Press Release: Board of Directors: Results at 31March 2023 Approved

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

Results at 31 March 2023 approved[1]

Consolidated revenue in the quarter amounts to € 179.1 million (€ 183.6 million in 1° quarter 2022). Advertising revenue up by 2%. Positive EBITDA of € 10.6million (€ 12.3 million in 1° quarter 2022). Net Financial Position improves by more than € 3 million versus end 2022.

Corriere della Sera leading Italian daily newspaper on newsstands with a total active digital customer base at end March of 526 thousand subscriptions. The customer base of Gazzetta's pay products increases too, with 213 thousand subscriptions, and of El Mundo and Expansión, with 115 thousand and 56 thousand, respectively.

In the first two months of 2023, RCS retains its position as the leading online publisher in Italy, with an aggregate figure of 33 million average monthly unique users (Audicom at February 2023).

Milan, 12 May 2023 - The Board of Directors of RCS MediaGroup S.p.A. met today and reviewed and approved the Interim Management Statement at 31 March 2023.

Group performance

The beginning of 2023 was marked by the continued conflict in Ukraine, with its consequences also in terms of impacts on the economy and trade. This has led to a state of great uncertainty and a slowdown in anticipated economic growth in relevant markets.

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

The performance in first quarter 2023 is still affected by the increase in raw material prices, especially paper costs, versus first quarter 2022, when paper used had been purchased at 2021 prices.

The Group's consolidated net revenue at 31 March 2023 amounted to € 179.1 million (€ 183.6 million in first quarter 2022), with the change attributable mainly to publishing and circulation revenue, particularly revenue from add-ons. Digital revenue amounted to € 45.1 million and makes for approximately 25.2% of overall revenue.

Advertising revenue in first three months 2023 amounted to € 64.1 million, up versus € 62.8 million in the same period of 2022 (€ +1.3 million). Total advertising sales on online media amounted to € 28.7 million in first quarter 2023, or approximately 45% of total advertising revenue.

Publishing and circulation revenue amounted to € 83 million (€ 90.7 million in the same period of 2022), dropping by € 7.7 million, attributable mainly to a decline in revenue from add-ons (€ -4.4 million) and print circulation revenue, partly offset by growth in digital subscription revenue.

In first quarter 2023, both Italian newspapers retained their circulation leadership in their respective market segments (ADS January-March 2023). At end March, the total active customer base for Corriere della Sera (digital edition, membership and m-site) reached 526 thousand subscriptions. The customer base of Gazzetta's pay products (which includes G ALL, G+, GPRO and Fantacampionato products) closed at end March 2023 with 213 thousand subscriptions (Internal source).

The main digital performance indicators confirm the top market position of RCS, with the Corriere della Sera and La Gazzetta dello Sport brands, which counted in the period January-February 2023 31.5 million and 20.1 million average monthly unique users, and in the period January-March 2023 4 million and 2.6 million average daily unique users, respectively (Audicom). RCS ranks as the top online publisher also in first two months 2023 in Italy with an aggregate figure of 33 million average monthly unique users (net of duplications) (Audicom).

The main social accounts of the Corriere publications at 31 March 2023 reached 11.5 million total followers in the first three months of the year (considering Facebook, Instagram, Twitter, LinkedIn and TikTok - Internal source). The growth of social profiles also continues for La Gazzetta dello Sport, which also launched its new Twitch channel, reaching a total social audience of 5.6 million at end March (considering Facebook, Instagram, Twitter and TikTok - Internal Source).

In Spain, Marca and Expansión once again confirmed their print circulation leadership in their respective market segments at March 2023 (OJD). EGM's April 2023 "General Media Research" survey confirms Unidad Editorial as the leader in Spanish print media with more than 1.5 million daily readers of its three daily newspapers, up by 6% from the last survey in 2022.

Digital subscriptions continue to grow, amounting at March 2023 to approximately 115 thousand subscriptions for El Mundo and 56 thousand subscriptions for Expansión. As part of the online activities, elmundo.es, marca.com and expansión.com reached 44.4 million, 97.1 million and 10.6 million average monthly unique browsers in first nine three 2023, respectively, comprising both domestic and foreign browsers and including apps (Google Analytics).

The social audience of Unidad Editorial Group titles (Internal Source) stands at 8.8 million followers for El Mundo, 16.2 million for Marca and 2.3 million for Telva (considering Facebook, Instagram, Twitter) and 1.4 million for Expansión (considering Facebook, Instagram, Twitter and LinkedIn).

Sundry revenue closed at € 32 million, increasing by € 1.9 million versus first three months 2022 (€ 30.1 million).

EBITDA in first three months 2023 amounted to a positive € 10.6 million (€ +12.3 million in first quarter 2022). Net non-recurring expense and income came to € -0.4 million (same figure in first quarter 2022). The performance in first quarter 2023 is still affected by the increase in raw material prices, especially paper costs. Mention should be made that RCS's seasonality factors generally impact on the results of the first and third quarters of the year.

In 2023, initiatives continued on maintaining and developing revenue, boosting the publishing systems' range of products, developing the digital platforms and enhancing the vertical publishing systems.

In Italy, regarding the main initiatives only, for Corriere della Sera, new TikTok accounts were opened, video sections of local newspapers were updated, and exclusive events dedicated to digital subscribers were organized. Major events were also organized, including the second edition of Obiettivo5 in association with La Sapienza University of Rome and "Italia Genera Futuro" at Palazzo Mezzanotte. La Gazzetta dello Sport continued the graphical enhancement of G+ content, launched the new Stile Gazzetta section, and boosted the online game offerings of Gazzetta.it. La Gazzetta dello Sport's new Twitch channel quickly became one of the top channels in Italy in terms of cumulative video views. In Spain, regarding the main initiatives only, in February the new online version of El Mundo was launched, while renewing the graphical design and organization of the print version. In March, the online Cooking platform was launched. Work also continued on organizing major events, including the second edition of Classica di Jaén, the participation of El Mundo and La Lettura in the International Contemporary Art Fair in Madrid, and the annual Marca Sport Weekend in Malaga.

EBIT came to € -2.6 million (breakeven in the same period of 2022). The decrease reflects the above phenomena commenting on EBITDA, in addition to higher amortization and depreciation attributable to expenditure in digital business development.

The Group's net result at 31 March 2023, amounted to € -1.8 million, (€ -0.7 million in first quarter 2022), overall reflecting the above trends.

At 31 March 2023, the net financial position stood at a negative € 28.5 million, improving by € 3.1 million versus a negative € 31.6 million at 31 December 2022. The change is due mainly to the positive contribution from ordinary operations, partly offset by outlays for capital expenditure and, to a lesser extent, by non-recurring expense in the period.

Total net financial debt, which includes financial payables from leases pursuant to IFRS 16 (mainly property leases), totaling € 137.8 million at 31 March 2023, amounted to € 166.3 million, decreasing by € 8.1 million versus the figure at 31 December 2022 (€ 174.4 million).

Business outlook

The beginning of 2023 was marked by the continued conflict in Ukraine, with its consequences also in terms of economic sanctions applied to Russia and of impacts on the economy and trade, leading to a state of great uncertainty and a slowdown in anticipated economic growth in relevant markets.

The Group has no direct exposure and/or business activities towards the markets affected by the conflict and/or sanctioned entities.

This backdrop fueled the inflationary pressure in 2022 and the growing trend in the costs of various inputs already underway since 2021.

With regard to the Group, this economic context impacted 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.

Moreover, in first quarter 2023, energy and gas costs, after the strong volatility and increases recorded in 2022, gradually returned to values basically similar to those of end of summer 2021; additionally, paper costs have decreased at the moment versus 2022 figures, with anticipated positive effects on the income statement, primarily from the latter half of 2023, also taking account of the turnover time of existing inventory.

In the opening months of 2023 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 over these past years, focusing on their mission as a non-partisan, trustworthy public service, and establishing themselves as authoritative players in daily television, print and online information, with strong digital traffic figures.

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 the developments and duration of the conflict in Ukraine and its geopolitical effects, and on the effectiveness of the public measures - including economic and/or monetary 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 the consequences from the continued conflict in Ukraine and/or cost dynamics, the Group believes that it can set the goal of confirming strongly positive margins (EBITDA) in 2023, up from those achieved in 2022, and to continue with further cash generation from operations.

Developments in 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 Group EBITDA, EBIT and Net Financial Position or Group net financial debt (liquidity), reference should be made to the section "Alternative Performance Measures" in this Press Release.