Mediaset S.p.A. - Board approves Results for First Quarter 2020: partial containment of the impact of the emergency

PRESS RELEASE

Mediaset Board of Directors' Meeting 12 May 2020

BOARD APPROVES RESULTS FOR FIRST QUARTER 2020

PARTIAL CONTAINTMENT OF THE IMPACT OF THE

EMERGENCY

Mediaset Group

Net revenues: €682.1 million

Operating costs: €498.1 million

Operating profit (EBIT): €41.6 million

Net profit: €14.6 million

TV ratings: leadership in the commercial target in both Italy and Spain

The Board of Directors of Mediaset, which met under the Chairmanship of Fedele Confalonieri, has approved the interim report for the first quarter of 2020.

The Group's performance in the first quarter, after the first two months in which the trend was positive, reflects the sharp slowdown in the advertising market that began in March in both Italy and Spain following the effective block of most business activity in response to the health emergency. The impact on margins and cash generation has however been held back by prompt actions aimed at reducing costs.

Obviously, the situation remains critical and does not permit much visibility in terms of future performance.

The main results in the first three months of 2020 can be summarised as follows:

• Net revenues amounted to €682.1 million, compared with €718.2 million in the first quarter of 2019. In particular, revenues in Italy came to €452.4 million compared with €492.1 million in the same period last year. In Spain, revenues amounted to €229.8 million compared with €226.1 million in 2019.
  Revenues in both countries have been affected by a marked slump in the advertising market that began in March. In Italy, gross television advertising revenues were up by 2.1% up to the end of February, compared with 2019, while with March the first quarter ended with sales of €427.5 million, compared with the €483.6 million of the first three months of 2019. In Spain, gross television advertising revenues amounted to €202.8 million, compared with €223.7 million the previous year, a fall that was nevertheless lower than the market and which means that Mediaset España has reinforced its national leadership in advertising sales.
• Total consolidated operating costs (labour costs, procurement costs, services and other charges, amortisations and depreciations of rights and other assets) came to €640.6 million, essentially in line with the €639.7 million of the first quarter of 2019.

In Italy, in particular, costs fell to €472.7 million, compared with €480.3 in 2019 mainly due to the management and review of the schedules launched in March to face the impact of the Covid-19 emergency. In Spain, total operating costs came to €168.0 million, compared with €159.5 million in the same period of the previous year.

• The Group's EBIT amounted to €41.6 million, compared with €78.5 million in Q1 2019. In Italy EBIT amounted to -€20.4million, compared with €11.9 million in the same period of 2019. In Spain the figure was €61,8 million, compared with €66.6 million in the first quarter of last year.
• Consolidated net profit amounted to €14.6 million, compared with €36.7 million for the same period of 2019.
• Net financial debt to 31 March 2020 came to €1,243.8 million, compared with €1,348.3 million at the beginning of the period. Excluding liabilities booked since 2019 in line with IFRS 16 and outlays for the acquisition of stakes in ProsiebenSat.1, the level of debt would be €619.1 million, compared with €768.8 million on 31 December 2019.
• Free cash flow rose to €182.2 million, compared with €146.9 million in Q1 2019.
• TV ratings. In the first three months of 2020 Mediaset confirmed its clear leadership in the commercial target, both in Italy and in Spain.
  In Italy, Mediaset is the unchallenged leader in the commercial target of 15 to 64-year-olds in all the main time bands, with a peak share of 35.8% in prime time. Of note is the first place of Canale 5, and the third place of Italia 1 in all time bands.
  In Spain, the Group's channels maintained their absolute leadership in the 24-hours with a 28.1% share. Telecinco remained Spain's most popular channel across the whole day (14.2%).

FORECAST FOR THE YEAR

As a result of the ongoing situation, short and mid-term visibility remains extremely limited by the ongoing pandemic. At a time when monetary and fiscal measure to support business have still to be finalised and applied , at both the national and European level, leading specialised observers for the moment estimate a global recession in 2020 of the order of -3%, which is expected to be followed by a gradual recovery and return to normal in 2021. However, as things stand, it is not possible to make reliable forecasts on the length and the impact of the emergency on the management and results of the Group.

In this context, the Group will continue to operate on two complementary fronts: firstly by ensuring the safety of the workforce and the company's economic and financial solidity with all the necessary measure to safeguard business results and cash generation (for example, measures have already been taken to reduce costs to offset the eventual impact of trends in the advertising market in the second quarter, even if the lockdown is brought to an end). And, at the same time, pursuing, with even greater determination, the Group's international development and mid-term structural projects.

In this regard, it should be noted that the cross-border merger project MFE, the timing of which remains conditioned by legal proceedings instigated by Vivendi, is expected to provide the Group with advantages in terms of synergies and new opportunities resulting from the pan-European scale of the projects.

The executive responsible for the preparation of the Mediaset S.p.A. accounts, Luca Marconcini, declares that, as per para. 2 art. 154-bis, of the Single Finance Bill, that the accounting information contained in this press release corresponds to that contained in the company's books.

ANNUAL GENERAL MEETING

Further to indications in the Corporate Calendar, published on 30 January 2020, and the subsequent press release of 5 May 2020, the Board of Directors has resolved to convene, with a single calling, the Annual General Meeting of the Shareholders for the approval of the Company's Financial Statements for the year 2019, at 10 am on 26 June 2020. The formal calling with be made in accordance with current legislation.

DISTRIBUTION OF DIVIDENDS FOR 2019

The Board of Directors has resolved to propose to the upcoming Annual General Meeting of the Shareholders that the profit for the period of Mediaset S.p.A., amounting to €126,028,023.96 be retained and held in the Extraordinary Reserve.

REMUNERATION REPORT

The Board of Directors has approved the Remuneration Report, prepared in compliance with Art. 123-ter of Legislative Decree n. 58 of 24 February 1998 and Art. 84-quater of Consob Resolution n. 11971 of 14 May 1999, and which will be presented at the upcoming Annual General Meeting of the Shareholders.

ACQUISITION AND DISPOSAL OF OWN SHARES

The Board of Directors of Mediaset will propose to the upcoming Annual General Meeting of the Shareholders the renewal of authorisation to purchase the company's own shares with the aim of pursuing, in the interests of the company, and in the form and conditions determined from time to time by the Board of Directors, the purposes permitted by current EU and national legislation and Allowed Market Practices, including the New Practice no. 1, adopted by Consob with resolution no. 21318 of 7 April 2020 following the favourable opinion expressed by ESMA on 22 January 2020, where applicable:

1. the use of shares for the implementation of compensation plans with allocation, against payment or free of charge, of company shares (such as stock grants, stock options and, in general, share and securities plans exchangeable for company shares) aimed at managers, employees and/or associates of the Group;
2. for trading and hedging;
3. for the investment of liquidity, also in order to contain anomalous price movements, to regularise trends in negotiations and prices and to support the liquidity of the security on the market, as a means of encouraging the regular conduct of negotiations beyond normal variations linked to market trends, and, in any case, in line and in compliance with current provisions.

To date, the share capital of €614,238,333.28, divided into 1,181,227,564 ordinary shares, of which the company currently holds 43,283,164 shares, corresponding to 3.66% of the share capital; Mediaset subsidiaries do not own shares of the parent company.

The proposal foresees that the Board of Directors be given the power to buy, also through options trading or financial instruments and derivatives of Mediaset stock, up to a maximum of 118,122,756 ordinary shares with a par value of €0.52 each - and corresponding to 10% of the share capital - in one or more transactions, until the approval of the Financial Statements for the year to 31 December 2020 and for a period not exceeding 18 months form the date of the resolution. The above sum is covered by existing reserves resulting from the last approved financial statements. For the calculation of when the maximum limit of 10% of the share capital is reached, treasury shares already in the portfolio will also be taken into account.

Acquisition operations must be made in compliance with Articles 237 and following, of the Civil

Code, Article 144-bis of Issuers' Regulations (EU) n. 596/2014, and all other applicable Italian and EU norms.

In accordance with the provisions of Art, 132, para. 1 of the Consolidated Finance Act, the acquisition of own shares must be made guaranteeing parity of treatment to all Shareholders, in line with the procedures established by Consob. Consequently, the procedures outlined in Art. 144-bis, para. 1 of the Issuers' Regulations, stipulate that the acquisition of shares may be made in compliance with the indications outlined in sections a), b), and c) of the Issuers' Regulations.

The proposal foresees that the purchase price of the shares be determined from time to time, with regard to the manner in which the transaction is conducted, and in accordance with regulatory requirements, norms or permitted market practices, within minimum and maximum limits defined by the following criteria:

• purchases must be made, in the event that the purchase of treasury shares is carried out on the regulated market, at a price in compliance with the provisions of art. 3, para. 2 of Delegated Regulation 2016/1052/EU, i.e. at a price not higher than the highest price between the price of the last independent transaction and the price of the highest current independent offer on the market in which the proposal for purchase is registered, in other words, in line with currently applicable regulations.
• in any case, purchases must be made at a price per share that may not deviate from, or decrease, or increase, by more than 10% compared to the reference price that the shares recorded on the stock exchange session the day prior to each single transaction or the date on which the price is fixed.

Pursuant to art. 132, paragraph 3, of the Consolidated Finance Act, the aforementioned operating procedures shall not apply to the purchase of treasury shares owned by employees of the company, or its subsidiaries, and assigned or subscribed pursuant to art. 2349 and 2441, para. 8, of the Civil Code, i.e. resulting from remuneration plans based on financial instruments approved pursuant to art. 114-bis of the Consolidated Finance Act.

The Shareholders will also be asked to authorise the Board of Directors, pursuant to art. 2357-ter of the Civil Code, in accordance with current laws and regulations, and the regulations issued by the Italian Stock Exchange and in compliance with EU provisions, to:

1. sell the shares purchased pursuant to this resolution or already in the portfolio, to participants in compensation plans, whether against payment or free of charge, by them of options to purchase shares allocated to them, at the prices, terms and in the manner prescribed - including the price, where relevant, established by the plans and related regulations. The authorisation referred to in this paragraph is in line with the time limits set by the stock option plans;
2. sell the shares purchased pursuant to this resolution, or already in the portfolio with the following alternatives:
3. 1. by cash transactions, in which case, sales shall be made on the listing stock exchange and/or off market, at a price not less than 90% of the reference price recorded by the Stock Exchange trading session prior to each operation;
   2. by trading, exchange, transfer or other disposition, as part of industrial projects or extraordinary corporate finance operations. In this case, the economic terms of the transfer, including the valuation of the shares traded, will be determined by independent experts, on the basis of the nature and characteristics of the transaction, also taking into account the market performance of Mediaset shares.

The authorisation referred to in paragraph b) is given for an unlimited period.

In general, it should be remembered that treasury shares held by the Company, also indirectly, are excluded from the share capital on which the relevant shareholding is calculated for the purposes of Article 106 of the Consolidated Finance Act for the purposes of the regulation of public purchase offerings.

However, pursuant to Article 44-bis, para. 2, of the Issuers' Regulation, the aforementioned provision does not apply if the thresholds indicated in Article 106 of the Consolidated Finance Act

are exceeded as a result of purchases of treasury shares, also indirectly, by the Company in execution of a resolution that was approved with a favourable vote by the majority of shareholders of the issuer, present at the meeting, other than the shareholder or shareholders who hold, even jointly, a majority shareholding, even relative, provided it is more than 10% (the so-called whitewash).

Consequently, Shareholders are advised that if, in application of the aforementioned whitewash, where shareholders are asked to authorise the purchase or use of treasury shares - they approve the proposal with the majority foreseen by the aforementioned Art. 44-bis, para. 2, of the Consob Regulation, the treasury shares purchased by the company in execution of the said authorisation will not be excluded from the ordinary share capital (and will therefore be included in the share capital) if, due to the impact of the purchase of treasury shares, this would result in an overrun, by a shareholder, of the relevant thresholds, pursuant to art. 106 of the Consolidated Finance Act.

The situation, as foreseen by art. 44-bis, paragraph 4, of the Issuers' Regulations, pursuant to which they are not excluded from the share capital on which the relevant shareholding is calculated for the purposes of art. 106 of the Consolidated Finance Act, treasury shares acquired as a result of transactions executed for the fulfilment of obligations related to remuneration plans approved by the Shareholders pursuant to art. 114-bis of the Consolidated Finance Act remain unchanged.

Cologno Monzese, 13 May 2020

Department of Communications and Media Relations

Tel. [phone]

Fax [phone]

e-mail: [e-mail] www.mediaset.it/corporate/

Investor Relations Department

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					(in €m)
	MEDIASET GROUP		Q1		Q1
	Income statement (highlights)	2020		2019(*)
	Consolidated net revenues	682.1		718.2
	Labour costs	116.5		124.1
	Procurement, services and other costs	381.6		372.7
	Operating costs	498.1		496.9
	Gross operating profit (EBITDA)	184.0		221.3
	Amortisation of rights	116.7		119.5
	Other amortisations and depreciations	25.7		23.3
	Total amortisations and depreciations	142.5		142.8
	Operating profit (EBIT)	41.6		78.5
	Financial income (charges)	2.4		0.1
	Income (charges) from investments	2.8		1.4
	Profit before taxation	46.8		80.1
	Income tax	(10.4)		(18.5)
	Minority interest (profit)/loss	(21.7)		(25.0)
	Net profit from operations	14.6		36.7
	Net profit from disposed assets	-		-
	Net profit for the Mediaset Group	14.6		36.7
	(*) Q1 2019 results restated to retroactively acknowledge the impact of the accounting allocation of the goodwill	of subsidiaries
	MEDIASET GROUP		31/03/2020		31/12/2019
	Balance sheet (highlights)
	Television and film rights		1,113.3		974.7
	Goodwill		799.4		796.7
	Other tangible/intangible assets		930.4		968.8
	Financial assets		1,034.8		1,026.6
	Net working capital & other assets/liabilities		301.5		541.0
	Severance indemnity reserve		(68.4)		(69.2)
	Net invested capital		4,111.0		4,238.7
	Net Group assets		2,443.9		2,477.9
	Shareholders' equity and minority interest		423.3		412.5
	Net assets		2,867.2		2,890.4

Net financial position

1,243.8

1,348.3