Iervolino & Lady Bacardi Entertainment S p A: ILBE 2021 Annual Financial Report

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Annual financial report of Iervolino & Lady Bacardi Entertainment SpA as at 31

December 2021

IERVOLINO & LADY BACARDI ENTERTAINMENT SPA

Registered office: Via Barberini n. 29 – 00187 – ROME Registered in the Companies Registry of: ROME

Tax code and VAT number: 11 636 381 003 Registered at the REA of ROME no. RM-1318599

Euro subscribed capital: 1,400,644.00 fully paid up

IERVOLINO & LADY BACARDI ENTERTAINMENT ACTIVITY REPORT FOR THE YEAR ENDED DECEMBER 31, 2021

1.

Introduction

  • 2. The macroeconomic context and the reference industry ‘Media & Entertainment’

  • 3. ILBE’s business model

  • 4. Activities carried out in 2021

  • 5. Order book and projects in development

  • 6. Summary Data and Alternative Performance Indicators (APIs)

  • 7. Transactions with related parties

  • 8. Human Resources

  • 9. Research and development

  • 10. Disclosure of Principal Risks and Uncertainties

  • 11. Issue of a bond of 10,000,000 euros

  • 12. Significant events occurring after the end of the financial year

  • 13. Management outlook

BALANCE SHEET AS OF DECEMBER 31, 2021

Statement of financial position

Statement of comprehensive income / (loss) for the year

Statement of changes in equity

Cash Flow

1.

Company Information

2. Main accounting principles

EY SPA STATUTORY AUDITORS’ REPORT

REPORT ON THE MANAGEMENT OF IERVOLINO & LADY BACARDI ENTERTAINMENT SPA FOR THE YEAR ENDED DECEMBER 31, 2021

1. Introduction

The financial statements for the year ended December 31, 2021 of Iervolino & Lady Bacardi Entertainment (now also referred to as ILBE or the Company) 2021 closed with total revenue of €147,758 thousand, an increase of 30,753 thousand euros compared to 2020 (+26%).

EBIT for the 2021 financial year, before certain non-recurring charges of 941 thousand euros, amounted to 26,810 thousand euros, an increase of 5,119 thousand euros compared to the same period of 2020 ( +24%).

These brilliant results are the result of the strategic choices of:

(i) (ii)Invest in quality intellectual properties; essentially international market choice and, mainly, intended for a streaming audience;

(iii) (iv)

Prioritize growth and value creation over time rather than short-term profitability; Investment and growth within the framework of financial equilibrium.

The success of the “Actic-Friends” and “Puffins” collections on Apple TV and Amazon Prime Video in terms of audience confirms the soundness of the choices made. Recently, there was also a deal for programming rights to the animated series’puffins with KidsMethe kids content factory Gruppo De Agostini Editorespecializing in the development, production and distribution of Italian and European content dedicated to the Kids and Family target audience.

Conversely, the effects of the Covid-19 pandemic were limited and essentially resulted in (i) an increase in non-recurring smart-working production expenses of approximately €941 thousand for fiscal year 2021 (€741 thousand for fiscal year 2020) (ii) a cascading postponement of film production and (iii) related deliveries, to which the Company responded as of fiscal year 2020 advancing certain productions of the ‘Actic-Friends’ and ‘Puffins’ web series and reviewing its financial plans.

Following the resolution of the general meeting of shareholders on June 23, the Company changed its name to “Iervolino & Lady Bacardi Entertainment SpA”, abbreviated as “ILBE SpA”, in order to focus more on foreign markets. It is within this framework, in fact, that the decision to include the name of Lady Monika Bacardi is inserted, an important name at the international level: a woman entrepreneur, our largest shareholder and producer of all our projects, who has always strongly believed in the Company.

A real rebranding process followed, which saw the birth of a new logo inspired by the structural elements of the film reel: a harmonious system of letters, of geometries that dialogue through joints and links, to evoke connection. , the union, the compactness of ideas, of people, of society.

The renewed brand of ILBE expresses both the plurality and the dynamism of the international 4

company: the brand was designed in a “reassuring” cage that makes the graphics stable and solid but at the same time dynamic thanks to the evolution of the content.

2. The macroeconomic context and the reference industry ‘Media & Entertainment’

Some Preliminary Considerations on Future Market Trends Related to the Development of the COVID-19 Pandemic

The restriction and subsequent relaxation of certain activities of daily living adopted by governments in most countries to contain the pandemic have led to changes in community behaviors, activities and desires, some of which are likely intended to last because they are the result of an acceleration of dynamics already in progress.

Therefore, we are talking about those trends which, unlike momentary trends, foreshadow the future. Among those most analyzed by academics and experts, although it must be said that these dynamics are still developing and not consolidated, the following should be mentioned:

  • the new frontiers of health;

  • the mentality of the new generations;

  • the centrality of the ESG factor (Environment, Social and Governance).

The new frontiers of health care will likely be shaped by a regulatory reorganization of risk protection and risk taking. Such regulation could give a boost to the development of new drugs, but also to genomics and precision medicine. On the other hand, new rules aimed at protecting against risks could lead to new technologies capable of ensuring better preparedness of health systems.

The mindset of the new generation is to take an online approach to everything from e-commerce to entertainment to e-learning. Again, it is reasonable to think that we are in the presence of a trend projected well beyond the pandemic and which, from an investor’s point of view, will reward companies with a strong digital footprint.

Finally, the commitment and consideration of environmental, social and governance aspects to promote a more sustainable society and economy are at the top of the agendas of actors in society and the global economy.

The importance of these factors is reflected in the ever-increasing importance of extra-financial sustainable development reporting (called social report) which, combined with an adequate communication policy in compliance with the principle of responsibility, constitutes an irreplaceable means of characterizing globally recognized company.

The macroeconomic and market context: an industry undergoing global restructuring

The year 2021 has presented itself for players in the media and entertainment market with a landscape that has been definitively changed by the pandemic. Consumers adopted new habits and preferences, while the impacts that affected the industry in the previous year increased.

As we slowly move into a post-COVID-19 world, there are some structural trends generally accepted by observers of market dynamics that need to be carefully considered.

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