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Outlook and going-concern

The financial statements at 31 December 2012 close with a loss that significantly reduces the overall amount of Shareholders’ equity. The financial statements are prepared in consideration of the Company as a going concern, in that the 2013-2015 business plan, approved by the Board of Directors, envisages a loss for 2013 which will not materially affect the amount of Shareholders’ equity.

A substantial breakeven is envisaged for 2014, while a significant and positive operating result is expected for 2015. The plan takes into particular consideration the fact that the outlook of the Italian economy for 2013 continues to be characterised by a high level of uncertainty, which translates into lower consumption and spending on advertising by companies.
The macro-economic picture will have negative repercussions for Rai in terms of advertising revenues, confirmed by the disappointing market trend in the first quarter, substantially in line with the negative trends of the last part of 2012.

Against this backdrop, Rai has elaborated and is about to enter into further, increasingly extensive and effective interventions to rationalise spending.

The review of processes and activities, together with the forthcoming review of the organisational model, will enable improvement of the level of operating efficiency and allow Company resources to focus on the editorial and production activity.
Given the above and considering the absence of big sporting events in programming for 2013, it is reasonable to sustain that, for Rai, 2013 is characterised by the requirements for a marked improvement in the operating result compared to 2012. In fact, on the basis of the projections currently available, 2013 should record a limited loss.

The three guidelines that Rai intends to pursue during the year are:
• the completion of the in-depth organisational review of the advertising concession holder and of the management of revenues as a tool and basis for achieving the aim of recovering market shares;
•the launch of a process to strengthen the product according to a logic of allocation of resources which prioritises the segments placed on the lines of development, especially the specialised channels and the Internet;
• the continuation, intensification and sophistication of the process to rationalise spending within constant settings, intervening in all company areas and, where necessary, redefining the processes with a view to simplifying and saving on activities and therefore costs.

In short, Rai will put into effect management to fairly and determinedly combine rigour and discipline in terms of costs with a targeted and selective support for corporate areas of excellence, the strengthening of which represents the best guarantee of vitality of the editorial offer in the name of the Public Service mission and to strengthen the Rai brand.

The commitment is to free up resources from ancillary activities, acting on the rationalisation of the mechanisms of Company operation to redirect them towards the development of the product, offer and new channels, using all the levers available, including technology.

Company management will be guided by the choices of the 2013-2015 Business Plan. This is a Plan which, over the three years, together with the corresponding operating instruments, is intended to achieve a sustainable level of profitability and lower financial exposure. We believe that, also in relation to the obtainment of the financial resources envisaged by the plan, there will be no particular difficulty.