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RADIO TELEFÍS ÉIREANN Financial Review Overall RTÉ delivered a “break-even” result for 2008 generating a Net Surplus After Tax of €0.03 million (2007 €26.4 million) based on Revenues of €441 million (2007: €441 million) and reflecting a rapid decline in commercial revenues in the second half of the year. Interpretation Framework The interpretation of RTÉ’s financial performance is particularly affected by two matters relating to the RTÉ Superannuation Scheme (a contributory, funded, occupational, defined benefit pension scheme trust sponsored by RTÉ to which no new employee members have been admitted since 1989): 1. Under International Financial Reporting Standards (IFRS), the separate liabilities of Defined Benefit pension scheme trusts are reflected in the scheme sponsor’s Financial Statements in a manner akin to Debt (measured by reference to Corporate Bond rates). In RTÉ’s case the Liabilities of the RTÉ Superannuation Scheme are over five times greater than the reported Net Assets of RTÉ and the scale of this imbalance has the potential to detract from a meaningful understanding of RTÉ’s underlying operational financial performance. Accordingly the divisional commentary below is based on the results of the Group excluding the net defined benefit pension related finance income arising on the assets and liabilities within the Scheme. 2. As at 31 December 2008 the actuaries to the RTÉ Superannuation Scheme have certified that it failed to meet the “Minimum Funding Standard” (M.F.S.) required by the Pensions Act, 1990. The exact size of the deficit estimated by the Actuaries varies daily and depends on the differing measurement bases used: M.F.S. €84.2m Long-Term Actuarial Funding €102.3m IFRS Accounting Valuation €86.6m The shape, duration and nature of the longterm financial burden that rectification of the deficit places on RTÉ (and on employee members) under current legislation cannot reasonably be fully identified until the Trustees of the Scheme submit a funding proposal and timetable for Pensions Board approval which must done by June 2010. This is currently under examination. Divisional Results The integrated business divisions (IBDs) and HQ contributed to the annual result as follows: 2008 2007 €m €m Television (17.28) 10.15 Radio 2.76 2.66 News and Current Affairs (2.75) (2.65) Performing Groups 0.00 0.00 Network 6.11 5.52 Publishing (2.06) (0.98) Corporate HQ (2.53) (4.34) Consolidation Adjustments 0.60 3.04 Sub-Total (15.15) 13.40 Net Defined Benefit Pension Related Finance Income 5.72 16.18 Income Tax 9.46 (3.15) Surplus for the year 0.03 26.43 Commercial Revenue Following a satisfactory start Commercial Revenues dropped sharply in the 2 nd half of the year with the onset of recession. Overall in 2008 commercial revenues declined by €5.6 million (2 1 ⁄4%): €m Television Advertising -7.8 Radio Advertising +1.1 Other areas +1.1 Year-on-Year movement -5.6 Commercial Revenue 2007 245.5 Commercial Revenue 2008 239.9 “ RTÉ delivered a “break-even” result for 2008.” 26
ANNUAL REPORT & GROUP FINANCIAL STATEMENTS 2008 “ The majority of RTÉ’s activities are of a public service character but the cost of providing such services exceeds the amount of Public Funding received. As a result RTÉ relies on a Dual Public / Commercial funding model and engages in commercial activities to bridge the gap in public funding received.” Television Licence Revenue The Department of Communications, Energy and Natural Resources (DCENR) collect monies due both by the Department of Social and Family Affairs (DFSA) (in respect of “Free” television licences) and from An Post (the Ministers sole agent for the sale of TV Licences to the public). DCENR then make a grant-in-aid of appropriate amounts to RTÉ. Total Licence Revenue in 2008 increased by €5.2 million (2.7%) as summarised below: €m Growth in Volume of TV Licences Sold +5.2 Increase in the unit price of a TV Licence 0.0 Year-on-Year movement +5.2 Licence income 2007 195.7 Licence income 2008 200.9 The underlying level of Licence Fee evasion remains high by international standards and RTÉ estimates that approximately 14% of all eligible households in the Republic of Ireland currently do not hold a valid television licence. Licence Fee attribution and use The majority of RTÉ’s activities are of a public service character but the cost of providing such services exceeds the amount of Public Funding received. As a result RTÉ relies on a Dual Public/Commercial funding model and engages in commercial activities to bridge the gap in public funding received. RTÉ is not the recipient of all Licence Fee monies raised by DCENR and thus the table below seeks to represent how each TV Licence Fee was utilised in 2008: Utilisation of Each TV Licence Fee Collected 2008 2007 € € RTÉ One 58.44 60.12 RTÉ Two 35.01 31.47 RTÉ Television 93.45 91.59 RTÉ Radio 1 14.19 14.64 RTÉ RnaG 10.74 10.02 RTÉ lyric fm 5.79 5.68 RTÉ Radio 30.72 30.34 RTÉ Performing Groups 11.02 10.89 RTÉ Activities 135.19 132.82 84% 84% RTÉ Support for TG4 7.92 8.34 BCI Broadcasting fund 7.53 7.40 Collection costs - An Post / DCENR / DSFA 9.36 9.44 Non-RTÉ Activities 24.81 25.18 16% 16% Avg. cost of TV Licence 1 160.00 158.00 1 Licence Fee increased from €158 to €160 from 1 Jan 2008. The accompanying pie-chart summarises the attribution of RTÉ’s 2008 Licence Fee revenue used by RTÉ to contribute to the funding of public service activities carried by RTÉ in 2008. Source: RTÉ 27
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