Press Release RCS – BoD: Results at 31 December 2018 approved

Press Release: RCS MediaGroup Board of Directors

Results at 31 December 2018 approved1

INCREASING MARGINALITY AND NET DEBT REDUCTION TARGETS REACHED

PROPOSAL FOR A DISTRIBUTION OF A DIVIDEND OF 0,06 PER SHARE.

BACK TO DIVIDEND DISTRIBUTION AFTER 10 YEARS

Consolidated results

Consolidated revenues at EUR 975.6 million, gorwing on a like-for-like basis (net of IFRS 15)2

Revenues from digital activities totalling EUR 163 million, up 12.6% compared to 2017

EBITDA of EUR 155.3 million vs. EUR 138.2 al 31.12.2017

Efficiencies of EUR 25.7 million

Net result positive at EUR 85.2 million

Net debt at EUR 187.6 million, 99.8 million lower than net debt reported at 31.12.2017

Consolidated Figures (EUR million)	31/12/2018	31/12/2017
Consolidated revenue	975.6	895.8
EBITDA	155.3	138.2
EBIT	115.5	95.6
Net profit	85.2	71.1

1 For the definitions of EBITDA, EBIT and Net financial debt, please refer to the paragraph "Alternative performance indicators" in this press release. 2 The adoption of IFRS 15. which came into force from 1 January 2018, has resulted in 2018 a total increase of net revenues for EUR 76.4 million, relating to publishing revenue of EUR +100.7 million, advertising revenue of EUR -11.5 million and other revenue of EUR -12.8 million.

Balance sheet Figures (EUR million)	31/12/2018	31/12/2017
Net financial debt	187.6	287.4

Milano, 18 march 2019 The Board of Directors of RCS MediaGroup met today under the chairmanship of Urbano Cairo to examine and approve the consolidated results at 31 December 2018.

In 2018, the Group has fully achieved the expected economic and financial objectives:

• - EBITDA at 155.3 million, up of EUR 17.1 million compared to 2017;

• - Efficiencies of EUR 25.7 million

• - Net resulta of EUR 85.2 million, up EUR 14.1 million compared to 2017which had benefited for about EUR 14.9 million arising from the on disposal of the minority stake held in IEO - Istituto Europeo di Oncologia;

• - Net financial debt stands at EUR 187.6 million, with a cash generation of almost 100 million in 2018.

Group performance as at 31 December 2018

The consolidated net revenues of the Group as at 31 December 2018 amounted at EUR 975,6 million compared with EUR 895,8 million in 2017. On a like-for-like basis, excluding from the comparison the effects arising from the adoption of the new accounting standard IFRS 15 (EUR +76.4 million, relating to publishing revenue of EUR +100.7 million, advertising revenue of EUR -11.5 million and other revenue of EUR -12.8 million), revenues would be increased by EUR 3.4 million.

Advertising revenues totalled EUR 405.8 million, increased by EUR 7.5 million (almost +2%) on a like-for-like basis compared with 2017 (net of IFRS 15 effects equal to EUR -11.5 million in 2018). The positive reversal trend recorded in 2017 (for the first time since 2011) is confirmed, although the reference market for print media is still declining. In particular, digital advertising revenue reached EUR 126 million at 31 December 2018 (EUR 15.1 million compared to 2017), comparing with the reference online market growing 4.5% in Italy (Source: Nielsen) and 14.8% in Spain (Source: i2p, Arce Media).

Publishing revenue amounted to EUR 432.3 million, compared to publishing revenue for 2017 of EUR 331.6 million. On a like-for-like basis (net of the effects of IFRS 15 of EUR +100.7 million), there would have been an overall decrease of EUR 13.3 million, totalling EUR 331.6 million.

The decrease is mainly due to the fall in Unidad Editorial's publishing revenue (EUR 15.2 million), driven by the unfavourable trend in the reference markets, partially offset by the € 1.8 million increase of Newspapers Italy's publishing revenues (+0.6%), also thanks to the growth from Corriere della Sera digital subscriptions revenues. In terms of circulation, leadership was confirmed in the respective reference sectors for the daily newspapers Corriere della Sera, La Gazzetta dello Sport, Marca and Expansión, while El Mundo confirmed its second place among Spanish generalist newspapers.

The significant growth in the digital performance indicators of the Group's newspaper sites continued: in 2018, the site gazzetta.it recorded an increase of 17.9% in the average monthly unique browsers (34.3 million), while corriere.it recorded an increase of 4% compared to 2017 (48.9 million) (source: Adobe Analytics). In December, the active customer base of Corriere is 135 thousand subscribers, up 29% compared to December 2017. Also in Spain, the average monthly unique browsers of elmundo.es (+9.1% to 54.3 million) and marca.com (+29.4% to 57.7 million) grew compared to the previous year (source: Omniture).

In this context, the Group's revenues from digital activities totalled EUR 163 million, growing by 12.6% compared to the same period of 2017, with an incidence of 16.7% on total revenues (18% before application of IFRS 15).

During 2018, the commitment on containing operating and structural costs continued, together with a strong activity for the enrichment and development of the publishing offer, both on the digital and traditional channels.

In 2018 were launched in Italy the monthly Corriere Innovazione (23 February), the weekly supplement Liberi Tutti (18 May), the new monthly back dedicated to the world of cooking and food COOK (19 September) and the new supplement Trovolavoro, dedicated to job world, that completes the already extensive editorial proposal dedicated to this very important and current topic. In the months of July, September and October respectively, the cultural supplement laLettura, the women's weekly Io Donna and the weekly ViviMilano were renewed in their contents. On 19 April Solferino-i libri del Corriere della Sera made its debut and in the first months of 2019 the monthly Amica and the Corriere della Sera's Corriere Milano section were renewed.

La Gazzetta dello Sport offer has been enriched with daily spaces in the back system and with new initiatives such as Gazza Mondo, Time Out and the new free Sunday weekly Fuorigioco.

From 11 to 14 October, RCS was also the protagonist and promoter, together with the Trentino Region, under the patronage of Coni and the Italian Paralympic Committee, of Il Festival dello Sport which staged more than 130 events in 15 different locations and totaled 50 thousand presences with over 500 accredited journalists.

Starting from January 2019, the RCS group launched RCS Academy, the new Business School which, through an innovative and qualified offer, focuses on six areas of specialization: Journalism and Communication; Economy, Innovation and Marketing; Art Culture and Tourism; Fashion, Luxury andDesign; Food & Beverage; Sport.

In Spain, the daily newspaper El Mundo has renewed the Su Vivienda supplement and since 5 March Actualidad Económica has become its reference economic weekly. In July the new Masterpasatiempos crossword magazine was launched and in October the Esfera de Papel cultural supplement.

The MarcaClaro portals were also launched in Colombia and Argentina, after Mexico in 2017, which allowed the recording of significant growth in average monthly unique users in Latin America. In the early months of 2019, the restyling of the elmundo.es site and of Telva magazine were reported.

EBITDA is a positive at EUR 155.3 million (15.9% on revenues), an improvement of over EUR 17.1 million (+ 12.4%) compared to the previous year, thanks to new initiatives launched in 2018, as well as the continuous and incisive efficiency actions that resulted in benefits amounting to EUR 25.7 million. These positive effects are attributable to activities in Italy for EUR 12 million and to activities in Spain for EUR 13.7 million. Non-recurring income totalled EUR 0.2 million (net non-recurring charges equal to EUR 1.8 million in 2017).

The table below shows the breakdown of EBITDA and revenue performance for the individual business areas:

(in milioni di euro)

Progressivo al 31/12/2018 (1)

Progressivo al 31/12/2017

Ricavi	EBITDA	%sui ricavi	EBITDA	%sui ricavi
Quotidiani Italia	458,6	84,2	18,4%	380,4	86,8	22,8%
Periodici Italia	95,9	10,8	11,3%	93,6	14,2	15,2%
Pubblicità e Sport	301,0	32,5	10,8%	313,2	22,7	7,2%
Unidad Editorial	310,8	44,7	14,4%	300,5	32,1	10,7%
Altre attività Corporate	21,5	(16,9)	n.a.	23,1	(17,7)	n.a.
Diverse ed elisioni	(212,2)	0,0	n.a.	(215,0)	0,1	n.a.
Consolidato	975,6	155,3	15,9%	895,8	138,2	15,4%

(1)

Ri cavi

(1) The adoption of the IFRS 15 accounting standard starting from 1 January 2018, without restating the balances as at 30 Decemerb 2017, involved an overall increase in revenues of EUR 76.4 million in 2018, made up of higher revenues of Newspapers Italy for EUR 72.8 million, Magazines Italy for EUR 8.4 million, Unidad Editorial for EUR 15.2 million and a decrease in Advertising and Sports for EUR 20 million.

EBIT totaled EUR 115.5 million, increasing by EUR 19.9 million compared to 2017. In addition to the improvement in EBITDA, the operating result benefits of lower amortization for EUR 8.5 million, while write-downs of fixed assets were recorded at 31 December 2018 for 8.1 million compared to 2.4 million at the end of 2017.

The Group's net result for 2018 is EUR 85.2 million positive, with an improvement of EUR 14.1 million compared to 2017 which benefited of EUR 14.9 million arising from the capital gain on disposal of the minority stake held in IEO - Istituto Europeo di Oncologia. Net of this benefit, the improvement is EUR 29 million.

Net financial debt decreased at 187.6 million euros (287.4 million at 31 December 2017) and shows a decrease of around 100 million euros compared to 31 December 2017 and a decrease of 234.8 million compared to 30 June 2016, recording a more than half reduction with respect to net debt at 30 June 2016.

The improvement achieved in the 2018 financial year is attributable to the significant positive cash flows of the typical operations (approximately 118.7 million), partially offset by the disbursements for investments and non-recurring charges (EUR 6.4 million) mainly of previous years.

The Board of Directors resolved to propose to the Shareholders' Meeting the distribution of a dividend of EUR 0,06 per share gross of withholding taxes, with coupon detachment (coupon number 8) on 20 May 2019 and currency day 22 May 2019 (record dates on 21 May 2019), back to dividend distribution after 10 years.

Business outlook

In a context still characterized by uncertainty, with the main reference markets falling (with the exception of online advertising), in 2018 as well the Group's performance showed a strong improvement in results compared to the same period of the previous year and achieved its margin targets and a progressive reduction of its financial debt.

In consideration of the actions already implemented and those envisaged for the development of products and revenues as well as for the continuous pursuit of operating efficiency, in the absence of events that are currently unforeseeable and without considering the effects of the different accounting representation that will arise from the adoption, starting from 1 January 2019, of the new accounting standard IFRS 16, the Group believes that it is possible to confirm also for 2019 the target of achieving margins levels and cash flows from typical operations almost in line with those achieved in 2018, allowing a further significant reduction in Net Debt.

The evolution of the general situation of the economy and the reference sectors could, however, affect the full achievement of these targets.

RCS MediaGroup S.p.A.

The Board also approved the draft Financial Statements of the Parent Company RCS MediaGroup S.p.A., which shows a net result of EUR 41.9 million, decreasing of EUR 12.1 million compared to the pro forma result for 2017 (EUR 54 million), which included the aforementioned capital gain on the sale of the minority share in I.E.O. amounting to EUR 14.9 million. Net of this capital gain, the net result would be up € 2.8 million. The shareholders' equity of RCS MediaGroup S.p.A. rose from EUR 410.5 million pro forma at 31

December 2017 to EUR 451.3 million at 31 December 2018.

It should be noted that the economic and financial data for the year 2018 of RCS MediaGroup S.p.A., for a better comparison, are compared with the pro-forma 2017, which takes into account the merger of RCS International Newspapers S.r.l. as if it had taken place in 2017.

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Roberto Bonalumi, the Director responsible for drawing up the company's statements, hereby declares, pursuant to Article 154-bis, paragraph 2 of the Consolidated Law on Finance (Testo Unico della Finanza, TUF), that the information contained in this press release accurately represents the figures contained in the Group's accounting records.

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