Cairo Communication S p A : Half-Year Report as at 30 June 2023

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Half-Year Report as at 30 June 2023

English translation for convenience of international readers. Only the Italian version is authentic

Cairo Communication S.p.A.

Head office: Via Angelo Rizzoli 8

Share capital Euro 6,989,663.10

Governance

Board of Directors (*)
		Urbano Cairo (**)	Chairman
		Uberto Fornara	CEO
		Daniela Bartoli	Director
		Stefania Bedogni	Director
		Valentina Beatrice Manfredi	Director
		Laura Maria Cairo	Director
		Roberto Cairo	Director
		Massimo Ferrari	Director
		Paola Mignani	Director
		Marco Pompignoli	Director
Control and Risk Committee
		Massimo Ferrari	Director
		Daniela Bartoli	Director
		Paola Mignani	Director
Remuneration and Appointments Committee
		Paola Mignani	Director
		Daniela Bartoli	Director
		Valentina Manfredi	Director
Board of Statutory Auditors (***)
		Michele Paolillo	Chairman
		Gloria Marino	Standing Auditor
		Maria Pia Maspes	Standing Auditor
		Emilio Fano	Alternate Auditor
		Francesco Brusco	Alternate Auditor
Independent Auditors (****)
		Deloitte & Touche S.p.A.

1. The Board of Directors was appointed by resolution of the Shareholders' Meeting held on 8 May 2023. The Directors are in office for the years 2023-2024-2025, therefore until the Shareholders' Meeting called to approve the financial statements for the year ending 2025
   (**) Ordinary and extraordinary executive powers exercised with single signatory, as limited by the Board of Directors
   (***) The Board of Statutory Auditors in office at the date of approval of this Report was appointed by resolution of the Shareholders' Meeting on 8 May 2023. The Statutory Auditors are in office for the years 2023-2024-2025, therefore until the Shareholders' Meeting called to approve the financial statements relating to the last of these years. (****) In office until the Shareholders' Meeting called to approve the financial statements for the year ending 2028

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The Group as at 30 June 2023

Cairo Communication S.p.A.

99,95%

Cairo Editore

S.p.A.

100%

100%51%

CAIRORCS Media

S.p.A.

59,69%

RCS

MediaGroup

S.p.A.

and

subsidiaries

49%

100%80%

100%

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Interim Report on Operations at 30 June 2023

In the first half of 2023, the Group operated as a:

• publisher of magazines and books (Cairo Editore/Editoriale Giorgio Mondadori and Cairo Publishing);
• TV (La7, La7d) and Internet (La7.it, TG.La7.it) publisher and network operator (Cairo Network);
• multimedia agency for the sale of advertising space (CAIRORCS Media);
• publisher of dailies and magazines (weeklies and monthlies) in Italy and in Spain, through RCS MediaGroup, also active in the organization of major world sporting events, and in newsstand distribution through its subsidiary m-Dis.

The beginning of 2023 was still marked by the continued conflict in Ukraine, with its consequences also in terms of impacts on the economy and on trade. This is leading to a state of great uncertainty and a slowdown in anticipated economic growth in relevant markets, exacerbating in 2022 the pre- existing inflationary dynamics since 2021. The Group has no direct exposure and/or business activities towards the markets affected by the conflict and/or sanctioned entities.

With regard to the Group, this economic context impacted on production costs, on paper in particular, and may also affect the performance of the advertising market, as it may influence the advertisers' propensity to spend.

Moreover, in first half 2023, energy and gas costs, after the strong volatility and increases recorded in 2022, gradually returned to values basically similar to those of end of summer 2021; additionally, paper costs have decreased at the moment versus 2022 figures, with anticipated positive effects on the income statement, primarily from the latter half of 2023, also taking account of the turnover time of existing inventory.

The latest figures published by the IMF in July 2023 (World Economic Outlook- July 2023) estimate Italy's GDP to increase by 1.1% in 2023 and 0.9% in 2024. For Spain, the estimated GDP growth is 2.5% in 2023 and 2% in 2024.

The six-month period saw a slowdown in the inflation rate, with June 2023 showing a YoY change of +6%, remaining unchanged from the prior month, attributed primarily to the trend in energy goods prices (ISTAT - FOI index excluding tobacco).

Spain is also seeing a reduction in the inflation rate, which, YoY at June 2023, stands at 1.9% (INE).

In Italy, the advertising market in first six months 2023 (Nielsen January-June2023) was up by 1.1% versus the same period of 2022, with online (excluding search, social media and over the top) and TV up by 6.1% and 0.5%. Newspapers and magazines were down by 3.4% and 1%. In first half 2023, the Spanish advertising sales market was up by 2.8% versus the same period of 2022 (i2p, Arce Media). Specifically, the newspaper and magazine markets increased by 1.8% and 1.9%. Internet (excluding

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social media, search, etc.) and radio sales were up too by 6.2% and 6.9%.

Economic uncertainty and the general scenario also affected daily newspaper and magazine sales figures. On the circulation front, in the first five months of 2023, generalist newspapers in Italy recorded a 4.5% decline in print and digital circulation, while sports newspapers recorded a 35% increase in print and digital circulation (source ADS January-May2023), thanks mainly to the performance of digital copies. In Spain, in the first six months of 2023, circulation figures show a decline for both generalist newspapers (-8.9%) and sports newspapers (-12.3%); the business newspaper segment was instead on an upward trajectory (+2.5%) (OJD).

In the first half of 2023, in a context still marked by uncertainty due to the conflict in Ukraine:

• the Group confirmed revenue and grew its margins (EBITDA, EBIT, and net profit) versus the results in the same period of 2022;
• RCS too grew its margins (EBITDA, EBIT, and net profit) versus the results in the same period of 2022. Corriere della Sera confirmed remarkable newsstand circulation levels and continued the growth of digital operations. In the first five months of 2023 too, RCS ranks as the top online publisher in Italy with an aggregate figure of 32.3 million average monthly unique users (net of duplications - source Audicom). At end of June, its total active digital customer base (digital edition, membership and m-site) counted 535 thousand subscriptions (508 thousand at end 2022 - Internal Source). At end of June 2023, the customer base for Gazzetta's pay products (G ALL, G+, GPRO and Fantacampionato) counted 211 thousand subscriptions (171 thousand at end 2022 - Internal Source). Digital subscriptions grew in Spain too, reaching at the end of June 2023 123 thousand subscriptions for El Mundo (101 thousand at the end of 2022 - Internal Source) and 70 thousand subscriptions for Expansión (51 thousand at the end of 2022 - Internal Source);
• the TV publishing (La7) and network operator segment achieved high ratings of the La7 channel (3.4% in the all-dayshare and 4.6% in prime time). Advertising sales on La7 and La7d channels totaled approximately Euro 74.6 million, up from Euro 73.4 million in the first half of 2022;
• the Cairo Editore magazine publishing segment confirmed the results of first half 2022, despite the increase in the cost of paper (Euro -1.7 million) versus the first half of 2022.

In the first half of 2023, consolidated gross revenueamounted to approximately Euro 599.2 million (comprising gross operating revenue of Euro 577 million and other revenue and income of Euro 22.2 million) versus Euro 598.6 million in the first half of 2022 (comprising gross operating revenue of Euro 580.1 million and other revenue and income of Euro 18.5 million).

EBITDAand EBITcame to Euro 80.2 million and Euro 41.1 million (Euro 69 million and Euro 31.3 million in the same period of the prior year), still impacted by the increase in the cost of paper (Euro -5.4 million) versus the same period of the prior year, when the paper used had been purchased at

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