Annual Report at 31 December 2019 Incorporates the New IFRS 16 - Leases, Which Came Into Force As from 1 January 2019

Annual Report

at 31 December 2019

This is English translation of the Italian annual report, which is the sole authoritative version.

RCS MediaGroup S.p.A. Via A. Rizzoli, 8 – 20132 Milan Share Capital € 270,000,000.00 - Company Register and Tax Code/VAT No. 12086540155, REA No. 1524326 Subject to the direction and coordination of Cairo Communication S.p.A.

Contents Corporate Officers ...... 3 Group overview ...... 5 Information regarding shareholders ...... 7 Group financial highlights of RCS MediaGroup ...... 8 Report on Group operations of RCS MediaGroup ...... 10 Group performance at 31 December 2019 ...... 12 Human resources ...... 21 Environment ...... 24 Principal risks and uncertainties ...... 25 Operating segment performance ...... 30 Financial highlights of RCS MediaGroup S.p.A...... 44 Business outlook ...... 50 Alternative performance measures ...... 51 Information on ongoing disputes ...... 52 Other Information ...... 54 Proposed Resolution ...... 57 Consolidated Financial Statements ...... 58 Income statement ...... 59 Statement of comprehensive income ...... 60 Statement of financial position ...... 61 Statement of cash flows ...... 62 Statement of changes in equity ...... 63 Notes to the consolidated financial statements ...... 64 Certification of the Financial Reporting Manager and the Chief Executive Officer ...... 134 Separate financial statements ...... 135 Financial statements of RCS MediaGroup S.p.A...... 136 Income statement ...... 137 Statement of comprehensive income ...... 138 Statement of financial position ...... 139 Statement of cash flows ...... 140 Statement of changes in equity ...... 141 Notes to the separate financial statements ...... 143 Certification of the Financial Reporting Manager and the Chief Executive Officer ...... 198 Annexes to the consolidated financial statements ...... 199 List of Group investments at 31 December 2019 ...... 200 Exchange rates against the Euro ...... 202 Quarterly consolidated income statement ...... 203 Income statement pursuant to CONSOB Resolution no. 15519 of 27 July 2006 ...... 204 Statement of financial position pursuant to CONSOB Resolution no. 15519 of 27 July 2006 ...... 205 Related party transactions ...... 206 Tables attached to the separate financial statements of RCS MediaGroup S.P.A...... 208 Details on Related Party Transactions at 31 December 2019 ...... 209 List of investments ...... 211 Merger schedules - pro forma 2018 and 2019 ...... 215 List of local branches of RCS MediaGroup S.p.A. at 31 December 2019 ...... 219

CORPORATE OFFICERS

Honorary Chairman

Cesare Romiti

Board of Directors (*)

Urbano Roberto Cairo Chairman and Chief Executive Officer Marilù Capparelli Director Carlo Cimbri Director Alessandra Dalmonte Director Diego Della Valle Director Uberto Fornara (**) Director Veronica Gava Director Gaetano Micciche’ Director Stefania Petruccioli Director Marco Pompignoli (**) Director Stefano Simontacchi Director Marco Tronchetti Provera Director

(*) The Board of Directors, in office at the date of approval of this Report, was appointed by resolution of the Shareholders' Meeting held on 2 May 2019, with the exception of Director Stefano Simontacchi, who was appointed by resolution of the Shareholders' Meeting held on 14 May 2019. The Directors are in office for the years 2019-2020-2021 and therefore until the Shareholders’ Meeting called to approve the 2021 financial statements. (**) Director with delegated powers

Powers delegated by the Board of Directors

Without prejudice to the internal observance of the functions and rules of corporate governance adopted, the Board of Directors has granted all the powers to the Chairman and Chief Executive Officer for the conduct of the Company’s ordinary administration, as well as a set of powers for the Company’s management, with limits on the size of financial commitments and/or risks that may be assumed for certain types of transactions. The Board of Directors also assigned Director Marco Pompignoli the role of overseeing and supervising the administration, finance and management control, legal and corporate affairs, procurement and information systems functions of the RCS Group, in coordination with and in support of the Chairman of the Board of Directors and Chief Executive Officer, granting him within the scope of these functions a series of powers with limits on the financial commitments and/or risks that may be assumed for certain types of transactions. Director Marco Pompignoli was also designated by the Board of Directors as Director responsible for the internal control and risk management system. The Board of Directors assigned Director Uberto Fornara the role of managing RCS's ordinary advertising agency activities, granting him a series of powers within the scope of his role, with limits on the financial commitments and/or risks that may be taken on for certain types of transactions.

Board of Statutory Auditors (*)

Enrico Maria Colombo Chairman Marco Moroni Standing auditor Paola Tagliavini Standing auditor Guido Croci Alternate auditor Maria Pia Maspes Alternate auditor Piera Tula Alternate auditor

(*) The Board of Statutory Auditors in office at the date of approval of this Report was appointed by resolution of the Shareholders’ Meeting on 26 April 2018. The Statutory Auditors are in office for the years 2018-2019-2020 and therefore until the Shareholders’ Meeting called to approve the financial statements relating to the last of these years.

Independent Auditors (*)

Deloitte & Touche S.p.A.

(*) In office until the Shareholders’ Meeting called to approve the 2026 financial statements.

GROUP OVERVIEW

RCS MediaGroup is one of the top publishing groups in Europe. It is a leader on the Italian and Spanish daily newspaper market, active in magazines, books, television, radio and new media, one of the top players in the advertising sales market, and operates also in the distribution field. It is a reference point in sport business through the production of high-quality publishing content and the organization of major sporting events. As from July 2016, following the successful conclusion of the purchase and exchange offer (OPAS) launched on RCS MediaGroup S.p.A. shares, Cairo Communication S.p.A. has become the direct parent of RCS MediaGroup S.p.A., over which it also exercises direction and coordination from December 2019.

In a global context marked by disruptive changes in communication media, RCS MediaGroup spearheads the evolutionary process in the publishing industry, drawing on the founding values and principles which inspire it and the acknowledged influence underlying its content and brands.

In Italy, the RCS Group publishes Corriere della Sera and La Gazzetta dello Sport, leading names in national and sport dailies, as well as local editions and weekly and monthly magazines, including Amica, Dove, Oggi and Abitare and numerous supplements and inserts (weekly and monthly) associated with the two daily newspapers. These include laLettura, Corriere Salute, L’Economia, 7, Buone Notizie - L’impresa del Bene, Style Magazine, Living, Cook, Trovolavoro, Corriere Innovazione, IO Donna for Corriere della Sera, and SportWeek, Speciali G, Time Out and VcomeVolley for La Gazzetta dello Sport.

In Spain, the Group is one of the main players in the media sector with the Unidad Editorial Group, which publishes El Mundo, Spain’s second daily newspaper in terms of newsstand sales, Marca, leader in sports news, and Expansión, leader in business news, in addition to numerous magazines, including Telva and Marca Motor. The supplements (weekly and monthly) of these publications include Actualidad Economica, Yo Dona, Fuera de Serie, El Cultural and Metropoli.

The RCS Group organizes major world sporting events, including Giro d’Italia, Milano-Sanremo, Il Lombardia, Tirreno Adriatico, UAE Tour, Milano Marathon and Color Run, and is well-positioned as a partner for the creation and organization of events through RCS Live. The Group also operates in Spain in the football and sport online betting sector with the Marca Apuestas website.

The RCS Group, through its Sfera operations hinged on a business model focused on the early childhood segment, with printing and online activities, direct marketing and trade fairs, is the market leader in Italy and Spain and also has a presence in Mexico with business models similar to Italy’s; in France and Portugal, its offer is exclusively digital.

Mention should particularly be made in the book segment of Solferino - i libri del Corriere della Sera and RCS Academy, the new RCS Group business school launched in 2019 and boasting an innovative and qualified offer, focused on six areas of specialization: Journalism and Communication; Economy, Innovation and Marketing; Art, Culture and Tourism; Fashion, Luxury, and Design; Food & Beverage; Sport.

In Italy, RCS has a presence in the radio television communication sector, through both the satellite channels Lei, Dove and Caccia and Pesca, and through the web TV channels of Corriere della Sera and La Gazzetta dello Sport. In Spain, it is also present with the top national sports radio station Radio Marca, with the web TV channels of El Mundo and Marca and broadcasts through the two digital TV channels Gol Television and Discovery Max, produced by third parties.

RCS MediaGroup is a leading operator in advertising sales in Italy and in Spain, capable of offering its customers a broad and diversified communication offer through the prestige of the Group’s publications, including on innovative means of communication such as digital editions, web, mobile, tablets, and leveraging on a wide range of consumer engagement services and solutions.

RCS MediaGroup holds an investment in m-dis Distribuzione Media S.p.A. and, through Unidad Editorial S.A., in Corporaciòn Bermont B.L., leaders in distribution on the newsstands channel in Italy and in the daily press in Spain, respectively.

INFORMATION REGARDING SHAREHOLDERS

 SHARES 1

No. of ordinary shares 521,864,957

 CHANGE IN PRICES AND VOLUMES (ordinary shares)

Source:Reuters 2019 2018 High (€) 1.48 1.29 Date 5 March 10 January Low (€) 0.82 0.83 Date 12 August 24 October December average price (€) 1.05 1.19

Average volumes (m) 0.73 0.47 Max. volumes (m) 4.04 2.17 Date 2 December 3 December Min. volumes (m) 0.11 0.04 Date 15 April 23 July

Capitalization (€ m) (at 31 December) 525 600.8

 SHAREHOLDER COMPOSITION 1

Reference is made to the data published on the CONSOB website updated in January 2020.

CONSOB SHAREHOLDER SHARE % (*)

Urbano Cairo (**) 59.831

Mediobanca - Banca di Credito Finanziario S.p.A. 9.930

Diego Della Valle (**) 7.624

Unipol Gruppo S.p.A. (**) 4.891

China National Chemical Corporation (**) 4.732

(*) The above percentages are based on the notices sent by the shareholders pursuant to Article 120 of the Consolidated Finance Act by the shareholders (thresholds: 3 if the listed company is not a SME, 5, 10, 15, 20, 25, 30, 50, 66.6, and 90 percent). Therefore, these percentages may not align with figures processed and made public by other sources, if the change in the shareholding did not trigger shareholder reporting obligations. (**) The above shareholders are at the top of the shareholding chain and are not direct shareholders.

Source: CONSOB

1 For additional information, refer to the Report on Corporate Governance and Ownership Structure.

GROUP FINANCIAL HIGHLIGHTS OF RCS MEDIAGROUP

31/12/2019 31/12/2018 (€ millions)

INCOME STATEMENT

Net revenue 923.6 975.6 EBITDA (1) 153.3 155.3 EB IT (1 ) 102.5 115.5 Profit (loss) before tax and non-controlling interests 86.4 100.5 Income tax ( 17.6) ( 15.2) Profit (loss) from continuing operations 68.8 85.3 Profit (loss) for the period attributable to the owners of the parent 68.5 85.2

Basic earnings (losses) per share: continuing operations (Euro) 0.13 0.16 Diluted earnings per share: continuing operations (Euro) 0.13 0.16

31/12/2019 31/12/2018 STATEMENT OF FINANCIAL POSITION

Net capital employed 587.7 442.1 of which related to rights of use pursuant to IFRS 16 160.7 n.a. Net financial debt (1) (2) 131.8 187.6 Financial payables from leases pursuant to IFRS 16 175.3 n.a. Equity 280.6 254.5

Average number of employees 3,279 3,310

(1) For the definitions of EBITDA, EBIT and Net Financial Debt, reference should be made to the paragraph "Alternative Performance Measures" in this Annual Report. (2) The figure excludes financial payables from leases pursuant to IFRS 16 recorded under financial liabilities following the adoption of IFRS 16.

The Board of Directors approved the Group Consolidated Financial Statements and Separate Financial Statements on 26 March 2020.

Compared to the 2018 Annual Report, the Annual Report at 31 December 2019 incorporates the new IFRS 16 - Leases, which came into force as from 1 January 2019. The new standard establishes a single model of recognition and measurement of leases for the lessee, without making any distinction between operating leases and finance leases; specifically, it provides - for contracts to which it applies - the recognition of a right of use of the underlying asset in the balance sheet assets against a financial liabilities. The standard provides the possibility of not recognizing as leases those contracts that involve low-value assets and leases with a residual term equal to or less than 12 months. For the adoption of the new standard, the Group followed the modified retrospective transition method, opting for “cherry picking” on a number of contracts (i.e. with the cumulative effect of the adoption recognized as an adjustment to the opening balance of retained earnings at 1 January 2019, without restating comparative information).

For a limited number of property rental contracts – as an exception transition method generally applied by the Group - the right of use was valued by applying discounting from the effective date of the contracts, with the

same IBR used in calculating the financial liability. This accounting treatment (known as “cherry picking”) at 1 January 2019 had a negative effect on equity as a result of the difference between the right of use, calculated in this manner, and the financial liability of approximately € 12.7 million gross of the accounting effect of the tax component (approximately € 9.1 million the net effect).

Overall, the application of the new accounting standard at 31 December 2019 resulted in:  the recognition under fixed assets of rights of use on leased assets for a total of € 160.7 million;  the recognition of a financial liability (financial payables from leases pursuant to IFRS 16), calculated as described above, of approximately € 175.3 million;  the reversal of lease payments of € 26.2 million (€ 24.8 million recognized in cash), offset by higher amortization and depreciation of € 23.2 million, higher financial expense of € 3.5 million and lower tax of € 0.1 million; with an impact on EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +26.2 million, € +3 million and € -0.4 million respectively;  a decreasing impact on initial equity of € 9.1 million, net of the accounting effects of the tax component, related “cherry picking” treatment applied to a small number of property lease contracts, as described above.

Note 9 “Accounting standards, amendments and interpretations which came into force as from 1 January 2019: IFRS 16 - Leases” in this Annual Report contains a clearer description of the new standard and its effects at 1 January 2019.

The adoption of IFRS 16 has no impact on the measurement of the covenant (Net Financial Debt/EBITDA) provided in the Loan Agreement dated 4 August 2017, because its exclusion from the relating calculation had been expressly regulated at the time the Agreement had been concluded.

***

For complete disclosure purposes, the RCS Group’s financial highlights for the fourth quarter are as follows:

(€ millions) 4th quarter 2019 % 4th quarter 2018 % Difference Difference (1) ABA-B% Net revenue 249.7 100.0 262.3 100.0 (12.6) (4.8%) Publishing revenue 102.3 41.0 105.7 40.3 (3.4) (3.2%) Advertising revenue 116.6 46.7 124.8 47.6 (8.2) (6.6%) Sundry revenue 30.8 12.3 31.8 12.1 (1.0) (3.1%) EBITDA 50.9 20.4 53.6 20.4 (2.7) (5.0%) EBIT 38.0 15.2 38.2 14.6 (0.2) (0.5%) Profit (loss) for the period attributable to the owners of the parent 27.8 11.1 33.1 12.6 (5.3) (16.0%)

(1) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in fourth quarter 2019 in the reversal of lease payments of € 6.5 million, offset by higher amortization and depreciation of € 5.5 million and higher financial expense of € 0.8 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +6.5 million, € +1 million and € 0.1 million respectively.

EBIT in fourth quarter 2019 amounts to € 38 million versus € 38.2 million in fourth quarter 2018. Excluding the effect of the adoption of IFRS 16 from the comparison, EBIT for fourth quarter 2019 would amount to € 37 million, showing a decrease of € 1.2 million compared to fourth quarter 2018.

REPORT ON GROUP OPERATIONS OF RCS MEDIAGROUP

In 2019, the Italian economy showed a weak positive trend in the first three quarters of the year. The fourth quarter, instead, saw a slowdown in GDP, which dropped by 0.3% versus the prior quarter and unchanged versus the same quarter of the prior year. In 2019, GDP grew by 0.3%, down compared to 0.8% in 2018 (Source: ISTAT). The slowdown in the Italian economy falls into a global economic framework has shown moderate growth during the same period. International trade expanded again in third quarter 2019, but the risks identified in 2019 and the additional COVID-19 related risks still loom. Specifically, the risks of a fiercer tariff dispute between the US and China and the UK's hard exit from the EU (Brexit) have eased, however prospects remain uncertain as the COVID-19 spread continues and the countries affected adopt restrictive measures as described below. In 2019, Spain’s economy showed a different scenario, with much stronger growth, driven by domestic demand. In Spain, GDP in 2019 grew by 2% (2.4% in 2018; Source: Institute of National Statistics - INE), higher than other major European economies.

Against this backdrop, in 2019 the Italian advertising market saw investments drop by 5.4% versus 2018. Print media decreased by 11.6%; specifically, newspapers declined by 10% and magazines by 13.9%. Bucking this trend was the advertising market on radio, up in investments by 1.7%, and online, up by 3.5% (excluding over the tops) versus 2018 (Source: Nielsen). In Spain, at 31 December 2019, the gross advertising sales market fell by 1.5% versus the same period of 2018 (i2p, Arce Media). The newspapers market fell by 9.9%, magazines dropped by 14.9% and supplements lost 9.8% versus the same period of 2018. The Internet segment drove the market (net of social media) and posted a 10.9% improvement. (Source:i2p, Arce Media).

In Italy, ADS figures for the period January-December 2019 show an 8.8% drop in print circulation of the main national general interest newspapers, down by -7.4% including digital copies. Circulation of the main sports newspapers fell too, recording in 2019 an 8.9% decline, or -8.5%, including digital copies (Source:ADS January-December 2019). In Spain too, sales performance on the print newspapers market declined versus 2018. Circulation figures for Spain up to year-end regarding the generalist newspapers market showed an overall 12.7% reduction. Business newspapers, instead, dropped by 12.1%. Daily sports newspapers witnessed the same trend, with circulation down by 10.6% (Source:OJD).

Despite the challenging backdrop, in 2019 Group EBITDA amounted to € 153.3 million, thanks also to efficiencies for € 24.4 million, with a financial debt that stands at € 131.8 million, improving by € 55.8 million (after dividend payments of € 31.1 million), thanks to cash generation from ordinary operations.

In 2019, we continued in our efforts to curb operating and structural expenses, accompanied by intense publishing development, with the aim of strengthening our competitive positioning in the Group’s strategic business areas.

As known, since January 2020, the national and international scenario was featured by the spread of the Coronavirus and the ensuing restrictions for its containment adopted by the governments of the various countries involved. Since the second half of February, the virus has spread significantly across Italy, affecting Lombardy in particular, in terms of number of cases and speed of the infection. The containment measures adopted by the Italian Government are having a direct impact on work organization and timing and on the Group's activities. For instance, sporting events such as the Milano Marathon and the cycling races Strade Bianche, Tirreno Adriatico, Milano Sanremo, Giro di Sicilia and the Giro d'Italia have been postponed. The subsidiary RCS Sport is working to put these races back on the international cycling calendar. In Spain too, the infection has accelerated from the second week of March and the Government has adopted containment measures similar to those put in place in Italy. The current health emergency, besides its severe social impacts, is having direct and indirect repercussions on the general performance of the economy, leading to a climate of general uncertainty. Advertising sales in March slowed down in both Italy and Spain.

The Group is monitoring developments on a daily basis to minimize the impacts in terms of health and safety in the workplace and on the operating and ﬁnancial front, by defining and implementing flexible and timely action plans. The developing situation, as well as the potential effects on the business outlook, are unforeseeable at this time – as they depend on the length of the health emergency and the spread (including on a global scale), as well as on the public measures, including economic and financial ones, which will be implemented in the meantime - and will be subject to constant monitoring in the further course of the year.

GROUP PERFORMANCE AT 31 DECEMBER 2019

The Group’s financial highlights and related comments are shown below.

Reference to the (€ millions) financial 31 December 2019 % 31 December 2018 % Difference Difference statements (1) (2) ABA-B% Net revenue 923.6 100.0 975.6 100.0 (52.0) (5.3%) Publishing revenue I 408.4 44.2 432.3 44.3 (23.9) (5.5%) Advertising revenue I 384.5 41.6 405.8 41.6 (21.3) (5.2%) Sundry revenue (3) I 130.7 14.2 137.5 14.1 (6.8) (4.9%) Operating costs II (501.9) (54.3) (549.2) (56.3) 47.3 8.6% Personnel expense III (264.5) (28.6) (264.7) (27.1) 0.2 0.1% Provisions for risks IV (1.5) (0.2) (5.4) (0.6) 3.9 72.2% (Write-down)/write-back of trade and sundry receivables V (2.5) (0.3) (3.0) (0.3) 0.5 16.7% Income (expense) from equity-accounted investees VI 0.1 0.0 2.0 0.2 (1.9) (95.0%) EBITDA (4) 153.3 16.6 155.3 15.9 (2.0) (1.3%) Amortization of intangible fixed assets VII (15.5) (1.7) (19.6) (2.0) 4.1 Depreciation of property, plant and equipment VIII (10.5) (1.1) (11.5) (1.2) 1.0 Depreciation of rights of use on leased assets IX (23.2) (2.5) 0.0 0.0 (23.2) Depreciation of investment property X (0.6) (0.1) (0.6) (0.1) 0.0 Other (impairment losses)/reversal on non-current assets XI (1.0) (0.1) (8.1) (0.8) 7.1 EBIT (4) 102.5 11.1 115.5 11.8 (13.0) Financial income (expense) XII (16.0) (1.7) (14.1) (1.4) (1.9) Other income (expense) from financial assets/liabilities XIII (0.1) (0.0) (0.9) (0.1) 0.8 Profit (loss) before tax 86.4 9.4 100.5 10.3 (14.1) Income tax XIV (17.6) (1.9) (15.2) (1.6) (2.4) Profit (loss) from continuing operations 68.8 7.4 85.3 8.7 (16.5) Profit (loss) from assets held for sale and discontinued operations XV 0.0 0.0 0.0 0.0 0.0 Profit (loss) before non-controlling interests 68.8 7.4 85.3 8.7 (16.5) (Profit) loss pertaining to non-controlling interests XVI (0.3) (0.0) (0.1) (0.0) (0.2) Profit (loss) for the year attributable to the owners of the parent 68.5 7.4 85.2 8.7 (16.7) (1) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in 2019 in the reversal of lease payments of € 26.2 million, offset by higher amortization and depreciation of € 23.2 million, higher financial expense of € 3.5 million and lower tax of € 0.1 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +26.2 million, € +3 million and € -0.4 million respectively. (2) These notes relate to the corresponding headings in the consolidated income statement. (3) Sundry revenue includes primarily revenue for television activities, the organization of events and exhibitions, sales of customer lists and boxed sets, and for betting activities in Spain. (4) For the definitions of EBITDA and EBIT, reference should be made to the paragraph "Alternative Performance Measures" in this Annual Report.

The change in revenue versus 31 December 2018 is shown below.

Total revenue in 2019 amounted to € 923.6 million, down by € 52 million versus € 975.6 million in 2018. The performance is attributable mainly to publishing revenue and advertising revenue, down by € 23.9 million and € 21.3 million respectively, while sundry revenue decreased by € 6.8 million. The Group's digital revenue is highly significant; at 31 December 2019, it amounted to approximately € 167 million, up by 2% versus the same period of 2018, with a percentage on total revenue of 18% (16.7% in 2018). Publishing revenue amounted to € 408.4 million versus € 432.3 million (€ -23.9 million) in 2018. The change is explained basically by the following reasons:  the € 15.4 million drop in publishing revenue from Newspapers Italy, due to the decline in circulation and sales of add-on products, only partly offset by the growth in revenue from the Solferino publishing house and the growth in digital subscriptions. Specifically, total print-digital circulation of Corriere della Sera and La Gazzetta dello Sport fell by 4.1% and 7%, respectively, compared with 2018 (Source; ADS). These trends outperformed the market; specifically, the generalist newspapers market was down by 7.4% and the sports newspapers market was down by 8.5% (Source: ADS). Both newspapers retained their leadership position in their respective market segments at December 2019 (Source: ADS);  the € 6.2 million decrease in Unidad Editorial's publishing revenue, still affected by the adverse trend in the relevant markets. Specifically, Group publications showed a performance in terms of copies that was almost in line or better than the decline in the relevant market of print products. Mention should be made that the trend recorded by El Mundo's print circulation (-10% versus the figure in 2018) outperformed the decline of the market (-12.7%; Source:OJD). The decrease, including digital copies, would amount to 8.7% versus 2018 (Source:OJD). Average daily distributed copies of Marca and Expansión (including digital copies) decreased by 10.1% and 7.4% respectively versus 2018 (Source:OJD);  a decrease of € 2.3 million in publishing revenue from Magazines Italy. The performance is net of the benefits from the growth in revenue of Amica and higher revenue from add-on products. A noteworthy point was the increased circulation of the monthly magazine Amica (including digital copies) by +11% versus 2018 (Internal Source based on ADS figures updated at November). Publishing revenue from add-on products fell from € 70.3 million in 2018 to € 61.1 million in 2019, dropping by an overall € 9.2 million, attributable basically to Newspapers Italy (€ -9 million), in particular La Gazzetta dello Sport due to fewer launches in 2019, and to a different product composition with positive effects on the margins of the title.

Advertising revenue amounted to € 384.5 million, down by € 21.3 million versus the prior year, due to the lower-than-expected performance of the advertising market and to the absence in 2019 of major sporting events typical of even-numbered years (World Cup, Olympics, European Championships, etc.), which had generated in 2018 additional revenue of approximately € 6 million, net of which the contraction would be 3.8% instead of 5.2%. Taking account also of advertising revenue generated by the Group's advertising agency, the fall is attributable to the decrease of € 12.8 million of Newspapers Italy, of € 10.7 million of Unidad Editorial and of € 3.4 million of Magazines Italy, partly offset by the increase in advertising revenue from Sporting Events. Specifically, magazine advertising of the Group's agency, while decreasing, showed a 4.3% decline in gross revenue, outperforming the 13.9% decline of the relevant market (Source: Nielsen). Bucking the trend, Sporting Events saw advertising revenue grow (€ +5.2 million). Advertising revenue from third-party publishers increased by € 0.4 million versus 2018. Digital advertising revenue reached € 129 million at 31 December 2019. Thanks to continued growth, it now makes for 33.6% of Group advertising revenue. Specifically, digital advertising revenues in the Unidad Editorial area in Spain represent more than 50% of total advertising revenue.

Sundry revenue amounted to € 130.7 million (€ 137.5 million in 2018). The change is due almost entirely to Sporting Events and is adversely affected by the comparison with revenue generated in 2018 by the Grande Partenza of the Giro d'Italia. This performance was partly offset by the increase in sundry revenue from Unidad Editorial, due mainly to the development of digital operations.

The change in EBITDA versus 31 December 2018 is shown below.

EBITDA came to € 153.3 million. Excluding the effects of the new IFRS 16, EBITDA amounted to € 127.1 million versus € 155.3 million in 2018, when the results of the RCS Group had benefited from the strong contribution from the Grande Partenza of the Giro d’Italia outside of Italy, and from the positive effect on advertising revenue of the “even-numbered year" of sporting events. The decrease was due also to the impact on operating costs of the increased purchase price of paper, and to the effect of net non-recurring expense and income (€ -3.8 million the overall effect, being equal to € -3.6 million at 31 December 2019 versus € +0.2 million at 31 December 2018).

The continued efficiency actions in 2019 brought benefits to operating costs of € 24.4 million, of which € 10.8 million in Italy and € 13.6 million in Spain.

The following table shows the most significant results by operating segment. For a detailed comment on revenue and EBITDA, reference should be made to "Operating segment performance”:

(€ millions) 31/12/2019 (1) 31/12/2018

% of % of % of % of Revenue EBITDA EBIT Revenue EBITDA EBIT revenue revenue revenue revenue Newspapers Italy 431.6 65.8 15.2% 56.4 13.1% 458.6 84.2 18.4% 71.1 15.5% Magazines Italy 90.2 9.3 10.3% 2.2 2.4% 95.9 10.8 11.3% 2.4 2.5% Advertising and Sport 286.8 28.4 9.9% 28.1 9.8% 301.0 32.5 10.8% 32.5 10.8% Unidad Editorial 295.0 48.3 16.4% 37.2 12.6% 310.8 44.7 14.4% 37.8 12.2% Other Corporate Activities 35.6 1.5 4.2% (21.4) n.a. 21.5 (16.9) n.a. (28.3) n.a. Other and eliminations (215.6) - n.a. (0.0) n.a. (212.2) - n.a. - n.a. Consolidated 923.6 153.3 16.6% 102.5 11.1% 975.6 155.3 15.9% 115.5 11.8%

(1) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in 2019 in the reversal of lease payments of € 26.2 million, offset by higher amortization and depreciation of € 23.2 million, higher financial expense of € 3.5 million and lower tax of € 0.1 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +26.2 million, € +3 million and € -0.4 million respectively.

In order to facilitate comparability with 2018 data, here are the operating results at 31 December 2019 and EBITDA, excluding the effects of the adoption of IFRS 16:

(€ millions) 31/12/2019 31/12/2018 EBITDA % of EBIT be fore % of % of % of Revenue before IFRS Revenue EBITDA EBIT revenue IFRS 16 revenue revenue revenue 16 Newspapers Italy 431.6 61.7 14.3% 56.1 13.0% 458.6 84.2 18.4% 71.1 15.5% Magazines Italy 90.2 8.9 9.9% 2.2 2.4% 95.9 10.8 11.3% 2.4 2.5% Advertising and Sport 286.8 28.1 9.8% 28.1 9.8% 301.0 32.5 10.8% 32.5 10.8% Unidad Editorial 295.0 43.7 14.8% 36.9 12.5% 310.8 44.7 14.4% 37.8 12.2% Other Corporate Activities 35.6 (15.3) n.a. (23.8) n.a. 21.5 (16.9) n.a. (28.3) n.a. Other and eliminations (215.6) - n.a. - n.a. (212.2) - n.a. - n.a. Consolidated 923.6 127.1 13.8% 99.5 10.8% 975.6 155.3 15.9% 115.5 11.8%

More specifically:  EBITDA before IFRS 16 in the Newspapers Italy area decreased by € 22.5 million versus 2018, due to lower advertising revenue, increasing personnel expense and paper prices. The downturn is also explained by the decrease in revenue from Television Activities and in traditional circulation revenue, although offset by the positive effects of the measures to continuously expand and enhance the publishing offer, the ongoing cost containment measures and the push for efficiency of corporate processes, as well by the improvement in margins from add-on products;  EBITDA before IFRS 16 in the Advertising and Sport area decreased by € 4.4 million (€ -1.7 million excluding non-recurring expense and income from the comparison with 2018). The change is due mainly to Sporting Events and is partly offset by the improvement achieved by the advertising agency, in particular for the efficiency measures adopted;  EBITDA before IFRS 16 in the Magazines Italy area decreased by € 1.9 million as a result of lower advertising revenue and higher paper prices, only partly offset by the suspension of less profitable operations and the curbing of both direct and structural costs;  EBITDA before IFRS 16 in the Unidad Editorial area decreased by € 1 million versus 2018. If non- recurring expense and income were excluded, the figure would show an increase of € 0.8 million versus 2018, due mainly to the growth in digital revenue and ongoing cost containment and efficiency gain actions, the beneficial effects of which more than offset the drop in traditional revenue;  EBITDA before IFRS 16 in Other Corporate Activities improved by € 1.6 million versus 2018. If non- recurring expense and income were excluded from the comparison (basically referring to personnel expense in both 2019 and 2018), EBITDA would come to a positive € 0.8 million. Net non-recurring expense in 2019 that impact on EBITDA amounted to € 3.6 million (a positive € 0.2 million at 31 December 2018), € 2.7 million of which related to personnel expense. Net non-recurring income in 2018 referred to non-recurring income in the Advertising and Sport area (€ +2.6 million), mainly offset by non- recurring expense in the remaining areas, mostly for personnel expense. Personnel expense including non-recurring expense was basically steady (€ -0.2 million versus 2018). Non- recurring expense increased from € 1.8 million in 2018 to € 2.7 million in 2019. Personnel expense before non-recurring expense decreased by € 1.1 million (with a total average workforce down by 31 units), contributed by all areas of the Group's activities, except for the Newspapers area, where personnel expense increased by € 3 million versus 2018, due partly to higher average staff numbers linked to the development of publishing initiatives such as the Solferino books and the RCS Academy activities, as well as the development of digital assets. For a more detailed comment on human resources and on average and exact staff figures, reference is made to the section “Human Resources”. Net income from equity-accounted investees at 31 December 2019 amounted to € 0.1 million versus net income of € 2 million at 31 December 2018. This item includes the pro-rata results of the investees: specifically, the Bermont Group (a positive € 0.5 million) and the m-dis Distribuzione Media group, whose

negative result of € 0.4 million includes € 1.2 million from a write-down of intangible assets made by a direct subsidiary of m-dis Distribuzione Media S.p.A..

Operating profit (EBIT) amounted to € 102.5 million versus € 115.5 million at 31 December 2018. Excluding the effects of the application of the new IFRS 16, EBIT would amount to € 99.5 million. In addition to reflecting the EBITDA trend, the change is explained by lower amortization and depreciation before IFRS 16 (€ -5.1 million), in particular intangible assets (€ -4.1 million), plus the effect of lower impairment losses and reversals on property, plant and equipment and intangible assets, which decreased from € 8.1 million at 31 December 2018 to a net negative effect of € 1 million at 31 December 2019.

Amortization and depreciation of fixed assets before IFRS 16 decreased by € 5.1 million versus 2018, due mainly to the gradual completion of the useful life of intangible and tangible assets, attributable mostly to the Other Corporate Activities area and the television activities of the Newspapers Italy area. For comments on Other impairment losses and reversals, reference is made to Note 24 of the notes. Net financial expense amounted to € 16 million (€ 14.1 million at 31 December 2018). Excluding the effects from the application in 2019 of the new IFRS 16, the figure would amount to € 12.5 million, improving by € 1.6 million versus 2018. The improvement was due to lower net interest expense on bank loans (€ -2.8 million), as a result of the decrease in average debt and a more favourable spread, in particular following the renegotiation of the Loan Agreement in October 2018. These positive effects were partly offset mainly by higher discounting expense on the items recorded in the financial statements. Net expense on financial assets and liabilities amounted to € 0.1 million. This includes a write-down of financial receivables (€ -0.3 million), only partly offset by the liquidation proceeds of a subsidiary (€ +0.2 million) versus a net expense of € 0.9 million at 31 December 2018. Tax in 2019 came to a negative € 17.6 million (a negative € 15.2 million at 31 December 2018) and refers for € 3.8 million to IRAP, for € 14 million to the net reversal of deferred tax assets, for € 1.1 million to the provision for deferred tax liabilities, and for € 1.4 million to the provision for current tax for the period, partly offset by prior years' tax for € 2.7 million.

Due to the elements described above, the profit attributable to the owners of the parent in 2019 amounted to € 68.5 million, down by € 16.7 million versus € 85.2 million in 2018.

The highlights from the statement of financial position are summarized below:

Reference to the 31 December 2019 financial statements % 31 December 2018 % (1) (€ millions) (2) Intangible fixed assets XVII 363.3 61.8 369.4 83.6 Property, plant and equipment XVIII 62.5 10.6 65.4 14.8 Rights of use on leased assets XIX 160.7 27.3 - - Investment property XX 19.5 3.3 20.1 4.5 Financial fixed assets and other assets XXI 144.7 24.6 154.1 34.9 Net fixed assets 750.7 127.7 609.0 137.8 Inventory XXII 23.3 4.0 19.6 4.4 Trade receivables XXIII 206.3 35.1 212.0 48.0 Trade payables XXIV (198.7) (33.8) (204.7) (46.3) Other assets/liabilities XXV (55.7) (9.5) (57.8) (13.1) Net working capital (24.8) (4.2) (30.9) (7.0) Provisions for risks and charges XXVI (46.1) (7.8) (47.6) (10.8) Deferred tax liabilities XXVII (52.5) (8.9) (51.5) (11.6) Employee benefits XXVIII (39.6) (6.7) (36.9) (8.3) Net capital employed 587.7 100.0 442.1 100.0 Equ i ty XXX 280.6 47.7 254.5 57.6 Non-current financial payables XXXI 82.9 14.1 141.6 32.0 Current financial payables XXXII 74.6 12.7 58.8 13.3 Current financial liabilities from derivatives XXXIII 0.2 0.0 0.1 0.0 Non-current financial liabilities from derivatives XXXIV 1.0 0.2 1.0 0.2 Financial assets recognized for derivatives XXXV -- -- Cash and cash equivalents and current financial receivables XXXVI (26.9) (4.6) (13.9) (3.1) Net financial debt (3) 131.8 22.4 187.6 42.4

Financial payables from leases pursuant to IFRS 16 (3) XXXVII 175.3 29.8 - - Total financial sources 587.7 100.0 442.1 100.0

(1) The effects of the new IFRS 16 on balance sheet items resulted in: - the recognition under fixed assets of rights of use on leased assets for a total of € 160.7 million; - the recognition of a financial liability (financial payables from leases pursuant to IFRS 16) of approximately € 175.3 million; - a decreasing impact on initial equity of € 9.1 million, net of the accounting effects of the tax component, the latter concurrently recorded under “Financial fixed assets and other assets” of € 3.6 million. Property, plant and equipment include € 13.3 million relating to assets under a finance lease, the recognition of which in the financial statements dates back to prior years under IAS 17 applicable at the time. In the first months of 2020, these assets, following the contractual exercise of the redemption option, will become, in all respects, owned tangible assets. (2) These references relate to the corresponding items in the statement of financial position. (3) The financial payables from leases pursuant to IFRS 16 do not include the financial payables relating to the previous IAS 17 standard (applied until end 2018) classified under “Current financial payables” (zero million at 31 December 2019 and € 4.3 million at 1 January 2019). For the definition of Net Financial Debt, reference should be made to the section "Alternative Performance Measures".

The main changes in the Group’s statement of financial position at 31 December 2019 versus 31 December 2018 are discussed below. Net capital employed, amounting to € 587.7 million, increased by € 145.6 million versus 31 December 2018, due mainly to the recognition of rights of use on leased assets of € 160.7 million and the related tax effect for deferred tax assets of € 3.7 million. Excluding this effect, the overall change shows a decrease of € 18.8 million, attributable to net fixed assets, down by € 22.7 million, an increase in provisions of € 2.2 million, and an increase in working capital (€ +6.1 million), which fell from a negative € 30.9 million in 2018 to a negative € 24.8 million in 2019. The reduction of € 22.7 million in net fixed assets before IFRS 16 is due to the following decrease: € 13.1 million in financial fixed assets and other assets, € 6.1 million in intangible fixed assets, € 2.9 million in property, plant and equipment, and € 0.6 million in investment property. Specifically:  intangible assets decreased by € 6.1 million versus 31 December 2018. This change reflects capital expenditure of € 15.5 million, amortization and depreciation of € 15.5 million, write-downs of € 5.8

million and reclassifications and other minor changes of € 0.3 million. Most of the capital expenditureinvestment refers to the Other Corporate Activities area (€ 7.8 million) and to Unidad Editorial (€ 5.4 million), and regards in particular the purchase and/or development of software licenses, infrastructure for the provision of web and mobile digital services, the purchase of copyrights as well as the implementation of new IT and multimedia projects, referring partly to the new RCS Academy activities. New capital expenditure was made in television activities (€ 1.9 million), for the acquisition of television rights and concessions used on the Lei, Dove, Caccia and Pesca channels. The impairment-loss of € 5.8 million concerns the goodwill of Sfera, made to align its book values with the recoverable amounts resulting from the impairment test;  property, plant and equipment and investment property decreased by € 3.5 million versus 31 December 2018, due mainly to depreciation of € 11.1 million, partly offset by capital expenditure of € 2.8 million and write-backs of land and buildings of € 4.8 million relating to the property in Pessano con Bornago. Capital expenditure refers to property, plant and equipment and consists mainly of the purchase of other assets for € 1.4 million, relating mostly to Unidad Editorial and RCS Academy, improvements to leased property for € 0.5 million, relating to the definition of the layout of RCS Academy, as well as expense incurred for the renewal of facilities used in the shipping process of the Pessano con Bornago plant;  financial fixed assets and other assets before IFRS 16 (i.e. excluding € 3.7 million of deferred tax assets allocated to take account of the effects on equity of the adoption of the new accounting standard) amounted to € 141 million at 31 December 2019 versus € 154.1 million in financial fixed assets and other assets at 31 December 2018 (€ -13.1 million). The change mainly includes the decrease in deferred tax assets (€ -12.1 million), almost entirely attributable to RCS MediaGroup S.p.A., due largely to the deduction in the period of amounts taxed in prior years. Additionally, the share of profits of equity-accounted investees decreased (€ -1.4 million), owing basically to the distribution of the amount of dividends due. Net long-term loans decreased by € 1.2 million, due to the natural course of the repayment plan for a long-term loan from Unidad Editorial to a distribution company. The decrease in this item was partly offset by the increase in long-term tax receivables of € 2 million. Net working capital came to € -24.8 million versus € -30.9 million at 31 December 2018, increasing by € 6.1 million. The various components of net working capital contributed to the growth, with the exception of trade receivables, which fell by € 5.7 million. The main trends are highlighted below:  inventory increased by € 3.7 million from € 19.6 million at 31 December 2018 to € 23.3 million at 31 December 2019. The change is due mainly to paper inventory in Italy. The trend was affected by the changed cost of paper and the increase in volumes in stock, related also to the gradual development of new publishing initiatives, including Solferino, and by a portfolio of add-on products featuring a greater number of literary works;  trade receivables amounted to € 206.3 million, down by € 5.7 million versus the same figure of 2018. The change is attributable mainly to Unidad Editorial's trade receivables (€ -3.6 million);  trade payables at 31 December 2019 amounted to € 198.7 million, down by € 6 million versus 2018. Other Corporate Activities saw a decrease in payables of € -5.9 million, while the remaining business areas as a whole were steady;  net other liabilities amounted to € 55.7 million at 31 December 2019 (€ 57.8 million at 31 December 2018), shows lower net liabilities of € 2.1 million versus 31 December 2018. Assets increased by € 6.7 million, due mainly to the increase in the VAT receivable (€ +4.7 million). Liabilities increased by € 4.6 million, due mainly to the increase in deferred income of € 4.6 million. The increase in payables to the tax authorities (€ +3.4 million) was offset by the decrease in payables to employees (€ -2.1 million) and tax payables (€ -1.5 million). The provisions are made up of the provisions for risks and charges, the provision for deferred tax and the provision for employee benefits. Overall, the provisions rose from € 136 million at 31 December 2018 to € 138.2 million at 31 December 2019, up by € 2.2 million versus 31 December 2018, due mainly to the net increase in employee benefits (€ +2.7 million).

Net financial debt at 31 December 2019 amounted to € 131.8 million (€ 187.6 million at 31 December 2018), confirming the ongoing downward trend since 2016. The decrease versus 31 December 2018 was € 55.8 million (after dividend payments of € 31.1 million), while the overall reduction versus 30 June 2016 amounts to € 290.6 million, bringing the debt to less than one third versus € 422.4 million at 30 June 2016. In 2019, the significant positive cash flows from ordinary operations (approximately € 106.9 million) more than offset the payment of dividends (€ 31.1 million), the outlays for capital expenditure made (€ 16.4 million), as well as the amount paid for non-recurring expense net of proceeds from disposals (Management Reporting). The net financial debt/EBITDA ratio (before IFRS 16) stands at approximately 1.0x versus 1.2x at 31 December 2018.

The above changes are explained in detail below:

Source: Management Reporting, analyzing the main changes in net financial debt. The analysis of flows of cash and cash equivalents in accordance with the provisions of IAS 7 is provided and commented on in the Consolidated Financial Statements.

The adoption of IFRS 16 resulted in the recognition of financial liabilities of € 175.3 million at 31 December 2019. Total net financial debt, which includes financial payables from leases pursuant to IFRS 16 (mainly property leases), amounted to € 307.1 million.

The following table reconciles RCS MediaGroup S.p.A.’s equity and profit (loss) for the year with the corresponding consolidated amounts:

31/12/19 31/12/18

Equity Profit (loss) Equity Profit (loss)

Equity and profit (loss) for the year of RCS MediaGroup S.p.A. 456.6 39.1 451.3 41.9

Elimination of the total carrying amount of investments and related reversal, write-downs and dividends (222.6) (14.8) (196.1) (13.5)

Total amount of equity and pro-rata results of investees 141.3 46.6 122.9 60.5

Recognition of allocations and goodwill in the consolidated financial statements 112.4 - 113.5 (0.8)

Deferred tax on consolidation adjustments (36.4) (2.4) (34.0) (2.9)

Elimination of effects of transactions between consolidated companies (171.9) - (204.4) -

Equity and profit (loss) for the year attributable to the owners of the parent 279.4 68.5 253.2 85.2 Equity and profit (loss) for the year attributable to non- controlling interests 1.2 0.3 1.3 0.1 Equity and profit (loss) for the year 280.6 68.8 254.5 85.3

HUMAN RESOURCES

The RCS Group, in accordance with the provisions of Article 5, paragraph 3, letter b, of Legislative Decree 254/2016 in implementation of EU Directive 2014/95, has prepared the consolidated Non-Financial Statement (hereinafter “NFS”), which is a separate document from the Annual Report, to which reference should be made for further information relating, among others, to human resources issues. The 2019 Consolidated Non-Financial Statement was prepared in accordance with the "GRI Standards" (the world's most widely used sustainability reporting framework) and subject to limited audit by Deloitte & Touche S.p.A..

Breakdown of employees by geographical area

The exact workforce of the RCS Group at 31 December 2019 (3,253 units, of whom 52 fixed-term contracts) shows 12 units less than the figure at 31 December 2018. The decrease in the workforce is explained by the reduction in temporary contracts (-41 units) versus an increase in the number of permanent contracts (+29 units). The change primarily includes the effects of reorganization actions and efficiency gains, the implementation of policies for the development of digital assets and revenue diversification, including through initiatives such as the launch of the RCS Academy and the Solferino books, as well as operations to stabilize and manage turn over.

The exact headcount broken down by geographical area is shown below.

Italy Spain Other countries Total 31 December 31 December 31 December 31 December 2019 2018 2019 2018 2019 2018 2019 2018 Executives, middle managers and 998 994 725 707 46 47 1,769 1,748

Publication editors and journalists 755 765 496 517 3 3 1,254 1,285 Blue collars 192 193 38 39 00230 232

Consolidated total 1,945 1,952 1,259 1,263 49 50 3,253 3,265

The average number of RCS Group employees in January-December 2019 was 3,279, down by 31 units versus 2018 (an average of 3,310). The reduction in average workforce in Spain was quite significant (-24 units), especially in the editorial staff (- 16 units); the change in the average workforce in Italy (-5 units) was more moderate, equally referring to the population of journalists covered by National Collective Labour Agreements.

The number of employees abroad in 2019 represented approximately 40% of the Group's average total workforce.

The average workforce broken down by geographical area is shown below.

Italy Spain Other countries Total Jan-Dec Jan-Dec Jan-Dec Jan-Dec 2019 2018 2019 2018 2019 2018 2019 2018 Executives, middle managers and 1,004 1,002 720 728 47 50 1,771 1,780 Publication editors and journalists 769 774 505 521 3 2 1,277 1,297 Blue collars 192 194 39 39 231 233

Consolidated total 1,965 1,970 1,264 1,288 50 52 3,279 3,310

Changes in the organizational structure

RCS manages its organizational structure with the aim of supporting and facilitating the editorial development and implementation of new business initiatives, while optimizing productivity and achieving efficiencies to ensure the safety and competitiveness of the Group in all its markets of operation.

To this end, in 2019, RCS carried out a range of organizational activities. Specifically: - work continued on implementing and adapting structures aimed at boosting digital business, advertising revenue and new forms of revenue; - reorganization operations were performed with a view to achieving company-wide synergies and/or aimed at the optimization and efficiency of operating processes; - the coordination and effectiveness of company processes was improved, also by arranging specific procedures, with a view to optimizing the internal control and risk management system, with particular regard to sensitive processes under Legislative Decree 231, Law 262 and GDPR Privacy.

In December 2019, the Board of Directors of Cairo Communication S.p.A. informed the subsidiary RCS MediaGroup S.p.A. of its decision to carry out direction and coordination activities at Group level in the area of advertising sales; following this decision, the Advertising Department of RCS MediaGroup S.p.A. now reports to the CEO of Cairo Communication S.p.A.. This change in the organizational setup ensures strategic and operational coordination between Cairo Pubblicità and the Advertising Department of RCS MediaGroup S.p.A., and facilitates the achievement of significant business benefits such as a broad, diversified and multimedia portfolio of publishing solutions, and advertising planning capable of covering most of the population through different channels and fully meeting advertisers' needs.

Skills development and training

In 2019, RCS MediaGroup S.p.A. delivered over 11,499 hours of training dedicated to monitoring legally- required training and to updating and developing in-house professional skills. In line with the update on regulatory developments, courses on health and safety in the workplace continued. Lastly, a number of training initiatives were completed to increase skills for digital development in the publishing industry and in the field of journalistic professionalism. Skill assessment was carried out by HR with the area managers of the various business divisions.

Industrial relations

With regard to trade union relations in Italy, in 2019 trade union agreements were formalized with the representatives of the two daily newspapers on the uptake of accrued holidays and productivity increases linked to new publishing projects. No agreements were signed on the use of social safety nets. In 2019, no new agreements were signed with the use of social safety nets for RCS MediaGroup S.p.A.'s blue- collar and white-collar workers. The second year of the agreement dated 31 July 2017 was managed, regarding the management of turn over, mobility across departments and the entry of new hires with specific digital skills with a view to business evolution.

With reference to Law no. 160/2019 on the “2020 State Budget and multi-year budget for the three-year period 2019-2021", in application of the provisions of Article 37, paragraph 1, letter b) of Law no. 416 of 5 August 1981, and in compliance with the guidelines of Legislative Decree no. 148/15 on the CIGS (extraordinary redundancy fund) for publishing companies, as from February 2020, RCS has taken the administrative steps for the recognition by the Ministry of Labour of the "crisis-related corporate reorganization" for RCS MediaGroup S.p.A. journalists and graphic designers and print workers.

Following prior notice to the trade union representatives, the RCS MediaGroup S.p.A. reorganization plan was submitted to the Ministry of Labour, the implementation of which will result in redundancies for a total of 240

employees, to manage through an extraordinary redundancy fund (C.I.G.S.) and early retirement expressly provided for. The reorganization will be managed with the trade unions, and specific union agreements are being jointly drawn up regarding in particular the management of redundancies; the reorganization will begin after the internal trade union agreements have been finalized at the Ministry of Labour and the competent bodies have received authorization to use the required social shock absorbers. The early retirement plans are part of the ongoing reorganization, including the editorial processes aimed at digital development, and are functional to the achievement of greater flexibility as well as the entry of new skills.

Unidad Editorial Staff development - with special regard to new digital environments - is the business priority for Unidad Editorial. To this end, specific committees were set up for training, workplace risk prevention, and equality, as well as a joint committee. This aims to establish more effective channels of communication with trade unions on issues of particular importance. Several trade union meetings were held in the period under review on the implementation of the work time register, in line with the new legal provisions. Additionally, in 2019 the organization of the various units was reviewed, with the aim of improving their processes and achieving greater effectiveness and efficiency, leveraging, among other things, on the use of internal mobility. At the same time, with a view to growth, the potential and performance of staff were assessed so as to correctly recognize their abilities and contribution to the creation of value and therefore appoint the most suitable people to key positions.

ENVIRONMENT

In 2019, the RCS Group continued to give the utmost attention to environmental issues, continuing a process that has gone on interrupted for quite a few years now. Attention to environmental problems was also been gradually increased in the macroeconomic context, because of the possible negative impacts on business that climate change could bring. Reference is also made to the section “Main risks and uncertainties” in this document.

The ongoing improvement actions have involved the production and the other processes.

As previously mentioned, RCS has prepared the Consolidated Non-Financial Statement, which reports on non- financial information, in accordance with the relevant regulations, to which reference is made for further information regarding, among others, environmental issues.

With regard to the Environmental Report of the RCS Group, pursuant to Article 2428 of the Italian Civil Code, the provision should be interpreted in keeping with the subsequent provisions of Legislative Decree 254/2016 on the above Non-Financial Statement (NFS), as suggested by the Italian Association of Public Accountants and Accounting Professionals in the Report on Operations issued in June 2018. The NFS at 31 December 2019 also reports the specific issues previously discussed in the Environment Report; reference is therefore made to it for any further details:

- the Board of Directors of RCS MediaGroup S.p.A. approving this Annual Report also approves the NFS at 31 December 2019, presented autonomously and separately; - this non-financial statement contains information on environmental, social, personnel and human rights issues, and on the fight against corruption and bribery to the extent required to ensure an understanding of the Group's activities, performance, results and impact; - the reporting scope matches that of the Consolidated Financial Statements net of companies excluded for being in liquidation/non-operational and of companies excluded as considered not relevant for the purposes of this report.

The 2019 Consolidated Non-Financial Statement is available on the Group's website at: www.rcsmediagroup.it, 'Sustainability' section, and will be published at the Milan Company Register together with the Annual Report.

PRINCIPAL RISKS AND UNCERTAINTIES

Risks relating to macroeconomic trends

Most of the RCS Group’s activities are on the European market, primarily in Italy and Spain. Therefore, the Group’s results are exposed to the risks caused by the economic environment in those countries and by the effectiveness of the economic policies adopted by the different Governments.

The Spanish economy shows a different scenario, where growth is much stronger in 2019, driven by domestic demand. The Spanish GDP grew by 2% in 2019 (Source: Institute of National Statistics - INE), higher than other major European economies. Growth forecasts estimate a +1.6% uptick in GDP for 2020 and +1.5% for 2021 (Source: Economic Forecast European Commission February 2020).

Risks associated with the health emergency

As known, since January 2020, the national and international scenario has been swept by the spread of the Coronavirus and the ensuing restrictions for its containment adopted by the governments of the various countries involved. Since the second half of February, the virus has spread significantly across Italy, affecting Lombardy in particular, in terms of number of cases and speed of the infection. The containment measures adopted by the Italian Government are having a direct impact on work organization and timing and on the Group's activities. For instance, sporting events such as the Milano Marathon and the cycling races Strade Bianche, Tirreno Adriatico, Milano Sanremo, Giro di Sicilia and the Giro d'Italia have been postponed. The subsidiary RCS Sport is working to put these races back on the international cycling calendar. In Spain too, the infection has accelerated from the second week of March and the Government has adopted containment measures similar to those put in place in Italy. The current health emergency, besides its severe social impacts, is having direct and indirect repercussions on the general performance of the economy, leading to a climate of general uncertainty. Advertising sales in March slowed down in both Italy and Spain. The Group is monitoring developments on a daily basis to minimize the impacts in terms of health and safety in the workplace and on the operating and ﬁnancial front, by defining and implementing flexible and timely action plans. The developing situation, as well as the potential effects on the business outlook, are unforeseeable at this time - as they depend on the length of the health emergency and the spread (including on a global scale), as well as on the public measures, including economic and financial ones, which will be implemented in the meantime - and will be subject to constant monitoring in the further course of the year.

Risks relating to the Group’s results

The media segment is witnessing an increase in the level of penetration of new communication resources, the Internet in particular, together with technology innovations that may lead to changes in the demand by consumers, who in future will increasingly be able to request personalized content by directly selecting the source. As a result, this may change the importance of the various media and audience distribution, leading to

greater market fragmentation. Specifically, technological advancements have gradually changed the way content is used, towards more interactive/on demand media, enabling younger audiences to switch to more personalized user options. RCS constantly monitors the level of penetration of new resources as well as changes in the business model related to the distribution of content available, to assess the opportunity to develop the various distribution platforms. Against this backdrop, great importance is attached to the ability to:  organize activities and adapt them to the increasingly rapid changes in markets and consumers;  promptly develop cutting-edge, intuitive and effective technological products.

The current publishing scenario may lead to business combinations of publishing groups, with a consequent change in the market structures.

Advertising Among the Group’s activities, advertising represents nearly half of total revenue and, though it has generally higher margins than other RCS businesses, it is significantly affected by the trend in the macroeconomic cycle, amplifying its trends and, as a result, influencing the Group’s results both in Italy and Spain. Vis-à-vis the macroeconomic trends, the specific advertising markets in which RCS operates continued to perform poorly in 2019, with advertising down both in newspapers (10% in Italy and 9.9% in Spain) and magazines (13.9% in Italy and 14.9% in Spain).

Traditional publishing One of the main activities of the Group is the sale of publishing products to a market that has been undergoing a period of change in Italy and Spain for quite a few years now, and is heading towards increasing integration with online information systems. This transition is causing tension in terms of the distribution of printed products and the concurrent need to adopt suitable strategies for the development of new products and the enhancement of traditional products. However, any worsening of the macroeconomic scenario may aggravate these aspects, as has already partly occurred in the past.

Online The digital segment may help to mitigate the abovementioned pro-cyclical trend of the advertising market, and counter the trend of the traditional publishing market, as it has gradually established itself (ever since it first appeared) both in Italy and in Spain; a point to bear in mind, however, is Italy’s inconsistent market performance. Against this backdrop, RCS developed its digital advertising revenue, reaching 33.6% of total advertising revenue at the end of 2019 (in Spain, digital advertising revenue made for over 50% of total advertising revenue).

On the editorial front too, digital innovation and the enhancement of technological platforms aimed at the organic development of digital products, resulted in a major boost of Internet traffic to the Group's main websites and customer profiling, facilitating the introduction and development of forms of paid digital access (paywall in Italy for Corriere della Sera and the latest: G+ premium content for La Gazzetta dello Sport and Freemium for the newspaper El Mundo). 2019 closed with a record number of 170 thousand digital subscribers to Corriere della Sera, over 35 thousand more than 2018, and greater revenue from digital subscriptions in December alone of +50% versus the same month in 2018. The RCS Group pursues and maintains its leadership position through publishing and marketing investments, reorganization plans geared to digital first, with the aim of increasing its range of solutions through both the development of new formats and the creation of new events (by RCS Sport) in combination with existing formats.

Moreover, it should be noted that the digital segment includes different types of advertising media that are constantly evolving, the offer of which could impact customer preferences with margins that may vary based on the device (mobile, pc) and with strong competition coming from OTT (over the tops). RCS constantly monitors the developments in this environment to anticipate and/or adapt to any changes. The analysis and

understanding of the strategies and initiatives put in place by competitors (for example, the advertising marketplace in Spain) allows for an assessment of the possible operations to carry out. However, given these market characteristics, the prospects for the Group's activities could change, even in the presence of global growth in the online market segment, impacting heavily on the Group's results.

Sporting Events The group activities correlated with sports and in particular the organization of sporting events, have an appreciable margin experiencing rapid development. The business is seasonal in nature, as it is correlated with the frequency of the sporting events. This situation directly influences the financial cycle, thereby concentrating greater inflows in certain parts of the year (coinciding with the date of the event, for instance, the Giro d’Italia).

Other The Group’s results are also influenced by the trend in the price of raw materials, essentially paper and energy costs. Possible increases in procurement costs could also negatively impact the Group’s results.

Management of financial risks

The Group manages its capital structure and financial risks in accordance with the assets structure. Its aim is to maintain a suitable credit rating and adequate capital ratio levels over time, given the current lending dynamics in Italy, where banks are called for more stringent capital requirements by European legislation, and the potential funding opportunities offered by the capital markets. No changes were made to the operating targets, policies and procedures in 2019 from the year ended 31 December, 2018. Market and business risk are added, for the RCS Group, to the exposure to several financial risks: market risks (such as interest rate risk and, to a lesser extent, currency risk, while it is not exposed to price risk), liquidity risk and credit risk. These risks are commented on in Note 14 of the specific Notes to the Annual Report.

Risks associated with employee, supplier and client relationships The Group’s activities cover publishing, journalism and printing activities.

To increase the efficiency of its cost structure, the RCS Group has, in some cases, outsourced several functions, including for example Spanish printing activities and distribution, attaching greater importance to close relationships with suppliers and monitoring activities aimed at guaranteeing and preserving the quality of its production with the help of external suppliers.

For other types of supplies, such as paper in particular, the main risk is tied to a gradual intensification of the oligopolistic market structure, with possible ensuing difficulties in procurement and price tensions (for pink newsprint in particular). Certain dealings with suppliers/customers are based on licence and/or sponsorship agreements, non-renewal of which on expiry or renewal of which at less favourable conditions could impact on the results and financial position of the Group.

The Group is additionally exposed in terms of distribution to the geographical setup of newsstand sales points. Their more or less ubiquitous presence in the territory could have an impact on the Group's activities and affect the Group's operating and financial results.

As far as relations with employees are concerned, work stoppages or other protests by certain categories of workers (journalists and print workers in particular, given the speed and frequency of the product’s economic cycle, regarding in particular the newspaper and, in some cases, the online business) could cause interruptions and, if extended over time, disruptions serious enough to impact the Group’s operating and financial results.

Risks associated with brand protection

The Group brands constitute a fundamental asset for the development of Group activities in both the traditional (print) and digital areas. The occurrence of events that harm the prestige of the brands could result in losses of profit and affect the valuation of the related intangible assets.

Risks associated with the valuation of assets

At 31 December 2019, the Group held € 327.5 million in intangible assets with indefinite useful life. International accounting standards require the periodical assessment of the book value of intangible assets, by means of an impairment test to determine their recoverability (see also Note 35 of this Annual Report). This test is based on financial ratios and estimates of the trend of the activities to which the assets are linked, which are highly sensitive to the financial and economic markets. The main decisions when applying accounting standards and key sources of estimation uncertainty are commented on in Note 12 of this Annual Report, to which reference is made for further details. Significant changes in the economic and financial environment may lead to significant deviations in the parameters and forecasts as estimated and used in the impairment test. If these changes were negative, impairment loss could be made with a significant impact on results.

Legal and regulatory risks

The RCS Group operates within a complex regulatory environment in Italy and abroad. Developments in reference regulations involving the introduction of new legal specifications, including tax, or the amendment of current laws could have significant effects on the group asset portfolio, as well as on corporate governance and on internal compliance processes, which may work against the economic need to simplify administrative processes and improve the quality of reporting in support of the business, with resulting negative effects on profits.

Risks related to privacy, data protection and cybersecurity

The innovation and enhancement of technological platforms and the organic development of digital products and customer centric strategies lead to increased risks related to cybersecurity and data protection. Privacy and personal data protection are becoming an increasingly important issue for the Group and, especially in the publishing industry, play a key role in the relationship of trust with readers and users. The issue requires stringent rules and policies, complemented with a corporate culture that needs to be aligned with the latest regulations that have extended and consolidated the protection of data subjects’ rights. The Group has procedures and tools in place to ensure compliance with the European Regulation on the protection of personal data EU 679/2016, with Legislative Decree 196/2003 as amended by Legislative Decree 101/2018 in Italy, and with Ley Orgánica 3/2018, de Protección de Datos Personales y Garantía de los Derechos Digitales in Spain of 5 December 2018.

Risks associated with climate change

The RCS Group’s distinctive features are the specificity of its supply chain, hinged on the procurement of the raw material "paper", the typicality of its paper products, the processing of which is outsourced in Spain and managed in Italy at the Group's various plants, and the distribution process of paper publishing products, the operation of which is outsourced.

With regard to publishing production and the outsourced distribution chain, the RCS Group, in addition to complying with current regulations, has adopted stringent environmental policies, as commented on in the NFS, to which reference is made. Additionally, the traditional product developed on paper is gradually shifting towards digital media, reducing the already low environmental impacts even more.

As far as its supply chain is concerned, RCS considers management to be crucial, making appropriate selections also on the basis of a certified attention to the environment, as commented in the NFS.

Any climate upheavals could also jeopardize the balance of wooded areas, with impacts on the price of raw materials and consequences on the Group's results, as well as affect the transport system, therefore, the distribution chain, with direct effects on the Group's revenue. The geographical location of the paper supply (North Europe and North America), with regard to the risk of forest fires, and the trend towards the gradual replacement of the traditional product developed on paper with the digital product with regard to transport risks, reduce, and could also mitigate these risks in the future.

Risks associated with management and key staff

The Group's success also depends on the ability of its executive directors and the other members of the management team to effectively manage the Group and the individual business segments. Publication directors play an important role in the publications they manage. The loss of an executive director, publication director or other key person without having a suitable replacement, as well as difficulty in attracting and retaining new and qualified personnel could have adverse effects on the Group's business prospects, earnings and financial position.

Risks associated with disputes

The RCS Group's exposure to litigation risks is consistent with the Group's size and business activities. By way of example, unlike other industries, publishing is marked by greater exposure to the risk of civil and criminal litigation for libel. However, even where RCS lost the case, such disputes gave rise to generally small amounts of compensation compared to the original claims of the counterparty. The most significant disputes, both qualitatively and quantitatively, are commented on in the notes to the Information on ongoing disputes, to which reference is made for more detailed information. Contingent liabilities are allocated to provisions for risks and charges in the financial statements in accordance with the criteria explained in Note 8: "Valuation Criteria”.

Risks relating to RCS MediaGroup S.p.A.

The Company is basically exposed to the same risks and uncertainties described for the RCS Group.

OPERATING SEGMENT PERFORMANCE

NEWSPAPERS ITALY

Segment profile

The Newspapers Italy area is primarily dedicated to the editing, production and marketing of publishing products relating to the titles Corriere della Sera (Corriere publications) and La Gazzetta dello Sport (Gazzetta dello Sport publications). It also includes television activities for Digicast satellite channels and digital development activities. Mention should also be made of the recent initiative Solferino - i libri del Corriere della Sera launched starting from April 2018, and of RCS Academy, the business school launched in 2019.

Corriere publications include the national newspaper, the leading national news and information daily, in addition to a structured, integrated platform of print and digital information media, including a network of local newspapers, the weekly 7, special sections and general interest and specialized supplements, as well as the entire digital offer consisting of the corriere.it website, the digital edition, mobile, the economia.corriere.it section and the apps.

La Gazzetta dello Sport publications include the national newspaper, the leading Italian sports information publication, the weekly Sportweek, special sections and specialized supplements, the gazzetta.it website, the infotainment GazzaNet web network, featuring the latest news and details about the main teams and athletes. Two new sections of the network were launched in 2019: Gazzetta Motori dedicated to the world of cars and motors, and Gazzetta Active dedicated to the world of practiced sport.

The Newspapers Italy area also includes local editions of the two newspapers.

The segment also includes the television activities relating to satellite television broadcasting in Italy (formerly Digicast S.p.A. merged into RCS MediaGroup S.p.A. in 2019), organized in a five-channel offer on the SKY platform: Lei (channel 138), Lei+1 (channel 139) and Dove (channel 413), in addition to the optional channels Caccia (channel 235) and Pesca (channel 236).

The Newspapers Italy area also includes the activities to develop newspapers on digital media as well as classified activities including Trovocasa and, through Trovolavoro S.r.l., the market segment dedicated to the search for qualified personnel.

Lastly, as regards the distribution of newspapers, m-dis Distribuzione Media S.p.A., an equity-accounted investee, which handles the distribution of publishing products of the Newspapers Italy and Magazines Italy areas, contributed to the segment’s results.

Financial highlights

2019 2018 Change % change (€ millions) Publishing revenue 269.4 285.2 (15.8) (5.5) Advertising revenue 146.4 157.6 (11.2) (7.1) Sundry revenue 15.8 15.8 0.0 0.0 Total revenue from sales and services (1) 431.6 458.6 (27.0) (5.9) EBITDA 65.8 84.2 n.s. n.s. EBITDA before IFRS 16 61.7 84.2 (22.5) (26.7)

(1) Revenue from add-ons at 31 December 2019, amounting to € 57.5 million, refers for € 54.9 million to publishing revenue and for € 2.6 million to sundry revenue (the total at 31 December 2018 was € 66.6 million, of which € 63.8 million for publishing revenue and € 2.7 million for sundry revenue).

31 not been applied, the area's EBITDA would be € 61.7 million instead of € 65.8 million, with a difference of € 4.1 million attributable entirely to the reversal of lease payments.

Market trend

The advertising market at end December 2019 was down overall by -5.4% versus the same period of 2018. The print media segment fell by a total of 11.6%, with newspapers down by 10% and magazines by 13.9%. The TV segment followed the same downward pattern (-5.3%), while radio (+1.7%) and the online segment grew (+3.5% excluding search, social networks and over the tops), again versus the same period of 2018 (Source: Nielsen).

In terms of circulation, in Italy the unfavourable trend in the print products market also continued in 2019. In 2019, generalist newspapers recorded an 8.8% decline in print circulation versus the same period of 2018. Including digital copies, the market dropped by 7.4% (Source: ADS). In 2019, print sports newspapers fell by 8.9% versus 2018; including digital copies, the decrease was -8.5%. (Source: ADS).

The average audience of paid satellite television channels in December 2019 was down by 17% versus 2018 (Internal source from data processed by Auditel – Average Daily Audience figures - Live + Vosdal - calculated in respect of paid TV broadcasts), achieving a 4.3% share of the total television audience in December 2019 (Internal source from data processed by Auditel – Share - Live + Vosdal - calculated in respect of paid TV broadcasts).

Performance

The RCS Group continued its intense efforts in 2019 to enrich and expand its publishing products on both the digital and traditional channels.

With regard to Corriere della Sera:  6 March 2019 saw the launch of the new Corriere Milano, featuring new content and graphics, investigations, insights and digressions into the city's cultural offerings;  25 March 2019 saw the launch of economia.corriere.it, the new website of the economy-related section of Corriere della Sera. The newspaper’s coverage of the economy is therefore enhanced not only by a print weekly, but also by an integrated multimedia platform offering boasting a unique leadership in the economic information arena;  26 March saw the debut of Corriere del Mezzogiorno Puglia e Matera. The new title relaunches the Bari version of Corriere del Mezzogiorno, adding new content, doubling the number of pages with local news stories from across Apulia, and offering two daily pages dedicated to Matera, European Capital of Culture 2019;  9 May 2019 saw the debut on newsstands of the new weekly supplement Corriere Salute, enriching the features of the traditional inside pages of Corriere della Sera. Corriere Salute is a truly enlightening guide to health and wellbeing, featuring hot topics and the most useful advice;  10 May 2019 saw the launch of the restyled weekly analysis magazine 7 led by Barbara Stefanelli. The weekly is now out on Fridays instead of Thursdays, and the editorial formula has completely changed, offering national and international news, a second more personal and intimate section, finishing off with generous space dedicated to leisure time;  the new Corriere della Sera mobile website is online as from 16 May 2019, offering greater accessibility, thanks also to innovative technological solutions that allow faster uploads, and greater readability by highlighting key topics;  starting in June, the digital offer of Corriere della Sera has been enhanced with five series of exclusive podcasts created in partnership with Storytel to tell and to dig deep into quality stories and events. From early August, the new Corriere della Sera App is available and downloadable from digital stores;  in December, Corriere della Sera's digital offering grew, with a revamped website, a customizable app, subscriptions also accessible from Google and a new special rate for the annual subscription.

Noteworthy events organized in fourth quarter 2019 include the first edition of the festival on the theme of "feeling good”, and Cook Awards, the event organized by Corriere della Sera at Teatro Franco Parenti in Milan to pay tribute to the Italian and international food personalities who, as the monthly magazine Cook, act as ambassadors of food and cooking in an innovative way.

As for La Gazzetta dello Sport:  7 March 2019 saw the expansion of the online Motors section of La Gazzetta dello Sport, placing greater focus on the community of car and motorcycle enthusiasts: specs comparison, road tests, offers and promotions, new technologies, accessories, clothing, itineraries, shows, maintenance, safety, crash tests, traffic regulations, with a strong coverage of motorsport championships, such as Formula 1 and MotoGP;  the month of May saw the heavy revamping of La Gazzetta dello Sport both in its print version on newsstands from 7 May, and digital rendition with the new live website (available from 8 May);  19 October 2019 saw the launch at newsstands of the new Sportweek, weekly supplement of La Gazzetta dello Sport, featuring new graphics and content. The new format, which includes several columns, a Travel section and the TV diary, achieved remarkable results in terms of advertising sales: in the four months following its launch, advertising revenue grew by 20% versus the same period of the prior year;  October 12 saw the unveiling of Gazzetta Active, the new gazzetta.it offer dedicated to the world of practiced sport. A project conceived and created for non-professional sportsmen and women of all disciplines who practice sport to feel good and be fit. Theme areas will be dedicated to health and proper nutrition as well as sports activities (Running, Sea, Snow, Bike and Fitness):  on 10 December, gazzetta.it launched its new Freemium model, with G+ and G All, offering select and in-depth editorial content of the paid website.

The events organized in the fourth quarter include the second edition of Festival dello Sport in Trento, with 65,000 attendees and more than 350 guests in over 140 events, as well as the 2019 edition of Gazzetta Sports Awards, with prizes given to the outstanding champions of the year, organized under the patronage of CONI and the Italian Paralympic Committee.

28 March witnessed the start of the activities of RCS Academy, the business school launched in January 2019 and focused on six areas of specialization: Journalism and Communication; Economy, Innovation and Marketing; Art, Culture and Tourism; Luxury, Fashion and Design; Food & Beverage; Sport. A total of 9 masters courses were launched in 2019, including the highly successful “Scrivere e fare giornalismo oggi: metodo Corriere”, a part time course held in association with Corriere della Sera journalists, and the full-time course “Management della Moda e del Lusso”. Both masters were all booked up.

***

Consolidated revenue in the Newspapers Italy area at 31 December 2019 amounted to € 431.6 million, down by € 27 million versus 2018, due to lower advertising revenue of € 11.2 million (-7.1% versus 31 December 2018) and lower publishing revenue of € 15.8 million (-5.5% versus 31 December 2018). Digital revenue accounts for 13.6% of total revenue in the area (12.6% at 31 December 2018).

Publishing revenue in the Newspapers Italy area totaled € 269.4 million, down by € 15.8 million versus 2018 (-5.5%), due mainly to the € 11.5 million decline in circulation revenue of the two titles and € 9 million in revenue from add-ons, offset by € 1.2 million in revenue from digital subscriptions of Corriere della Sera and € 4.8 million in revenue from the Solferino publishing house.

Both newspapers retained their leadership position in their respective market segments at December 2019 (Source: ADS January-December 2019). In 2019, Corriere della Sera reported an average circulation of 274 thousand copies, including digital copies (Source: ADS January-December 2019).

Total circulation of La Gazzetta dello Sport in 2019 was 154 thousand average copies, including digital copies (Source: ADS January-December 2019). With regard to the comparison with the market, the newsstands channel (channels required by law) outperformed the market with both Corriere della Sera, down by 5.3% versus the market’s 8.2% (Source: ADS January-December) and La Gazzetta dello Sport, down by 6% versus the market’s 8.2% (Source: ADS January-December).

At end December, the total active customer base for Corriere della Sera (digital edition, membership and m- site) was 170 thousand subscribers, up by 23% versus the same period of 2018. The main digital performance indicators confirm the top market position of RCS, with corriere.it and gazzetta.it reaching respectively 24.8 million and 13 million average monthly unique users at end December 2019, and 2.6 million and 2.2 million average daily unique users at December (Source: Audiweb 2.0 survey launched in June 2018). For the two websites, average monthly unique browsers in the period amounted to 47.6 million and 34.1 million (Source: Adobe Analytics). In regard to television activities, in December 2019 the television channels achieved an average audience of approximately 7,000 AMR (Source: Average Minute Rating, Auditel All day - consolidated).

Advertising revenue in the Newspapers Italy area totaled € 146.4 million, down by € 11.2 million (-7.1%) versus 2018. Total advertising sales for online media reached approximately 28.6% of total advertising revenue for the segment versus 26.8% in the prior year.

Sundry revenue amounted to € 15.8 million and was in line with the prior year.

***

EBITDA amounted to € 65.8 million versus € 84.2 million in 2018. Net of the impact of the adoption of IFRS 16, equal to € 4.1 million, EBITDA would be down by € 22.5 million versus 2018 (-26.7%). The decline is attributable to lower revenue from both traditional and television broadcasting activities and to the increased cost of raw materials (paper in particular) and personnel expense, only partly offset by cost rationalization actions and the ongoing commitment to efficiency, and by a different mix of add-on products which, while causing a decline in revenue, allowed margins to improve.

MAGAZINES ITALY

Segment profile

The Magazines Italy area heads up the editing, production and marketing activities of a wide range of publishing products. The Magazines segment mainly includes seven Italian magazines, including weeklies and monthlies, and concern the following areas: Women’s (IO Donna and Amica), Home Furnishings and Interior Design (Living and Abitare), Family (Oggi publications) and Men’s & Lifestyle (Style Magazine, Dove). In the multimedia segment, the magazines have a presence through the websites of Living.corriere.it, Iodonna.it, Amica.it, Oggi.it, Doveviaggi.corriere.it, Style.corriere.it, Doveclub.it and Abitare.it, with the digital editions of the publications, and through the social activities of Amica, IoDonna, Dove, Living, Abitare, Style and Oggi.

The area also includes the activities of Hotelyo SA, a company operating under the Dove Club name in the online travel segment in ‘flash sales’, catalogue and ‘tailor made’ mode.

The Magazines area also includes the Childhood Magazines specialized in the early childhood segment, including the publications Insieme and Io e il mio Bambino, the controlled distribution of boxed sets containing assorted sample products for mothers, the organization of events and fairs (Bimbinfiera), the offer of digital products (quimamme.it website and publication websites), as well as direct marketing functions. Thanks to its business model focused on print and online activities, direct marketing and trade fairs, the Sfera Group is market leader in Italy and Spain and also has a presence in Mexico with business models similar to Italy’s; in France and Portugal, its offer is exclusively digital.

The Magazines system also includes the activities of MyBeautyBox S.r.l., an e-commerce cosmetics brand of the RCS Group. As regards the distribution of magazines, m-dis Distribuzione Media S.p.A., an equity-accounted investee, which handles the distribution of publishing products, contributed to the segment’s results.

Financial highlights

2019 2018 Change % change (€ millions) Publishing revenue 34.2 36.5 (2.3) (6.3) Advertising revenue 42.3 45.4 (3.1) (6.8) Sundry revenue 13.7 14.0 (0.3) (2.1) Total revenue from sales and services (1) 90.2 95.9 (5.7) (5.9) EBITDA 9.3 10.8 n.s. n.s. EBITDA before IFRS 16 8.9 10.8 (1.9) (17.6)

(1) Revenue from add-ons at 31 December 2019 amounted to € 4 million, entirely attributable to publishing revenue (at 31 December 2018, revenue amounted to € 3.8 million and was entirely attributable to publishing revenue).

Mention should be made that this Annual Report incorporates the new IFRS 16, which came into effect as from 1 January 2019. There were no significant effects for the Magazines Italy area.

Market trend

In the period January-December, the advertising market for print magazines posted a 13.9% decline in investments versus the same period of the prior year, against a market that lost an overall 5.4%. Internet saw advertising investments rise by 3.5% (net of search, social and over the tops - Nielsen). The magazines circulation market, at December, referring to titles declared in ADS, fell versus the same period of 2018, including digital copies, both for monthlies and weeklies, respectively, by -11.8% and -6.6%. (Internal source based on ADS data).

The market trend for activities in the Childhood segment depends also on the ongoing decline in the birth rate in both Italy and Spain. Births in 2018 in Italy totaled 440,000 (-4% versus 2017) compared with 369,000 in Spain (-6.1% versus 2017). Versus 2008, the last year of growth in both countries, births decreased by 137,000 units in Italy (-23.7%), and by approximately 150,000 units in Spain (-29%). Estimates for 2019 confirm a further decline in Italy with approximately 435,000 newborns in the year (Source: Istat, Movimiento natural de la poblacion).

Performance

In 2019, among initiatives to improve and enhance the overall offer of the Magazines Italy area, specifically:

 19 February 2019 saw the first issue of the restyled Amica distributed on newsstands, gaining instant success (+18% of advertising revenue);  26 September 2019 saw the launch of the restyling of Style Magazine (the monthly supplement to Corriere della Sera), receiving a warm welcome by the advertising market, with revenue up by over 30%;  starting from 30 September 2019, the new rendition of amica.it is available online.

Also worth mentioning, the special event held on 2 October, organized to celebrate the first 80 years of Oggi, with the participation of showbiz celebrities who have contributed to the history of the magazine. The event was enriched by the publication of an exclusive 220-page edition, tracing the history of the weekly through portraits, interviews and photos of the characters.

***

Revenue in the Magazine area in 2019 totaled € 90.2 million, € 5.7 million less (-5.9%) than in 2018, of which € 3.1 million attributable to advertising revenue, € 2.3 million to publishing revenue of the titles, and € 0.3 million to sundry revenue.

The drop in publishing revenue (€ -2.3 million versus 2018) is attributable mainly to the titles in the Family area (Oggi, Oggi Enigmistica settimanale, Oggi Cucino) and, to a lesser extent, to supplements distributed with Corriere della Sera (IoDonna, Style, Living), partly offset by the growth in revenue from the women's magazine Amica and revenue from add-on products. Publishing revenue in the Childhood System was basically steady (€ -0.2 million versus 2018, as a result of the suspension of the less profitable activities).

As for the circulation of copies (including digital copies) at December, a noteworthy point is the good performance of the monthly Amica, which increased by 11%, while the monthly Dove was down by 4% overall, with digital copies on the rise, while the weekly Oggi posted a 6% decline in copies. (Internal source based on ADS data).

Also with regard to digital performance indicators, the trend is quite significant for Amica.it and on a continuing rise in 2019, reaching 1.9 million monthly unique users at December (499 thousand at end 2018). The audience figure for IODonna.it is positive too, reaching 3 million monthly unique users (1.5 million in December 2018). The Oggi.it website stands at 1.5 million monthly unique users. (Source: Audiweb 2.0 survey launched in June 2018).

Advertising revenue at December was down by € 3.1 million versus 2018 (-6.8%), with a fall in print media revenue for both the Magazine System (€ -1.9 million) and the Childhood System (€ -1.5 million), despite the stronger performance than the relevant segment (down by 13.9%). Advertising sales reported a growth in digital publications (+7%), driven by Amica and Dove.

Sundry revenue amounted to € 13.7 million, down by € 0.3 million versus the same period of 2018, due largely to the Childhood Segment from the suspension in Italy of less profitable operations.

EBITDA before IFRS 16 came to a positive € 8.9 million, € 1.9 million less than in 2018. The decline in revenue, along with the negative effect of the increased price of paper, has been partly offset by the actions taken to contain both direct and structural costs, as well as the suspension of less profitable operations.

ADVERTISING AND SPORT

Segment profile

The Advertising and Sport area is composed of Advertising and sundry events and Sporting Events activities, as commented below.

Advertising and events includes the activities of the Advertising Division of RCS MediaGroup S.p.A., the advertising agency of the RCS Group, and the activities of RCS Live. The Advertising Division comprises both the Italian advertising sales activities of the RCS Group, except for the Childhood Magazines, Classified and Television Activities of the Dove, Lei and Lei + channels, which operate directly through their own agency or through third-party agencies, the advertising sales activities of La7.it (the TV website of the Cairo Communication Group) and, since 1 March 2018, of LeiTV.it. Local advertising sales are managed by sub-agencies in Tuscany, Emilia-Romagna, Marche, La Spezia (Speed Società Pubblicità Editoriale e Digitale S.p.A.) Trentino-Alto Adige (Media Alpi Pubblicità S.r.l.), Friuli-Venezia Giulia, Veneto, Campania, Lazio, Calabria (PIEMME S.p.A.), Sicily (PK Sud S.r.l.), Puglia and Basilicata (Mediterranea S.p.A.) and the provinces of Brescia and Bergamo (Publiadige S.r.l.). The Advertising Division is also the agency for third-party publishers of domestic advertising sales (print and online) for a number of publications distributed in Southern Italy. The publishers involved are: Società Editrice Sud or SES, which publishes Gazzetta del Sud, Gazzetta Avvisi (Friday insert also online), Noi Magazine (Thursday school insert) and gazzettadelsud.it; Domenico Sanfilippo Editore, publisher of La Sicilia and lasicilia.it; Sicilia Multimedia S.r.l., publisher of Siciliaweb.it.; Editrice del Sud Edisud, publisher of Gazzetta del Mezzogiorno and gazzettadelmezzogiorno.it; Giornale di Sicilia Editoriale Poligrafica, publisher of Giornale di Sicilia and gds.it; Unione Sarda, publisher of Unione Sarda and Unionesarda.it. The RCS Live events agency is known for its direct, multimedia and efficient approach to the design, planning and execution of business to consumer, business to business and corporate events. The Sporting Events area, comprising RCS Sport S.p.A. and RCS Sports & Events S.r.l. (and their subsidiaries RCS Sports and Events DMCC, Società Sportiva Dilettantistica RCS Active Team a.r.l. and Consorzio Milano Marathon S.r.l.), is positioned as one of the top players on the Italian and international stage in the organization and management of high-profile mass national and international events for a variety of sports (including Giro d’Italia, Milano Sanremo, Tirreno Adriatico, Il Lombardia, UAE Tour in cycling and Milano Marathon and The Color Run in running), by providing a full and customized range of services as well as advertising sales activities for itself an on behalf of third parties.

*** Mention should be made that in December 2019, the Board of Directors of Cairo Communication informed the subsidiary RCS MediaGroup S.p.A. of its decision to carry out direction and coordination activities at Group level in the area of advertising sales; following this decision, the Advertising Department of RCS MediaGroup S.p.A. now reports to the CEO of Cairo Communication.

Financial highlights

2019 2018 Change % change (€ millions) Advertising and sundry events 223.1 235.5 (12.4) (5.3) Sporting Events 63.7 65.5 (1.8) (2.7) Total revenue from sales and services 286.8 301.0 (14.2) (4.7) EBITDA 28.4 32.5 n.s. n.s. EBITDA before IFRS 16 28.1 32.5 (4.4) (13.5)

Mention should be made that this Annual Report incorporates the new IFRS 16, which came into effect as from 1 January 2019. There were no significant effects for the Advertising and Sport area.

Market trend

The Italian gross advertising market (Nielsen) at December 2019 fell by an overall 5.4% versus 2018. Specifically, newspapers lost 10%, magazines 13.9%, and television 5.3%, while the Internet rose by 3.5% (net of search, social and over the tops).

Performance

Revenue in the area amounted to € 286.8 million at 31 December 2019 (€ 301 million at 31 December 2018), down by € 14.2 million versus 2018, due mainly to the performance of both sundry revenue and advertising revenue, down by € 7.4 million and € 6.8 million respectively.

The decrease in advertising revenue versus 2018 (€ -6.8 million) is attributable to the Group's advertising agency (€ -12 million versus 2018), only partly offset by the increase in advertising revenue from Sporting Events (€ +5.2 million). Advertising revenue from the Group's advertising agency was down by € 13.8 million (-10.9% versus a 10% decline of the gross advertising market, Nielsen); magazines fell by € 2.1 million (-4.3% versus a 13.9% decline of the gross market, Nielsen); online grew by approximately € 3.6 million (+6.3% versus the gross advertising market, Nielsen, which was up by 3.5%). Bucking the trend, advertising revenue from Sporting Events was up by € 5.2 million (+26.2%) versus the same period of the prior year, thanks to the growth in sponsorship revenue from Giro d'Italia and advertising revenue from the second edition of Giro E, as well as the contribution from the organization of EA7 Sportour.

Total sundry revenue in the area decreased by € 7.4 million, due mainly to Sporting Events (€ -6.7 million); the difference is attributable to the fact that revenue in 2018 had benefited from the success of the Grande Partenza of the Giro d'Italia outside of Italy. Sundry revenue from the Group's advertising agency fell by € 0.7 million, due to the grouping of the events organized by the United Arab Emirates and to lower production of content for third party customers.

***

Total EBITDA for the area before IFRS 16 amounted to € 28.1 million, down by € 4.4 million versus 2018. Net of non-recurring expense and income (in particular € 2.6 million of non-recurring income recorded in 2018), the decrease would be € -1.7 million, due to the abovementioned drop in sundry revenue from cycling events, partly offset by the strong commitment to cost reduction made by the Group's advertising agency.

UNIDAD EDITORIAL

Segment profile

Unidad Editorial is one of the main players in the Spanish publishing market, where it operates under several media and brands. It operates in the daily and magazine segments, in book publishing, in the radio segment, in event and conference organization (also in Portugal) and in distribution, with products in its own portfolio and other national and international products, through its own distribution company Logintegral 2000 SAU. It also owns, through Veo TV, a multiplex for national digital television transmission, and has a presence in online betting on football and sports with the website Marca Apuestas.

As regards the product portfolio, the Group publishes El Mundo, Spain's number two daily newspaper in terms of newsstand sales, and is leader in sports news, with the daily newspaper Marca, and in business news, with the daily newspaper Expansión. It maintains a web presence through the relating sites for each of its publications, elmundo.es, marca.com and expansión.com. It is active in the magazines market with the women’s magazine Telva and the specialist magazine Marca Motor. In book publishing, it operates together with the publishing house La Esfera de los Libros. It operates in radio with Radio Marca, the top national sports radio station. In digital television, it broadcasts two television channels through its own multiplex: Discovery Max and Gol Television, produced by third parties.

Financial highlights

2019 2018 Change % change (€ millions) Publishing revenue 106.6 112.5 (5.9) (5.2) Advertising revenue 127.0 137.8 (10.8) (7.8) Sundry revenue 61.4 60.5 0.9 1.5 Total revenue from sales and services (1) 295.0 310.8 (15.8) (5.1) EBITDA 48.3 44.7 n.s. n.s. EBITDA before IFRS 16 43.7 44.7 (1.0) (2.2)

(1) Revenue from add-ons at 31 December 2019 amounted to € 2.4 million, attributable to publishing revenue for € 2.2 million and sundry revenue for € 0.2 million (at 31 December 2018, the total was € 2.8 million, of which € 2.7 million attributable to publishing revenue and € 0.1 million to sundry revenue).

Market trend

At 31 December 2019, the Spanish gross advertising sales market fell by 1.5% versus the same period of 2018 (Source: i2p, Arce Media). The newspapers market fell by 9.9%, magazines dropped by 14.9% and supplements lost 9.7% versus the same period of 2018. The Internet segment leaded the market (net of social media) and posted a 10.9% improvement. (Source: i2p, Arce Media).

Overall, sales performance on the newspapers market in 2019 declined versus 2018. Circulation figures for Spain at December (Source: OJD) regarding the generalist newspapers market show an overall retreat by 12.7%. Business newspapers dropped by 12.1%. Daily sports newspapers witnessed the same trend, with circulation down by 10.6%.

Performance

In the first half of the year, the Group's editorial content was strengthened with the restyling of existing titles and the launch of new products on the market.

Specifically:  the start of 2019 saw the creation of BeStory, a digital content production area for social networks also involving marketing influencers. Yet another offer added to the business portfolio, to intercept the growing communication needs of the market through special storytelling projects on social platforms;  20 February 2019 saw the presentation of the restyled Telva, a high-end, highly-sold magazine in Spain. Elegance and modernity are the cornerstones of the restyling, hinged on a new balanced layout, targeted pick of photographic images, use of a richer palette of colours, plus a new selection of editorial content;  4 March 2019 saw the inauguration of the restyled El Mundo; the website offers a more modern look, improved performance and smoother access for its readers;  May saw the launch of UEtv, a new audiovisual production company, with the aim of enhancing the development of multimedia content for both the group and the external market, focusing on the production of content for TV, digital platforms, cinema, advertising and branded content;  starting in May, Metropoli (El Mundo supplement) has restyled its format and content with a fresher and more modern look, new graphics and sections such as Guía de Comer y Beber, central section on cooking, Top de Restaurantes, Recetas de Cocina, Dónde comen los cocineros? and a section with a guide on living in Madrid;  3 June 2019 saw the launch of the weekly supplement Expansión Juridico, featuring constantly updated information tailored to legal professionals and entrepreneurs;  10 June 2019 saw the birth of Marca Claro USA. The portal created from the partnership between Marca and Claro lands in the USA after the launch in Argentina, Colombia and Mexico. The new website offers Spanish-speaking users information on US soccer (male and female, recent winner the latter of the Women's World Cup), baseball, American football, basketball and all the most popular sports phenomena in the United States;  on 22 October 2019, El Mundo, concurrent to the thirtieth anniversary of its foundation, launched a pay model for online news (freemium) for its subscribers, who can access a series of exclusive content (opinions, reports, interviews, etc.) and have the opportunity of commenting and interacting with the main contributors of the newspaper, as well as a series of other pluses and opportunities. El Mundo is the first Spanish daily newspaper among generalists to launch this type of product, aligning with the policy already adopted by major foreign newspapers, and anticipating its direct competitors.

2019 also saw a great many events, including, on the occasion of the thirtieth anniversary of the magazine El Mundo, the special celebration on 1 October 2019, graced by the presence of the King and Queen and of the top representatives from Spanish society and business. Also worth mentioning, the first edition of Marca Sport Weekend, an event celebrated in Marbella over the weekend from 15 to 17 November, dedicated to sport with conferences, outdoor activities, forums and performances by leading athletes of all ages. The event was highly appreciated by the public, especially on social networks with video clips viewed by more than 5 million people, 300 thousand direct interactions and an estimated total of 9.5 million people who came into contact in some form with the event. On 2 December 2019, in Barcelona Marca celebrated the awarding of the sixth Golden Shoe to the champion Messi, generating news that propagated worldwide.

***

Consolidated revenue from Unidad Editorial at 31 December 2019 amounted to € 295 million, down by € 15.8 million (-5.1% versus 2018), with a drop in publishing revenue of € 5.9 million and in advertising revenue of € 10.8 million, and an increase in sundry revenue of € 0.9 million.

Digital revenue in the area at 31 December 2019 made for 27.6% of total revenue, up by 0.6% versus the same period of 2018.

Publishing revenue at 31 December 2019 amounted to € 106.6 million (€ 112.5 million at 31 December 2018). The decrease by € 5.9 million is attributable mainly to the general drop in the newspapers market.

The figures published by EGM (Estudio General de Medios: latest update November 2019) confirm Unidad Editorial’s leadership in the daily newspapers segment; through its brands, it reaches approximately 2.5 million readers/day, approximately 300 thousand readers more than its main competitors.

The average daily circulation of El Mundo at December 2019 was 101 thousand copies (including digital copies), down by 8.7% versus the same period of 2018. El Mundo retains its position as second generalist title at national level for average copies sold at newsstands (Source: OJD).

Circulation of the sports daily Marca (average daily circulation of approximately 108 thousand copies, including digital copies) fell by 10.1% versus the same period of 2018 (Source: OJD). OJD figures (total print circulation) at December 2019 confirm Marca’s leadership with 101 thousand average copies.

In 2019, Expansión recorded an average daily circulation of approximately 32 thousand copies, including digital copies, down by 7.4% versus the same period of the prior year (Source: OJD). For Expansión too, figures (total print circulation) at December 2019 confirm the undisputed leadership of the newspaper.

In terms of online activity, elmundo.es's average monthly unique browsers (Source: Omniture) reached 51.2 million at December 2019 (+9.1% versus 2018). The average monthly unique users of elmundo.es in December 2019 reached 20.1 million (+1.5% versus 2018: Source: Comscore). In 2019 marca.com reached 64.2 million average monthly unique browsers (+29.5% versus the same period of 2018). Additionally, at December 2019, marca.com reached 16.1 million average monthly unique users (+5.2% versus the same period of 2018 - Source: Comscore). The MarcaClaro portal, active in Latin America, brought a significant growth in average monthly unique users (+45% versus the same period of 2018). The average monthly unique browsers of expansión.com at December 2019 reached 11.5 million, up by 15.7% versus 2018. The average monthly unique users of expansión.com in December 2019 reached 6.4 million, up by 4.1% versus 2018 (Source: Comscore). All three websites recorded a significant increase in mobile access.

Advertising revenue amounted to € 127 million, down by € 10.8 million (-7.8%) versus 2018, due mainly to a reduction in advertising investments in the print media. Overall advertising sales on online media accounted for 51.3% of total net advertising revenue and grew by 3.2% versus 2018.

Sundry revenue, amounting to € 61.4 million, increased by € 0.9 million versus 2018, due mainly to the gradual development of the digital area.

EBITDA at 31 December 2019 came to € 48.3 million, improving by € 3.6 million versus € 44.7 million recorded in the same period of 2018. Net of the adoption of IFRS 16, EBITDA would amount to € 43.7 million, down by € 1 million versus the same period of 2018 (up by € 0.8 million excluding non-recurring expense). The decline in traditional revenue was more than offset by the growth in digital revenue and by ongoing cost containment and efficiency gains (such as the rationalization of consultancy services and collaborations and the review of supplier fees).

OTHER CORPORATE ACTIVITIES

Segment profile

This area includes the service structures providing support to other group companies and business units. These include, in particular, IT, administration and tax, management control, finance and treasury, procurement, legal and corporate affairs, human resources and facility management activities, serving the operating segments. Added to these are the structures responsible for group-wide policy-making, control and coordination.

The area paid a contribution to support the Fondazione Corriere della Sera, whose activities are aimed at the cataloguing and custody of the archives of Corriere della Sera and the main RCS Group magazines. The Foundation increases the archive and cultural value of its assets through intense activities involving debates, conferences, publications and photographic and documentary exhibitions.

Financial highlights

2019 2018 Change % change (€ millions) Publishing revenue - - - - Sundry revenue 35.6 21.5 14.1 65.6 Total revenue from sales and services 35.6 21.5 14.1 65.6 EBITDA 1.5 (16.9) n.s. n.s. EBITDA before IFRS 16 (15.3) (16.9) 1.6 9.5

Performance

Mention should be made that this Annual Report incorporates the new IFRS 16, which came into effect as from 1 January 2019. The income statement figures of 2019, therefore, cannot be directly compared with the corresponding amounts of the same period of the prior year. Specifically, if this new accounting standard had not been applied, the area's EBITDA would come to a negative € 15.3 million instead of a positive € 1.5 million, with a difference of € 16.8 million attributable entirely to reversed lease payments. Additionally, under IFRS 16, income from agreements for the supply of serviced spaces to the Group's various business units (+14.4 million) was classified under sundry revenue, with no impact on EBITDA. Excluding this effect, revenue remained basically steady.

EBITDA before IFRS 16 came to a negative € 15.3 million, improving versus the prior year by € 1.6 million (€ +0.8 million excluding non-recurring expense). The uptick is due to the higher net chargebacks made to the other areas of the Group and the benefits deriving from ongoing cost reduction and efficiency gains across every area of the Group. This trend was partly offset by the increase in energy rates and property management costs for the use of additional space, as well as expense from professional consulting services.

FINANCIAL HIGHLIGHTS OF RCS MEDIAGROUP S.P.A.

RCS MediaGroup S.p.A. publishes Corriere della Sera and La Gazzetta dello Sport, leading national and sports newspaper titles, as well as numerous weekly and monthly magazines, including Amica, Dove, Oggi and Abitare and many supplements and inserts (weekly and monthly) linked to the two newspapers, such as La Lettura, L’Economia, 7, Buone Notizie – L’impresa del Bene, Style Magazine, Living, Corriere Innovazione, IO Donna, SportWeek, and Time Out, and is also a leader in the early childhood segment with a product range encompassing print, online, e-commerce, direct marketing, events and fairs dedicated to such segment. In Italy, RCS MediaGroup operates in radio television communication through the satellite channels Lei, Dove, Caccia and Pesca. RCS MediaGroup is a leading operator in advertising sales in Italy, capable of offering its customers a broad and diversified communication offer through the prestige of the RCS Group’s publications, including on innovative means of communication such as digital editions, web, mobile, tablets, and leveraging on a wide range of consumer engagement services and solutions. It also manages national advertising sales activities (print and web) for several major third-party publishers. Lastly, mention should particularly be made in the book segment of Solferino - the books of Corriere della Sera and RCS Academy, the new RCS Group business school launched in 2019 and boasting an innovative and qualified offer, focused on six areas of specialization: Journalism and Communication; Economy, Innovation and Marketing; Art, Culture and Tourism; Fashion, Luxury, and Design; Food & Beverage; Sport.

Additionally, RCS MediaGroup S.p.A. conducts direction and coordination activities for the subsidiaries offering, in particular, IT, administration and tax, finance and treasury, procurement, legal and corporate affairs, human resources and facility management activities, serving the various operating segments.

On 28 November 2019, a merger deed was entered into to incorporate Digicast S.p.A. and RCS Digital Ventures S.r.l. into RCS MediaGroup S.p.A.; the accounting and tax effects of the merger apply as from 1 January 2019, and the legal effects as from 31 December 2019. For easier comparison, the income statement and balance sheet figures of RCS MediaGroup S.p.A. for 2019 are compared versus 2018 pro-forma, which takes account of the merger of Digicast S.p.A. and RCS Digital Ventures S.r.l. as if it had occurred in 2018. Further information is found in the appropriate annexes.

Compared with prior year, the figures shown in the financial statements at 31 December 2019 incorporate the new IFRS 16 - Leases, which came into force as from 1 January 2019. The new standard establishes a single model of recognition and measurement of leases for the lessee, without making any distinction between operating leases and finance leases; specifically, it provides - for contracts to which it applies - - the recognition of a right of use of the underlying asset in the balance sheet assets against a financial liabilities. The standard provides the possibility of not recognizing as leases those contracts that involve low-value assets and leases with a residual term equal to or less than 12 months. For the adoption of the new standard, the Company followed the modified retrospective transition method, opting for “cherry picking” on a number of contracts (i.e. with the cumulative effect of the adoption recognized as an adjustment to the opening balance of retained earnings at 1 January 2019, without restating comparative information).

For leases contracts previously classified as operating leases, the following have been accounted for:  a financial liability, equal to the present value of the remaining future payments at the transition date, discounted using for each contract the incremental borrowing rate (IBR) applicable at the transition date;  a right of use equal to the value of the financial liability at the transition date, with exception of the application of the “cherry picking” accounting treatment, as described below. For a limited number of property rental contracts - as an exception transition method generally applied by the Company - the right of use was valued by applying discounting from the effective date of the contracts, with the same IBR used in calculating the financial liability. This accounting treatment (known as “cherry picking”) at 1 January 2019 had a negative effect on equity as a result of the difference between the right of

44 use, calculated in this manner, and the financial liability of approximately € 10.6 million gross of the accounting effect of the tax component (approximately € 7.4 million the net effect). Additionally, the company holds two sublease contracts covered by IFRS 16. For these contracts, the value of the right of use, as explained earlier, is reclassified under financial assets, keeping the financial liability from property ownership unchanged.

Overall, the application of the new accounting standard at 31 December 2019 resulted in:  the recognition under fixed assets of rights of use on leased assets for a total of € 134 million;  the recognition of a financial liability (financial payables from leases pursuant to IFRS 16), calculated as described above, of approximately € 156.7 million;  the recognition of a financial asset (financial asset from leasing pursuant to IFRS 16), amounting to approximately € 11.4 million, related to the two subleases;  the reversal of lease payments of € 21.1 million, the reversal of rental income of € 1.2 million, higher amortization and depreciation of € 17.4 million, higher financial expense of € 3.1 million and higher financial income of € 0.2 million; with an impact on EBITDA, EBIT and profit attributable to the Company in the period of € +19.9 million, € +2.5 million and € -0.4 million respectively;  a decreasing impact on initial equity of € 7.4 million, net of the accounting effects of the tax component, linked to the above “cherry picking” treatment applied to a small number of property lease contracts.

Reference is made to Note 6 “Accounting standards, amendments and interpretations which came into force as from 1 January 2019: IFRS 16 - Leases” of these financial statements, which contains a clearer description of the new standard and its effects at 1 January 2019.

RCS MediaGroup S.p.A. closed 2019 with a net profit of € 39.1 million (€ +46.2 million net profit in 2018 pro-forma).

The company’s restated income statement, together with prior year comparatives, is presented below:

(€ millions) Reference to the Difference separate financial 2019 % 2018 % 2018 statements pro-forma (2) ABA-B Net revenue I 560.0 100.0 593.0 100.0 ( 33.0) 583.6 Circulation revenue 303.7 54.2 321.7 54.2 ( 18.0) 321.7 Advertising revenue 229.7 41.0 244.9 41.3 ( 15.2) 243.0 Sundry publishing revenue 26.6 4.8 26.4 4.5 0.2 18.9 Operating costs II ( 328.4) ( 58.6) ( 359.2) ( 60.6) 30.8 ( 357.0) Personnel expense III ( 158.7) ( 28.3) ( 158.1) ( 26.7) ( 0.6) ( 157.6) Provisions for risks IV 0.3 0.1 ( 4.0) ( 0.7) 4.3 ( 4.0) (Write-down)/write-back of trade and sundry receivables V ( 1.7) ( 0.3) ( 1.9) ( 0.3) 0.2 ( 2.0) EBITDA (1) 71.5 12.8 69.8 11.8 1.7 63.0 Amortization of intangible fixed assets VI ( 9.9) ( 1.8) ( 14.2) ( 2.4) 4.3 ( 10.4) Depreciation of property, plant and equipment VII ( 6.0) ( 1.1) ( 6.7) ( 1.1) 0.7 ( 6.7) Depreciation of rights of use on leased assets VIII ( 17.4) ( 3.1) - 0.0 ( 17.4) - Other (impairment losses)/reversal on non-current assets IX ( 1.1) ( 0.2) ( 8.2) ( 1.4) 7.1 ( 7.4) EB IT 37.1 6.6 40.7 6.9 ( 3.6) 38.5 Net financial income (expense) X ( 4.4) ( 0.8) ( 0.9) ( 0.2) ( 3.5) ( 0.9) Other income (expense) from financial assets/liabilities XI 13.9 2.5 14.7 2.5 ( 0.8) 14.7 (Write-down)/write-back of receivables and other financial assets XII ( 0.1) ( 0.0) ( 0.2) ( 0.0) 0.1 ( 2.4) Profit (loss) before tax 46.5 8.3 54.3 9.2 ( 7.8) 49.9 Income tax XIII ( 7.4) ( 1.3) ( 8.1) ( 1.4) 0.7 ( 8.0) Profit (loss) for the year 39.1 7.0 46.2 7.8 ( 7.1) 41.9

(1) Earnings before interest, tax, amortization/depreciation and write-downs. (2) These references relate to the corresponding headings in the separate income statement.

The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in 2019 in an increase in amortization and depreciation of € 17.4 million, a decrease in other rental income of € 1.2 million, an increase in net financial expense of € 3.1 million and an increase in net financial income of € 0.2 million, offset by a reduction in operating costs due to lower lease payments of € 21.1 million.

Net revenue in 2019 amounted to € 560 million, down by € 33 million versus 2018 pro-forma (€ 593 million), due mainly to a reduction in both circulation and advertising revenue. Sundry publishing revenue increased slightly by € 0.2 million.

With regard to circulation revenue, the decrease of € 18 million, versus 2018 pro-forma, is due mainly to the drop in circulation of the two daily titles, the drop in revenue from add-ons and, to a lesser extent, the drop in magazines circulation. Conversely, revenue from Corriere della Sera digital subscriptions was on the rise. Both newspapers retained their circulation leadership in their respective market segments at December 2019 (ADS January-December 2019).

Advertising revenue amounted to € 229.7 million, down by € 15.2 million versus 2018 pro-forma, as a result of the decline in the print media advertising market. Online media grew by approximately € 3.6 million.

Sundry publishing revenue amounted to € 26.6 million, basically in line with 2018 pro-forma (€ +26.4 million).

Operating costs decreased by € 30.8 million to € 328.4 million (€ 359.2 million in 2018 pro-forma). Excluding from the comparison the effects of the application of the new IFRS 16, amounting to € 19.9 million (of which € 21.1 million of lease payments and € 1.2 million of rental income), total operating costs would decrease by € 10.9 million, as a result of ongoing efficiency gains. Mention should be made of the implementation of savings and efficiency policies from a logistical point of view, in addition to the renegotiation of printing rates with third party centres.

Personnel expense amounted to € 158.7 million, basically in line with 2018 pro-forma (€ 158.1 million) and included net non-recurring expense totaling € 1.1 million (the same value as net non-recurring expense also in 2018 pro-forma). 46

Taking into account the above effects, EBITDA came to a positive € 71.5 million, up by € 1.7 million versus 2018 pro-forma (a positive € 69.8 million). Excluding the effect from the application of IFRS 16, which no longer provides, as from 1 January 2019, for operating lease payments, converted into amortization and depreciation charges and a portion of rental income from subleases, EBITDA would decrease by € 18.2 million, as a result of the decrease in revenue, only partly offset by lower operating costs and lower provisions for risks.

EBIT, a positive € 37.1 million (a positive € 40.7 million in 2018 pro-forma), includes amortization and depreciation totaling € 15.9 million, down by € 5 million versus € 20.9 million in 2018 pro-forma, in addition to amortization and depreciation calculated on rights of use on leased assets (IFRS 16) not present in 2018 pro-forma for € 17.4 million. Operating profit includes, on the one hand, the impairment reversal of the historical value of the Pessano property for € 4.8 million and, on the other, the impairment loss - of intangible assets for € 5.9 million (€ 8.2 million in 2018 pro-forma). The impairment loss refers to the Sfera goodwill. Please refer to the specific notes in the financial statements of RCS MediaGroup S.p.A. for the measurement of intangible assets, including goodwill.

Net financial expense amounted to € 4.4 million, up by € 3.5 million (€ 0.9 million in net financial expense in 2018 pro-forma). Excluding the effect from the application of IFRS 16, amounting to € 2.9 million in net financial expense in 2019, the increase versus 2018 pro-forma would be € 0.6 million, due mainly to higher net discounting expense.

Net income from financial assets amounted to € 13.9 million (income of € 14.7 million in 2018 pro-forma) and refers mainly to dividends received totaling € 15.5 million (€ 15.6 million in 2018 pro-forma) and liquidation income for € 0.3 million, partly offset by write-downs of investments totaling € 1.9 million. Reference is made to the specific notes in the financial statements of RCS MediaGroup S.p.A. for the measurement of investments.

Income tax for 2019 shows a net expense of € 7.4 million (net expense of € 8.1 million in 2018 pro-forma), due mainly to the use of the receivable from deferred tax assets (€ 10.7 million) and the provision for IRAP for the period (€ 2.7 million), partly offset by current and prior years' IRES income totaling € 6 million.

The highlights from the statement of financial position are summarized below:

Reference to the 31 December 31 December 31 December (€ millions) separate financial % % 2019 2018 2018 statements (1) pro-forma Property, plant and equipment XIV 41.2 7.0 40.8 8.7 40.8 Intangible assets XV 23.1 3.9 28.8 6.1 25.5 Rights of use on leased assets XVI 134.0 22.8 - - - Investment property XVII 2.7 0.5 2.7 0.6 2.7 Financial fixed assets and other assets XVIII 437.6 74.4 448.9 95.9 448.9 Net fixed assets 638.6 108.5 521.2 111.3 517.9 Inventory XIX 18.0 3.1 13.8 2.9 13.8 Trade receivables XX 152.9 26.0 158.7 33.9 155.7 Trade payables XXI ( 123.1) ( 20.9) ( 128.5) ( 27.4) ( 125.5) Other assets/liabilities XXII ( 33.4) ( 5.7) ( 32.0) ( 6.8) ( 33.0) Net working capital 14.4 2.4 12.0 2.6 11.0 Employee benefits XXIII ( 32.8) ( 5.6) ( 30.7) ( 6.6) ( 30.5) Provisions for risks and charges XXIV ( 31.2) ( 5.3) ( 33.5) ( 7.2) ( 33.5) Deferred tax liabilities XXV ( 0.6) ( 0.1) ( 0.7) ( 0.1) ( 0.7) Net capital employed 588.4 100.0 468.3 100.0 464.2 Equity XXVI 456.6 77.6 460.0 98.2 451.3 Net financial debt (liquidity) (2) XXVII ( 13.5) ( 2.3) 8.3 1.8 12.9 Net financial payables from leases pursuant XXVIII 145.3 24.7 - - - to IFRS 16 588.4 100.0 468.3 100.0 464.2 Total sources of financing

(1) These references relate to the corresponding captions in the statement of financial position in the separate financial statements. (2) Indicator of financial structure, calculated as current and non-current financial payables less cash and cash equivalents, current financial assets and non-current financial assets recognized for derivatives. Net Financial Debt as set out by CONSOB in its Communication DEM/6064293 dated 28 July 2006 excludes non-current financial assets. At 31 December 2019, the net financial position stood at € +13.5 million (€ -12.9 million at 31 December 2018 pro-forma).

Fixed assets decreased from € 521.2 million at 31 December 2018 pro-forma to € 638.6 million at 31 December 2019. As explained earlier, the value of fixed assets at 31 December 2019 includes € 134 million relating to rights of use on leased assets, following application of the new IFRS 16. If this item were excluded, net fixed assets would decrease by € 16.6 million, due mainly to lower deferred tax assets (€ 8.4 million) and to changes in financial fixed assets. With regard to changes in investments, mention should be made of the following: payments to cover losses of € 0.7 million; the effects of the merger of Digicast and RCS Digital Ventures, which led to the write-off of the carrying amounts of Digicast (€ 1.2 million) and RCS Digital Ventures (€ 1.6 million), and the recognition of the carrying amounts of the investments previously held by the merged companies for a total value of € 0.2 million. The carrying amount of RCS Factor S.r.l. in liquidation (€ 0.5 million) was written off following completion of the liquidation process. Regarding the measurement of investments, mention should be made of the impairment losses in the income statement totaling € 1.9 million, in order to align the carrying amounts of certain investees with their respective fair value. Please refer for further details to the specific notes in the financial statements of RCS MediaGroup S.p.A..

Net working capital at 31 December 2019 came to a positive € 14.4 million (a positive € 12 million at 31 December 2018 pro-forma). The increase of € +2.4 million is due mainly to the increase in inventory of € 4.2 million, relating to both paper and finished products, and to the decrease in trade receivables (€ 5.8 million) and trade payables (€ 5.4 million). Other assets and liabilities vary by a total of € 1.4 million.

Employee benefits increased to € 32.8 million versus € 30.7 million at 31 December 2018 pro-forma. The increase of € 2.1 million is due essentially to the higher value of the provision for post-employment benefits following a lower discount rate than last year.

Provisions for risks and charges decreased by € 2.3 million, from € 33.5 million at 31 December 2018 pro- forma, to € 31.2 million at 31 December 2019. The change, relating mainly to legal disputes and, to a lesser

48 extent, to personnel expense, is explained mainly by the progress of the company's reorganization process and the settlement of legal disputes.

Net capital employed amounted to € 588.4 million, up by € 120.1 million versus 31 December 2018 pro- forma (€ 468.3 million). Net of the value of rights of use on leased assets of € 134 million, net capital employed would decrease by € 13.9 million, as a summary of the above effects.

Equity increased from € 460 million at 31 December 2018 pro-forma to € 456.6 million at 31 December 2019. The negative change of € 3.4 million takes account of the distribution of the dividend for € 31 million, of "cherry picking" applied to a small amount of property rentals following application of IFRS 16 for € 7.4 million, and of the reduction in the post-employment benefits reserve for € 1.6 million in order to align to actuarial calculations. On the other hand, equity increased due to the profit for the period, equal to € 39.1 million, and the merger reserve of € 6.5 million.

The net financial position of RCS MediaGroup S.p.A. at 31 December 2019 stood at a positive € 13.5 million, improving by € 21.8 million versus 31 December 2018 pro-forma. A noteworthy contribution came from ordinary operations, and from the cash in of dividends from investees for € 15.5 million. Payment of dividends to shareholders for € 31 million, outlays for non-recurring expense and outflows for capital expenditure, instead, went in the opposite direction. The application of IFRS 16 resulted in the recognition under liabilities of the financial payable from leases amounting to € 145.3 million.

BUSINESS OUTLOOK

Against a backdrop of persisting uncertainty and shrinking core markets, the advertising market in Italy and Spain in particular, which posted a lower-than-forecast performance, in 2019, the Group continued to generate positive margins and cash flows and achieved its targets to gradually reduce financial debt.

After year-end, the national and international scenario has been swept by the spread of the Coronavirus and the ensuing restrictions for its containment adopted by the governments of all the countries involved.

Prior to the health emergency, in view of the actions planned to develop activities, specifically digital operations, and to pursue operational efficiency, RCS had considered it feasible to achieve in 2020 margin levels at least in line with those of 2019 and a further strong reduction in net financial debt.

Since the second half of February, the virus has spread significantly across Italy, affecting Lombardy in particular, in terms of number of cases and speed of the infection. In Spain too, the infection has accelerated from the second week of March and the Government has adopted containment measures similar to those put in place in Italy.

The containment measures adopted by the Italian Government are having a direct impact on work organization and timing and on the Group's activities. For instance, sporting events such as the Milano Marathon and the cycling races Strade Bianche, Tirreno Adriatico, Milano Sanremo, Giro di Sicilia and the Giro d'Italia have been postponed. The subsidiary RCS Sport is working to reschedule these races on the 2020 international cycling calendar. The circulation of sports newspapers has also been hit by the suspension of "played" sport.

The current health emergency, besides its severe social impacts, is having direct and indirect repercussions on the general performance of the economy, leading to a climate of general uncertainty. Advertising sales in March slowed down in Italy and Spain.

Conversely, in this context RCS stands as one of the main and most authoritative information players, with digital traffic figures growing significantly. The total active customer base for Corriere della Sera too is increasing day by day.

The developing situation, as well as the potential effects on the business outlook, are unforeseeable at this time – as they depend, inter alia, on the length of the health emergency and the spread (including on a global scale), as well as on the public measures, including economic ones, which will be implemented in the meantime - and will be subject to constant monitoring in the further course of the year.

At any rate, the Group believes it has adequate management levers to counter the impacts of the health emergency in 2020 and thus confirm its medium-long term prospects.

ALTERNATIVE PERFORMANCE MEASURES

In order to provide a clearer picture of the financial performance of the RCS Group, besides of the conventional financial measures required by IFRS, a number of alternative performance measures are shown that should, however, not be considered substitutes of those adopted by IFRS. In accordance with CESR/05-178b recommendation published on 3 November 2005, the methods used for building the main alternative performance measures that Management considers useful for monitoring the Group's performance are shown below.

EBITDA: to be understood as earnings before interest, tax, amortization/depreciation and write-downs on non-current assets. It includes the share of profits and losses from equity-accounted investees, since associates and joint ventures held are considered operational with respect to the activities of the RCS Group. The measure is used by the RCS Group as a target to monitor internal management, and in public presentations (to financial analysts and investors). It serves as a unit of measurement to evaluate the operational performance of the RCS Group.

EBITDA before IFRS 16: to be understood as EBITDA defined above adjusted to exclude the effects deriving from the adoption of IFRS 16.

EBITDA before non-recurring income/expense: to be understood as EBITDA as specified above before components of income (positive and/or negative) deriving from events or transactions, the occurrence of which is non-recurring, or deriving from transactions or events that are unlikely to occur frequently in the normal course of business.

Operating profit EBIT: to be understood as the Result before tax, gross of "Financial Income (Expense)" and "Other gains (losses) on financial assets/liabilities".

Operating profit EBIT before IFRS 16: to be understood as EBIT defined above adjusted to exclude the effects deriving from the adoption of IFRS 16.

Net Financial Position (or net financial debt): this is a valid measure of the financial structure of the RCS Group. It is calculated as the result of current and non-current financial payables, net of cash and cash equivalents and current financial assets, as well as non-current financial assets from derivative instruments, excluding financial liabilities (current and non-current) from leases recognized in the financial statements pursuant to IFRS 16.

Total Net Financial Position (or total net financial debt) also includes the financial liabilities from leases recorded in the financial statements pursuant to IFRS 16, previously classified as operating leases.

INFORMATION ON ONGOING DISPUTES

RCS Sporting Events

Regarding the above events, reference should be made to the previous Annual Reports published in the years from 31 December 2013 to 31 December 2018. Updates on the various events still pending are reported below:

(i) with regard to the criminal proceedings instituted following the complaint filed by RCS Sport on 10 October 2013, where RCS filed civil action against certain defendants, the Court of Milan sentenced a former RCS Sport employee (Laura Bertinotti) in the first instance to 8 years and 8 months imprisonment (for fraud, slander and embezzlement against the state) and acquitted the other defendants with a ruling served on 19 September 2019. The Court also ordered the former employee (Laura Bertinotti) to pay compensation for financial and non-financial damages to RCS, to settle in separate civil proceedings.

(ii) With regard to the appeal against the dismissals of the former Chief Executive Officer and former General Manager, the two appeals to the Court of Cassation are still pending, one filed by RCS against the former Chief Executive Officer and the other by the former General Manager against RCS.

(iii) Pending before the Court of Milan against the Bank where the current account is held (a) the action for liability brought by Consorzio Milano Marathon (b) the actions for liability brought by the Amateur Sports Association Milano City Marathon and other associations. At the hearing held on 9 January 2020, the conclusions in the joined cases were clarified and the Judge granted the parties time limits for filing their final arguments (9 and 30 March).

Property complex in via Solferino

The dispute in question regards the transaction, negotiated and concluded in 2013, on the sale to the speculative real-estate fund "Delphine" by the Company of the properties located in Via Solferino 28-Via San Marco 21-Via Balzan 3 in Milan (collectively, the "Property"), and their concurrent lease by RCS (the "Transaction").

On 9 November 2018, the Company - after a thorough review carried out with the help of consultants - filed a request for arbitration with the Milan Chamber of Arbitration, by which it requested, inter alia, the contracts through which the Transaction was completed to be declared null and void and an order for Delphine to return the Property and the lease payments in the meantime received, as well as, in any event, to pay damages. On 9 January 2019, the Delphine fund, through its management asset company Kryalos SGR S.p.A., appeared in the arbitration with a Statement of Defense challenging the jurisdiction and/or competence of the Board of Arbitrators and the grounds of the Company’s claims, and filed a liability claim pursuant to Article 96 of the Italian Code of Civil Procedure. The parties exchanged defense briefs and documents, specifying their respective conclusions. On 2 March 2020, the deadline for filing the award was extended until 29 May 2020. This is without prejudice to any extensions that may result from measures taken in the context of the current health emergency.

On 20 November 2018, the Company received a complaint before the New York Supreme Court from the Delphine fund, from its parent Sforza Holdco S. à r.l., from Blackstone Real Estate Advisory L.P., and from eleven entities indicated as indirect shareholders of Sforza HoldCo S. à r.l.. The plaintiffs argue that the Company has acted unlawfully and in breach of its obligations (specifically, for challenging the ownership of the Property and interfering in the sale negotiations allegedly underway with a third party), and request to declare the validity of the contracts by means of which the Transaction was completed, and that the Company be ordered to pay damages, which are not quantified but generally indicated as exceeding USD 500 thousand. The Company appeared in the proceedings requesting to "dismiss" the case even before opening the trial, on the grounds of a lack of jurisdiction of the New York Supreme Court; alternatively, the Company has requested a stay of the case in New York, pending the outcome of the Arbitration in Italy, as the latter is the

52 only body having the jurisdiction to decide on the validity or invalidity of the Transaction. The Company also requested the dismissal of the case on the grounds that the plaintiffs' claims were unfounded in law. On 24 April 2019, the New York Supreme Court decided to "stay" the case in New York pending the outcome of the arbitration in Italy.

On 23 May 2019, the same plaintiffs also sued the Chairman of RCS, Urbano Cairo, before the New York Supreme Court, against whom claims for damages have been lodged that are not quantified but generally indicated in excess of USD 500 thousand, based on the same factual circumstances on which the identical claims filed against the Company are grounded. The latter dispute has also been suspended pending the outcome of the arbitration in Italy.

Given that the Chairman has acted and is acting as the Company’s legal representative, in the name, on behalf and in the interest of the Company, as well as in execution of a resolution of the Board of Directors, the Company has undertaken to indemnify the Chairman against any costs or damages arising from any legal or extra-judicial disputes brought with regard to the Transaction and for the acts carried out in execution of the resolutions of by the Board of Directors.

The Company, having obtained the valuations of its legal advisors, has decided that the conditions for the recording of provisions for risks do not exist.

***

With regard to the contract for the purchase of RCS Libri S.p.A., commented on in the 2016, 2017 and 2018 Annual Reports, and to the earn-out established therein, it should be noted that the required procedures for verifying the existence (or less) of the conditions for payment of the earn-out and, in such case, for its determination, have been put in place and are still in progress, as set out in the sale contract.

OTHER INFORMATION

Research and Development

For comments, please refer to Note 35 of this Annual Report; any research activities are recognized in the income statement in line with the provisions of IFRS.

Treasury shares

At 31 December 2019, a total of 4,481,787 treasury shares were held (44,527 of which made available to the minorities of RCS Investimenti S.p.A. following the merger by incorporation of the latter with RCS MediaGroup S.p.A., corresponding to an average carrying amount of € 5.9 per share and representing 0.86% of the total share capital.

Shares of parent companies

At 31 December 2019, no shares in parent companies were held, either directly or through trust companies or intermediaries. No shares of parent companies were purchased or sold during the year, either directly or through a trust company or third party.

Related party transactions

Details of related party transactions can be found in the notes to the consolidated financial statements. As for the procedures adopted regarding related party transactions, also with reference to the provisions of Article 2391-bis of the Italian Civil Code, in force in 2019, please refer to the procedure adopted by RCS MediaGroup S.p.A., also pursuant to the Regulations approved by CONSOB through resolution no. 17221 of March 12, 2010 and subsequent amendments, published on the Company website www.rcsmediagroup.it in the Governance section, with information also provided in the Report on Corporate Governance and Ownership Structure.

Significant events duringthe year

Reference should be made to Note 5 for a list of the significant events during the year.

Significant events after year end

Reference should be made to Note 6 for a list of the significant events after year end.

Provisions under Articles 15 and 18 of CONSOB Market Regulations

With regard to compliance with articles 15 and 18 of the CONSOB Market Regulation, as amended by CONSOB Resolution no. 20249 of 28 December 2017, relating to the conditions for the listing of shares of companies with control over companies established and regulated under the law of non-EU countries, it is reported that three subsidiaries fall under the scope of Article 15 (none of them qualify as individually material for the purposes of the CONSOB definition), that the conditions contained in Article 15, par. 1 have been complied with, and that there are procedures in place to ensure that such compliance is maintained.

Report on Corporate Governance and Ownership Structure (Article 123-bis of Legislative Decree no. 58 of 24 February 1998)

The Report on Corporate Governance and Ownership Structure, containing information on RCS MediaGroup S.p.A.’s compliance with the Corporate Governance Code for Listed Companies promoted by Borsa Italiana S.p.A. as well as the additional information pursuant to paragraphs 1 and 2 of Article 123-bis of Legislative Decree no. 58 of February 24, 1998, is also published by the time limits of law on the Company website www.rcsmediagroup.it in the Governance Section.

Participation in the regulatory simplification process adopted by CONSOB resolution no. 18079 of 20 January 2012. Disclosure pursuant to Articles 70, paragraph 8, and 71, paragraph 1-bis of CONSOB regulation no. 11971/99 as amended

As of 7 August 2012, the RCS MediaGroup S.p.A. Board of Directors, pursuant to Article 3 of CONSOB resolution no. 18079 of 20 January 2012 and in relation to the provisions of articles 70, paragraph 8, and 71, paragraph 1-bis of CONSOB regulation no. 11971/1999 as amended, decided to make use of the right to exemption from the informational document publication obligations set forth in the above-mentioned CONSOB regulation at the time of significant mergers, spin-offs, share capital increases through the contribution of goods in kind, acquisitions and disposals.

Direction and Coordination

As explained in Note 5 of the specific notes "Significant events during the year", RCS MediaGroup S.p.A. became subject to the direction and coordination (as defined under Article 2497 et seq. of the Italian Civil Code) of Cairo Communication S.p.A.. In December 2019, Cairo Communication S.p.A. informed RCS that it will direct and coordinate advertising sales at group level. On 12 December 2019, the Board of Directors of RCS resolved to implement the organizational changes required to enable Cairo Communication S.p.A. to fulfil strategic and operational coordination between Cairo Pubblicità S.p.A. and the Advertising Department of RCS, in the belief, among other things, that this will enable the Company to offer customers a broad, diversified and multimedia portfolio of publishing solutions, offering "all-round" advertising plans that cover most of the population through various channels and fully meet advertisers’ needs. Transactions with Cairo Communication S.p.A. and the companies subject to its direction and coordination are indicated in the specific notes, in particular in Note 17 Related party transactions in the Consolidated Financial Statements and Note 47 Direction and Coordination Activities in the separate financial statements of RCS MediaGroup S.p.A..

Certification pursuant to Article 2.6.2, paragraph 8, of the Stock Exchange Regulations

Pursuant to Article 2.6.2, paragraph 8, of the Regulations of the Markets Organized and Managed by Borsa Italiana S.p.A., the meeting of the Board of Directors of 26 March 2020 certified that there were no conditions preventing the listing of shares of subsidiaries subject to direction and coordination by another company pursuant to Article 16 of CONSOB Regulation 20249 of 28 December 2017. Specifically, the Company: (i) complies with the disclosure obligations set forth in Article 2497-bis of the Italian Civil Code; (ii) has an independent negotiating ability in relations with customers and suppliers; (iii) does not have a centralized treasury relationship with Cairo Communication S.p.A. (or with another company controlled by Cairo Communication S.p.A. other than the group headed by the Company). Additionally, the majority of the Company's Board of Directors is made up of independent directors and the Control, Risk and Sustainability Committee and the Remuneration and Appointments Committee are made up exclusively of independent directors.

Milan, 26 March 2020

For the Board of Directors:

Chairman and Chief Executive Officer

Urbano Cairo (signed on the original)

PROPOSED RESOLUTION

Dear Shareholders, we submit for your approval (a) the separate financial statements as at and for the year ended 31 December 2019, comprising the statement of financial position, the income statement, the statement of comprehensive income, the statement of cash flows, the statement of changes in equity and the notes, together with related attachments, which show profit for the year of € 39,103,388.76, and the accompanying Report on Operations, as well as (b) the proposal to allocate, taking into particular account the provisions of Article 23, par. 1, of the Bylaws, the above profit for the year as follows:

Given the above, we propose that you adopt the following resolution:

“The shareholders of RCS MediaGroup S.p.A.  have reviewed the Directors’ Report on Operations;  acknowledge the reports of the Board of Statutory Auditors and the Independent Auditors Deloitte & Touche S.p.A.;  have reviewed the separate financial statements as at and for the year ended 31 December 2019 presented by the Board of Directors, which show profit for the year of € 39,103,388.76;

and hereby resolve

(a) to approve:

1. the Directors’ Report on Operations; 2. the separate financial statements as at and for the year ended 31 December 2019 presented by the Board of Directors, which show profit for the year of € 39,103,388.76, as a whole and in their individual parts, together with the proposed accruals and allocations;

(b) the allocation of net profit for the year of € 39,103,388.76 as follows:

 to the Shareholders, as a dividend, the amount of € 0.03 for each of the ordinary shares outstanding on the ex-dividend date, therefore excluding the treasury shares held at that date;  to carry forward the residual profit for the year; and to pay the above dividend per share as from 20 May 2020 with ex dividend date (coupon no. 3) on 18 May 2020 (payment eligibility date, pursuant to Article 83-terdecies of the TUF, 19 May 2020).

Milan, 26 March 2020

For the Board of Directors:

Chairman and Chief Executive Officer

Urbano Cairo (signed on the original)

CONSOLIDATED FINANCIAL STATEMENTS

Income statement (*)

€/millions Notes 31 December

2019 (1) 2018 I Revenue from sales 15 923.6 975.6 II Increase in internal work capitalized - - II Changes in work in progress, finished and semi-finished products 41 1.9 0.3 II Raw materials and services 18 (504.1) (553.2) III Personnel expense 19 (264.5) (264.7) II Other operating revenue and income 20 15.8 19.8 II Sundry operating expense 21 (15.5) (16.1) II Profit (loss) from derecognition of trade and sundry receivables - - IV Provisions 52 (1.5) (5.4) V (Write-down)/write-back of trade and sundry receivables 22 (2.5) (3.0) VI Share of income (expense) from equity-accounted investees 23 0.1 2.0 VII Amortization of intangible assets 24 (15.5) (19.6) VIII Depreciation of property, plant and equipment 24 (10.5) (11.5) IX Depreciation of rights of use on leased assets 24 (23.2) 0.0 X Depreciation of investment property 24 (0.6) (0.6) XI Other (impairment losses)/reversal on non-current assets 24 (1.0) (8.1) Operating profit (EBIT) 102.5 115.5 XII Interest income calculated using the effective interest method 25 0.3 0.3 XII Financial income 25 0.6 3.9 XII Financial expense 25 (16.9) (18.3) XIII Other income (expense) from financial assets/liabilities 26 0.2 1.5 XIII Profit (loss) from derecognition of receivables and other financial assets - - XIII (Write-down)/write-back of receivables and other financial assets 27 (0.3) (2.4) Profit (loss) before tax 86.4 100.5 XIV Income tax 28 (17.6) (15.2) Profit (loss) from continuing operations 68.8 85.3 XV Profit (loss) from assets held for sale and discontinued operations - - Profit (loss) for the year 68.8 85.3

Attributable to: XVI Profit (loss) attributable to non-controlling interests 29 0.3 0.1 Profit (loss) attributable to the owners of the parent 68.5 85.2 Profit (loss) for the year 68.8 85.3

Basic earnings (losses) per share: continuing operations 30 0.13 0.16 Diluted earnings (losses) per share: continuing operations 30 0.13 0.16 Profit (loss) from assets held for sale and discontinued operations 30 - -

Diluted earnings (losses) per share: assets held for sale and discontinued operations 30 - - (1) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in 2019 in the reversal of lease payments classified under Raw materials and services of € 26.2 million, offset by higher amortization and depreciation of rights of use on leased assets of € 23.2 million, higher financial expense of € 3.5 million and lower tax of € 0.1 million; with an impact on EBIT for € +3 million and on profit attributable to the owners of the parent for the period of € -0.4 million.

(*) In accordance with CONSOB Resolution n° 15519 of July 27, 2006, the effects of related party transactions and of non-recurring income and expense on the income statement are reported in the specific income statement presented in the section "Annexes to the Consolidated Financial Statements" and are described in detail in Notes 17 and 31, respectively.

The notes form an integral part of these financial statements.

Statement of comprehensive income

(€ millions) Notes 31 December 2019 2018 Profit (loss) for the year 68.8 85.3

Other comprehensive income (expense):

Other comprehensive income/(expense) that will subsequently be reclassified to profit/(loss) for the year:

Gains (losses) on foreign currency translation of foreign operations - -

Reclassification of gains (losses) on foreign currency translation of foreign operations to profit or loss - -

Gains (losses) on cash flow hedges 50 ( 0.7) ( 1.5)

Reclassification of gains (losses) on cash flow hedges to profit or loss 50 0.6 1.1 Share of comprehensive income (expense) of equity-accounted investees - - Income tax on other comprehensive income 50 - 0.1

Other comprehensive income/(expense) that will not be subsequently reclassified to profit/(loss) for the year:

Actuarial (loss)/gain on defined benefit plans 50 ( 2.9) 0.5 Actuarial (loss)/gain on defined benefit plans relating to equity-accounted investees - - Gains (losses) from the fair value measurement of other equity instruments 50 ( 0.1) ( 1.5) Income tax on other comprehensive income 50 0.7 ( 0.1)

Total other comprehensive income (expense) (2.4) (1.4)

Total comprehensive income (expense) 66.4 83.9

Comprehensive income (expense) attributable to: non-controlling interests 0.2 0.1 owners of the parent 66.2 83.8

Total comprehensive income (expense) 66.4 83.9

The notes form an integral part of these financial statements.

Statement of financial position (*) (€ millions) Notes 31 December 2019 31 December 2018

ASSETS XVIII Property, plant and equipment 32 62.5 65.4 XIX Rights of use on leased assets 33 160.7 - XX Investment property 34 19.5 20.1 XVII Intangible assets 35 363.3 369.4 XXI Investments in associates and joint ventures 36 37.5 38.9 XXI Other non-current equity instruments 37 2.0 2.1 XXXV Financial assets recognized for derivatives 38 - - XXI Non-current financial receivables 39 1.0 2.2 XXI Other non-current assets 40 16.7 15.0 XXI Deferred tax assets 28 87.5 95.9 Total non-current assets 750.7 609.0 XXII Inventory 41 23.3 19.6 XXIII Trade receivables 42 206.3 212.0 XXV Sundry receivables and other current assets 43 28.3 25.9 XXV Current tax assets 28 6.0 1.7 XXXV Financial assets recognized for derivatives 38 - - XXXVI Current financial receivables 44 13.9 1.4 XXXVI Cash and cash equivalents 44 13.0 12.5 Total current assets 290.8 273.1 Non-current assets held for sale - - TOTAL ASSETS 1,041.5 882.1 EQUITY AND LIABILITIES XXX Share capital 45 270.0 270.0 XXX Other equity instruments - - XXX Treasury shares 47 (26.6) (26.9) XXX Reserves 46/47/48 (6.2) (4.0) XXX Retained earnings/losses carried forward (26.3) (71.1) XXX Profit (loss) for the year 68.5 85.2 Total equity attributable to the owners of the parent 279.4 253.2 XXX Non-controlling interests 1.2 1.3 Total 280.6 254.5 XXXI Non-current financial payables and liabilities 44 82.9 141.6 XXXVII Non-current liabilities from lease contracts (1) 44 150.9 - XXXIV Financial liabilities from derivatives 38 1.0 1.0 XXVIII Employee benefits 51 39.6 36.9 XXVI Provisions for risks and charges 52 15.0 16.2 XXVII Deferred tax liabilities 28 52.5 51.5 XXV Other non-current liabilities 53 0.9 0.9 Total non-current liabilities 342.8 248.1 XXXII Payables to banks 44 8.8 13.6 XXXII Current financial payables 44 65.8 45.2 XXXVII Current liabilities from lease contracts (1) 44 24.4 - XXXIII Financial liabilities from derivatives 38 0.2 0.1 XXV Current tax liabilities 28 0.6 2.1 XXIV Trade payables 54 198.7 204.7 XXVI Current portion of provisions for risks and charges 52 31.1 31.4 XXV Sundry payables and other current liabilities 55 88.5 82.4 Total current liabilities 418.1 379.5 Liabilities relating to assets held for sale - - TOTAL EQUITY AND LIABILITIES 1,041.5 882.1 (1) The effects of the new IFRS 16 on balance sheet items resulted at 31 December 2019 in: - the recognition under rights of use on leased assets for a total of € 160.7 million; - the recognition of current and non-current liabilities from lease contracts amounting to approximately € 24.4 million and € 150.9 million respectively; - a decreasing impact on initial equity of € 9.1 million, net of the accounting effects of the tax component, the latter concurrently recorded under “Deferred tax assets” of € 3.6 million.

(*) In accordance with CONSOB Resolution 15519 of July 27, 2006, the effects of related party transactions on the statement of financial position are reported in the

specific statement of financial position presented in the section "Annexes to the Consolidated Financial Statements" and are further commented on in Note 17. The notes form an integral part of these financial statements.

Statement of cash flows (*)

(€ millions) Notes 2019 2018 A) Cash flows from operations (**) Profit (loss) before tax from continuing operations 86.4 100.5 Amortization, depreciation and impairment losses 24 50.8 39.8 (Gains) losses and other non-monetary items 26 (0.2) (1.5) (Gains) losses of equity-accounted investees 23 (0.1) (2.0) Dividends from equity-accounted investees 36 1.4 5.9 Write-downs of financial fixed assets 27 0.3 2.4 Net financial income (expense) 25 16.0 14.1 - of which with related parties (0.2) (0.1) Increase (decrease) in employee benefits and provisions for risks and charges (2.5) (3.6) Changes in working capital (5.0) (24.7) - of which with related parties ( 2.0) (4.3) Income tax paid ( 9.8) (4.4) Total 137.3 126.5 B) Cash flows from investing activities Acquisition of investments - - Capital expenditure in property, plant and equipment and intangible fixed assets (**) (16.4) (17.8) (Purchase) sale of other financial fixed assets - - Proceeds from the sale of investments 0.8 Proceeds from the sale of property, plant and equipment and intangible fixed assets 0.2 0.2 Total (15.4) (17.6) Free cash flow (A+B) 121.9 108.9 C) Cash flows from financing activities Net change in financial payables and other financial assets 56 (46.7) (94.2) - of which with related parties ( 19.3) 2.5 Net financial interest received (paid) (**) (12.3) (14.5) - of which with related parties 0.2 0.1 Dividends paid by the Parent Company 49 ( 31.0) - Dividends paid to third parties by subsidiaries 49 (0.1) (0.1) Liabilities from leased assets (**) 56 (26.4) Total (116.5) (108.8) Net increase (decrease) in cash and cash equivalents (A+B+C) 5.4 0.1 Opening cash and cash equivalents (1.1) (1.2) Closing cash and cash equivalents 4.3 (1.1) Increase (decrease) for the year 5.4 0.1

ADDITIONAL DISCLOSURES OF THE STATEMENT OF CASH FLOWS

Opening cash and cash equivalents consisting of (1.1) (1.2) Cash and cash equivalents 56 12.5 15.6 Current payables to banks 56 (13.6) (16.8) Closing cash and cash equivalents 4.3 (1.1) Cash and cash equivalents 56 13.0 12.5 Current payables to banks 56 (8.7) (13.6) Increase (decrease) for the year 5.4 0.1

(*) Also pursuant to CONSOB Resolution no. 15519 of 27 July 2006.

(*) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted at 31 December 2019 in the reclassification of payments from lease liabilities to cash flows from financing activities, while previously such payments were included in cash flows from operations, for a total of € 24.8 million. Payment of the principal portion of finance lease payments under IAS 17, following application of the new IFRS 16, was reclassified from "Capital expenditure in property, plant and equipment and intangible assets" to "Liabilities from leased assets", for total outlays of € 4.3 million. The overall impact of the application of IFRS 16 on cash flows from financing activities amounted to € 29.1 million.

The notes form an integral part of these financial statements.

Statement of changes in equity (1)

Equ i t y Retained Equity attributable attributable Share premium Tr e a s u r y s h a r e s Optional Equ i t y Other earnings/losses Profit (loss) for (€ millions) Share capital Legal reserve to the owners of the to non- Equ i t y reserve (*) reserve transaction reserves carried forward the year parent controlling (**) interests Note 45 Note 46 Note 47 Note 46 Note 47 Note 48

Balance at 31/12/2017 475.1 110.4 19.1 (27.1) (143.0) (0.9) (334.5) 71.1 170.2 1.3 171.5 Gross effects from the application of IFRS 9 ------(1.1) - (1.1) - (1.1) Tax effects from the application of IFRS 9 ------0.3 - 0.3 - 0.3

Balance at 1/1/2018 475.1 110.4 19.1 (27.1) - (143.0) (0.9) (335.3) 71.1 169.4 1.3 170.7

Resolution of Ordinary Shareholders’ Meeting of 26 April 2018: - allocation of the 2017 result to retained earnings (losses carried forward) ------71.1 (71.1) --- - use of share premium reserve - (110.4) -----110.4 -- - - use of legal reserve --(19.1) -- - - 19.1 - ---

Resolution of Extraordinary Shareholders’ Meeting of 26 April 2018: - reduction of the share capital (205.1) - 54.0 - 87.3 -- 63.8 - ---

Dividends paid to non-controlling interests ------(0.1) (0.1) Other movements ---0.2 -- - (0.2) -- Total comprehensive income (expense) ------(1.4) - 85.2 83.8 0.1 83.9

Balance at 31/12/2018 270.0 - 54.0 (26.9) 87.3 (143.0) (2.3) (71.1) 85.2 253.2 1.3 254.5 Gross effects from the application of IFRS 16 ------(12.7) - (12.7) - (12.7) Tax effects from the application of IFRS 16 ------3.6 - 3.6 - 3.6

Balance at 1/1/2019 270.0 - 54.0 (26.9) 87.3 (143.0) (2.3) (80.2) 85.2 244.1 1.3 245.4

Resolution of the Ordinary Shareholders' Meeting of 2 May 2019: - allocation of the 2018 result to dividends ------(31.0) (31.0) - (31.0) - carryforward of the residual amount ------54.2 (54.2) ---

Equity transaction -----0.1 ---0.1(0.1) - Dividends paid to non-controlling interests ------(0.1) (0.1) Other movements ---0.3 -- - (0.3) --- - Change in equity attributable to non-controlling interests ------(0.1) (0.1)

Total comprehensive income (expense) ------(2.3) - 68.5 66.2 0.2 66.4

Balance at 31/12/2019 270.0 - 54.0 (26.6) 87.3 (142.9) (4.6) (26.3) 68.5 279.4 1.2 280.6 (1) Comments on the availability and possible distribution of equity reserves (under Article 2427, paragraph 7-bis of the Italian Civil Code) are provided in the additional statement of changes in equity in the separate financial statements of RCS MediaGroup S.p.A.. (*) At 31 December 2019, it includes 44,527 shares made available to the minority shareholders of RCS Investimenti S.p.A. following the merger by incorporation of the latter with RCS MediaGroup S.p.A. (**) Inclusive at 31 December 2019 of € 4.8 million in unavailable retained earnings to be allocated in accordance with the Bylaws in force of the subsidiary RCS Sport S.p.A. 63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FORMAT, CONTENT AND OTHER INFORMATION ON THE FINANCIAL STATEMENTS

1. Corporate information

RCS MediaGroup S.p.A. is a joint-stock company at the head of the RCS Group and is subject, as from 12 December 2019, to the direction and coordination of Cairo Communication S.p.A.. It is listed on Italy’s electronically-traded equities market, organized and managed by Borsa Italiana S.p.A, is headquartered in Via Angelo Rizzoli 8, Milan, and has been registered at number 12086540155 in the Milan Company Register since 6 March 1997 (ISIN: IT0004931496). RCS MediaGroup is an international multimedia publishing group that operates in daily newspapers, magazines, books, new media and digital and satellite TV, organizes highly important global sporting events and is among the leading operators in advertising sales and distribution of publishing products in Italy and Spain. It is also present in the radio segment through the Unidad Editorial Group. The Group’s principal activities are described in Note 15 “Operating segments”. The main direct subsidiary of RCS MediaGroup S.p.A. is Unidad Editorial S.A., which operates predominantly in the Spanish market. At 31 December 2019, the consolidated financial statements included 45 direct and indirect subsidiaries consolidated on a line-by-line basis (48 at 31 December 2018). For additional details on investments, please refer to the annex “List of Group investments at 31 December 2019”. The consolidated financial statements of RCS MediaGroup S.p.A. as at and for the year ended 31 December 2019 were approved by the Board of Directors on 26 March 2020 and also authorized for publication.

The entity which prepares the consolidated financial statements of the largest body of entities, of which the entity forms part as a subsidiary, is U.T. Communications S.p.A., with registered office in Via Montenapoleone 8, Milan. The entity which prepares the consolidated financial statements of the smallest body of entities, of which the entity forms part as a subsidiary, is Cairo Communication S.p.A., listed on the STAR market, with registered office in Corso Magenta 55, Milan.

2. Format and content

The consolidated financial statements of the RCS Group were drawn up in accordance with the International Financial Reporting Standards (IFRS) endorsed by the European Union, as explained in greater detail in Note 8 of this Annual Report. As from 2006, the consolidated companies have voluntarily adopted the International Financial Reporting Standards, except for a few smaller Italian and foreign companies, whose financial statements are restated in specific financial reporting packages, in order to bring them into line with IFRS for the sole purpose of the Group's consolidated financial statements. The consolidated financial statements of the Unidad Editorial group were prepared in compliance with IFRS. For an exhaustive list of investments consolidated on a line-by-line basis, reference is made to the annex "List of Group investments at 31 December 2019". The Group's consolidated financial statements include the financial statements at 31 December 2019 of RCS MediaGroup S.p.A., its subsidiaries and the consolidated financial statements of the Unidad Editorial group, and for a number of minor companies (for the above reasons) the abovementioned financial reporting package prepared at 31 December 2019.

Deloitte & Touche S.p.A. carries out the statutory audit of the consolidated financial statements.

The presentation currency of these condensed interim consolidated financial statements is the Euro, which is used as the functional currency by most of the Group's companies.

Unless otherwise specified, all amounts are stated in millions of Euro.

3. Reporting formats

The following is a list of the Group's consolidated financial statements:  the statement of financial position in which assets and liabilities are separately classified as current and non-current;  the income statement in which income and expense are classified by nature;  the statement of comprehensive income which presents all changes in equity generated by transactions other than those with owners of the parent;  the statement of cash flows using the indirect method, whereby profit (loss) for the year before tax is adjusted for the effects of non-monetary items, of any deferral or provision for past or future operating receipts or payments and of revenue or costs associated with cash flows from (used in) investing or financing activities;  the statement of changes in consolidated equity showing the changes in equity with shareholders and the allocation of profit, as well as changes generated by transactions other than those with shareholders.

With regard to CONSOB Resolution no. 15519 of 27 July 2006, significant related party transactions and non-recurring items have been highlighted in separate schedules.

4. Changes in the scope of consolidation

In 2019, no companies entered or left the consolidation scope.

However, within the consolidation scope, the following extraordinary transactions took place in 2019: - following the deed concluded in December 2018, a partial demerger was carried out in favour of RCS Eventi Sportivi S.r.l. by RCS Sport S.p.A., the effects of which vis-à-vis third parties, as well as the accounting and tax effects, ran as from 1 January 2019; additionally, as from such date, RCS Eventi Sportivi S.r.l. changed its name to RCS Sport & Events S.r.l.; - on 23 May, 49% of the share capital of Hotelyo, a company already owned 51% and fully consolidated, was acquired for € 1; - on 28 November 2019, the deed of merger by incorporation of Digicast S.p.A. and RCS Digital Ventures S.r.l. into RCS MediaGroup S.p.A. was concluded, with accounting and tax effects from 1 January 2019, and legal effects from 31 December 2019; - on 12 December 2019, the deed of merger by incorporation of Editoriale del Mezzogiorno S.r.l. into RCS Edizioni Locali S.r.l. was concluded, with accounting effects from 1 January 2019, and legal effects from 31 December 2019.

In June, Editoria de Medios de Valencia, Alicante y Castellón S.L. changed its name to Editora de Medios Locales S.L..

5. Significant events during the year

 On 18 March 2019, the Board of Directors of RCS MediaGroup S.p.A., which met under the chairmanship of Urbano Cairo, reviewed and approved the results at 31 December 2018.

 On 2 May 2019, the Shareholders' Meeting of RCS MediaGroup S.p.A. met in ordinary session and adopted the following resolutions:

 approved the Financial Statements at 31 December 2018 and the distribution of a dividend of € 0.06 per share, gross of tax, with ex dividend date (coupon no. 2) on 20 May 2019, payable on 22 May 2019 (record date 21 May 2019);  appointed for 2019-2021 the Board of Directors composed of 11 members: - Urbano Cairo, Marco Pompignoli, Uberto Fornara, Gaetano Miccichè, Stefania Petruccioli, Alessandra Dalmonte and Marilù Capparelli, elected from the majority list submitted by Cairo Communication S.p.A., holding 59.69% of the ordinary share capital; - Diego Della Valle, Marco Tronchetti Provera, Carlo Cimbri and Veronica Gava, elected from the minority list submitted by Diego Della Valle & C. S.r.l., also in the name and on behalf of the shareholders Mediobanca Banca di credito Finanziario S.p.A., UnipolSai Assicurazioni S.p.A., UnipolSai Finance S.p.A. and Pirelli & C. S.p.A., which together hold 23.78% of the ordinary share capital;  appointed Urbano Cairo as Chairman of the Board of Directors;  set, in accordance with Article 2389, par. 1 of the Italian Civil Code, at € 370,000 the total annual remuneration due to the Board of Directors to be divided among its members in accordance with the resolutions to be taken by the Board of Directors, without prejudice to any additional remuneration due to directors holding special offices to be established by the Board of Directors in accordance with Article 2389, par. 3, of the Italian Civil Code;  authorized the members of the Board of Directors of the Company, pursuant to Article 2390 of the Italian Civil Code, to continue the activities in competition indicated in their respective curricula vitae as sent to the Company on submission of the lists and available on the Company's website www.rcsmediagroup.it, as well as in parent companies of RCS MediaGroup S.p.A. or under common control.

 On 2 May 2019, following the Shareholders' Meeting of RCS MediaGroup S.p.A., the Board of Directors met and:

 confirmed Urbano Cairo as Chief Executive Officer, granting him the powers of management;  ascertained, based on the information provided by the parties involved, the satisfaction by the members of the Board of Directors (i) of the requirements of applicable regulations for taking up the office of Director and (ii) the independence requirements of all the directors, except for Urbano Cairo, Marco Pompignoli and Uberto Fornara, pursuant to Article 148, par. 3 of Legislative Decree no. 58/1998 and to the Corporate Governance Code for Listed Companies of Borsa Italiana S.p.A. to which the Company adheres;  adopted resolutions on corporate governance, appointing Independent Director Marilù Capparelli as Lead Independent Director. Additionally, the Board of Directors appointed: - as members of the Remuneration and Appointments Committee, Directors Marilù Capparelli, Diego Della Valle and Stefania Petruccioli; - as members of the Control and Risk and Sustainability Committee, Directors Alessandra Dalmonte, Veronica Gava and Stefania Petruccioli;  confirmed the executive director Marco Pompignoli as Director in charge of the internal control and risk management system, also appointing him to oversee and supervise the administration, finance and management control departments, legal and corporate affairs,

procurement, and information systems of the RCS Group, in coordination with and support of the Chairman of the Board of Directors and Chief Executive Officer;  appointed the Supervisory Board pursuant to Legislative Decree no. 231/2001 for 2019-2021 in the persons of Enrico Calabretta, Alessandra Dalmonte and Marco Moroni.

 On 14 May 2019, the Shareholders’ Meeting of RCS MediaGroup S.p.A., chaired by Urbano Cairo, met in extraordinary and ordinary session and passed the following resolutions:

 in extraordinary session: - resolved to amend Article 10 of the Bylaws by increasing the maximum number of directors from 11 to 15; - resolved to make further detailed amendments to articles 8, 10, 12 and 13 of the Bylaws, illustrated in the Directors' Report on Operations available on the Company's website www.rcsmediagroup.it.

 in ordinary session: - set the number of members of the Board of Directors to 12; - appointed Stefano Simontacchi to complete the Board of Directors; - authorized Stefano Simontacchi, pursuant to Article 2390 of the Italian Civil Code, to continue the activities in competition indicated in the curriculum vitae as sent to the Company and attached to the Directors' Report (available on the Company's website www.rcsmediagroup.it) as well as in parent companies of RCS MediaGroup S.p.A. or under common control.

 On 12 December 2019, the Board of Directors of Cairo Communication informed the subsidiary RCS MediaGroup that it will direct and coordinate advertising sales at group level. The strategic and operational coordination between Cairo Pubblicità and the Advertising Department of RCS MediaGroup will also enable it to offer customers a broad, diversified and multimedia portfolio of publishing solutions, offering "all-round" advertising plans that cover most of the population through various channels and fully meet advertisers’ needs. The responsibility for the direction and coordination of the Cairo Pubblicità and RCS MediaGroup structures, which act as advertising agents, has been entrusted to Uberto Fornara, CEO of Cairo Communication, to whom Raimondo Zanaboni, General Manager of the Advertising Department of RCS MediaGroup and Giuliano Cipriani, General Manager and Managing Director of Cairo Pubblicità, will report. At the same date (12 December 2019), the Board of Directors of RCS MediaGroup deemed that the above organizational changes constitute direction and coordination activities by the parent company Cairo Communication, pursuant to Article 2497 et seq. of the Italian Civil Code and after assessing that the Company’s current governance set-up is consistent with the provisions of the regulations in force, resolved to implement the legal advertising requirements and granted director Uberto Fornara operational powers in the field of advertising sales.

 “Information on ongoing disputes" includes a description of the dispute relating to the property complex in Via Solferino.

6. Significant events after year end

 After year end, no events occurred which would require adjustments to the amounts presented with respect to the information already provided in this Financial Report.

 As known, since January 2020, the national and international scenario has been swept by the spread of the Coronavirus and the ensuing restrictions for its containment adopted by the governments of the various countries involved. Since the second half of February, the virus has spread significantly across Italy, affecting Lombardy in particular, in terms of number of cases and speed of the infection. The containment measures adopted by the Italian Government are having a direct impact on work organization and timing and on the Group's activities. For instance, sporting events such as the Milano Marathon and the cycling races Strade Bianche, Tirreno Adriatico, Milano Sanremo, Giro di Sicilia and the Giro d'Italia have been postponed. The subsidiary RCS Sport is working to reschedule these races on the 2020 international cycling calendar. In Spain too, the infection has accelerated from the second week of March and the Government has adopted containment measures similar to those put in place in Italy. The current health emergency, besides its severe social impacts, is having direct and indirect repercussions on the general performance of the economy, leading to a climate of general uncertainty. Advertising sales in March slowed down in both Italy and Spain. The Group is monitoring developments on a daily basis to minimize the impacts in terms of health and safety in the workplace and on the operating and ﬁnancial front, by defining and implementing flexible and timely action plans. The developing situation, as well as the potential effects on the business outlook, are unforeseeable at this time - as they depend, inter alia, on the length of the health emergency and the spread (including on a global scale), as well as on the public measures, including economic and financial ones, which will be implemented in the meantime - and will be subject to constant monitoring in the further course of the year. Given the uncertainty generated by the spread of COVID-19 in the assessment of national and international macroeconomic scenarios, (as explained in the Main Risks and Uncertainties section), financial statement estimates were made based on assumptions regarding a highly uncertain future. Therefore, actual events over the next year may likely have a different outcome to those forecast at 31 December 2019, causing significant adjustments to the carrying amounts of assets and liabilities, amongst which, due to their significance, goodwill, other intangible assets with indefinite useful life, as well as deferred tax assets and the estimated recoverability of receivables. In this regard, as for the intangible assets of the Unidad Editorial CGU and deferred tax assets, a number of sensitivity analyses were carried out, as shown in the respective notes.

7. Consolidation methods

Subsidiaries indicated in the annex “List of Group investments at 31 December 2019” are consolidated as from their acquisition date, meaning the date on which the Group obtains control, and cease to be consolidated on the date on which control is lost. The Group controls a company when, by virtue of its relationship with the entity. it has control over its relevant activities, is exposed to variable returns, it has rights to those returns and it also has the ability to affect the returns by exercising its power over the entity.

The income and expense of the subsidiaries acquired or sold during the year are included in the income statement from the date on which the Group gains control until the date on which the Group no longer controls the companies.

Companies under joint control and associates or companies over which the Group nonetheless has a significant influence have been consolidated using the equity method.

The accounting standards adopted are basically consistent for the companies included in the consolidation scope and the related financial statements were prepared at 31 December 2019.

The main procedures used for consolidation are as follows.

Profits arising from transactions between subsidiaries that have not yet been realized outside the Group are eliminated, as are receivables, payables, income and expense between consolidated companies when the amounts concerned are material.

Dividends paid by consolidated companies are eliminated from the income statement and added to prior year retained earnings if, and to the extent that, they have been drawn from the latter.

Equity and profit (loss) for the year attributable to non-controlling interests are shown separately in a dedicated item of equity, separately from equity attributable to owners of the parent, while the profit or loss for the year is broken down between attributable to non-controlling interests and the owners of the parent. Goodwill arising on line-by-line consolidation was recognized without exercising the full goodwill option or without recognizing goodwill of non-controlling interests.

Assets held for sale and which are highly likely to be sold in the next twelve months, if the conditions set out by IFRS 5 have been fulfilled, taking account of the material amounts, are classified in accordance with this standard. This means that, whereas formerly they would have been consolidated on a line-by-line basis, the related assets are now classified in “Non-current assets held for sale” with the related liabilities also separately recognized under liabilities. The results are shown in the income statement as “Profit (loss) from assets held for sale and discontinued operations”.

With regard to transactions with equity-accounted investees, profits and losses are eliminated to the extent of the Group’s interest in the associate, unless the unrealized losses are evidence that the transferred assets are impaired.

The financial statements of foreign subsidiaries expressed in currencies other than the Euro are translated into Euro on consolidation, using the closing rate for assets and liabilities and the average rate for the year for revenue and expense. Exchange rate differences are recorded in a separate provision called Translation Reserve.

Changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control or that refer to subsidiaries are accounted for as equity transactions and therefore recognized in equity.

8. Accounting policies

These financial statements, prepared in accordance with the provisions of CONSOB Resolution no. 11971/1999 as subsequently amended, including in particular those introduced by Resolutions no. 14990 of 14 April 2005 and no. 15519 of 27 July 2006, contain the Group consolidated financial statements and explanatory notes, prepared in accordance with the IFRS international accounting standards issued by the IASB (International Accounting Standards Board) and adopted by the European Union. The term IFRS encompasses all the International Financial Reporting Standards (IFRS), all the International Accounting Standards (IAS) and all the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC, formerly IFRIC), previously known as Standing Interpretations Committee (SIC). Specifically, it is noted that the IFRS were consistently applied to all of the periods presented herein this document, with the exception of the comments in Note 9.

In compliance with document no. 2 published jointly by the Bank of Italy, CONSOB (the Italian Commission for Listed Companies and the Stock Exchange) and ISVAP (Italy’s insurance industry regulator) on 6 February 2009, it is reported that the consolidated financial statements of the RCS Group at 31 December 2019 have been prepared on a going concern basis.

With regard to CONSOB communication no. DEM/11070007 of 5 August 2011, it is also noted that the Group does not hold bonds in its portfolio issued by central or local governments or government authorities, and, therefore, it is not exposed to the risk of market fluctuations in the aforementioned bonds.

In 2019, the RCS Group benefited from special rates for the amount of € 110,029, pursuant to Article 28 of Law no. 416 of 5 August 1981 "Regulations governing publishers and publishing benefits" relating to certain dedicated telephone lines.

Pursuant to Article 1, par. 125 to 129 of Law no. 124 of 4 August 2017, with regard to the obligations to publish grants, contributions, paid assignments and, in any case, economic benefits of any kind received from the PA, and to Article 3-quater, par. 2, of Decree Law no. 135/2018 (Simplification Decree), it should be noted that the Allocating Bodies are required to publish the contributions in the National Aids Register, available at: www.rna.gov.it/sites/PortaleRNA/it_US/transparency in the field of State aid and de minimis aid. It should also be noted that amounts relating to commercial transactions carried out during the year that involve a consideration have not been taken into account.

The financial statements have been prepared in accordance with the conventional historical cost method, except for a number of financial assets and liabilities, including derivative instruments, which are measured at fair value.

This section summarizes the most important accounting policies adopted by the RCS Group.

Revenue

Revenue is recognized in the income statement when the criteria set out in IFRS 15 are met. Specifically:

 revenue from the sale of goods is considered to have been earned and is recognized gross of the distribution premiums at the time of the transfer of ownership, which conventionally coincides: - on the publication date for newspapers and magazines, recorded at the value reasonably estimated on the basis of a consignment contract, - and the shipment date for book publications, recorded net of reasonably estimated returns;  revenue from the sale of magazine subscriptions is recognized on the basis of the magazines published and distributed during the period;  revenue from the sale of advertising space on traditional media is recognized according to the issue date of the publications;  advertising revenue generated by digital operations is recognized at the time of the broadcasting or publication of the message which normally (banner) coincides with the publication date;  revenue from the sponsorship of sporting events and from the organization of events is recognized at the date of the event, taking into account the short time horizon of such events;  revenue from services is recognized on an accruals basis, as set out in the respective contracts;  royalties are recognized on an accruals basis, as set out in the respective contracts;  dividends are recognized on the payable date, i.e. the date of the shareholders’ resolution for allocation.

Revenue is shown net of returns, discounts and allowances.

Costs

Costs and other operating expense are recognized in the income statement when they are incurred using the accruals basis of accounting also used for revenue, or when they do not qualify for recognition as assets in the statement of financial position. Costs are shown net of returns, discounts and allowances.

Government grants

Government grants are recognized when there is reasonable assurance that they will be received and that all the conditions attached to them are satisfied.

Financial income and expense

Financial income and expense are recognized in the income statement through the effective interest method. Interest is recognized using the effective interest method. Financial income and expense are shown in Note 25 in accordance with the categories defined in IFRS 9 and in the manners set out by IFRS 7.

Income tax

Tax for the year corresponds to the sum of current, deferred and prepaid tax. Current tax is recorded and determined on the basis of a realistic estimate of taxable income in accordance with current country tax regulations, and taking into account any applicable exemptions and tax receivables due if any. In detail, the calculation takes account of the more significant tax adjustments and, in the case of companies filing for income tax on a group basis in Italy, the credit arising on tax losses that have been offset and may be offset against expense arising from taxable profit. Deferred tax assets and liabilities are recognized on temporary differences between the asset and liability carrying amounts used in the consolidation and the corresponding figures in the individual companies’ separate financial statements recognized for tax purposes, as well as on tax losses from prior years that are deductible from taxable profit. They are calculated at the rates (inferred from the prevailing law at the reporting date) that are expected to apply to the period when the tax asset is realized or the tax liability is settled. Deferred tax assets are recognized only if it is likely that the Company will have sufficient taxable income to use them. Deferred tax assets are reviewed at the end of each period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available in the future to allow part or all of that asset to be utilized. Deferred tax is not discounted.

Earnings per share

Basic earnings per share are calculated by dividing the consolidated profit for the year attributable to the ordinary shares by the weighted average number of ordinary shares outstanding during the year.

Statement of cash flows

The statement of cash flows prepared using the indirect method presents cash flows for the year based on whether they are associated with operating, investing or financing activities, with a separate indication of cash flows generated by assets held for sale and discontinued operations. Cash and cash equivalents are expressed net of current account overdrafts. Cash flows used in operations also include outlays for the payment of non-recurring expense. This does not include financial expense, which is classified under cash flows from financing activities. Payments relating to lease liabilities are included in the cash flows from financing activities. The statement of cash flows also shows cash flows associated with transactions with related parties separately.

Property, plant and equipment

Property, plant and equipment are assets recognized in the financial statements as they satisfy the requirement of producing probable future economic benefits for the Group, and of having a reliably estimated cost. These are recorded in the financial statements at purchase cost (including ancillary expense), if acquired separately, or at production cost (including direct and indirect production expense), if produced internally, or at fair value at the date of acquisition if acquired through business combinations. Assets held for sale are classified separately under non-current assets held for sale and no longer depreciated, but impaired to their fair value if the latter is less than their carrying amount. Property, plant and equipment are systematically depreciated (except for the component relating to land and assets held for sale). Depreciation is calculated on a straight-line basis using rates considered to reflect the estimated useful lives of the assets; assets acquired during the year are depreciated on a pro-rata basis, taking account of the asset’s effective use during the year. The useful life and the amortization criteria applied are reviewed on a regular basis and where change is deemed necessary, the amortization rate is restated in accordance with the prospective method. Improvement expenditure is recorded as an asset only when it can be recovered through expected future economic benefits and can be reliably estimated. Ordinary maintenance costs are charged to the income statement in the year in which they are incurred. Any dismantling costs are estimated and added to the cost of the asset, with a corresponding credit recognized in a provision for dismantling charges. They are then depreciated over the residual useful life of the asset concerned. The accounting treatment of assets acquired under lease contracts, as regards the effects on the statement of financial position, statement of cash flows and income statement, is in line with the provisions of IFRS 16, which came into force on 1 January 2019, in the manner and effects explained in Note 9 and Note 16. This standard essentially requires such assets to be recognized at cost among assets owned by the Group and depreciated over the estimated useful life, on the same basis as other property, plant and equipment. The principal portion of lease payments is deducted from the associated payable recognized as a liability, while the interest portion of payments is recognized on an accrual basis as a financial expense in the income statement. The carrying amount of an item of property, plant and equipment is derecognized on disposal or fully impaired when no future economic benefits are expected from its use or disposal. Any associated gains or losses (calculated as the difference between the net disposal proceeds and the carrying amount of the item) are included in the income statement at the time of the abovementioned derecognition and classified as other operating revenue and income or sundry operating expense. Property, plant and equipment are reviewed if there are indicators of impairment to identify any associated losses as described in the section “Impairment of non-financial assets”.

Investment property

completion of construction or development. Transfers from investment property are made when, and only when, there is a change in use indicated by events such as the commencement of owner-occupation. Investment property is tested if there are indicators of impairment to identify any associated losses as described in the section “Impairment of non-financial assets”. This item also includes any rights of use deriving from lease contracts and referring to assets that satisfy the definition of investment property.

Intangible assets

Intangible assets are resources that are clearly identifiable and controllable by the Group, from which it expects future economic benefits. These are recorded at purchase cost if acquired separately, and are capitalized at fair value at the date of acquisition if acquired through business combinations. Advertising costs, start-up and expansion costs, research costs, internally-generated trademarks and publications are not capitalized. Other intangible assets generated internally as a result of developing the Group’s products are capitalized only if all the following conditions are met:  the asset is identifiable;  it is probable that the asset developed will generate future economic benefits;  the costs of developing the asset can be measured reliably. Intangible assets with finite useful life are systematically amortized on a straight-line basis over that life. Goodwill and intangible assets with indefinite useful lives are not amortized but periodically tested for impairment, as described in the section “Impairment of non-financial assets”. If the recoverable amount is lower than the carrying amount, the asset is impaired accordingly. The higher value attributed to an intangible asset with finite useful life, recorded in accordance with IFRS 3 as a result of the acquisition of an investment upon first consolidation, is amortized if referred to an intangible asset with finite useful life. If goodwill is allocated to intangible assets with indefinite useful life, it is not amortized. Those assets are tested for impairment, as required by IAS 36. The useful life and the amortization criteria applied are reviewed on a regular basis and where a material change compared to previous circumstances is found, the asset can be transferred from indefinite to finite useful life or vice versa and, for assets with finite useful lives, the amortization rate can be modified in accordance with the prospective method. The Group holds that there is a trigger event when an asset with indefinite useful life is classified as an asset with finite useful life in light of the aforementioned review. Additionally, if expense with future economic benefits is incurred but does not qualify for recognition as intangible assets, it is charged to the income statement when incurred, or in the case of acquiring goods, when the Group has a right to control such goods, or in the case of the supply of services, when the Group receives the services.

Rights of use on leased assets

The rights of use refer to lease contracts concluded by the Group as lessee, with a duration of more than 12 months and not low value.

A contract is or contains a lease if, in exchange for consideration, it conveys the right to control the use of an identified asset for a specified period of time. Any rights of use that meet the definition of investment property must be shown in the balance sheet as investment property.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method, under which identifiable assets, liabilities and contingent liabilities of the acquired entity which qualify for recognition under IFRS 3, are recognized at their fair values at the date on which the Group effectively obtains control. Deferred and prepaid tax is also recognized on adjustments to carrying amounts to bring it in line with that value. The very complexity of applying the acquisition method means that the standard provides for an initial, provisional calculation of the fair value of the assets, liabilities and contingent liabilities acquired, such as to allow initial recognition of the transaction in the consolidated financial statements at the end of the year in which the business combination took place. Such initial recognition must be completed and adjusted within twelve months of the acquisition date. Amendments to the initial consideration arising from facts or circumstances subsequent to the acquisition date are recognized in profit or loss. Goodwill is recognized as the difference between: a) the aggregate of:  the consideration transferred;  the amount of any non-controlling interests in the acquired entity, measured for each acquisition in proportion to the identifiable net assets attributable to such non-controlling interests and measured in compliance with IFRS 3;  and, in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquired entity, with any resulting gain or loss recognized in profit or loss. b) the net fair value of the identifiable assets acquired and the liabilities assumed.

The amount of non-controlling interests can be calculated as the minority's share of the fair value referred to in point b) or, if the full goodwill option is applied, as the minority's share of the total fair value of the company inferable from the listing of the acquired company, also taking into account any majority bonuses paid to the RCS Group. If, at the acquisition date, the fair value of the acquiree cannot be inferred from a price quoted on an active stock market, other valuation techniques will be used in line with the provisions of international accounting standards. The full goodwill option can also be applied for a single aggregate without the need to extend the option to all the other aggregates recorded in the financial statements. At 31 December 2019, RCS Group goodwill was determined without applying the full goodwill option. Once the fair value of the assets, liabilities and contingent liabilities is determined, if the value pursuant to point b) above exceeds the sum pursuant to point a), then there is no goodwill and this excess is immediately recognized in profit or loss as non-recurring income.

Transaction costs do not form part of the consideration transferred and so are accounted for as expense in the period they are incurred.

Goodwill is periodically tested to assess recoverability through a comparison with the greater of fair value and value in use, calculated as the sum of discounted future cash flows generated by the underlying investment. Impairment losses on goodwill are recognized directly in profit and loss and are not reversable.

For the purpose of consistent assessment, goodwill acquired in a business combination is allocated, at the acquisition date, to the Group’s individual cash-generating units, or groups of cash-generating units expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or groups of units to which the goodwill is allocated:  represents the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets;  is not larger than any of the operating segments identified under IFRS 8. If goodwill is allocated to a cash-generating unit (or groups of cash-generating units) and part of the asset within that unit is disposed of, the goodwill associated with such an asset is included in the asset’s carrying

amount when determining the gain or loss on disposal. Goodwill disposed of in such circumstances is measured on the basis of the related carrying amounts of the asset sold and the portion of the cash-generating unit retained. If the disposal relates to a subsidiary, the difference between the disposal price and the net assets, plus cumulative exchange rate differences and residual goodwill, is recognized in the income statement. On first-time adoption of IFRS, the Group decided not to apply IFRS 3 to acquisitions prior to the IFRS transition date, meaning that goodwill arising on acquisitions before this date has been kept at the amounts resulting from the application of Italian GAAP and is periodically tested for impairment. Business combinations carried out between 1 January 2004 and 31 December 2008 (prior to the early application date of the IFRS 3 2008 Revised) are reflected in financial statements under the methods provided for by IFRS 3 (2004). The main differences in treatment refer to ancillary costs that were previously capitalized and are now recognized in profit or loss, changes in the opening amount due to transactions occurred after the acquisition and measurement at fair value of ownership interest previously owned in the investment.

Impairment of non-financial assets

The RCS Group assesses the existence of impairment (impairment tests) on assets recorded (tangible and intangible assets and investments) at each balance sheet date. In the case of goodwill, other intangible assets with indefinite useful life and intangible assets not yet available for use, the Group makes this assessment at least once a year, even in the absence of impairment indicators. In the case of tangible assets as well as investments and intangible assets with finite useful life, the recoverable value is assessed whenever trigger events arise from the periodic analysis carried out at each reporting date. The recoverability of the carrying amounts is tested by comparing them with the higher of fair value net of disposal costs and value in use. For the purpose of the impairment test, the book value is represented by the individual assets or the relevant CGUs. The book value of the CGUs undergoing test consists of net capital employed (intended as equity plus net financial position), increased by goodwill and allocated titles. The fair value is determined based on the market price of the asset, or of an identical asset, traded on an active market, net of disposal costs. In the absence of a market listing, reference may be made to a binding sales agreement, or to the price of the most recent transaction with similar characteristics. In the absence of market value, estimates are used based on data available on the market. Value in use is defined as the present value of estimated future cash flows expected to arise from the continuing use of an asset (the asset subject to impairment), or from its cash-generating unit, and from disposal at the end of its useful life. The cash-generating units have been identified in line with the Group’s organizational structure and business, as the smallest groups of assets that generate independent cash inflows from continuing use of the relevant groups of assets, or groups of cash generating units, which benefit from combination synergies. If the recoverable value determined above is lower than the value of the asset recorded in the financial statements, the asset would be immediately adjusted and aligned with the recoverable value by recording a write-down in the income statement. If the impairment of an asset other than goodwill is subsequently reduced or no longer exists, the carrying amount of the asset is restored until the new estimate of its recoverable value has been made and up to the limit of the value of the asset previously recorded in the financial statements. The reversal of the impairment loss is also recorded in the income statement.

Investments in associates and joint ventures

Associates are entities over which the Group exercises significant influence, although it does not control or jointly control them. Significant influence refers to the power to contribute to deciding on financial and management policies of the investee without having control or joint control over it. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control refers to the contractually agreed sharing of control

of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Investments in associates and joint ventures are accounted for using the equity method, whereby the investee is recorded at purchase cost and adjusted thereafter for the post-acquisition change in the investor’s share of the investee’s equity. If the losses of an associate exceed the Group’s interest in the same, these are not recognized unless the Group has an obligation to cover such losses. The income statement reflects the investor’s share of the associate’s profit or loss, reported in the line item “Share of profit (loss) of equity-accounted investees”. The positive difference between the acquisition cost and the Group’s share of the acquisition-date fair value of the investee’s identifiable assets, liabilities and contingent liabilities, remains included in the carrying amount of the investment. If the acquisition cost is lower than the Group’s share of the fair value of the investee’s identifiable assets and liabilities at the acquisition date, the difference is recognized in profit or loss. If an associate or joint venture makes any adjustments directly to their equity and/or in the statement of comprehensive income, the Group recognizes its related share and reports such a change, where applicable, in the statement of changes in equity and/or statement of comprehensive income. An impairment loss recognized in accordance with IAS 36 is not allocated to goodwill or the fair value measurement of assets recognized in the financial statements of the investment, but to the entire carrying amount of the investment. Therefore, any write-back is recognized in full within the limits of the cost of the investment initially recognized and to the extent inferable from the result of the impairment test.

Inventory

Inventory is measured at the lower of purchase or production cost (inclusive of any directly attributable expenditure and net of trade discounts and allowances) and its estimated realizable value as deduced from market trends. The purchase cost is calculated using the weighted average cost method. Inventory is adjusted to its estimated net realizable value by taking into account market prices and costs to sell. The adjustment of the inventory recorded to the estimated net realizable value is made by recognizing accruals directly deducted from the assets.

Financial assets

Receivables (with the exception of trade receivables) and other financial assets are initially recognized at fair value plus (only for financial assets measured at fair value through profit or loss) any purchase-related costs. As an exception to the general rule, trade receivables on initial recognition are measured at the price set in the transaction. Management determines upon initial recognition how financial assets are to be classified, identified in Note 13 in accordance with IFRS 9 criteria and as required by IFRS 7. After initial recognition, financial assets are measured in accordance with their classification. More specifically:  “Receivables and other financial assets” are measured at amortized cost using the effective interest method, in other words, recognizing in profit or loss the interest calculated using a rate that exactly discounts the financial asset’s estimated future net cash flows to its carrying amount. Losses are recognized in profit or loss when the loans and receivables are derecognized or when they become impaired. Receivables are impaired and recognized at their estimated realizable value (fair value) by means of the allowance for impairment directly deducted from their carrying amount. Receivables are impaired when there is objective evidence that the receivable is unlikely to be collected and also on the basis of past experience and statistics (expected losses). If, in a subsequent period, the amount of previous impairment losses decreases, the carrying amount of the assets is reinstated up to the amount that would have derived from applying the amortization cost, if the impairment loss had not been recognized.

The RCS Group mainly reports in this category assets due within twelve months, which are recognized at nominal amount as an approximation of amortized cost. If the terms of payment are longer than normal market terms and the loan or receivable does not earn interest, the amount recognized in the financial statements contains an implicit time value component and so must be discounted by recognizing the discount in profit or loss. Loans and receivables expressed in foreign currencies are converted at closing rates, and the gains or losses from their translation are taken to profit or loss.  Other non-current equity instruments (ex available for sale) are initially recognized at cost (fair value of the initial consideration given in exchange), increased by any relating directly-attributable transaction costs. As the RCS Group does not trade equities, it has adopted the option of presenting subsequent changes in the fair value of the investment among other comprehensive income. Accordingly, only dividends are recognized in the income statement (unless they clearly represent a refund of the investment). In addition to changes in fair value, any capital gains and losses realized on the sale of Other non-current equity instruments are recognized in the statement of comprehensive income and never pass through the income statement. As this option is final and can be exercised for each investment, any exceptions at the initial recognition stage will be shown in the comment on this item. All the investments in equity instruments must be measured at fair value. In the case of securities traded on active markets, fair value is determined with reference to the closing price on the last trading day of the reporting period. In the case of assets for which there is no active market, fair value is determined on the basis of the price used in recent transactions between independent parties in instruments that are substantially the same, or using other valuation techniques, such as income valuations or based on discounted cash flow analysis. However, in a few circumstances only, cost may represent an adequate estimate of fair value if, for example, the latest information available to measure fair value is insufficient, or if there is a wide range of possible fair value measurements. Cost is never the best estimate of fair value for investments in listed equity instruments. As the RCS Group does not trade equities, Other non-current equity instruments are equivalent to investments in equity instruments below 20% in which the RCS Group does not exercise significant influence.  “Financial assets, designated upon initial recognition at fair value through profit or loss” are measured at fair value at the reporting date; in the case of unquoted instruments, this amount is determined using generally accepted valuation techniques based on market information. Fair value gains and losses on assets in this category are recognized in profit or loss. At 31 December 2019, the RCS Group did not hold any financial assets, which are initially recognized at fair value.

Derivative financial instruments

Prospectively testing effectiveness involves developing aggregate discounted cash flows by year for the hedged item and its hedging derivative (regression method). When hedging derivatives hedge the risk of change in fair value of the hedged instruments (fair value hedges), the derivatives are recognized at fair value through profit or loss. The effective portion of changes in the fair value of cash flow hedges, which hedge the exposure to changes in cash flows for the items hedged, is recognized in other comprehensive income and presented in the hedging reserve. The ineffective portion of changes in the fair value of the derivative financial instrument is immediately recognized in profit/(loss) for the year. If the derivative instrument is sold or no longer qualifies as an effective hedge of the risk for which it was taken out or if the underlying transaction is no longer highly probable, the related portion of the hedging reserve is immediately reclassified to profit or loss. Regardless of classification, all derivatives are stated at fair value, determined using valuation techniques based on market data (such as discounted cash flows, forward exchange rate method, Black-Scholes model and its variants). Specifically, this value is determined by the “Administration and Finance” department, using specific pricing instruments based on market parameters (i.e. interest rates, exchange rates and volatilities), recognized on individual valuation dates and compared with the figures communicated by the counterparties.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, bank and post office on-demand deposits and financial investments carried out as part of the treasury management function which have a short-term maturity, are highly liquid and subject to an insignificant risk of changing value. They are stated at nominal amount. For the purposes of classifying financial instruments according to the criteria set out by IFRS 9 as required by IFRS 7 and reported in Note 13, cash and cash equivalents have been classified, with regard to the related credit risk, under Financial assets at amortized cost, while in the consolidated statement of cash flows, cash and cash equivalents, as defined above, are shown net of bank overdrafts.

Payables and other liabilities

Payables and other liabilities are initially recognized at fair value, which is basically the amount cashed in, or to cash in, less any related transaction costs. Management determines upon initial recognition how liabilities are to be classified, as identified in Note 13, in accordance with IFRS 9 criteria and as required by IFRS 7. Subsequent to initial recognition, these payables are measured on the basis of their classification in one of the categories under IFRS 9. Specifically, it should be noted that the RCS Group classifies them in the amortized cost category, except for derivative instruments, for which reference should be made to the specific paragraph. “Financial liabilities at amortized cost” are measured at amortized cost, by recognizing in profit or loss the interest calculated using the effective interest method, applying a rate that exactly discounts the financial instrument’s estimated future net cash flows to its carrying amount. Instruments due within twelve months are measured at their nominal amount as an approximation of amortized cost. With regard to the modification of the contractual terms of a financial liability, the Group assesses when such a modification can be considered as "substantial", resulting in a derecognition of the financial liability in the accounts. If the change is not substantial (a "modification"), then the financial liability is not derecognized and the Group recognizes the gain or loss deriving from this change through profit and loss. Payables and other liabilities comprise trade payables, financial payables and payables to banks, and other liabilities. These mostly fall due within twelve months and/or bear interest and therefore are not discounted. Payables denominated in a foreign currency are aligned at the exchange rate at year end, and the gains or losses deriving from the adjustment are recognized in the income statement.

Liabilities from lease contracts They represent the present value of payments due for leases (with a term of more than twelve months and not low value), measured at the effective date of the contract and not yet paid at the balance sheet date.

Equity

Treasury shares are recognized as a deduction from equity at their original cost. Gains and losses arising on any subsequent sales are recognized as changes in equity. Dividends payable are recognized as a change in equity in the year they are approved by the shareholders’ meeting or by the Board of Directors in the event of an interim dividend, pursuant to Article 2433-bis of the Italian Civil Code.

Employee benefits

Post-employment benefits reported by Italian companies with at least 50 employees are treated as a defined benefit plan only for that part of the liability vested before 1 January 2007 (and not yet paid out at the reporting date), while amounts accruing thereafter are treated as a defined contribution plan; the relating accrued benefits are paid to the pension funds. Italian companies with less than 50 employees treat their post- employment benefits as a defined benefit plan. All defined benefit plans are discounted using actuarial criteria: actuarial gains and losses are classified in the statement of comprehensive income, while cost components related to work performance and net financial expense are recognized in the income statement. The actuarial valuation, based on financial and demographic assumptions, is carried out with the help of external professional actuaries.

Provisions for risks and charges

Provisions are recognized when the company has a present obligation, deriving from a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation and/or the timing. The amount recognized as a provision is the best estimate of the expenditure that the Group would reasonably pay to settle the obligation at the reporting date or to transfer it to a third party at that time. The estimate implicitly reflects a time value component if it is assumed that the obligation will be settled in the long term. If this component is material and the payment date for the obligation may be reliably estimated, the provision is discounted; the increase in the provision associated with the time value of money is recognized in the income statement under “Financial expense”. If the liability relates to property, plant and equipment (e.g. site dismantling and restoration), the provision is recognized as a balancing entry to the carrying amount of the asset to which it refers; the cost is recognized in profit or loss through the process of depreciating the related asset.

Assets and liabilities held for sale

Assets and liabilities held for sale include non-current assets (or disposal groups) and the associated liabilities, the sale of which is highly likely on the basis of a specific plan, and whose book value will therefore be recovered mainly through a sale transaction rather than through continuous use. These items are valued at the lower of the net book value to which these assets and liabilities were recorded and the fair value less the foreseeable costs of disposal. From the date on which such assets are classified under held-for-sale non-current assets, the relating depreciation and amortization is suspended. Any losses arising from this measurement are recognized in “Profit (loss) from assets held for sale and discontinued operations”.

Translation of foreign currency items

The consolidated financial statements are presented in Euro, being the functional and presentation currency adopted by RCS MediaGroup S.p.A.. Each company within the Group decides its own functional currency, which is used to recognize their individual financial statements items. Foreign currency transactions are recognized, on initial recognition in the functional currency, at the exchange rate between the functional 80

currency and the foreign currency at the date of the transaction. Foreign currency monetary assets and liabilities are translated into the functional currency using the exchange rate at the end of the reporting period. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. At the reporting date, the assets and liabilities of subsidiaries which adopt a functional currency other than the Euro are converted into the presentation currency of the Group’s consolidated financial statements (Euro) using the closing rate, while their income statements are translated using the average exchange rate for the year. The resulting exchange rate differences are recognized in the statement of comprehensive income and as a separate component of equity. On disposal of one of these subsidiaries, the related cumulative exchange rate differences are reclassified from equity and recognized in profit or loss.

9. Accounting standards, amendments and interpretations which came into force as from 1 January 2019

IFRS 16 – Leases

In January 2016, the IASB published IFRS 16 - Leases. The new standard, endorsed by the European Commission in October 2017, establishes a new single model of recognition and measurement of leases for the lessee, without making any distinction between operating leases and finance leases. Specifically, it provides for the recognition of the right of use of the underlying asset with the assets in the statement of financial position with a balancing entry in financial liabilities. The standard provides the possibility of not recognizing as a lease those contracts that involve low-value assets (i.e. leases relating to assets with a value of less than USD 5,000, hereinafter also referred to as "low value") and leases with a term equal to or less than 12 months, hereinafter also referred to as "short term”. The standard, instead, introduces no material changes for the lessor. The standard introduces a criterion based on the control of the use of an asset to distinguish leases from service contracts, identifying the following distinguishing factors:  identification of the asset granted for use (i.e. without a right of replacement thereof by the lessor);  the right to obtain substantially all economic benefits deriving from use of the asset;  the right to establish how and why the asset is to be used. The RCS Group applied the standard as from 1 January 2019, availing itself of the right to exclude from the application of the recognition and measurement provisions those leases that can be defined as short term or low value, for a total of approximately 200 contracts. Short-term contracts refer mainly to the classes of assets of motor vehicles and real estate (for leasing of apartments or offices); low-value contracts refer mainly to printers, computers and other electronic devices. For such contracts, the introduction of IFRS 16 did not imply the recognition of the financial liability of the lease and the relating right of use, but lease payments are recognized in the income statement for the duration of the respective contracts.

The contracts falling within the new scope of application under IFRS 16 relate mainly to the rental of real estate and company cars used by employees. A few minor contracts (in terms of amounts, duration and number) refer to operating leases of plant and machinery, furniture and office machinery. The components of the contracts or the contracts themselves, the lease of which can be traced back to a service contract or a licence concession, have been excluded from the scope of IFRS 16. Sublease contracts identified are attributable to properties in use. The RCS Group, as a lessor of real estate to third parties, has identified these contracts as operating leases.

The RCS Group, as lessee, adopted the modified retrospective transition method, without restating comparative information, making use of the option to measure certain contracts through the “cherry picking” method, with a cumulative effect as an adjustment to the opening balance of retained earnings at 1 January 2019 without restating comparative information.

As of 1 January 2019, the Group, in its capacity as lessee and with regard to lease contracts, accounted for:

 a financial liability, equal to the present value of the remaining future payments at the transition date, discounted using for each contract the incremental borrowing rate applicable at the transition date;  a right of use as a general rule equal to the amount of the financial liability at the transition date, or, in the few, selected cases where “cherry picking” is applied, equal to the amount of payments discounted by applying the same IBR used to determine the financial liability instead of at the transition date (1 January 2019), at the starting date of the contracts. The “cherry picking” method applied as from 1 January 2019 had an impact of € 12.7 million gross of the tax effect (€ 9.1 million net), which led to a decrease in equity as a result of the difference between the right of use calculated in such way and the financial liability.

The financial liability following the application of the modified retrospective method was discounted at 1 January 2019 using an IBR (incremental borrowing rate) consistent with the maturity of the underlying contracts. The IBR-weighted average rate applied is roughly 2%.

In applying the lease accounting method, Management assessed the definition of lease term (duration of contracts), identifying the non-cancellable period of the lease at the transition date and integrating it to take account of any options whose exercise is reasonably certain. In December 2019, the IFRS Interpretation Committee published its conclusions on an Agenda Decision concerning the Lease Term and, as an accompaniment, the useful life of Leasehold Improvements. At the date of preparation of these Financial Statements, the Group is assessing the possible impact of this interpretation on the accurate estimate of the lease term of its lease contracts and on the useful life of leasehold improvements. In light of the Agenda Decision, the Group does not expect significant impacts on the determination of the Right of Use for leased assets and Liabilities/Financial Assets for leased assets, and expects to complete this analysis in 2020.

The leases recorded in the financial statements at 31 December 2018 in application of IAS 17, were reviewed to ascertain whether by applying the new provisions of IFRS 16 they should have been subject to changes regarding their duration or any service obligation components included in the contracts, concluding that, in the manner presented in the financial statements at 31 December 2018, these leases were not to be subject to changes in treatment in 2019.

Lease contracts under IFRS 16 refer to numerous positions (approximately 600 excluding short term and low value leases); however, the impact of the adoption of IFRS 16 can be attributed to few contracts (roughly ten or so referring mainly to property leases) whose values represent approximately 80% of the adjustment.

The estimated financial liability resulting from the application of IFRS 16, calculated as explained above, amounted to € 189.3 million at 1 January 2019. The amount includes the effects of the lease of the property complex in Via Solferino, without prejudice to the comments in the section on “Information on ongoing disputes” in this Annual Report.

The table below shows the estimated impacts of the adoption of IFRS 16 at the transition date:

31/12/2018 IFRS 16 impacts 1/1/2019 (€ millions)

ASSETS Property, plant and equipment 65.4 - 65.4 Rights of use on leased assets - 176.6 176.6 Investment property 20.1 - 20.1 Intangible assets 369.4 - 369.4 Financial and other assets 58.2 - 58.2 Deferred tax assets 95.9 3.6 99.5 Total non-current assets 609.0 180.2 789.2 Inventory 19.6 - 19.6 Trade receivables 212.0 - 212.0 Sundry receivables and other current assets 25.9 - 25.9 Current tax assets 1.7 - 1.7 Current receivables and financial assets 1.4 - 1.4 Cash and cash equivalents 12.5 - 12.5 Total current assets 273.1 - 273.1 Non-current assets held for sale - - - TOTAL ASSETS 882.1 180.2 1,062.3 EQUITY AND LIABILITIES - Share capital 270.0 - 270.0 Reserves (30.9) - (30.9) Retained earnings/losses carried forward (71.1) (9.1) (80.2) Profit (loss) for the year 85.2 - 85.2 Equity attributable to the owners of the parent 253.2 (9.1) 244.1 Non-controlling interests 1.3 - 1.3 Total equity 254.5 (9.1) 245.4 Non-current financial payables and liabilities 141.6 - 141.6 Non-current liabilities from lease contracts - 167.1 167.1 Financial liabilities from derivatives 1.0 - 1.0 Employee benefits 36.9 - 36.9 Provisions for risks and charges 16.2 - 16.2 Deferred tax liabilities 51.5 - 51.5 Other non-current liabilities 0.9 - 0.9 Total non-current liabilities 248.1 167.1 415.2 Current financial payables and liabilities 58.9 - 58.9 Current liabilities from lease contracts - 22.2 22.2 Current tax liabilities 2.1 - 2.1 Trade payables 204.7 - 204.7 Current portion of provisions for risks and charges 31.4 - 31.4 Sundry payables and other current liabilities 82.4 - 82.4 Total current liabilities 379.5 22.2 401.7 Liabilities relating to assets held for sale - - - TOTAL EQUITY AND LIABILITIES 882.1 180.2 1,062.3

Net financial debt at 31 December 2018 (including lease payables under IAS 17) 187.6 Liabilities arising from the adoption of the new IFRS 16 at 1 January 2019 189.3 Total at 1 January 2019 376.9

Additionally, the adoption of the standard led to the introduction of two new cost components in the Income Statement:  amortization, depreciation and write-downs of rights of use on leased assets (€ 23.2 million at 31 December 2019);  interest expense on liabilities from lease contracts (€ 3.5 million at 31 December 2019).

Here below a reconciliation between operating lease commitments, the amount of which is shown in Note 63 of the Annual Report at 31 December 2018, and the liability emerging at 1 January 2019 applying IFRS 16.

(€ millions)

Operating lease commitments at 31 December 2018 252.4 Lease payment commitments - renewal options 9.2 Reduction for exemption Short term (0.8) Reduction for exemption Low value - Reduction for non-IFRS 16 services included in lease contracts (service components) - Increase for variable items of lease payments - Others (1) (51.3) Gross amount of lease liabilities at 1 January 2019 - first-time application of IFRS 16 209.5 Discounting (20.2) Lease liabilities at 1 January 2019 - first-time application of IFRS 16 189.3

Present value of finance leases at 31 December 2018 ex IAS 17 4.3 Lease liabilities under IFRS 16 and IAS 17 at 1 January 2019 193.6

(1) These refer to lease payments relating to contracts not covered by IFRS 16.

The first-time adoption of the new standard also required that Group implement specific procedures for the mapping and analysis of all those contracts that could contain a lease, making the appropriate assessments in accordance with the new standard.

The transition to IFRS 16 introduced a number of elements of professional judgement that involve the definition of certain accounting policies and the use of assumptions and significant estimates with particular regard to the estimate of lease terms and the definition of the discount rate for future lease payments.

For the sake of completeness, at 31 December 2019, the balance sheet, statement of financial position and income statement items affected by lease contracts payable and receivable are summarized in Note 16 Leases.

Other accounting standards, amendments and interpretations effective as from 1 January 2019

The following are the amendments, interpretations and improvements in force as of 1 January 2019, which had no significant impact on the Group's 2019 Annual Report:

 Amendment to IFRS 9 - Financial instruments: Prepayment features with negative compensation;  IFRIC 23 - Uncertainty over Income Tax Treatments;  Amendment to IAS 28 - Investments in associates: Long-term Interests in Associates and Joint Ventures;  Amendment to IAS 19 - Plan Amendment, Curtailment or Settlement;  Improvements to IFRS: 2015-2017 Cycle: - IFRS 3 - Business Combinations and IFRS 11 - Joint Arrangements; - IAS 12 - Income tax consequences of payments on financial instruments classified as equity; - IAS 23 - Borrowing costs eligible for capitalization.

10. Accounting standards, amendments and interpretations approved by the EU, not yet mandatorily applicable, and not adopted in advance by the Group.

 Amendment to IAS 1 and IAS 8 - Definition of Material: the amendments will apply as from 1 January 2020.  Amendment to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform: the amendments will apply as from 1 January 2020.  Amendment to IAS 1, IAS 8, IAS 34, IAS 37, IAS 38 IFRS 2, IFRS 3, IFRS 6, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, SIC 32 - Amendments to references to the IFRS conceptual framework: the amendments will apply as from 1 January 2020.

11. Accounting standards, amendments and interpretations yet to be endorsed by the EU and applicable from financial periods after 1 January 2020

The following are the amendments not yet approved and not adopted in advance by the Group, whose assessment of their impact is in progress, with indication of the effective date:

 Amendment to IFRS 10 - Consolidated financial statements and IAS 28 -Investments in associates and joint ventures: date of first-time adoption yet to be set by the IASB;  Amendment to IFRS 3 - Definition of a Business: the amendments will apply to acquisitions after 1 January 2020;  Amendment to IAS 1 - Classifications of current and non-current liabilities: The amendments will apply retroactively as from 2022. Early application is allowed.

12. Main decisions when applying accounting standards and key sources of estimation uncertainty

The preparation of the consolidated financial statements and notes thereto has required using estimates and assumptions both for determining the carrying amounts of some assets and liabilities and for measuring contingent liabilities. The estimates and assumptions are based on past experience and other relevant factors. However, future events might not fully confirm the forecast amounts. The estimates and assumptions are periodically reviewed and the effects of any changes are immediately reflected in the financial statements. Owing to the persisting negative trend of the main markets of operation of the Group, and in the face of a turbulent macroeconomic environment, the estimates were made on the basis of assumptions relating to a highly uncertain future. Therefore, actual events over the next years may likely have a different outcome to those forecast at 31 December 2019, causing significant adjustments to the carrying amounts of assets and liabilities, amongst which goodwill, other intangible assets with indefinite useful life, as well as deferred tax assets and the estimated recoverability of receivables. In order to determine whether there are impairment losses on goodwill and on the other assets with indefinite useful life, it is necessary to estimate the value in use of the cash-generating unit (CGU) to which assets are allocated, or the value of use of the other assets with indefinite useful life. The determination of value in use involves estimating the cash flows that the Company expects to produce, and identifying an appropriate discount rate. As further explained in Note 35, the principal uncertainties affecting this estimate refer to the discount rate (WACC), the growth rate (g) and the assumptions about expected cash flows, which in turn are significantly influenced by the performance of the publishing market and the more general macroeconomic context. Projections are also used when determining the estimated revenue generated through consignment contracts (newspapers and magazines), the estimated provisions for risks and charges and legal disputes, returns to receive (books), allowances for impairment and other allowances for write-downs, particularly for estimates on inventory, depreciation and amortization, and employee benefits. Estimates are also required to assess the recoverability of deferred tax.

13. Financial Instruments: disclosures

As required by IFRS 7, the following table shows the carrying amounts of items included in each category identified by IFRS 9. The carrying amount generally coincides with the measurement at amortized cost of the financial assets/liabilities, except for derivative instruments and other equity instruments measured at fair value. For fair value, reference should be made to the notes to the individual items.

Statement of financial position

Carrying Carrying amount at amount at Categories of financial instruments Notes 31/12/2019 31/12/2018 FINANCIAL ASSETS

Financial assets at amortized cost Non-current financial receivables 39 1.0 2.2 Other non-current assets 40 1.9 2.0 Trade receivables 42 206.3 212.0 Sundry receivables and other current assets 43 11.5 12.7 Current financial receivables 44 13.9 1.4 Cash and cash equivalents 44 13.0 12.5 Financial assets at fair value through profit or loss Non-hedging derivatives -- Other non-current equity instruments - - Financial assets at fair value through the comprehensive income statement Other non-current equity instruments 37 2.0 2.1 Hedging derivatives -- Total 249.6 244.9

FINANCIAL LIABILITIES Liabilities at amortized cost Non-current financial payables and liabilities 44 82.9 141.6 Other non-current liabilities -- Non-current liabilities from lease contracts 44 150.9 - Payables to banks 44 8.8 13.6 Current financial payables 44 65.8 45.2 Trade payables 54 198.7 204.7 Sundry payables and other current liabilities 55 23.0 24.0 Current liabilities from lease contracts 44 24.4 - Financial liabilities at fair value through profit or loss Non-hedging derivatives -- Financial liabilities measured at fair value through the comprehensive income statement Hedging derivatives 38 1.2 1.1 Total 555.7 430.2

The following are classified under "Financial assets":

 financial assets measured at fair value through profit or loss;  financial assets measured at fair value through the comprehensive income statement;  financial assets measured at amortized cost, including: - trade receivables; - sundry receivables which, for the purposes of this presentation, excluded: tax receivables, receivables from social security institutions, advances to authors, receivables for state grants and prepaid expenses; - other non-current assets which, for the purposes of this presentation, excluded: the payment of an advance on post-employment benefits; - current and non-current financial receivables; - cash and cash equivalents.

The following are classified under "Financial liabilities":

Financial assets measured at fair value through other comprehensive income includes Other equity instruments as the Group has taken the option to measure the instrument at fair value through other comprehensive income. IFRS 7 requires financial instruments recognized in the statement of financial position at fair value to be classified on the basis of a three-level fair value hierarchy. For assets whose recoverable amount corresponds to the fair value net of cost of sales, the fair value hierarchy disclosure on Intangible assets is presented in Note 35.

The levels of the hierarchy are as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); Level 3: Inputs for the asset or liability which are not based on observable market data.

At 31 December 2018 and 2019, assets and liabilities have been classified in accordance with the fair value hierarchy as follows.

Hierarchy of fair value measurement for categories of financial instruments at 31 December 2019 Notes Level 1 Level 2 Level 3 Total FINANCIAL ASSETS

Financial assets at fair value through the comprehensive income statement Other equity instruments 37 0.4 - 1.6 2.0 Total 0.4 - 1.6 2.0

FINANCIAL LIABILITIES Financial liabilities at fair value through the comprehensive income statement Hedging derivatives 38 - 1.2 - 1.2 Total - 1.2 - 1.2

Hierarchy of fair value measurement for categories of financial instruments at 31 December 2018 Notes Level 1 Level 2 Level 3 Total FINANCIAL ASSETS Financial assets at fair value through the comprehensive income statement Other equity instruments 37 0.6 - 1.5 2.1 Total 0.6 - 1.5 2.1

FINANCIAL LIABILITIES Financial liabilities at fair value through the comprehensive income statement Hedging derivatives 38 - 1.1 - 1.1 Total - 1.1 - 1.1

The table below shows movements in the year in items classified in Level 3:

Level 3 financial assets Balance at 31/12/2018 1.5 Gains/(losses) recognized in profit or loss - Increases/purchases/capital increases Decreases/disposals Gains/(losses) recognized as other comprehensive income 0.1 Transfers to/from level 3 Balance at 31/12/2019 1.6

Impact of financial instruments on profit or loss, in compliance with IFRS 7

In compliance with IFRS 7, the following table presents the effects on profit or loss and comprehensive profit or loss of each category of financial instruments held by the Group in the two-year period 2019-2018. These mainly consist of gains and losses arising on the purchase and sale of financial assets and liabilities as well as from fair value gains or losses and the interest income/expense relating to financial assets/liabilities measured at amortized cost.

The table below shows the effects on the income statement and statement of comprehensive income of financial instruments under IFRS 9.

(*) Figures are shown gross of tax effects. Notes 31/12/2019 31/12/2018

Net gains/(net losses) on financial assets or liabilities measured at fair value in profit or loss Other equity instruments: of which dividends -- of which gains/(losses) from changes in fair value -- of which gains/(losses) from derecognition 26 -1.5

Net gains/(net losses) recognized on financial liabilities measured at amortized cost Financial liabilities: of which gains/(losses) from derecognition - (2.5) of which gains/(losses) from renegotiation -3.0

Net gains/(net losses) recognized on financial assets measured at amortized cost Impairment losses on trade and sundry receivables, including reversal 22 (2.5) (3.0) Gains (losses) from the derecognition of trade and sundry receivables (amortized cost) -- Gains (losses) from the derecognition of receivables and other financial assets at amortized cost -- Write-down of receivables and other financial assets, including reversals 27 (0.3) (2.4)

Net gains/(net losses) recognized on investments in equity instruments measured at fair value recorded in the comprehensive income statement Other equity instruments: of which dividends -- of which gains/(losses) from changes in fair value 37 (0.1) (1.5) of which gains/(losses) from derecognition --

Net gains/(net losses) on cash flow hedge derivatives Hedging derivatives: of which profit/(loss) through the comprehensive income statement (*) 38 (0.1) (0.4) of which profit (loss) through profit or loss 25 (0.6) (1.2)

Interest income/expense at the effective interest rate, accrued on financial assets/ liabilities not at FVTPL Interest income on: Receivables/loans at amortized cost 25 0.3 0.3 Interest expense on Financial liabilities at amortized cost 25 (3.6) (6.4) Liabilities from lease contracts 25 (3.5) -

Expenses and fees not included in effective interest rate relating to financial assets: Receivables/loans at amortized cost -- Derivatives through FVOCI -- relating to financial liabilities: Financial liabilities at amortized cost 25 (1.8) (1.9) More details on the characteristics of financial instruments held and the associated gains and losses can be found in the specific notes.

14. Management of capital and financial risks

The Group manages its capital structure and financial risks in accordance with the assets structure. The Group’s objective is to maintain a suitable credit rating and capital ratio levels over time which are consistent with its asset structure, taking into consideration current trends in credit supply in the Italian economy, which remains stiff as it still represents a high percentage of sources of corporate funding with respect to other countries, where the capital markets play a significant role in funding. No changes were made to the operating targets, policies and procedures in 2019 from the year ended 31 December, 2018. No further changes were made to the loan renegotiated on 10 October 2018. As concerns financial risks, the RCS Group is exposed to market risks (such as interest rate risk, and to a lesser extent currency risk, while it is not exposed to price risk), liquidity risk and credit risk. The Group

constantly monitors financial risks connected with its businesses. The various financial risks to which the RCS Group is exposed are commented below.

Interest rate risk

Interest rate risk refers to the risk of possible higher financial expense caused by an adverse, unexpected fluctuation in interest rates. The Group is exposed to this risk in relation to its floating-rate financial liabilities. Interest rate risk is managed using specific policies defining the risk management objectives, limits, roles and responsibilities of the various departments involved in the process. Specifically:  it is the Group's objective to mitigate exposure to interest rate risk by establishing an adequate mix between floating-rate and fixed-rate liabilities, using derivatives where necessary;  interest rate risk is managed by the “Administration and Finance” department within the operating limits; this department draws up strategies for hedging the exposure identified and presents them for top management approval;  using derivatives for speculative purposes is not permitted, in other words, it is not in line with the stated objective, unless previously authorized by the Board of Directors in cases of proven benefit;  the “Administration and Finance” department periodically informs top management of its work and results in different ways, including a report on the status of the derivatives portfolio and a report analyzing changes in the net financial position. At 31 December 2019, the portion of payables contractually hedged at a fixed rate before IFRS 16, or transformed through Interest Rate Swaps (IRS), was approximately 68% (83% at 31 December 2018). At 31 December 2019, the hedging objective was pursued using IRSs taken out with highly-rated leading financial institutions. IRSs transform the floating rate into a fixed one (or vice versa) through the periodic swap, with the financial counterparty, of the difference between the fixed-rate interest (swap rate) and floating-rate interest, both calculated on the contractual notional amount. Mention should be made that a number of new IRS hedging contracts for a further € 20 million were concluded in November 2019, with a duration of 4 years at a rate of -0.25%.

RCS is in line with the requirements of EU Regulation no. 648/2012 for OTC (over the counter) derivatives, since its entry into force in Italy and in every European country (the so-called EMIR Regulation). The aforementioned Regulation introduces the requirement to report transactions on derivatives, carried out on official markets or on the OTC market, to a trade repository, i.e. a third party responsible for collecting and centrally storing reports received from trading counterparties to make them accessible to the regulatory authorities.

Notes 38 and 44 contain detailed information about the fair value of derivative financial instruments at the reporting date, and Note 44 contains the table summarizing interest rate risks.

Sensitivity analysis

The following table shows the results of the sensitivity analysis of interest rate risk, reporting its impact on profit or loss and equity, as required by IFRS 7. This sensitivity analysis was performed assuming a parallel 1% increase/decrease in the relevant interest rate curves by individual currency.

Increase/ Sensitivity analysis of interest rate risk on floating Impact on profit Unde rl yi ng Decrease in underlying Impact on equity rate items or loss interest rates

2019 (135.8) 1% (0.4) 2.5 2018 (192.8) 1% (0.2) 3.2

2019 (135.8) -1% 0.1 (2.6) 2018 (192.8) -1% 0.1 (3.3)

At 31 December 2019, the Group held floating-rate debt financial instruments. The use of interest rate derivatives, transforming liabilities from floating rate to fixed rate, should be noted.

Floating-rate financial instruments included in the sensitivity analysis concern cash and cash equivalents, current and non-current financial assets and liabilities and any interest rate derivatives held. The analysis was conducted taking into account:  the change in interest income and expense during the year attributable to any reasonable changes in interest rates applicable to floating-rate assets and liabilities held during the year;  the opposite impact of the hypothetical rate shock in terms of fair value changes in interest rate derivatives recognized in equity (for the hedge component beyond the relevant year) and in the income statement, assuming a sudden change in the rate curve at the reporting date. Hedges of interest rate risk have a notional amount of € 110 million at 31 December 2019 (€ 170 million in 2018) and refer solely to Interest Rate Swaps, as in 2018; No impact is recognized in relation to fixed-rate financial instruments because the statement of financial position showed no significant financial assets or liabilities bearing fixed interest. As far as risk factors generating significant exposures to risk were concerned, the sensitivity analysis at 31 December 2019 revealed that an increase in interest rates, as shown in the table above, would cause a potential expense of € 0.4 million in the income statement (expense of € 0.2 million in 2018) and an increase of € 2.5 million in equity (€ 3.2 million in 2018). A decrease in interest rates, which takes account of contractual provisions, if any, on the application of negative rates, gave rise to potential income of € 0.1 million in the income statement (income below € 0.1 million in 2018) and a decrease of € 2.6 million in equity (a decrease of € 3.3 million in 2018).

Currency risk

Currency risk can be defined as the set of effects on balance sheet assets or liabilities arising from changes in exchange rates. Although the RCS Group has an international presence, it does not have a large exposure to currency risk because the Euro is the functional currency in its principal areas of business. Exposure to currency risk refers mainly to: certain trade and financial positions in United Arab Emirates dirhams referring in particular to RCS Sport and Events DMCC. Similarly to interest rate risk, currency risk is also managed using specific policies defining the risk management objectives, limits, roles and responsibilities within the process. Specifically:  it is the Group’s objective to mitigate the effects caused by an adverse movement in exchange rates, using derivatives where necessary;  exchange rate risk is managed by the “Administration and Finance” department within the established operating limits; this department draws up strategies for hedging the exposure identified and presents them for top management approval;  using derivatives for speculative purposes it is not permitted, in other words, it is not in line with the stated objective;  the “Administration and Finance” department informs top management of its work and results through its report on the status of the derivatives portfolio;

 for purposes of ensuring consistency between currency flows from trading activities and those generated by hedging financial instruments, the Group may use roll-over and unwinding transactions.

At 31 December 2019, there were no currency derivatives as presented in Note 38.

Sensitivity analysis The currency to which the Group has the greatest currency risk exposure is the United Arab Emirates dirham. As regards the exposure to the dirham, the net payable position is € 0.5 million. A 10% appreciation of the Euro against the dirham would have produced, at consolidated level, a profit of approximately € 0.1 million (profit of € 0.8 million in 2018 with a net debt position of € 8.1 million). If the dirham appreciated 10% against the euro, the impact on the income statement would have the same amount but opposite sign.

Liquidity risk

Liquidity risk may arise owing to difficulties in obtaining financing in due time to support operations, also possibly for the purpose of repaying maturing loans. The Group manages liquidity on a centralized basis (using cash management systems for the main subsidiaries) in compliance with the objectives and policies defined by management.

The renegotiation of the loan on 10 October 2018 increased the company's flexibility in managing liquidity risk. The additional flexibility is due to: - from the optimal management of any available funds in relation to the requirements highlighted from time to time based on the seasonal nature of operations; - the possible use of different forms of short and medium/long-term financing.

Liquidity analysis The following tables present the maturity analysis of the RCS Group’s financial and trade assets and liabilities at 31 December 2019 and 31 December 2018, based on undiscounted contractually agreed payments (including principal and interest even if not matured at the reporting date). In the absence of an agreed repayment date, the payments have been included on the basis of the first date that payment could be requested. For this reason, bank overdrafts have been included in the first repayment period.

The Group continues to monitor the trend in and possible development of the credit and capital markets, to plan the necessary actions for the correct handling of these maturities.

2019

Analysis of balances reported at the end of 2019 (1) Contractual due date (interest and principal)

on demand 0 - 6M 6M - 1 Y 1-2 Y 2-5 Y > 5 Y Total

Financial assets Trade receivables - third parties 42.4 138.8 3.6 - - - 184.8 Intragroup trade receivables 4.9 16.4 0.3 - - - 21.6 Sundry receivables and other assets (trade or financial) 13.5 0.6 0.5 0.8 0.1 0.2 15.6 Intragroup financial receivables 12.5 - - - - - 12.5 Hedging derivatives ------Non-hedging derivatives ------Cash and cash equivalents 13.0 - - - - - 13.0 Financial assets classified as assets held for sale ------Total financial assets 86.3 155.8 4.4 0.8 0.1 0.2 247.6

Financial liabilities Trade payables to third parties 98.2 88.7 - - - - 186.9 Intragroup payables 3.6 8.2 - - - - 11.8 Financial payables to third parties 8.8 55.3 13.0 25.9 61.0 - 164.0 Intragroup financial payables ------Sundry payables (trade or financial) 22.9 - - - - - 22.9 Liabilities from lease contracts - 15.1 12.5 24.3 57.7 83.4 193.0 Derivatives embedded in financial liabilities ------Hedging derivatives - 0.3 0.3 0.4 0.2 - 1.1 Non-hedging derivatives ------Financial payables classified as liabilities held for sale ------Committed credit facilities ------Total financial liabilities 133.5 167.6 25.8 50.5 119.0 83.4 579.8 (1) These figures include forecast interest not yet accrued at 31 December 2019 and, therefore, are not reconcilable with those reported in the statement of financial position.

2018

Analysis of balances reported at the end of 2018 (1) Contractual due date (interest and principal)

on demand 0 - 6M 6M - 1 Y 1-2 Y 2-5 Y > 5 Y Total

Financial assets Trade receivables - third parties 45.5 142.2 2.2 - - - 189.9 Intragroup trade receivables 6.4 15.7 - - - - 22.1 Sundry receivables and other assets (trade or financial) 14.1 1.4 0.6 1.1 0.8 0.3 18.4 Intragroup financial receivables ------Hedging derivatives ------Cash and cash equivalents 12.5 - - - - - 12.5 Total financial assets 78.5 159.3 2.8 1.1 0.8 0.3 242.9

Financial liabilities Trade payables to third parties 100.1 88.6 0.2 - - - 188.9 Intragroup payables 8.7 7.1 - - - - 15.8 Financial payables to third parties (including leases) 13.6 26.3 15.9 26.8 124.5 - 207.1 Intragroup financial payables 6.8 - - - - - 6.8 Sundry payables (trade or financial) 23.9 0.1 - - - - 24.0 Hedging derivatives - 0.3 0.2 0.3 0.2 - 1.1 Committed credit facilities ------

Total financial liabilities 153.1 122.4 16.3 27.1 124.7 - 443.6

(1) These figures include forecast interest not yet accrued at 31 December 2018 and, therefore, are not reconcilable with those reported in the statement of financial position.

Credit risk

Credit risk may be defined as the possibility that one party to a financial instrument will cause a financial loss by failing to discharge an obligation.

The Group's exposure to credit risk is broken down by business unit as follows:

Carrying amount at Carrying amount at Credit risk concentration by business area % % 31/12/2019 31/12/2018

Newspapers Italy 37.3 15.1% 39.2 16.1% Magazines Italy 12.9 5.2% 14.5 6.0% Advertising and Sport 118.7 47.9% 117.9 48.6% Unidad Editorial 57.0 23.0% 60.0 24.7% Other Corporate Activities 21.7 8.8% 11.2 4.6%

Total 247.6 100% 242.8 100%

Trade receivables are managed by the Group's individual companies in compliance with the Group's financial objectives, agreed commercial strategies and operating procedures, which prevent products or services from being sold to customers without an adequate credit rating or collateral. New customers and their credit rating are generally evaluated using an automated credit scoring system, subject to regular reviews that confirm and/or improve their predictive capacity. The rating model applied to Italy uses the “expected default frequency” model prepared by a leading financial information and analysis group. The Unidad Editorial group also employs a system for assessing customers and assigning a financial rating, similar to the Italian system.

They are constantly controlled during the year with the aim of reducing late payments and limiting any losses of financial assets.

The following tables, relating to 2019 and 2018, provide information on the credit quality of financial assets, according to the IFRS 9 format, as well as maximum credit exposure:

Non-current Other non- Sundry Current Cash and Trade financial current assets receivables and Rating 2019 financial cash Total receivables receivables 12 months other current receivables equivalents lifetime ECL ECL assets Rating A (low risk) 37.8 0.0 0.2 0.1 0.4 1.4 39.9 Rating B (medium risk) 146.2 0.0 0.0 0.0 0.0 0.0 146.2 Rating C (high risk) 24.5 0.0 0.0 0.0 0.0 0.0 24.5 Rating Z (not rated) (1) 31.3 4.7 13.7 1.8 21.2 11.6 84.3 Total gross amount 239.8 4.7 13.9 1.9 21.6 13.0 294.9

Impairment loss (33.5) (3.7) - - (10.1) - (47.3)

Net total 206.3 1.0 13.9 1.9 11.5 13.0 247.6

Collateral (and other credit risk 0.7 - - - - - 0.7 mitigation tools) (1) The category of loans and receivables with a Z Rating mostly refers to loans and receivables from public entities, foreign customers and mass market customers.

Non-current Other non- Sundry Current Cash and Trade financial current assets receivables and Rating 2018 financial cash Total receivables receivables 12 months other current receivables equivalents lifetime ECL ECL assets Rating A (low risk) 44.3 0.0 0.2 0.1 0.6 6.0 51.2 Rating B (medium risk) 153.8 0.0 0.0 0.0 0.0 0.0 153.8 Rating C (high risk) 21.6 0.0 0.0 0.0 0.0 0.0 21.6 Rating Z (not rated) (1) 24.8 5.6 1.2 1.9 22.4 6.5 62.4 Total gross amount 244.5 5.6 1.4 2.0 23.0 12.5 289.0

Impairment loss (32.5) (3.4) - - (10.3) - (46.2)

Net total 212.0 2.2 1.4 2.0 12.7 12.5 242.8

Collateral (and other credit risk 0.4 - - - - - 0.4 mitigation tools)

(1) The category of loans and receivables with a Z Rating mostly refers to loans and receivables from public entities, foreign customers and mass market customers.

The allowance for impairment of trade receivables at 31 December 2019 amounted to € 33.5 million (€ 32.5 million at 31 December 2018) The allowance for impairment of trade receivables at 31 December 2019 came to 14% of gross trade receivables (13.3% at 31 December 2018), up to take account of the lower impact of rating classes A and B on the total portfolio versus 2018. The table below shows the impairment percentages applied at 31 December 2019 to trade receivables based on past due age range.

Rating (1) Not overdue 1- 30 days 31-60 days 61-90 days 91-180 days 181-360 days 361-540 days 541-720 days >720 days Rating A (low risk) 0.13% 3% 6% 8% 10% 20% 30% 40% 50% Rating B (medium risk) 0.55% 5% 8% 10% 12% 30% 40% 50% 60% Rating C (high risk) 1.72% 8% 10% 12% 15% 40% 60% 70% 80% Rating E (public entities) 1.45% 1% 1% 1% 2% 5% 10% 20% 30% Rating Z (not rated) 1.12% 6% 8% 10% 12% 30% 40% 50% 60%

(1) The percentages above apply to Italy; Spain adopts specific impairment percentages that take account of country risk.

The total amount of financial assets subject to enforcement proceedings, amounting to € 0.7 million, is written off in the balance sheet and refers to trade receivables.

Price risk

The Group is not exposed to significant price risks from financial instruments that fall within the scope of application of IFRS 9.

15. Operating segments

In application of IFRS 8, the following tables show information by operating segment. RCS has identified its various operating segments subject to disclosure, based on the elements used by Management to make its operating decisions, or based on internal reporting that is regularly reviewed by Management of the highest operating decision-making level for the purpose of allocating resources to the different operating segments and for the purpose of performance analyses. The segment statement of financial position figures, in particular those for total assets for each segment subject to disclosure, are not currently periodically provided to the highest operating decision-making level. Therefore, these details are not provided in these notes in accordance with the amendment of IFRS 8 - Operating segments, in force as from 1 January 2010. The Group used a combination of factors in identifying the areas subject to disclosure, including the goods and services offered by the operating segment and the geographic area. Each segment has its own structures and managers.

The operating segments at 31 December 2019 are therefore: Newspapers Italy, Magazines Italy, Advertising and Sport, Unidad Editorial and Other Corporate Activities. The products and services, from which each area subject to disclosure obtains revenue, are detailed in this Annual Report, in the section dedicated to comments on the economic trend of the business segments, in the paragraphs “Segment profile”. The aggregation criteria for setting up these areas are the same as those adopted in 2018.

The accounting standards used for presenting the figures of reportable segments are consistent with those adopted for preparing this Annual Report. Transactions between the different segments refer mostly to the exchange of goods and the provision of services. All such transactions are conducted on an arm’s length basis, in accordance with the quality of the goods transferred and/or the services provided.

Figures at 31 December 2019

Other reconciliation (€ millions) Operating segments items Other Newspapers Magazines Advertising Unidad Eliminations / 31/12/2019 (1) Corporate TOTAL Italy Italy and Sport Editorial adjustments Activities Publishing revenue 269.4 34.2 - 106.6 - (1.8) 408.4 Advertising revenue 146.4 42.3 246.2 127.0 - (177.4) 384.5 Sundry publishing revenue 15.8 13.7 40.6 61.4 35.6 (36.4) 130.7 Segment revenue 431.6 90.2 286.8 295.0 35.6 (215.6) 923.6 Intersegment revenue (143.2) (36.5) (0.2) (2.0) (33.7) Net revenue 288.4 53.7 286.6 293.0 1.9 923.6 Segment operating profit (loss) 56.4 2.2 28.1 37.2 (21.4) (0.0) 102.5 - Share of profits (losses) of equity-accounted investees (0.4) --0.5 - 0.1 Financial income (expense) (16.0) Other income (expense) from financial assets/liabilities (0.1) - of which dividends from investments held as fixed assets 0.0 Profit (loss) before tax 86.4 Income tax (17.6) Profit (loss) from continuing operations 68.8 Profit (loss) from assets held for sale and discontinued operations 0.0 Profit (loss) for the year 68.8 Profit (loss) for the year attributable to non-controlling interests (0.3) Profit (loss) for the year attributable to the owners of the parent 68.5

Figures at 31 December 2018

Other reconciliation (€ millions) Operating segments items Other Newspapers Magazines Advertising Unidad Eliminations / 31/12/2018 Corporate TOTAL Italy Italy and Sport Editorial adjustments Activities Publishing revenue 285.2 36.5 - 112.5 - (1.9) 432.3 Advertising revenue 157.6 45.4 253.1 137.8 - (188.1) 405.8 Sundry publishing revenue 15.8 14.0 47.9 60.5 21.5 (22.2) 137.5 Segment revenue 458.6 95.9 301.0 310.8 21.5 (212.2) 975.6 Intersegment revenue (151.7) (38.3) (0.3) (2.0) (19.9) Net revenue 306.9 57.6 300.7 308.8 1.6 975.6 Segment operating profit (loss) 71.1 2.4 32.5 37.8 (28.3) 115.5 - Share of profits (losses) of equity-accounted investees 1.6 0.2 - 0.2 - 2.0 Financial income (expense) (14.1) Other income (expense) from financial assets/liabilities (0.9) - of which dividends from investments held as fixed assets - Profit (loss) before tax 100.5 Income tax (15.2) Profit (loss) from continuing operations 85.3 Profit (loss) from assets held for sale and discontinued operations - Profit (loss) for the year 85.3 Profit (loss) for the year attributable to non-controlling interests (0.1) Profit (loss) for the year attributable to the owners of the parent 85.2

Write-downs/write-backs (please see Note 24) amounted to € 8.1 million at 31 December 2018 versus write- downs for € 1 million at 31 December 2019. The change of € 7.1 million includes the write-down of the Sfera goodwill following the results of the impairment test (€ 5.8 million as commented in Note 35), offset by € 4.8 million in write-backs of the property in Pessano con Bornago, written down in prior years, as the reasons for these previous write-downs no longer apply; specifically, this property is part of the Newspapers Italy CGU.

Information by geographical area

2019 Italy Spain Other countries Total Net revenue 614.0 300.1 9.5 923.6

2018 Italy Spain Other countries Total Net revenue 651.0 316.4 8.2 975.6

Information about major customers No revenue was earned in 2019 from a single customer not belonging to the Group that amounted to more than 10% of the Group’s total revenue.

16. Leases

The following table summarizes the balances at 31 December 2019 expressed in the financial statements and relating to lease contracts treated in accordance with IFRS 16, with the relating notes to the financial statements

(€ millions) Notes 31 December 2019

AS S ETS

Rights of use property 33 153.5 Rights of use plant and machinery 33 0.4 Rights of use motor vehicles 33 6.8 Total rights of use 160.7

Receivables for prepaid tax 28 3.7 TOTAL ASSETS 164.4

EQ UITY AND LIABILITIES

Retained earnings 9(9.1) Impact on result for the period (1) (26.6)

Non-current liabilities from lease contracts 43-14 150.9 Current liabilities from lease contracts 43-14 24.4 TOTAL EQUITY AND LIABILITIES 139.6

Cash outflows for rents (2) 24.8

(1) The result for the year includes the amortization of rights of use for € 23.2 million, financial expense for € 3.5 million and deferred tax assets for € 0.1 million.

(2) Cash outflows relate to lease payments from lease contracts classified as rights of use

The income statement items shown below include, in addition to the impact on the income statement of the balance sheet items shown above, operating sublease fees and the fees for low value leases and short-term contracts. (€ millions) Notes 31 December 2019

Rentals and leases (3) 18 (5.3) Other operating revenue and income (4) 20 3.0 Depreciation of rights of use on leased assets 24 (23.2) Financial expense 25 (3.5) Income tax 28 0.1

(3) Lease and rental costs include the cumulative lease payments due at 31 December 2019 relating to low-cost leases and short-term contracts outside the application of IFRS 16 as explained in Note 9 of this Annual Report.

(4) Other operating revenue and income are made up of income from rental income from subleases. For an analysis of the maturity dates of lease liabilities, reference is made to Note 14 below.

The due dates of payments for operating leases to receive are the following: Due dates of payments for operating leases to receive 31/12/2019 Future operating lease payments: - due within one year 3.6 - due within two years 2.6 - due within three years 1.7 - due within four years 0.7 - due within five years - - due after five years - Total 8.6

Mention should be made that a number of leases in which the Group acts a lessee contain variable payment terms tied to price indices (ISTAT revaluation). The breakdown of lease payments is as follows:

31/12/2019 Fixed payments 5.7 Variable payments 19.1 Total payments 24.8

Variable payments make for approximately 77% of the payments from leases incurred by the Group.

In fixed assets under property, plant and equipment, the amount of € 13.3 million refers to assets held under finance leases, recorded in the financial statements in prior years under the then applicable IAS 17. In the first months of 2020, these assets, following the contractual exercise of the redemption option, will become, in all respects, owned tangible assets. Current and non-current liabilities from lease contracts do not include financial payables relating to the pre- existing IAS 17 (applied until end 2018), classified under Current financial payables (at 31 December 2019, equal to € 0 million and at 1 January 2019 equal to € 4.3 million).

17. Related party transactions

As required also by CONSOB Communication pursuant to Article 114, paragraph 5 of Italian Legislative Decree no. 58/98, protocol number 13046378 of 27 May 2013, transactions with the related parties of the RCS Group are shown below. Specifically, as regards the Regulations approved by CONSOB with resolution no. 17221 of 12 March 2010 and subsequent amendments, on 10 November 2010 RCS MediaGroup S.p.A. adopted a related party transaction procedure covering authorizations and communication with the market and CONSOB. This procedure was subject to certain revisions effective as from 1 January 2014 and subsequently effective as from 1 October 2015. The latest amendments came into force on 4 August 2017. The Procedure is published in the “Governance” section of the Company’s website. This procedure, as the previous provisions, has also been described in the Report on Corporate Governance and Ownership Structure. In this regard, in consideration of the provisions of said Procedure, in addition to the more significant transactions indicated above, several less significant transactions were subject to the prior opinion of the Related Party Transactions Committee provided for therein.

The ultimate parent of the Group is U.T. Communications S.p.A., the de facto parent of Cairo Communication S.p.A., which became, in turn, the direct controlling entity of RCS MediaGroup S.p.A.. At 31 December 2019, the interest in the RCS MediaGroup S.p.A. share capital held by Cairo Communication S.p.A. was 59.693% (59.831% if the percentage directly held by U.T. Communications S.p.A. at 31 December 2019 is also included - CONSOB).

That being said, the following were identified as related parties:  the direct and indirect controlling entities of RCS MediaGroup S.p.A., their subsidiaries, joint ventures and their associates;  controlled entities (whose transactions are eliminated in the consolidation process), jointly controlled entities and associates of RCS MediaGroup S.p.A.;  key management personnel, their close family members, and any companies directly or indirectly controlled by them or subject to joint control or significant influence.

The key managers of the Group have been identified as: the Directors, Statutory Auditors, the Chief Executive Officer, the Financial Reporting Manager and the other key management personnel of RCS MediaGroup S.p.A. and of the parent Cairo Communication Cairo Communication S.p.A., as shown in the relevant remuneration reports.

The following table shows the amount and proportion of related party transactions and balances included in each relevant financial statement item. Intragroup transactions eliminated on consolidation are excluded.

Current Sundry payables and Financial-related transactions Tra de financial Trade payables other current Commitments (€ millions) receivables receivables liabilities

Parents 0.1 - - - - Jointly controlled companies 18.0 12.5 2.6 - - Associates 0.2 - 6.9 - - Supplementary pension fund for executives - - - - - Other affiliates (1) 1.3 - 1.9 - - Other related parties (2) 0.8 - - 1.7 6.8 Total 20.4 12.5 11.4 1.7 6.8 Total RCS Group 206.3 13.9 198.7 88.5 22.0 Related party % of the RCS Group total 9.9% 89.9% 5.7% 1.9% 30.9%

(1) Include the subsidiaries, associates and jointly controlled companies of Cairo Communication S.p.A. and U.T. Communication S.p.A. (2) Refers mainly to transactions with key management personnel and their close family members and companies directly or indirectly controlled by them or subject to joint control or significant influence.

Other operating Income-related transactions Revenue from Raw materials Personnel Financial revenue and (€ millions) sales and services expense income income

Parents 0.1 (0.2) - 0.9 - Jointly controlled companies (1) 259.3 (79.7) - 1.1 0.2 Associates 1.2 (19.3) - - - Supplementary pension fund for executives - (0.0) (0.4) - - Other affiliates (2) 1.8 (4.7) - 0.5 - Other related parties (3) 1.6 (3.4) (4.2) - - Total 264.0 (107.3) (4.6) 2.5 0.2 T otal RCS Group 923.6 (504.1) (264.5) 15.8 0.6

Related party % of the RCS Group total 28.6% 21.3% 1.7% 15.8% 33.3%

(1) Revenue from sales to customers of € 259.3 million is generated through the distribution of m-dis Distribuzione Media S.p.A.. (2) Include the subsidiaries, associates and jointly controlled companies of Cairo Communication S.p.A. and U.T. Communication S.p.A. (3) Refers mainly to transactions with key management personnel and their close family members and companies directly or indirectly controlled by them or subject to joint control or significant influence.

Transactions with parents, associates and jointly controlled companies refer mostly to the exchange of goods, the provision of services, the provision and use of funds, as well as tax-related transactions. All such transactions are conducted on an arm’s length basis, in accordance with the quality of the goods and services provided. Transactions with parent companies include consumption of materials and services for € 0.2 million, revenue from sales and other operating income for a total of € 1 million, and trade receivables for € 0.1 million. They relate mainly to income for the rent of office space, for chargebacks of costs for RCS personnel seconded to the Cairo Group, as well as costs for market surveys. Transactions with jointly controlled companies refer to m-dis Distribuzione Media S.p.A. and its subsidiaries, in respect of which the Group achieved revenue from sales of € 259.3 million; the Group also incurred costs for the consumption of materials and services of € 79.7 million, other operating revenue and income of € 1.1 million, trade receivables of € 18 million, current financial payables of € 12.5 million and trade payables of € 2.6 million. The most significant trade transactions between associates concerned the Bermont group companies, responsible for the printing of Unidad Editorial’s newspapers (total of: € 6.7 million in trade payables, € 1.1 million in revenue from sales and € 18.6 million in consumption of materials and services). Income and financial-related transactions with "Other affiliates" refer to transactions with Cairo Group companies (specifically: consumption of raw materials and services for € 4.7 million, revenue from sales and other revenue and operating income totaling € 2.3 million, trade receivables of € 1.3 million and € 1.9 million in trade payables). Revenue and other operating income refer mainly to the sale of advertising spaces, organization of events, as well as to revenue from chargebacks of costs for RCS personnel with operating activities at the Cairo group; the costs incurred concern mainly the purchase of advertising spaces on the La7.it website as part of the advertising concession acquired, as well as advertising for the promotion

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of RCS Group initiatives, and costs for the purchase of technical services supporting the RCS Group's television activities.

Transactions with "Other related parties", apart from including compensation for key management personnel as commented on below, include revenue from sales of € 1.6 million and trade receivables of € 0.8 million from companies of the Della Valle group and the Pirelli group related to the sale of advertising space.

***

Group tax consolidation for IRES purposes. In 2019, RCS MediaGroup S.p.A. continued to file for tax on a group basis, as permitted by Legislative Decree no. 344 dated December 12, 2003 in order to come to a tax rate by calculating tax on a single tax base, with a consequent immediate offset of tax assets and tax liabilities for the year. Intragroup transactions deriving from group tax consolidation are based on the objectives of fairness and neutrality. The companies participating in group tax consolidation, where the consolidating company is RCS MediaGroup S.p.A. from the 2019 tax year, are: Trovolavoro S.r.l., RCS Sport S.p.A., RCS Produzioni Padova S.p.A., Sfera Service S.r.l., Blei S.r.l. in liquidation, RCS Edizioni Locali S.r.l., RCS Produzioni S.p.A., Digital Factory S.r.l., RCS Produzioni Milano S.p.A. and RCS Sports & Events S.r.l. and Mybeautybox S.r.l. Group tax consolidation for VAT purposes. In 2019, RCS MediaGroup S.p.A. continued to make use of the rules allowing the RCS Group filing of VAT returns with a payable balance of € 3.1 million. RCS MediaGroup S.p.A. transferred net tax liabilities totaling € 17.7 million to the RCS Group VAT consolidation for 2019.

***

Information is provided below in aggregate form concerning the fees for the key managers, as identified above:

(€ millions) Sundry payables and other S ervice costs Personnel expense current liabilities Board of Directors (3.2) - 1.0 Board of Statutory Auditors (0.2) - 0.2 Key management personnel - (4.2) 0.5 Total related parties (3.4) (4.2) 1.7 T otal RCS Group (504.1) (264.5) 88.5 Related party % of the RCS Group total 0.7% 1.6% 1.9%

"Personnel expense" includes € 4.2 million in remuneration paid to key management personnel. Personnel expense referring to related parties accounted for 1.6% of total personnel expense. There were also commitments to key management personnel, in which regard reference should be made to the Remuneration Report published on the website www.rcsmediagroup.it, as well as commitments to other related parties as further described in Note 57 to this Annual Report.

18. Raw materials and services

These amount to € 504.1 million and consist of € 120.7 million in costs for raw and ancillary materials, consumables and goods, € 356.8 million in costs for services, and € 26.6 million in rentals and leases. Mention should be made that the item in 2019 shows non-recurring expense of € 0.5 million (zero in the prior year), specifically in the service costs line. The composition of this balance is discussed below:

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Raw and ancillary materials, consumables and goods

Details of raw and ancillary materials, consumables and goods are presented below:

Description 2019 2018 Change Paper consumption 58.0 57.1 0.9 Purchase of finished products 32.8 29.9 2.9 Purchase of other materials 16.5 16.8 (0.3) Purchase of advertising space 13.2 12.4 0.8 Allocation to provision for inventory write-down 0.2 0.1 0.1 Total 120.7 116.3 4.4

The item amounted to € 120.7 million, up by € 4.4 million versus 31 December 2018. This change is due mainly to higher costs for the purchase of finished products (€ +2.9 million) incurred mainly by the Unidad Editorial Area for the development of its book business. Paper consumption also increased (€ +0.9 million), especially in the Newspapers Italy area (€ +1.9 million), due to the increased price of raw materials in 2019, partly offset by lower consumption in the Unidad Editorial area (€ -0.9 million), attributable to the different magazine publishing plan and the lower number of copies sold. Lastly, purchases of advertising space increased (€ +0.8 million), attributable mainly to the Newspapers Italy area and in particular to La Gazzetta dello Sport publications.

Service costs

Description 2019 2018 Change Subcontracted work 67.3 74.1 (6.8) Advertising, promotions, merchandising 31.0 33.8 (2.8) Distribution costs 105.9 119.7 (13.8) Sundry services 49.5 48.1 1.4 Freelance staff and reporters 32.1 34.9 (2.8) Professional and consulting fees 21.5 19.7 1.8 Commission expense 16.4 19.2 (2.8) Post, telephone and telegraph 3.5 4.3 (0.8) Travel and accommodation 7.5 8.1 (0.6) Maintenance and refurbishing 8.3 8.4 (0.1) Energy and power 8.6 8.1 0.5 Directors' and statutory auditors' fees 3.6 3.8 (0.2) Insurance 1.6 1.7 (0.1) Total 356.8 383.9 (27.1)

The item shows a balance of € 356.8 million, down by € 27.1 million versus 31 December 2018 (excluding the effect of non-recurring expense, the reduction would be € 27.6 million). Different types of expenses contribute to this change. The most significant differences relate to distribution costs (€ -13.8 million), down in Unidad Editorial (€ -8.4 million) and Newspapers Italy, as a result of the review of distribution rates and the implementation of savings and efficiency policies. Another decreasing item is third-party processing (down by € 6.8 million overall), as a result of the renegotiation of printing rates and the reduction in copies sold by Unidad Editorial, and the reduction in costs achieved by Newspapers Italy also through the renegotiation of printing rates with third-party centres. Lastly, advertising, promotion and merchandising expense decreased (€ -2.8 million), as well as costs for freelance staff and reporters (€ -2.8 million), which included, as mentioned above, non-recurring expense of € 0.5 million (net of which, the decrease would be € 3.3 million).

Rentals and leases Rentals and leases amounted to € 26.6 million, down by € 26.4 million versus 31 December 2018. This change is attributable mainly to the application of the new IFRS 16 which, as previously commented, resulted in the reversal of lease payments recorded under this item for € 26.2 million. The item includes 102

copyrights for text and photographs, and royalties on the sale of add-on products bundled with Corriere della Sera and La Gazzetta dello Sport. The item also includes lease payments for short-term and low-cost lease contracts amounting to € 5.3 million, outside the application of IFRS 16.

19. Personnel expense

Personnel expense amounts to € 264.5 million (€ 264.7 at 31 December 2018) and reports a decrease of € 0.2 million, including net non-recurring expense and income equal to € 2.7 million (non-recurring expense and income equal to € 1.8 million in the previous year). Non-recurring expense refers to the restructuring action underway across the RCS Group. Excluding this expense, the comparison would show a net decrease of € 1.1 million, due to a reduction in personnel expense across all areas of the Group (€ -4.1 million overall), with the exception of the Newspapers Italy area (€ +3 million), which increased due also to the higher average headcount linked to the development of initiatives such as the Solferino books and the RCS Academy activities.

Personnel expense is analyzed as follows:

Description 2019 2018 Change Wages and salaries 194.8 193.6 1.2 Social security charges 60.9 60.4 0.5 Employee benefits 10.5 11.5 (1.0) Other expense and income (1.7) (0.8) (0.9) Total 264.5 264.7 (0.2)

The average workforce during the year is broken down by category as follows:

Category 2019 2018 Change Executives/white collars 1,771 1,780 (9) Journalists 1,277 1,297 (20) Blue collars 231 233 (2) Total 3,279 3,310 (31)

For additional information on headcount, please refer to the Human Resources section of the Directors’ Report on Operations.

20. Other operating revenue and income

Description 2019 2018 Change Cost recharges 5.2 4.3 0.9 Grants relating to income 1.0 1.4 (0.4) Ordinary release of provision for risks - 3.3 (3.3) Income from operating leases (ex rental income) 3.0 3.0 - Sale of returns, leftovers and sundry materials 2.8 2.6 0.2 Other revenue 3.8 5.2 (1.4) Total 15.8 19.8 (4.0)

This item decreased by € 4 million versus the prior year, due mainly to the different recognition of the ordinary recovery of the provision for risks, which, starting from 2019, is directly deducted from the provision for risks (€ -3.3 million in 2018). “Sundry revenue” (€ -1.4 million) also decreased, which comprised non-recurring income of € 2.6 million in the prior year.

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21. Sundry operating expense

This is detailed as follows:

Description 2019 2018 Change Other operating expense 7.9 7.8 0.1 Tax charges 5.6 6.4 (0.8) Contest prizes 2.0 1.9 0.1 Total 15.5 16.1 (0.6)

Sundry operating expense, amounting to € 15.5 million, decreased by € 0.6 million versus the prior year, due mainly to the reduction in tax expense (€ -0.8 million) attributable to the Unidad Editorial area.

“Other operating expense” includes profits passed back to co-publishers activities developed by the Newspapers Italy area, as well as membership fees, contributions, costs for entertaining, gifts, settlement costs, fines and penalties.

22. (Write-down) and write-back of trade and sundry receivables

This item totaled € 2.5 million (€ 3 million at 31 December 2018). As from 2018, as a result of the application of IFRS 9, the reversals of the allowance for impairment of trade and sundry receivables are also classified under this item. The decrease in absolute terms (related to the decrease in trade receivables) corresponds to an increase in the percentage of the allowance for impairment of trade receivables on total trade receivables as commented on in Note 14 for Credit risk.

23. Share of profit (loss) of equity-accounted investees

The share of profit of equity-accounted investees amounted to € 0.1 million, down by € 1.9 million versus the prior year. This item includes the pro-rata results of the investees: specifically, the Bermont Group (a positive € 0.5 million) and the m-dis Distribuzione Media group, whose negative result of € 0.4 million includes € 1.2 million from a write-down of intangible assets made by a direct subsidiary of m-dis Distribuzione Media S.p.A..

24. Amortization, depreciation and impairment losses on non-current assets

The item amounted to € 50.8 million, up by € 11 million versus € 39.8 million in the prior year. This item includes the main types of amortization and depreciation and impairment losses:

2019 2018 Change Amortization of intangible assets 15.5 19.6 (4.1) Depreciation of property, plant and equipment 10.5 11.5 (1.0) Depreciation of rights of use on leased assets 23.2 - 23.2 Depreciation of investment property 0.6 0.6 0.0 Impairment losses/(reversal) on non-current assets 1.0 8.1 (7.1) Total 50.8 39.8 11.0 The increase of € 11 million versus the prior year is due mainly to the adoption of the new IFRS 16 (€ +23.2 million in amortization and depreciation of the right of use on leased assets versus € 0 million in 2018), partly offset by lower amortization of intangible assets (€ -4.1 million) and lower depreciation of property, plant and equipment (€ -1 million). -Impairment losses (reversal) on non-current assets amounted to € 1 million at 31 December 2019 and included € 5.8 million for the impairment loss of the Sfera goodwill

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following the results of the impairment test (as commented in Note 35), offset by € 4.8 million for the impairment reversal of the Pessano con Bornago industrial complex. The decrease in amortization of intangible assets of € 4.1 million is explained for € 2.6 million in the Other Corporate Activities area by the gradual completion of the useful life of software licenses and developmental enhancements recorded under “Concessions, licenses and trademarks", plus € 1.4 million in lower amortization attributable to the television activities of RCS MediaGroup S.p.A. following a review of the useful life of certain rights and a different distribution of investments over time. Depreciation of property, plant and equipment decreased by € 1 million, as a result mainly of the completion of the useful life of printing plant and machinery and equipment in the Newspapers Italy area (€ -0.4 million), as well as furniture, personal computers, notebooks and servers in the Other Corporate Activities area (€ -0.4 million). Depreciation of investment property was in line with 2018.

25. Interest income calculated using the effective interest method, financial income and expense

The following tables summarize the details of interest income calculated using the effective interest method, financial income and expense. Interest income calculated using the effective interest method:

Description 2019 2018 Change Interest income on bank deposits - - - Interest income on fixed receivables - - - Interest income on current receivables 0.3 0.3 - Total interest income calculated using the effective interest method 0.3 0.3 0.0

Financial income:

Description 2019 2018 Change Exchange rate gains 0.4 0.6 (0.2) Gains on derivatives - - - Current sundry financial income 0.2 3.3 (3.1) Total financial income 0.6 3.9 (3.3)

Financial expense:

Description 2019 2018 Change Interest expense to banks (0.1) (0.2) 0.1 Interest expense on loans (3.5) (6.2) 2.7 Interest expense on lease liabilities (3.5) - (3.5) Exchange rate losses (0.7) (0.8) 0.1 Losses on derivatives (0.6) (1.2) 0.6 Sundry financial expense (8.5) (9.9) 1.4 Total financial expense (16.9) (18.3) 1.4

In the Directors' Report on Operations of this Annual Report, the three lines of the Income Statement detailed above are summarized under Income (financial expenses) for a total of € 16 million (€ 14.1 million at 31 December 2018). Excluding the effects from the application in 2019 of the new IFRS 16, the total would amount to € 12.5 million, improving by € 1.6 million versus 2018. The lower net interest expense on loans to banks (€ -2.8 million), due to the reduction in average financial exposure and a more favourable spread also following the renegotiation of the loan agreement in October 2018, contributed to the positive change, marked by the financial management of the Group as a whole.

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These positive effects were partly offset mainly by higher discounting expense on the items recorded in the financial statements.

26. Other gains (losses) on financial assets/liabilities

Description 2019 2018 Change Capital gains/losses on disposal of investments - - - Write-down/Write-back of financial assets - - - Dividends - - - Other 0.2 1.5 (1.3) Total 0.2 1.5 (1.3)

This item ended with a positive balance of € 0.2 million at 31 December 2019. This compares with a balance of € 1.5 million in 2018 attributable to the income from the liquidation of Emittenti Titoli S.p.A..

27. (Write-down) write-back of receivables and other financial assets

The item shows a negative balance of € 0.3 million (€ -2.4 million at 31 December 2018) and includes the write-down of sundry financial receivables.

28. Income tax

Income tax recognized in the income statement is as follows:

2019 2018 Change Current tax: (1.2) (5.1) 3.9 - Income tax 2.6 - 2.6 - IRAP (3.8) (5.1) 1.3 Deferred tax income/expense: (16.4) (10.1) (6.3) - Income (15.3) (14.1) (1.2) - Expense (1.1) 4.0 (5.1) Total tax (17.6) (15.2) (2.4)

Tax in 2019 ended with a negative balance of € -17.6 million (€ -15.2 million at 31 December 2018), due to the tax charge of € 10.8 million relating to the companies participating in the national tax consolidation scheme, to IRAP of € 3.8 million, IRES of € 0.5 million of companies outside national tax consolidation, and negative consolidation adjustments of € 2.5 million.

The change in tax versus 31 December 2018 shows a negative € 2.4 million, commented in the table below that reconciles the actual tax charge recorded in the financial statements with the theoretical tax charge. The decrease of € 1.3 million in IRAP is due mainly to lower operating results.

Current tax assets and current tax liabilities are analyzed below:

2019 2018 Change

Current tax assets 6.0 1.7 4.3 Current tax liabilities (0.6) (2.1) 1.5 Total 5.4 (0.4) 5.8

Current tax assets, net of liabilities, increased by € 5.8 million versus the prior year, attributable mainly to RCS MediaGroup S.p.A.. (€ 2.7 million) and the Unidad Editorial group (€ 2.5 million).

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Deferred tax assets and deferred tax liabilities are broken down as follows:

Recognized in Recognized in profit or loss under the item tax Reclassifications equity 31/12/2018 31/12/2019 deferred tax income/expense current Deferred tax assets -Carry forward tax losses 35.1 (3.5) 1.3 - 0.1 33.0 - Allowances for impairment of assets 3.1 - - - 3.1 - Provisions for risks and charges 7.0 (0.9) - - (0.1) 6.0 - Costs with deferred deductibility 0.7 (0.1) - - (0.6) - - Deferred tax arising from tax transparency criteria 1.4 (1.4) - - - -

- Property, plant and equipment and intangible assets 5.0 (1.8) - 3.6 0.8 7.6 - Measurement of derivatives 0.2 - - - 0.1 0.3 - Interest expense 27.1 (9.2) - - (0.1) 17.8 - Other 16.3 1.6 - 0.7 1.1 19.7 Total deferred tax assets 95.9 (15.3) 1.3 4.3 1.3 87.5

Deferred tax liabilities

- Property, plant and equipment and intangible assets (51.1) (1.2) - - 0.1 (52.2) - Other (0.4) 0.1 - - - (0.3) Total deferred tax liabilities (51.5) (1.1) - - 0.1 (52.5)

Net total 44.4 (16.4) 1.3 4.3 1.4 35.0 Deferred tax assets are accounted for on the basis of expected taxable income in future years and amount to € 87.5 million, of which € 27.1 million relating to RCS MediaGroup S.p.A. and € 58.4 million to the Unidad Editorial group. With particular regard to deferred tax assets relating to the Unidad Editorial group, recognition and recoverability of the value at 31 December 2019 was measured on the basis of the estimated taxable income obtainable from the 2020-2024 plan approved, and extrapolating from the plan the basis of calculation of the projections for subsequent years. Additionally, the amount of tax losses carried forward for which no deferred tax assets have been recorded is significant. In light of the uncertainty generated by the Coronavirus, sensitivity analyses were carried out on the business plan used to verify the recoverability of deferred tax assets recognized in Spain in line with the impairment test. These sensitivity analyses did not show any critical issues regarding the overall recoverability of the deferred tax assets recognized. The effective tax charge reported in the financial statements is reconciled to the theoretical tax charge, resulting from the application of current rates, as follows:

2019 2018 Profit (loss) before tax 86.4 100.5 Theoretical income tax 20.7 24.1 Net effect of permanent differences (1) (7.8) (10.7) Effect of using t ax losses (1.7) (0.9) Net effect of temporary deductible and taxable differences (9.8) (10.2) Prior-years’ tax (2) (4.0) (2.3) Current tax (2.6) 0.0 IRES deferred/pre-paid tax 16.1 10.5 Income tax reported in the financial statements, excluding current and deferred IRAP 13.5 10.5 IRAP - current tax 3.8 5.1 IRAP - deferred/pre-paid tax 0.3 (0.4) Income tax reported in the financial statements (current and deferred) 17.6 15.2 (1) It includes the difference between the theoretical Italian tax rate and the tax rates of foreign companies. (2) They include € 1.3 million in changes in deferred tax assets at 31 December 2019 (€ 2 million at 31 December 2018).

For a clearer understanding of the difference between the reported tax charge and the theoretical tax charge, IRAP (Italian regional business tax) is ignored because it uses a different tax base to profit before tax and its inclusion would create distortions between one year and the next. As a result, the theoretical tax was determined by applying the current corporation tax rate in Italy (IRES of 24% in 2019 and 2018) to profit (loss) before tax.

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29. Profit (loss) for the year attributable to non-controlling interests

Profit (loss) for the year attributable to non-controlling interests is broken down as follows:

2019 2018 Unidad Editorial S.A. (0.2) 0.1 Hotelyo S.A. - (0.1) Sfera France S.A.S. (0.1) 0.1 Total (0.3) 0.1

30. Earnings per share

31 December 2019 31 December 2018 Profit (loss) for the period from continuing operations attributable to the owners of the parent (€ 68.5 85.2 millions) Profit (loss) for the period from assets held for sale and discontinued operations (€ millions) 0.0 0.0

No. of ordinary shares 521,864,957 521,864,957 No. of treasury shares (weighted average) (4,481,912) (4,481,912) No. of outstanding ordinary shares (weighted average) 517,383,045 517,383,045

Basic earnings (losses) per share: continuing operations (Euro) 0.13 0.16 Diluted earnings per share: continuing operations (Euro) 0.13 0.16 Basic earnings (losses) per share: assets held for sale and discontinued operations (Euro) 0.00 0.00 Diluted earnings per share: assets held for sale and discontinued operations (Euro) 0.00 0.00

31. Non-recurring income (expense)

In accordance with CONSOB Resolution no. 15519, the main components of income (positive and/or negative) deriving from events or transactions, the occurrence of which is non-recurring, or deriving from transactions or events that are unlikely to occur frequently in the normal course of business, are shown below.

Non-recurring Non-recurring % of reported Total Reported total expense income total Personnel expense (2.8) 0.1 (2.7) (264.5) 1% Raw materials and services (0.5) - (0.5) (504.1) 0.1% Provisions (0.7) 0.3 (0.4) (1.5) 27% Total (expense)/income (4.0) 0.4 (3.6)

“Non-recurring income (expense)” at 31 December 2019 includes non-recurring expense of € 4 million relating mainly to personnel expense (€ 2.8 million relating to the various Group areas) and non-recurring income of € 0.4 million, due to the recovery of excess provisions basically attributable to the Newspapers Italy and Magazines Italy areas.

At 31 December 2018, the item amounted to net income of € 0.2 million (consisting of € 2.6 million of non- recurring income from the Advertising and Sport area, basically offset by non-recurring expense relating to other areas and mainly attributable to personnel expense).

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32. Property, plant and equipment

Movements in the year were as follows:

Fixed assets Land and Other DESCRIPTION Plant Equipment under To t a l buildings assets construction Cost 53.8 195.5 6.1 113.9 369.3 (Impairment losses)/Reversal of impairment lossses (4.8) (25.0) (1.0) (0.7) (31.5) HISTORICAL COST AT 31/12/2018 49.0 170.5 5.1 113.2 337.8 Addit ions 0.6 0.6 0.1 1.4 0.1 2.8 (Impairment losses)/Reversal of impairment lossses 4.8 4.8 Sales/Disposals (1.5) (1.5) Exchange rate differences Change in consolidation scope Other movements (0.4) (2.3) (2.7) HISTORICAL COST AT 31/12/2019 54.4 170.7 5.2 110.8 0.1 341.2 ACC. DEPRECIATION AT 31/12/2018 (27.5) (132.4) (4.9) (107.6) (272.4) Depreciation (1.8) (6.5) (0.1) (2.1) (10.5) Sales/Disposals 1.5 1.5 Exchange rate differences Change in consolidation scope Other movements 0.4 2.3 2.7 ACC. DEPRECIATION AT 31/12/2019 (29.3) (138.5) (5.0) (105.9) (278.7) NET BALANCE AT 31/12/2018 21.5 38.1 0.2 5.6 65.4 Addit ions 0.6 0.6 0.1 1.4 0.1 2.8 (Impairment losses)/Reversal of impairment lossses 4.8 4.8 Sales/Disposals Depreciation (1.8) (6.5) (0.1) (2.1) (10.5) Exchange rate differences Change in consolidation scope Other movements NET BALANCE AT 31/12/2019 25.1 32.2 0.2 4.9 0.1 62.5 Land is not depreciated. It is, however, subject to appraisal if there are indicators of impairment.

Other property, plant and equipment recognized in the financial statements are depreciated over the estimated useful life of each individual asset, using the following rates: Buildings from 2% to 20% Plant from 5% to 20% Equipment from 12% to 25% Other assets from 7% to 50% No financial expense was capitalized.

Land and buildings

The item shows a balance of € 25.1 million at 31 December 2019 (€ 21.5 million at 31 December 2018); it includes real estate (€ 11 million at 31 December 2019) and land (€ 5.8 million) referring largely to owned civil and industrial properties, specifically to the Pessano con Bornago industrial complex. Also included are improvements (amounting to € 8.3 million at 31 December 2019) to the leased offices in Via Rizzoli and Via Solferino and other leased industrial buildings (specifically the printing plants in Rome and Padua). Capital expenditure for € 0.6 million is related mainly to improvements to the leased building in Via Rizzoli to use for new spaces for the RCS Academy business school. During the year, the value (following impairment losses recognized in prior years) of the Pessano con Bornago industrial complex was written back by € 4.8 million, as the reasons for these previous write-downs no longer apply; specifically, this property is part of the Newspapers Italy CGU.

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Plant This item amounted to € 32.2 million (€ 38.1 million at 31 December 2018), of which € 14 million in plant improvements, including printing presses and other machinery used primarily to print newspapers and magazines. The decrease of € 5.9 million is attributable to depreciation in the year for € 6.5 million, offset by new capital expenditure of € 0.6 million mainly in the printing plants of the Newspapers Italy area for the Pessano con Bornago and Rome plants and in the printing plants of the Unidad Editorial area in Spain.

Other assets This item amounts to € 4.9 million and decreases by € 0.7 million. It consists mainly of servers and data storage supporting the publishing and management systems, as well as PCs, miscellaneous electronic devices, and furniture and furnishings. The change includes new acquisitions of € 1.4 million, offset by decreases due to depreciation of € 2.1 million. Capital expenditure is attributable to Other Corporate Activities (€ 0.7 million) and to the Unidad Editorial group (€ 0.7 million), and refers to the purchase of IT equipment such as PCs, servers, notebooks, smartphones and tablets, furniture and fittings.

33. Rights of use on leased assets

The details of changes in rights of use from 1 January 2019 to 31 December 2019 are shown below:

Rights of use Rights of Rights of use Rights of use DESCRIPTIO N To t a l property use plant other assets motor vehicles

HISTORICAL COST AT 31/12/2018 Increases from first-time application of IFRS 16 169.4 0.9 0.1 6.2 176.6 Additions 9.2 2.8 12.0 Impairment losses Decreases (4.7) (0.2) (4.9) Exchange rate differences Change in consolidation scope Other movements HISTORICAL COST AT 31/12/2019 173.9 0.9 0.1 8.8 183.7 ACC. DEPRECIATION AT 31/12/2018 Depreciation (20.5) (0.5) (0.1) (2.1) (23.2) Decreases 0.1 0.1 0.2 Exchange rate differences Change in consolidation scope Other movements ACC. DEPRECIATION AT 31/12/2019 (20.4) (0.5) (0.1) (2.0) (23.0) NET BALANCE AT 31/12/2018 Effects from the application of IFRS 16 169.4 0.9 0.1 6.2 176.6 NET BALANCE AT 01/01/2019 169.4 0.9 0.1 6.2 176.6 Additions 9.2 2.8 12.0 Impairment losses Decreases (4.6) (0.1) (4.7) Depreciation (20.5) (0.5) (0.1) (2.1) (23.2) Exchange rate differences Change in consolidation scope Other movements NET BALANCE AT 31/12/2019 153.5 0.4 6.8 160.7

The effect of the first-time application of IFRS 16 at 1 January 2019 was € 176.6 million. The mainly rights of use refer to property leases (€ +169.4 million at 1 January 2019) used by the Group primarily as office space. In 2019, increases of € 12 million were due mainly to the renewal of the lease contract for the Viale Campania building in Rome (€ 5.2 million), to a lease contract concluded by Unidad Editorial for a new building in Barcelona (€ 0.9 million) and new motor vehicle leases (€ 2.8 million). Total decreases for the

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year amounted to € 27.9 million and are due to depreciation of € 23.2 million and miscellaneous decreases, in particular for rights of use on real estate (€ -4.6 million) relating mainly to the Unidad Editorial area.

34. Investment property

Net balance at 31/12/2018 20.1 Additions (Impairment losses)/Reversal of impairment lossses Disposals Depreciation (0.6) Exchange rate differences Change in consolidation scope Other movements Net balance at 31/12/2019 19.5

This item, totaling € 19.5 million, relates to the Unidad Editorial group for € 16.9 million and RCS MediaGroup S.p.A. for € 2.6 million. It refers to industrial buildings currently not used in the cities of Madrid (Meco Industrial Park - Torrejon de Ardoz), Turin (via Reiss Romoli) and Piacenza (via Don Minzoni).

35. Intangible assets

Movements in the year were as follows:

FINITE USEFUL LIFE INDEFINITE USEFUL LIFE DESCRIPTION Intellectual Concessions, Assets under Other Concessions, property rights licenses, development intangible licenses, Goodwill TOTAL trademarks and advances assets trademarks and HISTORICAL COST AT 31/12/2018 35.4 321.1 0.9 8.5 456.0 49.7 871.6 Additions - acquired 1.3 13.7 0.5 15.5 Additions - internally generated Decreases (2.0) (39.9) (0.2) (42.1) (Impairment losses)/Reversal of impairment lossses (5.8) (5.8) Exchange rate differences Change in consolidation scope (0.1) (0.1) Other movements 0.5 (0.7) (0.2) HISTORICAL COST AT 31/12/2019 34.7 295.3 0.5 8.5 456.0 43.9 838.9 ACC. AMORTIZATION AT 31/12/2018 (34.4) (286.9) (8.5) (151.2) (21.2) (502.2) Amortization (1.3) (14.2) (15.5) Decreases 2.0 39.9 41.9 Exchange rate differences Change in consolidation scope 0.1 0.1 Other movements 0.1 0.1 ACC. AMORTIZATION AT 31/12/2019 (33.7) (261.0) (8.5) (151.2) (21.2) (475.6) NET BALANCE AT 31/12/2018 1.0 34.2 0.9 304.8 28.5 369.4 Additions 1.3 13.7 0.5 15.5 Additions - internally generated Decreases (0.2) (0.2) Amortization (1.3) (14.2) (15.5) (Impairment losses)/Reversal of impairment lossses (5.8) (5.8) Exchange rate differences Change in consolidation scope Other movements 0.6 (0.7) (0.1) NET BALANCE AT 31/12/2019 1.0 34.3 0.5 304.8 22.7 363.3

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Intangible assets with finite useful lives are amortized over their useful lives, estimated on average as follows:

Intellectual property rights from 2 to 5 years Concessions, licenses, trademarks and similar rights from 2 to 30 years Other intangible assets from 3 to 10 years

Development costs The Group incurs costs for the development of IT applications classified directly in the item Concessions, licenses and trademarks. Other costs incurred linked to innovation activities were recognized in the income statement.

Intellectual property rights They amounted to € 1 million (same amount at 31 December 2018) with amortization and new capital expenditure for the same amount (€ 1.3 million). € 1 million of the latter are attributed to the television activities of the Newspapers Italy area for the purchase of rights relating to the production of audiovisual works broadcast on the satellite channel Caccia e Pesca, and to the Unidad Editorial group (€ 0.3 million) for the purchase of literary rights.

Concessions, licenses, trademarks and similar rights

Concessions, licenses, trademarks and similar rights comprise assets with finite useful life and indefinite useful life, as discussed below.

Finite useful life

The item amounted to € 34.3 million, up by € 0.1 million versus 31 December 2017. The change includes amortization of € 14.2 million, new capital expenditure of € 13.7 million and reclassifications from assets under development of € 0.6 million. Most of the capital expenditure refers to the Other Corporate Activities area (€ 7.3 million) and regards new developments on the Group's websites (mainly corriere.it and gazzetta.it and the relating digital editions of the two newspapers), and new expenditure to support the RCS Academy. New digital advertising and e-commerce projects were also developed, as well as editorial systems to support the Group's publications. New capital expenditure was made also in the Unidad Editorial area (€ 5.1 million) for the purchase of software licenses and the development of digital projects, and in the Newspapers Italy area, particularly in the Television Activities segment of RCS MediaGroup S.p.A. (€ 0.9 million), for the acquisition of television rights used on the Lei, Dove, Caccia and Pesca channels.

Indefinite useful life

At 31 December 2019, this item amounted to € 304.8 million and consisted entirely of assets belonging to the Spanish subsidiary Unidad Editorial, i.e.: the publication El Mundo (€ 110.3 million), the television license for the digital terrestrial TV of VEO Television (€ 11.7 million), and other intangible assets (€ 1.2 million) comprising the radio frequency in Zaragoza. As from 2017, the daily sports newspaper Marca, and the business newspaper Expansiòn (totaling € 181.6 million) are classified in this item. El Mundo, whose first edition dates back to October 1989, became one of the most widely circulated national newspapers in just under four years. Since 2001, it has been Spain’s number two newspaper in terms of number of copies sold at newsstands, characterized by the ever-increasing importance of the internet in terms of readers, proof of the gradual integration among traditional publishing and multimedia activities.

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Marca was founded in 1938 and went on to become the market leader in the Spanish sports newspapers sector with news that covers all types of sports. Particular attention is devoted to football, the most popular sport, but there are also articles and news on all types of national and international sports. It was the first Spanish newspaper to dedicate a specific section to the world of motorsports in its various forms. In 1995, marca.com was launched to take advantage of the newspaper's popularity on the Internet. The website is currently the top sports information portal in Spain for number of hits. In partnership with Claro, a company operating in the communications sector in Latin America, the new Marca portal was launched in 2017 in Mexico, followed in 2018 by portals in Colombia and Argentina, and in June 2019 by the portal Marca Claro USA in the United States. Expansiòn was founded in 1986 and is the leader in the business-financial newspaper sector in Spain both for the number of readers and for advertising sales volume. expansion.com is an online communication model providing articles and reports from the financial, business, and legislative worlds. When these assets were recorded in the financial statements, they gave rise to deferred tax liabilities. In the case of assets with indefinite useful life, this tax will be released in the future if the asset is sold or impaired. The tax rates used are always revised to reflect the latest tax rate in force in the country concerned. Assets under development and advances The item amounted to € 0.5 million, down overall by € 0.4 million versus 31 December 2018. Capital expenditure in the year amounted to € 0.5 million, attributable to the Other Corporate Activities area for projects in progress, including the subscription system. The increases were more than offset by decreases of € 0.2 million relating to the Unidad Editorial area, and by the negative reclassification of concessions, licenses and trademarks of € 0.6 million relating to capital expenditure made by the Unidad Editorial area and by Other Corporate Activities completed during the year under review.

Goodwill This item, amounting to € 22.7 million, decreased by € 5.8 million due to the impairment loss of the goodwill in Sfera (Childhood Magazines) following the results of the impairment test. In addition to the previously mentioned Sfera goodwill (€ 7.7 million residual value at 31 December 2019), the item also includes the goodwill of RCS Produzione Padova S.p.A. (€ 2.4 million) and RCS Digital Ventures S.r.l. merged into RCS MediaGroup S.p.A. in November 2019. € 1.1 million). This item also includes goodwill arising on first-time consolidation or identified as a residual after allocating the difference to the relevant assets, liabilities and contingent liabilities of consolidated companies. Specifically, they refer to the Spanish subsidiary Unidad Editorial following the acquisition of the Recoletos group (residual value of € 9.4 million) and the goodwill of Editoriale del Mezzogiorno (€ 2.1 million) merged into RCS Edizioni Locali S.r.l. in December 2019.

Impairment test

Goodwill and intangible assets with indefinite useful life are not amortized, but are tested for impairment whenever certain facts or circumstances make it possible to assume an impairment risk, or at least once a year. The cash-generating units to which goodwill and intangible assets with indefinite useful life have been allocated are as follows:

Goodwill Concessions, licenses and trademarks Segments CGU 31/12/2019 31/12/2018 31/12/2019 31/12/2018 Newspapers Italy RCS Produzioni Padova - 2.4 - - Ed. del Mezzogiorno - 2.1 - - RCS Digital Ventures - 1.1 - - Newspapers 5.6 - Unidad Editorial Unidad Editorial 9.4 9.4 304.8 304.8 Magazines Italy Sfera 7.7 13.5 - - Total 22.7 28.5 304.8 304.8 113

Goodwill was measured at the higher of fair value and value in use. Management has carried out its tests at 31 December 2019 using value in use. The value in use for impairment testing is calculated in accordance with the requirements of IAS 36 (also considering the recommendations set forth in the document published by the ESMA “European enforces review of impairment of goodwill and other intangible assets in the IFRS financial statements” of January 2013, in Document no. 4 of the coordination board between Bank of Italy, CONSOB and Isvap of 3 March 2010, in the document published by ESMA on 28 October 2014, the Public Statement “European common enforcement priorities for 2014 financial statements”, as well as in CONSOB Communication no. 3907 of 19 January 2015). The recoverable amount of each asset with indefinite useful life and of goodwill is calculated by estimating future cash flows generated by use of the assets over time, using a discount rate that reflects the specific risks. For goodwill and assets with indefinite useful life whose cash flows are largely independent of those derived from other assets or groups of assets, this assessment is performed considering the recoverable value of the cash generating unit to which each is attributed. Taking account of the entry into force of IFRS 16, impairment tests were carried out to verify consistency, in two ways, i.e., either by excluding the effects of the adoption of IFRS 16 which took place as from 1 January 2019, or by taking it into account. Before IFRS 16, net capital employed does not take account of the rights of use on lease contracts, while the expected cash flows used to calculate the recoverable value include the cash flows from lease payments, and the WACC applied to discount these flows is determined in the same manner at 31 December 2018. Post IFRS 16, the carrying amounts of the cash generating units showed, versus the amounts used at 31 December 2018, an increase due to the recognition of Rights of Use, an increase in cash flows following the reversal of expected lease payments (for the portion already reflected in net capital employed), a WACC affected by the changed component of the debt/equity ratio (in the case where the exposure of debt for lease payments is considered as a further new financial source). The results obtained by developing impairment tests in these two different ways lead basically to the same valuation results. 98.3% of intangible assets with indefinite useful life is attributed to two cash generating units: Unidad Editorial and Sfera. Below are the key assumptions used in performing the related impairment tests:

Calculation methodExpe cte d Average discount rate CGU Years of explicit forecast terminal valuegrowth rate net of taxation of yield adopted"g" WACC BEFORE IFRS 16 31/12/2019 31/12/2018 31/12/2019 31/12/2018 2019/2018 31/12/2019 31/12/2018 Unidad Editorial 5 years 5 years perpetuity perpetuity 0 7.67% 8.00% Sfera 3 years 3 years perpetuity perpetuity 0 7.72% 8.09% Newspapers 1 year n.a. perpetuity n.a. 0 7.86% n.a. Among the assumptions shown in the table, the WACC is determined before IFRS 16 to allow for a consistent comparison with the WACC at 31 December 2018 The breakdown of the Group's assets into cash generating units and their identification criteria were basically confirmed with the financial statements for the year ended 31 December 2018, the only change being the centralization of the pre-existing CGUs in a single CGU called Newspapers: RCS Digital Ventures S.r.l. (merged with effect since 1 January 2019 into RCS MediaGroup S.p.A.), RCS Edizioni Locali S.r.l. (into which Editoriale del Mezzogiorno S.r.l. merged with effect since 1 January 2019) and RCS Produzioni Padova S.p.A.. These companies were involved in 2019 in a reorganization of business models partly determined by corporate merger transactions as indicated above. Cash-generating units represent the individual cash-generating units or groups of cash-generating units that benefit from synergies of aggregation.

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For the cash-generating units, as in the past year, the overall duration of the time horizon, as well as the growth rate g, were confirmed. The explicit forecast period of the cash-generating unit is between 1 and 5 years. WACCs before IFRS 16 decreased versus 31 December 2018 by 33 basis points for the Unidad Editorial CGU and 37 basis points for the Sfera CGU, as a result of the change in the risk-free rate (long-term government bond rates down in both Italy and Spain) and the reduction in the cost of debt related to the performance of long-term interest rate swaps (IRS). To avoid the risks of double counting Country risk, the Group has adopted the so-called Practitioners method (consistent with prior years and as commented below). As a result, the market risk premium included in the calculation of the Group's WACC matches the market risk premium of a virtuous country, and at 31 December 2019 was higher than in 2018, with a decrease in the risk-free rate and the cost of debt. At 31 December 2019, explicit cash flows were developed on the basis of the plans prepared, adjusted, if necessary, only to ensure that they meet the requirements established by IAS 36. The impairment tests were approved by the respective Boards of Directors independently and in advance of the approval of the consolidated financial statements of the RCS Group. Mention should be made that when preparing the business plans, the impact of the Coronavirus spread was not taken into consideration, as it is an event occurring after the date of preparation of the financial statements, the potential effects of which cannot be determined and quantified at this time and will be constantly monitored in the coming months of 2020.

*** The main assumptions used by Management to estimate value in use refer to the discount rate (WACC), the growth rate (g), the expected changes in revenue and operating costs (EBITDA) over the calculation period. The discount rate used for discounting future cash flows is the post-tax weighted average cost of capital (WACC), comprising a weighted average for the financial structure of the following elements:  the cost of risk capital determined as the return on risk-free assets, summed with the product obtained by multiplying the Beta and the risk premium, plus the Firm Specific Risk Premium;  the cost of debt. The risk-free return was assumed as the return on government bonds of the CGU’s country of origin (one year’s average), whose duration is consistent with the valuation period. The Beta was calculated with reference to the average of a sample of comparable companies. The risk premium is equal to the historical additional return required on equity of a virtuous country over the government bonds (the method used by Practitioners), while the Firm Specific Risk Premium is the additional premium aimed at including the risk of reaching the forecast objectives established by management (execution risk) in the assessment, also with respect to the Group’s size. The entity's cost of debt is determined using the 10-year EurIRS rate (one year’s average) plus the spread on debt. For RCS, the spread was inferred by analyzing the available market data for a basket of companies with ratings consistent with those indicated by the Italian Valuation Organization (Credit Rating Spread Damodaran). The financial structure (Debt/Equity) used was defined on the basis of the comparable companies analysis, using the average median data of the financial structure of the reference sample before IFRS 16 (S&P Capital IQ). The discount rate used was calculated post-tax. The growth rate of cash flows adopted for the cash flow forecast at the end of the explicit period (g) was assumed as equal to zero (negative in real terms in the presence of inflation), similar to the tests carried out in the prior year. *** The impairment test of the intangible assets of the Unidad Editorial cash-generating unit is considered significant, amounting to an overall € 335.4 million, of which € 314.2 million with indefinite useful life (confirming the same figures of 2018). They represent approximately 92.3% of the Group's total intangible 115

assets (90.8% in the prior year). Specifically, the financial forecasts used in the impairment test have been prepared by taking as a reference base the latest parameters available from official sources and relating to both medium-term macroeconomic expectations of Spain (Banco Espana, IMF, Government) and to the expected trends in the Unidad Editorial group’s markets of operation, namely Media and Publishing and Internet (I2P PWC), supplemented with specific business assumptions formulated by the management of Unidad Editorial, including in relation to the positioning and specificity of Unidad Editorial products. Given the materiality of the carrying amount of this CGU and in line with the approach adopted last year, the impairment test was prepared on the Unidad Editorial CGU with the assistance of a leading consulting firm. Cash flows for the first year of the explicit forecast period correspond to the 2020 budget data approved by Board of Directors of Unidad Editorial on 24 February 2020. Cash flows for the remaining years of the explicit forecast (2021-2024) were developed on the basis of the Unidad Editorial plan approved by the Board of Directors of Unidad Editorial on 16 March 2020.

In the explicit forecasts, the decrease in the circulation of print editions is offset by the increase in digital revenue and further development initiatives. As far as costs are concerned, the actions already taken at the impairment test date will continue in order to reduce costs and generate efficiencies, as well as to adapt to the new business model. The contribution of efficiencies to EBITDA is expected to gradually decrease over the years of explicit forecast. The estimate of the terminal value takes account of a normalized EBITDA.

The impairment test on Unidad Editorial was carried out in two ways, i.e., both excluding the effects of the adoption of IFRS 16 and taking them into account, with the typical features of the two methods commented above. The WACC decreased from 7.67% before IFRS 16 to 7.46%, due to the changed component of the debt/equity ratio (considering the financial liability resulting following the application of IFRS 16 as an additional financial source). The discounted cash flow method applied to the carrying amount of the cash generating unit (carried out either by including or excluding the effects of the application of IFRS 16) strongly confirmed the carrying amount. Sensitivity analyses were carried out, as an integral part of the measurements of Unidad Editorial, showing the change in the excess recoverable amount with respect to the carrying amount which would have been generated with changes in the WACC and the g rate. Even an increase in the WACC (e.g. by over 1% percentage points) would not require impairment. As suggested by the ESMA, the result of the impairment test was also subject to sensitivity analysis to determine how it would change with EBITDA changes for the explicit time horizon. Even a 15% negative change in EBITDA over all the explicit forecast years would not require impairment. Lastly, as known, since January 2020, the global scenario has been swept by the spread of the Coronavirus and the ensuing restrictions for its containment adopted by the governments of the countries involved, creating a climate of general uncertainty, the effects of which are not foreseeable at this time. In light of this situation, as changes in future cash flows cannot be foreseen, more conservative sensitivity analyses were also carried out - in terms of reduction in cash flows and increase in WACC - in order to verify the sustainability of the book value of the Unidad Editorial CGU. This sensitivity showed that even with these changes, no impairment losses would be generated. *** Unidad Editorial's publications were measured, in the same way as at 31 December 2018, using the Unlevered Discounted Cash Flow method and using the financial parameters (WACC before IFRS 16 and g rate) applied to the Unidad Editorial CGU.

The outcome of the impairment test performed on the titles resulted in a value in use that is greater than the carrying amount of the individual publications.

Even though the value in use is greater than the carrying amount of the individual publications, based on the following observations: 116

 the turnaround of Spanish operations is still underway, and the growth in profitability, which depends to a large extent on digital activities, will have to be reconfirmed and measured over the next few years;  the yields on Spanish government bonds are confirmed particularly low, so a reversal in the trend could even have a significant impact on the amounts recoverable by the titles;  despite the macroeconomic recovery reflected in the growth in GDP, the trends of the relevant markets in which the publications that are subject to the Test operate are still characterized by moderate uncertainty, especially as regards the trend in print circulation and therefore advertising sales;  the recoverable value of publications is sensitive to changes in margins and interest rates;  digital publishing is a continually-evolving market and its future trends are still hard to predict;  additionally, the current COVID-19 health emergency (recently classified as a pandemic by the World Health Organization) is having direct and indirect repercussions also on the general trend of the economy, with forecasts on the developments in the relevant markets in Spain highly unpredictable at this time.

The Group decided not to recognize, in this financial year, a write-back for the publications subject to the test, which had been written down in prior financial years.

***

The Sfera cash generating unit has intangible fixed assets totaling € 7.9 million, equal to 2.2% of the Group's total intangible fixed assets (of which € 7.7 million in goodwill after the impairment loss of € 5.8 million). The WACC of 7.72% applied was calculated with reference to the relevance of the activities in the different countries in which the cash-generating unit operates. The projection shows, in the period 2020-2022, an increase in digital revenue linked to the development of video, the expansion of the offering (digital magazines) and, in Italy, the restyling of a website. Profitability is also expected to improve as a result of the use of the same contents for all countries and, in Italy, an increase in the offer of boxed sets. Advertising revenue from print media is expected to remain steady, also through the expansion of the offer to customers outside the Childhood segment. Recovery actions will continue on all costs over the period of the plan. The impairment test resulted in a write-down of € 5.8 million.

*** The remaining intangible assets with indefinite useful life totaled € 5.6 million and are part of the Newspapers Italy cash generating unit, whose total intangible assets account for 2.1% of the Group's total intangible assets. The discounted cash flow method applied to the carrying amount of the cash generating unit (both including and excluding the effects of the application of IFRS 16) using the 2020 budget EBIT, and applying the CGU's reference WACC of 7.86%, with g rate equal to nominal zero, largely confirmed the carrying amount.

36. Investments in associates and joint ventures

Investments in associates and joint ventures at 31 December 2019 total € 37.5 million (€ 38.9 million at 31 December 2018).

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Movements in the year were as follows:

Investments in joint Investments in Notes Total ve nture s associates Balance at 31/12/2018 5.8 33.1 38.9 Result of equity-accounted investees 23 (0.4) 0.5 0.1 Acquisitions/to cover losses --- Transfers/liquidations --- Other movements (0.1) - (0.1) Dividends distributed (1.0) (0.4) (1.4) Balance at 31/12/2019 4.3 33.2 37.5 Investments in joint ventures at 31 December 2019, totaling € 4.3 million (€ 5.8 million at 31 December 2018), were measured at equity and mainly include the investment in m-dis Distribuzione Media S.p.A. and its subsidiaries. The item decreased due to the total net loss of € 0.4 million in the period (including the write-down of € 1.2 million relating to intangible assets of a direct subsidiary of m-dis Distribuzione Media S.p.A.), and to the effect of the distribution of dividends by m-dis Distribuzione Media S.p.A.. Investments in associates at 31 December 2019, totaling € 33.2 million (€ 33.1 million at 31 December 2018), were measured at equity and mainly include the investment in the Corporacion Bermont group. The value was basically stable: the increase resulting from the profit of € 0.5 million was partly offset by the effect of the distribution of dividends of € 0.4 million by Corporacion Bermont.

Figures at 31 December 2019 for the joint ventures and associates are shown below:

Total non- Total current Total fixed Total current 2019 current Total equity assets assets liabilities liabilities Joint Ventures (1) 136.6 11.1 127.6 7.2 12.9 Associates (1) 25.8 71.5 7.4 1.2 88.7

Profit (loss) Operating Profit/(loss) for Other comprehensive Total comprehensive 2019 Total revenue from continuing costs the period income (expense) income (expense) operations Joint Ventures (1) 71.3 (70.7) 0.2 0.2 (0.1) 0.1 Associates (1) 39.0 (30.9) 2.2 2.2 - 2.2

(1) Figures taken from financial statements currently in the approval phase.

37. Other non-current equity instruments

At 31 December 2019, “Other non-current equity instruments” amounted to € 2 million and was basically steady versus 31 December 2018 (€ 2.1 million).

The item includes securities and investments in companies which are not subsidiaries, associates or held for trading. At 31 December 2019, these amounted to € 2 million and included, among the most significant amounts, € 0.6 million relating to Ansa Società Cooperativa (€ 0.6 million at 31 December 2018), € 0.4 million relating to Immobiliare Editrice Giornali S.r.l. (€ 0.4 million at 31 December 2018), € 0.2 million relating to H-Farm S.p.A. (€ 0.4 million at 31 December 2018), € 0.2 million relating to Digital Magics S.p.A. (€ 0.2 million at 31 December 2018).

The decrease of € 0.1 million in this item versus 31 December 2018 is due to the net negative change in fair value recognized in other comprehensive income.

38. Financial assets and liabilities recognized for derivatives

The item includes derivative financial instruments. Such instruments are recognized as financial assets or financial liabilities at fair value.

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The principal types of derivative contracts taken out are analyzed below, specifying whether they are hedging or trading instruments.

31 December 2019 31 December 2018 Notes Assets Liabilities Assets Liabilities Interest Rate Cap for cash flow hedges Interest rate swaps for cash flow hedges (1.0) (1.0) Non-current - (1.0) - (1.0) Interest rate swaps for cash flow hedges (0.2) (0.1) Forward foreign exchange contracts for trading Current - (0.2) - (0.1) To t a l 13 - (1.2) - (1.1) Interest rate derivative notional amounts mature as follows:

Notional amount Description Parameter Rate 0-6 months 6M - 1 Y 1-2 Y 2-5 Y > 5 Y outstanding

IRS 110.0 Euribor 3M 0.131% (50.0) (60.0) -

Total 110.0 (50.0) (60.0) -

The notional amount of interest rate swaps at 31 December 2019 is € 110 million (hedging derivatives totaled € 170 million at 31 December 2018). The average contractual fixed interest rate of the interest rate swaps for the entire length of the contracts is 0.131%; the reference parameter for the floating rate is the three-month Euribor. Contracts taken out by RCS MediaGroup refer to interest rate swaps to cover exposure to interest rate risk on short and medium/long-term debt, primarily represented by the Term and Revolving lines of the loan. In November 2019, new IRS hedging contracts were signed for € 20 million, with a duration of 4 years and a rate of -0.25%. At 31 December 2019, there were no foreign currency hedges. The above mentioned financial instruments, related to hedges of the interest rate risk, have been negotiated for hedging purposes. In compliance with International Financial Reporting Standards they have been submitted to the so-called effectiveness testing (prospective and retrospective), to see whether they qualify for hedge accounting, in accordance with the specific requirements for hedges.

(€ millions) Fair Value Amount recognized in Hedged item Type of hedge Hedged risk comprehensive income 31/12/2019 31/12/2018 Change (1)

NFP hedge IRS Interest rate risk (1.2) (1.1) (0.1) (0.1) Total (1.2) (1.1) (0.1) (0.1) (1) Figures are shown gross of tax effects

The total net financial debt at year end is broken down by currency as follows:

31/12/2019 31/12/2018

Euro (136.1) (193.5) US dollar 0.3 0.3 British pound 0.1 (0.0) Swiss franc 0.1 0.3 United Arab Emirates dirham 3.7 5.1 Mexican peso 0.3 0.3 Total (131.8) (187.6)

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As required by IFRS 7, the following table shows movements in the hedging reserve in the past two years, reporting separately the amounts recognized in equity for increases/decreases in hedge effectiveness in the year and the amounts transferred to profit or loss to cover the underlying cash flows.

Balance at 31 December 2017 (1) (0.7) + hedging gains 0.2 - hedging losses (1.7) - hedging losses to profit or loss (0.6) + hedging gains to profit or loss 1.7 Balance at 31 December 2018 (1) (1.1) + hedging gains 0.3 - hedging losses (1.0) - hedging losses to profit or loss - + hedging gains to profit or loss 0.6

Balance at 31 December 2019 (1) (1.2) (1) The cash flow hedge reserve, shown in detail in the table compared to the amounts shown in the statement of changes in consolidated equity, does not consider tax effects.

The hedging reserve is the result of the effects of hedges of expected cash flows relating to underlying loans, whose payments and related effect on profit or loss fall in the periods set out below. The expected outlays represent the interest on the amount of debt hedged, calculated using the market interest rate curve consistent with the mark-to-market measurement of the hedging instruments. The exposure on which the net outlays for financial expense are calculated takes account of the volumes and the contractual maturities of the hedging derivatives.

31 December 2019 Expected cash Actual impact of underlying flows 1 Y 1-2 Y 2 - 5 Y > 5 Y flows Interest rate risk

Expected outflows for floating-rate interest (2.9) (1.2) (0.7) (1.0) - Total (2.9) (1.2) (0.7) (1.0) -

31 December 2018 Expected cash Actual impact of underlying flows 1 Y 1-2 Y 2 - 5 Y > 5 Y flows Interest rate risk

Expected outflows for floating-rate interest (4.6) (2.0) (1.2) (1.4) - Total (4.6) (2.0) (1.2) (1.4) -

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39. Non-current financial receivables

This item, amounting to € 1 million, decreased by € 1.2 million versus the prior year, due mainly to the reclassification to short-term of the portion of the receivable falling due and the write-down of a receivable.

The fair value of non-current loans to third parties was estimated by discounting future cash flows at the market rate. A comparison of carrying amount and fair value is shown below.

Carrying amount Fair Value Change Change 31/12/2019 31/12/2018 31/12/2019 31/12/2018 carrying amount fair value

Non-current loans to third parties 4.5 5.4 1.0 2.2 (0.9) (1.2) Allowance for impairment of financial receivables (3.5) (3.2) - - (0.3) 0.0 Non-current loans to associates 0.2 0.2 0.0 0.0 Allowance for impairment of financial receivables from associate (0.2) (0.2) 0.0 0.0 Total 1.0 2.2 1.0 2.2 (1.2) (1.2)

The table below shows changes in the allowance for impairment of financial receivables, estimated according to the lifetime expected credit losses method:

Allowance for impairment of financial receivables Balance at 31/12/2018 3.4 12-month transfers ECL - Lifetime transfers ECL - Lifetime transfers ECL impaired assets - Reclassification - (Write-down)/(write-back) of financial receivables 0.3 Closing balance 31/12/2019 3.7

40. Other non-current assets

Other non-current assets, amounting to € 16.7 million, increased by € 1.7 million versus the prior year, due to the increase in tax receivables. Description 31/12/2019 31/12/2018 Change Security deposits given 1.8 1.9 (0.1) Term bank deposits 0.1 0.1 - Non-current prepayments 0.1 0.3 (0.2) Non-current tax receivables 14.7 12.7 2.0 Total 16.7 15.0 1.7

The following items are shown in Note 13 (pursuant to IFRS 7). Non-current tax assets and non-current prepayments are not considered as part of IFRS 7.

Carrying amount Change Description 31/12/2019 31/12/2018 Security deposits given 1.8 1.9 (0.1) Term bank deposits 0.1 0.1 - Total 1.9 2.0 (0.1)

The carrying amount of these assets reflects their fair value.

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41. Inventory

The table below shows inventory by type along with the provisions made to adjust their cost to market values:

Gross Allowance Gross Allowance Net balance Net balance balance at for balance at for Change at 31/12/2019 at 31/12/2018 31/12/2019 impairment 31/12/2018 impairment Raw and ancillary materials and 19.2 0.5 18.7 16.7 0.5 16.2 2.5 Work in progress 1.4 - 1.4 1.8 - 1.8 (0.4) Finished products and goods 4.5 1.3 3.2 1.9 0.3 1.6 1.6 Total 25.1 1.8 23.3 20.4 0.8 19.6 3.7

This item increased by € 3.7 million versus 31 December 2018, due mainly to the inventory of paper, ink, other consumables, and to finished products. The main inventory of raw materials refers to paper and is attributable for € 2.7 million to RCS MediaGroup S.p.A.. The trend was affected by the changed cost of paper and an increase in volumes in stock linked also to the gradual development of new publishing initiatives, including Solferino, and by of a portfolio of add-on products featuring a greater number of literary works. Inventory of finished goods increased by € 1.6 million, due mainly to Newspapers Italy. Conversely, inventory of work in progress decreased by € 0.4 million. Details of inventory by business segment are provided below:

Raw and ancillary materials and Work in progress and semi- Inventory at Description Finished products consumables finished products 31/12/2019 Newspapers Italy 13.5 0.6 1.7 15.8 Magazines Italy 2.5 0.8 0.6 3.9 Unidad Editorial 2.7 - 0.9 3.6 Total 18.7 1.4 3.2 23.3

“Change in inventory” in the income statement is broken down as follows:

Description 2019 2018 Change Changes in work in progress 0.1 0.1 - Change in finished products 1.8 - 1.8 Changes in raw and ancillary materials and consumables (1) 2.5 3.6 (1.1) Total changes in finished and semi-finished products 4.4 3.7 0.7

(1) These amounts are also classified under raw and ancillary materials, consumables and goods.

42. Trade receivables

Trade receivables are broken down as follows:

Description 31/12/2019 31/12/2018 Change Receivables from customers 218.1 222.3 (4.2) Allowance for impairment (33.4) (32.4) (1.0) Net receivables from customers 184.7 189.9 (5.2) Intragroup receivables 21.7 22.2 (0.5) Allowance for impairment of receivables from Group compa (0.1) (0.1) - Net receivables from other Group companies 21.6 22.1 (0.5) Total 206.3 212.0 (5.7)

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“Receivables from customers” and “Intragroup receivables” are shown net of expected returns (of newspapers and magazines) amounting to € 29.1 million (€ 29.8 million in expected returns in the prior year).

Receivables due from Group companies relate mainly to transactions with the associate m-dis Distribuzione Media S.p.A.. For an explanation of credit risk, see Note 14.

Trade receivables totalled € 206.3 million and were down by € 5.7 million versus € 212 million at 31 December 2018. The following should be noted:  the € 3.6 million decrease attributable to Unidad Editorial, as a result of lower revenue in the period;  the € 0.8 million decrease relating to Newspapers Italy, due to the combined effect of lower receivables from the associate m-dis Distribuzione Media S.p.A. (€ -2.7 million), offset by higher receivables from the new activities of RCS Academy, and the Solferino book publishing initiative;  the € 1.4 million decrease in Magazines Italy, due mainly to the drop in revenue;  the € 0.1 million increase attributable to Advertising and Sport. The Advertising segment fell by € 5.5 million, due to both the recovery of past dues (€ -0.9 million) and litigation (€ -0.5 million), and to the drop in revenue versus 2018. The decrease was offset by higher trade receivables in the Sports sector (€ +5.6 million), originating both in new sports events organized in Italy and the United Arab Emirates and in different invoicing plans of the Sponsors of the Giro d'Italia.

Mention should be made that the adoption in 2018 of IFRS 9 Financial Instruments had resulted in the application of the expected credit loss model, replacing the incurred credit loss model provided for by IAS 39, with a consequent increase in the allowance for impairment of trade receivables of € 1.1 million at 1 January 2018. The table below shows changes in the allowance for impairment of trade receivables: Allowance for impairment of trade receivables Closing balance 31/12/2017 31.4 Effects from the application of IFRS 9 1.1 Opening balance 1/1/2018 32.5 Utilization (3.0) (Write-down)/(write-back) of trade receivables 3.0 Closing balance 31/12/2018 32.5 Utilization (1.5) (Write-down)/(write-back) of trade receivables 2.5 Closing balance 31/12/2019 33.5 The allowance for impairment of trade receivables increased by € 1 million versus the prior year to reach € 33.5 million.

The carrying amount of these assets reflects their fair value.

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43. Sundry receivables and other current assets

Description 31/12/2019 31/12/2018 Change Advances to agents 10.2 10.6 (0.4) Allowance for impairment of advances to agents (1.2) (1.3) 0.1 Net advances to agents 9.0 9.3 (0.3) Sundry receivables 5.7 5.2 0.5 Allowance for impairment of sundry receivables (4.9) (5.0) 0.1 Net sundry receivables 0.8 0.2 0.6 Advances to suppliers 5.2 6.4 (1.2) Allowance for impairment of advances to suppliers (4.0) (4.0) - Net advances to suppliers 1.2 2.4 (1.2) Advances to authors 0.8 0.6 0.2 Advances to employees 0.5 0.7 (0.2) Advances to freelance staff - 0.1 (0.1) Tax receivables 6.0 1.3 4.7 Receivables from social security institutions 0.7 1.9 (1.2) Government grants --- Prepayments 8.7 9.1 (0.4) Release rights for book returns from customers 0.6 0.3 0.3 Total 28.3 25.9 2.4 Sundry receivables and other current assets increased by € 2.4 million versus 31 December 2018, due mainly to the increase in tax receivables (€ +4.7 million) for VAT receivables, partly offset by lower receivables from social security institutions (€ -1.2 million) and lower advances to suppliers (€ -1.2 million).

The table below shows the changes in the allowance for impairment relating to receivables subject to IFRS 7:

Allowance for impairment subject to IFRS 7

Opening balance 1/1/2019 10.3 Utilizations (0.2) Write-down/(write-back) of receivables subject to IFRS 7 - Closing balance 31/12/2019 10.1

The following items are shown in Note 13 (pursuant to IFRS 7). Tax receivables, receivables from social security institutions (€ 6.7 million in total), prepayments (€ 8.7 million), advances to authors and release rights for book returns from customers totaling € 1.4 million have not been considered for the purposes of IFRS 7 in 2019.

Carrying amount Change Description 31/12/2019 31/12/2018 Net advances to agents 9.0 9.3 (0.3) Net sundry receivables 0.8 0.2 0.6 Net advances to suppliers 1.2 2.4 (1.2) Advances to employees 0.5 0.7 (0.2) Advances to freelance staff - 0.1 (0.1) Total 11.5 12.7 (1.2)

The carrying amount of these assets reflects their fair value.

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44. Total net financial debt

Details of the net financial debt are provided below at carrying amount and fair value. Comparison of carrying amount vs. fair value

Carrying amount Fair Value 31/12/2019 31/12/2018 31/12/2019 31/12/2018

A Cash and cash equivalents 13.0 12.5 13.0 12.5 B Current financial receivables 13.9 1.4 13.9 1.4

C Current payables to banks (8.8) (13.6) (8.8) (13.6) D Current financial payables (65.8) (45.2) (65.8) (45.2) E Current financial liabilities from derivatives (0.2) (0.1) (0.2) (0.1) F Current financial debt (C+D+E) (74.8) (58.9) (74.8) (58.9) G Net current financial debt (A+B+F) (47.9) (45.0) (47.9) (45.0) H Non-current financial payables and liabilities (82.9) (141.6) (82.9) (141.6) I Non-current financial liabilities from derivatives (1.0) (1.0) (1.0) (1.0) L Non-current financial debt (H+I) (83.9) (142.6) (83.9) (142.6) M Net financial debt (G+L) (1) (131.8) (187.6) (131.8) (187.6) N Non-current liabilities from lease contracts (2) (150.9) 0.0 n.a. 0.0 O Current liabilities from lease contracts (2) (24.4) 0.0 n.a. 0.0 P Total net financial debt (M+N+O) (1) (307.1) (187.6) n.a. (187.6)

(1) For the definition of Net Financial Debt and Total Net Financial Debt, reference should be made to the paragraph "Alternative Performance Measures" in this Annual Report. (2) Liabilities from lease contracts do not include lease payables relating to the pre-existing IAS 17 (applied until the end of 2018) classified in keeping with prior years in the line Current financial payables (€ 0 million at 31 December 2019 and € 4.3 million at 31 December 2018).

The improvement of approximately € 56 million in net financial debt was attributable to the strong contribution of ordinary operations for € 106.9 million. This effect was only partly offset by the outlays for the distribution of dividends to the market (€ 31.1 million), capital expenditures incurred during the year (€ 16.4 million), and the amount paid for non-recurring expense (€ 4.3 million), most of which had already been recognized in prior years (Management Reporting). No changes were made in 2019 to the Loan Agreement concluded in August 2017 and then renegotiated on 10 October 2018. At 31 December 2019, Credit Line A (amortizing term) amounted to € 100 million and the Revolving Credit Line (€ 125 million) was drawn down for € 10 million. The above Loan Agreement envisages a single covenant for 31 December 2019 based on a maximum Leverage Ratio threshold (debt/EBITDA before IFRS 16 and before non-recurring expense/income) of 3.00x. At 31 December 2019, the leverage ratio was approximately 1.0x (down further from 1.2x at 31 December 2018).

The table below shows the carrying amount at 31 December 2019, broken down by maturity, of the Group’s financial instruments that are exposed to interest rate risk.

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Interest rate risk

FIXED RATE >0M<6M >6M<1 >1<2Y >2<3Y >3<4Y >4<5Y >5 Total

Loans ------

Total liabilities ------

Financial receivables 0.5 0.5 0.7 - - - - 1.7

Total assets 0.5 0.5 0.7 - - - - 1.7

TOTAL fixed rate 0.5 0.5 0.7 - - - - 1.7

FLOATING RATE >0M<6M >6M<1 >1<2Y >2<3Y >3<4Y >4<5Y >5 Total

Loans (54.7) (12.5) (25.0) (25.0) (35.0) - - (152.2) Bank overdrafts (8.8) ------(8.8) Leases (0.0) ------(0.0)

Total liabilities (63.5) (12.5) (25.0) (25.0) (35.0) - - (161.0)

Cash and cash equivalents 13.0 ------13.0 Financial receivables 12.9 - 0.1 - 0.1 - 0.1 13.2 Total assets 25.9 - 0.1 - 0.1 - 0.1 26.2

TOTAL floating rate (37.5) (12.5) (24.9) (25.0) (34.9) - 0.1 (134.7) The amounts shown in this table, unlike those reported in total net financial debt, exclude the fair value of derivatives (€ -1.2 million), the deferral from the effect of debt being accounted for using the amortized cost method (€ +3.4 million), and include the interest-bearing portion of non-current financial receivables (€ 1 million). The average annual rate on financial positions at 31 December 2019 is approximately 1% for the return on investments and 1.5% for the cost of borrowing. The cost of borrowing reflects the effect of outstanding hedging derivatives.

45. Share capital

The share capital at 31 December 2019 amounted to € 270 million, unchanged versus 31 December 2018. It is divided into 521,864,957 ordinary shares with no par value. At 31 December 2019, a total of 4,481,787 ordinary treasury shares were held (44,527 of which made available to the minorities of RCS Investimenti S.p.A. following the merger by incorporation of the latter with RCS MediaGroup S.p.A. in December 2017), worth € 26.6 million, corresponding to an average carrying amount of € 5.9 per ordinary share and representing 0.86% of the total share capital.

Outstanding ordinary Number of shares issued Ordinary treasury shares Total shares At 31/12/2018 517,322,483 4,542,474 521,864,957 Shares granted in exchange following merger by incorporation of RCS Investimenti S.p.A. 60,687 (60,687) At 31/12/2019 517,383,170 4,481,787 521,864,957

The main features of the ordinary shares consist of full voting rights and the right to attend ordinary and extraordinary shareholders’ meetings and to participate in the allocation of profit for the period/year and equity, if the company is wound up. These shares are registered shares.

In 2019, RCS MediaGroup S.p.A. distributed dividends of € 31 million (€ 0 at 31 December 2018).

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46. Legal reserve and voluntary reserve

The legal reserve at 31 December 2019 amounted to € 54 million (unchanged versus 31 December 2018). This reserve is increased through the compulsory allocation of at least one-twentieth of annual profit, until reaching an amount corresponding to one-fifth of share capital.

The optional reserve of € 87.3 million is an available reserve, unchanged versus the prior year.

47. Treasury shares and equity transactions

The treasury shares reserve amounted to € 26.6 million (€ 26.9 million at 31 December 2018) and is deducted from the Company's equity. The change is due to the allocation of RCS MediaGroup S.p.A.'s treasury shares to the minority shareholders of RCS Investimenti S.p.A. following the merger by incorporation in the prior year. Equity transaction reserve: this represents the higher amount paid for the acquisition of non-controlling interests with respect to the carrying amount of the corresponding equity interests acquired and is stated in Group equity for a total of € 142.9 million (down by € 0.1 million versus the prior year).

48. Other reserves

Description 31/12/2019 31/12/2018 Change Fair value reserve (2.1) - (2.1) Cash flow hedge reserve (0.9) (0.8) (0.1) Financial receivables reserve at FVOCI (1.6) (1.5) (0.1) Total (4.6) (2.3) (2.3)

“Other reserves” includes:

 the valuation reserve at 31 December 2019 amounted to € 2.1 million (virtually zero at 31 December 2018) and is composed of:

- the translation reserve (€ -0.3 million), used to record the exchange rate differences arising from the translation into euro of the financial statements of foreign subsidiaries;

- the recognition of actuarial gains and losses as part of the process for discounting post- employment benefits amounting to € -2.4 million and the related positive tax effect of € 0.6 million;

 the cash flow hedge reserve amounted to € -0.9 million (€ -0.8 million at 31 December 2018) and contains the effects directly recognized in equity of the fair value measurement of derivative financial instruments taken out to hedge the risk of fluctuations in interest rates as well as the positive tax effect of € 0.3 million (unchanged versus 31 December 2018);

 the financial assets reserve measured at fair value through other comprehensive income (OCI) came to € -1.6 million (€ -1.5 million at 31 December 2018). It includes the effects arising from the measurement of "Other non-current equity instruments". It was established in 2018 following entry into force of IFRS 9.

49. Dividends paid

The Shareholders' Meeting of RCS MediaGroup S.p.A., held on 2 May 2019, approved the distribution of a dividend of € 0.06 per outstanding ordinary share, gross of tax, with ex dividend date on 20 May 2019. The total amount paid for 517,367,926 ordinary shares in circulation was € 31,042,075.56. The payable date was 22 May 2019.

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Dividends paid in the period 31/12/2019 31/12/2018 Dividends paid to shareholders of RCS MediaGroup S.p.A. 31.0 - Dividends paid to non-controlling interests of subsidiaries 0.1 0.1 Total 31.1 0.1

50. Tax effect of other consolidated comprehensive income

The tax effect of profits and losses included in other comprehensive income is as follows:

At 31 December 2019 At 31 December 2018 Tax Tax Gross amount benefit/(expense Net amount Gross amount benefit/(expense Net amount Other comprehensive income (expense): ) )

Reclassifiable to profit (loss) for the period: Gains (losses) on foreign currency translation of foreign operations ------Gains (losses) on cash flow hedges ( 0.1) - ( 0.1) (0.4) 0.1 (0.3) Share of comprehensive income (expense) of equity-accounted investees ------

Not reclassifiable to profit or loss: Actuarial (loss)/gain on defined benefit plans ( 2.9) 0.7 ( 2.2) 0.5 ( 0.1) 0.4 Actuarial (loss)/gain on defined benefit plans relating to equity-accounted investees ------Gains (losses) from the FVOCI measurement of equity instruments ( 0.1) - ( 0.1) ( 1.5) - ( 1.5)

Total other comprehensive income (expense) (3.1) 0.7 (2.4) (1.4) 0.0 (1.4)

51. Employee benefits

These include the actuarial amount of benefits for employees following termination of the employment relationship.

Provisions in income statement Actuarial gains/(losses) Balance at Balance at Description Personnel expense Financial recognized in statement of 31/12/2018 31/12/2019 Current service cost from actuarial (income) Utilizations comprehensive income calculations expense

Provisions for post-employment benefits 36.2 0.8 (0.5) 0.6 (1.1) 2.9 38.9 Provisions for post-employment benefits for executives 0.7 0.7 Total 36.9 0.8 (0.5) 0.6 (1.1) 2.9 39.6

Post-employment benefits of € 38.9 million represent a type of employee remuneration, whose payment is deferred until termination of employment. These benefits accumulate in proportion to the length of service and represent an additional employment cost for the company. Post-employment benefits for executives of € 0.7 million refer mainly to the payment due under the national contract for executives of the Newspapers Italy segment, calculated on the basis of length of service and with reference to the employee’s remuneration in the last twenty-four months. Payment of this amount is deferred until termination of employment. These provisions have been valued with the assistance of independent actuaries. The amounts recognized in the income statement and statement of comprehensive income in 2018 with regard to the plans described above are as follows:

Provisions in income statement Actuarial gains/(losses) recognized 2018 Current Personnel expense Financial (income) in statement of comprehensive service cost from actuarial expense income Provisions for post-employment benefits 1.0llti (0.8) 0.5 (0.5) Provisions for post-employment benefits for executives Total 1.0 (0.8) 0.5 (0.5)

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The table below shows the actuarial assumptions used by the Group’s main companies for the calculation: Description 2019 2018 Discount rates 0.7% 1.6% Expected rates of salary increases Inflation Inflation The discounting rate was calculated using the Iboxx Eurozone Corporate AA index with an average remaining term consistent with the term of the collective being assessed. Since year 2016, the expected rates of salary increase are related to the forecast inflation rates. The following table shows the results of the sensitivity analysis of the discount rate risk upon a change of +/- 0.5%.

Sensitivity analysis of discount rate 2019 + 0.5% - 0.5% Post-employment benefits 38.9 37.4 40.4 Post-employment benefits for executives 0.7 0.7 0.7 Total 39.6 38.1 41.1

52. Provisions for risks and charges

Movements in the year were as follows:

Balance at Net Other Reclassifications Balance at Description Gross provisions Releases Utilizations 31/12/2018 provisions movements and adjustments 31/12/2019 Non-current: Provision for legal disputes 6.1 1.6 (1.7) (0.1) - (0.6) (0.8) 4.6 Other provisions for risks 10.1 0.4 - 0.4 - (0.2) 0.1 10.4 Total non-current 16.2 2.0 (1.7) 0.3 - (0.8) (0.7) 15.0 Current: Provision for legal disputes 8.1 0.5 (0.7) (0.2) - (0.6) 0.8 8.1 Other provisions for risks 21.2 2.4 (1.0) 1.4 (0.7) (1.3) (0.1) 20.5 Provision for returns to 2.1 - - 0.4 - - 2.5 Total current 31.4 2.9 (1.7) 1.2 (0.3) (1.9) 0.7 31.1 Total provisions for risks 47.6 4.9 (3.4) 1.5 (0.3) (2.7) - 46.1

Provisions for risks and charges decreased by € 1.5 million, down from € 47.6 million at 31 December 2018 to € 46.1 million at 31 December 2019. Net provisions of € 1.5 million consist of provisions for € 4.9 million and recoveries for € 3.4 million. Allocations include provisions for legal disputes of € 2.1 million, customer indemnities of € 0.4 million and provisions for sundry risks (€ 2.4 million) relating mainly to Unidad Editorial (€ 1.9 million), of which non- recurring expense of € 0.7 million. The recoveries originated mainly in the positive settlement outcome of legal disputes (€ 2.4 million) and in the recoveries of miscellaneous risks relating to the various areas of the Group, € 0.3 million of which classified as non-recurring income. Utilizations of € 2.7 million include € 1.2 million for the settlement of legal disputes and € 0.6 million for personnel expense, plus € 0.9 million for miscellaneous utilizations. Other movements include estimates of returns to receive for books sold, as well as recoveries classified almost entirely under personnel expense.

*** “Other provisions for risks and charges” at 31 December 2019 amounted to € 30.9 million. The main components of this item are:  € 12.2 million in provisions for personnel expense, mainly for personnel departures and terminations of employment;  € 16.7 million in provisions for risks, attributable mainly to Other Corporate Activities, Advertising and Sport and Unidad Editorial;

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 € 2 million in provisions for agents’ termination indemnities, payable to agents at the end of their mandate.

The returns to receive provision represents the estimated returns reasonably expected on the sale of books.

The legal disputes provision refers to probable charges resulting from disputes with third parties and other legal fees. At 31 December 2019, 48% of the outstanding disputes regarded civil lawsuits in Italy, 15% were work-related, and approximately 16% regarded publishing activities. The remainder is attributable mainly to the Spanish group, Unidad Editorial.

***

In accordance with IFRS, the non-current portion of provisions for risks was discounted to take account of the effect of the time value of money, using a rate of approximately 0.034% for the legal disputes provision, and 0.7% for the provision for agents’ termination indemnities, diversifying them based on their average financial duration. The provision for specific risks was not discounted as the reference rate, for the expected average duration of the provision, is negative. The sensitivity analysis of the discount rate risk, assuming a parallel change of +/- 0.5%, showed no significant effects.

For the sake of full disclosure, please refer also to the comment on “Information on ongoing disputes” in the Report on Operations of the RCS Group in this Annual Report.

53. Other non-current liabilities

The item, unchanged versus the prior year and totaling € 0.9 million, includes a tax liability as a portion of a non-current tax asset booked following an IRES reimbursement request. This item does not include non-current financial liabilities. In application of IFRS 7 requirements, tax liabilities were not included.

54. Trade payables

Description Notes 31/12/2019 31/12/2018 Change Payables to suppliers 156.4 156.9 (0.5) Payables to authors 0.4 0.3 0.1 Payables to agents 16.8 17.1 (0.3) Payables to associates 6.6 7.4 (0.8) Payables to parents - 0.2 (0.2) Payables to associates and joint ventures 9.5 13.1 (3.6) Payables to associates 2.3 2.5 (0.2) Advances from subscribers 6.4 6.9 (0.5) Advances from customers 0.3 0.3 - Total 13198.7204.7(6.0)

Trade payables decreased across almost all items by an overall € 6 million versus 31 December 2018. The main decreasing items are payables to associates and joint ventures (€ -3.6 million), payables to associates (€ -0.8 million) and payables to suppliers (€ -0.5 million). The reduction in payables to associates and joint ventures is due mainly to the Unidad Editorial group and relates in particular to transactions with the Bermont group. The decrease in payables to associates affected the Magazines Italy (€ -0.4 million) and Newspapers Italy (€ -0.4 million) areas; lastly, trade payables decreased mainly in the Corporate segment of RCS MediaGroup.

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The carrying amount of trade payables reflects their fair value, also in accordance with the application of IFRS 7.

55. Sundry payables and other current liabilities

Description 31/12/2019 31/12/2018 Change Payables to employees 28.1 30.2 (2.1) Tax payables 16.2 12.8 3.4 Payables to social security institutions 12.8 12.9 (0.1) Deferred income 23.9 19.3 4.6 Sundry payables 6.5 6.7 (0.2) Security deposits received 1.0 0.5 0.5 Total 88.5 82.4 6.1 This item increased by € 6.1 million versus the prior year, due mainly to the greater contribution from deferred income (€ +4.6 million) and payables to the tax authorities (€ +3.4 million). Payables to employees decreased by € 2.1 million. The increase in deferred income is attributable mainly to the Advertising and Sport area (€ +2.4 million) and in particular to Sporting Events (€ +3 million). Deferred income also increased in the Newspapers Italy area (€ +0.9 million) and in the Magazines Italy area (€ +0.7 million). The increase in tax payables of € +3.4 million is due mainly to the Advertising and Sport area and refers to VAT payables. Payables to employees fell, instead, by € 2.1 million, partly as a result of lower payables for untaken holiday entitlement.

The following items are shown in Note 13 (pursuant to IFRS 7). The carrying amount of these liabilities reflects their fair value. Carrying amount Description 31/12/2019 31/12/2018 Change Payables to employees 15.5 16.9 (1.4) Sundry payables 6.5 6.6 (0.1) Security deposits received 1.0 0.5 0.5

To t a l 23.0 24.0 (1.0) Tax liabilities and payables to social security institutions (€ 29 million) have not been included. Payables to employees differ from those reported in the financial statements because IFRS 7 ignores both untaken holiday entitlement (€ 12.7 million) and deferred income (€ 23.9 million).

56. Net change in financial payables and other financial assets reported in the statement of cash flows

Changes in financial payables and other financial assets are shown below. The table reconciles the cash flows shown in the statement of cash flows with the total changes recorded in the period under review in the "Summary statement of financial position".

131

1/1/2019 Non-monetary changes 31/12/2018 IFRS 16 Cash flow Net increases Changes in Other non- 31/12/2019 Reclassifications impacts leases fair value monetary changes Financial payables 186.8 - (35.2) (4.3) - - 1.5 148.8 Current financial receivables (1.4) - (11.5) - - - ( 1.0) (13.9) Derivative liabilities 1.1 - - - - 0.1 - 1.2 Net change in financial payables and other financial assets 186.5 - (46.7) (4.3) - 0.1 0.5 136.1 Cash and cash equivalents 12.5 - 0.5 - - - - 13.0 Current payables to banks (13.6) - 4.9 - - - - (8.7) Cash and cash equivalents (1.1) - 5.4 - - - - 4.3 Net financial debt 187.6 - (52.1) (4.3) - 0.1 0.5 131.8

Liabilities from leased assets - 189.4 (26.4) 4.3 7.3 - 0.7 175.3

As required by IFRS, current bank loans and overdrafts form part of the change in cash and cash equivalents.

57. Commitments

The principal guarantees given are listed below. Trends in the main guarantees given in 2019 are as follows:

 Sureties and endorsements provided totaled € 12.7 million, down by € 28.8 million versus the prior year. The item includes the guarantees given to the Public Administration and other public bodies for prize contests, concessions and disputes. Versus the prior year, this item no longer includes amounts from to lease contracts for properties subject to IFRS 16 Leases (€ -17.7 million), following the recognition of liabilities from lease contracts.  Other guarantees totaled € 2.5 million, or € 0.5 million less than at 31 December 2018, due mainly to the cancellation of other guarantees with related parties. The item includes the indemnity issued to Agenzia per lo Sviluppo dell’Editoria and to SIAE for reimbursements received.  Commitments amounted to € 6.8 million. The item includes existing and potential contractual commitments relating to personnel, which refer solely to agreements in force at 31 December 2019, subject to contractual clauses at that date under the exclusive control of RCS. These commitments are entered into with related parties for the entire amount. For additional information regarding the commitments to key management personnel of RCS MediaGroup S.p.A., refer is made to the Remuneration Report published on the website www.rcsmediagroup.it..

As part of disposals or contributions of equity interests or businesses, the RCS Group has given guarantees still in force in relation to tax, social security and employment. Such guarantees were issued according to market practices and conditions.

58. Information pursuant to Article 149-duodecies of CONSOB Issuer Regulation

The table below, prepared in accordance with Article 149-duodecies of the CONSOB Issuer Regulation, reports the fees earned in 2019 for audit and other services provided by the independent auditors and members of their network.

132

(€ millions) Party performing the service Recipient Fees paid in 2019

Audit Deloitte & Touche S.p.A. RCS MediaGroup S.p.A. 0.4 Deloitte & Touche S.p.A. Italian subsidiaries 0.1 Deloitte Network Foreign subsidiaries 0.4

Attestation services (1) Deloitte & Touche S.p.A. Italian companies 0.0 Deloitte Network Foreign subsidiaries 0.0

Other services (1) Deloitte & Touche S.p.A. RCS MediaGroup S.p.A. 0.0 Deloitte Network Foreign subsidiaries 0.0

Total 1.0

(1) Attestation services refer mainly to the Consolidated Non-Financial Statement (€ 34 thousand), while Other services refer mainly to tax compliance activities for a Spanish subsidiary (€ 45 thousand) and methodological support activities for IFRS 16 (€ 22 thousand).

Milan, 26 March 2020

For the Board of Directors:

Chairman and Chief Executive Officer Urbano Cairo (signed on the original)

133

CERTIFICATION OF THE FINANCIAL REPORTING MANAGER AND THE CHIEF EXECUTIVE OFFICER

Certification of the consolidated financial statements pursuant to Article 81-ter of CONSOB Regulation no. 11971 dated 14 May 1999 as subsequently amended and supplemented

- the adequacy in relation to the company’s characteristics and - the effective application,

of the administrative and accounting procedures in preparing the 2019 Consolidated Financial Statements.

2. The assessment of the adequacy of the administrative and accounting procedures for preparing the consolidated financial statements as at and for the year ended 31 December 2019 was carried out on the basis of the process defined by RCS MediaGroup S.p.A., in line with the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organizations of the Treadway Commission as the reference framework generally accepted at international level.

3. We also certify that: 3.1 the consolidated financial statements of RCS MediaGroup S.p.A. at 31 December 2019: a. have been prepared in accordance with the International Financial Reporting Standards endorsed by the European Union pursuant to EC Regulation no. 1606/2002 of the European Parliament and Council dated 19 July 2002; b. correspond to the books and accounting records; c. are suitable to give a true and fair view of the Issuer’s financial position, results of operations and cash flows and those of the group of companies included in the consolidation.

3.2 The report on operations contains a reliable analysis of the performance and results of operations, and of the situation of the issuer and the group of companies included in the consolidation, together with a description of the principal risks and uncertainties to which they are exposed.

Milan, 26 March 2020

Chairman and Chief Executive Officer Financial Reporting Manager Urbano Cairo Roberto Bonalumi (signed on the original) (signed on the original)

134 SEPARATE FINANCIAL STATEMENTS

135

FINANCIAL STATEMENTS OF RCS MEDIAGROUP S.P.A.

136

Income statement (^)

(^) Also pursuant to CONSOB Resolution no. 15519 of 27 July 2006.

The notes form an integral part of these financial statements.

137

Statement of comprehensive income

(€) Notes 2019 2018

Profit (loss) for the year 38 39,103,389 41,929,973

Other comprehensive income (expense): - will be subsequently reclassified to profit/(loss) for the year Gains (losses) on cash flow hedges ( 651,179) ( 1,475,317) Reclassification of gains (losses) on cash flow hedges to profit or loss 568,823 1,135,346 Tax effect on cash flow hedges 19,765 81,593

- will not be subsequently reclassified to profit/(loss) for the year

Actuarial (loss)/gain on defined benefit plans ( 2,246,725) 518,884 Tax effect on actuarial valuation defined benefit plans 539,214 ( 124,532) Gains (losses) from the fair value measurement of other equity instruments ( 117,339) 408,228

Total other comprehensive income (expense) ( 1,887,441) 544,202

Total comprehensive income (expense) 37,215,948 42,474,175

The notes form an integral part of these financial statements.

138

Statement of financial position (^)

(1) The effects of the new IFRS 16 on balance sheet items resulted at 31 December 2019 in: - the recognition under rights of use on leased assets for a total of € 134 million; - the recognition of current and non-current financial liabilities from lease contracts amounting to approximately € 19.2 million and € 137.5 million respectively; - the recognition of current and non-current financial assets from lease contracts amounting to approximately € 1 million and € 10.4 million respectively; - a decreasing impact on initial equity of € 7.5 million, net of the accounting effects of the tax component, the latter concurrently recorded under “Deferred tax assets” of € 3.1 million. (^) Also pursuant to CONSOB Resolution no. 15519 of 27 July 2006. The notes form an integral part of these financial statements. 139

Statement of cash flows (^) (€ millions) Notes 2019 2018

A) Cash flows from operations Profit (loss) before tax from continuing operations 46.5 50.0 Profit (loss) from assets held for sale and discontinued operations - - Amortization, depreciation and impairment losses 20 34.4 24.5 (Gains) losses and other non-monetary items - ( 1.4) Write-downs/write-backs of net financial fixed assets 23 2.0 4.6 - of which with related parties 1.9 2.2 Net financial income (expense) including dividend income 21 ( 11.4) ( 14.8) - of which with related parties ( 20.0) ( 22.6) Decrease in provisions ( 2.2) ( 2.0) Changes in working capital ( 3.2) ( 4.4) - of which with related parties ( 1.2) ( 2.1) Income tax (paid) received 3.3 3.6 Total 69.4 60.1 B) Cash flows from investing activities Acquisition of investments (net of dividends received) 14.8 14.8 - of which with related parties 14.8 14.2 Capital expenditure in property, plant and equipment and intangible fixed assets ( 11.4) ( 7.5) Proceeds from the sale and liquidation of investments 0.9 - Proceeds from the sale of property, plant and equipment and intangible fixed assets - - Other changes - - Total 4.3 7.3 Free cash flow (A+B) 73.7 67.4 C) Cash flows from financing activities Net change in financial payables and other financial assets 44 ( 17.5) ( 63.8) - of which with related parties 5.1 32.3 Financial interest collected/paid ( 2.0) ( 0.5) - of which with related parties 4.5 7.0 Dividends paid 38 ( 31.0) - Liabilities from leased assets (*) 44 ( 18.4) - Total ( 68.9) ( 64.3) Net increase (decrease) in cash and cash equivalents (A+B+C) 4.8 3.1 Opening cash and cash equivalents ( 12.9) ( 16.1) Closing cash and cash equivalents ( 8.1) ( 13.0) Increase (decrease) for the year 4.8 3.1

ADDITIONAL DIS CLOS URES OF THE S TATEMENT OF CAS H FLOWS (€ millions)

Opening cash and cash equivalents consisting of ( 12.9) ( 16.1) Cash and cash equivalents 0.4 0.7 Current payables to banks ( 13.3) ( 16.8) Closing cash and cash equivalents ( 8.1) ( 13.0) Cash and cash equivalents 0.6 0.4 Current payables to banks ( 8.7) ( 13.4) Increase (decrease) for the year 4.8 3.1 (^) Also pursuant to CONSOB Resolution no. 15519 of 27 July 2006. (*) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted at 31 December 2019 in the reclassification of lease payments to cash flows from financing activities, while previously such payments were included in cash flows from operations, for a total of € 19.9 million. Payment of the principal portion of finance lease payments under IAS 17, following application of the new IFRS 16, was reclassified from "Capital expenditure in property, plant and equipment and intangible assets" to "Liabilities from leased assets", for total outlays of € 2.1 million. The overall impact of the application of IFRS 16 on cash flows from financing activities amounted to € 22 million. The notes form an integral part of these financial statements.

140

Statement of changes in equity

(€ millions) Actuarial Financial Cash Retained valuation of Profit Sh ar e Legal Treasur receivables flow Merger Optional earnings/losse post- (loss) for Equ i t y capital reserve y shares reserve at hedge reserve reserve s carried employment the year FVOCI reserve forward benefit s Note 38 Note 38 Note 38 Note 38 Note 38 Note 38 Note 38 Note 38 Note 38 Note 38 Balance at 31/12/2018 270.0 54.0 ( 26.9) 0.4 ( 0.8) ( 0.1) 0.3 87.3 25.2 41.9 451.3 Allocation of net profit at 31.12.2018 of RCS MediaGroup S.p.A.: - to retained earnings (losses carried forward) 10.9 ( 10.9) - - to dividends ( 31.0) ( 31.0) - merger reserve Digicast S.p.A. and RCS Digital Ventures S.r.l. 6.5 6.5 - reclassification under reserves 0.1 0.2 ( 0.3) - - exchange of treasury shares for former RCS Investimenti shares 0.3 ( 0.3) - - application of IFRS 16 at 1 January 2019 ( 7.4) ( 7.4) Total comprehensive income (expense) ( 0.1) ( 0.1) ( 1.7) 39.1 37.2 Balance at 31/12/2019 270.0 54.0 ( 26.6) 0.4 ( 0.9) ( 1.6) 6.5 87.3 28.4 39.1 456.6

The notes form an integral part of these financial statements.

Further details are found in the appropriate annexes.

141 The following statement shows the availability and possible distribution of the reserves that comprise equity, as required by Article 2427, 7-bis) of the Italian Civil Code:

Permitted Equity Amount Permitted use Utilizations in past three years distribution other (€ millions) to cover losses reasons

Share capital 270.0 B

Legal reserve 54.0 B Treasury shares (26.6) Cash flow hedge reserve (0.9) Actuarial valuation of post-employment benefits (1.6) Optional reserve 87.3 A,B,C 84.2 Merger reserve 6.5 A,B,C 6.5 Financial receivables reserve at FVOCI 0.4 Prior-years’ retained earnings 28.4 A,B,C 1.8 Profit (loss) for the year 39.1 A,B,C 39.1 Total 456.6 131.6 - -

Key: A: for share capital increase B: to cover losses C: dividends

142 NOTES TO THE SEPARATE FINANCIAL STATEMENTS

143 FORMAT, CONTENT AND OTHER INFORMATION ON THE FINANCIAL STATEMENTS

1. Corporate information

The financial statements of RCS MediaGroup S.p.A. (hereinafter also "the Company") as at and for the year ended 31 December 2019 were approved and authorized for publication by the Board of Directors on 26 March 2020, and will be submitted for approval by the shareholders in the Shareholders’ Meeting.

RCS MediaGroup S.p.A. is a publicly listed company at the head of the RCS Group, and is subject, as from 12 December 2019, to the direction and coordination of Cairo Communication S.p.A..

RCS MediaGroup S.p.A., in addition to managing and coordinating its subsidiaries, offering centralized services and financial management, carries out its activities within the main publishing, television and advertising operations of the RCS Group.

The entity which prepares the consolidated financial statements of the largest body of entities, of which the Company forms part as a subsidiary is U.T. Communications S.p.A., with registered office in Via Montenapoleone 8, Milan, where a copy of the consolidated financial statements is also available The entity which prepares the consolidated financial statements of the smallest body of entities, of which the Company forms part as a subsidiary is Cairo Communication S.p.A., with registered office in Corso Magenta 55, Milano, where a copy of the consolidated financial statements is also available

2. Format and content

The 2019 financial statements represent the separate financial statements of RCS MediaGroup S.p.A., prepared under the International Financial Reporting Standards (IFRS) issued or revised by the International Accounting Standards Board and endorsed and adopted by the European Union.

These financial statements were audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree no. 39 of 27 January 2010 and Regulation (EU) no. 537/214. The assignment has been awarded for a period of nine financial years (2018 - 2026), pursuant to Article 17, par. 1 of the above Decree.

The presentation currency of these separate financial statements is the Euro, which is also used to present the RCS Group's consolidated financial statements. Unless otherwise specified, all amounts shown in these notes are stated in Euro.

3. Reporting formats

RCS MediaGroup S.p.A. has adopted:  the statement of financial position in which assets and liabilities are separately classified as current and non-current;  the income statement in which income and expense are classified by nature;  the statement of comprehensive income which presents the revenue and cost items that are not included in profit or loss for the year but are reflected directly in equity;  the statement of cash flows using the indirect method, whereby profit (loss) for the year before tax is adjusted for the effects of non-monetary items, of any deferral or provision for past or future operating receipts or payments and of revenue or costs associated with cash flows from (used in) investing or financing activities;  the statement of changes in equity, in which the individual reserves are presented separately, with their movements and transactions carried out with shareholders.

With regard to CONSOB Resolution no. 15519 of 27 July 2006, significant related party transactions and non-recurring items were reported separately on the face of the financial statement schedules.

144 4. Basis of preparation - use of going concern assumption in preparing the separate financial statements

The 2019 separate financial statements of RCS MediaGroup S.p.A. were prepared on a going concern basis, as detailed in the Directors’ Report on Operations, and in accordance with the requirements of document no. 2 of 6 February 2009 issued jointly by the Bank of Italy, CONSOB and ISVAP.

5. Accounting policies

These financial statements, prepared in accordance with the provisions of CONSOB Resolution no. 11971/1999 as subsequently amended, including in particular those introduced by Resolutions no. 14990 of 14 April 2005 and no. 15519 of 27 July 2006, contain the financial statements and explanatory notes of the parent company RCS MediaGroup S.p.A., prepared in accordance with the IFRS international accounting standards issued by the IASB (International Accounting Standards Board) and adopted by the European Union. The term IFRS encompasses all the International Financial Reporting Standards (IFRS), all the International Accounting Standards (IAS) and all the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC, formerly IFRIC), previously known as Standing Interpretations Committee (SIC). Specifically, it is noted that the IFRS were consistently applied to all of the periods presented herein this document, with the exception of the comments in Note 6.

The separate financial statements were prepared in compliance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and endorsed by the European Union.

With regard to CONSOB communication no. DEM/11070007 of 5 August 2011, it is also noted that the Company does not hold bonds in its portfolio issued by central or local governments or government authorities, and, therefore, it is not exposed to the risk of market fluctuations related to the aforementioned bonds.

In 2019, RCS MediaGroup S.p.A. benefited from special rates for the amount of € 80,527, pursuant to Article 28 of Law no. 416 of 5 August 1981 "Regulations governing publishers and publishing benefits" relating to certain dedicated telephone lines. Pursuant to Article 1 par. 125 to 129 of Law no. 124 of 4 August 2017, with regard to the obligations to publish grants, contributions, paid assignments and, in any case, economic benefits of any kind received from the PA, and to Article 3-quater, par. 2, of Decree Law no. 135/2018 (Simplification Decree), it should be noted that the Allocating Bodies are required to publish the contributions in the National Aids Register, available at: https://www.rna.gov.it/sites/PortaleRNA/it_IT/trasparenza on government aid and de minimis aid. It should also be noted that amounts relating to commercial transactions carried out during the year that involve a consideration were not taken into account. The financial statements were prepared in accordance with the conventional historical cost method, except for a number of financial assets and liabilities, including derivative instruments, which are measured at fair value.

This section summarizes the most important accounting policies adopted by RCS MediaGroup S.p.A..

145 Revenue

Revenue is recognized in the income statement when the criteria set out in IFRS 15 are met, specifically:  revenue from the sale of goods is considered to have been earned and is recognized gross of the distribution premiums at the time of the transfer of ownership, which conventionally coincides:  with the publication date for newspapers and magazines, recorded at the value reasonably estimated on the basis of a consignment contract,  and the shipment date for book publications, recorded net of reasonably estimated returns;  revenue from the sale of magazine subscriptions is recognized on the basis of the magazines published and distributed during the period;  revenue from the sale of advertising space on traditional media is recognized according to the issue date of the publications;  advertising revenue generated by digital operations is recognized at the time of the broadcasting or publication of the message which normally (banner) coincides with the publication date;  revenue from services is recognized on an accruals basis, as set out in the respective contracts;  royalties are recognized on an accruals basis, as set out in the respective contracts;  dividends are recognized on the payable, i.e. the date of the shareholders’ resolution for allocation;  revenue is shown net of returns, discounts and allowances.

Costs

Government grants

Government grants are recognized when there is reasonable assurance that they will be received and that all the conditions attached to them are satisfied.

Financial income and expense

Financial income and expense are recognized in the income statement through the effective interest method. Interest is recognized using the effective interest method. Financial income and expense are shown in Note 11 in accordance with the categories defined in IFRS 9 and in the manners set out by IFRS 7.

Income tax

Income tax corresponds to the sum of deferred and prepaid tax. Current tax is recorded and determined on the basis of a realistic estimate of taxable income in accordance with current tax regulations. The charge or income relating to current income tax for the year is determined using the tax rules currently in force. RCS MediaGroup S.p.A. has made an Italian group tax election, as allowed by Legislative Decree no. 344 dated 12 December 2003. Under the scheme, an entity may determine a single tax base by adding up the income and losses of all the participating companies. Deferred tax assets and liabilities are determined on the basis of temporary differences between the carrying amount of assets and liabilities reported for accounting purposes and the corresponding amounts that are applicable for tax purposes. Deferred tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized, while deferred tax liabilities must be recognized for all taxable temporary differences. They are calculated at the tax rates that are expected to apply to the period when the tax asset is realized or the tax liability is settled. The value of deferred tax assets recognized in the financial statements is reviewed annually.

146 Statement of cash flows

Property, plant and equipment

Property, plant and equipment are assets recognized in the financial statements as they satisfy the requirement of producing probable future economic benefits for the Company, and of having a reliably estimated cost. These are recorded in the financial statements at purchase cost (including ancillary expense), if acquired separately, or at production cost (including direct and indirect production expense), if produced internally, or at fair value at the date of acquisition if acquired through business combinations. Assets held for sale are classified separately under non-current assets held for sale and no longer depreciated, but impaired to their fair value if the latter is less than their carrying amount. Property, plant and equipment are systematically depreciated (except for the component relating to land and assets held for sale). Depreciation is calculated on a straight-line basis using rates considered to reflect the estimated useful lives of the assets; assets acquired during the year are depreciated on a pro-rata basis, taking account of the asset’s effective use during the year. The useful life and the amortization criteria applied are reviewed on a regular basis and where change is deemed necessary, the amortization rate is restated in accordance with the prospective method. Improvement expenditure is recorded as an asset only when it can be recovered through expected future economic benefits and can be reliably estimated. Ordinary maintenance costs are charged to the income statement in the year in which they are incurred. Any dismantling costs are estimated and added to the cost of the asset, with a corresponding credit recognized in a provision for dismantling charges. They are then depreciated over the residual useful life of the asset concerned. The accounting treatment of assets acquired under lease contracts, as regards the effects on the statement of financial position, statement of cash flows and income statement, is in line with the provisions of IFRS 16, which came into force on 1 January 2019, in the manner and effects explained in Note 6 and Note 43. This standard basically requires such assets to be recognized at cost among assets owned by the Group and depreciated over the estimated useful life, on the same basis as other property, plant and equipment. The principal portion of lease payments is deducted from the associated payable recognized as a liability, while the interest portion of payments is recognized on an accrual basis as a financial expense in the income statement. The carrying amount of an item of property, plant and equipment is derecognized on disposal or fully impaired when no future economic benefits are expected from its use or disposal. Any associated gains or losses (calculated as the difference between the net disposal proceeds and the carrying amount of the item) are included in the income statement at the time of the abovementioned derecognition and classified as other operating revenue and income or sundry operating expense. Property, plant and equipment are reviewed if there are indicators of impairment to identify any associated losses as described in the section “Impairment of non-financial assets”.

147 Investment property

This item comprises property held to earn rentals or for invested capital appreciation or both, generating cash flows that are largely independent of the other assets held by the Company. Investment property is recognized at cost, inclusive of any directly attributable expenditure, and is held to earn rental income or for capital appreciation or both. Investment property (except for the land component) is systematically depreciated. Depreciation is calculated on a straight-line basis using rates considered to reflect the estimated useful lives of the assets. Assets acquired during the year are depreciated on a pro-rata basis, taking account of the asset’s effective use during the year. Improvement expenditure is added to the carrying amount of the assets concerned only when it can be reliably estimated and can be recovered through the associated expected future economic benefits. Transfers to investment property are made when, and only when, there is a change in use indicated by events such as: the end of owner-occupation, the commencement of an operating lease to another party or the completion of construction or development. Transfers from investment property are made when, and only when, there is a change in use indicated by events such as the commencement of owner-occupation. Investment property is tested if there are indicators of impairment to identify any associated losses as described in the section “Impairment of non-financial assets”. This item also includes any rights of use deriving from lease contracts and referring to assets that satisfy the definition of investment property.

Intangible assets

Intangible assets are resources that are clearly identifiable and controllable by the Company, from which it expects future economic benefits. These are recorded at purchase cost if acquired separately, and are capitalized at fair value at the date of acquisition if acquired through business combinations. Advertising costs, start-up and expansion costs, research costs, internally-generated trademarks and publications are not capitalized. Other intangible assets generated internally as a result of developing the Company’s products are capitalized only if all the following conditions are met:  the asset is identifiable;  it is probable that the asset developed will generate future economic benefits;  the costs of developing the asset can be measured reliably. Intangible assets with finite useful life are systematically amortized on a straight-line basis over that life. Goodwill and intangible assets with indefinite useful lives are not amortized but periodically tested for impairment, as described in the section “Impairment of non-financial assets”. If the recoverable amount is lower than the carrying amount, the asset is impaired accordingly. The useful life and the amortization criteria applied are reviewed on a regular basis and where a material change compared to previous circumstances is found, the asset can be transferred from indefinite to finite useful life or vice versa and, for assets with finite useful life, the amortization rate can be modified in accordance with the prospective method. The Company holds that there is a trigger event when an asset with indefinite useful life is classified as an asset with finite useful life in light of the aforementioned review. Additionally, if expense with future economic benefits is incurred but does not qualify for recognition as intangible assets, it is charged to the income statement when incurred, or in the case of acquiring goods, when the Group has a right to control such goods, or in the case of the supply of services, when the Group receives the services.

Rights of use on leased assets

The rights of use refer to lease contracts concluded by the Company as lessee, with a duration of more than 12 months and not low value. A contract is or contains a lease if, in exchange for consideration, it conveys the right to control the use of an identified asset for a specified period of time.

148 Any rights of use that meet the definition of investment property must be shown in the balance sheet as investment property Impairment of non-financial assets

The Company assesses the existence of impairment (impairment tests) on assets recorded in the balance sheet (tangible and intangible assets and investments) at each balance sheet date. In the case of goodwill, other intangible assets with indefinite useful life and intangible assets not yet available for use, the Company makes this assessment at least once a year, even in the absence of impairment indicators. In the case of tangible assets as well as investments and intangible assets with finite useful life, the recoverable value is assessed whenever trigger events arise from the periodic analysis carried out at each reporting date. The recoverability of the carrying amounts is tested by comparing them with the higher of fair value net of disposal costs and value in use. For the purpose of the impairment test, the book value of the CGUs undergoing test consists of net capital employed, i.e. equity adjusted by the net financial position. The fair value is determined based on the market price of the asset, or of an identical asset, traded on an active market, net of disposal costs. In the absence of a market listing, reference may be made to a binding sales agreement, or to the price of the most recent transaction with similar characteristics. In the absence of market value, estimates are used based on data available on the market.

Value in use is defined as the present value of estimated future cash flows expected to arise from the continuing use of an asset (the asset subject to impairment), or from its cash-generating unit, and from disposal at the end of its useful life. The cash-generating units have been identified in line with the Company’s organizational structure and business, as the smallest groups of assets that generate independent cash inflows from continuing use of the relevant groups of assets, or groups of cash generating units, which benefit from combination synergies. If the recoverable value determined above is lower than the value of the asset recorded in the financial statements, the asset would be immediately adjusted and aligned with the recoverable value by recording a write-down in the income statement. If the impairment of an asset other than goodwill is subsequently reduced or no longer exists, the carrying amount of the asset is restored until the new estimate of its recoverable value has been made and up to the limit of the value of the asset previously recorded in the financial statements. The reversal of the impairment loss is also recorded in the Income Statement.

Investments in subsidiaries, associates and joint ventures

Investments in subsidiaries, associates and joint ventures are stated at cost and tested for impairment if there is such evidence. These tests are carried out whenever any investments display evidence that they might be impaired. These investments are measured using the Discounted Cash Flow model, adopting the methods described in the section “Impairment of assets”, or at fair value, calculated as the amount that could be obtained from the sale of the investments in a free market transaction between knowledgeable and available parties, less sales costs. If it is necessary to recognize an impairment loss, it is recognized in the income statement in the period in which it is identified.

Inventory

Financial assets

149 the transaction. Management determines upon initial recognition how financial assets are to be classified, identified in Note 11 in accordance with IFRS 9 criteria and as required by IFRS 7. After initial recognition, financial assets are measured in accordance with their classification. More specifically:  Receivables and other financial assets are measured at amortized cost using the effective interest method, in other words, recognizing in profit or loss the interest calculated using a rate that exactly discounts the financial asset’s estimated future net cash flows to its carrying amount. Losses are recognized in profit or loss when the loans and receivables are derecognized or when they become impaired. Receivables are impaired and recognized at their estimated realizable value (fair value) by means of the allowance for impairment directly deducted from their carrying amount. Receivables are impaired when there is objective evidence that the receivable is unlikely to be collected and also on the basis of past experience and statistics (expected losses). If, in a subsequent period, the amount of previous impairment losses decreases, the carrying amount of the assets is reinstated up to the amount that would have derived from applying the amortization cost, if the impairment loss had not been recognized. The Company mainly reports in this category assets due within twelve months, which are therefore recognized at nominal amount as an approximation of amortized cost. If the terms of payment are longer than normal market terms and the loan or receivable does not earn interest, the amount recognized in the financial statements contains an implicit time value component and so must be discounted by recognizing the discount in profit or loss. Loans and receivables expressed in foreign currencies are converted at closing rates, and the gains or losses from their translation are taken to profit or loss.  Other non-current equity instruments (ex available for sale) are initially recognized at cost (fair value of the initial consideration given in exchange), increased by any relating directly-attributable transaction costs. As the Company does not trade equities, it has adopted the option of presenting subsequent changes in the fair value of the investment among other comprehensive income. Accordingly, only dividends are recognized in the income statement (unless they clearly represent a refund of the investment). In addition to changes in fair value, any capital gains and losses realized on the sale of Other non-current equity instruments are recognized in the statement of comprehensive income and never pass through the income statement. As this option is final and can be exercised for each investment, any exceptions at the initial recognition stage will be shown in the comment on this item. All the investments in equity instruments must be measured at fair value. In the case of securities traded on active markets, fair value is determined with reference to the closing price on the last trading day of the reporting period. In the case of assets for which there is no active market, fair value is determined on the basis of the price used in recent transactions between independent parties in instruments that are substantially the same, or using other valuation techniques, such as income valuations or based on discounted cash flow analysis. However, in a few circumstances only, cost may represent an adequate estimate of fair value if, for example, the latest information available to measure fair value is insufficient, or if there is a wide range of possible fair value measurements. Cost is never the best estimate of fair value for investments in listed equity instruments. As the Company does not trade equities, Other non-current equity instruments are equivalent to investments in equity instruments below 20% in which the Company does not exercise significant influence.  Financial assets, designated upon initial recognition at fair value through profit or loss are measured at fair value at the reporting date; in the case of unquoted instruments, this amount is determined using generally accepted valuation techniques based on market information. Fair value gains and losses on assets in this category are recognized in profit or loss. At 31 December 2019, the Company did not hold any financial assets, which are initially recognized at fair value.

150 Derivative financial instruments

Derivatives are classified as “Hedging derivatives” when they meet the requirements for hedge accounting, otherwise, even if they have been taken out with the intent of managing exposure to risks, they are recognized as “Non-hedging derivatives”. In accordance with the provisions of IFRS 9, the Company has availed itself of the provisional option to continue to apply the methods and requirements established for hedge accounting by IAS 39, previously in force, and thus define the hedge effectiveness relationship relating to the derivative financial instrument. Specifically, financial instruments are accounted for based on the hedge accounting methods adopted by the Company, only when their relationship with the hedged item is formally documented and the hedge effectiveness is high (effectiveness test). The effectiveness of hedging transactions is documented both at the inception of the hedge and periodically thereafter (quarterly or at least at every reporting date) and is measured by comparing changes in the hedging instrument’s fair value with those in the hedged item (dollar offset method) for back testing effectiveness. Prospectively testing effectiveness involves developing aggregate discounted cash flows by year for the hedged item and its hedging derivative (regression method). When hedging derivatives hedge the risk of change in fair value of the hedged instruments (fair value hedges), the derivatives are recognized at fair value through profit or loss. The effective portion of changes in the fair value of cash flow hedges, which hedge the exposure to changes in cash flows for the items hedged, is recognized in other comprehensive income and presented in the hedging reserve. The ineffective portion of changes in the fair value of the derivative financial instrument is immediately recognized in profit/(loss) for the year. If the derivative instrument is sold or no longer qualifies as an effective hedge of the risk for which it was taken out or if the underlying transaction is no longer highly probable, the related portion of the hedging reserve is immediately reclassified to profit or loss. Regardless of classification, all derivatives are stated at fair value, determined using valuation techniques based on market data (such as discounted cash flows, forward exchange rate method, Black-Scholes model and its variants). Specifically, this value is determined by the “Administration and Finance” department, using specific pricing instruments based on market parameters (i.e. interest rates, exchange rates and volatilities), recognized on individual valuation dates and compared with the figures communicated by the counterparties.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, bank and post office on-demand deposits and financial investments carried out as part of the treasury management function which have a short-term maturity, are highly liquid and subject to an insignificant risk of changing value. They are stated at nominal amount. For the purposes of classifying financial instruments according to the criteria set out by IFRS 9 as required by IFRS 7 and reported in Note 11, cash and cash equivalents have been classified, with regard to the related credit risk, under Financial assets at amortized cost, while in the statement of cash flows, cash and cash equivalents, as defined above, are shown net of bank overdrafts.

Payables and other liabilities

151 With regard to the modification of the contractual terms of a financial liability, the Company assesses when such a modification can be considered as "substantial", resulting in a derecognition of the financial liability in the accounts. If the change is not substantial (a "modification"), then the financial liability is not derecognized and the Company recognizes the gain or loss deriving from this change through profit and loss. Payables and other liabilities comprise trade payables, financial payables and payables to banks, and other liabilities. These mostly fall due within twelve months and/or bear interest and therefore are not discounted. Payables denominated in a foreign currency are aligned at the exchange rate at year end, and the gains or losses deriving from the adjustment are recognized in the income statement.

Treasury shares

Treasury shares are recognized as a deduction from equity at their original cost. Gains and losses arising on any subsequent sales are recognized as changes in equity.

Employee benefits

Provisions for risks and charges

Provisions are recognized when the company has a present obligation, deriving from a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation and/or the timing. The amount recognized as a provision is the best estimate of the expenditure that the Company would reasonably pay to settle the obligation at the reporting date or to transfer it to a third party at that time. The estimate implicitly reflects a time value component if it is assumed that the obligation will be settled in the long term. If this component is material and the payment date for the obligation may be reliably estimated, the provision is discounted; the increase in the provision associated with the time value of money is recognized in the income statement under “Financial expense”. If the liability relates to property, plant and equipment (e.g. site dismantling and restoration), the provision is recognized as a balancing entry to the carrying amount of the asset to which it refers; the cost is recognized in profit or loss through the process of depreciating the related asset.

Assets and liabilities held for sale

Assets and liabilities held for sale include non-current assets (or disposal groups) and the associated liabilities, the sale of which is highly likely on the basis of a specific plan, and whose book value will be recovered mainly through a sale transaction rather than through continuous use. These items are measured at the lower of the carrying amount of the assets and liabilities and their fair value less any foreseeable cost of sales. From the date on which such assets are classified under held-for-sale non-current assets, the relating

152 depreciation and amortization is suspended. Any losses arising from this measurement are recognized in “Profit (loss) from assets held for sale and discontinued operations”.

6. Accounting standards, amendments and interpretations which came into force as from 1 January 2019

IFRS 16 – Leases

In January 2016, the IASB published IFRS 16 - Leases. The new standard, endorsed by the European Commission in October 2017, establishes a new single model of recognition and measurement of leases for the lessee, without making any distinction between operating leases and finance leases. Specifically, it provides the right of use recognition of the underlying asset in the balance sheet assets against a financial liability. The standard provides the possibility of not recognizing as a lease those contracts that involve low- value assets (i.e. leases relating to assets with a value less than USD 5 thousand, hereinafter also referred to as "low value") and leases with a term equal to or less than 12 months, hereinafter also referred to as "short term”. The standard, instead, introduces no material changes for the lessor. The standard introduces a criterion based on the control of the use of an asset to distinguish leases from service contracts, identifying the following distinguishing factors:  identification of the asset granted for use (i.e. without a right of replacement thereof by the lessor);  the right to obtain substantially all economic benefits deriving from use of the asset;  the right to establish how and why the asset is to be used. The Company applied the standard as from 1 January 2019, availing itself of the right to exclude from the application of the recognition and measurement provisions those leases that can be defined as short term or low value, for a total of approximately 180 contracts. Short-term contracts refer mainly to the classes of assets of motor vehicles and real estate (for lease of apartments or offices); low-value contracts refer mainly to printers, computers and other electronic devices.

For such contracts, the introduction of IFRS 16 did not imply the recognition of the financial liability of the lease and the relating right of use, but lease payments are recognized in the income statement for the duration of the respective contracts.

The contracts falling within the new scope of application under IFRS 16 relate mainly to the rental of real estate and company cars used by employees. A few minor contracts (in terms of amounts, duration and number) refer to operating leases of plant and machinery, furniture and office machinery. The components of the contracts or the contracts themselves, the lease of which can be traced back to a service contract or a licence concession, have been excluded from the scope of IFRS 16. Sublease contracts have been identified for properties in use. The Company, as a lessor of real estate to third parties, has identified these contracts as operating leases, with the exception of two subleases identified as finance leases and therefore accounted for as follows.

The Company, as lessee (and in part as lessor), adopted the modified retrospective transition method, without restating comparative information, making use of the option to measure certain contracts through the cherry picking method, with a cumulative effect as an adjustment to the opening balance of retained earnings at 1 January 2019 without restating comparative information. As 1 January 2019, the Company, in its capacity as lessee and with regard to lease contracts, accounted for:  a financial liability, equal to the present value of the remaining future payments at the transition date, discounted using for each contract the incremental borrowing rate applicable at the transition date;  a right of use as a general rule equal to the amount of the financial liability at the transition date, or, in the few, selected cases where cherry picking is applied, equal to the amount of payments discounted by applying the same IBR used to determine the financial liability instead of at the transition date (1 January 2019), at the starting date of the contracts. The cherry-picking method applied as from 1 January 2019 had an impact of € 10.6 million gross of the tax effect (€ 7.4 million net), which led to a decrease in equity as a result of the difference between the right of use calculated in such way and the financial liability;

153 RCS MediaGroup, as the financial lessor, with regard to only two contracts at 1 January 2019, accounted for:  a financial asset equal to the present value of future cash receipts remaining at the transition date, discounted using for each contract the incremental borrowing rate applicable at the transition date, offset against a financial liability.

The financial liability emerging from the application of the modified retrospective method was discounted at 1 January 2019 using an IBR (incremental borrowing rate) consistent with the maturity of the underlying contracts. The IBR-weighted average rate applied is roughly 2%. In applying the lease accounting method, Management assessed the definition of the lease term (duration of the contracts), identifying the non-cancellable period of the lease at the transition date and integrating it to take account of any options, the exercise of which is reasonably certain. In December 2019, the IFRS Interpretation Committee published its conclusions on an Agenda Decision concerning the Lease Term and, as an accompaniment, the useful life of Leasehold Improvements. At the date of preparation of these Financial Statements, the Company is assessing the possible impact of this interpretation on the accurate estimate of the lease term of its lease contracts and on the useful life of leasehold improvements. In light of the Agenda Decision, the Company does not expect significant impacts on the determination of the Right of Use for leased assets and Liabilities/Financial Assets for leased assets, and expects to complete this analysis in 2020. The leases recorded in the financial statements at 31 December 2018 in application of IAS 17, were reviewed to ascertain whether by applying the new provisions of IFRS 16 they should have been subject to changes regarding their duration or any service obligation components included in the contracts, concluding that, in the manner presented in the financial statements at 31 December 2018, these leases were not to be subject to changes in treatment in 2019.

The overall portfolio of lease contracts under IFRS 16 includes numerous positions (approximately 420 excluding short term and low value leases); however, the impact of the adoption of IFRS 16 can be attributed to few contracts (roughly ten or so referring mainly to property leases) whose values represent more than 80% of the adjustment.

The estimated financial liability, net of financial assets from sub-leases, arising from the application of IFRS 16, calculated as explained above, amounted to € 151 million at 1 January 2019. The amount includes the effects of the lease of the property complex in Via Solferino, without prejudice to the comments in the section on “Information on ongoing disputes” in this Annual Report.

The table below shows the estimated impacts of the adoption of IFRS 16 at the transition date:

154 (€ millions) 31/12/2018 IFRS 16 impacts 01/01/2019 ASSETS Property, plant and equipment 40.8 0.0 40.8 Rights of use on leased assets 0.0 140.7 140.7 Investment property 2.7 0.0 2.7 Intangible assets 25.5 0.0 25.5 Investments measured at cost 397.4 0.0 397.4 Other non-current equity instruments 1.6 0.0 1.6 Non-current financial receivables 0.6 0.0 0.6 Other non-current assets 13.5 0.0 13.5 Non-current financial assets from lease contracts 0.0 11.4 11.4 Deferred tax assets 35.8 3.1 38.9 Total non-current assets 517.9 155.2 673.1 Inventory 13.8 0.0 13.8 Trade receivables 155.7 0.0 155.7 Sundry receivables and other current assets 18.9 0.0 18.9 Current tax assets 2.9 0.0 2.9 Current financial receivables 269.5 0.0 269.5 Current financial assets from lease contracts 0.0 1.0 1.0 Cash and cash equivalents 0.4 0.0 0.4 Total current assets 461.2 1.0 462.2 Non-current assets held for sale - - - TOTAL ASSETS 979.1 156.2 1,135.3 EQUITY AND LIABILITIES Share capital 270.0 0.0 270.0 Reserves 141.0 0.0 141.0 Treasury shares (27.0) 0.0 (27.0) Retained earnings/losses carried forward 25.3 (7.5) 17.8 Profit (loss) for the year 41.9 0.3 42.2 To t a l e qu i t y 451.2 (7.2) 444.0 Non-current financial payables 141.6 0.0 141.6 Non-current liabilities from lease contracts 0.0 145.7 145.7 Financial liabilities from derivatives 1.0 0.0 1.0 Employee benefits 30.5 0.0 30.5 Provisions for risks and charges 10.3 0.0 10.3 Deferred tax liabilities 0.7 0.0 0.7 Sundry payables and other non-current liabilities 1.8 0.0 1.8 Total non-current liabilities 185.9 145.7 331.6 Payables to banks 13.3 0.0 13.3 Current financial payables 126.8 0.0 126.8 Current liabilities from lease contracts 0.0 17.7 17.7 Financial liabilities from derivatives 0.1 0.0 0.1 Current tax liabilities 4.0 0.0 4.0 Trade payables 125.5 0.0 125.5 Current portion of provisions for risks and charges 23.2 0.0 23.2 Sundry payables and other current liabilities 49.1 0.0 49.1 Total current liabilities 342.0 17.7 359.7 Liabilities relating to assets held for sale - - - TOTAL EQUITY AND LIABILITIES 979.1 156.2 1,135.3

Net financial debt at 31 December 2018 12.9 Net liabilities arising from the adoption of the new IFRS 16 at 1 January 2019 151.0 Total at 1 January 2019 163.9 Additionally, the adoption of the standard led to the introduction of two new items in the income statement: - amortization, depreciation and write-downs of the Right of Use on Leased Assets (€ 17.4 million for the twelve months of 2019) and:

155 - imputed interest, i.e. the updated present value of the Payable from Lease Contracts (€ 3.1 million at 31 December 2019) and interest income from Financial Assets from Lease Contracts (€ 0.2 million at 31 December 2019).

A reconciliation is given below of operating lease commitments, the amount of which is shown in Note 50 of the Financial Statements at 31 December 2018, and the liability emerging at 1 January 2019 applying IFRS 16.

(€ millions)

Operating lease commitments at 31 December 2018 227.0 Lease payment commitments - renewal options 7.3 Reduction for exemption Short-term leases (0.8) Reduction for exemption Low-value assets - Reduction for non-IFRS 16 services included in lease contracts (service components) - Increase for variable items of lease payments - Others (1) (51.2)

Gross amount of lease liabilities at 1 January 2019 - first-time application of IFRS 16 182.3

Discounting (18.9)

Lease liabilities at 1 January 2019 - first-time application of IFRS 16 163.4

Present value of finance leases at 31 December 2018 ex IAS 17 2.1

Lease liabilities at 1 January 2019 165.5

(1) These refer to lease payments relating to contracts not covered by IFRS 16.

The first-time application of the new standard also required the Company to adopt specific procedures for mapping and analysis of all contracts that could contain a lease, making the appropriate assessments in accordance with the new standard.

Other accounting standards, amendments and interpretations effective as from 1 January 2019

The following are the amendments, interpretations and improvements in force as from 1 January 2019, which had no significant impact on the Company's 2019 financial statements:

156

7. Accounting standards, amendments and interpretations approved by the EU, not yet mandatorily applicable, and not adopted in advance by the Company

8. Accounting standards, amendments and interpretations yet to be endorsed by the EU and applicable from financial periods after 1 January 2020

The following are the amendments not yet endorsed and not adopted in advance by the Company, on which an assessment of their impact is in progress, with indication of the effective date:

 Amendment to IFRS 3 - Definition of a Business: the amendments will apply to acquisitions after 1 January 2020;  Amendment to IAS 1 - Classifications of current and non-current liabilities: The amendments will apply retroactively as from 2022. Early application is allowed.

9. Main decisions when applying accounting standards and key sources of estimation uncertainty

Key sources of estimation uncertainty

The preparation of the financial statements and notes thereto has required using estimates and assumptions both for determining the carrying amounts of some assets and liabilities and for measuring contingent liabilities. The estimates and assumptions are based on past experience and other relevant factors. However, future events might not fully confirm the forecast amounts. The estimates and assumptions are periodically reviewed and the effects of any changes are immediately reflected in the financial statements.

Owing to the persisting negative trend of the main markets of operation of the Company, and in the face of a turbulent macroeconomic environment, the estimates have been made on the basis of assumptions relating to a highly uncertain future. However, it is possible that actual events over the next years may have a different outcome to those forecasted at 31 December 2019, causing significant adjustments to the carrying amounts of assets and liabilities, amongst which investments and goodwill because of their materiality.

In order to determine whether there are impairment losses on fixed assets, including the carrying amount of investments and goodwill, it is necessary to estimate the value in use of the cash-generating unit (CGU) to which the fixed asset has been allocated. The determination of value in use involves estimating the cash flows that the Company expects to derive from the assets under evaluation, and identifying an appropriate discount rate. As further explained in Notes 28 and 29, the principal uncertainties affecting this estimate refer to the discount rate (WACC), and the assumptions about expected cash flows, which in turn are significantly influenced by the performance of the publishing market and the more general macroeconomic context. Projections are also used when determining returns to receive, provisions for risks and charges, and other allowances for write-downs, particularly for inventory, depreciation and amortization, and employee benefits. Significant estimates are also required to assess the recoverability of deferred tax.

After year end, the national and international scenario has been swept by the spread of the COVID-19 and the ensuing restrictions for its containment adopted by the governments of all the countries involved. The current health emergency, besides its severe social impacts, is having direct and indirect repercussions on the general performance of the economy, leading to a climate of greater uncertainty in the use of estimates (as shown in Significant events after year end). 157 The following is a summary of the principal assumptions used by management in the Group’s most critical valuation process, namely the determination of the recoverable amount of non-current assets, including goodwill.

Principal assumptions for determining the recoverable amount of non-current assets

The Company periodically reviews the carrying amount of investments and intangible assets with indefinite useful life, even if there are no signs of impairment, to ensure that this is not higher than the recoverable amount. When indicators of impairment are identified, the carrying amounts of property and plant are also promptly reviewed. The carrying amount of investments is measured, as is goodwill, each time there is an indication that the carrying amounts may have been impaired and, in any event, at least annually. The carrying amount of investments in the portfolio stands at € 392.6 million and represents approximately 60% of total non-current assets.

10. Management of capital and financial risks

The Company manages its capital structure and financial risks in accordance with the asset structure. Its aim is to maintain a suitable credit rating and adequate capital ratio levels over time, given the current lending dynamics in Italy, where banks are called for more stringent capital requirements by European legislation, and the potential funding opportunities offered by the capital markets. No changes were made to the operating targets, policies and procedures in 2019 from the year ended 31 December, 2018. No further changes were made to the Loan renegotiated on 10 October 2018.

RCS MediaGroup S.p.A. provides a centralized treasury service to group companies, including through the use of a zero-balance cash pooling system. This means that the cash needs of group companies are satisfied by RCS MediaGroup S.p.A..

Market and business risk are added, for the Company, to the exposure to several financial risks: market risks (such as interest rate risk, and to a lesser extent currency risk, while it is not exposed to price risk), liquidity risk and credit risk. The Company constantly monitors financial risks connected with its business and that of its subsidiaries.

Interest rate risk

Interest rate risk refers to the risk of possible higher financial expense caused by an adverse, unexpected fluctuation in interest rates. The Company is exposed to this risk in relation to its floating-rate financial liabilities. Interest rate risk is managed using specific policies defining the risk management objectives, limits, roles and responsibilities of the various departments involved in the process. Specifically:  it is the Company’s objective to mitigate exposure to interest rate risk by establishing an adequate mix between floating-rate and fixed-rate liabilities, using derivatives where necessary;  interest rate risk is managed by the “Administration and Finance” department within the operating limits; this department draws up strategies for hedging the exposure identified and presents them for top management approval;  using derivatives for speculative purposes is not permitted, in other words, it is not in line with the stated objective, unless previously authorized by the Board of Directors in cases of proven benefit;  the “Administration and Finance” department periodically informs top management of its work and results in different ways, including a report on the status of the derivatives portfolio and a report analyzing changes in the net financial position.

158 At 31 December 2019, the portion of Company payables contractually hedged at a fixed rate, including finance lease liabilities, or transformed through Interest Rate Swaps (IRS), was approximately 47% (59% at 31 December 2018). Hedging, at Group level, was approximately 68% (83% at 31 December 2018). At 31 December 2019, the hedging objective was pursued using the above types of derivatives taken out with highly-rated leading financial institutions. IRSs transform the floating rate into a fixed one (or vice versa) through the periodic swap, with the financial counterparty, of the difference between the fixed-rate interest (swap rate) and floating-rate interest, both calculated on the contractual notional amount. Mention should be made that a number of new IRS hedging contracts for a further € 20 million were concluded in November 2019, with a duration of 4 years at a rate of 0.25%. RCS has complied with Regulation (EU) no. 648/2012 on OTC (over the counter) derivatives ever since it came into force in Italy and in all European countries (the EMIR Regulation); the Regulation introduces the requirement to report transactions on derivatives, carried out on official markets or on the OTC market, to a trade repository, i.e. a third party responsible for collecting and centrally storing reports received from trading counterparties to make them accessible to the regulatory authorities. Note 36 contains detailed information about the fair value of derivative financial instruments at the reporting date, and the table summarizing interest rate risks.

Sensitivity analysis

(€ millions)

Sensitivity analysis of interest rate risk Increase/decrease in underlying Impact on profit Impact on Underlying on floating rate items interest rates or loss equity

2019 10.4 1% 0.3 2.5 2018 (17.3) 1% 1.3 3.2

2019 10.4 -1% (1.2) (2.6) 2018 (17.3) -1% (1.8) (3.3)

The Company held exclusively floating-rate financial instruments at 31 December 2019. The use of interest rate derivatives, transforming liabilities from floating rate to fixed rate, should be noted.

No impact is recognized in relation to fixed-rate financial instruments because the statement of financial position showed no significant financial assets or liabilities bearing fixed interest.

As far as risk factors generating significant exposures to risk were concerned, the sensitivity analysis at 31 December 2019 revealed that an increase in interest rates would produce a potential income of € 0.3 million in the income statement (income of € 1.3 million in 2018) and an increase of € 2.5 million in equity (€ 3.2 million in 2018). A decrease in interest rates would produce potential losses of € 1.2 million in the income statement (€ 1.8 million losses in 2018) and a decrease of € 2.6 million in equity (€ 3.3 million in 2018).

159 Mention should be made that the centralized treasury service provided by RCS MediaGroup has financial receivables with the Group companies; this has an effect on the sensitivity results, also with regard to the hedges on the Group's financial exposure.

Currency risk

Currency risk can be defined as the sum of negative effects on assets or liabilities in foreign currency caused by changes in exchange rates. RCS MediaGroup S.p.A. has minimum exposure to currency risk (in terms of transactions and economically) in that the commercial cash flows are primarily carried out in euro; hence there are no active hedges on currency risk in place. The exposure to currency risk for net investments in a foreign entity is not hedged. Given the small amount of foreign currency balances, the results of the associated sensitivity analysis were immaterial.

Liquidity risk

Liquidity risk may arise owing to difficulties in obtaining financing in due time to support operations, also possibly for the purpose of repaying maturing loans. The Company manages liquidity on a centralized basis (using cash management systems for the main subsidiaries) in compliance with the objectives and policies defined by management.

Liquidity analysis

The following tables present a maturity analysis of the Company’s financial and trade assets and liabilities at 31 December 2019 and 31 December 2018, based on undiscounted contractually agreed payments (including principal and interest even if not matured at the reporting date).

In the absence of an agreed repayment date, the payments have been included on the basis of the first date that payment could be requested. For this reason, bank overdrafts have been included in the first repayment period.

The Company continues to monitor the trend in and possible development of the credit and capital markets, to plan the necessary actions for the correct handling of these maturities.

160

Analysis of balances reported at the end of 2019 (1) Contractual due date (interest and principal)

(€ millions) on demand < 6M 6M> <1 Y 1-2 Y 2-5 Y >5 Y Total Financial assets Trade receivables - third parties 22.2 95.7 3.1 - - - 121.0 Intragroup trade receivables 11.7 19.9 0.3 - - - 31.9 Assets from lease contracts - 1.1 3.5 6.9 11.5 Sundry receivables (trade or financial) 10.9 - - - - - 10.9 Intragroup financial receivables 26.7 221.6 - - - - 248.3 Cash and cash equivalents 0.6 - - - - - 0.6 Held-for-trading securities ------Total financial assets 72.1 337.2 3.4 1.1 3.5 6.9 424.2

Financial liabilities Trade payables to third parties (75.0) (33.6) - - - - (108.6) Financial payables (8.7) (55.2) (13.1) (25.9) (61.0) - (163.9) Intragroup financial payables ------Liabilities from lease contracts - (10.5) (8.7) (17.0) (42.7) (77.8) (156.7) Intragroup trade payables (5.7) (8.8) - - - - (14.5) Sundry payables (trade or financial) (14.1) - - - - - (14.1) Intercompany financial payables (16.6) (59.0) - - - - (75.6) Derivatives embedded in financial liabilities ------Hedging derivatives - (0.3) (0.3) (0.3) (0.2) - (1.1) Total financial liabilities (120.1) (167.4) (22.1) (43.2) (103.9) (77.8) (534.5)

(1) These figures include forecast interest not yet accrued at 31 December 2019 and, therefore, not reconcilable with those reported in the statement of financial position.

Analysis of balances reported at the end of 2018 (1) Contractual due date (interest and principal)

(€ millions) on demand < 6M 6M> <1 Y 1-2 Y 2-5 Y >5 Y Total Financial assets Trade receivables - third parties 20.3 103.3 1.6 - - - 125.2 Intragroup trade receivables 14.5 17.5 - - - - 32.0 Sundry receivables (trade or financial) 10.5 0.8 - 0.1 0.1 0.4 11.9 Intragroup financial receivables 3.2 273.1 - - - - 276.3 Hedging derivatives ------Non-hedging derivatives ------Cash and cash equivalents 0.4 - - - - - 0.4 Held-for-trading securities ------Total financial assets 48.9 394.7 1.6 0.1 0.1 0.4 445.8

Financial liabilities Trade payables to third parties (74.4) (35.9) - - - - (110.3) Financial payables (with leases) (13.3) (24.7) (14.5) (26.7) (124.5) - (203.7) Intragroup trade payables (9.0) (5.8) (0.3) - - - (15.1) Sundry payables (trade or financial) (14.8) - - - - - (14.8) Intercompany financial payables - (66.8) (24.5) - - - (91.3) Derivatives embedded in financial liabilities ------Hedging derivatives - (0.3) (0.2) (0.4) (0.2) - (1.1) Total financial liabilities (111.5) (133.5) (39.5) (27.1) (124.7) - (436.3)

(1) These figures include forecast interest not yet accrued at 31 December 2018 and, therefore, not reconcilable with those reported in the statement of financial position.

161 Credit risk

Credit risk may be defined as the possibility that one party to a financial instrument will cause a financial loss by failing to discharge an obligation.

RCS MediaGroup S.p.A.’s exposure to credit risk refers to loans and trade receivables. Any liquidity is deposited with highly reputable banking counterparties. Additionally, there are loans to group companies as part of the Group’s centralized treasury management.

Trade receivables are recognized in the financial statements after deducting impairment losses and returns to receive.

Trade receivables are managed by the divisions in compliance with the Group’s financial objectives, agreed commercial strategies and operating procedures, which prevent products or services from being sold to customers without an adequate credit record or collateral guarantees. New customers and their credit rating are accurately evaluated using an automated credit scoring system. The rating model applied uses the expected default frequency model prepared by a leading financial information and analysis group.

They are constantly controlled during the year with the aim of reducing late payments and limiting losses of financial assets. The table below provides information on the credit quality of financial assets, according to the IFRS 9 format, as well as maximum credit exposure:

Balances at 31 December 2019

Trade Non-current Current Financial Other non- Sundry receivables Cash and Total receivables (1) financial financial assets from current assets and other current cash Rating receivables receivables lease 12 months assets equivalents lifetime ECL contracts ECL

Rating A (low risk) 18.3 18.3 Rating B (medium risk) 117.2 117.2 Rating C (high risk) 20.6 20.6 Rating Z (not rated) 6.7 4.1 248.2 11.4 0.7 15.7 0.6 287.4 Total gross receivables 162.8 4.1 248.2 11.4 0.7 15.7 0.6 443.5

Allowance for impairment (9.9) (3.7) (1.2) 0.0 (6.4) 0.0 (21.2)

Total net receivables 152.9 0.4 247.0 11.4 0.7 9.3 0.6 422.3

(1) As from 2018, the presentation of trade receivables for the purposes of IFRS 7, limited to consignment contracts, is made net of the expected returns. (2) The category of receivables with a Z Rating refers mostly to receivables from subsidiaries and to a lesser extent from public bodies.

Balances at 31 December 2018

Trade Non-current Current Other non- Sundry receivables Cash and Total receivables (1) financial financial current assets and other current cash Rating receivables receivables 12 months assets equivalents lifetime ECL ECL

Rating A (low risk) 20.9 20.9 Rating B (medium risk) 127.2 127.2 Rating C (high risk) 14.5 14.5 Rating E (public entities) 0.0 0.0 Rating Z (not rated) 2.2 4.0 270.9 0.6 16.8 0.4 294.9 Total gross receivables 164.8 4.0 270.9 0.6 16.8 0.4 457.5

Allowance for impairment (9.1) (3.4) (1.4) 0.0 (6.4) 0.0 (20.3)

Total net receivables 155.7 0.6 269.5 0.6 10.4 0.4 437.2

The allowance for impairment of trade receivables at 31 December 2019 amounted to € 9.9 million (€ 9.1 million at 31 December 2018), which is commented on in Note 35.

162 The allowance for impairment of trade receivables at 31 December 2019 came to 6.1% of gross trade receivables (5.5% in 2018).

Receivables were down versus the prior year. Current financial receivables, relating mainly to the centralized management of the Group's requirements, decreased by € 22.5 million. Financial assets from lease contracts, amounting to € 11.4 million, were recognized following the introduction of the new IFRS 16, which came into force in 2019, to which reference is made for further details in Note 6 above.

The table below shows the impairment percentages applied at 31 December 2019 to loans and receivables based on past due age range.

Rating Not overdue 1- 30 days 31-60 days 61-90 days 91-180 days 181-360 days 361-540 days 541-720 days >720 days Rating A (low risk) 0.13% 3% 6% 8% 10% 20% 30% 40% 50% Rating B (medium risk) 0.55% 5% 8% 10% 12% 30% 40% 50% 60% Rating C (high risk) 1.72% 8% 10% 12% 15% 40% 60% 70% 80% Rating E (public entities) 1.45% 1% 1% 1% 2% 5% 10% 20% 30% Rating Z (not rated) 1.12% 6% 8% 10% 12% 30% 40% 50% 60%

The financial assets that were written off during the reporting period and are still subject to enforcement proceedings totaled € 0.3 million, relating entirely to trade receivables.

Price risk

RCS MediaGroup S.p.A. is not exposed to significant price risks related to financial instruments included in the scope of application of IFRS 9.

11. Financial instruments: disclosures

As required by IFRS 7, the following table shows the carrying amounts of items included in each category identified by IFRS 9.

The carrying amount generally coincides with the measurement at amortized cost of the financial assets/liabilities, except for derivative instruments and other equity instruments measured at fair value. For fair value, reference should be made to the notes to the individual items.

163 Carrying amount Notes 31/12/2019 31/12/2018 (€ millions) FINANCIAL ASSETS Financial assets at fair value through the comprehensive income statement

Other equity instruments - investments 31 1.7 1.6 Financial assets at amortized cost Trade receivables 35 152.9 155.7 Current financial receivables 37 247.0 269.5 Current and non-current financial assets from lease contracts 27 11.4 - Cash and cash equivalents 37 0.6 0.4 Sundry receivables and other current assets 36 9.3 10.4 Non-current financial receivables 32 0.4 0.6 Sundry receivables and other current assets 33 0.7 0.6

TOTAL FINANCIAL ASSETS 424.0 438.8

FINANCIAL LIABILITIES Liabilities at amortized cost Trade payables 42 123.0 125.4 Payables to banks 37 8.8 13.3 Current financial payables 37 141.4 126.8 Non-current financial payables 37 82.9 141.6 Sundry payables and other current liabilities 43 14.1 14.9 Current liabilities from lease contracts 27 19.2 - Non-current liabilities from lease contracts 27 137.5 - Financial liabilities at fair value through the comprehensive income statement Current financial payables (hedging derivatives) 37 0.2 0.1 Non-current financial payables (hedging derivatives) 37 1.0 1.0

TOTAL FINANCIAL LIABILITIES 528.1 423.1

The following are classified under "Financial assets":

The following are classified under "Financial liabilities":

 financial liabilities measured at amortized cost, including: - trade payables; - sundry payables, which for the purposes of this presentation excluded: payables to the tax authorities, payables to social security institutions, deferred income and payables for untaken holiday entitlement accrued; - current and non-current financial payables; - financial liabilities from lease contracts;  financial liabilities measured at fair value through profit or loss;  financial liabilities measured at fair value through the comprehensive income statement. 164 Financial assets measured at fair value through other comprehensive income includes Other equity instruments as the Company has taken the option to measure the instrument at fair value through other comprehensive income. IFRS 7 requires financial instruments recognized in the statement of financial position at fair value to be classified on the basis of a three-level fair value hierarchy. For assets whose recoverable amount corresponds to fair value net of cost of sales, the fair value hierarchy disclosure on Intangible assets is presented in Note 11.

The levels of the hierarchy are as follows:

At 31 December 2019 and 2018, assets and liabilities have been classified in accordance with the fair value hierarchy as follows.

Hierarchy of fair value measurement for categories of financial instruments at 31 December 2019 (€ millions) Notes Level 1 Level 2 Level 3 Total FINANCIAL ASSETS Financial assets at fair value through the comprehensive income statement ---- Other non-current equity instruments Investments 30 0.4 - 1.3 1.7 Hedging derivatives ----

TOTAL FINANCIAL ASSETS 0.4 - 1.3 1.7

FINANCIAL LIABILITIES Hedging derivatives 37 - 1.1 - 1.1

TO TAL FINANCIAL LIABILITIES - 1.1 - 1.1

Hierarchy of fair value measurement for categories of financial instruments at 31 December 2018 (€ millions) Notes Level 1 Level 2 Level 3 Total FINANCIAL ASSETS Financial assets at fair value through the comprehensive income statement ---- Other non-current equity instruments Investments 30 0.4 - 1.2 1.6 Hedging derivatives ----

TOTAL FINANCIAL ASSETS 0.4 - 1.2 1.6

FINANCIAL LIABILITIES Hedging derivatives 37 - 1.1 - 1.1

TO TAL FINANCIAL LIABILITIES - 1.1 - 1.1

The table below shows movements in the year in items classified in Level 3:

Gains/(losses) Gains and losses Balance at Additions/ Decreases/ Transfers Balance at recognized in recognized as other 31/12/2018 purchases sales to/from level 3 31/12/2019 profit or loss comprehensive income 1.2 - 0.1 - - - 1.3

165 Impact of financial instruments on profit or loss and equity, in compliance with IFRS 7

In compliance with IFRS 7, the following table presents the effects on profit or loss and equity of each category of financial instruments held by the Company in the two-year period 2019-2018. These mainly consist of gains and losses arising on the purchase and sale of financial assets and liabilities as well as from fair value gains or losses and the interest income/expense relating to financial assets/liabilities measured at amortized cost.

The table below shows the effect on profit or loss and equity for IFRS 9 financial instruments.

(€ millions) Notes 2019 2018 Net gains/losses recogniszd on financial instruments 15.1 15.7 Held-for-trading financial assets/liabilities - - Hedging derivatives 21 (0.7) (1.4) - of which gains recognized in equity (0.1) (0.3) - of which profit/(losses) recognized in income statement (0.6) (1.1) Gains/(losses) on other equity instruments 22 15.8 17.1 - of which dividends from investments 15.5 15.6 - of which sundry income on investments 0.3 1.5 Interest income/expense (at internal rate of return) accrued on financial assets/liabilities not at FVTPL (3.2) 1.0 Interest income on 21 4.8 7.6 - receivables/loans 4.8 7.6 Interest expense on 21 (8.0) (6.6) - financial liabilities (8.0) (6.6) Expenses and fees not included in effective interest rate (0.7) (0.9) relating to financial assets 21 (0.7) (0.9) - receivables/loans (0.7) (0.9) Provisions for impairment of financial assets (1.7) (4.4) - Receivables/loans 19 (1.7) (4.4)

More details on the characteristics of financial instruments held and the associated gains and losses can be found in the related specific notes. The figures showed in the tables and notes are in millions of Euro, unless otherwise indicated.

12. Net revenue

Description 2019 2018 Change Circulation revenue 303.7 321.7 (18.0) Advertising revenue 229.7 243.0 (13.3) Sundry publishing revenue 26.6 18.9 7.7 Total 560.0 583.6 (23.6)

Net revenue in 2019 amounted to € 560 million, down by € 23.6 million versus 2018 (€ 583.6 million), mainly due to a reduction in both circulation and advertising revenue. Sundry publishing revenue increased by € 7.7 million. Mention should be made that 2019 includes revenue, of an advertising and sundry nature, from the merger by incorporation of Digicast and RCS Digital Ventures for a total of € 8.2 million. Reference is made to the specific annexes for further information on the merger.

With regard to circulation revenue, the decrease of € 18 million versus 2018 is mainly due to the drop in circulation of the two daily titles, the drop in revenue from add-ons and, to a lesser extent, the drop in magazines circulation. Conversely, revenue from Corriere della Sera digital subscriptions was on the rise. Both newspapers retained their circulation leadership in their respective market segments at December 2019 (ADS January-December 2019).

166 Advertising revenue amounted to € 229.7 million, down by € 13.3 million versus 2018, as a result of the decline in the print media advertising market. Online media grew by approximately € 3.6 million. 2019 includes advertising revenue of € 1.1 million from the merger of Digicast.

Sundry publishing revenue amounted to € 26.6 million, increasing by € 7.7 million versus 2018 (€ 18.9 million). The increase is mainly due to revenue from the merger of Digicast (€ 6.9 million in revenue from satellite TV subscriptions) and RCS Digital Ventures (€ 0.2 million for royalties).

13. Related party transactions

As required also by CONSOB Communication pursuant to Article 114, paragraph 5 of Italian Legislative Decree no. 58/98, protocol number 13046378 of 27 May 2013, transactions with the related parties of the Company are shown below. Specifically, as regards the Regulations approved by CONSOB with resolution no. 17221 of 12 March 2010 and subsequent amendments, on 10 November 2010 RCS MediaGroup S.p.A. adopted a related party transaction procedure covering authorizations and communication with the market and CONSOB. This procedure was subject to certain revisions effective as from 1 January 2014 and subsequently effective as from 1 October 2015. The latest amendments in chronological order take effect from 4 August 2017. The Procedure is published in the “Governance” section of the Company’s website. This procedure, as the previous provisions, has also been described in the Report on Corporate Governance and Ownership Structure. In this regard, in consideration of the provisions of said Procedure, in addition to the more significant transactions indicated above, several less significant transactions were subject to the prior opinion of the Related Party Transactions Committee provided for therein.

The ultimate parent of the Company is U.T. Communications S.p.A., the de facto parent of Cairo Communication S.p.A., which became, in turn, the direct controlling entity of RCS MediaGroup S.p.A.. At 31 December 2019, the interest in the RCS MediaGroup S.p.A. share capital held by Cairo Communication S.p.A. was 59.693% (59.831% if the percentage directly held by U.T. Communications S.p.A. at 31 December 2019 is also included - CONSOB).

RCS MediaGroup S.p.A. is subject, as from 12 December 2019, to the direction and coordination of Cairo Communication S.p.A..

That being said, the following were identified as related parties:  the direct and indirect controlling entities of RCS MediaGroup S.p.A., their subsidiaries, joint ventures and their associates;  controlled entities and jointly controlled entities, as well as associates of RCS MediaGroup S.p.A.;  key management personnel, their close family members, and any companies directly or indirectly controlled by them or subject to joint control or significant influence.

The key managers of the Company have been identified as: the Directors, Statutory Auditors, the Chief Executive Officer, the Financial Reporting Manager and the other key management personnel of RCS MediaGroup S.p.A. and of the parent Cairo Communication Cairo Communication S.p.A., as shown in the relevant remuneration reports.

The following table shows the amount and proportion of related party transactions and balances included in each relevant heading of the statement of financial position and income statement.

167 Non-current Non-current financial Current financial Investments measured Current tax Current financial financial assets from Trade receivables assets from lease at cost assets receivables receivables lease contracts contracts Parents - 0.1 - - Subsidiaries 384.8 0.1 10.4 10.5 3.4 234.3 1.0 Associates 8.2 - - 18.2 - 12.4 - Other affiliates - 1.3 - - Other related parties (1) - - - 0.7 - - - Total related parties 393.0 0.1 10.4 30.8 3.4 246.7 1.0 Reported total 393.0 0.4 10.4 152.9 5.5 247.0 1.0 % of reported total 100.00% 25.00% 100.00% 20.14% 61.82% 99.88% 100.00%

Sundry Sundry payables and Current Current tax Trade payables and Commitme other non- financial liabilities payables other current nts current payables liabilities liabilities Parent ------Subsidiaries 0.9 75.6 6.6 9.7 0.1 17.2 Associates - - - 2.6 - - Other affiliates - - - 1.9 - - Sub-holdings and their parents ------Other related parties (1) - - - - 1.7 4.7 Total related parties 0.9 75.6 6.6 14.2 1.8 21.9 Reported total 1.8 141.4 6.6 123.1 48.4 40.7 % of reported total 50.00% 53.47% 100.00% 11.54% 3.72% 53.81%

(Write- Other income Raw Other Interest income down)/write- (expense) material Personnel operating calculated using Financial back of Revenue from financial s and expense revenue the effective expense receivables and assets/liabiliti services and income interest method other financial es assets Parents 0.1 ( 0.2) - 0.9 - - - - Subsidiaries 9.8 ( 55.7) - 7.9 4.5 ( 0.2) 13.0 0.2 Associates 259.3 ( 79.8) - 1.3 0.2 - 1.0 - Other affiliates 1.8 ( 4.6) - 0.4 - - - - Supplementary pension fund for - executives ( 0.4) - - - - - Sub-holdings and their parents ------Other related parties (1) 1.5 ( 3.5) ( 3.3) - - - - - Total related parties 272.5 ( 143.8) ( 3.7) 10.5 4.7 ( 0.2) 14.0 0.2 Reported total 560.0 ( 345.8) ( 158.7) 21.7 4.7 ( 9.6) 14.0 ( 0.1) % of reported total 48.66% 41.58% 2.33% 48.39% 100.00% 2.08% 100.00% -200.00%

(1) Refers mainly to transactions with key management personnel and their close family members, as specified below.

For a detailed analysis on related party transactions that took place throughout the year, refer to the specific attachment to these notes.

Transactions between RCS MediaGroup S.p.A. and subsidiaries and associates mainly involve the exchange of goods, the provision of services and the provision and use of funds, as well as tax transactions.

The transactions are part of ordinary operations and are undertaken at market conditions, taking into account the service quality rendered or received in compliance with procedures aimed at ensuring the fairness of the transaction.

168 Transactions with parents include revenue of € 0.9 million, costs for services of € 0.2 million, trade receivables of € 0.1 million and trade payables of approximately € 0.1 million. These amounts mainly refer to the purchase and sale of advertising space made between the Company and Cairo Communication S.p.A..

RCS MediaGroup S.p.A. provided services including administrative, tax, receivables management, legal and corporate assistance and assistance in finance and treasury transactions, human resources and insurance, purchasing and logistics, communication and assistance for the Prevention and Protection Service, IT and digital-related assistance, facilities management and general services to Italian and foreign subsidiaries and associates, most of which were managed and coordinated by RCS MediaGroup S.p.A., in order to optimize the available resources and to achieve economies of scale for RCS Group.

RCS MediaGroup S.p.A. had commercial dealings with the subsidiaries RCS Produzioni S.p.A., RCS Produzioni Milano S.p.A., RCS Produzioni Padova S.p.A., RCS Sport S.p.A., RCS Sports & Events S.r.l., Trovolavoro S.r.l., Sfera Service S.r.l., Blei S.r.l. in liquidation, RCS Edizioni Locali S.r.l., SSD Active Team S. a r.l. and the associate m-dis Distribuzione Media S.p.A..

RCS MediaGroup S.p.A. purchased advertising space from its subsidiaries RCS Edizioni Locali, Trovolavoro S.r.l., Unidad Editorial S.A. and companies in the Cairo group.

RCS MediaGroup S.p.A. uses distribution services provided by m-dis Distribuzione Media S.p.A., which is not managed and coordinated by RCS MediaGroup S.p.A., for distribution in Italy in the newsstands channel.

RCS MediaGroup S.p.A. uses Logintegral 2000 S.a. (part of Unidad Editorial Group) for the distribution of its own newspapers in Spain.

RCS MediaGroup S.p.A. provided production and printing services to the subsidiary RCS Edizioni Locali S.r.l. and received the same service from RCS Produzioni S.p.A., RCS Produzioni Milano S.p.A. and RCS Produzioni Padova S.p.A..

Additionally, key management personnel have been identified as the Directors, Statutory Auditors, the Chief Executive Officer, the Financial Reporting Manager and the Key management personnel of RCS MediaGroup S.p.A. and of the parent Cairo Communication S.p.A., details of whose remuneration in the various forms received are provided in the following table.

Sundry payables and Personnel Commitme Service costs other current expense nts liabilities Board of Directors - fees 3.2 - 1.0 - Board of Statutory Auditors - fees 0.2 - 0.2 - Key management personnel - 3.3 0.5 4.7 Director of RCS MediaGroup S.p.A. - - - - Total related parties 3.4 3.3 1.7 4.7 Reported total 247.3 158.7 48.4 40.7 % of reported total 1.37% 2.08% 3.51% 11.55%

Relationships with subsidiaries, associates and other RCS Group companies are indicated in the notes as part of the specific comments on the individual items of the statement of financial position and the income statement.

Group tax consolidation for IRES purposes In 2019, RCS MediaGroup S.p.A. continued to file for tax on a group basis, as permitted by Legislative Decree no. 344 dated December 12, 2003, which allows a tax burden to be determined by calculating tax on a single tax base, with a consequent immediate offset of tax assets and tax liabilities for the year. Intragroup transactions deriving from group tax consolidation are based on the objectives of fairness and neutrality.

169 Group tax consolidation for VAT purposes In 2019, RCS MediaGroup S.p.A. continued to make use of the rules allowing the RCS Group filing of VAT returns with a payable balance of € 3.1 million. RCS MediaGroup S.p.A. transferred net tax liabilities totaling € 17.7 million to the RCS Group VAT consolidation for 2019.

14. Changes in work in progress, finished and semi-finished products

The change in inventory totaled € 2.1 million and related mainly to finished products (€ 3.2 million), regarding the inventory of add-on products and the "Solferino" inventory.

Description 2019 2018 Change Change in work in progress 0.1 0.2 (0.1) Change in finished products 3.2 0.3 2.9 Allocation to provision for finished products (1.2) 0.1 (1.3) Total 2.1 0.6 1.5

15. Raw materials and services

Raw materials and goods

Description 2019 2018 Change Purchase of paper 49.0 47.2 1.8 Purchase of advertising space 21.7 21.3 0.4 Purchase of finished products 11.1 11.6 (0.5) Purchase of other materials 3.9 4.3 (0.4) Change in raw and ancillary materials and goods (2.7) (2.6) (0.1) Provisions for write-downs of property, plant and equipment inventory - 0.1 (0.1) Total 83.0 81.9 1.1

The overall increase in purchases and consumption of raw materials and goods versus 2018 is € 1.1 million and is mainly due to higher paper purchase costs (€ +1.8 million), mainly due to the higher price of paper. Lower costs were recorded for the purchase of products and other materials (€ -0.9 million), as a result of the different publishing plan for add-on products. The effect of raw material inventory (€ -2.7 million) is related to the increase in paper products inventory.

170 Service costs

Description 2019 2018 Change Distribution costs 93.1 98.4 ( 5.3) Subcontracted work 58.1 62.6 ( 4.5) Freelance staff and reporters 20.5 22.5 ( 2.0) Promotional and advertising expenses 16.6 18.2 ( 1.6) Commission expense and other sales costs 11.5 12.3 ( 0.8) Professional and consulting fees 10.5 7.9 2.6 Sundry service costs 8.7 5.7 3.0 Utilities 4.1 3.7 0.4 Travel and accommodation 3.5 3.9 ( 0.4) Directors' and statutory auditors' fees 3.4 3.6 ( 0.2) Maintenance 2.9 3.1 ( 0.2) Market survey services 2.9 2.0 0.9 Postal expenses 2.8 3.7 ( 0.9) IT services 2.7 2.0 0.7 News agencies 1.6 1.9 ( 0.3) Personnel services 1.6 1.6 - Services of seconded personnel 1.3 1.3 - Insurance 1.0 1.1 ( 0.1) Services for sporting events 0.3 - 0.3 Bank expenses and fees 0.2 0.3 ( 0.1) Total 247.3 255.8 ( 8.5)

Service costs amounted to € 247.3 million, down by € 8.5 million versus 2018, as a result of the ongoing efficiency gains. Mention should be made of the implementation of savings and efficiency policies from a logistical point of view, in addition to the renegotiation of printing rates with third party plants. The increase in expense for sundry services (€ +3 million) includes mainly IT services related to the sale of digital products. 2019 includes € 1.4 million in service costs arising from the merger of Digicast, relating mainly to costs for the airing of satellite TV programs and professional services for in-house television productions.

In compliance with Legislative Decree no. 39/2010, the fees for the legally-required audit of these financial statements total € 0.4 million (€ 0.4 million in 2018).

Rentals and leases

Description 2019 2018 Change Fees 10.6 11.6 (1.0) Leases 4.6 6.3 (1.7) Rentals 0.3 18.8 (18.5) Total 15.5 36.7 (21.2)

Rentals and leases amounted to € 15.5 million, down by € 21.2 million versus 2018. This change is attributable mainly to the application as from 1 January 2019 of the new IFRS 16 which, as previously commented, led to the reversal of lease payments of € 21.1 million recorded under this item. The remaining balance includes mainly copyrights for text and photographs, royalties on the sale of add-on products bundled with Corriere della Sera and La Gazzetta dello Sport. This item also includes lease payments for short-term and low-cost contracts totaling € 4.9 million.

171

16. Personnel expense

Description 2019 2018 Change Wages and salaries 115.1 111.8 3.3 Social security charges 37.1 36.1 1.0 Employee benefits 8.4 9.0 (0.6) Other costs/recoveries (3.0) (0.4) (2.6) Non-recurring expense (income) 1.1 1.1 - Total 158.7 157.6 1.1

Personnel expense amounted to € 158.7 million, down slightly versus 2018 (€ 157.6 million) and include net non-recurring expense totaling € 1.1 million (net non-recurring expense of € 1.1 million in 2018).

The average workforce during the year is broken down by category as follows:

Category 2019 2018 Change Executives, middle managers and 896 882 14 white collars Publication editors and journalists 658 654 4 Blue collars 50 49 1 Total 1,604 1,585 19

The average workforce increased by 19 units versus 2018. The trend in the workforce was marked mainly by the incorporation of Digicast (+7 average employees), by increases and stabilizations aimed at developing the editorial offer, digital assets and new businesses, management of staff turnover and transfers from other Group companies.

17. Other revenue and income

Description 2019 2018 Change Cost recharges 6.1 5.4 0.7 Rental income 4.2 5.8 (1.6) Sale of returns, leftovers and sundry materials 4.6 4.4 0.2 Revenue for chargeback of personnel expense 3.0 2.7 0.3 Other revenue 1.8 1.0 0.8 Co-publication income 1.1 0.8 0.3 Grants relating to income 0.9 1.3 (0.4) Ordinary release of provisions for risks - 2.3 (2.3) Total 21.7 23.7 (2.0)

“Other revenue and income" amounted to € 21.7 million, down versus 2018 (€ 23.7 million). The change is mainly due to a different classification of the recovery of provisions for risks, which is allocated net of provisions to the reference risk funds since this year. Lower rents receivable were also recorded following the introduction of the new IFRS 16, which classifies two lease contracts as sub-leases of a financial nature, with consequent reversal of the related rents, which have become financial income from financial assets from leasing contracts (see Note 6 above).

172 18. Sundry operating expense

Description 2019 2018 Change Other operating expense 5.3 4.8 0.5 Tax charges 0.9 1.1 (0.2) Co-publication expense 0.2 1.2 (1.0) Total 6.4 7.1 (0.7)

“Sundry operating expense” amounted to € 6.4 million, down by € 0.7 million versus 2018. The change is attributable mainly to co-publication charges (€ -1 million) as a result of the different publishing plan for add-ons.

19. (Write-down)/write-back of trade and sundry receivables

The item amounts to € 1.7 million and reflects provisions made for default risks on trade receivables. Prior year impairment losses on receivables totaled € 2 million.

20. Amortization, depreciation and write-downs on fixed assets

Description 2019 2018 Change Amortization of intangible assets 9.9 10.4 (0.5) Depreciation of property, plant and equipment 6.0 6.7 (0.7) Depreciation of rights of use on leased assets 17.4 - 17.4 Impairment losses/(reversal) on non-current assets 1.1 7.4 (6.3) Total 34.4 24.5 9.9 Amortization and depreciation of intangible assets and property, plant and equipment totaled € 33.3 million (€ 17.1 million in 2018). The increase is attributable to the new item “Amortization and depreciation of rights of use on leased assets” (€ +17.4 million at 31 December 2019) set up in application of the new IFRS 16 for the accounting of amortization and depreciation relating to the new item “Rights of use on leased assets” in the statement of financial position. Additionally, amortization for 2019 includes € 2.4 million from the merger of Digicast (€ 2.2 million) and RCS Digital Ventures (€ 0.2 million) not present in 2018.

Write-downs of fixed assets amounted to € 5.9 million (€ 7.4 million in 2018), and refer to the Sfera goodwill, partly written down following the impairment test performed at the end of the year. Further details are found in Note 29.

Write-backs amounted to € 4.8 million and refer to the property in Pessano con Bornago, written down in prior years, as the reasons for these previous impairment losses no longer apply; specifically, this property is part of the Newspapers Italy CGU.

173 21. Financial income (expense)

Description 2019 2018 Change Interest on current intragroup receivables 4.5 7.5 ( 3.0) Interest income on assets from lease contracts 0.2 - 0.2 Interest income on other st receivables 0.1 0.1 - Total interest income calc. using effective interest 4.8 7.6 ( 2.8) method Exchange rate gains 0.1 - 0.1 Current sundry financial income - 3.0 ( 3.0) Interest income on tax assets 0.3 0.1 0.2 Income on discounting to present value - 0.1 ( 0.1) Total financial income other than previous 0.4 3.2 ( 2.8) Exchange rate losses ( 0.1) - ( 0.1) Interest expense to banks ( 0.1) ( 0.1) - Interest expense on non-current loans ( 1.7) ( 5.9) 4.2 Interest expense on current loans ( 1.7) ( 0.1) ( 1.6) Interest payable to Group companies ( 0.2) ( 0.5) 0.3 Losses on derivatives ( 0.6) ( 1.1) 0.5 Sundry financial expense ( 0.8) ( 3.5) 2.7 Interest expense on lease liabilities ( 3.1) - ( 3.1) Expense on discounting to present value ( 1.3) ( 0.5) ( 0.8) Total financial expense ( 9.6) ( 11.7) 2.1

Total financial income (expense) ( 4.4) ( 0.9) ( 3.5)

Net financial expense totaled € 4.4 million (€ 0.9 million at 31 December 2018). Excluding the effects from the application in 2019 of the new IFRS 16, the balance would amount to a net expense of € 1.5 million, up by € 0.6 million versus 2018. Higher net discounting expense of € 0.7 million was recognized, as well as lower expense of € 0.5 million to hedge interest rate risk, and further changes totaling € -0.4 million.

22. Other gains (losses) on financial assets/liabilities

Description 2019 2018 Change Dividends 15.5 15.6 (0.1) Write-downs (1.9) (2.2) 0.3 Other income (expense) from financial assets 0.3 1.4 (1.1) Total 13.9 14.8 (0.9)

Dividends received amounted to € 15.5 million (€ 15.6 million in 2018), from the following investees: RCS Sport S.p.A. (€ 13 million), RCS Produzioni S.p.A. (€ 0.4 million), RCS Produzioni Milano S.p.A. (€ 0.7 million), RCS Produzioni Padova S.p.A. (€ 0.4 million), and m-dis Distribuzione Media S.p.A. (€ 1 million).

Impairment losses totaling € 1.9 million (€ 2.2 million in 2018) refer mainly to the write-down of the investment in Trovolavoro S.r.l., in order to align the book value to the year-end equity of the investee, and to the write-down of Sfera Mexico to align the book value to the respective equity value at 31 December 2019 following the impairment test. Reference is made for further details to Note 30.

Other net income from financial assets totaling € 0.3 million (€ +1.4 million in 2018) refers to the income from the liquidation of the investee RCS Factor S.r.l..

174 23. (Write-down)/write-back of receivables and other financial assets

These amount to € -0.1 million (€ -2.4 million in 2018) and refer to the partial write-down of a loan granted to a third-party company.

24. Income tax

Tax recognized in the income statement in application of current tax rates (24% for IRES and 5.57% for IRAP) is as follows:

Description 2019 2018 Change Prior years’ tax: 4.0 2.3 1.7 - IRES 4.0 2.3 1.7 Current tax: (0.7) (3.5) 2.8 - IRES 2.0 - 2.0 - IRAP (2.7) (3.5) 0.8 Deferred tax income/expense: (10.7) (6.8) (3.9) - Income (10.8) (6.7) (4.1) - Expense 0.1 (0.1) 0.2 Total tax (7.4) (8.0) 0.6

Income tax for 2019 shows a net expense of € 7.4 million, mainly due to the use of the receivable from deferred tax assets (€ 10.8 million) and the provision for IRAP for the period (€ 2.7 million), partly offset by current and prior years' IRES income totaling € 6 million.

Current tax assets and current tax liabilities are analyzed below:

Description 31/12/2019 31/12/2018 Change Current tax assets 5.5 2.9 2.6 Current tax liabilities (6.6) (4.0) (2.6) Total liabilities net of current tax assets ( 1.1) ( 1.1) -

Liabilities net of current tax assets, amounting to € 1.1 million, were of the same net value at 31 December 2018. They consisted mainly of payables to companies participating in the tax consolidation (€ 3.2 million), offset by the IRAP receivable for advances paid net of the payable for the period (€ 1.0 million), by the IRES receivable and by other tax receivables (€ 1.1 million).

175 Deferred tax assets and deferred tax liabilities are broken down as follows:

Recognized Recognized Other 31/12/2018 in profit or 31/12/2019 in equity changes loss RCS MEDIAGROUP SPA Deferred tax assets -Carry forward tax losses 13.0 - - (1.6) 11.4 - Allowances for impairment of assets 3.0 0.1 - - 3.1 - Provisions for risks and charges 5.9 (0.7) - - 5.2 - Costs with deferred deductibility 0.6 (0.1) - - 0.5 - Actuarial valuation of employee benefits 0.2 - 0.5 - 0.7 - Deferred tax arising from tax transparency criteria 1.4 (1.4) - - - - Property, plant and equipment and intangible 2.4 assets 4.1 (1.7) - - - Right of use property Cherry Picking via Rizzoli - 0.1 3.2 - 3.3 - Interest expense pursuant to Art. 96 7.3 (7.1) - - 0.2 - Measurement of derivatives 0.2 - - - 0.2 - Expense for share capital increase and share 0.1 conversion 0.1 - - - Total deferred tax assets 35.8 (10.8) 3.7 (1.6) 27.1 Deferred tax liabilities - Property, plant and equipment and intangible (0.3) assets (0.3) - - - - Deferred tax arising from tax transparency criteria (0.1) - - - (0.1) - Discounting of provisions for risks and charges (0.3) 0.1 - - (0.2) Total deferred tax liabilities (0.7) 0.1 - - (0.6)

Net total 35.1 (10.7) 3.7 (1.6) 26.5 Deferred tax assets recognized at the reporting date represent amounts which are likely to arise, based on management estimates, on future taxable profit, taking into account the effects of participation in the Group tax consolidation.

The effective tax charge reported in the financial statements is reconciled to the theoretical tax charge as follows:

2019 2018 Profit (loss) before tax 46.5 50.0 Theoretical income tax 11.2 12.0 Net effect of permanent differences (5.1) (8.4) Effect of using tax losses (1.6) - Effect of temporary taxable differences 5.0 3.3 Effect of temporary deductible differences (11.5) (7.0) Prior-years’ tax IRES (4.1) (2.2) IRES - Current tax (6.1) (2.3) IRES - deferred tax 10.6 7.3 Income tax reported in the financial statements, excluding current an 4.5 5.0 IRAP - current tax 2.7 3.5 IRAP - deferred tax 0.2 (0.5) Income tax reported in the financial statements (current and deferred 7.4 8.0

The effect of the permanent differences of € -5.1 million on tax refers mainly to the benefits gained from the use of the “ACE” (Support for Economic Growth) of € -1.5 million, the benefit deriving from offsetting interest expense against the operating results of the other companies in the tax consolidation (€ -2.2 million)

176 in addition to the effect related to dividends (€ -3.5 million), partly reduced by the effect of the write-down of the Sfera goodwill (€ 1.4 million) and investments (€ 0.4 million).

Temporary differences are, for the most part, related to accruals to and utilizations of provisions for risks and charges and to interest and kindred expense, not deducted in prior years.

25. Non-recurring income (expense)

Personnel S ervice costs Total expense Non-recurring expense - (1.1) (1.1) Non-recurring income 0.2 - 0.2 Net non-recurring expense 0.2 (1.1) (0.9)

Reported total (247.3) (158.7) (406.0) % of reported total (0.1)% 0.7% 0.2%

Non-recurring expense and income amounted to € 0.9 million in net expense and refer to personnel expense totaling € 1.1 million, relating to ongoing corporate reorganization processes and € 0.2 million to the release of provisions previously set aside as non-recurring expense.

Net non-recurring expense totaled € 1.1 million at 31 December 2018.

26. Property, plant and equipment

Movements in the year were as follows:

Description Fi xe d Improveme Improveme assets Other Land Buildings nts on Plant nts on Equ i pm e n t under To t a l assets buildings plant constructio n Cost 5.8 16.3 30.9 78.0 22.4 1.9 70.0 - 225.3 Impairment losses -(4.8)-(10.9)(3.5)---(19.2) HISTORICAL COST AT 31/12/2018 5.8 11.5 30.9 67.1 18.9 1.9 70.0 - 206.1 Additions - - 0.6 0.1 - - 0.8 0.1 1.6 Decreases ------(1.5)-(1.5) Other changes in allowance for impairment-4.8------4.8 HISTORICAL COST AT 31/12/2019 5.8 16.3 31.5 67.2 18.9 1.9 69.3 0.1 211.0 ACC. DEPRECIATION AT 31/12/2018 - (4.9) (21.9) (56.2) (12.7) (1.8) (67.8) - (165.3) Depreciation - (0.5) (1.3) (2.4) (0.6) (0.1) (1.1) - (6.0) Decreases --- --1.5-1.5 Other movements ---1.0(1.0)---- ACC. DEPRECIATION AT 31/12/2019 - (5.4) (23.2) (57.6) (14.3) (1.9) (67.4) - (169.8) NET BALANCE AT 31/12/2018 5.86.69.010.96.20.12.2-40.8 Additions - - 0.6 0.1 - - 0.8 0.1 1.6 Other changes in allowance for impairment-4.8------4.8 Depreciation - (0.5) (1.3) (2.4) (0.6) (0.1) (1.1) - (6.0) Other movements ---1.0(1.0)---- NET BALANCE AT 31/12/2019 5.8 10.9 8.3 9.6 4.6 (0.0) 1.9 0.1 41.2

Land is not depreciated.

177 Other property, plant and equipment recognized in the financial statements are depreciated over the estimated useful life of each individual asset, using the following rates:

Buildings from 2% to 5% Property improvements from 5% to 6% Plant from 10% to 30% Plant improvements from 5% to 20% Equipment from 10% to 25% Other assets from 10% to 25%

No financial expense was capitalized.

“Property, plant and equipment", amounting to € 41.2 million, increased by € 0.4 million versus 31 December 2018, due to depreciation for the period (€ 5.9 million), more than offset by the write-back of the Pessano con Bornago industrial complex (following write-downs recognized in prior years), amounting to € 4.8 million, as the reasons for these previous write-downs no longer apply (specifically, this property is part of the Newspapers Italy CGU), and by the increases for the year, amounting to € 1.5 million, related mainly to some improvements to plant and the purchase of other assets.

“Other movements” refer entirely to reclassifications to assets under construction and the other categories of non-current assets subject to amortization and depreciation.

Land

This item includes the land for the industrial complex in Pessano con Bornago (€ 3.4 million) and the sports field in Via Cefalù, Milan (€ 2.4 million).

Buildings

The item includes the Pessano con Bornago industrial complex (€ 10.2 million), the value of which was written back for € 4.8 million as mentioned earlier, and the civil buildings in Milan located in via Rizzoli and via Cefalù (totaling € 0.7 million). The decrease versus 31 December 2018, equal to € 0.4 million, refers to the depreciation charge for the year.

Improvements on buildings

This item refers to the capitalization of improvements on printing operations buildings in Padua and Rome, on the buildings on Via Rizzoli and Via Solferino in Milan. The increase of € 0.6 million refers mainly to the buildings in Via Rizzoli for the new spaces dedicated to the RCS Academy. The decrease of € 1.3 million versus 31 December 2018 reflects the depreciation charge in the year.

Plant, plant improvements and equipment

“Plant”, “Plant improvements” and “Equipment” refer mainly to the assets acquired under a finance lease regarding the Corriere della Sera and La Gazzetta dello Sport production lines. The decrease of € 3 million versus 31 December 2018 reflects the depreciation charge in the year.

Other assets

This item mostly contains furniture and furnishings for € 0.7 million and electronic machinery for € 1.1 million. Versus 31 December 2018, the item increased by € 0.7 million, mainly due to the purchase of new personal computers, notebooks, tablets, servers and mobile phones, in addition to depreciation of € 1.1 million.

178 27. Rights of use on leased assets

The details of changes with regard to rights of use from 1 January 2019 to 31 December 2019 are shown below:

Rights of use Rights of use Rights of use Rights of use DESCRIPTIO N To t a l property plant other assets motor vehicles HISTORICAL COST AT 31/12/2018 0.0 0.0 0.0 0.0 0.0 Increases from first-time application of IFRS 16 146.3 0.8 0.1 5.8 153.0 Additions 8.2 0.0 0.0 2.7 10.9 Decreases 0.0 0.0 0.0 (0.2) (0.2) Other movements (12.4) 0.0 0.0 0.0 (12.4) HISTORICAL COST AT 31/12/2019 142.1 0.8 0.1 8.3 151.3 ACC. DEPRECIATION AT 31/12/2018 0.0 0.0 0.0 0.0 0.0 Depreciation (15.0) (0.4) (0.1) (1.9) (17.4) Decreases 0.0 0.0 0.0 0.1 0.1 ACC. DEPRECIATION AT 31/12/2019 (15.0) (0.4) (0.1) (1.8) (17.3) NET BALANCE AT 31/12/2018 0.0 0.0 0.0 0.0 0.0 Effects from the application of IFRS 16 133.9 0.8 0.1 5.8 140.6 Balance at 01/01/2019 133.9 0.8 0.1 5.8 140.6 Additions 8.2 0.0 0.0 2.7 10.9 Decreases 0.0 0.0 0.0 (0.1) (0.1) Depreciation (15.0) (0.4) (0.1) (1.9) (17.4) NET BALANCE AT 31/12/2019 127.1 0.4 0.0 6.5 134.0

The effect of the first-time application of IFRS 16 at 1 January 2019 was € 153 million. The prevailing rights of use refer to property leases (€ +146.3 million at 1 January 2019) used by the Company mainly as office space. In 2019, increases of € 10.9 million were mainly due to the renewal of the lease contract for the Viale Campania building in Rome (€ 5.2 million), the new motor vehicle lease contracts (€ 2.7 million) and the ISTAT revaluation effect of the lease payments for Via Rizzoli (€ 2.5 million). The total decrease for the year amounted to € 17.5 million, attributable to depreciation. Other changes in rights of use on real estate (for € 12.4 million) refer to the reclassification of two subleases classified as finance leases in accordance with IFRS 16. The value was therefore reclassified under financial assets for lease contracts.

28. Investment property

Description Investment property Land Buildings Total Cost 3.8 9.2 13.0 Impairment losses (1.5) (6.8) (8.3) HISTORICAL COST AT 31/12/2018 2.3 2.4 4.7 Addit ions - - - Decreases - - - HISTORICAL COST AT 31/12/2019 --- ACC. DEPRECIATION AT 31/12/2018 - (2.0) (2.0) Depreciation - - - ACC. DEPRECIATION AT 31/12/2019 --- NET BALANCE AT 31/12/2018 2.3 0.4 2.7 Addit ions - - - Decreases - - - Depreciation - - - NET BALANCE AT 31/12/2019 2.3 0.4 2.7

179 29. Intangible assets

Movements in the year were as follows:

FINITE US EFUL LIFE INDEFINITE USEFUL LIFE Description Concessions, Patents and Assets under licenses, intellectual development and Other intangible assets Total trademarks and property advances similar rights Cost 258.7 0.4 45.5 304.6 Impairment losses (7.6) - (31.9) (39.5) HISTORICAL COST AT 31/12/2018 - 251.1 0.4 13.6 265.1 Additions 1.0 8.6 0.5 - 10.1 Decreases - (32.4) - - (32.4) Reclassifications - 0.4 (0.4) - - Impairment losses - - - (5.9) (5.9) Other movements 8.3 7.0 - 20.1 35.4 HISTORICAL COST AT 31/12/2019 9.3 234.7 0.5 27.8 272.3 ACC. DEPRECIATION AT 31/12/2018 - (239.6) - - (239.6) Amortization (1.0) (8.9) - - (9.9) Decreases - 32.4 - - 32.4 Other movements (7.4) (5.7) - (19.0) (32.1) ACC. DEPRECIATION AT 31/12/2019 (8.4) (221.8) - (19.0) (249.2) NET BALANCE AT 31/12/2018 - 11.5 0.4 13.6 25.5 Additions 1.0 8.6 0.5 - 10.1 Impairment losses - - - (5.9) (5.9) Amortization (1.0) (8.9) - - (9.9) Reclassifications - 0.4 (0.4) - - Other movements 0.9 1.3 - 1.1 3.3 NET BALANCE AT 31/12/2019 0.9 12.9 0.5 8.8 23.1 Intangible assets with finite useful life are amortized over their useful lives, estimated as follows:

Patents 5 years Rights for executive productions and internal productions 2 years Concessions, licenses and trademarks from 3 to 5 years Other intangible assets 5 years

Patents and intellectual property

The net balance at 31 December 2019 was € 0.9 million and refers to the rights to executive productions of the satellite channels Caccia e Pesca and Lei. “Other movements" includes the gross amounts referring to the mentioned rights recorded with the merger of Digicast. The amortization charge for the period was € 1 million.

Concessions, licenses, trademarks and similar rights

The item includes mainly software application licenses and related consulting for enhancements, as well as rights for audiovisual productions of the satellite channels Caccia e Pesca, Dove and Lei, from former Digicast. “Other movements" and "decreases" include the gross amounts referring to the rights for the above audiovisual productions resulting from the merger of Digicast.

The increases by € 8.6 million are primarily related to purchases of licenses and web platform development for digital projects and developments relating to corriere.it and gazzetta.it, and amortization in the year totaling € 8.9 million.

180 Other intangible assets

Other intangible assets refer to the goodwill from the Sfera cash generating unit (€ 7.7 million) and the goodwill from Youreporter recorded following the merger of RCS Digital Ventures. The Sfera goodwill was partly written down by € 5.9 million following the impairment test carried out at the end of the period, while Youreporter showed no impairment. The Company reviews the carrying amount of the aforementioned goodwill whenever facts or circumstances cause an impairment risk, and in any event each year, to ensure that this amount is not higher than the recoverable amount, determined by using the value in use resulting from the respective impairment tests. The main assumptions used by Management to estimate value in use refer to the discount rate (WACC), the growth rate (g), the expected changes in revenue and operating costs (EBITDA) over the calculation period. The discount rate used for discounting future cash flows is the post-tax weighted average cost of capital (WACC), comprising a weighted average for the financial structure of the following elements:  the cost of risk capital determined as the return on risk-free assets, summed with the product obtained by multiplying the Beta and the risk premium, plus the Firm Specific Risk Premium;  the cost of debt. The risk-free return was assumed as the return on government bonds of the CGU’s country of origin (one year’s average), whose duration is consistent with the valuation period. The Beta was calculated with reference to the average of a sample of comparable companies. The risk premium is equal to the historical additional return required on equity of a virtuous country over the government bonds (the method used by Practitioners), while the Firm Specific Risk Premium is the additional premium aimed at including the risk of reaching the forecast objectives established by management (execution risk) in the assessment, also with respect to the Group’s size. The entity's cost of debt is determined using the 10-year EurIRS rate (one year’s average) plus the spread on debt. For RCS, the spread was inferred by analyzing the available market data for a basket of companies with ratings consistent with those indicated by the Italian Valuation Organization (Credit Rating Spread Damodaran). The financial structure (Debt/Equity) used was defined on the basis of the comparable companies analysis, using the average median data of the financial structure of the reference sample before IFRS 16 (S&P Capital IQ). The discount rate used was calculated post-tax. The growth rate of cash flows adopted for the cash flow forecast at the end of the explicit period (g) was assumed as equal to zero (negative in real terms in the presence of inflation), similar to the tests carried out in the prior year.

The basic assumptions relating to the developments of expected cash flows beyond the explicit forecast periods and the outcomes of the impairment tests are listed below.

The parameters used for impairment testing on goodwill for the Sfera segment (€ 7.7 million) were: WACC of 7.72% applied, calculated with reference to the relevance of the activities in the different countries in which the cash-generating unit operates. The projection shows, in the period 2020-2022, an increase in digital revenue linked to the development of video, the expansion of the offering (digital magazines) and, in Italy, the restyling of a website. Profitability is also expected to improve as a result of the use of the same contents for all countries and, in Italy, an increase in the offer of boxed sets. Advertising revenue from the print media is expected to remain steady, also through the expansion of the offer to customers outside the Childhood segment Recovery actions will continue on all costs over the period of the plan. The impairment test resulted in a write-down of € 5.9 million.

181 30. Equity investments measured at cost

The list of investments measured at cost, including changes in the carrying amounts over the course of the year, is attached to these notes.

Movements in the year were as follows:

Subsidiaries Associates Total

Balance at 31/12/2018 389.2 8.1 397.3 Additions 0.7 - 0.7 Decreases (0.5) - (0.5) Other movements (2.7) 0.1 (2.6) Write-downs (1.9) - (1.9) Balance at 31/12/2019 384.8 8.2 393.0

Increases in 2019 refer to the payment of € 0.7 million, to cover losses, to Trovolavoro S.r.l., made in December 2019.

The decreases of € 0.5 million refer to the write-off of the book value of RCS Factor S.r.l., due to closure of the liquidation process.

Other movements, totaling € 2.6 million, refer mainly to the mentioned merger of Digicast and RCS Digital Ventures. Mention should be made of the write-off of the carrying amounts of the merged companies for € 2.8 million and the recognition of the carrying amounts of minor companies, previously held by the above companies for € 0.2 million.

Impairment losses of € 1.9 million refer mainly to the investment in Trovolavoro (€ 1.5 million) in order to align the carrying amount to the corresponding equity value at year-end and to the investment in Sfera Mexico (€ 0.3 million) in order to align the carrying amount to the corresponding equity value resulting from the impairment test.

Regarding the valuation of equity investments, with evidence indicating impairment, impairment tests were carried out to assess the recoverability of the carrying amounts recorded in the balance sheet.

Particular importance is attached to the test conducted on the investee Unidad Editorial SA, with the direct ownership of a 99.99% interest. The carrying amount of Unidad Editorial SA represents approximately 85% of the total carrying amounts of equity investments held. Given the materiality of the carrying amount of this CGU and in line with the approach adopted last year, the impairment test of the CGU Unidad Editorial was prepared with the assistance of a leading consulting firm. Cash flows for the first year of the explicit forecast period correspond to the 2020 budget data approved by Board of Directors of Unidad Editorial on 24 February 2020. Cash flows for the remaining years of the explicit forecast (2021-2024) were developed on the basis of the Unidad Editorial plan approved by the Board of Directors of Unidad Editorial on 16 March 2020. The estimate of the terminal value takes account of a normalized EBITDA. Mention should be made that when preparing the business plans, the impact of the Coronavirus spread was not taken into consideration, as it is an event occurring after the date of preparation of the financial statements, the potential effects of which cannot be determined and quantified at this time and will be constantly monitored in the coming months of 2020.

Regarding the explicit forecasts provided and the analyses conducted and ratios used to calculate the tests, reference is made to Note 35 to the consolidated financial statements. The outcome of the test highlighted an equity value of the investee Unidad Editorial higher than the carrying amounts booked in RCS MediaGroup S.p.A.

Even if there is an equity value higher than book value of the equity investment, taking into account the same

182 considerations described in note no. 35 of the consolidated financial statements, the Company has decided not to recognize, in this year, a reinstatement of the value of the investment.

Lastly, as known, since January 2020, the global scenario has been swept by the spread of the Coronavirus and the ensuing restrictions for its containment adopted by the governments of the countries involved, creating a climate of general uncertainty, whose effects are not foreseeable at this time. In light of this situation, as changes in future cash flows cannot be foreseen, more conservative sensitivity analyses were also carried out - in terms of reduction in cash flows and increase in WACC - in order to verify the sustainability of the book value of the CGU Unidad Editorial. This sensitivity showed that even with these changes, no impairment losses would be generated.

31. Other non-current equity instruments

Balance at Balance at Change 31/12/2019 31/12/2018 Ansa S.r.l. 0.6 0.6 - H-Farm S.p.A. 0.2 0.4 (0.2) Immobiliare Editori Giornali S.r.l. 0.4 0.4 - Cefriel S.c.a.r.l. 0.2 0.2 - Mperience S.r.l. 0.1 - 0.1 Digital Magics S.p.A. 0.2 - 0.2 Total 1.7 1.6 0.1

The item includes securities and investments in companies which are not subsidiaries, associates or held for trading. At 31 December 2019, these amounted to € 1.7 million and included, among the most significant amounts, € 0.6 million relating to Ansa Società Cooperativa (€ 0.6 million at 31 December 2018), € 0.4 million relating to Immobiliare Editrice Giornali S.r.l. (€ 0.4 million at 31 December 2018), € 0.2 million relating to H-Farm S.p.A. (€ 0.4 million at 31 December 2018), € 0.2 million relating to Digital Magics S.p.A. (€ 0.2 million at 31 December 2018).

The € 0.1 million increase versus 31 December 2018 is due, on the one hand, to the recognition in 2019 of the investments in Mperience S.r.l. and Digital Magics S.p.A. previously held by the former RCS Digital Ventures (€ +0.3 million) and, on the other, to the net negative change in fair value recognized in other comprehensive income (€ -0.2 million).

32. Non-current financial receivables

Non-current financial receivables, amounting to € 0.4 million, refer mainly to the non-current portion of a loan granted to a third-party company. At the end of the prior year, these assets amounted to € 0.6 million. The change versus 31 December 2018 is mainly due to the partial write-down of the existing loan.

33. Other non-current assets

Description Balance at Balance at Change 31/12/2019 31/12/2018 Security deposits given 0.5 0.5 - Term bank deposits 0.2 0.1 0.1 Non-current prepayments 0.1 0.3 ( 0.2) Non-current tax receivables 14.6 12.6 2.0 Total 15.4 13.5 1.9

183 Other non-current assets amounted to € 15.4 million, up by € 1.9 million versus 31 December 2018 (€ 13.5 million). The change is mainly due to long-term tax receivables following integration of the receivable concerning the IRES refund claim for failure to deduct IRAP relating to personnel expense for the year 2003.

34. Inventory

The table below shows inventory by type along with the provisions made to adjust their cost to market value:

Raw and ancillary Work in progress Finished products Total materials and and goods consumables 31/12/2018 Gross balances 12.4 1.8 0.4 14.6 Allowance for impairment (0.5) - (0.3) (0.8) Net balance at 31-12-2018 11.9 1.8 0.1 13.8 31/12/2019 Gross balances 15.1 1.3 3.4 19.8 Allowance for impairment (0.5) (1.3) (1.8) Net balance at 31-12-2019 14.6 1.3 2.1 18.0 Change 2.7 (0.5) 2.0 4.2 The increase in inventory versus the end of the prior year (€ 4.2 million) is mainly due to raw, ancillary and consumable materials (€ +2.7 million), from greater supplies, as well as to the increase in the purchase price of paper, in addition to finished products (€ +2 million) relating to add-on products and Solferino books. The provision for inventory write-down increased to € 1.8 million (€ 0.8 million at 31 December 2018).

35. Trade receivables

Trade receivables are broken down as follows:

Description Balance at Balance at Change 31/12/2019 31/12/2018 Receivables from customers 131.7 134.2 ( 2.5) Expected returns ( 1.0) ( 1.5) 0.5 Allowance for impairment ( 9.8) ( 9.0) ( 0.8) Receivables from customers - net amounts 120.9 123.7 ( 2.8) Receivables from subsidiaries 10.6 10.1 0.5 Receivables from associates 41.7 46.5 ( 4.8) Receivables from parents 0.1 0.3 ( 0.2) Receivables from other Group companies 1.3 1.2 0.1 Expected returns vs. associates ( 21.6) ( 26.0) 4.4 Allowance for impairment trade receivables from Group ( 0.1) ( 0.1) - companies Intragroup receivables - net amount 32.0 32.0 0.0 Total 152.9 155.7 ( 2.8)

Trade receivables at 31 December 2019 amounted to € 152.9 million, down by € 2.8 million versus 31 December 2018. The decrease is mainly due to lower receivables from customers (€ 2.8 million) related to reduced revenue.

€ 0.9 million of the allowance for impairment of receivables from customers was used and was increased by € 1.7 million to adjust to the effective risk of these receivables at the end of the year.

184 The following table shows the changes in the allowance for impairment of trade receivables under first-time application of said standard, the impact of which was recognized in equity (€ 0.8 million).

Allowance for impairment of trade receivables Closing balance 31/12/2017 (8.7) Effects from the application of IFRS 9 (0.8) Opening balance 1/1/2018 (9.5) Utilization 2.4 (Write-down)/(write-back) of trade receivables (2.0) Closing balance 31/12/2018 (9.1) Utilization 1.0 (Write-down)/(write-back) of trade receivables (1.7) Closing balance 31/12/2019 (9.8)

36. Sundry receivables and other current assets

Description Balance at Balance at Change 31/12/2019 31/12/2018 Tax receivables 0.8 0.1 0.7 Receivables from social security institutions 0.3 1.3 ( 1.0) Receivables from employees 0.2 0.4 ( 0.2) Sundry receivables 0.5 0.5 - Allowance for impairment of sundry receivables ( 0.4) ( 0.4) - Net sundry receivables 0.1 0.1 - Sundry receivables from subsidiaries - 0.1 ( 0.1) Sundry receivablesfp from associates y f 0.7 0.7 - Group companies ( 0.7) ( 0.7) - Sundry receivables from Group companies - net - 0.1 ( 0.1) Total other receivables 1.4 2.0 ( 0.6) Advances to suppliers 4.5 5.6 ( 1.1) Allowance for impairment of author advances ( 4.0) ( 4.0) - Net advances to suppliers 0.5 1.6 ( 1.1) Advances to authors 1.1 0.7 0.4 Allowance for impairment of author advances ( 0.3) ( 0.1) ( 0.2) Net advances to authors 0.8 0.6 0.2 Advances to freelance staff - 0.1 ( 0.1) Net advances to freelance staff - 0.1 ( 0.1) Advances to agents 9.6 9.4 0.2 Allowance for impairment of agents advances ( 1.2) ( 1.2) - Net advances to agents 8.4 8.2 0.2 Prepayments 6.6 6.3 0.3 Release rights for book returns from customers 0.2 0.1 0.1 Total other current assets 16.5 16.9 ( 0.4) Total 17.9 18.9 ( 1.0)

Sundry receivables and other current assets decreased by € 1 million versus 31 December 2018, mainly due to the decrease in advances to suppliers (€ 1.1 million) and receivables from social security institutions (€ 1 million), the latter following the use and recovery of advances previously paid. Tax receivables (€ 0.7 million) and net advances from authors (€ 0.2 million) increased.

For IFRS 7 purposes, tax receivables, receivables from social security institutions, prepayments are not considered, hence, sundry receivables and current assets at 31 December 2019 would total € 10.2 million (€ 11.2 million at 31 December 2018). The carrying amount of these assets for IFRS 7 purposes reflects their fair value.

185 37. Net financial debt

Financial assets and liabilities recognized for derivatives

The item includes derivative financial instruments. Such instruments are recognized as financial assets or financial liabilities at fair value.

The main types within this category are shown below.

31 December 2019 31 December 2018

AS S ETS LIABILITIES AS S ETS LIABILITIES Interest rate swaps for cash flow hedges - 1.0 - 1.0 NON-CURRENT - 1.0 - 1.0 Interest rate swaps for cash flow hedges - 0.1 - 0.1 CURRENT - 0.1 - 0.1

TOTAL - 1.1 - 1.1

The instruments related to interest rate risk (Interest Rate Swaps) have been taken out for hedging purposes and are submitted to the so-called effectiveness test to check that they meet the specific IFRS conditions for hedge accounting. The effectiveness test was carried out on the derivatives of RCS MediaGroup S.p.A. considering the debt exposure of the medium/long-term loan.

Details of the net financial debt are provided below at carrying amount and fair value.

Comparison of carrying amount vs. fair value

Carrying amount Fair Value 31/12/2019 31/12/2018 31/12/2019 31/12/2018

A Cash and cash equivalents 0.6 0.4 0.6 0.4 B Current financial receivables 247.1 269.5 247.1 269.5

C Current payables to banks (8.8) (13.6) (8.8) (13.6) D Current financial payables (141.4) (126.5) (141.4) (126.5) E Current financial liabilities from derivatives (0.1) (0.1) (0.1) (0.1) F Current financial debt (C+D+E) (150.3) (140.2) (150.3) (140.2) G Net current financial debt (A+B+F) 97.4 129.7 97.4 129.7 H Non-current financial payables and liabilities (82.9) (141.6) (82.9) (141.6) I Non-current financial liabilities from derivatives (1.0) (1.0) (1.0) (1.0) L Non-current financial debt (H+I) (83.9) (142.6) (83.9) (142.6) M Net financial debt (G+L) 13.5 (12.9) 13.5 (12.9) N Net non-current liabilities from lease contracts (2) (127.1) - n.s. - O Net current liabilities from lease contracts (2) (18.2) - n.s. - P Total net financial debt (M+N+O) (1) (131.8) (12.9) n.s. (12.9)

Net financial debt to related parties 182.7 177.9 0.0 0.0

% of reported total > 100% > 100%

(1) For the definition of Net Financial Debt and Total Net Financial Debt, reference should be made to the paragraph "Alternative Performance Measures" in this Annual Report. (2) Net financial payables from leases pursuant to IFRS 16 do not include financial payables relating to the pre-existing IAS 17 standard (applied until the end of 2018), classified in keeping with prior years under the line “Floating rate finance lease payables”.

The net financial position of RCS MediaGroup S.p.A. at 31 December 2019 stood at a positive € 13.5 million, improving by 26.4 million versus 31 December 2018. Mention should be made of the strong

186 contribution from ordinary operations, only partly offset by dividends paid to the market and outlays for capital expenditure made during the period.

Mention should be made that the Loan Agreement provides a single covenant for 31 December 2019 based on a maximum Leverage Ratio threshold (debt/EBITDA before IFRS 16 and before non-recurring expense/income) of 3.00x. At 31 December 2019, the leverage ratio was approximately 1.0x (down further from 1.2x at 31 December 2018).

Financial Assets (€ 247.7 million) may be analyzed as follows:  bank deposits and current accounts amounting to € 0.6 million (value at 31 December 2018: € 0.4 million);  loans and asset positions in intra-group current accounts relating to RCS Group companies amounting to € 246.8 million (amount at 31 December 2018: € 269.2 million);  financial receivables amounting to € 0.3 million (€ 0.3 million at 31 December 2018).

Financial liabilities (€ 234.2 million) may be analyzed as follows:  current payables to banks amounting to € 74.6 million (value at 31 December 2018: € 46.8 million), € 8.8 million of which for bank overdrafts and € 65.8 million for a bank loan;  non-current payables to banks of € 82.9 million (value at 31 December 2018: € 141.6 million);  loans payable and liability positions in intra-group current accounts relating to RCS Group companies amounting to € 75.6 million (amount at 31 December 2018: € 91.2 million);  lease liabilities of € 0.02 million (value at 31 December 2018: € 2.1 million), down as a result of the repayment of principal amounts as per the repayment plan;  financial liabilities recognized for derivatives totaling € 1.1 million (amount at 31 December 2018: € 1.1 million);

The methods of measuring fair value are summarized below for the principal categories of financial instruments to which they have been applied:  derivative instruments: the standard calculation models have been used, based on market interest rates by maturity, currency and on the corresponding exchange rates;  asset and liability positions: the calculation methods used for interest rate derivatives have been applied with appropriate adaptations.

The fair value of both current and non-current liabilities has been assessed by taking account of the new financial environment's impact on the credit spread.

The breakdown of the net financial debt by currency is as follows:

Currency 31/12/2019 31/12/2018 Euro 13.1 (13.4) US dollars 0.3 0.2 Swiss francs 0.1 0.3 Total net financial debt 13.5 (12.9)

187 The table below analyzes the carrying amount at 31 December 2019, broken down by maturity, of the Company’s financial instruments that are exposed to interest rate risk:

FIXED RATE >0m<6m >6m<1 >1<2Y >2<3Y >3<4Y >4<5Y >5 Total

FLOATING RATE < 6M 6M> x <1 Y >1<2Y >2<3Y >3<4Y >4<5Y >5 Total

Loans (1) (54.7) (12.5) (25.0) (25.0) (35.0) - - (152.2) Intercompany loans (75.5)------(75.5) Bank overdrafts (8.8)------(8.8) Total liabilities (139.0) (12.5) (25.0) (25.0) (35.0) - - (236.5) Cash and cash equivalents0.6------0.6 Intercompany loans 246.8 ------246.8 Other lending positions 0.3 - 0.1 - 0.1 - 0.1 0.6 Total assets 247.7 - 0.1 - 0.1 - 0.1 248.0 TOTAL floating rate 108.7 (12.5) (24.9) (25.0) (34.9) - 0.1 11.5

(1) The debt exposure has been hedged with interest rate derivatives (Interest Rate Swaps) totaling € 110 million (€ 170 million at 31 December 2018).

The amounts shown in the table here above, unlike those reported in total net financial debt, exclude the fair value of derivatives (€ -1.2 million), the effect of debt being accounted for using the amortized cost method (€ +3.4 million), and include the interest-bearing portion of non-current financial receivables (€ 0.3 million).

The use of derivatives on interest rates allows for the transformation of floating-rate liabilities into fixed-rate liabilities.

Mention should be made that the hedging strategy is implemented at a Group financial exposure level.

Interest rate derivatives mature as follows at 31 December 2019:

6 M Notional Description Parameter range % < 6M < x < 1-2 Y 2-5 Y > 5 Y amount 1 Y

Cash flow hedge from floating to 110.0 3-month Euribor 0.131 - (50.0) - (60.0) - fixed IRS 110.0 - (50.0) - (60.0) -

The disclosures required by IFRS 7 in relation to the cash flow hedges are provided below:

Fair Value Amount in Hedged item Type of hedge Hedged risk 31/12/19 31/12/18 equity Loan hedge IRS Interest rate risk (1.2) (1.1) (0.1) Total (1.2) (1.1) (0.1)

The following table shows movements in the hedging reserve during the year, reporting separately the amounts recognized in equity for increases/decreases in hedge effectiveness in the year and corresponding amounts transferred to profit or loss.

Total

Opening balance (1.1)

+ hedging gains 0.3 - hedging losses (1.0) + hedging gains to profit or loss 0.6

Closing balance (1.2)

188 Mention should be made that the figures presented in the tables above for the hedging reserve are shown gross of their tax effects, which amounted to € 0.3 million at 31 December 2019.

The hedging reserve reflects hedges of expected cash flows relating to underlying loans, whose payments and related effect on profit or loss fall in the following periods.

The expected outlays represent the interest on the amount of debt hedged, calculated using the hypothetical interest rate curve consistent with the mark-to-market measurement of the hedging instruments. For lease agreements, the underlying loans evolve according to the natural maturity, while for the loan, the volumes and analogous contractual maturities of the hedging derivatives were taken into consideration.

31 December 2019

(€ millions) Total expected Actual impact of underlying flows 6 M 1 Y 1-2 Y 2 - 5 Y > 5 Y cash flows

Interest rate risk

Expected outflows for floating-rate interest ( 2.9) - ( 1.2) ( 0.7) ( 1.0) -

31 December 2018

(€ millions) Total expected Actual impact of underlying flows 6 M 1 Y 1-2 Y 2 - 5 Y > 5 Y cash flows

Interest rate risk

Expected outflows for floating-rate interest ( 4.6) - ( 2.0) ( 1.2) ( 1.4) -

It should be noted that the minimum lease payments, which amounted to € 2.1 million at 31 December 2018, were written off at 31 December 2019.

The average annual rate on financial positions at 31 December 2019 is 1.67% for the return on investments and 1.04% for the cost of borrowing. The cost of borrowing reflects the effect of outstanding hedging derivatives.

38. Share capital and reserves

The share capital is divided into 521,864,957 ordinary shares with no par value. At 31 December 2019, a total of 4,481,787 ordinary treasury shares were held (44,527 of which unavailable, servicing the exchange transactions arising from the merger of RCS MediaGroup S.p.A. with the subsidiary RCS Investimenti S.p.A., which took place on 31 December 2017), worth € 26.6 million, corresponding to an average price of € 5.9 per ordinary share and representing 0.86% of the total share capital.

Outstanding Number of shares issued Treasury shares Total ordinary shares At 31/12/2018 517,322,483 4,542,474 521,864,957 shares exchanged in 2019 60,687 (60,687) - At 31/12/2019 517,383,170 4,481,787 521,864,957

The share capital is made up entirely of ordinary shares, which carry full voting rights. They entitle their owners to attend ordinary and extraordinary shareholders' meetings and to participate in the allocation of profit for the year and equity, if the company is wound up. These shares are registered shares. 189 The nature and purpose of the equity reserves is summarized below:

 Legal reserve (€ 54 million): increased through the compulsory allocation of at least one-twentieth of annual profit, until reaching an amount corresponding to one-fifth of share capital. At 31 December 2019, the legal reserve amounted to one fifth of the share capital.

 Treasury shares (€ -26.6 million): are deducted from the Company's equity.

 Hedging reserve (€ -0.9 million): contains the effects directly recognized in equity of the fair value measurement of derivative financial instruments taken out to hedge the risk of fluctuations in exchange rates and interest rates. The hedging reserve is shown net of related tax effects.

 The reserve for the actuarial valuation of post-employment benefits (€ -1.6 million) was established on 1 January 2013 in compliance with the amendment to IAS 19.

 Merger reserve (€ +6.5 million): includes the positive effects of the merger of subsidiaries, including Digicast and RCS Digital Ventures merged in 2019.

 Voluntary reserve (€ 87.3 million): this is an available reserve set up by means of a partial reduction in share capital, as per the shareholders' resolution of 26 April 2018. Pursuant to Article 109 of the Consolidated Tax Act, the optional reserve is restricted for € 0.6 million representing the sum of depreciation/amortization and other negative components deducted off-balance sheet for tax purposes, net of deferred tax.

 Financial receivables reserve at FVOCI (Fair value through other comprehensive income) of € +0.4 million: includes the fair value measurement of other non-current equity instruments.

 Retained earnings/losses carried forward (€ 28.4 million) include, on the one hand, the reserve for treasury shares (€ 26.6 million) and, on the other, the effects of the first-time application of IFRS 9 (applied in 2018) and IFRS 16 (applied in 2019 and relating to cherry picking, as further explained in Note 6 above).

The Shareholders' Meeting of RCS MediaGroup S.p.A. held on 2 May 2019 approved the distribution of a dividend of € 0.06 per outstanding ordinary share, gross of tax, with ex-dividend date on 20 May 2019. The total amount paid for 517,367,926 ordinary shares in circulation was Euro 31,042,075.56. The payable date was 22 May 2019.

Details of and movements during the year in the equity reserves can be found in the statement of changes in equity.

31 December 2019, net profit amounted to € 39,103,388.76.

39. Employee benefits

Description Merger Discounting Balance at Balance at balances Provisions Utilizations to present 31/12/2018 31/12/2019 Digicast val ue Post-employment benefits 29.9 0.2 0.6 (0.7) 2.2 32.2 Post-employment benefits for exe 0.6----0.6 Total 30.5 0.2 0.6 (0.7) 2.2 32.8

This item includes the actuarial value of the payable to employees. Post-employment benefits of € 32.2 million represent a type of employee remuneration, whose payment is deferred until termination of employment.

190 Post-employment benefits for executives of €0.6 million refer to the payment due under the national contract for newspaper-industry executives, calculated on the basis of length of service and with reference to the employee's remuneration in the last twenty-four months. Payment of this amount is deferred until termination of employment.

The measurement of post-employment benefits, which are considered a defined contribution plan, was assigned to an independent actuary.

The amounts recognized in the income statement and equity in respect of the above post-employment benefits are as follows:

2019 Current service Financial Personnel Actuarial Total cost (income) expense from gains/(losses) expense actuarial recognized in calculations statement of comprehensive income Provisions for post-employment benefits 8.8 0.5 (0.4) 2.2 11.1 Provisions for post-employment benefits for executives - ---- Total 8.8 0.5 (0.4) 2.2 11.1

2018 Current service Financial Personnel Actuarial Total cost (income) expense from gains/(losses) expense actuarial recognized in calculations statement of comprehensive income Provisions for post-employment benefits 9.7 0.4 (0.6) (0.5) 9.0 Provisions for post-employment benefits for executives - ---- Total 9.7 0.4 (0.6) (0.5) 9.0

The principal actuarial assumptions used for the calculation are as follows:

The discount rate was calculated using the Iboxx Eurozone Corporate AA 10+ years index with an average remaining term consistent with the term of the collective being assessed. The expected rates of salary increase are linked to the inflation rates.

Mention should be made that accruals to post-employment benefits shown in the above table in relation to 2019 include € 7.8 million referring to payments to social security funds and € 0.5 million for contributions and withholdings required by law.

The following table shows the results of the sensitivity analysis of the discount rate risk upon a change of +/- 0.5%.

Sensitivity analysis of discount rate 2019 + 0.5% - 0.5% Post-employment benefits 32.2 30.8 33.1 Post-employment benefits for executives 0.6 0.6 0.6 Total 32.8 31.4 33.7

191 40. Provisions for risks and charges

Movements in the year were as follows:

Description Balance at Utilizations / Discounting to Balance at Provisions Reclassifications 31/12/2018 Releases present value 31/12/2019 Non-current: Provision for legal disputes 5.6 1.4 (2.1) (0.2) (0.8) 3.9 Other provisions for risks and charges 4.7 0.2 - 0.2 - 5.1 Total non-current 10.3 1.6 (2.1) - (0.8) 9.0 Current: Provision for legal disputes 4.8 0.1 (1.1) - 0.8 4.6 Other provisions for risks and charges 17.1 0.3 (1.5) - - 15.9 Provisions for returns to receive 1.3 0.4 - - - 1.7 Total current 23.2 0.8 (2.6) - 0.8 22.2 TOTAL PROVIS IONS FOR RIS KS 33.5 2.4 (4.7) - - 31.2

The “legal disputes provision” was set up for outstanding litigation with third parties resulting from the carrying out of the Company’s publishing activities and includes civil actions, lawsuits and employment- related disputes. Accruals for the year relate to civil actions, labour-related proceedings and lawsuits. Utilizations and releases refer mainly to the conclusion of civil actions and lawsuits.

“Other provisions for risks and charges” include potential liabilities related to operations and personnel liabilities.

Potential liabilities from operating activities include: provisions for disputes with social security agencies, customer indemnity provisions to be paid to agents at the end of their mandate, with the remainder related to provisions for various risks.

Potential personnel liabilities refer mainly to expense from personnel departures, terminations of employment, and contractual renewals under the law, if any.

“Utilizations/Releases”, in other provisions for risks and charges, refers to utilizations relating primarily to staff exits due to the continued Company reorganization plan. Releases were also recorded for excess portions set aside in prior years relating to provisions for legal disputes.

In compliance with IFRS, the non-current portion of provisions for risks has been discounted to take account of the effect of the time value of money. The rate used to discount the legal disputes provision is roughly 0.03%, while the rate used to discount the provision for specific risks is approximately 0.07%.

The following table shows the results of the sensitivity analysis of the discount rate risk upon a change of +/- 0.5%.

Sensitivity analysis of discount rate Basic rate 2019 + 0.5% - 0.5% Provision for legal disputes 0.03% 3.9 3.8 n.s. Provision for agents’ termination indemnities 0.70% 1.6 1.9 2.0 Other provisions for risks and charges -0.07% 3.5 3.3 n.s. Total 9.0 9.0 2.0 For the sake of full disclosure, reference is made also to the comment on “Information on ongoing disputes” in the Directors' Report on Operations of the RCS Group in this Financial Report.

192 41. Sundry payables and other non-current liabilities

Sundry payables and other non-current liabilities, totaling € 1.8 million and unchanged versus 31 December 2018 (€ 1.8 million), consist mainly of tax payables, including a payable associated with an IRES refund request, recognized under “non-current tax receivables”.

42. Trade payables

Description Balance at Balance at Change 31/12/2019 31/12/2018 Payables to agents 15.8 15.5 0.3 Payables to freelance staff 5.4 6.1 ( 0.7) Payables to authors 0.4 0.3 0.1 Trade payables to subsidiaries 9.7 10.9 ( 1.2) Trade payables to associates 2.6 1.9 0.7 Trade payables to parents 0.1 0.1 - Trade payables to affiliates 2.1 2.3 ( 0.2) Payables to suppliers 84.9 86.0 ( 1.1) Advances from subscribers 2.0 2.4 ( 0.4) Total 123.0 125.5 ( 2.5)

Trade payables decreased by an overall € 2.5 million versus 31 December 2018. The change relates mainly to lower payables to suppliers (€ 1.1 million) following lower operating costs from ongoing efficiency actions, and to lower payables to subsidiaries (€ 1.2 million).

The carrying amount of trade payables reflects their fair value, also in accordance with the application of IFRS 7.

43. Sundry payables and other current liabilities

Description Balance at Balance at Change 31/12/2019 31/12/2018 Tax liabilities 6.2 7.0 ( 0.8) Payables to social security institutions 9.3 9.3 - Payables to employees 17.9 19.5 ( 1.6) Sundry payables 5.9 5.8 0.1 Security deposits received 0.1 0.1 - Sundry payables to subsidiaries 0.1 0.1 - Deferred income 8.9 7.2 1.7 Total 48.4 49.0 ( 0.6)

Sundry payables and other current liabilities, amounting to € 48.4 million, were basically in line with 31 December 2018 (€ 49 million). Lower payables to employees were recorded (€ 1.6 million), as well as lower tax payables (€ 0.8 million), offset by higher deferred income (€ 1.7 million) as a result of the different publishing plan for add-on sales.

For IFRS 7 purposes, tax liabilities and payables to social security institutions, deferred income, and the payable for untaken holidays (equal to € 9.8 million at 31 December 2018 and € 10.6 million at 31 December 2018) are not included in payables to employees. Hence, sundry payables and other current liabilities at 31 December 2019 would total € 14.2 million (€ 14.9 million at 31 December 2018).

The carrying amount of these payables reflects their fair value.

193 Lastly, the liabilities for the untaken holidays of journalists, which are expected to be used over the long term, were discounted by applying a rate of 0.569%.

44. Net change in loans and borrowings and other financial assets reported in the statement of cash flows

Non-monetary changes 1/1/2019 IFRS 16 Net Other non- 31/12/2018 Cash flow Reclassificat Changes in 31/12/2019 impacts increases Mergers monetary ions fair value leases changes Financial payables 268.4 (37.0) (2.1) (5.0) 224.3 Current financial receivables (269.5) 19.5 0.5 2.4 (247.1) Derivative liabilities 1.1 0.1 1.2 Net change in financial payables and other (0.0) 0.0 (17.5) (2.1) 0.0 0.1 (4.5) 2.4 (21.6) financial assets Cash and cash equivalents (0.4) (0.2) (0.6) Current payables to banks 13.3 (4.6) 8.7 Cash and cash equivalents 12.9 0.0 (4.8) 0.0 0.0 0.0 0.0 0.0 8.1 Net financial debt 12.9 0.0 (22.3) (2.1) 0.0 0.1 (4.5) 2.4 (13.5)

Net liabilities from leased assets 151.0 (18.4) 2.1 10.6 145.3

As required by IFRS, current bank loans and overdrafts form part of the change in cash and cash equivalents.

45. Commitments

The key commitments are shown below:

 Bank sureties given totaled € 21.8 million and consisted of sureties to third parties (€ 4.5 million) mainly for Group VAT compensation and to RCS Group companies (€ 17.3 million) mainly for endorsement credits. Versus the prior year, this item no longer includes amounts from to lease contracts for properties subject to IFRS 16 Lease (€ -9.3 million), following the recognition of liabilities from lease contracts.

 Third-party insurance sureties totaling € 2.3 million refer to sureties issued mainly for prize contests.

 Other guarantees given amounted to € 2.5 million and refer to indemnities issued in favour of Agenzia per lo Sviluppo dell’Editoria S.r.l. and of SIAE for reimbursements received.

 Commitments amount to € 4.7 million and include existing and potential contractual commitments relating to personnel, which refer solely to agreements in force at 31 December 2019, subject to contractual clauses at that date under the exclusive control of RCS. These commitments are entered into with related parties for the entire amount. For additional information regarding the commitments to key management personnel of RCS MediaGroup S.p.A., refer is made to the Remuneration Report published on the website www.rcsmediagroup.it.

As part of disposals or contributions of equity interests or lines of business, the Company has given guarantees still in force mainly in relation to tax, social security and employment. Such guarantees were issued according to market practices and conditions.

The Company expects to collect a total of approximately € 10.3 million (approximately € 3.5 million from RCS Group companies) in the future from sub-letting the leased buildings.

194 46. Information required by Article 149-duodecies of the CONSOB Issuer Regulations

The table below, prepared in accordance with Article 149-duodecies of the CONSOB Issuer Regulations, reports the fees for 2019 for audit and other services provided, only to RCS MediaGroup S.p.A, by the Independent Auditors and members of their network (information on services rendered to subsidiaries is given in the Report on Operations of the consolidated financial statements).

(€ millions) Party performing the service Fees paid in 2019

Audit Deloitte & Touche S.p.A. 0.4

Attestation services (1) Deloitte & Touche S.p.A. 0.0

Other services (2) Deloitte & Touche S.p.A. 0.0

Total 0.4

(1) Attestation services refer to the Consolidated Non-Financial Statement (€ 19 thousand) (2) Other services refer mainly to methodological support for IFRS 16 (€ 22 thousand)

47. Direction and Coordination Activities

As explained in Note 5 to the Consolidated Financial Statements in the section "Significant events during the year", RCS MediaGroup S.p.A. became subject to the direction and coordination (as defined under Article 2497 et seq. of the Italian Civil Code) of Cairo Communication S.p.A.. In December 2019, Cairo Communication S.p.A. informed RCS that it will direct and coordinate advertising sales at group level. On 12 December 2019, the Board of Directors of RCS resolved to implement the organizational changes required to enable Cairo Communication S.p.A. to fulfil strategic and operational coordination between Cairo Pubblicità S.p.A. and the Advertising Department of RCS, in the belief, among other things, that this will enable the Company to offer customers a broad, diversified and multimedia portfolio of publishing solutions, offering "all-round" advertising plans that cover most of the population through various channels and fully meet advertisers’ needs. Transactions with Cairo Communication S.p.A. and the companies subject to its direction and coordination are indicated in the specific notes, in particular in Note 17 Related party transactions in the Consolidated Financial Statements and Note 13 Related-party transactions in the Separate Financial Statements.

Therefore, as required by Article 2497-bis of the Italian Civil Code, the following table summarizes the parent company's key figures drawn from the financial statements for the year ended 31 December 2018. Cairo Communication S.p.A. prepares the consolidated financial statements of the Group.

For a full understanding of the financial position and financial performance of Cairo Communication S.p.A. at 31 December 2018, as well as the results achieved by the company in the year ended on that date, reference is made to the financial statements which, together with the Independent Auditors' Report, are available in the forms and manner required by law.

195 CAIRO COMMUNICATION S.p.A. STATEMENT OF FINANCIAL POSITION ASSETS

(€) 31/12/2018

Non-current assets 357,239,602 Current assets 54,085,671 Non-current assets held for sale -

TOTAL ASSETS 411,325,273

EQUITY AND LIABILITIES

(€) 31/12/2018

Equi ty 251,609,783 Non-current liabilities 41,572,323 Current liabilities 118,143,167 Liabilities relating to non-current assets held for sale -

TOTAL EQUITY AND LIABILITIES 411,325,273

INCOME STATEMENT

(€) 2018

Net revenue 6,909,959 Other operating revenue and income 705,878 Service costs ( 3,499,490) Rentals and leases ( 749,685) Personnel expense ( 3,172,666) Amortization, depreciation, provisions and write-downs ( 208,191) Other operating costs ( 83,168) EB IT ( 97,363) Net financial income (expense) ( 482,517) Income (expense) from investments 7,101,262 PROFIT (LOSS) BEFORE TAX 6,521,382 Income tax ( 63,288) PROFIT FROM CONTINUING OPERATIONS 6,458,094 Profit/(loss) from discontinued operations - PROFIT FOR THE PERIOD 6,458,094

196 SIGNIFICANT EVENTS AFTER YEAR END

For significant events after year end, reference is made to the Directors’ Report on Operations.

Milan, 26 March 2020

For the Board of Directors:

Chairman and Chief Executive Officer

Urbano Cairo

(signed on the original)

197 CERTIFICATION OF THE FINANCIAL REPORTING MANAGER AND THE CHIEF EXECUTIVE OFFICER

Certification of the separate financial statements pursuant to Article 81-ter of CONSOB Regulation no. 11971 dated 14 May 1999 as subsequently amended and supplemented

1. The undersigned, Urbano Cairo, Chairman and Chief Executive Officer, and Roberto Bonalumi, Financial Reporting Manager for RCS MediaGroup S.p.A., hereby certify, also taking account of the provisions of paragraphs 3 and 4, Article 154-bis of Legislative Decree no. 58 dated 24 February 1998: - the adequacy in relation to the company’s characteristics and - the effective application of administrative and accounting procedures in preparing the 2019 separate financial statements.

2. The assessment of the adequacy of the administrative and accounting procedures for preparing the separate financial statements as at and for the year ended 31 December 2019 was carried out on the basis of the process defined by RCS MediaGroup S.p.A., in line with the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organizations of the Treadway Commission as the reference framework generally accepted at international level.

3 We also certify that: 3.1 the separate financial statements of RCS MediaGroup S.p.A. at 31 December 2019: a. have been prepared in accordance with the International Financial Reporting Standards endorsed by the European Union pursuant to EC Regulation no. 1606/2002 of the European Parliament and Council dated 19 July 2002; b. correspond to the books and accounting records; c. are suitable to give a true and fair view of the Issuer's financial position, results of operations and cash flows;

3.2 the report on operations contains a reliable analysis of performance and the results of operations, and of the situation of the issuer, together with a description of the principal risks and uncertainties to which it is exposed.

Milan, 26 March 2020

Chairman and Chief Executive Officer Financial Reporting Manager Urbano Cairo Roberto Bonalumi

(signed on the original) (signed on the original)

198

ANNEXES TO THE CONSOLIDATED FINANCIAL STATEMENTS

199 LIST OF GROUP INVESTMENTS AT 31 DECEMBER 2019

Fully consolidated companies

REGISTERED BUSINESS SHARE/QUOTA HELD COMPANY NAME CURRENCY % by Group % held directly OFFICE SEGMENT CAPITAL BY

Geographical area - Italy Blei S.r.l. in liquidation Milan Advertising Euro 1,548,000.00 100.00 RCS MediaGroup S.p.A. 100.00 Consorzio Milano Marathon S.r.l. Milan Services Euro 20,000.00 100.00 RCS Sport S.p.A. 100.00 Digital Factory S.r.l. Milan Television Euro 500,000.00 100.00 RCS MediaGroup S.p.A. 100.00 MyBeautyBox S.r.l. Milan Multimedia Euro 10,000.00 60.00 RCS MediaGroup S.p.A. 60.00 RCS Edizioni Locali S.r.l Milan Publishing Euro 1,002,000.00 100.00 RCS MediaGroup S.p.A. 100.00 RCS Factor S.r.l. in liquidation Milan Factoring Euro 100,000.00 90.00 RCS MediaGroup S.p.A. 90.00 RCS Produzioni Milano S.p.A. Milan Production Euro 1,000,000.00 100.00 RCS MediaGroup S.p.A. 100.00 RCS Produzioni Padova S.p.A. Milan Production Euro 500,000.00 100.00 RCS MediaGroup S.p.A. 100.00 RCS Produzioni S.p.A. Rome Production Euro 1,000,000.00 100.00 RCS MediaGroup S.p.A. 100.00 RCS Sport S.p.A. Milan Services Euro 100,000.00 100.00 RCS MediaGroup S.p.A. 100.00 RCS Sports & Events S.r.l. Milan Services Euro 10,000.00 100.00 RCS MediaGroup S.p.A. 100.00 Sfera Service S.r.l. Milan Services Euro 52,000.00 100.00 RCS MediaGroup S.p.A. 100.00 Società Sportiva Dilettantistica RCS Active Team a r.l. Milan Services Euro 10,000.00 100.00 RCS Sport S.p.A. 100.00 Trovolavoro S.r.l. Milan Advertising Euro 674,410.00 100.00 RCS MediaGroup S.p.A. 100.00

Geographical area - Spain Canal Mundo Radio Cataluna S.L. Barcelona Radio Euro 3,010.00 99.98 Unidad Editorial S.A. 99.99 Corporación Radiofónica Informacion y Deporte S.L.U. Madrid Radio Euro 900,120.00 99.99 Unedisa Comunicaciones S.L.U. 100.00 Ediciones Cónica S.A. Madrid Publishing Euro 432,720.00 99.39 Unidad Editorial S.A. 99.40 Ediservicios Madrid 2000 S.L.U. Madrid Publishing Euro 601,000.00 99.99 Unidad Editorial Revistas S.L.U. 100.00 La Esfera de los Libros S.L. Madrid Publishing Euro 48,000.00 74.99 Unidad Editorial S.A. 75.00 Información Estadio Deportivo S.A. Seville Publishing Euro 154,339.91 84.96 Unidad Editorial Informaciòn Deportiva S.L.U 84.97 Last Lap S.L. Madrid Services Euro 6,010.00 99.99 Unidad Editorial Informaciòn Deportiva S.L.U 100.00 Logintegral 2000 S.A.U. Madrid Distribution Euro 500,000.00 99.99 Unidad Editorial S.A. 100.00 Unedisa Comunicaciones S.L.U. Madrid Multimedia Euro 610,000.00 99.99 Unidad Editorial S.A. 100.00 Unedisa Telecomunicaciones S.L.U. Madrid Multimedia Euro 1,100,000.00 99.99 Unidad Editorial S.A. 100.00 Unedisa Telecomunicaciones de Levante S.L. Valencia Multimedia Euro 3,010.00 51.15 Unedisa Telecomunicaciones S.L.U. 51.16 Unidad Editorial S.A. Madrid Publishing Euro 125,896,898.00 99.99 RCS MediaGroup S.p.A. 99.99 Unidad Liberal Radio S.L. Madrid Multimedia Euro 10,000.00 54.99 Unidad Editorial S.A. 55.00 Unidad de Medios Digitales S.L. Madrid Advertising Euro 3,000.00 50.00 Unidad Editorial S.A. 50.00 Unidad Editorial Informaciòn Deportiva S.L.U. Madrid Multimedia Euro 4,423,043.43 99.99 Unidad Editorial S.A. 100.00 Unidad Editorial Informaciòn Economica S.L.U. Madrid Publishing Euro 102,120.00 99.99 Unidad Editorial S.A. 100.00 Unidad Editorial Ediciones Locales, S.L. Valencia Publishing Euro 1,732,345.00 98.44 Unidad Editorial S.A. 87.23 Unidad Editorial Informaciòn General S.L.U. 11.22 Unidad Editorial Formacion S.L.U. Madrid Television Euro 1,693,000.00 99.99 Unedisa Telecomunicaciones S.L.U. 100.00 Unidad Editorial Informaciòn General S.L.U. Madrid Publishing Euro 102,120.00 99.99 Unidad Editorial S.A. 100.00 Unidad Editorial Juegos S.A. Madrid Multimedia Euro 100,000.00 99.99 Unidad Editorial S.A. 100.00 Unidad Editorial Revistas S.L.U. Madrid Publishing Euro 1,195,920.00 99.99 Unidad Editorial S.A. 100.00 Veo Television S.A. Madrid Television Euro 769,824.00 99.99 Unidad Editorial S.A. 100.00 Feria Bebe S.L. Barcelona Publishing Euro 10,000.00 60.00 Sfera Editores Espana S.L. 60.00 Sfera Direct S.L. Barcelona Publishing Euro 3,006.00 100.00 Sfera Editores Espana S.L. 100.00 Sfera Editores Espana S.L. Barcelona Publishing Euro 174,000.00 100.00 RCS MediaGroup S.p.A. 100.00

Geographical area - Other countries Sfera Editores Mexico S.A. Colonia Anzures Publishing/Services MXN 34,661,200.00 100.00 RCS MediaGroup S.p.A. 99.9997 Sfera Service S.r.l. 0.0003 Sfera France SAS Paris Publishing Euro 240,000.00 66.70 Sfera Editores Espana S.L. 66.70 Hotelyo S.A. Chiasso Digital CHF 100,000.00 100.00 RCS MediaGroup S.p.A. 100.00 A Esfera dos Livros S.L.U. Lisbon Publishing Euro 5,000.00 74.99 La Esfera de los Libros S.L. 100.00 Last Lap Organiçao de eventos S.L. Lisbon Services Euro 30,000.00 99.99 Last Lap S.L. 99.67 Unidad Editorial Informaciòn Deportiva S.L.U 0.33 RCS Sports and Events DMCC Dubai Services Euro 20,077.00 100.00 RCS Sports & Events S.r.l. 100.00

200 Equity-accounted investees

REGISTERED BUSINESS CURRENC SHARE/QUOTA HELD COMPANY NAME % held directly OFFICE SEGMENT Y CAPITAL BY

Geographical area - Italy Quibee S.r.l. Turin Digital Euro 15,873.02 RCS MediaGroup S.p.A. 37.00 Consorzio C.S.E.D.I. Milan Distribution Euro 103,291.00 M-Dis Distribuzione Media S.p.A. 20.00 GD Media Service S.r.l. Milan Distribution Euro 789,474.00 M-Dis Distribuzione Media S.p.A. 29.00 Liguria Press S.r.l. Genoa Distribution Euro 240,000.00 M-Dis Distribuzione Media S.p.A. 40.00 M-Dis Distribuzione Media S.p.A. Milan Distribution Euro 6,392,727.00 RCS MediaGroup S.p.A. 45.00 MDM Milano Distribuzione Media S.r.l. Milan Distribution Euro 611,765.00 M-Dis Distribuzione Media S.p.A. 51.00 Pieroni Distribuzione S.r.l. Milan Distribution Euro 750,000.00 M-Dis Distribuzione Media S.p.A. 51.00 TO-dis S.r.l. Milan Distribution Euro 510,000.00 M-Dis Distribuzione Media S.p.A. 100.00 Trento Press Service S.r.l. Trento Distribution Euro 260,000.00 M-Dis Distribuzione Media S.p.A. 36.92 Iniziativa Immobiliare Due S.r.l. Milan Real Estate Euro 500,000.00 Inimm Due S.à.r.l. 100.00

Geographical area - Spain Corporacion Bermont S.L. Madrid Printing Euro 21,003,100.00 Unidad Editorial S.A. 37.00 Bermont Catalonia S.a. Barcelona Printing Euro 60,101.21 Corporacion Bermont S.L. 100.00 Bermont Impresion S.L. Madrid Printing Euro 321,850.00 Corporacion Bermont S.L. 100.00 Calprint S.L. Valladolid Printing Euro 1,856,880.00 Corporacion Bermont S.L. 39.58 Escuela de Cocina Telva S.L. Madrid Training Euro 61,000.00 Ediciones Cónica S.A. 50.00 Impresiones y distribuciones de Prensa Europea S.A. Madrid Printing Euro 60,101.21 Corporacion Bermont S.L. 100.00 Lagar S.A. Madrid Printing Euro 150,253.03 Corporacion Bermont S.L. 60.00 Bermont Impresion S.L. 40.00 Madrid Deportes y Espectáculos S.A. (in liquidation) Madrid Multimedia Euro 600,000.00 Unidad Editorial Informaciòn Deportiva S.L.U. 30.00 Newsprint Impresion Digital S.L. Tenerife Printing Euro 93,000.00 TF Print S.A. 50.00 Santa Maria del Omniprint S.A. Printing Euro 2,790,000.00 Corporacion Bermont S.L. 100.00 Cami Radio Salud S.A. Barcelona Radio Euro 200,782.08 Unedisa Comunicaciones S.L.U. 30.00 Recoprint Dos Hermanas S.L.U. Madrid Printing Euro 2,052,330.00 Corporacion Bermont S.L. 100.00 Recoprint Güimar S.L.U. Madrid Printing Euro 1,365,140.00 Corporacion Bermont S.L. 100.00 Recoprint Impresiòn S.L.U. Madrid Printing Euro 3,010.00 Corporacion Bermont S.L. 100.00 Recoprint Pinto S.L.U. Madrid Printing Euro 3,652,240.00 Corporacion Bermont S.L. 100.00 Recoprint Rábade S.L.U. Madrid Printing Euro 1,550,010.00 Corporacion Bermont S.L. 100.00 Recoprint Sagunto S.L.U. Madrid Printing Euro 2,281,920.00 Corporacion Bermont S.L. 100.00 Santa Cruz de TF Press S.L. Printing Euro 3,005.06 Corporacion Bermont S.L. 100.00 Tenerife Santa Cruz de TF Print S.A. Printing Euro 1,382,327.84 Corporacion Bermont S.L. 75.00 Tenerife Bermont Impresion S.L. 25.00 Unidad Liberal Radio Madrid S.L. Madrid Multimedia Euro 10,000.00 Unidad Editorial S.A. 45.00 Libertad Digital S.A. 55.00

Geographical area - Other countries Inimm Due S.à.r.l. Luxembourg Real Estate Euro 240,950.00 RCS MediaGroup S.p.A. 20.00

Companies measured at fair value CURREN SHARE/QUOTA HELD COMPANY NAME REGISTERED OFFICE BUSINESS SEGMENT % held directly CY CAPITAL BY

Geographical area - Italy Ansa Società Cooperativa Rome Publishing Euro 10,783,361.63 RCS MediaGroup S.p.A. 4.38 Cefriel S.c.a r.l. Milan Research Euro 1,173,393.00 RCS MediaGroup S.p.A. 5.46 Consorzio Edicola Italiana Milan Digital Euro 60,000.00 RCS MediaGroup S.p.A. 16.67 Consuledit S.c.a r.l. in liquidation Milan Publishing Euro 20,000.00 RCS MediaGroup S.p.A. 19.55 Digital Magics S.p.A. Milan Multimedia Euro 7,415,086.00 RCS MediaGroup S.p.A. 0.39 Fantaking Interactive S.r.l. Brescia Digital Euro 10,000.00 RCS MediaGroup S.p.A. 15.00 Giorgio Giorgi S.r.l. Calenzano (FI) Distribution Euro 1,000,000.00 M-Dis Distribuzione Media S.p.A. 5.00 H-Farm S.p.A. Roncade (TV) Services Euro 8,924,165.00 RCS MediaGroup S.p.A 0.75 Immobiliare Editori Giornali S.r.l. Rome Publishing Euro 830,462.00 RCS MediaGroup S.p.A 7.49 ItaliaCamp S.r.l. Rome Services Euro 10,000.00 RCS MediaGroup S.p.A 3.00 Mach 2 Libri S.r.l. in liquidation Milan Publishing Euro 646,250.00 RCS MediaGroup S.p.A 19.09 Mperience S.r.l. Rome Digital Euro 31,856.00 RCS MediaGroup S.p.A. 1.68 Premium Publisher Network (Consortium) Milan Advertising Euro 19,425.77 RCS MediaGroup S.p.A. 20.51 SportPesa Italy S.r.l. Milan Multimedia Euro 10,000.00 RCS MediaGroup S.p.A. 25.00 The Gira s.r.l. Milan Services Euro 11,111.11 RCS Sports & Events S.r.l. 9.25

Geographical area - Spain Cronos Producciones Multimedia S.L.U. Madrid Publishing Euro 3,010.00 Libertad Digital Television S.A. 100.00 13 TV S.A Madrid Multimedia Euro 3,462,247.80 Unidad Editorial S.A. 0.14 Digicat Sis S.L. Barcelona Radio Euro 3,200.00 Radio Salud S.A. 25.00 Libertad Digital Publicidad y Marketing S.L.U Madrid Advertising Euro 3,010.00 Libertad Digital S.A. 100.00 Libertad Digital S.A. Madrid Multimedia Euro 2,582,440.00 Unidad Editorial S.A. 1.16 Libertad Digital Television S.A. Madrid Television Euro 2,600,000.00 Libertad Digital S.A. 99.66 Medios de Azahar S.A. Castellon Services Euro 825,500.00 Unidad Editorial Ediciones Locales, S.L. 6.12 Palacio del Hielo S.A. Madrid Multimedia Euro 185,741.79 Unidad Editorial S.A. 8.53 Suscribe S.L. Palma de Mallorca Publishing Euro 300,000.00 Logintegral 2000 S.A.U. 15.00 Wouzee Media S:L Madrid Multimedia Euro 14,075.00 Unidad Editorial S.A. 10.00

Geographical area - Other countries Yoodeal Ltd Crowborough Digital GBP 150,000.00 RCS MediaGroup S.p.A. 2.00

201 EXCHANGE RATES AGAINST THE EURO

The main exchange rates used to translate financial statements drawn up in currencies other than the euro are as follows:

Exac t Ave r ag e Exac t Ave r ag e exchange rate exchange rate exchange rate exchange rate 31.12.2019 2019 31.12.2018 2018

Swiss franc CHF 1.08540 1.11240 1.12690 1.15500 Mexican peso MXN 21.22020 21.55650 22.49210 22.70540 United Arab Emirates dirham AED 4.12570 4.11130 4.20500 4.33710

202 QUARTERLY CONSOLIDATED INCOME STATEMENT

1st quarter 2nd quarter 3rd quarter 4th quarter 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 (€ millions) (1) (2) (3) (4) (5) Net revenue 206.2 216.3 269.3 287.3 198.4 209.7 249.7 262.3 923.6 975.6 Circulation revenue 101.5 106.0 98.4 106.5 106.3 114.1 102.3 105.7 408.4 432.3 Advertising revenue 77.8 84.0 120.1 122.1 69.9 74.9 116.6 124.8 384.5 405.8 Sundry publishing revenue 26.9 26.3 50.8 58.7 22.2 20.7 30.8 31.8 130.7 137.5 Operating costs (115.9) (128.4) (137.2) (153.4) (115.2) (128.4) (133.6) (138.9) (501.9) (549.2) Personnel expense (67.3) (66.4) (68.6) (68.7) (62.1) (61.6) (66.5) (68.0) (264.5) (264.7) Provisions for risks (6) (0.7) (2.0) (0.9) (0.9) (1.2) (1.3) 1.2 (1.3) (1.5) (5.4) Allowance for impairment 0.2 (0.1) (1.3) (1.2) (0.9) (0.8) (0.5) (0.9) (2.5) (3.0) Income (expense) from equity-accounted investees 0.1 0.8 0.2 (0.2) (0.8) 1.0 0.6 0.4 0.1 2.0 EBITDA 22.6 20.2 61.5 62.9 18.2 18.6 50.9 53.6 153.3 155.3 Amortization of intangible assets (4.3) (5.8) (4.0) (5.4) (3.4) (4.1) (3.8) (4.4) (15.5) (19.6) Depreciation of property, plant and equipment (2.8) (3.0) (2.7) (2.8) (2.5) (2.8) (2.4) (2.8) (10.5) (11.5) Depreciation of rights of use on leased assets (5.5) 0.0 (6.2) 0.0 (6.0) - (5.5) 0.0 (23.2) 0.0 Depreciation of investment property (0.1) (0.2) (0.2) (0.1) (0.2) (0.2) (0.2) (0.1) (0.6) (0.6) Other (impairment losses)/reversal on non-current assets------(1.0)(8.1)(1.0)(8.1) Operating profit (EBIT) 9.9 11.2 48.4 54.6 6.1 11.5 38.0 38.2 102.5 115.5 Net financial income (expense) (3.9) (4.4) (4.4) (6.2) (3.9) (3.1) (3.7) (0.3) (16.0) (14.1) Income (expense) from financial assets/liabilities - - - 1.5 - - (0.2) (2.4) (0.1) (0.9) Profit (loss) before tax 6.0 6.8 44.0 49.9 2.2 8.4 34.1 35.5 86.4 100.5 Income tax (1.0) (0.7) (10.5) (10.5) (0.0) (1.7) (6.2) (2.4) (17.6) (15.2) Profit (loss) from continuing operations 5.0 6.1 33.5 39.4 2.2 6.7 27.9 33.1 68.8 85.3 Profit (loss) from assets held for sale ------Profit (loss) before non-controlling interests 5.0 6.1 33.5 39.4 2.2 6.7 27.9 33.1 68.8 85.3 (Profit) loss pertaining to non-controlling interests (0.1) (0.1) - - 0.1 0.1 (0.1) - (0.3) (0.1) Profit (loss) for the period 4.9 6.0 33.5 39.4 2.3 6.8 27.8 33.1 68.5 85.2

(1) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in first quarter 2019 in the reversal of lease payments of € 6.5 million, offset by higher amortization and depreciation of € 5.5 million and higher financial expense of € 0.9 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +6.5 million, € +1 million and € +0.1 million respectively. (2) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in second quarter 2019 in the reversal of lease payments of € 6.6 million, offset by higher amortization and depreciation of € 6.2 million and higher financial expense of € 0.9 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +6.6 million, € +0.4 million and € -0.5 million respectively. (3) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in third quarter 2019 in the reversal of lease payments of € 6.6 million, offset by higher amortization and depreciation of € 6 million and higher financial expense of € 0.9 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +6.6 million, € +0.6 million and € -0.2 million respectively, net of the tax effect. (4) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in fourth quarter 2019 in the reversal of lease payments of € 6.5 million, offset by higher amortization and depreciation of € 5.5 million and higher financial expense of € 0.8 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +6.5 million, € +1 million and € +0.1 million respectively, net of the tax effect. (5) The adoption of IFRS 16 as from 1 January 2019, without restating the balances at 31 December 2018, resulted in 2019 in the reversal of lease payments of € 26.2 million, offset by higher amortization and depreciation of € 23.2 million, higher financial expense of € 3.5 million and lower tax of € 0.1 million; with an impact on the Group’s EBITDA, EBIT and profit attributable to the owners of the parent for the period of € +26.2 million, € +3 million and € -0.4 million respectively, net of the tax effect. (6) As from the closing date of 31 December 2019, ordinary recoveries of provisions for risks and charges, previously recognized under "Other operating costs", are directly deducted from "Provisions for risks and charges", which therefore showed a positive balance in fourth quarter 2019.

203 INCOME STATEMENT PURSUANT TO CONSOB RESOLUTION NO. 15519 OF 27 JULY 2006

31 December €/millions Notes 2019 2018 I Revenue from sales 15 923.6 975.6 - of which with related parties 17 264.0 284.3 II Increase in internal work capitalized - - II Changes in work in progress, finished and semi-finished products 41 1.9 0.3 II Raw materials and services 18 ( 504.1) ( 553.2) - of which with related parties 17 ( 107.3) ( 114.1) - of which non-recurring 31 ( 0.5) - III Personnel expense 19 ( 264.5) ( 264.7) - of which with related parties 17 ( 4.6) ( 4.4) - of which non-recurring 31 ( 2.7) ( 1.8) II Other operating revenue and income 20 15.8 19.8 - of which with related parties 17 2.5 2.5 - of which non-recurring - 2.6 II Sundry operating expense 21 ( 15.5) ( 16.1) II Profit (loss) from derecognition of trade and sundry receivables - - IV Provisions 52 ( 1.5) ( 5.4) - of which non-recurring 31 ( 0.4) - V (Write-down)/write-back of trade and sundry receivables 22 ( 2.5) ( 3.0) VI Share of income (expense) from equity-accounted investees 23 0.1 2.0 - of which non-recurring - ( 0.6) VII Amortization of intangible assets 24 ( 15.5) ( 19.6) VIII Depreciation of property, plant and equipment 24 ( 10.5) ( 11.5) IX Depreciation of rights of use on leased assets 24 ( 23.2) - X Depreciation of investment property 24 ( 0.6) ( 0.6) XI Other (impairment losses)/reversal on non-current assets 24 ( 1.0) ( 8.1) Operating profit (EBIT) 102.5 115.5 XII Interest income calculated using the effective interest method 25 0.3 0.3 XII Financial income 25 0.6 3.9 - of which with related parties 17 0.2 0.1 XII Financial expense 25 ( 16.9) ( 18.3) XIII Other income (expense) from financial assets/liabilities 26 0.2 1.5 XIII Profit (loss) from derecognition of receivables and other financial assets - - XIII (Write-down)/write-back of receivables and other financial assets (1) 27 ( 0.3) ( 2.4) Profit (loss) before tax 86.4 100.5 XIV Income tax 28 ( 17.6) ( 15.2) Profit (loss) from continuing operations 68.8 85.3 XV Profit (loss) from assets held for sale and discontinued operations - - Profit (loss) for the year 68.8 85.3 Attributable to: XVI Profit (loss) attributable to non-controlling interests 29 0.3 0.1 Profit (loss) attributable to the owners of the parent 68.5 85.2 Profit (loss) for the year 68.8 85.3 Basic earnings (losses) per share: continuing operations 30 0.13 0.16 Diluted earnings (losses) per share: continuing operations 30 0.13 0.16 Basic earnings (losses) per share: assets held for sale and discontinued operations 30 - - Diluted earnings (losses) per share: assets held for sale and discontinued operations 30 - -

204 STATEMENT OF FINANCIAL POSITION PURSUANT TO CONSOB RESOLUTION NO. 15519 OF 27 JULY 2006

205 RELATED PARTY TRANSACTIONS

Parents Trade receivables Trade payables Financial-related transactions

Cairo Communication S.p.A. 0.1 0.0 U.T. Communication S.p.A. - -

TOTAL 0.1 0.0

Jointly controlled companies Current financial Trade receivables Trade payables Financial-related transactions receivables

m-Dis Distribuzione Media S.p.A. 18 . 0 10.3 2.6 To-dis S.r.l. - 1.6 - MDM Milano Distribuzione Media S.r.l. - 0.6 -

TOTAL 18 . 0 12.5 2.6

Associates Trade receivables Trade payables Financial-related transactions

Bermont Impresion S.L. (Bermont Group) - 2.2 Recoprint Dos hermanas S.L.U. (Bermont Group) - 1.0 Recoprint Sagunto S.L.U. (Bermont Group) - 0.8 Bermont Catalonia S.a. (Bermont Group) - 0.7 Recoprint Ràbade S.L.U. (Bermont Group) - 0.6 Calprint S.l. (Bermont Group) - 0.6 Omniprint S.A. (Bermont Group) - 0.4 TF Print S.a. (Bermont Group) - 0.4 Radio Salud SA 0.2 Iniziativa Immobiliare Due S.r.l. 0.2 -

TO TA L 0.2 6.9

Other affiliates (1) Trade receivables Trade payables Financial-related transactions

Cairo group companies 1. 3 1. 9

TO TAL 1. 3 1. 9 (1) Include the subsidiaries, associates and jointly controlled companies of Cairo Communication S.p.A. and U.T. Communications S.p.A.

Other related parties (1) Revenue from sales Trade receivables Income and financial-related transactions

Della Valle group companies 1. 5 0 . 7 P irelli group companies 0.1 0.1

TO TA L 1. 6 0 . 8 (1) Compensation/commitments for key management personnel, details of which are in Note 17 Related party transactions, are not included

206 Parents Other operating revenue and Revenue from sales Raw materials and services Income-related transactions income

Cairo Communication S.p.A. 0.1 (0.2) 0.9

U.T. Communication S.p.A. - - -

TOTAL 0.1 (0.2) 0.9

Jointly controlled companies Other operating Revenue from sales Raw materials and services Financial income Income-related transactions revenue and income

m-Dis Distribuzione Media S.p.A. 259.3 (79.6) 1.1 0.2

MDM Milano Distribuzione Media S.r.l. - (0.1)

TOTAL 259.3 (79.7) 1.1 0.2

Associates Revenue from sales Raw materials and services Income-related transactions

Bermont Impresion S.L. (Bermont Group) 1. 1 (6.8) Recoprint Dos hermanas S.L.U. (Bermont Group) - (2.5) Recoprint Sagunto S.L.U. (Bermont Group) - (2.1) Bermont Catalonia S.a. (Bermont Group) - (1.9) Recoprint Rábade S.L.U. (Bermont Group) - (1.7) Calprint S.l. (Bermont Group) - (1.4) TF Print S.A. (Bermont Group) - (1.2) Omniprint S.A. (Bermont Group) - (1.0) Radio Salud S.A. 0.1 (0.7) TO TAL 1.2 (19.3)

Other affiliates (1) Other operating revenue Revenue from sales Raw materials and services Income-related transactions and income

Cairo group companies 1.8 (4.7) 0.5

TO TAL 1.8 (4.7) 0.5 (1) Include the subsidiaries, associates and jointly controlled companies of Cairo Communication S.p.A. and U.T. Communications S.p.A.

Commitments and guarantees to related parties Parents - Associates - Other affiliates - Other related parties 6.8 To t a l 6.8

Supplementary pension fund for executives (FIPDIR) Personnel expense

RCS MediaGroup S.p.A. (0.4)

TO TAL ( 0 . 4 )

207 TABLES ATTACHED TO THE SEPARATE FINANCIAL STATEMENTS OF RCS MEDIAGROUP S.P.A.

208 Details on Related Party Transactions at 31 December 2019

(€ thousands) Non-current Investments Non-current Sundry receivables Current financial Sundry payables and Current Sundry payables and financial assets Current financial Guarantees and Company name measured at financial Trade receivables and other current Current tax assets assets from lease other non-current financial Current tax liabilities Trade payables other current from lease receivables commitments cost receivables assets contracts liabilities payables liabilities contracts Parents U.T. Communications S.p.A. - - - 0 ------Cairo Communication S.p.A. - - - 94 0 ------(49) - - Total parents - - - 95 0 ------(49) - - Subsidiaries Trovolavoro S.r.l. 838 - - 241 0 - - - - (708) (351) (43) - - RCS Factor S.r.l. in liquidation ------RCS Sport S.p.A. 15,820 - - 4,061 (0) - 1,917 - (97) - (5,050) - - 4,950 SSD RCS Active Team S.r.l. - - - 59 - - - - - (1,365) - - - - Unidad Editorial S.a. 334,483 - - 1,015 20 - 229,875 - - - - (314) - 11,000 RCS Sports and Events DMCC - - - 107 ------RCS Sports & Events S.r.l. 3,778 - - 1,035 - 3,363 - - - (47,341) (0) (388) (61) - Sfera Service S.r.l. 52 - - 154 - - - - - (494) (1) (82) (34) - Sfera Editores Espana S.l. 177 - - 839 - - - - - (217) - (129) - - Sfera Editores Mexico S.a. 1,135 - - 289 ------Blei S.r.l. in liquidation 2,024 - - 4 - - - - (133) (2,321) (43) - - - RCS Produzioni Padova S.p.A. 2,142 - 3,887 319 - 8 - 361 (70) (4,196) - (773) - - Logintegral 2000 S.a. - - - 66 ------RCS Intern. Newspapers S.r.l. ------Consorzio Milano Marathon S.r.l. - - - 3 - - - - - (2,349) - - - - La Es fera De Los Libros S.l.U - - - - 2 ------(0) - Digital Factory S.r.l. - - - (0) - - - - - (613) (396) - - - RCS Produzioni Milano S.p.A. 9,891 - - 673 - - 2,460 - - - (243) (2,079) (28) 1,270 RCS Produzioni S.p.A. 3,044 - 6,548 349 - - - 629 (242) (2,225) (75) (858) - - Rcs Edizioni Locali S.r.l. 11,264 - - 1,111 4 - - - (317) (13,602) (379) (5,049) - 6 Last Lap Organiçao eventos SL - - - - 0 ------Ediciones Cónica S.A. - - - 1 ------(2) - - Unidad Editorial Revistas SLU - - - 14 ------(0) - - Unidad Editorial Juegos S.A. - - - 50 ------MyBeautyBox S.r.l. 25 114 - 30 - - - - - (135) (17) - - - Hotelyo S.A. 131 - - 120 ------(8) - - Total subsidiaries 384,804 114 10,435 10,537 26 3,371 234,252 990 (858) (75,566) (6,555) (9,725) (123) 17,226 Associates M-Dis Distribuzione Media S.p.A. 8,053 - - 17,959 6 - 10,259 - - - - (2,594) - - MDM Milano Distribuzione Media ------643 - - - - (3) - - To-Dis S.r.l. ------1,596 ------Inimm Due S.a.r.l. - - - 29 (1) ------Iniziativa Immobilare 2 S.r.l. - - - 197 ------Quibee S.r.l. 150 ------(21) - - Total associates 8,203 - - 18,184 6 - 12,499 - - - - (2,618) - - Other affiliates Cairo Pubblicita' S.p.A. - - - 557 ------(567) (32) - Cairo Editore S.p.A. - - - 26 ------(2) - - Cairo Publishing S.r.l. - - - 463 ------(144) - - LA7 S.p.A. - - - 243 ------(1,081) - - Il Trovatore S.r.l. ------(91) - - Torino FC S.p.A. - - - 32 ------Total other affiliates - - - 1,321 ------(1,884) (32) - FipDir - Supplementary Fund fund for executives - - - - 10 ------1 - Board of Directors ------(950) - Board of Statutory Auditors ------(221) - Key management personnel ------(514) 4,700 Gruppo Pirelli & C. S.p.A. - - - 20 ------Della Valle Group -- -716------

Total other related parties - - - 737 10 ------(1,684) 4,700

Reported total 393,007 114 10,435 30,874 42 3,371 246,751 990 (858) (75,566) (6,555) (14,276) (1,839) 21,926

209 (€ thousands) Interes t income Other (Write-down)/write- Sundry Purchasing Other operating Sundry calculated Interes t and Circulation Advertising Service Rentals and Personnel Financial income/(expense) from back of receivables Company name publishing costs for raw revenue and operating using the other financial revenue revenue costs leases expense expense financial assets and and other financial revenue materials income expense effective income liabilities assets interest method Parents U.T. Communications S.p.A. ------Cairo Communication S.p.A. - (21) (47) - 215 - - (873) ------Total parents - (21) (47) - 215 - - (873) ------Subsidiaries Trovolavoro S.r.l. (2) (226) (358) 3 43 - - (111) - (0) - 0 1,483 - RCS Factor S.r.l. in liquidation ------0 (349) - RCS Sport S.p.A. (10) (10) (2,600) - - - - (392) - (3) - 22 (13,000) (10) SSD RCS Active Team S.r.l. - - (166) - - - - (10) - - - 3 - - Unidad Editorial S.a. - - (20) 1,657 323 23 - (1,727) 1 (4,105) - 3 - 179 RCS Sports and Events DMCC - - (202) - - - - (218) ------RCS Sports & Events S.r.l. - (13) (1,405) 282 95 - - (552) 15 - - 71 - - Sfera Service S.r.l. - - (128) - 201 - - (165) - (0) - 0 - - Sfera Editores Espana S.l. - - (282) - 90 ------0 - - Sfera Editores Mexico S.a. ------334 - Blei S.r.l. in liquidation - - (13) ------8 6 - RCS Produzioni Padova S.p.A. - - (152) - 5,754 - - (2) - (91) - 11 (400) - Logintegral 2000 S.a. (1,552) - - - 1,100 ------RCS Intern. Newspapers S.r.l. ------Consorzio Milano Marathon S.r.l. - - (9) ------8 - - La Es fera De Los Libros S.l.U ------Digital Factory S.r.l. ------1 - - RCS Produzioni Milano S.p.A. - - (376) 225 18,908 - - (1,939) - (144) - - (700) 8 RCS Produzioni S.p.A. - - (164) 112 6,723 - - (330) - (153) - 3 (400) - Rcs Edizioni Locali S.r.l. (0) - (1,587) 19,101 1,117 5 - (2,253) 6 (0) - 47 - - Last Lap Organiçao eventos SL ------Ediciones Cónica S.A. - - (5) - (0) 2 ------Unidad Editorial Revistas SLU - - (62) - 0 ------Unidad Editorial Juegos S.A. ------(176) ------MyBeautyBox S.r.l. - - (26) - - - - (74) - - - 0 47 - Hotelyo S.A. - -(456)-----0--- - - Total subsidiaries (1,564) (248) (8,011) 21,380 34,354 29 - (7,949) 22 (4,497) - 178 (12,979) 177 Associates M-Dis Distribuzione Media S.p.A. (258,219) (0) (1,073) - 79,691 - - (1,063) - (145) (0) 2 (1,007) - MDM Milano Distribuzione Media - - - 57 - - - - - (6) - 1 - - To-Dis S.r.l. ------(8) - 0 - - Inimm Due S.a.r.l. ------(15) - - - (15) Iniziativa Immobilare 2 S.r.l. ------(197) ------Quibee S.r.l. - - - - 17 ------Total associates (258,219) (0) (1,073) 57 79,708 - - (1,260) - (174) (0) 3 (1,007) (15) Other affiliates Cairo Pubblicita' S.p.A. - (772) (305) 200 1,369 - - (148) ------Cairo Editore S.p.A. - (96) (17) - 2 - - (126) ------Cairo Publishing S.r.l. - - - 137 ------LA7 S.p.A. (2) (339) (235) 2,238 654 - - (166) - - (0) - - - Il Trovatore S.r.l. - - - - 49 ------Torino FC S.p.A. ------Total other affiliates (2) (1,207) (556) 2,575 2,074 - - (440) - - (0) - - - FipDir - Supplementary Fund ----19-356------fund for executives Board of Directors - - - - 3,201 ------Board of Statutory Auditors - - - - 219 ------Key management personnel ------3,269 ------Gruppo Pirelli & C. S.p.A. - (21) - - 25 ------Della Valle Group - (1,511) ------

Total other related parties - (1,532) - - 3,464 - 3,626 ------

Reported total (259,785) (3,008) (9,686) 24,012 119,815 29 3,626 (10,522) 22 (4,671) (0) 181 (13,985) 162

210

List of investments pursuant to Article 2427, paragraph 5 of the Italian Civil Code with supplementary information recommended by CONSOB in its communication of February 23, 1994 and subsequent communications

Profit (loss) Name and registered office Share most recen Equity % Number of Carrying (€ millions) Capital period net held shares/quotas amount

Subsidiaries

RCS Factor S.r.l. (in liquidation) - Milan At 31/12/18 0.1 (0.1) 0.8 90.00 10.5 - Striking off of the company from the Company Register (0.5) At 31/12/19 ------

RCS Digital Ventures S.r.l. - Milan At 31/12/18 0.1 - 0.2 100.00 1 1.5 - Merger by incorporation into RCS MediaGroup S.p.A. (1.5) At 31/12/19 ------

Digicast S.p.A. - Milan At 31/12/18 0.2 3.0 7.8 100.00 41,000 1.2 - Merger by incorporation into RCS MediaGroup S.p.A. (1.2) At 31/12/19 ------

Unidad Editorial S.a. - Madrid At 31/12/18 (consolidated value) 123.9 21.3 106.0 99.99 1 334.5 At 31/12/19 (consolidated value) 123.9 17.5 122.0 99.99 (a) 1 334.5

Trovolavoro S.r.l. - Milan At 31/12/18 0.7 (0.4) 0.8 100.00 1 1.6 - Payment to cover losses 0.7 - Write-downs (1.5) At 31/12/19 0.7 (0.6) 0.8 100.00 (a) 10.8

RCS Sport S.p.A. - Milan At 31/12/18 0.1 20.4 24.8 100.00 100,000 19.6 - reallocation of carrying amount for demerger to RCS Sport Events S.r.l. (3.7) At 31/12/19 0.1 5.1 12.1 100.00 (a) 100,000 15.9

Editoriale del Mezzogiorno S.r.l. - Naples At 31/12/18 1.0 1.3 2.6 100.00 1 3.6 - Merger by incorporation into RCS Edizioni Locali S.r.l. (3.6) At 31/12/19 ------

RCS Produzioni Padova S.p.A. - Milan At 31/12/18 0.5 0.5 2.9 100.00 500,000 2.1 At 31/12/19 0.5 0.4 2.8 100.00 (a) 500,000 2.1

Digital factory S.r.l. - Milan At 31/12/18 ------Amount booked following merger by incorporation of Digicast S.p.A. 100.00 1 0.0 At 31/12/19 0.5 0.6 1.3 100.0 (a) 10.0

My BeautyBox S.r.l. - Milan At 31/12/18 ------Amount booked following merger by incorporation of RCS Digital Ventures S.r.l. 60.00 1 0.1 - Write-downs (0.0) At 31/12/19 0.0 (0.0) 0.0 60.0 (a) 10.1

211 Profit (loss) Name and registered office Share most recen Equity % Number of Carrying (€ millions) Capital period net held shares/quotas amount

RCS Produzioni S.p.A. - Milan At 31/12/18 1.0 0.4 3.1 100.00 1,000,000 3.0 At 31/12/19 1.0 0.3 2.9 100.00 (a) 1,000,000 3.0

RCS Produzioni Milano S.p.A. - Milan At 31/12/18 1.0 0.8 11.0 100.00 1,000,000 9.9 At 31/12/19 1.0 0.7 10.9 100.00 (a) 1,000,000 9.9

RCS Edizioni Locali S.r.l. - Milan At 31/12/18 1.0 (0.4) 8.6 100.00 1 7.7 - Amount booked following merger by incorporation of Editoriale del Mezzogiorno S.r.l. 3.6 At 31/12/19 1.0 0.4 11.5 100.00 (a) 111.3

RCS Sports&Events S.r.l. - Milan (former RCS Eventi Sportivi S.r.l.) At 31/12/18 0.0 - 0.0 100.0 - 1 0.0 - reallocation of carrying amount for demerger from RCS Sport S.p.A. 3.7 At 31/12/19 0.0 11.2 15.9 100.00 (a) 13.7

Sfera Service S.r.l. - Milan At 31/12/18 0.1 0.1 0.3 100.00 1 0.1 At 31/12/19 0.1 0.1 0.3 100.00 (a) 10.1

S fe r a Edi tor e s Es pana S .l . - Barcelona At 31/12/18 0.2 0.3 1.4 100.00 1 0.2 At 31/12/19 0.2 0.0 1.4 100.00 (a) 10.2

Sfera Editores Mexico S.a. - Colonia Anzures At 31/12/18 2.1 (0.4) 0.3 99.99 205,980 1.4 - Write-downs (0.3) At 31/12/19 2.1 (0.4) (0.1) 99.99 (a) 205,980 1.1

Hotelyo S.A. - Chiasso At 31/12/18 0.1 (0.1) 0.3 51.00 51,000 0.1 - Purchase of 49% quota 49.00 49,000 0.0 At 31/12/19 0.1 (0.1) 0.2 100.00 (a) 100,000 0.1

Blei S.r.l. in liquidation - Milan At 31/12/18 1.5 (0.0) 2.0 100.00 1 2.0 - Write-downs 0.0 At 31/12/19 1.5 (0.0) 2.0 100.00 (a) 12.0

Total carrying amount of “subsidiaries” at 31/12/19 384.8

212 Profit (loss) Name and registered office Share most recen Equity % Number of Carrying (€ millions) Capital period net held shares/quotas amount

Associates and joint ventures m-di s Dis tri buzione Media S .p.A. - Milan At 31/12/18 6.4 4.9 12.9 45.00 2,876,727 8.1 At 31/12/19 6.4 1.5 9.5 45.00 (a) 2,876,727 8.1

Inimm Due S .à.r.l. - Luxembourg At 31/12/18 0.2 (0.3) (0.6) 20.00 1,928 0.0 At 31/12/19 0.2 (0.3) (0.9) 20.00 (c) 1,928 0.0

Quibee S.r.l. - Turin At 31/12/18 ------Amount booked following merger by incorporation of RCS Digital Ventures S.r.l. 37.00 0.1 At 31/12/19 0.0 (0.0) 0.1 37.00 (b) -0.1

Total carrying amount of “associates” at 31/12/19 8.2

Other non-current equity instruments

SportPesa Italy S.r.l. (former RCS Gaming S.r.l.) - Milan At 31/12/18 0.0 (0.8) 0.5 25.00 1 - - Write-downs (0.0) At 31/12/19 0.0 (14.4) (1.4) 25.00 (b) 1 (0.0)

Immobiliare Editori Giornali S.r.l. - Rome At 31/12/18 0.8 (0.1) 5.0 7.49 1 0.4 - Fair value adjustment 0.0 At 31/12/19 0.8 (0.1) 5.0 7.49 (b) 10.4

Mode et Finance Société par actions simplifiée (in liquidation) - Paris At 31/12/18 7.0 (2.8) 1.1 4.62 60,980 0.0 - Striking off of the company from the Company Register 0.0 At 31/12/19 ------

ItaliaCamp S.r.l. - Rome At 31/12/18 0.0 0.2 0.6 3.00 1 0.0 - Fair value adjustment 0.0 At 31/12/19 0.0 0.3 0.9 3.00 (b) 10.0

H-Farm S .p.A. - Roncade At 31/12/18 8.9 (6.2) 24.7 0.75 673,333 0.4 - Fair value adjustment (0.2) At 31/12/19 8.9 (6.2) 21.3 0.75 (b) 673,333 0.2

Mach 2 Libri S .p.A. (i n li qui dation) - Milan At 31/12/18 0.6 ( 4.0) 0.3 19.09 23,864 0.0 At 31/12/19 0.6 (10.2) (13.1) 19.09 (b) 23,864 0.0

Vital Stream Holding Inc - Irvine, CA, USA At 31/12/18 n.a. n.a. n.a. 0.03 8,998 0.0 At 31/12/19 n.a. n.a. n.a. 0.03 8,998 0.0

Cardio Now - Encinitas, CA, USA At 31/12/18 n.a. n.a. n.a. n.a. - 0.0 At 31/12/19 n.a. n.a. n.a. n.a. - 0.0

213 Profit (loss) Name and registered office Share most recen Equity % Number of Carrying (€ millions) Capital period net held shares/quotas amount

Ansa S.r.l. - Rome At 31/12/18 10.8 (4.9) 13.2 4.38 5 0.6 - Fair value adjustment 0.0 At 31/12/19 10.8 0.9 14.1 4.38 (b) 50.6

Premium Publisher Network (Consortium) - Milan At 31/12/18 - - - 20.51 1 0.0 - Fair value adjustment 0.0 At 31/12/19 - - - 20.51 (b) 1 0.0

Consuledit S.c.ar.l. (in liquidation) - Milan At 31/12/18 - - - 19.55 1 0.0 At 31/12/19 --(0.1)19.55 (b) 1 0.0

Cefriel S.c.ar.l. - Milan At 31/12/18 1.2 0.7 3.8 5.46 1 0.2 - Fair value adjustment 0.0 At 31/12/19 1.2 0.8 4.3 5.46 (b) 1 0.2

Consorzio Edicola Italiana - Milan At 31/12/18 0.0 0.0 0.0 16.67 1 0.0 - Fair value adjustment 0.0 At 31/12/19 0.0 0.0 0.0 16.67 (b) 1 0.0

Mperience S.r.l. - Rome At 31/12/18 ------Amount booked following merger by incorporation of RCS Digital Ventures S.r.l. 1.68 1 0.0 At 31/12/19 2.2 0.0 2.3 1.68 (c) 1 0.0

Fantaking Interactive S.r.l. - Brescia At 31/12/18 ------Amount booked following merger by incorporation of RCS Digital Ventures S.r.l. 15.00 1 0.0 At 31/12/19 0.0 0.0 0.0 15.00 (b) 1 0.0

Yoodeal LTD - Crowborough At 31/12/18 ------Amount booked following merger by incorporation of RCS Digital Ventures S.r.l. 2.00 1 0.0 At 31/12/19 0.2 0.0 0.0 2.00 (d) 1 0.0

Digital Magics S.p.A. - Milan At 31/12/18 ------Amount booked following merger by incorporation of RCS Digital Ventures S.r.l. 0.39 29,200 0.2 At 31/12/19 7.4 0.4 19.8 0.39 (b) 29,200 0.2

Carrying amount of "Other non-current equity instruments" at 31/12/19 1.7

Net balance of “total investments” at 31/12/19 394.7

(a) Forecasts refer to financial statements at 31/12/2019 (b) Figures refer to financial statements at 31/12/2018 (c) Figures refer to financial statements at 31/12/2017 (d) Figures refer to financial statements at 31/03/2018

214 Merger schedules - pro forma 2018 and 2019

215

216

217 218

List of local branches of RCS MediaGroup S.p.A. at 31 December 2019

Via San Marco, 21 20121 MILAN Via Solferino, 28 20121 MILAN Via A. Rizzoli, 9 20132 MILAN Via Cefalù, 40 20151 MILAN C.so Galileo Ferraris, 124 10129 TURIN Galleria San Federico 16 10121 TURIN Piazza Piccapietra 73/8 16121 GENOA Piazza Libertà n.10 24121 BERGAMO Via Francesco Crispi, 3 25121 BRESCIA Piazza Gaetano Salvemini, 13 35131 PADUA Via Della Valverde, 45 37122 VERONA Viale del Risorgimento n. 10 40136 BOLOGNA Via Codignola, 20 50018 SCANDICCI Viale dei Mille, 9 50131 FLORENCE Lugarno delle Grazie n. 22 50122 FLORENCE Via Benedetto Croce, 23 73100 LECCE Vico II San Nicola alla Dogana 80123 NAPLES Via XXV Aprile, 1 31057 SILEA (TV) Via Campania, 59 00187 ROME

(as per tax returns submitted to the Italian Inland Revenue)

219