Press Release: Board of Directors: Results at 31 December 2021

CorporateMarch 21, 2022 - 13:38

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

Results at 31 December 2021 approved[1]

Strong growth in results versus the prior year: EBITDA of € 144.5 million (€ 86.0 million in 2020), EBIT of € 96.0 million (€ 35.4 million in 2020) and Net Result of € 72.4 million (€ 31.7 million in 2020).

The Net Financial Position improves by € 76.3 million versus end 2020, when net debt amounted to € 59.6 million, and at end 2021 amounts to a positive € 16.7 million.

Consolidated revenue of € 846.2 million, up by € 96.7 million versus 2020 (+12.9%), with digital revenue making for 24.2% of total.

Advertising sales on online media make for 44.4%. Advertising on RCS online media up by 20% in Italy and by 29.2% in Spain versus 2020.

Corriere della Sera is the leading Italian daily newspaper on newsstands with a total active digital customer base at end December of approximately 384 thousand subscriptions (+24% versus 2020). The digital customer base of Gazzetta's pay products at end December amounts to 80 thousand subscriptions (+46% versus 2020).

RCS is the top online publisher in 2021 with an aggregate figure of 32.2 million average monthly unique users (net of duplications)

Digital subscriptions grow strongly in Spain too: 80 thousand for El Mundo and 41 thousand for Expansión at end December 2021

Proposed resolution to distribute a dividend of € 0.06 per share

Milan, 21 March 2022 - The Board of Directors of RCS MediaGroup S.p.A. met today and reviewed and approved the consolidated results at 31 December 2021.

Income statement (€ millions)	31/12/2021	31/12/2020
Consolidated revenue	846.2	749.5
EBITDA	144.5	86.0

EBIT	96.0	35.4
Net result	72.4	31.7

Statement of financial position (€ millions)	31/12/2021	31/12/2020
Net financial position1	+16.7	(59.6)

Group performance

The beginning of 2021 continued to be marked by the health emergency and the containment measures implemented by the authorities, both in Italy and Spain.

Specifically, in Spain at the beginning of the year, and in Italy starting from the end of February, the number of cases has risen, leading to the adoption of additional restrictive measures. From the second half of February in Spain, and from mid-April in Italy, the situation has improved and the containment measures are being gradually lifted.

In both countries, the vaccination campaign, coupled with the introduction of measures to boost vaccination, prevention and monitoring, has gradually brought great benefits that have helped effectively counter the spread, at end 2021, of the Omicron variant and to curb its impact on business activities and people's lives.

Following the downtrend of 2020, the economic recovery that started in 2021 is being marked by higher prices for transportation and a number of commodities, including printing paper and energy, and in some cases, supply difficulties.

Against this backdrop, the Group's consolidated net revenue amounted in 2021 to € 846.2 million versus € 749.5 million in 2020. A strong contribution to the improvement of € 96.7 million came from the growth in advertising revenue, and partly from the organization of a number of sporting events that could not be held in 2020. The change in revenue also includes the positive effect of the full consolidation of m-dis in 2021 (measured at equity in 2020), amounting to € 44.2 million. The effects of the sale in Spain of Unidad Editorial Juegos S.A. (amounting to € 7.1 million) and the deconsolidation of the advertising area (relating to advertising revenue on third-party publishing products, amounting to € 10.9 million in 2020) went the opposite way. Given its role as principal (pursuant to IFRS 15), the RCS Group, even after the establishment of CAIRORCS Media, continues to recognize revenue earned from advertisers for its own publishing products in the income statement, while advertising revenue from third-party publishing products is no longer shown in the consolidated financial statements.

Special note must be made of the Group's digital revenue; at 31 December 2021, it amounted to approximately € 205 million, up by approximately 19% versus 2020 (€ 172 million), with a percentage on total revenue of 24.2% (23% in 2020).

Advertising revenue in 2021 amounted to € 348.3 million versus € 312.8 million in 2020 (€ +35.5 million). The improvement in revenue is attributable to all areas of activity in both Italy and Spain.

Total advertising sales on online media amounted to € 154.7 million in 2021, reaching approximately 44.4% of total advertising revenue. Online advertising on RCS media at 31 December 2021 grew by 20% in Italy and by 29.2% in Spain versus 31 December 2020.

Publishing and circulationrevenue amounted to € 375.7 million (€ 343.6 million in 2020), and includes € 30.1 million in revenue from the distribution of products of third-party publishers, following the full consolidation of m-dis.

Both Italian newspapers retained their circulation leadership in their respective market segments at December 2021 (ADS January-December 2021).

At end December, the total active customer base for Corriere della Sera (digital edition, membership and m-site) reached 384 thousand subscriptions. The customer base of Gazzetta's pay products (which includes G ALL, G+, GPRO and Magic products) closed at end December with 80 thousand subscriptions.

The main digital performance indicators confirm the strong market position of RCS, which is once again the top online publisher in the period January-December 2021 with an aggregate figure of 32.2 million average monthly unique users (net of duplications) (Audiweb). The Corriere della Sera and La Gazzetta dello Sport brands, in the period January-December 2021, reached 28.4 million and 19.6 million average monthly unique users and 3.8 million and 3 million average daily unique users respectively (Audiweb).

In Spain, Marca and Expansiòn retained their circulation leadership in their respective market segments at December 2021 (OJD). Digital subscriptions grew strongly in December to approximately 80 thousand subscriptions for El Mundo and 41 thousand subscriptions for Expansión.

In 2021, elmundo.es reached 52.8 million average monthly unique browsers; marca.com stood at 94.5 million and expansión.com at 11.3 million average monthly unique browsers (Google Analytics).

Sundry revenue of € 122.2 million increased by € 29.1 million versus 2020 (amounting to € 93.1 million), and includes the positive effect on sundry revenue of the full consolidation of m-dis from 2021, amounting to € 14.1 million. Also contributing to the increase was the return to a normal scheduling of a number of sporting

events, which had not been held in 2020.

Sundry revenue from Unidad Editorial decreased by € 4.6 million versus 2020, due mainly to the deconsolidation of Unidad Editorial Juegos S.A., following its sale at the beginning of April.

In 2021, EBITDA came to a positive € 144.5 million, up by € 58.5 million versus 2020. Net non-recurring expense and income came to € -3.8 million (€ -14.5 million in 2020).[1]

In 2021, initiatives continued on maintaining and developing revenue, boosting the RCS Group's publishing systems' range of products, developing the digital platforms and enhancing the vertical publishing systems.

In Italy, regarding the main initiatives only: Corriere della Sera published a series of guides and presented new podcasts ("Incontri", "L'Ammazzacaffè", "Radio Italians", "Mama non Mama", "Tracce" and "Fortissime") and new newsletters for the titles "Cook", "Buone Notizie", "La 27esima ora", "Corriere Torino", "Corriere Veneto", "Corriere Bologna" and "Global". On 28 May, the weekly magazine 7 hit the newsstands unveiling a new format and graphical design. Numerous events were organized and held on the Digilive platform, including the Pianeta 2021 meetings on sustainability. May saw the 12th edition of "Cibo a regola d'arte", the fourth edition of "L'Italia genera Futuro" while the "Gazzetta Motori Days" event was held on Gazzetta.it. From 13 to 24 September, the eighth edition of "Il tempo delle donne" was held, from 20 September the second edition of Campbus, and in October in Trento the fourth edition of Festival dello Sport. For the European Football Championship and the Tokyo Olympics, La Gazzetta dello Sport developed various initiatives dedicated to the events. July saw the release of the new digital edition of Corriere della Sera, and in third quarter 2021, the start of a new boost to the digital offering of local editions. During the year, La Gazzettadello Sport's pay offer was enriched with content, while activity on social media grew, especially on Instagram. The Gazzanet network underwent full graphical restyling. December saw the holding of the Gazzetta Sports Awards. The titles in the magazines area launched various editorial initiatives, including the 25th anniversary of iO Donna, the 30th anniversary of Dove, celebrated with a graphical restyling of the magazine, and the restyling of Abitare, relaunched for its sixtieth anniversary. Effective 1 February 2022, Carlo Verdelli took over as the new editor-in-chief of weekly OGGI.

In Spain, regarding the main initiatives only, a new section of elmundo.es was launched in February: "Sostenibles", focused on green transition, followed in March 2021 by a new section of Expansión: Economía Sostenible, on issues of corporate sustainability. Radio Marca, thanks to an increased presence of audio content on marca.com and other digital platforms, increased its own digital audience. June saw the launch of the new daily podcast El Mundo al dia. With the start of the European Football Championship, Marca and marca.com launched several editorial initiatives dedicated to the event. To celebrate its 35th anniversary, Expansión organized events and "specials" on digitization, sustainability and the post-Covid economy. On 8 and 9 June, the second edition of "El Foro Economico International Expansion" was held, organized in association with The European House Ambrosetti. In July, marca.com launched the "signwall" for premium content development. 27 September saw the launch of a new editorial initiative of El Mundo named "Gran Madrid", covering news from the Spanish capital and its autonomous community. November saw the third edition of MarcaSport Weekend, the Marca sports festival.

The activities on developing and enhancing the editorial offering were complemented by extraordinary actions taken on costs to promptly adjust the company organization to the changed environment. The benefits of these cost containment actions in 2021 amounted to approximately € 9.2 million, of which € 4.2 million in Italy and € 5 million in Spain.

EBIT came to a positive € 96 million (€ 35.4 million in 2020), up by € 60.6 million, driven by the improvement in EBITDA.

The Group's profit amounted to € 72.4 million, up significantly from the profit of € 31.7 million in 2020 (€ +40.7 million).

At 31 December 2021, the net financial position stood at € 16.7 million (net cash), improving by € 76.3 million versus a net debt of € 59.6 million at 31 December 2020. The net financial position, in addition to capital expenditure and non-recurring expense, was impacted negatively by (i) the distribution of dividends for € 15.6 million, (ii) the consolidation of the main companies of the m-dis group, which at 31 December 2021 carries a net debt of € 1.8 million and (iii) the financial effect, amounting to € 3.9 million at 1 January 2021, of the contribution to CAIRORCS Media (which has a positive net financial position of € 13.9 million at 31 December 2021). Conversely, the positive effects came from the significant contribution from ordinary operations, the net proceeds from the sale and purchase of investments and the sale of fixed assets, totaling € 16.1 million, relating mainly to the sale of Unidad Editorial Juegos S.A. and a number of non-instrumental properties.

Strong cash generation for the year confirmed the trend that had started in 2016. The overall reduction versus 30 June 2016 (when debt amounted to € 422.4 million) is € 439.1 million, net of dividend payments of € 46.5 million.

Total net financial debt, which includes financial payables from leases pursuant to IFRS 16 (mainly property leases), totaling € 161.6 million at 31 December 2021, amounted to € 144.9 million, improving by € 69.6 million versus 31 December 2020).

Business outlook

After 2020, the year 2021 continued to be marked by the health emergency and the containment measures implemented by the authorities, both in Italy and Spain. Compared with the beginning of the year, starting from the second half of February 2021 in Spain, and from mid-April in Italy, the situation has improved and the containment measures are being gradually lifted.

In both countries, the vaccination campaign, coupled with the introduction of measures to boost vaccination, prevention and monitoring, has gradually brought great benefits, which have helped speed up the reduction of restrictions, improving the situation further.

The vaccination campaign and the measures adopted have allowed the two countries to cope effectively with the spread of the Omicron variant at the end of 2021 and to curb its impact on business activities and people's lives.

In 2021 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.

Following the downtrend of 2020, the economic recovery that started in 2021 is being 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 causing a general increase in production costs and difficulties in production processes for various sectors, whose current production is struggling to keep pace with the trend in demand. Broadly speaking, after several years of virtual price stability, in 2021 the national consumer price index recorded a stronger year-on-year growth in both Italy and Spain than in the more recent past.

With regard to the Group, this economic context, and its development during the year, impacts on production costs and may also affect the performance of the advertising market, as it may influence the advertisers' propensity to spend.

The beginning of 2022 is yet again marked by the spread of the Omicron variant and the continued restrictive measures implemented by both Governments in Italy and Spain. Starting from the beginning of February, the situation has begun to improve in both countries, allowing them to speed up the gradual and rapid lifting of 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 causing grave uncertainty.

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 and the effectiveness of the public measures - including economic ones - adopted and on the developments and duration of the conflict in Ukraine and its geopolitical effects.

In consideration of the actions already implemented and those planned, in the absence of a new deterioration of health conditions and/or a worsening of the consequences of a continuing conflict in Ukraine and/or further increases in the costs of certain commodities, the Group believes that it can set itself the target of confirming in 2022 margins (EBITDA) in line with those achieved in 2021 and a resulting further improvement in the net financial position.

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.

Performance of the Parent Company

The Board also approved the draft Financial Statements of the Parent Company RCS MediaGroup S.p.A., which show net revenue of € 508.2 million in 2021 versus € 488.8 million in 2020. The increase of € 19.4 million is due primarily to higher advertising revenue and sundry revenue. Circulation revenue was basically in line. Profit was € 38.7 million (€ 12.8 million in 2020). Parent Company equity increased from € 468.8 million at 31 December 2020 to € 492.3 million at 31 December 2021.

Calling of the Ordinary Shareholders' Meeting (3 May 2022)

The Board of Directors has resolved to convene the Ordinary Shareholders' Meeting in single call for 3 May 2022. The Shareholders' Meeting will be held in the manners set forth in the notice of call, which will be published within the time limits of law. The Board of Directors also resolved to propose to the Shareholders' Meeting a distribution of € 0.06 per share, gross of tax, with ex-dividend date (coupon no. 4) on 16 May 2022, and payable date on 18 May 2022 (record date 17 May 2022).

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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.

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[1] As from 2021, the item Net income (expense) from equity-accounted investees, amounting to a net expense of € 2.1 million, previously under EBITDA, has been classified under EBIT, among financial items. Consistently, this item was also reclassified for 2020 (net expense of € 2.9 million).

[1] For the definitions of EBITDA,EBIT, and Net Financial Position, reference should be made to the section "Alternative Performance Measures" in this Press Release. As from 2021, the item Net income (expense) from equity-accounted investees, amounting to a net expense of € 2.1 million, previously under EBITDA, has been classified under EBIT, among financial items. Consistently, this item was also reclassified for 2020 (net expense of € 2.9 million).