GEDI Gruppo Editoriale S p A : First quarter 2020

GEDI Gruppo Editoriale

Società per Azioni

Interim Financial Report at 31 March 2020

|GEDI Gruppo Editoriale |

Company Name	GEDI Gruppo Editoriale
	Società per Azioni
Share capital	Euro 76,303,571.85
Tax ID and Business Registry
of Rome registration number	no. 00488680588
VAT	No. 00906801006
Registered office	Via Cristoforo Colombo 90, Rome, Italy
The Board of Directors:
Chairman	John Elkann
CEO and Managing Director	Maurizio Scanavino
Directors	Agar Brugiavini
	Giacaranda Maria Caracciolo di Melito Falck
	Elena Ciallié
	Alberto Clò
	Marco De Benedetti
	Silvia Merlo
	Turi Munthe
	Luca Paravicini Crespi
	Carlo Perrone
	Tatiana Rizzante
	Pietro Supino
	Enrico Vellano
	Michael Zaoui
The Board of Statutory Auditors:
Chairman	Gaetano Rebecchini
Statutory Auditors	Maurizio Lauri
	Marina Scandurra
Independent Auditors	KPMG SpA

TABLE OF CONTENTS
Board of Directors' Report at 31 March 2020
Key financial figures of the GEDI Group at 31 March 2020	page	5
Introduction	page	6
Market review	page	6
GEDI Group operating performance for the 1st quarter of 2020	page	7
Events after the reporting period and outlook	page	9
Consolidated financial statements of the GEDI Group at 31 March 2020
Income Statement and Statement of comprehensive income	page	11
Statement of Financial Position	page	12
Changes in Net Financial Debt	page	13
Statement of Cash Flow	page	14
Net Financial Debt	page	15
Notes to the consolidated financial statement of GEDI Group at 31 March 2020
Introduction	page	17
Scope of consolidation	page	17
Income statement	page	18
Financial Position	page	21

Certification of the consolidated financial statements pursuant to paragraph 2 of Article

154 bisof Italian Legislative Decree No. 58 of 24 February 1998

page 26

Directors' Report

GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

BOARD OF DIRECTORS' REPORT AT 31 MARCH 2020

KEY FINANCIAL FIGURES OF THE GEDI GROUP AT 31 MARCH 2020

Reported below are the main economic and financial indicators at 31 March 2020.

Consolidated results (€ million)	Jan-Mar	Jan-Mar
2019	2020
Revenueof which:	145.6	129.8
	circulation	67.1	63.8
	advertising	67.5	56.3
	add-ons and others	10.9	9.8
Gross operating profit	8.4	(0.3)
Adjusted operating profit	1.5	(8.1)
Operating profit	0.5	(67.0)
Profit (loss) before taxes	(2.6)	(68.0)
Net profit (loss) of assets from continuing operations	2.0	(52.9)
Profit (loss) from discontinued operations and assets	0.0	-
Adjusted net profit	2.8	(9.9)
Net profit (loss)	2.0	(52.9)
(€ million)	31 December	31 March
2019	2020
Net financial debt before IFRS 16	(44.1)	(47.7)
Liabilities for leases and rights-of-use - IFRS 16	(55.3)	(52.5)
Net financial debt post-IFRS 16	(99.4)	(100.2)
Equity (incl. non-controlling interests)	393.9	341.0
Equity attributable to the owners of the parent	393.4	340.6
	Non-controlling interests	0.5	0.5
Employees	2,221	2,185

1. The "Profit (loss) from discontinued operations and assets held for sale" at 31 March 2019 includes the result for the period of the subsidiary Persidera, subsequently sold in 2019.

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

INTRODUCTION

Results in the initial months of 2020 have been significantly affected by the spread of the COVID-19 virus and consequent restrictions for its containment established by national and local authorities.

From a macroeconomic perspective, the main agencies and banks have revised their GDP growth estimates downwards, whereas the company has seen a direct contraction in advertising revenue, with the cancellation of certain national and local campaigns that had already been booked for February, March and April (some of these have been rescheduled for a later date, whereas others cannot be recovered), as well as a decrease in daily bookings.

Meanwhile, all Group brands have further consolidated their central position and authority in providing accurate information to readers, recording particularly significant increases in digital traffic.

In this context, the Group prioritised actions to guarantee the health and safety of its workforce and swiftly adopted a series of measures for further rationalisation and reduction of costs, aimed at containing the economic and financial effects deriving from the sudden drop in advertising revenue, whilst continuing investment according to the strategic guidelines identified.

MARKET REVIEW

In the first two months of 2020, advertising investments grew slightly (+0.8%) compared to the corresponding period in the previous year (Nielsen Media Research figures).

However, in this health-emergency scenario, the trend of the first two months of the year, whilst traditionally indicative of a trend that will be consolidated for the first quarter, already represents a situation that the market has moved beyond.

Considering individual platforms, in the two-month period, television saw growth of 2.0%, as did the Internet with +4.8%, excluding Search and Social, and above all radio, that reached +13.9%. Printed media again recorded a drop, this time of -8.6%, with newspapers reporting -6.7%(-9.9% revenue for national papers and -4.9% for local papers) and magazines -12.2%.

According to ADS (Accertamento Diffusione Stampa) data, in the first two months of 2020, newspaper subscriptions and sales at news stands fell by 6.8% (-5.0% for national newspapers and -9.0% for local newspapers). Including digital copies, overall circulation dropped by around -6.5%.

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

GEDI GROUP OPERATING PERFORMANCE FOR THE 1ST QUARTER OF 2020

Consolidated revenue, totalling € 129.8 million, fell by 10.8% compared to the first quarter of 2019. Revenue from digital activitiesrepresented a total of 13.5% of consolidated revenue (17.4% on the Repubblica brand).

Circulation revenue, amounting to € 63.8 million, decreased by 4.9% when compared with the previous financial year, in a market which, as indicated above, reported a decrease of 6.8% in the sales of daily newspapers at newsstands and via subscription.

The effects of COVID-19 and the restrictions introduced at a regional and national level have also affected sales at newsstands, with a significantly greater drop in March compared to the decrease in the first two months of the year.

Meanwhile, sales of digital subscriptions confirmed their positive trend, supported both by continued actions to maximise consumer-base profitability and increased new activations following readers' growing attention to news regarding the spread of COVID-19. In this context, a promotional policy was introduced for digital-only products (Rep:, Topnews, Stai con Noi) and on annual dual-copy subscriptions. All of these actions increased the customer base, which exceeded 216,000 subscriptions across all Group publications.

Advertising revenuewas down by 16.7% compared to the first quarter of 2019. In January- February, revenue from the Group's different platforms was in line with the corresponding period of the previous year (-0.3%), reflecting the trend in the respective reference markets. The subsequent health emergency and lockdown measures initiated during March led to a drastic reduction in advertising revenue, which dropped 37.4%.

With reference to the Group's different platforms, in the quarter, print advertising was down 21.6% and radio 10.3%. The drop in internet advertising revenue was slightly less marked at -6.2%.

Costs, including depreciation, were 4.2% lower compared to the first quarter of 2019. Personnel expenses (-3.6%) and other costs (-4.6%) have decreased. It should also be highlighted that these reductions still only marginally reflect the effects of the current restructuring in the printing, administrative and management areas of GEDI News Network and the Parent Company, as well as the local commercial structures of the advertising concessionaire A.Manzoni&C.

Consolidated gross operating losswas € -0.3 million compared to € 8.4 million in the first quarter of 2019.

Consolidated operating losswas € 67.0 million and includes € 58.9 million of goodwill impairment losses on publications following impairment testing. These impairment losses relate for € 34.6m to the "La Repubblica" cash generating unit (CGU), for € 10.2 million to the "GEDI News Network North East CGU (Messaggero Veneto, Il Piccolo, Quotidiani Venetiand Corriere delle Alpi)", for € 12.6 million to the "GEDI News Network North West CGU (La Stampaand Il Secolo XIX)" and for € 1.5 million to the "GEDI News Network

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

Livorno CGU (Il Tirreno)", and have been carried out to align the carrying amounts for each CGU to the relative recoverable values determined on the basis of cash flows under the latest approved Business Plan, adapted to reflect certain scenarios for the possible evolution of the pandemic and its effects on Italian GDP, and consequently on advertising investments, "weighted" relative to their degree of probability.

Excluding these impairment losses, the adjusted operating profittotals € -8.1 million compared to € 1.5 million in the first quarter of 2019.

The Consolidated net losswas € 52.9 million, including goodwill impairment losses on publications performed following impairment testing for € 42.9 million, net of the effect on taxes.

Net of the afore mentioned effects, the adjusted net lossfor the first quarter of 2020 was € 9.9 million, compared to € 2.8 million in the corresponding period of the previous year.

Loans and borrowingsat 31 March 2020, before the application of the IFRS 16 accounting standard, totalled € 47.7 million, slightly up compared to the € 44.1 million at the end of 2019: the cash flow from ordinary operations was positive, at € 1.9 million, while restructuring plans in progress resulted in expenditure of € 5.3 million. The application of IFRS 16 led to recording of liabilities for leases and rights-of-use of € 52.5 million at 31 March 2020, and therefore net financial debt after IFRS 16 application totalled € 100.2 million.

The Group's workforce, including fixed-term employees, at the end of March 2020, numbered 2,185 employees, down 36 compared to 31 December 2019. The average workforce for the period was 5.3% lower than in the first quarter of the previous year.

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

EVENTS AFTER THE REPORTING PERIOD AND OUTLOOK

On 23 April 2020, the agreement signed on 2 December 2019 was executed between CIR and EXOR N.V. ("EXOR"), for the sale of all GEDI Gruppo Editoriale S.p.A. ("GEDI") ordinary shares owned by CIR (the "CIR shareholding"), equal to 43.78% of the share capital released by GEDI. Specifically, having obtained the necessary authorisations, the sale was completed of the CIR Shareholding to Giano Holding S.p.A. ("Giano Holding"), a newly established joint stock company wholly owned by EXOR and designated by the latter as the purchaser of the CIR Shareholding, at a price of € 0.46 per share, which corresponds to a total amount of € 102.4 million. Once the sale of the CIR Shareholding is completed, Giano Holding will launch a mandatory takeover bid regarding all outstanding GEDI shares that it does not already hold, at the same price per GEDI share paid to CIR and, therefore, at the fixed unit price of € 0.46, pursuant to Article 106, paragraph 1 of Italian Legislative Decree No. 58 of 24 February 1998, as amended (the "TUF").

In a context of extremely poor visibility, certain leading operators in the sector forecast that the advertising revenue market may experience a drop of between 15% and 19% in 2020 based on the various scenarios for the predicted COVID-19 effects. A drop of these proportions had only been seen before during the 2012 financial crisis, when the market fell - 14.3%.

With the current situation, all elements feeding into forecasts for the year remain completely uncertain: the development of the pandemic, the authorities' decisions to restart manufacturing activity that is currently under lockdown and economic support for companies and, finally, following the possible recovery of business, the reaction of advertising investors in the context of the serious recession that may develop. The circumstances listed render any forecast that the company can formulate extremely uncertain.

The Group is focused on doing everything within its powers to manage the crisis: it has implemented further measures to reduce costs and contain expenditure for investments that are not strictly necessary. It is regularly reassessing liquidity positions, through dialogue with its financial partners, with whom it has also agreed the temporary suspension of covenants, and continues to adopt all health and safety measures required to safeguard its employees, as defined and required by the various local authorities.

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Consolidated financial statements of the GEDI Group at 31 March 2020

GEDI Group - Interim Financial Report at 31 March 2020

GEDI GRUPPO EDITORIALE

CONSOLIDATED INCOME STATEMENT

(€ million)	1stQuarter		1stQuarter
2019	2020
Revenue	145.6	129.8
Change in inventories	(0.0)	0.2
Other operating income	1.3	0.4
Purchases	(13.7)	(12.5)
Services	(65.1)	(61.4)
Other operating costs	(2.8)	(2.9)
Personnel costs	(57.0)	(53.9)
Depreciation, amortisation and write-downs	(7.9)	(66.8)
Operating profit	0,5	(67.0)
Net financial income (expense)	(3.2)	(1.0)
Net gains on equity-accounted investments	0.1	0.1
Result before taxes	(2.6)	(68.0)
Taxes	4.6	15.0
Net profit (loss) from continuing operations	2.0	(52.9)
Profit (loss) from discontinued operations and assets held for sale	0.0	-
Net profit (loss)	2.0	(52.9)
Non-controlling interests	(0.0)	0.0
PROFIT (LOSS) ATTRIBUTABLE TO THE OWNERS OF THE PARENT	2.0	(52.9)
Earnings per share, basic	0.004	(0.108)
Earnings per share, diluted	0.004	(0.106)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	1stQuarter		1stQuarter
(€ million)	2019		2020
NET PROFIT (LOSS) LESS NON-CONTROLLING INTERESTS	2.0		(52.9)
Other comprehensive income components:
Profit (loss) on restatement of available-for-sale financial assets	-		-
Tax effect of other profit (loss)	-		-
Other comprehensive income components, net of tax effect	-		-
TOTAL COMPREHENSIVE INCOME	2.0		(52.9)
Total comprehensive income attributable to:
Shareholders of the Parent Company	2.0		(52.9)
Non-controlling interests	0.0		(0.0)

.

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GEDI Group - Interim Financial Report at 31 March 2020

GEDI GRUPPO EDITORIALE

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS	31 Dec	31 March
(€ million)	2019	2020
Intangible assets with an indefinite useful life	425.2	366.8
Other intangible assets	10.3	9.8
Intangible assets	435.6	376.6
Rights of use	53.7	50.8
Property, plant and equipment	73.2	70.9
Investments valued at equity	17.9	18.0
Other investments	9.2	9.2
Other non-current receivables	0.9	0.9
Deferred tax assets	38.8	38.2
NON-CURRENT ASSETS	629.3	564.7
Inventories	15.9	15.1
Trade receivables	173.0	137.1
Receivables and other financial assets	3.1	-
Tax receivables	4.6	5.4
Other receivables	13.1	20.7
Cash and cash equivalents	51.4	38.0
CURRENT ASSETS	261.2	216.3
TOTAL ASSETS	890.5	781.0
LIABILITIES
	31 Dec	31 March
(€ million)		2019	2020
Share/quota capital		76.3	76.3
Reserves		228.3	254.6
Retained earnings (losses)		217.7	62.5
Loss for the period/year		(129.0)	(52.9)
Equity attributable to the owners of the parent		393.4	340.6
Non-controlling interests		0.5	0.5
SHAREHOLDERS' EQUITY		393.9	341.0
Financial debt		1.7	1.7
Financial debts for rights of use		41.7	39.3
Provisions for risks and charges		8.8	8.9
Post-employment benefits and other employee benefits		52.1	51.8
Deferred tax liabilities		90.0	74.4
NON-CURRENT LIABILITIES		194.4	176.1
Financial debt		96.8	83.9
Financial debts for rights of use		13.6	13.2
Provisions for risks and charges		32.2	29.5
Trade payables		88.3	77.3
Current tax liabilities		16.6	11.7
Other liabilities		54.7	48.2
CURRENT LIABILITIES		302.2	263.8
TOTAL LIABILITIES		496.6	439.9
TOTAL LIABILITIES AND EQUITY		890.5	781.0

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GEDI Group - Interim Financial Report at 31 March 2020

GEDI GRUPPO EDITORIALE

CHANGES IN THE CONSOLIDATED NET FINANCIAL DEBT

	1stQuarter	1stQuarter
(€ million)	2019	2020
SOURCES OF FINANCE
Net profit (loss) for the period, including non-controlling interests	2.0	(52.9)
Profit (loss) from discontinued operations	(0.0)	-
Depreciation, amortisation and write-downs	7.9	66.8
Actuarial assessment stock option plans	0.2	0.1
Net change in provisions for personnel costs	(2.2)	(0.3)
Net change in provisions for risks and charges	(17.8)	(2.6)
Adjustments for equity-accounted investments	(0.1)	(0.1)
Self-financing	(10.1)	10.9
Decrease (Increase) in non-current receivables	0.1	0.1
Increase in payables/Decrease in deferred tax assets	(0.1)	(15.0)
Increase in tax payables/Decrease in tax receivables	4.1	(5.7)
Decrease (Increase) in inventories	(2.3)	0.8
Decrease (Increase) in trade and other receivables	13.7	28.3
Increase (Decrease) in trade and other payables	(18.7)	(14.3)
Change in working capital	(3.3)	(5.8)
CASH FLOW FROM CURRENT OPERATIONS	(13.4)	5.1
TOTAL SOURCES	(13.4)	5.1
USES
Net increases in rights-of-use assets	(66.2)	(0.7)
Net capital expenditure in fixed assets	(4.5)	(5.3)
(Purchase) sale of own shares	0.1	0.0
Other changes	(0.3)	(0.0)
TOTAL USES	(71.0)	(5.9)
Financial surplus (deficit)	(84.3)	(0.8)
OPENING NET FINANCIAL POSITION	(103.2)	(99.4)
CLOSING NET FINANCIAL POSITION	(187.5)	(100.2)

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GEDI Group - Interim Financial Report at 31 March 2020

GEDI GRUPPO EDITORIALE

CONSOLIDATED CASH FLOW STATEMENT

	1stQuarter	1stQuarter
(€ million)	2019	2020
OPERATING ACTIVITIES
Net profit (loss) for the period, including non-controlling interests	2.0	(52.9)
Adjustments:
- Depreciation, amortisation and write-downs	4.5	66.8
- Actuarial assessment stock option plans	0.2	0.1
- Net change in provisions for personnel costs	(2.2)	(0.3)
- Net change in provisions for risks and charges	(17.8)	(2.6)
- Adjustments to the value of financial assets	(0.0)	-
- Adjustments for equity-accounted investments	(0.1)	(0.1)
Self-financing	(13.6)	10.9
Changes in current assets and other flows	(1.5)	(5.5)
CASH FLOW FROM OPERATING ACTIVITIES	(15.1)	5.4
of which:
Interest received (paid)	(0.3)	(0.4)
Income taxes paid	-	-
INVESTING ACTIVITIES
Outlay for purchase of fixed assets	(4.6)	(5.3)
Received on disposals of assets	0.1	0.1
CASH FLOW FROM INVESTING ACTIVITIES	(4.5)	(5.3)
FINANCING ACTIVITIES
(Purchase) sale of own shares	0.1	0.0
Lease liabilities	(13.3)	(3.7)
Issue (repayment) of financial debt	-	(9.9)
Other changes	(0.1)	(0.0)
CASH FLOW FROM FINANCING ACTIVITIES	(13.3)	(13.6)
Increase (decrease) in cash and cash equivalents	(32.9)	(13.4)
Cash and cash equivalents at beginning of the period	77.2	51.2
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	44.3	37.8

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GEDI Group - Interim Financial Report at 31 March 2020

GEDI GRUPPO EDITORIALE

CONSOLIDATED NET FINANCIAL DEBT

	31 March	31 Dec	31 March
(€ million)	2019	2019	2020
Loan assets Group companies	0.2	0.2	0.2
Financial debt to Group companies	-	-	-
Cash and bank and post office deposits	44.2	51.2	37.8
Bank overdrafts	(0.1)	(0.2)	(0.3)
Cash and cash equivalents	44.3	51.2	37.8
Marketable securities and other financial assets	0.8	3.1	-
Bond issue	(100.8)	-	-
Other bank debt	(6.2)	(23.0)	(23.1)
Due to other providers of finance	(62.8)	(75.3)	(62.3)
Other financial liabilities, net	(169.0)	(95.3)	(85.4)
NET FINANCIAL DEBT BEFORE IFRS 16	(124.7)	(44.1)	(47.7)
Payables for leasing and rights of use - IFRS 16	(62.8)	(55.3)	(52.5)
NET FINANCIAL DEBT POST-IFRS 16	(187.5)	(99.4)	(100.2)

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Notes to the consolidated financial statements of the GEDI Group at 31 March 2020

GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF GEDI GROUP AT 31 MARCH 2020

Introduction

The interim financial report of the GEDI Group at 31 March 2020, not subject to official auditing, has been drawn up in compliance with the IFRS international accounting standards.

*****

The interim financial report has been drawn up in accordance with the provisions under Article 154-ter, section 5 of the Consolidated Law on Finance ("TUF"). Therefore, the provisions of the international accounting standards relating to interim financial disclosure (IAS 34 "Interim Financial Reporting") have not been adopted.

The GEDI Group announces that it will continue to publish its interim financial reports at 31 March and 30 September (along with relative press releases), within 45 days of the end of the first and third business quarters.

Full disclosure of the half-yearly and annual results remain unchanged, pursuant to legislative and regulatory provisions. The interim financial reports will be available to the public from Borsa Italiana S.p.A., on the authorised storage system 1info at www.1info.it, at the registered office of the company and on the website www.gedispa.it.

Scope of consolidation

The scope of consolidation has not changed compared to the first quarter of 2019.

*****

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

INCOME STATEMENT

Revenue

(€ million)	Jan - Mar	Jan - Mar
2019	2020
Circulation revenue	73.2	69.8
Advertising revenue	67.5	56.3
Other revenue	4.8	3.7
TOTAL REVENUE	145.6	129.8

Revenuewas already discussed in the first part of this Report, to which reference should be made.

Other operating income/(costs)

Other operating income/(costs) includes extraordinary gains and losses, capital gains on disposal of assets, as well as the provisions for risks and the impairment losses on assets. At 31 March 2020, the item amounted to € 2.5 million in net expenses (€ 1.4 million in net expenses for the same period last year).

Purchases

(€ million)	Jan - Mar	Jan - Mar
2019	2020
Cost of paper	(9.2)	(8.5)
Other production purchases	(4.5)	(3.9)
TOTAL PURCHASES	(13.7)	(12.5)

The cost of paperwas € 0.7 million less than for the same period in 2019, resulting from reduced printing runs and foliation for the Group's daily newspapers and periodicals and the drop in the cost of paper.

Other production purchases, which include printing materials and the costs for buying add- on products, were € 0.6 million less than in the first quarter of 2019, mainly due to the lower costs for ink and plates, also following the new production structure of the Group's printing centres.

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

Services

(€ million)	Jan - Mar	Jan - Mar
2019	2020
Printing costs	(4.1)	(3.7)
Promotions	(3.4)	(2.7)
Distribution costs	(20.4)	(20.2)
Agent and agency costs	(5.9)	(4.8)
Rights	(1.4)	(1.3)
Other operating costs	(30.0)	(28.7)
TOTAL SERVICES	(65.1)	(61.4)

Printing costs, which include external processing for the production of Group newspapers and periodicals, as well as related add-on initiatives, amounted to € 3.7 million, down by 8.4% (-€ 0.3 million) on the first quarter of 2019.

Promotion costsamounted to € 2.7 million, falling by € 0.7 million on the first quarter of 2019, mainly due to less events over the period due to the health emergency.

Distribution costsfor € 20.2 million, were substantially in line with the corresponding period in 2019 (-€ 0.2 million).

Rights, which mainly include the royalties paid for the publication of add-on products and radio rights, amounted to € 1.3 million, which is basically unchanged from the same period in 2019 (€ 1.4 million).

Other operating costsfor € 28.7 million, have decreased by € 1.3 million on the first quarter of 2019 (-4.3%). This decrease reflects the additional measures undertaken to contain general expenses.

Personnel expenses

Personnel expenses, equalling € 53.9 million, excluding the impact of the reorganisation costs recorded in the first quarter of 2019 (€ 1.1 million), fell by € 2.0 million (-3.6%), due to the reduction in the workforce and the related cost undertaken in the different areas of the Group. It should also be highlighted that this reduction only marginally reflects the effects of the current restructuring in the printing, administrative and management areas of GEDI News Network and the Parent Company, as well as the local commercial structures of the advertising concessionaire A.Manzoni&C.

Depreciation, amortisation and impairment losses

Depreciations and amortisation at € 7.9 million were essentially unchanged when compared to the same period in 2019.

Impairment losses for € 58.9 million were recorded in the quarter based on the impairment tests conducted. These impairment losses were carried out to align the carrying amount for each CGU to the relative recoverable value determined on the basis of cash flows under the

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

latest approved Business Plan, adapted to reflect certain scenarios for the possible evolution of the pandemic and its effects on Italian GDP, and consequently on advertising investments, which are "weighted" relative to the degree of probability.

For additional information, reference is made to the item "Intangible assets".

Net financial income (expense)

In the first quarter of 2020, the item amounted to € 1.0 million in net financial expenses, down by € 2.1 million compared to the same period in the last year (€ 3.2 million), due to the absence of interest on the bond issue, which was fully repaid in April 2019, and the concurrent reduction in loan amounts.

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GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

STATEMENT OF FINANCIAL POSITION

Intangible assets, amounting to € 376.6 million, came down by € 58.9 million compared to 31 December 2019 (€ 435.6 million) due to theimpairment losses on publications and goodwill on the basis of the impairment tests carried out for € 58.9 million and amortisations for € 1.4 million. Investments for € 1.4 million were made over the period, referring primarily to management and improvements to editorial systems, network infrastructure upgrades and the acquisition of radio frequencies.

The COVID-19 pandemic and the restrictive measures introduced to contain its spread have had a negative effect on the market and economic context in which the Group operates. This resulted in a sharp contraction in advertising expenditure, which had already become apparent during the first quarter, but which will presumably also continue into the foreseeable future.

This situation is a potential indicator for asset impairment losses. The Financial Report at 31 December 2019 had already written down the main editorial CGUs for a total of € 131.9 million (specifically, "La Repubblica", "GEDI News Network North-East" and "GEDI News Network North-West"), whereas cover was reduced in respect of the other CGUs.

Although it is not possible to formulate reliable predictions on the impact of COVID-19 and estimate when this crisis will end, leading analysts and financial operators have outlined various scenarios, which whilst presenting different figures, all expect a significant decrease in GDP (both nationally and globally) during 2020, with a "rebound" in 2021 and 2022, even though at much weaker levels.

A new Impairment Test was therefore carried out on the Editorial CGUs (in addition to "La Repubblica", "GEDI News Network North-East" and "GEDI News Network North-West", also on "GEDI News Network Livorno" and "GEDI News Network Lombardy-Emilia"), namely the CGUs that are directly and mostly affected by advertising revenue.

The Test was based exclusively on the "value-of-use" criterion, as the "fair value" criterion is not deemed representative for the calculation of the recoverable value, because:

• the approach is strongly influenced by the current unfavourable economic context and high volatility levels;
• there are no updated economic forecasts available since 31 December 2019 (so the same

results would have been obtained).

Given the difficulties and uncertainty in setting the budget and the forecasts needed to estimate the value of use, the expected cash flow approach was applied (Expected Value Approach - IAS 36 A7-A14), because it is the most effective method to reflect the uncertainties around the COVID-19 pandemic when estimating the recoverable value.

This approach involves estimating different pandemic trend scenarios and their repercussions on cash flows, and then weighting each scenario on the basis of the probability of it occurring, as defined by management.

Cash flow projections are based on the Three-Year Plan approved by the board of directors on 12 February 2020, reflecting the contraction in Italian GDP on advertising revenue, calculated

21

GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

according to 3 different scenarios drawn up by an external advisor, and keeping the other assumptions underlying the Plan unchanged.

Scenari	2020	2021	2022
1	-9,4%	5,9%	2,0%
2	-6,1%	3,8%	1,3%
3	-4,0%	2,5%	0,9%

The 3 underlying scenarios developed in relation to the estimates from the predictive models over the contagion's duration, and in relation to the assumed economic impact from the restrictive measures ordered by Government, are shown below.

• Scenario 1: Period with the most negative impact: beginning of March 2020- beginning
  of May 2020; End of new cases: beginning of July 2020; End of contagion: beginning of
  August 2020; Range of the aftershock: 3%-7%.
• Scenario 2: Period with the most negative impact: beginning of March 2020- beginning
  of May 2020; End of new cases: end of June 2020; End of contagion: end of July 2020;
  Range of the aftershock: 5%-10%.
• Scenario 3: Period with the most negative impact: beginning of March 2020- beginning
  of May 2020; End of new cases: end of May 2020; End of contagion: end of June 2020;

Range of the aftershock: 5%-10%.

A probability of 60% was assigned by management to Scenario 2, whereas the other two scenarios were given a probability level of 20% each.

The discount rate is estimated net of taxes, on a consistent basis with the configurations of the flows to be discounted. An weighted average cost of invested capital (WACC) of 7.59% was adopted for the GEDI Group at 31 March 2020 (7.44% at 31 December 2019). The effects from the IFRS 16 accounting standard were sterilised in line with the test at 31 December 2019, because this would not change the cash flow risk profile; the growth rate "g" was kept at zero and the change in working capital was assumed to be zero in the terminal flow.

The outcome of the Impairment Test showed a total impairment loss of € 58.9 million (€ 42.9 million net of taxes); more specifically, with regard to the "La Repubblica" CGU, the impairment loss was € 34.6 million, for "GEDI News Network North-East" at € 10.2 million, for "GEDI News Network North-West" at € 12.6 million and for the "GEDI News Network Livorno" CGU at € 1.5 million).

If an equal probability were to be assigned to the three different scenarios, the total impairment loss would be € 61.4 million.

Rights of useat 31 March 2020 amounted to € 50.8 million and include the assets representing rights of use in terms of IFRS 16, which will be amortised over the contract's residual term.

Property, plant and equipmentwas € 70.9 million, down by € 2.3 million compared to the end of 2019 (€ 73.2 million) resulting from depreciations coming down by € 2.9 million and a € 0.6 million increase in investments during the period.

22

GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

Equity-accountedinvestmentstotalled € 27.2 million, remaining basically unchanged on 31 December 2019 (€ 27.1 million).

Othernon-currentassetsamounted to € 0.9 million and remained unchanged with respect to 31 December 2019 (€ 0.9 million).

Deferred tax assetsequalled € 38.2 million (€ 38.8 million at 31 December 2019) and include timing differences between amounts recorded in the statement of financial position and those recognised for tax purposes. At 31 March 2020, the item also included € 16.5 million for prior tax losses.

Inventoriesfor €15.1 million, refer to the inventories of paper, printing materials and publications. The decrease of € 0.8 million over 31 December 2019 is due to the lower carrying levels of paper in stock.

Trade receivablesamounted to € 137.1 million, down by € 35.9 million compared to 31 December 2019 due to lower advertising expenditure.

Tax assetsfor € 5.4 million, were down by € 0.7 million compared to € 4.6 million at 31 December 2019. As a reminder, at 31 December 2019, advances were reported net of the theoretical tax liability, while at 31 March 2020, tax assets and tax liabilities are reported separately.

Other assetsequalled € 20.7 million (€ 13.1 million at 31 December 2019) and include advances to suppliers (+€ 3.2 million, mainly due to the higher advances to third-party publishers), agents and freelance associates, prepaid rent and prepaid distribution rights (+€4.8 million) for optional add-on products sold with publications and radio programmes to be launched in the second half of 2020.

Cash and cash equivalentstotalled € 38.0 million and declined by € 13.4 compared to 31 December 2019.: the positive cash flow from ordinary operating activities for € 10.7 million was largely absorbed by € 5.3 million in payments relating to the restructuring plan underway, the outlay for investments for € 5.3 million and the reduction in financing sources from the release of receivables (totalling € 10.0 million) related to the usual cyclical nature of advertising trade receivables.

Equityat 31 March 2020 was € 341.0 million (€ 393.9 million at 31 December 2019), with €

340.6 million belonging to the Group (€ 393.4 million at the end of 2019) and € 0.5 million to non-controlling interests (€ 0.5 million at 31 December 2019). Treasury shares held by the Parent Company at 31 March 2020, whose value was subtracted from the equity, numbered 18,635,303 and represented 3.663% of the share capital.

Total current andnon-currentfinancial liabilitiesamounted to € 85.7 million (€ 98.6 million at 31 December 2019).

23

GEDI Gruppo Editoriale - Interim Financial Report at 31 March 2020

The item also includes the revolving credit line at 31 March 2020 amounting to € 20 million, liabilities relating to releasing the receivables of A. Manzoni & Co. for € 61.6 million and liabilities referring to the loan contracts with a pool of banks signed by companies in the ITEDI Group during 2014 for € 3.5 million. The spread was fixed at 0.75% until 31 December 2017, and then increases each subsequent year, ranging between 1.75% and 2.50%. Amortisation began during the 2016 financial period and will be completed in the 2022 financial year.

Financial liabilities for current and non-current rights of use for € 52.5 million at 31 March 2020 and according to the IFRS 16 accounting standard, include the current value of mandatory future lease instalments that the Group, as tenant, must pay from 1 January 2019. The liability shall progressively be reduced following payment of lease instalments and increased for financial expenses.

Provisions for current and non-current risks and charges were € 38.4 million, down € 2.6 million compared to 31 December 2019, mostly in relation to corporate reorganisation plans underway.

Post employment and other employee benefitsequalled € 51.8 million in total (€ 52.1 million at 31 December 2019). The € 0.3 million decrease compared to the end of 2019 is due to the employee post-employment and fixed indemnities paid out in the period (€ 0.5 million), offset only in part by the financial effect of the valuation of provisions (interest cost) and the discounted value of accruals (service cost), totalling € 0.2 million.

Deferred tax liabilitiestotalled € 74.4 million, down by € 15.6 million compared to the €

90.0 million compared to the end of 2019 at the end of 2019, following the impairment losses incurred by certain publications after the impairment test.

Trade payablesequalled € 77.3 million, with a decrease of € 11.0 million compared to € 88.3 million at 31 December 2019, resulting from the decrease in liabilities for investments (-€ 3.2 million) and lower costs incurred during the first quarter of 2020 compared to the last quarter of 2019.

Tax liabilitiesfor € 11.7 million recorded a decrease of € 4.9 million compared to 31 December 2019. Please note that, in all the interim accounts, tax assets and liabilities accrued in the period are reported separately.

Other liabilitiesamounted to € 48.2 million, down € 6.5 million on the € 54.7 million at 31 December 2019, mainly due to the settlement of the social security charges and payments related to the business restructuring plans underway, which were only partly offset by liabilities accrued to personnel for the thirteenth month wage.

24

Certification of the consolidated financial statements pursuant to Article 154 bis, paragraph 2 of Italian Legislative Decree No. 58 dated February 24, 1998

Certification of the consolidated financial statements pursuant to Article 154 bis,

paragraph 2 of Italian Legislative Decree No. 58 of 24 February 1998

The undersigned, Gabriele Acquistapace, Executive appointed to prepare the company accounting documents of GEDI Gruppo Editoriale S.p.A, certifies pursuant to paragraph 2 of Article 154 bisof Italian Legislative Decree No. 58 of 24 February 1998 that the accounting data contained in the Interim Financial Report at 31 March 2020 for GEDI Gruppo Editoriale S.p.A. corresponds with the results of the accounting documents, records and entries.

Rome, 5 May 2020

GEDI Gruppo Editoriale S.p.A.

(Gabriele Acquistapace)

GEDI Gruppo Editoriale S.p.A.	Share Capital € 76,303,571.85 fully paid-up - Economic and Administrative
Via Cristoforo Colombo, 90 - 00147 Rome, Italy	Index (R.E.A.) Rome no.192573 VAT no. 00906801006
Tel. [phone] Fax. [phone]	Tax ID code and registration Rome Companies' Register No. 00488680588
www.gedispa.it