Cairo Communication S p A : Half-Year Report at 30 June 2021

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Half-Year Report at 30 June 2021

Cairo Communication S.p.A.

Head office: Corso Magenta 55, Milan

Share capital Euro 6,989,663.10

English translation for convenience of international readers. Only the Italian version is authentic

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Interim Report on Operations at 30 June 2021

In 2021, the Group operated as a:

• publisher of magazines and books (Cairo Editore/Editoriale Giorgio Mondadori and Cairo Publishing);
• TV (La7, La7d) and Internet (La7.it, TG.La7.it) publisher;
• multimedia agency for the sale of advertising space. Specifically, from 1 January 2021, the contribution by RCS and Cairo Pubblicità to CAIRORCS Media (on an equal basis) of their respective advertising sales business units, relating to the print and online titles in Italy of RCS and the print, television and online titles of Cairo Editore and La7, as well as, for both businesses, certain third-party media, became effective;
• publisher of dailies and magazines (weeklies and monthlies) in Italy and in Spain, through RCS MediaGroup, also active in the organization of major world sporting events;
• network operator (Cairo Network).

In first half 2021, the acquisition of 55% of m-Dis Distribuzione Media S.p.A. also came to conclusion, bringing RCS's stake to 100%. The income statement and balance sheet amounts of m-Dis are therefore fully consolidated as from 2021.

In the first months of 2020, the national and international landscape had been swept by the spread of the Coronavirus and the ensuing restrictions for its containment adopted by the governments of all the countries involved; these restrictions have had a direct effect on the organization and timing of work and on the Group's activities, in first half 2020 in particular.

In the so-called phase 1 (lockdown), the measures adopted by the public authorities had resulted in the closure of non-essential activities and severe restrictions on people movement (unless authorized for specific reasons).

As part of the activities relating to the organization of sporting events, the Strade Bianche, Tirreno Adriatico, Milano Sanremo, Giro di Sicilia and Giro d'Italia, as well as the Milano Marathon and a number of mass events, scheduled for the first half, had been postponed.

From end February 2020, the circulation of sports newspapers La Gazzetta dello Sport and Marca had been affected by the suspension of "played" sport, as well as the closure of bars and the restrictions on the reading of newspapers there.

Advertising sales in the four months March - June had slowed down both in Italy and Spain, but have rebounded starting from June. The books segment had been impacted by the order to shut bookstores, which reopened from May in Italy and June in Spain.

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The curbing of infections, which marked the end of the first half and part of third quarter 2020, had led to a gradual improvement in the situation.

As early as August in Spain and October in Italy, the curve of infections had started to rise again, leading the public authorities of the two countries to reintroduce a series of restrictive measures. Specifically, in Italy the measures had led to reducing recreational and catering activities, as well as amateur sports, and to further encouraging smart working and the use of flexible and/or remote forms for the organization of teaching. Tougher measures had been adopted, which differed by risk zone, designated by a series of indicators that classify the various regions.

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

In Spain, the beginning of the year witnessed an increase in the number of infections; measures were therefore adopted, mainly at a regional level and "in patches", which were generally less stringent than in Italy. The situation gradually improved starting from the second half of February; the "state of alert", instead, ended at the beginning of May, amid a widespread reduction of containment measures, thanks also to the rollout of the vaccination campaign. However, starting from the end of June, there is growing concern about the spread of new variants and the increase of infections, especially among the very young and the under-30 age group. However, hospitalizations, ICU admissions and fatalities still remain low.

In Italy, the number of cases has risen since February, reaching a peak in the third decade of March, thus leading to the adoption of additional containment measures, including the suspension of school activities in red zones and further restrictions during the Easter holidays and the extension of those in place.

The situation has improved since mid-April, and the restrictive measures are being gradually lifted, with the reopening of restaurants, bars and other retail activities, albeit with well-defined opening time and service rules. The acceleration of the vaccination campaign has allowed the regions to move into the "white zone" status and further ease the containment measures. As in Spain since July, attention has focused on the spread of new variants and the increase of infections especially among young people.

In both countries, the vaccination campaign has in any case brought a significant improvement in terms of general infections, hospitalizations, ICU occupancy and fatalities.

At the end of July, approximately 58% of the population over the age of twelve in Italy had completed the vaccination cycle, and in Spain approximately 56% of the population.

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