in Slovenian and French refer to services rendered in 2011, and those from broadcasts in German and Ladin relate to services rendered in 2010 for 15,389 euros and in 2011 for 14,801 thousand euros;
– Ministry of the Economy and Finance: in relation to the management of television licence fee collection, the receivable refers only to 2011;
– Autonomous Region of Valle d’Aosta: the receivable of 9,005 thousand euros relates to the reimbursement of costs incurred for the operation of equipment for the reception of French-language programmes for the years from 1994 to 2011.

• Net receivables for licence fees: these amount to 12,153 thousand euros, down 22,084 thousand euros on 31 December 2010, representing licence fees not yet transferred to Rai. Activities, already successfully pursued in the previous year, will be launched to recover such receivables. They consist in asking the Ministry of the Economy and Finance to increase the specific provision of the expense section during the settlement of the Government Financial Statements for 2012, in order to allow recovery, with liquidation of the fourth instalment of transfer of the fees, envisaged to take place in December 2012.

• Other receivables: these amount to nominal value 257,790 thousand euros, up 75,814 thousand Euros on 31 December 2010. They relate to the sale of rights, services of varying nature, etc.

Receivables from subsidiaries: these amount to nominal value 705,699 thousand euros (595,131 thousand euros at 31 December 2010) net of a provision for bad debts of 66 thousand euros, set up against the risk of non-recoverability of costs sustained in relation to commercial initiatives. They represent the year-end balance of transactions with subsidiaries, as shown in Schedule 8. They include financial receivables of 308,487 thousand euros (211,840 thousand euros at 31 December 2010) and non-financial receivables of 397,212 thousand euros (383,291 thousand euros at 31 December 2010).

Receivables from associated companies: these amount to 340 thousand euros (128 thousand euros at 31 December 2010) and represent the balance of non-financial transactions with Tivù (233 thousand euros), San Marino Rtv (106 thousand euros) and Euronews (1 thousand euros).

Tax receivables: these are carried at nominal value of 48,632 thousand euros (54,968 thousand euros at 31 December 2010). They comprise 41,040 thousand euros for the balance of Group VAT credits for tax refunds requested (including credit for IRES following the introduction of law which made the IRAP paid during previous tax years partly deductible) of 7,352 thousand euros and the remainder relating to minor items.

Deferred tax assets: these amount to 27,915 thousand euros and represent the credit deriving from items deductible on a deferred basis for tax purposes, as explained more fully in the section dealing with income taxes.

Details of deferred tax assets, regarding movements in 2011, are provided in the following table:



Receivables from others: these amount to 157,160 thousand euros (63,500 thousand euros at 31 December 2010).
Net of writedowns of 1,997 thousand 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 123,403 thousand euros;
• advances to Social Security Institutions on contributions payable for artistic activities and other, carried at nominal value of 14,036 thousand euros;
• miscellaneous advances to suppliers carried at nominal value of 9,249 thousand euros;
• receivables from personnel carried at nominal 6,361 thousand euros. They are entirely composed of advances of various types, mainly for travel expenses (2,488 thousand euros) and production expenses (1,574 thousand euros);
• receivables from the European Union for subsidies and grants for nominal 835 thousand euros, consisting entirely of receivables for research projects;
• receivables from others, carried at nominal value of 5,273 thousand euros.

Cash and cash equivalents

These are listed in Schedule 12, and comprise:

• Bank and post office deposits: these amount to 18,239 thousand euros (1,842 thousand euros at 31 December 2010). They represent sight or short-term balances on deposit or current accounts with banks, financial institutions and the Post Office.

• Cheques: these amount to 21 thousand euros (27 thousand euros at 31 December 2010).

• Cash and cash equivalents on hand: these amount to 400 thousand euros (409 thousand euros at 31 December 2010) 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 2011.

Schedule 11 gives a breakdown of the caption by euros and other currencies and Schedule 24 shows amounts at banks and the Post Office held with Group Companies and restricted by attachments.

Accrued income and prepaid expenses

Accrued income and prepaid expenses total 44,359 thousand euros.
They are detailed in Schedule 13.

Liabilities

Shareholders’ equity

Shareholders’ equity totals 427,548 thousand euros.

The components of shareholders’ equity and the effects of operations carried out in 2011 and the previous year are shown in Schedule 14.

Schedule 15 presents the classification of the shareholders’ equity items in compliance with their origin, possibility of use and distribution, as well as their use during the previous three years.

The notes indicated hereunder provide further details on the contents of the individual items.



Share Capital At 31 December 2011 the share capital was represented by 242,518,100 ordinary shares with a 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 The legal reserve amounts to 6,977 thousand euros.

Other reserves Other reserves total 138,714 thousand euros which refer entirely to the merger surplus. The merger by incorporation of Rai Trade determined the booking of a merger surplus of 13,407 thousand euros, broken down as follows:



Profit for the year

This amounts to 39,338,513.88 euros.

Provisions for risks and charges

These amount to 387,967 thousand euros, down 218 thousand euros net on 31 December 2010. The breakdown of these items and details of the reduction are shown in Schedule 16. The notes which follow provide additional information on the individual provisions.



Provision for pension and similar liabilities: this amounts to 154,821 thousand euros and comprises the supplementary seniority benefits provision, the retirement benefits provision and the company supplementary pension fund.

• The provision for supplementary seniority benefits amounts to 1,071 thousand euros (1,350 thousand euros at 31 December 2010: It represents the liability in respect of indemnities in lieu of notice towards employees hired before 1978 who have reached the compulsory retirement age. The amount is revalued each year for 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 239 thousand euros (286 thousand euros at 31 December 2010), 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 employees in accordance with the terms of the national collective labour agreement.

Since 1 January 1989 retirement benefits paid by Rai and withholdings from employees have been paid into CRAIPI (supplementary retirement fund for Rai employees) and FIPDRAI (supplementary retirement fund for Rai managers), associations which are responsible for managing retirement funds under the agreements entered into between Rai and the trade unions. Upon retirement, the funds accumulated by Rai, CRAIPI and FIPDRAI are paid out unless employees opt, at the time they obtain the pension rights, to obtain equivalent life annuities. In this case, the Rai, FIPDRAI and CRAIPI funds remain with the associations to finance the said life annuities.

• The provision for supplementary seniority benefits amounts to 153,511 thousand euros (148,866 thousand euros at 31 December 2010) and includes:
– 144,578 thousand euros for supplementary pension benefits currently being paid (139,638 thousand euros at 31 December 2010). It consists of funds accrued for 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;
– 8,933 thousand euros (9,228 thousand euros at 31 December 2010) for supplementary pensions that will be paid to eligible managerial staff still in service in the event that some of these opt for the supplementary pension plan. Benefits are calculated on the basis of pay earned, seniority and financial and demographic parameters normally used in similar cases.

The provision for current and deferred taxes amounts to 7,215 thousand euros (9,889 thousand euros at 31 December 2010). The following table shows a breakdown of the item and changes during 2011.



Other provisions: these amount to 225,931 thousand euros (227,358 thousand euros at 31 December 2010). 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. The main items are detailed in Schedule 16. As regards pending litigation with employees and third parties, the amount carried in the provisions for risks and charges is the best estimate of the likely charges based on the most up-to-date information available.

Provision for staff severance pay

The provision totals 296,114 thousand euros (305,142 thousand euros at 31 December 2010).
The provision for staff severance pay is determined at individual level in accordance with the provisions of art. 2120 of the Italian Civil Code, complemented by Budget Law 2007 (Law 296 of 27 December), 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 this 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 breakdown of the caption and changes during the year are shown in Schedule 17.



Payables

These amount to 1,307,705 thousand euros, down 252,242 thousand euros on 31 December 2010.
More specifically, amounts due to banks total 282,527 thousand euros, with a net increase of 134,548 thousand euros on the figure disclosed in the 2010 financial statements. No payables covered by collateral in the form of company assets are recorded.
A breakdown of the caption and the contribution deriving from the merger with Rai Trade is given in Schedule 18, while Schedules 19 and 20 show the composition of payables by maturity, type and currency.
With regard to geographic distribution, about 89% relates to Italian residents and about 9% relates to non-EU residents.





The notes indicated hereunder provide further details on the contents of the individual items.

Due to banks: these amount to 282,527 thousand euros (147,979 thousand euros at 31 December 2010) and consist of:

• 210,000 thousand euros of amounts payable after the next year, belonging to an unsecured loan taken out in May 2011 with five banks. The loan, which can be extended up to a maximum of 295 million euros, envisages full repayment by 31.12.2015, amortisable from June 2013, in constant six-monthly instalments. This loan, converted in observance of the company policy for about 70% at a fixed rate through an Interest Rate Swap is destined to hedge investments in Digital Terrestrial and on the radio and television offering, as well as other production investments.
The loan envisages the observance of two parametric/equity indexes to calculate on the consolidated financial statements, and they have been fully observed.
• 72,527 thousand euros, representing the negative balance of current account overdrafts with certain banks.

Advances: these amount to 3,077 thousand euros (747 thousand euros at 31 December 2010), relating entirely to miscellaneous advances.

Due to suppliers: these amount to 658,686 thousand euros (557,103 thousand euros at 31 December 2010). They refer entirely to non-financial payables (556,980 thousand euros at 31 December 2010).
Financial payables were zeroed during the year (123 thousand euros at 31 December 2010).

Accounts payable to subsidiaries: these amount to 177,281 thousand euros (166,657 thousand euros at 31 December 2010), as detailed in Schedule 18. They include financial debt for 43,353 thousand euros (60,676 thousand euros at 31 December 2010) and non-financial payables of 133,928 thousand euros (105,981 thousand euros at 31 December 2010).

Accounts payable to associated companies: these amount to 4,256 thousand euros (5,646 thousand euros at 31 December 2010), as detailed in Schedule 18. They include financial debt for 438 thousand euros (1,560 thousand euros at 31 December 2010) and non-financial payables of 3,818 thousand euros (4,086 thousand euros at 31 December 2010).

Taxes payable: these amount to 67,665 thousand euros (71,806 thousand euros at 31 December 2010). They consist of:




As regards debt in relation to IRES, as reported in the accounting policies, the company has opted for group taxation, transferring to the itself, as the consolidating entity, the activities inherent in the liquidation and payment of the tax with regard to the following companies: Rai World, Rai Cinema, Rai Way, Rai Net and Sipra, within the consolidated taxation arrangement.
The national tax consolidation option was renewed for all the companies until the tax year ending 31 December 2012, with the exception of Sipra, for which the option is exercised until 31 December 2013.

Welfare and social security institutions: these payables amount to 47,825 thousand euros (45,030 thousand euros at 31 December 2010). They reflect contributions due on remuneration paid to employees and consultants, to be paid over to the institutions at the scheduled dates. They consist of:



Other payables: these amount to 66,388 thousand euros (60,495 thousand euros at 31 December 2010)

Accrued expenses and deferred income

This caption totals 44,764 thousand euros. Details and a comparison with the previous year are provided in Schedule 21.




The caption contains the entire amount contributed of 42,630 thousand euros, net of the amount already booked to the income statement, disbursed by the Ministry for Communications since 2007 in support of initiatives to accelerate the switchover 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 total investments envisaged for the accomplishment of related projects.

5) Memorandum accounts

Memorandum accounts amount to 549,932 thousand euros. A breakdown by type is provided in the table attached to the Parent Company balance sheet.




The terms of the hedge contracts covering the specific company commitments or those taken on for the subsidiary Rai Cinema SpA relating to its fair value are summarised in Schedule 25.
The fair value of these instruments is determined with reference to the market value on the closing date of the period under assessment; in the case of unlisted instruments, fair value is determined using commonly used financial evaluation techniques.




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.

At 31 December 2011 there were no commitments, other than those highlighted among the memorandum accounts, of particular significance for the purchase or sale of goods and services in addition 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.

Schedule 24 details the amount of company assets held by third parties for the various reasons indicated therein.

6) Income Statement

Production value

Revenues from sales and services: these amount to 2,751,712 thousand euros (2,740,323 thousand euros at 31 December 2010). They basically include revenues pertaining to the year from licence fees and advertising. A breakdown into major components is given in Schedule 26. As can be seen from the distribution of revenues by geographic area, they almost all originate in Italy.



As regards revenues from licence fees, the mechanism used to determine the per-unit fee envisaged by the Consolidated Broadcasting Law (“separate accounting”), aimed at guaranteeing the proportions between costs sustained by Rai, and certified by an independent auditor, for the performance of its public service remit and resources from licence fees, highlights a lack of the latter for the period from 2005 to 2010, totalling over 1.7 billion euros, of which more than 300 million euros refer to 2010 alone. In 2011, Rai requested, issuing warnings to such effect, the payment of the sums owing to it, as highlighted on the separate accounting forms, as well as interest matured and to mature.
For 2011, the “separate accounting” figures will be available, as established, within four months of the date on which the Shareholders’ Meeting approves the financial statements.

Changes in inventories of work in progress, semi-finished and finished goods: the positive amount of 55 thousand euros (up 59 thousand euros on 31 December 2010) expresses the increase in the value of inventories associated with the commercial activity.

Changes in work contracts in progress: the amount of 9 thousand euros refers to costs deferred in 2010, deriving from the merger of Rai Trade.

Internal cost capitalisations: the amount of 13,999 thousand euros (14,200 thousand euros at 31 December 2010) represents internal costs associated with non-current assets, which were capitalised under the specific asset captions. Details are shown in Schedule 27.



Other production-related income: this amounts to 108,598 thousand euros (131,492 thousand euros at 31 December 2010), as detailed in Schedule 28.

Production costs

This caption comprises costs and losses related to ordinary activities, excluding financial operations. The costs shown here do not include those relating to non-current tangible and intangible assets, which are recorded under the respective asset accounts.

Raw materials, supplies, consumables and merchandise: these total 22,607 thousand euros (22,703 thousand euros at 31 December 2010), which includes purchases of technical materials for inventory – excluding items used in the construction of plant, which are allocated directly to non-current tangible assets – production materials (sets, costumes etc) and miscellaneous operating materials (fuel, office supplies, printed documents etc), net of discounts and allowances, as shown in Schedule 29.




Services: these amount to 796,077 thousand euros (811,621 thousand euros at 31 December 2010) and comprise costs for freelance workers and other external services, net of discounts and allowances, as shown in Schedule 30.




Among other things, they include emoluments, remuneration for special functions and reimbursement of expenses paid to Directors for 1,901 thousand euros and to Statutory Auditors for 189 thousand euros. To provide a complete picture of the situation, following the merger by incorporation of Rai Trade Spa into Rai SpA, the caption discloses costs of 19 thousand euros for the directors of the incorporated company.
They also include 88 thousand euros of expenses for the annual independent audit, 132 thousand euros for other independent auditing services, and 16 thousand euros for other services.

Use of third-party assets: these amount to 683,584 thousand euros (827,564 thousand euros at 31 December 2010) and include costs for rents, leases, usage rights and filming rights, as detailed in Schedule 31.


Personnel costs: employee-related costs amount to 935,248 thousand euros (911,045 thousand euros at 31 December 2010), broken down as indicated in the income statement. The average number of employees on the payroll in 2011 was 11,829, including employees on fixed-term contracts (11,857 thousand euros at 31 December 2010), distributed as detailed in Schedule 32.



Amortisation, depreciation and writedowns: these amount to 356,604 thousand euros (374,644 thousand euros at 31 December 2010). The breakdown is shown directly in the income statement. In detail, amortisation in relation to intangible assets refers basically to industrial patents and intellectual property rights for 255,224 thousand euros (271,106 thousand euros at 31 December 2010), while Schedules 33 and 34 provide details of depreciation of tangible assets and writedowns in relation to non-current assets. They include the writedown of capitalised programmes amounting to 28,566 thousand euros, which was made to take account of the risk that certain programmes may not be transmitted, re-broadcast or commercially exploited.



Changes in inventories of raw materials, supplies, consumables and merchandise: the amount of 60 thousand euros (increase of 241 thousand euros at 31 December 2010) represents the reduction in the value of net inventories carried under current assets at 31 December 2011 with respect to the previous year.

Provisions for risks: these amount to 9,561 thousand euros (15,611 thousand euros at 31 December 2010) and indicate allocations to provisions for risks. The most significant items are detailed in Schedule 16.

Other provisions: these amount to 1,401 thousand euros (515 thousand euros at 31 December 2010). The main items are shown in Schedule 16.

Other operating costs: these amount to 92,489 thousand euros (82,903 thousand euros at 31 December 2010). Their composition is shown directly in the income statement and further information is provided in Schedule 35.

Financial income and expense

Income from equity investments: these amount to 80,189 thousand euros (62,407 thousand euros at 31 December 2010). They are represented by 80,153 thousand euros of dividends distributed in 2011 by investee companies and 36 thousand euros of capital gain deriving from the sale of shares held in Audiradio, as shown in Schedule 36.



Other financial income: this amounts to 7,785 thousand euros (4,605 thousand euros at 31 December 2010) broken down as follows:

• from non-current receivables: booked for 35 thousand euros for interest income on guarantee deposits;

• from non-current securities other than equity investments: booked for 88 thousand euros and referring to interest earned;

• financial income other than the above: this amounts to 7,662 thousand euros and mainly relates to interest on current receivables as shown directly in the income statement and detailed even further in Schedule 37.



Interest and other financial charges: these amount to 9,815 thousand euros (5,072 thousand euros at 31 December 2010). They relate to interest expense, commission expense for financial services received and other charges for financial operations, as shown directly in the income statement and in further detail in Schedule 38.



Foreign exchange gains and losses: these show a gain of 1,415 million euros (2,401 thousand euros at 31 December 2010), representing the balance of 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 further in Schedule 39.

Value adjustments to financial assets

Revaluations: these amount to 2,677 thousand euros (465 thousand euros at 31 December 2010) and reflect the recovery of losses incurred by subsidiaries in previous years.

Writedowns: these total 6,654 thousand euros (3,062 thousand euros at 31 December 2010). They comprise writedowns of non-current financial assets following losses incurred for the year by the subsidiaries for 6,434 thousand euros, and of value adjustments of non-current assets for 220 thousand euros.

Exceptional income and expense

The caption is comprised of expenses for 4,786 thousand euros (45,470 thousand euros at 31 December 2010) and income of 14 thousand euros (415 thousand euros at 31 December 2010) as detailed in Schedule 40.

Current income taxes for the year, and deferred tax assets and liabilities

These amount to 8,212 thousand Euros. They represent the total tax charge for the year and are made up as follows:



The following table presents the estimated reconciliation between the statutory result for the year and the taxable amount for IRES and IRAP purposes.



On the taxable amount for IRAP, current taxes of 36,000 thousand euros have been calculated.

7) Result for the year

The year closed with a profit of 39,338,513.88 euros.

8) Other information

As regards related party disclosures, no significant transactions took place outside the normal market conditions. For details on relations with Group companies, see the Report on operations.

As regards the rulings with which the Court of Auditors – Jurisdictional Section for the Lazio Region – ordered payment to Rai for state tax damages by certain parties including executives and members of the Board of Director of Rai, against which all those implicated decided to appeal, it is noted that, in relation to the request for the non-application of the tax regulations presented by some of those implicated in relation to one of the rulings, after the Chamber of Council of the Court of Auditors held on 18 January 2012, the Board accepted the application for reduction, quantifying the sum those implicated are obliged to pay to Rai as 20% of the original sum of the ruling. The positive effects on the financial statements of Rai shall be disclosed in 2012.

For important events occurring after the closing date, see the Report on operations.