Interim Management Statement at March 31, 2017

This is English translation of the Italian Interim Management Statement, which is the sole authoritative version

RCS MediaGroup S.p.A. Via A. Rizzoli, 8 - 20132 Milan

Share Capital €475,134,602.10 - Company Register and Tax Code/VAT No. 12086540155, REA No. 1524326

Contents

Consolidated financial highlights of RCS MediaGroup 3

RCS Group performance in the first quarter of the year 4

Significant events during the first quarter of the year 12

Events after the reporting date 12

2017 Outlook 13

Additional information required by Consob on 27 May 2013, pursuant to art. 114, paragraph 5 of Legislative Decree 58/1998 14

Statement pursuant to Article 154 bis, paragraph 2 of the Consolidated Finance Act 22

CONSOLIDATED FINANCIAL HIGHLIGHTS OF RCS MEDIAGROUP 1st quarter Year

INCOME STATEMENT

Revenue

213.4

219.8

968.3

EBITDA (1)

12.1

( 3.7)

89.9

OPERATING PROFIT (LOSS)

( 0.6)

( 17.5)

35.0

Profit (loss) before tax and non-controlling interests

( 7.0)

( 25.4)

5.0

Income taxes

1.3

3.2

( 9.9)

Loss from continuing operations

( 5.7)

( 22.2)

( 4.9)

Profit (loss) from assets held for sale and discontinued operations

-

-

8.4

Profit (loss) for the period

( 5.7)

( 22.0)

3.5

Basic earnings per share: continuing operations

( 0.01)

( 0.04)

( 0.01)

Diluted earnings per share: continuing operations

( 0.01)

( 0.04)

( 0.01)

Basic earnings per share: assets held for sale and discontinued operations

-

-

0.02

Diluted earnings per share: assets held for sale and discontinued operations

-

-

0.02

(€/millions) 2017 2016 2016

STATEMENT OF FINANCIAL POSITION

Mar-31-2017 Mar-31-2016 Dec-31-2016

Net capital employed

463.0

588.9

466.5

Net financial debt (2)

367.6

509.1

366.1

Net financial debt - continuing operations

367.6

538.2

366.1

Equity

95.4

79.8

100.4

Average number of employees excluding those involved with assets held for sale and discontinued operations

3,421

3,656

3,584

Average number of employees

3,421

3,987

3,584

  1. Earnings before interest, tax, amortisation/depreciation and impairment losses. Includes the share of profits and losses of equity-accounted investees.

  2. Indicator of financial structure, calculated as current and non-current loans and borrowings less cash and cash equivalents, current financial assets and non-current financial assets recognised for derivatives. Net financial debt as defined by CONSOB in its Communication DEM/6064293 dated July 28, 2006 excludes non-current financial assets. Non-current financial assets relating to derivatives at March 31, 2017, March 31, 2016 and December 31, 2016 amounted to zero and, therefore, RCS's financial ratio at March 31, 2017, March 31, 2016 and December 31, 2016 matches the net financial debt as defined by the above-mentioned CONSOB Communication.

This Interim Management Statement has been prepared in continuity with the International Accounting Standards applied in the Annual Report at December 31, 2016 and does not apply IAS 34.

In relation to Directive 2013/50/EU (Transparency Directive) and the relative domestic regulation transposing it into Italian law, within the new legal and regulatory framework resulting from CONSOB resolution no. 19770 of October 26, 2016 the RCS Group informed the market of its decision to approve and publish interim management statements on a voluntary basis in order to guarantee alignment with international sector best practices and with a view to maintaining the utmost transparency with respect to the market.

As described in the 2016 annual report, the organisational structure and the resulting identification of operating segments are subject to assessment, particularly in relation to the "Sport segment", for which the setup of a specific business unit was planned at the start of 2016, combining all La Gazzetta dello Sport and Marca activities, as well as the sporting events organisation activities of RCS Sport S.p.A. and Last Lap S.L. This unification of operations has not yet been implemented. In particular, Unidad Editorial continued and continues to operate as a single segment and single cash generating unit.

As the organisational structure and resulting identification of the operating segments are currently subject to assessment, in this interim management statement the results were represented according to the areas of activity identified on the basis of the Group's current operating structure.

This Interim Management Statement at March 31, 2017 was approved by the Board of Directors on May 9, 2017.

RCS GROUP PERFORMANCE IN THE FIRST QUARTER OF THE YEAR

In Italy, in April 2017 the Bank of Italy estimated that GDP had risen by 0.2% compared to the final quarter of 2016. The estimated favourable performance in the services sector especially contributes to this growth. (Source: Bank of Italy Economic Bulletin no. 2 2017 - April 2017).

In Spain, first-quarter growth reached 0.8% in 2017 (preliminary data of the national statistics institution, INE), equal to the growth recorded in the fourth quarter of 2016. Compared to the same period of last year, GDP rose by 3%.

The Group's financial highlights and related comments are presented below.

(€/millions)

Mar-31-

2017

%

Mar-31-

2016

%

Difference

Difference

A

B

A-B

%

A

B

A-B

%

Revenue

213.4

100.0

219.8

100.0

(6.4)

(2.9%)

Publishing revenue

86.1

40.3

94.7

43.1

(8.6)

(9.1% )

Advertising revenue

92.8

43.5

97.4

44.3

(4.6)

(4.7% )

Other revenue (1)

34.5

16.2

27.7

12.6

6.8

24.5%

Op erating exp enses

(131.4)

(61.6)

(151.0)

(68.7)

19.6

13.0%

Personnel expense

(67.5)

(31.6)

(71.1)

(32.3)

3.6

5.1%

Provisions for risks

(1.4)

(0.7)

(1.6)

(0.7)

0.2

12.5%

Allowance for imp airment

(1.3)

(0.6)

(0.4)

(0.2)

(0.9)

>100%

Share of profits of equity -accounted investees

0.3

0.1

0.6

0.3

(0.3)

n.s.

EBITDA (2)

12.1

5.7

(3.7)

(1.7)

15.8

>100%

Intangible asset amortisation

(8.8)

(4.1)

(9.2)

(4.2)

0.4

Prop erty , plant and equipment depreciation

(3.8)

(1.8)

(4.4)

(2.0)

0.6

Investment property depreciation

(0.1)

(0.0)

(0.2)

(0.1)

0.1

Other asset imp airment

0.0

0.0

0.0

0.0

0.0

EBIT

(0.6)

(0.3)

(17.5)

(8.0)

16.9

Net financial income (exp enses)

(6.4)

(3.0)

(8.0)

(3.6)

1.6

Income (exp enses) from financial assets/liabilities

0.0

0.0

0.1

0.0

(0.1)

Profit (loss) before tax

(7.0)

(3.3)

(25.4)

(11.6)

18.4

Income taxes

1.3

0.6

3.2

1.5

(1.9)

Profit (loss) from continuing operations

(5.7)

(2.7)

(22.2)

(10.1)

16.5

Profit (loss) from discontinued operations

0.0

0.0

0.0

0.0

0.0

Profit (loss) before non-controlling interests

(5.7)

(2.7)

(22.2)

(10.1)

16.5

(Profit) loss pertaining to non-controlling interests

0.0

0.0

0.2

0.1

(0.2)

Group's profit (loss) for the period

(5.7)

(2.7)

(22.0)

(10.0)

16.3

  1. Other revenue includes primarily revenue for television activities, the organisation of events and exhibitions, e-commerce activities, sales of customer lists and boxed sets and, in Spain, for betting activities.

  2. Earnings before interest, tax, amortisation/depreciation and impairment losses. Includes the share of profits and losses of equity-accounted investees.

Market trend

In Italy, the advertising market (Source: Nielsen) decreased by 2.3% at the end of February 2017 compared to the same period of last year. In the print media segment there was an overall downturn of 8.6%: newspapers dropped by 9.7%, with a negative trend for national business of 10.5%, and magazines were down by 6.4%. The on-line segment also fell by 2.9% over the same period of the previous year.

In Spain, there was a 2.2% increase in advertising sales in March 2017 compared to the same period of 2016 (Source: i2p, Arce Media), with newspapers decreasing by 7.4% and magazines declining by 5.7%. On the other hand, on-line sales posted 7.2% growth compared to the first quarter of 2016.

In terms of circulation, in Italy the unfavourable trend in the paper products market continued in the first three months of 2017. Specifically, circulation of general-interest newspapers in the reference market was down (including digital copies) by 15.6% (Source: ADS). Circulation of sports newspapers in the same period was down (including digital copies) by 7.3% (Source: ADS).

RCS Mediagroup S.p.A. published this content on 15 May 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 22 May 2017 14:07:24 UTC.

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