Press Release: Board of Directors: Results at 30 June 2022

CorporateJuly 29, 2022 - 14:44

Press Release: Meeting of the Board of Directors of RCS MediaGroup

Results at 30 June 2022 approved1

In the first half, consolidated revenue amounts to € 445.7 million, up by 5.7% versus the same period of 2021 (€ 421.8 million).

EBITDA before non-recurring expense comes to € 71.9 million, up by € 3.4 million versus 1° half 2021. Positive EBITDA of € 60.6 million, impacted by an increase in paper and other input costs of approximately € 10 million.

Net Profit of € 24.2 million (€ 38.7 million in 1° half 2021, which had benefited then from a gain of € 9.5 million on an investment asset).

Positive Net Financial Position of € +15.5 million at 30 June 2022, after distribution of dividends of € 31 million.

Corriere della Sera leading Italian daily newspaper on newsstands with a total active digital customer base at end June 2022 of 436 thousand subscriptions. The digital customer base of Gazzetta's pay products at end June 2022 amounts to 89 thousand subscriptions.

Digital subscriptions grow strongly in Spain too: 93 thousand for El Mundo and 46 thousand for Expansión at end June 2022.

Milan, 29 July 2022 - The Board of Directors of RCS MediaGroup S.p.A., which met today, reviewed and approved the Half-Year Report at 30 June 2022.

Income statement (€ millions)	30/06/2022	30/06/2021
Consolidated revenue	445.7	421.8
EBITDA	60.6	67.9
EBIT	35.8	43.9
Net result	24.2	38.7

Statement of financial position (€ millions)	30/06/2022	31/12/2021
Net financial position1	+15.5	+16.7

Group performance

The beginning of 2022 was yet again marked by the continuing health emergency. Starting from February, the situation began to improve in both Italy and Spain, allowing the acceleration of a phase of progressive significant reduction in restrictions.

After the downtrend of 2020, the economic recovery that started in 2021 was marked by higher prices for transportation and a number of commodities, including printing paper and energy, and in some cases, supply difficulties. This situation is leading to a general increase in production costs. The first months of 2022 too are being marked in both countries by high inflation rates.

With regard to the Group, this economic context impacts on production costs and may also affect the advertisers' propensity to spend.

As from end February 2022, the conflict in Ukraine and its consequences are creating an overall situation of great uncertainty. The Group has no direct exposure and/or business activities towards the markets affected by the conflict and/or sanctioned entities. The current situation is escalating the mentioned cost dynamics, already underway since 2021.

Against this backdrop, the Group continued to generate positive cash flows in first half 2022 and achieved higher revenue and EBITDA before non-recurring expense than in 2021. EBITDA came to a positive € 60.6 million, impacted by an increase in paper and other input costs of approximately € 10 million. EBITDA before non-recurring expense of € 71.9 million was up by € 3.4 million versus the same period of 2021.

Group consolidated net revenue at 30 June 2022 amounted to € 445.7 million, up by € 23.9 million versus 30 June 2021. Growth in advertising revenue and sundry revenue contributed to the improvement. Digital revenue amounted to approximately € 95.7 million overall and makes for approximately 21.5% of total revenue.

Advertising revenue amounted to € 175.1 million (€ 164.1 million in first half 2021), with a positive trend versus the same half of the prior year in both Italy and Spain. Total advertising sales on online media amounted to € 67.4 million in first half 2022, reaching approximately 39% of total advertising revenue.

Publishing and circulation revenue amounted to € 178.5 million (€ 180.2 million in first half 2021).

Both Italian newspapers retained their circulation leadership in their respective market segments at May 2022. At end June, the total active customer base for Corriere della Sera (digital edition, membership and m-site) reached 436 thousand subscriptions. The customer base of Gazzetta's pay products (which includes G ALL, G+, GPRO and Magic products) closed at end June 2022 with 89 thousand subscriptions.

In Spain, Marca and Expansion confirmed their print circulation leadership in their respective market segments at June 2022 too (OJD). Digital subscriptions continued to grow, amounting at June 2022 to approximately 93 thousand subscriptions for El Mundo and 46 thousand subscriptions for Expansión.

Sundry revenue amounted to € 92.1 million (€ 77.5 million in first half 2021).

EBITDA in first half 2022 amounted to a positive € 60.6 million, down by € 7.3 million versus first-half 2021. Net non-recurring expense and income came to € -11.3 million (€ -0.6 million in first half 2021), and include € 10 million in expense attributable to the settlement of the litigation related to the Via Solferino/San Marco/Balzan property complex.

The RCS Group continued its efforts in 2022 to build up its publishing products on both digital and traditional channels.

In Italy, in the six-month period, Corriere della Sera unveiled the new Login, ensured editorial coverage of major events through special issues, podcasts and newsletters dedicated to the Russia-Ukraine war with Corriere della Sera's top names and correspondents, while for digital projects it produced several new podcasts and formats. Major events were also organized, such as "Obiettivo 5-parità di genere", the third edition of "Civil Week," the thirteenth edition of "Cibo a Regola d'arte" and "Italia Genera Futuro". The weekly magazine OGGI, headed by Carlo Verdelli as from 1 February 2022, fully revamped its content with the launch in June, backed by a strong investment in marketing and a major product enhancement, of the new OGGI, which recorded an average circulation of approximately 241 thousand print copies in the first six issues, up by approximately 100 thousand copies versus the average figure for May (+58%). 31 March also saw the restyling of Amica. In Spain, El Mundo launched the cultural magazine La Lectura on 14 January, and the revamped women's magazine YoDona returned to newsstands on 26 March. The new supplement Expansión Fiscal was launched on 22 June. In Spain too, the organization of major events continued, including the third edition of "El foro económico internacional Expansión", the fourth edition of "Marca Sports Festival", and the annual congress "Energy and Happiness" by Telva. ElMundo, elmundo.es and expansiòn.es also produced new daily newsletters and supplements for in-depth coverage of the ongoing conflict in Ukraine.

Operating profit amounted to € 35.8 million versus € 43.9 million in first half 2021 (€ -8.1 million). The trend reflects the above phenomena and non-recurring expense of € 11 3 million commenting on EBITDA, as well as the recording of higher amortization/depreciation resulting from investments in the development of digital activities.

The Group's net profit in first half 2022 amounted to € 24.2 million, down by € 14.5 million versus first half 2021, when the result had benefited from the gain of € 9.5 million earned from the sale of Unidad Editorial Juegos S.A..

At 30 June 2022, the net financial position stood at a positive (net cash) € 15.5 million, basically in line with the figure at 31 December 2021. The positive contribution of € 42.4 million brought by ordinary operations was offset by the distribution of dividends of € 31 million, outlays for technical investments, as well as for non-recurring expense. Versus end June 2021, when net financial debt stood at € 55.9 million, the net financial position improved by € 71.4 million, after distributing dividends of € 31 million (a total of € 102.4 million).

Total net financial debt, which includes financial payables from leases pursuant to IFRS 16 (mainly property leases), totaling € 156.2 million at 30 June 2022, amounted to € 140.7 million, improving by € 4.2 million versus 31 December 2021 (€ 144.9 million).

Business outlook

The beginning of 2022 was yet again marked by the continuing health emergency, with the spread of the Omicron variant. Starting from early February, the situation began to improve in Italy and Spain, allowing both countries to speed up the phase of gradual and significant reduction in restrictions.

As from end February 2022, the conflict in Ukraine and its consequences, including in terms of economic sanctions against Russia and the impacts on the economy and trade, especially on energy, production and logistics supply chains, are creating an overall situation of great uncertainty and a possible slowdown in the economic growth expected in the relevant markets. The Group has no direct exposure and/or business activities towards the markets affected by the conflict and/or sanctioned entities.

The current situation is fueling the inflationary pressure and the growing trend in the costs of various production factors already underway since 2021 and, in some cases, also difficulties in supply, therefore in the production processes for several industries.

With regard to the Group, this economic context impacts 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.

In first quarter 2022 too, the Group met the public's strong need to stay informed through its information offering, ensuring a timely service to its readers. The daily editions of Corriere della Sera and La Gazzetta dello Sport in Italy, and of El Mundo, Marca and Expansión in Spain, the Group's magazines and web and social platforms have played a pivotal role in informing and reporting on this difficult phase, focusing on their mission as a non-partisan, trustworthy public service, and establishing themselves as authoritative players in daily paper and online information, with strong digital traffic figures.

As for both the health emergency and the ongoing conflict, the developing situation and the potential effects on the business outlook, which will be constantly monitored also in the further course of the year, are unforeseeable at this time as they depend, inter alia, on how the health context plays out, on the developments and duration of the conflict in Ukraine and its geopolitical effects, and on the effectiveness of the public measures - including economic ones - which have been and will be implemented.

In consideration of the actions already implemented and those planned, in the absence of a deterioration of health conditions and/or the consequences of a continuing conflict in Ukraine and/or the trend in costs, the Group believes that it can set itself the target of confirming in 2022 margins (EBITDA) before non-recurring expense basically in line with those achieved in 2021 and to continue in the second half of the year with additional cash generation from ordinary operations. Developments in the health emergency, the ongoing conflict, the overall economic climate and the core segments could, however, affect the full achievement of these targets.

***

Under paragraph 2, Article 154-bis of the Consolidated Finance Law (TUF), Roberto Bonalumi, in his capacity as Financial Reporting Manager, attests that the financial information contained herein is consistent with the Company's document results, books and accounting records.

(1) For the definitions of EBITDA and EBIT, reference should be made to the section "Alternative Performance Measures" in this Press Release. As from the Annual Report at 31 December 2021, the item "Net income (expense) from equity-accounted investees" (amounting to a net expense of € 0.1 million at 30 June 2022), previously under EBITDA, has been classified after Operating profit (loss) or EBIT, among financial items. Consistently, this item was also reclassified for 30 June 2021 (net expense of € 0.1 million).