Rai Way S.p.A. (hereafter "Rai Way" or the "Company") has prepared these financial statements for the years ended 31 December 2015 and 2014 (hereafter the "financial statements") in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board and adopted by the European Union ("IFRS").
In addition, certain items in the financial statements for the year ended 31 December 2014, as discussed in the following, were affected by the fact that the new active service agreement relating to the transmission and broadcasting services provided by Rai Way to Rai, which came into effect on 1 July 2014, is accounted for as an operating lease under IAS 17, whereas the previous agreement was accounted for as a finance lease. This led to a different means of accounting for the new agreement in the statement of financial position and income statement, causing the following effects:
- a) in the statement of financial position:
- the recognition of network assets in "Property, plant and equipment" and "Intangible assets";
- the reclassification of items in "Inventory", under "Contract work in progress", to "Property, plant and equipment under construction and advances";
- the elimination, against the recognition of the above items of property, plant and equipment and intangible assets, of the financial receivables due to the Company by its Parent resulting from the completion of the 2000-2014 service agreement that had been accounted for as a finance lease under IAS 17;
- the recognition of a "provision for site decommissioning and restoration" calculated on the basis of the present value of the costs that the Company estimates it will have to incur in the future to restore the leased areas to their state and condition before the installation of the works built there;
- b) in the income statement:
- the recognition as "Revenues" of the component of the contractual fees which as part of the accounting treatment of the finance lease implicit in the 2000-2014 Service Agreement had been recognized as a deduction from the financial receivable due to the Company by the Parent Rai;
- the recognition from 1 July 2014 of systematic depreciation and amortization on the basis of the respective economic and technical useful lives of the "Property, plant and equipment" and "Intangible assets" stated above;
- the discontinuance of the practice of recognizing interest income on the receivables due from the Parent Rai as part of the finance lease accounting, as these receivables, as discussed above, are no longer recognized under the New Service Agreement.