Mediaset S.p.A.: approval for First Half Results 2020. Strong response to the Covid-19 emergency

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PRESS RELEASE

Mediaset Board Meeting 8 September 2020

APPROVAL FOR FIRST HALF RESULTS 2020:

STRONG RESPONSE TO THE COVID-19 EMERGENCY

Mediaset Group

Net revenues: of €1,166.4 million

Total costs: down to €1,134.7 million

Operating profit (EBIT) €31.7 million

Net profit - €18.9 million

Free cash flow: up to €212.1 million

TV ratings: marked rise in television viewing in the period, with Mediaset

channels leaders in both Italy and Spain

The Board of Directors of Mediaset, which met under the Chairmanship of Fedele Confalonieri, has approved unanimously the company's Interim Report of the first half of the year to 30 June 2020.

After the first two months of the year that were characterised by a markedly positive performance, the subsequent months saw a big drop in advertising sales, in both Italy and Spain, following the introduction of restrictive lockdown measures, which were only loosened gradually from the second half of May in Italy and 21 June in Spain.

Despite these events, the television sector demonstrated positive signals of marked strategic significance: TV ratings during the lockdown period saw increases of up to 50% compared with the same period of 2019. A clear indication of the centrality of TV in the life of citizens which, from January to June 2020, saw Mediaset record the most significant increases in audience for both news and current affairs and entertainment programmes which continued to be broadcast even during the months of total lockdown: a scheduling mix that fully responded to and satisfied public demand.

The positive performance of television, as well as demonstrating the company's broadcasting know-how, did not affect Mediaset's capacity to pursue its business objectives: in fact, the results for the first half of the year show that there was not a fall proportional to the fall in advertising revenues. The impact of the lockdown was decisively mitigated by prompt action to reduce cost: a strong reaction which led to an increase in cash generation and a consequently marked reduction in the level of indebtedness.

The following is a summary of the Group's performance during the period.

• Net revenues amounted to €1,166.4 million, compared with the €1,482.5 million of the first half of 2019. In Italy, total revenues came to €791.3 million, compared with €1,002.2 million in the same period last year. In Spain revenues came to €375.1 million, compared with the €482.5 million in the same period of the previous year.

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As mentioned above, the generalised fall in gross television advertising revenues was decisive. In Spain the figure was €325.1 million, compared with €472.9 million in the same period of 2019. In Italy, the figure was €744.2 million, compared with €985.2 million in the first half of 2019.

It should be noted that while Mediaset recorded an increase in advertising revenues of +2.1% in the first two months of the year in Italy, the subsequent four months saw the suspension of a number of campaigns and a consequent fall in revenues. Nevertheless, on the basis of Nielsen data, in the first half of 2020 Mediaset performed better than the overall advertising market, which recorded a fall of 26.8%.

• Total Operating Costs (personnel costs, other operating costs, amortisations and depreciations) fell to €1,134.7 million, compared with €1,290.8 million for the first half of 2019 (-12.1%). In Spain the figure was €286.2 million, compared with €328.2 million in the same period of last year. In Italy total operating costs amounted to €848.9 million, down from €962.9 million in the same period of 2019.
• The Group's EBIT for the period was in any case positive at €31.7 million, despite being down on the €191.6 million of the same period of last year. In Italy EBIT amounted to -€57,6million, compared with €39.3 million in the first half of 2019. In Spain the figure was €88.9 million, compared with €154.2 million in the previous year.
• Group consolidated net result for the period came -€18.9million, compared with €102.7 million in the same period of last year. It should be noted that the consolidated net result of the comparative period was adjusted to account for the impact of the attribution of results pertaining to the allocation of goodwill generated by the public offering regarding EI Towers launched in 2018 by 2i Towers Holding, with retroactive effect from 1 October 2018.
• Net financial debt on 30 June 2020 fell to €1,197.7 million, compared with €1,348.3 million at the beginning of the period. Excluding losses booked from 2019 pursuant to IFRS 16 and the financial liabilities deriving from the acquisition of a stake in ProSiebenSat 1, net consolidated financial debt amounted to €576.2 million, compared with €768.8 million at 31 December 2019.
  Free cash flow rose to €212.1 million, compared with of €189.0 million in the first six months of 2019. Investments during the period amounted to €72.9 million, related to the increase in the stake in ProSiebenSat 1.
• TV ratings. Also in the first six months of 2020 Mediaset's channels confirmed their net leadership in the commercial target, both in Italy and Spain, in all time bands.
  In Italy, Mediaset had a 34.5% share in the 24 hours and a 36.5% share in prime time in the commercial target and recorded a marked increase in ratings compared with 2019 while out performing all of the principal competitors. Of particular note is the leading position of Canale 5 and the third place of Italia 1 in all time bands among the 15-64-year-old target
  In Spain, the Mediaset España channels remain leaders with a 29.6% share in the commercial target in the 24 hours. Telecinco is Spain's most popular channel with a 14.6% share of individual viewers.

FORECAST FOR THE YEAR

In the July-August period, the trend in the Group's advertising revenues continued to improve, reflecting the gradual normalisation of the market and the general economic situation after the lockdown.

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In particular, in Italy, from July advertising revenues returned to positive territory compared with the same period of the previous year, also without considering the benefits in the month of August of the availability of some of the matches in the final stages of the UEFA Champions League. In Spain, in a period that continued to be conditioned by unpredictable trends in the level of infections, the trend in advertising revenues showed a net improvement compared with the fall recorded in the second quarter, with a result which, despite still being down on the first half of 2019, was nevertheless significantly contained.

In September, along with the launch of the new TV season, initial signals in Italy regarding advertising revenues are positive, even though the general market context remains extremely fragile and with very limited mid-term visibility.

Provided that the health emergency in the coming weeks does not demand further restrictive measures and the expected economic rebound in the overall economy proceeds, the Groups results in the second half of the year are expected to gradually improve compared with the first six months.

VARIATIONS TO THE CORPORATE CALENDAR

Mediaset has announced the following variations to the Corporate Calendar released on 30 January 2020. The meeting of the Board of Directors to approve additional interim results to 30 September 2020 is scheduled to take place on 10 November 2020.

The conference call and presentation to the financial community in audio-webcasting of the results to 30 September 2020 will take place on 11 November 2020 at 09:00 am.

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.

Cologno Monzese, 9 September 2020

Department of Communications and Media Relations

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www.mediaset.it/corporate/

Investor Relations Department

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Disclaimer for American investors

The merger concerns financial instruments of a foreign company and is subject to the disclosure requirements of foreign countries that are different from those of the United States. Any financial statements included in the documents have been prepared in compliance with foreign accounting principles which may not be comparable to those used in the financial statements of US companies.

It may be difficult for you to exercise your rights and any judicial claims based on US federal securities laws, as the issuer is based in a foreign country and some or all of its managers and directors may be resident in a foreign country. You may be unable to sue a foreign company or its officers or directors in a foreign court for violating US laws on financial instruments. It may also be difficult to oblige a foreign company and its affiliates to comply with a decision issued by a US court.

You should be aware that the issuer may purchase financial instruments outwith the confines of the Merger, for example, on the market or in the form of private off-market purchases.

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Highlights from the consolidated income statement (*) in €m

	1st half	Q2
	2020	2019(*)	2020	2019(*)
Consolidated net revenues	1,166.4	1,482.5	484.3	764.3
Labour costs	(228.0)	(245.6)	(111.5)	(121.4)
Procurement, services and other costs	(638.2)	(762.8)	(256.6)	(390.1)
Operating costs	(866.2)	(1,008.4)	(368.1)	(511.5)
Gross operating profit (EBITDA)	300.2	474.1	116.1	252.8
Amortisation of rights	(216.7)	(234.2)	(100.0)	(114.7)
Other amortisation and depreciations	(51.8)	(48.2)	(26.1)	(24.9)
Total amortisation and depreciations	(268.5)	(282.4)	(126.0)	(139.6)
Operating profit (EBIT)	31.7	191.6	(9.9)	113.1
Financial income /(charges)	1.2	9.3	(1.2)	9.2
Income/(charges) from investments	5.3	9.7	2.5	8.3
Profit before taxation	38.2	210.7	(8.6)	130.6
Income taxes	(26.3)	(48.8)	(15.9)	(30.3)
(Profit)/loss for minority interest	(30.8)	(59.3)	(9.1)	(34.3)
Net profit from operations	(18.9)	102.7	(33.6)	66.0
Income/(charges) from discontinued operations	-	-	-	-
Net profit for the Mediaset Group	(18.9)	102.7	(33.6)	66.0

(*) Results for the first half of 2019 restated to retroactively acknowledge the impact of the accounting allocation process of goodwill attributable to subsidiaries.

Highlights from the consolidated balance sheet (*) in €m

	30/06/2020	31/12/2019
Television & film rights	1,099.8	974.7
Goodwill	799.4	796.7
Other tangible/intangible assets	921.1	968.8
Financial assets	1,021.0	1.026.6
Net working capital & other assets/liabilities	304.6	541.0
Severance indemnity reserve	(67.3)	(69.2)
Net invested capital	4,078.6	4,238.7
Net Group assets	2,439.3	2,477.9
Shareholders' equity and minority interest	441.7	412.5
Net assets	2,881.0	2,890.4
Net financial position	1,197.7	1,348.3

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