Unieuro S p A : Interim Directors’ Report At May 31, 2023

Interim Directors' Report

At May 31, 2023

1. Introduction

The Unieuro Group (hereinafter also the "Group" or "Unieuro Group") consists of the companies Unieuro S.p.A. and Monclick S.r.l..

Unieuro S.p.A. (hereinafter also referred to as the "Company" or "Unieuro" or "UE") is a company under Italian law based in Forlì, Italy at 10 Via Piero Maroncelli, founded in the late 1930s by Vittorio Silvestrini. Unieuro is now the leading distributor of consumer electronics and home appliances in Italy and operates as an integrated omnichannel distributor in four main product segments: Grey (telephony, computer and photo), White (large and small appliances), Brown (consumer electronics and media storage), Other products (consoles, video games, bicycles), offering in parallel a wide range of services such as delivery and installation, extended warranty and consumer financing.

Monclick S.r.l. (hereinafter also referred to as "Monclick" or "MK"), a wholly-owned subsidiary of Unieuro, is a company under Italian law based in Milan at Via Marghera 28, sells IT, electronics, telephony and home appliance products online in Italy through the website www.monclick.it, guaranteeing a complete shopping experience, which is perfected with home delivery and installation of the chosen product. Unieuro also operates in the B2B2C segment, which caters to operators who need to purchase and distribute electronic products to regular customers or employees as part of points schemes, competitions, and incentive plans.

The Group's mission is to accompany customers at all stages of their purchasing journey, placing them at the centre of an integrated ecosystem of product and service offerings that sees accessibility, proximity and closeness as the pillars of its strategic approach.

Unieuro's shares have been listed on the EURONEXT STAR MILAN since April 2017. The Company is features an extensive and fragmented shareholder base, and thus is structured like a public company.

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Interim Directors' Report

2. Methodological note

The following Interim Directors' Report provides information on consolidated revenues, consolidated profitability, cash flow and the financial position of the Unieuro Group at May 31, 2023, compared with the interim period to May 31, 2022 in terms of the operating results and cash flow, and with the latest approved financial statements for the fiscal year ended February 28, 2023 for the balance sheet.

On December 20, 2021, the Board of Directors of Unieuro approved the amendment to the Quarterly periodic financial disclosure communication policy, on whose basis, from the same date, the impact of direct taxes accruing in the period has been excluded from the calculation of the operating and financial results in the interim directors' report for the first quarter and for the first nine months of the year. This decision was taken in view of the need to fully reflect any impacts on the company's financial statements from the Budget Laws, taking into account the timing of their approval with respect to the approval date of Unieuro's first nine-month results (January of each year).

Unless otherwise indicated, all values are in millions of Euros. Amounts and percentages have been calculated on values in thousands of Euro, and therefore any differences found in some tables are due to rounding.

This Interim Directors' Report was drawn up according to Article 82-ter of the Issuers' Regulation, adopted with motion No. 11971 of May 14, 1999, introduced on the basis of Article 154-ter, paragraphs 5 and 6 of the Consolidated Finance Act ("CFA"). Therefore, the provisions of the international accounting standard covering interim reporting (IAS 34 "Interim Financial Reporting") were not adopted.

The publication of the Interim Directors' Report at May 31, 2023 is governed by the Stock Exchange Regulation and, in particular, Article 2.2.3, paragraph 3.

The accounting standards used by the Group are the International Financial Reporting Standards, endorsed by the European Union ("IFRS") and in application of Legislative Decree No. 38/2005 and the other CONSOB financial statements provisions. The accounting policies and consolidation principles adopted are the same as those utilised for the Group Consolidated Financial Statements at February 28, 2023, to which reference should be made.

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3. Key financial performance indicators

In order to facilitate understanding of the Group's operating and financial performance, a number of Alternative Performance Indicators ("API's") have been identified. For a correct interpretation of these API's, the following should be noted: (i) these indicators are constructed exclusively from the Group's historical data and are not indicative of future performance, (ii) the API's are not required by IFRS and, although derived from the Consolidated Financial Statements, they are not audited, (iii) the API's should not be considered as substitutes for the indicators provided by the applicable accounting standards (IFRS), (iv) these API's should be read in conjunction with the Group's financial disclosure in the Interim Directors' Report; (v) the definitions and criteria adopted for the determination of the indicators used by the Group, insofar as they are not derived from the applicable accounting standards, may not be homogeneous with those adopted by other companies or groups and, therefore, may not be comparable with those that may be presented by such entities; and (vi) the API's used by the Group are prepared in continuity and homogeneity of definition and representation for all periods for which financial information is included in the Interim Report.

The API's presented (Consolidated Adjusted EBIT, Consolidated Adjusted EBIT Margin, Consolidated Adjusted Result before taxes, Net Working Capital, Consolidated Adjusted Free Cash Flow and (Net Financial Debt) / Net Cash - Former IAS 17) are not identified as accounting measures under IFRS and, therefore, as stated above, should not be considered as alternative measures to those provided by the Group's consolidated financial statements for assessing their operating performance and relative financial position.

Certain indicators defined as "Adjusted" are presented in order to represent the Group's operating and financial performance, net of non-recurring events, non-core operations events, and events related to corporate transactions, as identified by the Group. The Adjusted indicators reported concern: Consolidated Adjusted EBIT, Consolidated Adjusted EBIT margin, Consolidated Adjusted Result before taxes and Consolidated Adjusted Free Cash Flow and (Net Financial Debt) / Net cash - Pursuant to IAS 17. These indicators reflect the main operating and financial aggregates adjusted for non-recurring income and expenses not closely related to the core business and operations and the effect resulting from the change in the business model for extended warranty services (as better described below in the "Consolidated Adjusted EBIT" API) and thus allow for a more homogeneous analysis of the Group's performance over the periods presented in the Interim Directors' Report.

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			Interim Directors' Report
	Key financial performance indicators1
			Period ended
	(in millions of Euro)
		May 31, 2023	May 31, 2022
	Operating indicators
	Consolidated revenues	589.3	611.9
	Consolidated Adjusted EBIT2	(9.4)	0.0
	Consolidated Adjusted EBIT margin3	(1.6%)	0.0%
	Consolidated adjusted result before taxes4	(11.9)	(3.5)
	Result before tax for the period	(15.6)	(5.6)
	Cash flows
	Consolidated Adjusted Free Cash Flow5	(41.3)	(109.9)
	Investments for the period	(5.7)	(13.4)
			Period ended
	(in millions of Euro)
		May 31, 2023	February 28, 2023
	Indicators from statement of financial position
	Net working capital	(305.7)	(339.9)
	(Net financial debt) / Net cash - Pursuant to IAS 176	79.7	124.4
	(Net financial debt) / Net cash	(355.7)	(323.1)

1. Adjusted indicators are not identified as an accounting measure under IFRS and, therefore, should not be considered an alternative measure for assessing Group performance. Since the composition of these indicators is not regulated by the applicable accounting standards, the Group's applied determination criterion may not be homogeneous both with that adopted by other companies and with that which may be adopted in the future by the Group, or realised by it, and therefore not comparable.
2. Consolidated Adjusted EBIT is Consolidated EBIT adjusted for (i) non-recurring expenses/(income), (ii) the effects of adjusting extended warranty service revenues net of the related estimated future service costs as a result of the change in the business model for directly operated service support services, and (iii) non-recurring amortisation and depreciation. Please refer to Section 4.2 for further details.
3. Consolidated Adjusted EBIT Margin is the ratio of Consolidated Adjusted EBIT to Consolidated Revenues.
4. The Consolidated Adjusted Result before taxes is calculated as the Consolidated Result before taxes adjusted for (i) the adjustments incorporated in Consolidated Adjusted EBITDA, (ii) adjustments of non-recurring amortisation and depreciation and write-downs and (iii) adjustments of non- recurring financial expenses/(income).
5. The Consolidated Adjusted Free Cash Flow is the consolidated cash flow generated/absorbed by operating activities and investing activities, including financial expenses, pre-IFRS 16 adoption. Consolidated Adjusted Free Cash Flow is adjusted for non-recurring operating and investment cash flows, and includes adjustments for non-recurring expenses (income), their non-cash component, and the related tax effects. Please refer to Section 4.5 for further details.
6. The (Net financial debt) / Net cash - Pursuant to IAS 17 is the consolidated (Net financial debt) / Net cash without incorporating the effects related to the application of IFRS 16. Please refer to Section 6 for additional details.

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