INTERIM DIRECTORS' REPORT AS AT 31 MAY 2021

1. Introduction

The Unieuro Group (hereinafter also the "Group" or "Unieuro Group") came into existence following the acquisition by Unieuro S.p.A. of the entire share capital of Monclick S.r.l., consolidated from 1 June 2017 and the share capital of Carini Retail S.r.l., consolidated from 1 March 2019 and subsequently merged into Unieuro S.p.A. with statutory effect beginning from 1 September 2020 and accounting effects beginning from 1 March 2020.

The company Unieuro S.p.A. (hereinafter also the "Company" or "Unieuro" or "UE") is a company incorporated under Italian law based in Forlì in Via Piero Maroncelli 10, founded in the late 1930s by Vittorio Silvestrini. Unieuro is now the leading company in the distribution of consumer electronics and appliances in Italy and it operates as an integrated omnichannel distributor in four major product segments: Grey (telephone systems, computers and photos), White (large and small appliances), Brown (consumer electronics and media storage), Other Products (consoles, video games, bicycles) and offering parallel ancillary services such as delivery and installation, extended warranties and consumer financing.

The company Monclick S.r.l. (hereinafter also known as "Monclick" or "MK") wholly-owned by Unieuro, is a company under Italian law with its registered office in Vimercate at Via Energy Park 22, which sells online I.T., electronic, telephone products and appliances in Italy through its website www.monclick.it, offering a catalogue with over 70,000 items and guaranteeing a comprehensive purchasing experience completed through the home delivery and installation of the chosen product. It also operates in the segment known as B2B2C, where the customers are operators which need to purchase electronic products to distribute to their regular customers or employees to accumulate points or participate in competitions or incentive plans.

The Group's mission is to accompany customers in all phases of their shopping experience, placing them at the centre of an integrated ecosystem of products and services with a strategic approach focusing on accessibility, a local presence and nearness.

Since April 2017, Unieuro shares have been listed on the STAR segment of the Milan Stock Exchange and, since June 2021, they have been included in the FTSE Italia Mid Cap index. The Company is, to all effects, a public company. In April 2021, the telecommunications operator Iliad announced the purchase of a stake equal to approximately 12% of the share capital of Unieuro, of which 1.9% through an equity swap contract expiring on 17 September 2021. Based on the information currently available, the other major shareholders of Unieuro are: ¹ the asset management company Amundi Asset Management (6.84% of the capital), some members of the Silvestrini family who overall own 7.3%, Mediolanum Gestione Fondi Sgr (4.93%), Mr Giuseppe Silvestrini (4.2%) and J.P. Morgan Asset Management (3.35%).

¹ Sources: minutes of the Ordinary Shareholders' Meeting dated 15 June 2021 and Consob communications.

2. Procedural note

The Interim Report on Operations herein, contains information relating to consolidated revenues, consolidated profitability, cash flows and the statement on the economic and financial position of the Unieuro Group as at 31 May 2021, compared with the figures as at 31 May 2020, for the economic results and the cash flows and with the figures of the latest financial statements approved as at 28 February 2021 for the economic and financial statement.

Unless otherwise indicated, all amounts are stated in millions of Euro. Amounts and percentages were calculated on amounts in thousands of Euro and, thus, any differences found in certain tables are due to rounding.

This Interim Report on Operations was prepared in accordance with Article 82-ter of the Issuers' Regulation adopted through resolution 11971 of 14 May 1999, introduced based on the provisions of Article 154-ter, paragraphs 5 and 6 of the Consolidated Finance Act ("TUF"). Therefore, the provisions of the international accounting standard relating to interim financial reporting (IAS 34 "Interim Financial Reporting") were not adopted.

The publication of the Interim Directors' Report as at 31 May 2021 is regulated by the provisions of the Stock Exchange Regulations, specifically Article 2.2.3, paragraph 3 of the Stock Exchange Regulations.

The accounting standards used by the Group are the International Financial Reporting Standards ("IFRS") adopted by the European Union and in accordance with Legislative Decree 38/2005, as well as other CONSOB provisions concerning financial statements. The accounting criteria and the consolidation principles adopted are consistent with those used in the Group's consolidated financial statements as at 28 February 2021, to which reference is made.

On 28 May 2020, the IASB issued amendments to IFRS 16 "Leases Covid-19-Related Rent Concessions" introducing a practical expedient in the chapter "Changes to Leases" which allows lessees not to consider any concessions related to the effects of Covid-19 as concessions on lease payments received from 1 January 2020 that amend the original contract. On the basis of these changes, these concessions can be accounted for as positive variable rents without requiring a contractual change. The adoption process in the European Union was concluded on 12 October 2020 and was published in the Official Journal of the European Union. It should be noted that on 31 March 2021, the IASB published the amendment to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021, which extends by one year the period of application of the amendment to IFRS 16, issued in 2020, relating to the accounting of the concessions granted by lessees due to Covid-19. The European Union is still in the midst of the process of adopting this measure.

3. Key Financial performance Indicators

To facilitate the understanding of the Group's economic and financial progress, some Alternative Performance Indicators ("APIs") are indicated. For a correct interpretation of the APIs, note the following: (i) these indicators are derived exclusively from the Group's historical data and are not indicative of future trends, (ii) the APIs are not provided for by the IFRS and, despite being derivatives of the Consolidated Financial Statement, they are not subject to audit, (iii) the APIs should not be regarded as substitutes for the indicators provided for in the reference accounting standards (IFRS), (iv) the interpretation of these APIs should be carried out together with the Group's financial information drawn from the Interim Performance Report; (v) the definitions and the criteria adopted for the determination of the indicators used by the Group, since they do not derive from the reference accounting standards, may not be aligned with those adopted by other companies or groups and, therefore, they may not be comparable with those potentially presented by such entities, and (vi) the APIs used by the Group are prepared with continuity and consistency of definition and they represent all the financial periods for which information is included in the Interim Performance Report.

The APIs reported (Consolidated Adjusted EBIT, Consolidated Adjusted EBIT margin, Adjusted Consolidated Profit (loss) for the period, Net Working Capital, Consolidated Adjusted levered Free Cash Flow and (Net financial debt)/ Net cash - Pursuant to IAS 17) have not been identified as IFRS accounting measures and, thus, as noted above, they shall not be considered as alternative measures to those provided in the Group's Consolidated Financial Statement to assess their operating performance and related financial position.

Certain indicators are referred to as "Adjusted", to represent the Group's management and financial performance, net of non-recurring events, non-characteristic events and events related to extraordinary transactions, as identified by the Group. The Adjusted indicators shown consist of: Consolidated Adjusted EBIT, Consolidated Adjusted EBIT Margin, Consolidated Adjusted Profit (Loss) for the period and Consolidated Adjusted Free Cash Flow and (Net financial debt) / Net cash – pursuant to IAS 17. These indicators reflect the main operating and financial measures adjusted for nonrecurring income and expenses that are not strictly related to the core business and operations and for the effect from the change in the business model for extended warranty services (as more fully described below in the API "Consolidated Adjusted EBIT") and, thus, they make it possible to analyse the Group's performance in a more standardized manner in the periods reported in the Interim Directors' Report.

Interim Directors' Report

Key financial performance indicators²

	Period ended
(in millions of Euro)	31 May 2021	31 May 2020
Operating indicators
Consolidated revenues	581.8	428.9
Consolidated Adjusted EBIT3	6.5	(11.1)
Consolidated Adjusted EBIT margin4	1.1%	(2.6%)
Adjusted Consolidated Profit/Loss for the Period5	3.0	(13.8)
Consolidated Profit/Loss for the Period	1.4	(14.4)
Cash flows
Consolidated Adjusted Free Cash Flow6	36.5	40.1
Investments for the period	(20.4)	(15.6)

	Period ended
(in millions of Euro)	31 May 2021	28 February 2021
Indicators from statement of financial position
Net working capital	(278.3)	(315.4)
(Net financial debt) / Net cash – Pursuant to IAS 177	121.4	154.8
(Net financial debt) / Net cash	(313.4)	(288.8)

2 Adjusted indicators are not identified as accounting measures in the IFRS and, thus, should not be considered as alternative measures for assessing the Group's results. Since the composition of these indicators is not governed by established accounting standards, the calculation criterion applied by the Group might not be the same as that used by other companies or with any criterion the Group might use or create in the future, which therefore will not be comparable.
³ Consolidated Adjusted EBIT is Consolidated EBIT adjusted for (i) non-recurring expenses/(income), (ii) the impact from the adjustment of revenues for extended warranty services net of related estimated future costs to provide the assistance service, as a result of the change in the business model for directly managed assistance services, and (iii) non-recurring amortisation/depreciation. See section 4.2 for additional details.
⁴ The Consolidated Adjusted EBIT Margin is the ratio of Consolidated Adjusted EBIT to revenues.
⁵ The Adjusted Consolidated Result for the period is calculated as the Consolidated Profit (Loss) for the period adjusted by (i) the adjustments incorporated in the Consolidated Adjusted EBITDA, (ii) the adjustments of the non-recurring depreciation, amortisation and write downs, (iii) the adjustments of the non-recurring financial expenses/(income) and (iv) the theoretical tax impact of these adjustments.
⁶ Consolidated Adjusted Free Cash Flow is the consolidated cash flow generated/absorbed by operating and investing activities, including financial expenses, prior to the adoption of IFRS 16. The Consolidated Adjusted Free Cash Flow is adjusted for non-recurring operating and investment cash flows, and includes adjustments for non-recurring charges (income), their non-monetary component and the related tax effects. See section 4.5 for additional details.
⁷ The (Net financial debt) / Net cash Pursuant to IAS 17, indicates the consolidated (Net financial debt) / Net cash without incorporating the effects related to the application of IFRS 16. See section 6 for additional details.

	Period ended
(in millions of Euro)	31 May 2021	28 February 2021
Operating indicators for the year
Like-for-like growth8	32.6%	8.7%
Direct points of sale (number)	276	273
of which Pick Up Points9	267	264
Affiliated points of sale (number)	258	254
of which Pick Up Points	138	123
Total area of direct points of sale (in square metres)	approximately 392,000	approximately 388,000
Sales density10 (Euro per square metre)	5,314	4,861
Full-time-equivalent employees11 (number)	4,715	4,679
Net Promoter Score12	51.5	46.3

⁸ Like-for-like revenue growth: the methods for comparing sales for the three-month period ended 31 May 2021 with those for the three-month period ended 31 May 2020, based on a standard scope of operations, for retail and travel stores operating for at least an entire financial year from the closing date of the reference period, excluding sales outlets affected by significant business operation discontinuity (e.g. temporary closures and major refurbishments), as well as the entire online channel.
⁹ Physical pick-up points for customer orders using the online channel.
10 This indicator is obtained from the ratio of annual sales generated by direct points of sale to the total area devoted to sales in all direct points of sale.
¹¹ Average annual number of full-time-equivalent employees.
12 The Net Promoter Score (NPS) measures customer experience and predicts business growth. It can range from -100 (if each customer is a Detractor) to 100 (if each customer is a Promoter).

4. Group operating and financial results

4.1 Consolidated revenues

In the quarter ended 31 May 2021, the Unieuro Group recorded Revenues of Euro 581.8 million, up 35.7% compared with the figure of Euro 428.9 million of the corresponding period of the previous year, an increase of Euro 152.9 million.

The good performance was favoured by the effectiveness of Unieuro's omnichannel strategy and by the consumption trends triggered by the pandemic, which resulted in sales up by 17.5% compared with the first pre-covid quarter ended 31 May 2019.

In the three months ended 31 May 2021, the development of like-for-like revenues¹³ - or the comparison of sales with those of the previous year based on a standard scope of operations - amounted to +32.6%. Excluding from the scope of analysis the pre-existing stores adjacent to the new stores, like-for-like sales would have recorded a growth of 31.0%. This indicator is influenced by the increase in revenues deriving from the easing of the restrictions that which offset the drop in turnover generated by the new openings on pre-existing stores.

(in millions of Euro and as a percentage of revenues)			Changes
	31 May 2021	%	31 May 2020	%		%
Retail	394.6	67.8%	225.1	52.5%	169.6	75.3%
Online	89.0	15.3%	123.0	28.7%	(34.0)	(27.7%)
Indirect	65.7	11.3%	49.3	11.5%	16.5	33.4%
B2B	26.9	4.6%	28.5	6.6%	(1.6)	(5.7%)
Travel	5.6	1.0%	3.1	0.7%	2.5	82.7%
Total consolidated revenues by channel	581.8	100.0%	428.9	100.0%	152.9	35.7%

4.1.1 Consolidated revenues by channel

The Retail channel (67.8% of total revenues) - which, as at 31 May 2021, comprised 265 direct points of sale – recorded sales amounting to Euro 394.6 million, up 75.3% compared with the same period of the previous year. The trend in revenues was positively influenced (i) by the gradual relaxation of restrictions on the accessibility of the direct network by customers - which is compared with a 2020 in which the channel suffered the total closure of direct sales points in the days from 14 to 29 March and at the same time for the entire period of the pandemic the partial closure of shopping centres on weekends and holidays/pre-holidays - (ii) from the passage to direct management of 18 Unieuro by Iper shop-in-shops previously under the affiliation regime and internalised starting from the second half of the previous year and (iii) from new important openings such as 3 Conad points of sale, Milano Portello in June 2020, Savona in November 2020 and Turin Orbetello, Pino Torinese and Messina in April 2021.

¹³ Like-for-like revenue growth: the methods for comparing sales for the nine-month period ended 31 May 2021 with those for the three-month period ended 31 May 2020, based on a standard scope of operations, for retail and travel stores operating for at least an entire financial year from the closing date of the reference period, excluding sales outlets affected by significant business operation discontinuity (e.g. temporary closures and major refurbishments), as well as the entire online channel.

The Online channel (15.3% of total revenues) recorded a drop of 27.7%, to Euro 89.0 million, compared with the Euro 123.0 million recorded in the same period the previous year. Compared with the pre-covid first quarter ended 31 May 2019, the channel's revenues are up by 75.6%, +38.3 million, thanks to both mainstream and digital marketing activities on the Online channel, as well as the dual presence on the web guaranteed by two well-known and distinct brands such as Unieuro and Monclick. The performance of the first quarter ended 31 May 2020 was the result of the emergency situation caused by the pandemic, which led customers to favour e-commerce to the detriment of physical stores.

The Indirect channel (11.3% of total revenues) - which includes the turnover generated by the network of affiliated stores, for a total of 258 points of sale as at 31 May 2021 - recorded revenues of Euro 65.7 million, up 33.4% compared with the Euro 49.3 million of the corresponding period of the previous year. The gradual relaxation of restrictions and the distinctive characteristics of the affiliated stores - small to medium in size and focused on proximity service contributed to the success achieved by benefiting from the closures of shopping centres at weekends. Added to this is the phenomenon of new openings, mainly driven by the launch in November 2020 of the partnership with the Partenope Group - which led to the landing of the Unieuro brand in the city of Naples - together with other openings including 3 important stores of Elettrocasa, which partially offset the passage to the Retail channel of the previously affiliated Unieuro by Iper shop-in-shops starting from the second half of the previous year.

The B2B channel (4.6% of total revenues) - which targets professional domestic and foreign customers that operate in industries other than those where Unieuro operates, such as hotel chains and banks, as well as operators that need to purchase electronic products to be distributed to their regular customers, or to employees to accumulate points or participate in prize competitions or incentive plans (B2B2C segment) - recorded sales of €26.9 million, down 5.7% from €28.5 million of the corresponding period of the previous financial year. The uncertain nature of revenues in this channel is confirmed, featuring an opportunistic approach influenced by multiple exogenous factors.

Lastly, the Travel channel (1.0% of total revenues) - composed of 11 direct sales outlets located at some of the main public transport hubs such as airports, railway and underground stations - recorded an increase of 82.7% and sales equal to Euro 5.6 million. Performance benefited from the gradual pick-up in traffic at stations and airports that had been fully or partially closed during the pandemic.

(in millions of Euro and as a percentage of revenues)	Period ended					Changes
	31 May 2021	%	31 May 2020	%	Δ	%
Grey	289.5	49.8%	223.6	52.1%	66.0	29.5%
White	156.1	26.8%	109.8	25.6%	46.3	42.1%
Brown	83.4	14.3%	57.6	13.4%	25.8	44.7%
Other products	25.1	4.3%	19.9	4.6%	5.2	26.3%
Services	27.7	4.8%	18.0	4.2%	9.7	53.5%
Total consolidated revenues by category	581.8	100.0%	428.9	100.0%	152.9	35.7%

4.1.2 Consolidated revenues by category

Through its distribution channels the Group offers customers a wide range of products - specifically electric appliances and consumer electronics, as well as ancillary services. The segmentation of sales by product category takes place on the basis of the classification of products adopted by the main sector experts. Note therefore that the classification of revenues by category is periodically revised in order to guarantee the comparability of Group data with market data.

The Grey category (49.8% of total revenues) - i.e. telephony, tablets, information technology, telephony accessories, cameras, as well as all wearable technological products - generated a turnover of Euro 289.5 million, up 29.5% compared with Euro 223.6 million of the corresponding period of the previous year. Sales in the quarter were mainly driven by telephony - which in the 1st quarter of 2020 suffered from the lack of mobility caused by the lock-down, while in 2021 it enjoyed a recovery thanks to the gradual easing of restrictions - and by IT, thanks to the persistence of positive purchasing trends linked to smart working, e-learning and communication.

The White category (26.8% of total revenues) - which is composed of large appliances (MDA) such as washing machines, tumble dryers, refrigerators or freezers and cooktops, small appliances (SDA), such as vacuum cleaners, food processors, coffee machines as well as the climate control segment - recorded sales of €156.1 million, up by 42.1% compared with €109.8 million of the corresponding period of the previous year. During the period, the category grew thanks to the positive results of products related to home care, with particular reference to the segments of large household appliances which in May saw the success of the activity of the Passione Casa flyer with the combination of the dryer, not present in the result of the same period last year, and of the world of aspiration and coffee machines.

The Brown category (14.3% of revenues) - including televisions and accessories, audio devices, devices for smart TVs, car accessories ad memory systems - recorded total revenues of Euro 83.4 million, +44.7% compared with the figure of Euro 57.6 million of the corresponding period of the previous year. The strong performance of the quarter is linked to the televisions benefiting from the important Switch-Off event scheduled for 1 September 2021, highlighting how the final consumer is preparing for the change in technology, anticipating this need also thanks to the occasion of the restart of the events sportsmen who had been blocked by the pandemic.

The Other Products category (4.3% of total revenues) – which includes both the sales of the Entertainment sector and other products not included in the consumer electronics market such as hoverboards or bicycles – recorded consolidated revenues of Euro 25.1 million, up 26.3%. The category mainly benefits from the increase in turnover generated by electric mobility products, which are compared with last year in which the sales of these products were severely limited by the restrictions imposed by the health emergency, in addition to the evident driving effect of the rules of the social distancing that has led to the use of environmentally sustainable vehicles allowing to avoid situations of usual gathering of public transport.

The Services category (4.8% of total revenues) grew by 53.5% to €27.7 million: the positive performance benefited from Unieuro's continued focus on providing services to its customers, particularly the extended warranty service.

4.2 Consolidated operating profit

The consolidated income statement tables present in this Report on Operations have been reclassified using presentation methods that management considered useful for reporting the operating profit performance of the Unieuro Group during the period. To more fully report the cost and revenue items indicated, the following were reclassified in this income statement by their nature: (i) non-recurring expenses/(income) and (ii) the impact from the adjustment of revenues for extended warranty services net of related estimated future costs to provide the assistance service, because of the change in the business model for directly managed assistance services.

	Period ended							Changes
(in millions and as a percentage of		31 May 2021	31 May 2020
revenues)	Adjusted amounts	%	Adjustments	Adjusted amounts	%	Adjustments	Δ	%
Revenue	581.8			428.9			152.9	35.7%
Sales revenues	581.8			428.9			152.9	35.7%
Purchase of goods and Change in inventories	(452.4)	(77.8%)	0.0	(349.1)	(81.4%)	0.0	(103.3)	29.6%
Marketing costs	(10.2)	(1.8%)	0.1	(8.1)	(1.9%)	0.1	(2.1)	26.2%
Logistics costs	(18.8)	(3.2%)	0.1	(16.8)	(3.9%)	0.0	(2.0)	11.8%
Other costs	(21.1)	(3.6%)	0.3	(12.1)	(2.8%)	0.0	(9.0)	74.3%
Personnel costs	(49.0)	(8.4%)	0.2	(30.3)	(7.1%)	0.1	(18.7)	61.6%
Other operating income and costs	(1.9	(0.3%)	0.0	(1.3)	(0.3%)	(0.0)	(0.5)	39.0%
Revenues from extended warranty services net of related estimated future costs to provide the assistance service - change in the business model for directly managed assistance services	0.9	0.2%	0.9	0.5	0.1%	0.5	0.5	100.0%
Consolidated Adjusted EBITDA14	29.4	5.0%	1.6	11.6	2.7%	0.7	17.8	153.5%
Amortisation, depreciation and write-downs of fixed assets	(22.9)	(3.9%)	0.2	(22.7)	(5.3%)	-	(0.2)	0.9%
Consolidated Adjusted EBIT	6.5	1.1%	1.7	(11.1)	(2.6%)	0.7	17.6	158.2%

Consolidated Adjusted EBIT for the first quarter increased by €17.6 million, settling at €6.5 million (negative for €11.1 million in the corresponding period of the previous financial year). The Adjusted EBIT margin was positive for 1.1%. The positive performance was favoured by the dynamics of the gross margin, which improved by 3.7 percentage points, equal to 22.4% compared with the 18.7% recorded as at 31 May 2020. The gross margin benefited from a more favourable channel mix compared with the corresponding period last year which was influenced by the consumption trends imposed by the pandemic.

Marketing costs increased by 26.2% compared with 31 May 2020. The increase is mainly attributable to the costs associated with the promotional campaigns that were suspended in the first three months of 2020 due to the pandemic, and investments in digital, radio and TV activities also increased following the company's choice to focus more on digital consumption, by progressively cutting the paper and distributing flyers. The impact on consolidated revenues decreased in the period to 1.8% (1.9% in the corresponding period of the previous year).

Logistics costs increased by around Euro 2.0 million. The trend is mainly attributable to the increase in overall sales. The incidence on consolidated revenues, on the other hand, decreased to 3.2% in the first three months of 2021 (3.9% in the corresponding period of the previous year).

The item Other costs increased by Euro 9.3 million compared with the corresponding period of the previous year, with an incidence on consolidated revenues of 3.7% (2.8% in the first three months of 2020). The trend is mainly attributable to fewer concessions received from lessors on the payment of rents due to the relaxation of restrictions, higher variable

¹⁴ Consolidated Adjusted EBITDA is Consolidated EBITDA adjusted for (i) non-recurring expenses/(income) and (ii) the impact from the adjustment of revenues for extended warranty services net of related estimated future costs to provide the assistance service, as a result of the change in the business model for directly managed assistance services.

rents due to the increase in turnover recorded in the period and the increase in the weight of the contracts that provide for a variable component of the rent. Operating costs essentially referable to utilities and maintenance fees also increased during the period as a result of the increased operation of the shops.

Personnel costs recorded an increase of Euro 18.7 million. The item, in that last period, was influenced by the effect of the actions taken by management to mitigate the impact of the pandemic, mainly relating to the use of the Cassa Integrazione Guadagni in Deroga (Wages Redundancy Fund), compensation for holidays and leaves of absence, nonrenewal of expired fixed-term contracts and the spontaneous reduction in management remuneration. Costs also increased as a result of the transition to direct management of the Unieuro by Iper shop-in-shops and Conad points of sale and the new openings in the period. The impact on consolidated revenues was 8.4% as at 31 May 2021 (7.1% in the corresponding period of the previous year).

Other operating income and costs increased by Euro 0.5 million. The impact on consolidated revenues (0.3%) is in line with the corresponding period of the previous year. The item mainly includes costs for expenses related to business operations such as waste disposal tax.

Amortisation, depreciation and write-downs of fixed assets amounted to Euro 22.9 million (Euro 22.7 million in the period ended May 31, 2020), substantially in line with the previous year. Investments in the period amounted to Euro 8.1 million (Euro 2.9 million as at 31 May 2020). In the last quarter, investments were significantly slowed down due to the pandemic.

The reconciliation between the Consolidated Adjusted EBIT and the consolidated Net Operating Profit reported in the consolidated financial statements is provided below.

(in millions of Euro and as a percentage of revenues)		Period ended				Changes
		%	31 May 2020	%	Δ	%
Consolidated Adjusted EBIT15	6.5	1.1%	(11.1)	(2.6%)	17.6	158.2%
Non-recurring expenses /(income)	(0.6)	(0.1%)	(0.2)	(0.0%)	(0.5)	232.1%
Revenues from extended warranty services net of related estimated future costs to provide the assistance service - change in the business model for directly managed assistance services16	(0.9)	(0.2%)	(0.5)	(0.1%)	(0.5)	100.0%
Non-recurring depreciation, amortisation and write-downs of fixed assets	(0.2)	0.0%	0.0	0.0%	(0.2)	100.0%
Net Operating Result	4.7	0.8%	(11.8)	(2.7%)	16.5	140.1%

Non-recurring expense/(income) of the Consolidated Adjusted EBITDA increased by €0.5 million compared with the previous period ended 31 May 2020 and are explained, in detail, in the subsequent section 5.3.

The adjustment due to the change in the business model for directly managed services was up by Euro 0.5 million compared with the previous period ended 31 May 2020, due to the larger volume of contracts signed in the period.

¹⁵ See note in the section "Main financial and operating indicators".
¹⁶ The adjustment was for the deferral of extended warranty service revenues already collected, net of the related estimated future costs to provide the assistance service. From the year ended 29 February 2012, for White products sold by Unieuro, from the year ended 28 February 2015 for all extended warranty services sold by Unieuro S.r.l. (hereinafter the "Former Unieuro") (excluding telephone systems and peripherals), from the year of acquisition for all extended warranty services sold by the sales outlets acquired by the business units the former Andreoli S.p.A., the former Cerioni S.p.A., the former DPS S.r.l., the former Galimberti S.p.A. and the former Pistone S.p.A. (excluding telephone systems and peripherals), Unieuro modified the business model for the management of extended warranty services by in-sourcing the management of services sold by the Former Unieuro and by Unieuro that were previously outsourced and by extending this model to the sales outlets acquired by the business units the former Andreoli S.p.A., the former Cerioni S.p.A., the former DPS S.r.l., the former Galimberti S.p.A. and the former Pistone S.p.A. (the "Change in Business Model"). As a result of the Change in Business Model, at the time of sale of extended warranty services, Unieuro suspends the revenue in order to recognise the revenue over the life of the contractual obligation, which starts on the expiration of the two-year legally required warranty. Thus, Unieuro begins to gradually record revenues from sales of extended warranty services two years (term of the legally required product warranty) after the execution of the related agreements and after the collection of compensation, which is generally concurrent. Thus, the revenue is recorded on a pro rata basis over the life of the contractual obligation (historically, depending on the product concerned, for a period of one to four years). As a result of this Change in Business Model, the income statements do not fully reflect the revenues and profit of the business described in this note. In fact, the income statements for the periods ended 31 May 2021 and 31 May 2020 only partially report revenues from sales generated starting with the Change in Business Model because Unieuro will gradually record sales revenues from extended warranty services (already collected by it) starting at the end of the legally required two-year warranty period. Thus, the adjustment is aimed at reflecting, for each period concerned, the estimated profit from the sale of extended warranty services already sold (and collected) starting with the Change in Business Model as if Unieuro had always operated using the current business model. Specifically, the estimate of the profit was reflected in revenues, which were held in suspense in deferred income, to be deferred until those years in which the conditions for their recognition are met, net of future costs for performing the extended warranty service, which were projected by Unieuro on the basis of historical information on the nature, frequency and cost of assistance work. The adjustment will progressively decrease to nil in future income statements when the new business model is fully reflected in our financial statements, i.e., for each product category, when the period has lapsed that starts on the first day of the legally required two-year warranty and ends on the last expiry date of warranty extensions.

4.3 Non-recurring income and expenses

The non-recurring charges/(income) of the Consolidated Adjusted EBITDA are shown below:

	Period ended			Changes
(in millions of Euro)	31 May 2020	31 May 2020	Δ	%
Costs for pre-opening, relocating and closing sales outlets17	0.3	0.2	0.1	26.9%
Mergers & Acquisitions	0.4	-	0.4	100.0%
Other non-recurring expenses	-	(0.0)	0.0	(100.0%)
Total	0.6	0.2	0.5	232.1%

Costs for the pre-opening, repositioning and closure of points of sale stand at €0.3 million (€0.2 million in the corresponding period ended on 31 May 2020). This item includes costs for finding points of sale, personnel, security, travel and transfer costs, for maintenance and marketing operations incurred as part of: i) store openings (in the months immediately preceding and following the opening of the same) and (ii) store closures.

The item relating to Mergers & Acquisition costs totalled €0.4 million (zero in the corresponding period ended on 30 November 2019). These costs are mainly related to the acquisition of the Limbiate, Pino Torinese and Turin Orbetello stores and mainly refer to higher costs for the training and training of employees of the acquired stores and consultancy costs and other costs incurred for the finalisation of the acquisition operations.

4.4 Net result

Below is a restated income statement including items from the Consolidated Adjusted EBIT to the consolidated adjusted profit (loss) for the period.

	Period ended						Changes
(in millions and as a percentage of revenues)		31 May 2021		31 May 2020
	Adjusted amounts	%	Adjustmen ts	Adjusted amounts	%	Adjustmen ts	Δ	%
Consolidated Adjusted EBIT	6.5	1.1%	1.7	(11.1)	(2.6%)	0.7	17.6	158.2%
Financial income and expenses	(3.2)	(0.5%)	0.0	(3.6)	(0.8%)	-	0.4	(10.7%)
Income taxes18	(0.3)	(0.0)%	(0.2)	0.9	0.2%	(0.1)	(1.1)	(133.5%)
Adjusted Consolidated Profit/Loss for the Period	3.0	0.5%	1.6	(13.8)	(3.2%)	0.6	16.8	121.7%

17 The costs for "pre-opening, relocating and closing points of sale" include expenses for security, travel, maintenance, and marketing work incurred as a part of i) remodelling work for downsizing and relocating points of sale, ii) opening points of sale (during the months immediately preceding and following the opening), and iii) closing points of sale.

¹⁸ The tax impacts of the adjustments were calculated using the theoretical rate deemed appropriate of 8.7% both for 31 May 2021 as well as 31 May 2020, which incorporates IRES at 4.8% (obtained by reducing taxable IRES income by 80% due to the ability to use past tax losses) and IRAP at 3.9%.

Net financial expenses in the period ended on 31 May 2021, amounted to €3.2 million (€3.6 million in the previous period ended on 31 May 2020). The change in the period is mainly attributable to financial expenses related to the IFRS 16 adjustment amounting to €2.4 million (€2.6 million as at 31 May 2021).

Income taxes excluding the theoretical tax impact from taxes on non-recurring expenses/(income) and the change of business model in the period ended on 31 May 2021, were negative by €0.3 million (positive by €0.9 million in the corresponding period of the previous year ended on 31 May 2020). Note that IRES tax losses, which were still available resulting from the tax estimate made during the closure of the financial statements as at 28 February 2021, totalled Euro 298 million in relation to Unieuro and Euro 6.2 million in relation to Monclick. These tax losses guarantee a substantial benefit in the payment of taxes in future years.

The Consolidated Adjusted Profit for the Period amounted to €3.0 million (it was negative for €13.8 million in the corresponding period of the previous year ended 31 May 2020): the positive performance is attributable to the increase in Adjusted EBIT and to the drop in net financial expenses, only partially offset by the increase in income taxes.

Below is a reconciliation between the consolidated adjusted profit (loss) for the period and the consolidated profit (loss) for the period.

	Period ended				Changes
(in millions of Euro and as a percentage of revenues)	31 May 2021	%	31 May 2020	%	Δ	%
Adjusted Consolidated Profit/Loss for the Period	3.0	0.5%	(13.8)	(3.2%)		16.8 (121.6%)
Non-recurring expenses/income	(0.6)	(0.1%)	(0.2)	0.0%	(0.5)	232.1%
Revenues from extended warranty services net of related estimated future
costs to provide the assistance service - change in the business model for	(0.9)	(0.2%)	(0.5)	(0.1%)	(0.5)	100.0%
directly managed assistance services
Non-recurring depreciation, amortisation and write-downs of fixed assets	(0.2)	0.0%	-	0.0%	(0.2)	100.0%
Non-recurring financial expenses/(income)	(0.0)	0.0%	-	0.0%	(0.0)	100.0%
Theoretical tax impact from taxes on non-recurring expenses/(income), non
recurring financial expenses/(income), non-recurring depreciation, amortisation	0.2	0.0%	0.1	0.0%	0.1	193.1%
and write-downs of fixed assets and the change in business model.
Consolidated Profit/Loss for the Period	1.4	0.2%	(14.4)	(3.4%)		15.8 (109.7%)

4.5 Cash flows

4.5.1 Consolidated Adjusted Free Cash Flow ¹⁹

The Group considers the Consolidated Adjusted Free Cash Flow to be the most appropriate indicator to measure cash generation during the period. The composition of the indicator is provided in the table below.

	Period ended			Changes
(in millions of Euro)	30 November 2020	30 November 2019	Δ	%
Consolidated Gross Operating Result (EBITDA)	27.8	10.9	16.9	154.3%
Cash flow generated/(absorbed) by operating activities20	(34.8)	(25.0)	(9.8)	39.2%
Taxes paid	0.0	0.0	0.0	0.0%
Interest	(2.7)	(2.8)	0.1	(2.3%)
Other changes	0.4	0.1	0.2	177.6%
Consolidated net cash flow generated/(absorbed) by operating activities21	(9.4)	(16.7)	7.3	(43.8%)
Investments22	(13.3)	(9.6)	(3.7)	38.7%
Investments for business combinations and business units	(7.1)	(6.0)	(1.1)	17.6%
Adjustment for non-recurring investments	8.3	6.0	2.3	39.0%
Non-recurring expenses /(income)	0.8	0.2	0.6	313.5%
Adjustment for non-monetary components of non-recurring (expenses)/income	0.0	0.0	0.0	#DIV/0!
Other non-recurring cash flows	(2.6)	(0.1)	(2.5)	1,811.8%
Theoretical tax impact of the above entries23	(0.1)	(0.0)	(0.1)	313.5%
IFRS 16 Leases24	(13.2)	(13.8)	0.6	(4.7%)
Consolidated Adjusted free cash flow	(36.5)	(40.1)	3.6	(9.1%)

The Consolidated net cash flow generated/(absorbed) by operating activities was a negative figure of €9.4 million (a negative figure of €16.7 million in the year ended on 31 May 2020). Cash absorption is linked to the dynamics of working capital.

Investments totalled €13.3 million (€9.6 million as at 31 May 2020). They mainly pertained to: (i) interventions for the development of the network of direct stores and the refurbishment of the existing store network and (ii) the purchase of new hardware, software, licenses and developments on the applications with a view to improving the infrastructure,

¹⁹ See note in the section "Main financial and operating indicators".
²⁰ The item "Cash flow generated/(absorbed) by operating activities" refers to cash generated/(absorbed) by the change in working capital and other non-current balance sheet items such as other assets, other liabilities and risk provisions.
²¹ The item "Consolidated net cash flow generated/(absorbed) by operating activities" refers to cash generated by operating activities in a broad sense net of outlays for interest and taxes and adjusted for non-cash effects of balance sheet changes included in the item "Cash flow generated/(absorbed) by operating activities".
²² For better representation, the item includes the portion of net investments paid during the period.
²³ The theoretical rate deemed appropriate by management is 8.7% both as at 31 May 2021 and 31 May 2020, and incorporates IRES at 4.8% (obtained by reducing taxable IRES income by 80% due to the ability to use past tax losses) and an IRAP rate at 3.9%.
²⁴ The item includes the cash flows relating to leases paid as well as leases expired during that period.

digitisation of the stores and launch of advanced functions for the online platform, with the aim of making each customer's omnichannel experience increasingly functional and enjoyable.

Investments for business combinations and business units of €7.1 million in the period ended on 31 May 2021 (€6.0 million in the corresponding period of the previous year) refer to the portion paid of the purchase price in the context of the acquisition of former Pistone S.p.A., former Cerioni, Convertino and Limbiate. These investments are classified as non-recurring and therefore adjusted by determining the Consolidated Adjusted Free Cash Flow indicator. The adjustment for non-recurring investments also includes any investments that took place during the period for the fittingout of the sales outlets.

Non-recurring income and expenses amounted to Euro 0.8 million in the period ended 31 May 2021 (Euro 0.2 million in the corresponding period of the previous year).

The other non-recurring operating cash flows, equal to Euro 2.6 million, from the insurance reimbursement obtained in relation to the theft of Piacenza in 2017.

Below are listed the main changes recorded in the Group's net financial indebtedness during the period ended 31 May 2021 and in the period ended 31 May 2020:

	Period ended			Changes
(in millions of Euro)	31 May 2021	31 May 2020	Δ	%
Operating profit	27.8	10.9	16.9	154.3%
Cash flow generated/(absorbed) by operating activities	(34.8)	(25.0)	(9.8)	39.2%
Taxes paid	0.0	0.0	0.0	(100.0%)
Interest paid	(2.7)	(2.8)	0.1	(2.3%)
Other changes	0.4	0.1	0.2	177.6%
Net cash flow generated/(absorbed) by operating activities	(9.4)	(16.7)	7.3	(43.8%)
Investments	(13.3)	(9.6)	(3.7)	38.6%
Investments for business combinations and business units	(7.1)	(6.0)	(1.1)	17.6%
Long Term Incentive Plan	3.7	-	3.7	100.0%
Payables from the acquisition of business units	6.4	6.0	1.1	6.1%
IFRS 16 Leases	(13.2)	(13.8)	0.6	(4.7%)
Other changes	(0.6)	(0.7)	(0.0)	6.2%
Change in net financial debt	(33.5)	(40.8)	7.4	(18.1%)

5. Statement of financial position

Below is a detailed breakdown of the Group's net working capital and net invested capital as at 31 May 2021 and as at 28 February 2021:

(in millions of Euro)	Period ended
	31 May 2021	28 February 2021
Trade receivables	86.6	65.3
Inventories	493.5	372.1
Trade payables	(639.3)	(505.1)
Net operating working capital	(59.3)	(67.7)
Other working capital items	(217.2)	(247.7)
Net working capital	(276.4)	(315.4)
Right-of-use assets	440.5	451.6
Non-current assets and (liabilities)	307.8	306.0
Net invested capital	471.9	442.1
(Net financial debt) / Net cash – Pursuant to IAS 17	121.4	154.8
IFRS 16 Leases	(434.8)	(443.7)
(Net financial debt) / Net cash	(313.4)	(288.8)
Shareholders' equity	(158.4)	(153.3)
Total shareholders' equity and financial liabilities	(471.9)	(442.1)

The Group's Net Working Capital as at 31 May 2021 was negative by Euro 59.3 million (negative by Euro 67.7 million as at 21 February 2021). The trend recorded is mainly attributable to a calendar effect.

The Net Invested Capital of the Group stood at Euro 471.9 million as at 31 May 2021, up Euro 29.7 million compared with 28 February 2021. The change is mainly attributable to the increase in the Group's Net Working Capital for Euro 39.0 million.

Investments as at 31 May 2021 stood at €8.4 million (€2.9 million as at 31 May 2020) and are attributable to capitalised costs incurred for network development interventions of direct shops and costs incurred for the purchase of new hardware, software, licenses and developments on applications with a view to improving the technological infrastructure.

Shareholders' equity amounted to Euro 158.4 million as at 31 May 2021 (Euro 153.3 million as at 28 February 2021), with an increase mainly determined by the accounting of the years of the Long Term Incentive Plan²⁵ reserved for certain managers and employees and by the recognition of the positive result for the period.

²⁵ On 6 February 2017, the Extraordinary Shareholders Meeting of Unieuro approved the adoption of a stock option plan ("Long Term Incentive Plan", "LTIP") reserved for Executive Directors, associates and employees, executives and others (the "Recipients"). The Long Term Incentive Plan calls for assigning ordinary shares derived from a capital increase with no option rights pursuant to Article 2441, paragraphs 5 and 8 of the Italian Civil Code approved by the Shareholders' Meeting on the same date. On 29 June 2017, the Board of Directors approved the plan regulations ("Regulations") whereby the terms and conditions of implementation of Long Term Incentive Plan were determined. The conclusion and subsequent acceptance of the Long-Term Incentive Plan by the Recipients took place in October 2017 and was effective from 29 June 2017.

Below is a detailed breakdown of the Group's net financial debt as at 30 November 2020 and 29 February 2020 in accordance with Consob Communication 6064293 of 28 July 2006 and in compliance with ESMA Recommendations 2013/319:

	Period ended	Changes
(in millions of Euro)	31 May 2021	28 February 2021	Δ	%
(A) Cash	180.3	219.4	(39.1)	(17.8%)
(B) Other cash and cash equivalents	0.0	0.0	0.0	0.0%
(C) Securities held for trading	0.0	0.0	0.0	0.0%
(D) Liquidity (A)+(B)+(C)	180.3	219.4	(39.1)	(17.8%)
- of which is subject to a pledge	0.0	0.0	0.0	0.0%
(E) Current financial receivables	0.0	0.1	(0.1)	(100.0%)
(F) Current bank payables	0.0	(0.1)	0.1	(100.0%)
(G) Current part of non-current debt	(10.2)	(9.6)	(0.6)	6.7%
(H) Other current financial payables	(60.1)	(61.2)	1.0	(1.7%)
(I) Current financial debt (F)+(G)+(H)	(70.4)	(70.8)	0.4	(0.6%)
- of which is secured	0.0	0.0	0.0	0.0%
- of which is unsecured	(70.4)	(70.8)	0.4	(0.6%)
(J) Net current financial position (I)+(E)+(D)	109.9	148.6	(38.7)	(26.1%)
(K) Non-current bank payables	(39.3)	(39.1)	(0.2)	0.5%
(L) Bonds issued	0.0	0.0	0.0	0.0%
(M) Other non-current financial payables	(384.1)	(398.4)	14.3	(3.6%)
(N) Non-current financial debt (K)+(L)+(M)	(423.4)	(437.5)	14.1	(3.2%)
- of which is secured	0.0	0.0	0.0	0.0%
- of which is unsecured	(423.4)	(437.5)	14.1	(3.2%)
(O) (Net financial debt) / Net cash(J)+(N)	(313.4)	(288.8)	(24.6)	8.5%

A breakdown of the composition of the net financial debt pursuant to IAS 17 as at 31 May 2021 and as at 21 February 2021 is shown below.

	Period ended	Period ended
(in millions of Euro)	31 May 2021	31 May 2021	Δ	%
(Net financial debt) / Net cash	(313.4)	(288.8)	(24.6)	8.5%
Current financial receivables - IFRS 16	(1.0)	(1.0)	0.0	(0.7%)
Non-current financial receivables - IFRS 16	(7.2)	(7.2)	0.0	(0.0%)
Other current financial payables - IFRS 16	57.2	58.0	(0.8)	(1.4%)
Other non-current financial payables - IFRS 16	385.8	393.8	(8.0)	(2.0%)
(Net financial debt) / Net cash – Pursuant to IAS 17	121.4	154.8	(33.5)	(21.6%)

Net cash - IAS 17 decreased by Euro 33.5 million compared with 28 February 2021, equal to Euro 121.4 million, mainly due to the dynamics deriving from operations.

6.IFRS 16 Impacts

The impact of IFRS 16 on the Group's main economic and financial indicators at 31 May 2021 is shown below²⁶:

		31 May 2021 (Ex - IAS 17)		31 May 2021 (IFRS 16)
EBITDA ADJ	• reduction in operating costs (rents paid on shops, offices, warehouses and cars), net of income from subleases of shops	12.4	16.9	29.4
EBIT ADJ	• increase in depreciation on right-of-use assets	4.9	1.6	6.5
PROFIT BEFORE TAXES ADJ	• increase in financial expenses for interest related to rights-of-use liabilities	4.1	(0.8)	3.3
NET FINANCIAL INDEBTEDNESS	• recognition of rights-of-use liabilities (other current and non-current financial payables), net of non-current financial receivables relating to subleases	121.4	(434.8)	(313.4)

7. Coronavirus epidemic

The first epicentre of the Coronavirus (or "Covid-19") epidemic was in Wuhan, China. It was initially reported by Chinese national authorities to the World Health Organization ("WHO") on 30 December 2019. On 30 January 2020, the WHO declared the Covid-19 outbreak a global health emergency and many national governments implemented measures following this announcement.

In the second half of February 2020, the first sporadic cases of Covid-19 in Italy started a second phase of the epidemic, with a rapid escalation of the spread of the disease throughout Europe.

On 11 March 2020, the WHO declared that the Coronavirus-related health emergency had become a pandemic with the increasing spread of the virus in Europe, the rapid rise in the United States and the first outbreaks in Latin America and Africa.

To contain the effects of the contagion, the Italian authorities have adopted increasingly stringent containment measures, first locally and then nationally. For the Group, the succession of regional ordinances and national decrees has resulted in the need to adapt to the measures gradually prescribed since the beginning of the emergency.

As of the end of February 2020, the Company has provided head office personnel with IT tools suitable for remote work and subsequently recommended that all head office personnel adopt this work method.

On 14 March 2020, Unieuro, in compliance with the need to protect the health of customers and its collaborators, announced the closure of the entire network of direct stores.

Starting from 30 March 2020, the Company began the gradual reopening of direct stores in order to guarantee customers the most urgent or necessity purchases as required by the Prime Ministerial Decree of 11 March 2020 and subsequent amendments.

Unieuro has adopted a series of measures to protect its customers and employees as well as the company stability and profitability, mostly in the following areas:

Revenue

The interventions mainly concerned the strengthening of the Online channel pending the return to full operation of the physical channels. In-store traffic has indeed dropped drastically due to restrictions on the movement of people and social-distancing regulations, which have mainly affected shops located outside city centres, in large shopping centres and business parks.

Unieuro's strategy has always been oriented towards customer proximity rather than on specific store formats, which has enabled it to limit the impact of these macrotrends and has contributed to the slow but steady improvement in revenues in the Retail Channel. On the other hand, e-commerce has benefited greatly from the situation, allowing operators who had positioned themselves early within the digital channel to at least partially offset the drop in turnover in physical stores.

Cost structure

Immediately, actions were initiated aimed at containing personnel costs through the use of previous holidays and leave. After the measures were implement by the Government, the Exceptional Redundancy Payments Fund (Cassa Integrazione Guadagni in Deroga) was launched. The entire corporate Management has also waived a part of its remuneration as a gesture of solidarity towards the corporate population.

Thanks to the successful dialogue with the owners of the properties that host the direct stores, the economic and financial impact of the leases was also mitigated to compensate for the lower revenues achieved during the lockdown period.

Purchases of goods and services that are not considered strictly necessary were lastly reduced to a minimum, both at the point of sale and corporate level.

Investments and acquisitions

Deferrable investment activities, with particular reference to those relating to the network of stores, have been temporarily suspended and rescheduled.

Financial situation

Measures have been implemented to preserve and strengthen the company's soundness, including negotiations with major trading partners to optimise cash flows from the Group's operating working capital and the non-payment of the dividend in derogation of the dividend policy currently in place.

Starting from May, with the end of the lockdown and the consolidation of favourable consumption trends for the product categories managed by Unieuro, the Group experienced a recovery in revenues and profitability. Month after month, traffic in direct stores (excluding the Travel channel) increased until it returned to the levels of the same period in 2019, while the growth trend of the Online channel - although declining - continued to be influenced by the boom of the previous months.

Against this backdrop, Unieuro fully recovered the lower revenues recorded during the most difficult months of the epidemic at the closure of the first half of the year. Margins and cash generation were strong, also as a result of the managerial actions taken in the meantime and certain non-recurring effects.

Since October, after a summer of relative tranquillity, the epidemiological situation in Italy has rapidly worsened. The sudden increase in infections has mainly involved certain regions, including Lombardy and Piedmont, pushed to adopt restrictive measures including the closure of shopping centres at weekends. The further deterioration of the situation prompted the government, on 4 November, to issue a decree that imposed new restrictions on commercial activities and the free movement of persons, effective from 6 November to 3 December 2020. These measures, initially valid from 6 November to 3 December 2020, were then extended on several occasions and are still in force at the closing date of the Financial Statements.

In relation to the retail distribution of consumer electronics and home appliances, considered an essential activity, the decree provides for the closure of all points of sale within shopping centres throughout the national territory, but limited to public holidays and pre-holidays.

Also during the peak season and in the following months of January and February, Unieuro's business has also been able to take advantage (i) of the continuous interest on the part of consumers for the products sold by the Group, that enable remote work and study, communication between people, as well as home well-being; (ii) of the multiplicity of sales channels through which the Group operates, which works to compensate for the impact of the lockdown on some of the channels, and (iii) of the omnichannel services launched by Unieuro in the course of the summer, with the aim of making the in-store purchasing process safer and faster during this complex historical moment.

On 24 May 2021, following the positive progress recorded by the vaccination campaign and the consequent improvement of epidemiological data, a new government decree came into force which sanctioned the reopening of shopping centres on holidays and pre-holidays, thus removing the last substantial limitation to the Unieuro's sales activity.

As at the date of this Report, with the exception of the persistent difficulties of the Travel Channel linked to the significant decrease in airport traffic, the situation of the sales channels can therefore be considered to have returned to normal before Covid.

8. Unieuro treasury shares

During the year, Unieuro S.p.A. did not purchase or sell any treasury shares directly or through an intermediary.

9. Right to waive the obligation to publish an information document in the event of insignificant transactions

Note that the Issuer has opted to adopt the waiver in Article 70, paragraph 6 and Article 71, paragraph 1 of the Issuers' Regulation, pursuant to Article 70, paragraph 8 and Article 71, paragraph 1 bis of the Issuers' Regulation.

10. Management and coordination activities

Unieuro S.p.A. is not subject to the management or coordination of companies or entities and it determines its general and operational strategies in full autonomy.

11. Significant events during and after the period-end

Significant events during the period

The adoption of the SAP management system

The transition to the new SAP S/4HANA management software began on 1 March 2021. The adoption of the new ERP (Enterprise Resource Planning) has been planned for some time and implemented with the support of the consulting companies, leaders in the sector, with the aim of radically evolving company information systems, making them technologically advanced and functional to the omnichannel growth strategy of Unieuro.

The acquisition of the Limbiate store

Following the participation in the competitive procedure announced by the Court, Unieuro was awarded the contract and on 01 March 2021, acquired the business unit of Galimberti S.p.A., in an arrangement with creditors consisting of a store located in Limbiate (Monza Brianza).

The expansion in the metropolitan area of Turin

On 31 March 2021, Unieuro announced a significant strengthening of the network in the Piedmont capital thanks to the acquisition of a business unit consisting of two 2C Srl stores and the signing of an affiliation contract for the third store managed by the same company. The three stores, previously members of the Expert purchasing group, reopened under the Unieuro sign in April.

Transfer of the registered office

As of 1 April 2021, Unieuro officially moved its registered office from via Schiaparelli 31 to Palazzo Hercolani, in via Maroncelli 10, also in Forlì. The new headquarters was officially inaugurated on 8 May 2021 in the presence of the city authorities.

The entry of Iliad in the capital

On 6 April 2021, Unieuro acknowledged the purchase of an interest of approximately 12% of the share capital by Iliad Italia, with which a successful commercial relationship is already in place and which declared its intention to accompany the Company in its long-term growth.

The consensual termination of the employment relationship with the CFO

On 9 April 2021, Unieuro and Italo Valenti signed an agreement for the consensual termination of the employment relationship, with effect from 31 May 2021, as a result of which Italo Valenti left his role as Chief Financial Officer and the positions of manager in charge of preparing the corporate and accounting documents and investor relator of Unieuro to pursue other professional opportunities.

Territorial expansion from Piedmont to Sicily

On 26 April 2021, Unieuro announced that it had consolidated its presence from Northern to Southern Italy through the opening of four stores: a new direct store in Messina and three affiliated stores in Brescia, Fiumicino and Mazzarone (Catania).

2020/21 dividend proposal and 2019/20 coupon recovery

On 7 May 2021, at the time of the approval of the financial results as at 28 February 2021 and by virtue of the exceptional profitability and cash generation, the Board of Directors of Unieuro resolved to propose to the Shareholders' Meeting

the distribution in ordinary dividend of €2.60 per share, which also compensates shareholders for the dividend not paid in 2020 due to the uncertainty caused by the pandemic.

Significant events following the closure of the period

The appointment of the new CFO

Since 1 June 2021, Marco Pacini has been the new Chief Financial Officer of the Company. A manager with many years of experience in administration, finance and control, in the new role, Pacini reports directly to CEO Giancarlo Nicosanti Monterastelli, assuming responsibility and coordination of the entire Finance area of Unieuro, including Administration & Control, Finance, Legal, Corporate Development and Investor Relations.

Approval of the Strategic Plan to 2026

On 10 June 2021, the Board of Directors approved Unieuro's five-year Strategic Plan, which envisages heavy investments - on average over Euro 50 million a year - dedicated to completing the company's digital transformation, with the aim of become the industry's omnichannel market setter. The Plan also provides for a strong generation of cash over the five-year period, which will be put at the service of external growth, in Italy and abroad, and the remuneration of shareholders. The Plan projects revenues of up to Euro 3.3 billion and an adjusted EBIT of between Euro 85 and 95 million in the year 2025/26.

The Shareholders' Meeting

On 15 June 2021, the Unieuro Shareholders' Meeting, which met in ordinary and extraordinary session, in single call, approved the financial statements as at 28 February 2021; approved the allocation of the profit for the year, including the distribution of a dividend of Euro 2.60 per share for a maximum total of 54.2 million; approved the first and expressed a favourable vote on the second section of the Report on the remuneration policy and remuneration paid; approved the proposal to increase the remuneration of the Board of Directors and the members of the Board of Statutory Auditors. The Shareholders' Meeting also redetermined the number of the Board of Directors from nine to eleven and approved the appointment of Benedetto Levi and Giuseppe Nisticò as new Directors of the Company. Lastly, the Shareholders' Meeting amended Articles 13.1, 13.9 and 14 of the Articles of Association and decided not to amend Article 17.1.

Inclusion in the FTSE Italia Mid Cap index

On 21 June 2021, the ordinary shares of Unieuro were included in the FTSE Italia Mid Cap index, ceasing to belong to the FTSE Italia Small Cap index. The inclusion in the index represents the entry of Unieuro amongst the top hundred listed in Italy by market value.

Awarding of the Netcomm Award

On 1 July 2021, Unieuro announced that it had received the award for the best omnichannel project within the Netcomm Award, an award ceremony organized by the Netcomm Italia Consortium with the support of Oney and Publitalia '80, dedicated to the recognition of Italian excellence in electronic commerce.

12. Foreseeable operating evolution

The good progress of the vaccination campaign, although complicated by the emergence of new variants of Covid-19, will impact in the coming months on consumption trends which - since the second quarter of the 2020/21 financial year - have positively influenced the sales of the product categories managed from Unieuro.

Once these trends have been exhausted, to all effects exceptional, it is, in fact, presumed that the demand for products belonging to the Grey category (in particular IT and telephony) may slow down, however offset by the acceleration of the White sector, which is already in progress. The Brown category will also continue to benefit from the migration to the DVB-T2 Hevc television standard, starting in September and decided by the Government to free up television frequencies for the benefit of 5G telephony.

At channel level, the lifting of restrictions on trade and the mobility of people will continue to provide a new impetus to physical stores, whilst e-commerce will continue to slow its growth, without however regressing to pre-Covid levels, in light of the consumer patterns that have profoundly changed by now.

In general, the expectations for the Italian market are confirmed in that it is expected to make further progress compared to the previous year, supported by growth in value rather than by the increase in volumes. Said phenomenon will allow a reduction of the gap still existing compared to the more mature European markets.

In light of this, Unieuro's Management confirms the growth expectations presented to the financial markets during the Investor Day of 10 June 2021, which for the current year include:

Consolidated revenues of between Euro 2.8 and 2.9 billion;
Adjusted EBIT of between Euro 65 and 75 million;
Free Cash Flow Adjusted of between Euro 40 and 50 million;

in the context of a significant increase in investments, aimed at accelerating the digital transformation of Unieuro and its natural evolution in the consumer electronics and household appliances retail market setter in Italy.

ACCOUNTING STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Year ended
(In thousands of Euro)	31 May 2021	28 February 2021
Plant, machinery, equipment and other assets	71,696	71,526
Goodwill	196,072	195,238
Intangible assets with definite useful life	33,483	32,927
Assets for rights of use	440,533	451,622
Deferred tax assets	40,297	40,766
Other non-current assets	11,934	10,082
Total non-current assets	794,015	802,161
Inventories	493,455	372,053
Trade receivables	86,576	65,314
Current tax assets	-	-
Other current assets	34,751	19,069
Cash and cash equivalents	180,294	219,366
Assets held for sale	-	-
Total current assets	795,076	675,802
Total Assets	1,589,091	1,477,963
Share capital	4,128	4,053
Reserves	69,363	75,588
Profit/(loss) carried forward	84,927	73,654
Total shareholders' equity	158,417	153,295
Financial liabilities	39,265	39,068
Shareholder funding	-	-
Employee benefits	13,643	12,979
Other financial liabilities	391,277	405,607
Provisions	19,348	20,752
Deferred tax liabilities	3,665	3,637
Other non-current liabilities	26	26
Total non-current liabilities	467,224	482,069
Financial liabilities	10,244	9,659
Shareholder funding	-	-
Other financial liabilities	61,121	62,157
Trade payables	639,316	505,066
Current tax liabilities	3,306	3,789
Provisions	3,090	754
Other current liabilities	246,373	261,174
Total current liabilities	963,450	842,599
Total liabilities and shareholders' equity	1,589,091	1,477,963

CONSOLIDATED INCOME STATEMENT

	Period ended
(In thousands of Euro)	31 May 2021	31 May 2020
Revenue	581,848	428,912
Other income	113	102
TOTAL REVENUE AND INCOME	581,961	429,014
Purchases of materials and external services	(624,424)	(320,990)
Personnel costs	(49,196)	(30,413)
Changes in inventory	121,402	(65,264)
Other operating costs and expenses	(1,970)	(1,428)
GROSS OPERATING RESULT	27,773	10,919
Depreciation, amortisation and write-downs of fixed assets	(23,046)	(22,693)
NET OPERATING RESULT	4,727	(11,774)
Financial income	5	2
Financial expenses	(3,199)	(3,562)
PROFIT BEFORE TAX	1,533	(15,334)
Income taxes	(135)	915
PROFIT/(LOSS) FOR THE PERIOD	1,398	(14,419)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands of Euro)	Period ended
	31 May 2021	31 May 2020
PROFIT/(LOSS) FOR THE PERIOD	1,398	(14,419)
Other items of comprehensive income that will or may be reclassified to profit/loss for the period:
Gain/(losses) on cash flow hedges	(136)	125
Income taxes	131	(35)
Total other components of comprehensive income that are or could be reclassified to profit/(loss) for the period	(5)	90
Other items of comprehensive income that will not be subsequently reclassified to profit/(loss) for the period:
Actuarial gains (losses) on defined benefit plans	(419)	306
Income taxes	117	(87)
Total other components of comprehensive income that will not be reclassified to profit/(loss) for the period:	(302)	219
Total comprehensive income for the period	1,091	(14,110)

CONSOLIDATED CASH FLOW STATEMENT

	Period ended
(In thousands of Euro)	31 May 2021	31 May 2020

Cash flow from operations
CONSOLIDATED PROFIT/(LOSS) FOR THE CONSOLIDATED PERIOD	1,398	(14,419)
Adjustments for:
Income taxes	135	(915)
Net financial expenses (income)	3,194	3,560
Depreciation, amortisation and write-downs of fixed assets	23,046	22,693
(Profits)/losses from the sale of property, plant and machinery
Other changes	372	134
	28,145	11,053
Changes in:
- Inventories	(121,402)	65,264
- Trade receivables	(21,262)	(750)
Trade payables	139,192	(88,085)
- Other changes in operating assets and liabilities	(31,359)	(1,446)
Cash flow generated/(absorbed) by operating activities	(34,831)	(25,017)
Interest paid	(2,713)	(2,777)
Net cash flow generated/(absorbed) by operating activities	(9,399)	(16,741)

Cash flow from investment activities
Purchases of plant, machinery, equipment and other assets	(8,285)	(4,308)
Purchases of intangible assets	(5,020)	(5,287)
Investments for business combinations and business units	(7,058)	(6,000)
Cash flow generated/(absorbed) by investing activities	(20,363)	(15,595)
Cash flow from investment activities
Increase/(Decrease) in financial liabilities	301	69,632
Increase/(Decrease) in other financial liabilities	(170)	11,241
Increase/(Decrease) in financial liabilities - IFRS 16 Leases	(13,186)	(13,829)
LTIPs	3,745	-
Net cash and cash equivalents generated by financing activities	(9,310)	67,044
Net increase/(decrease) in cash and cash equivalents	(39,072)	34,708
CASH AND CASH EQUIVALENTS AT THE START OF THE PERIOD	219,366	96,712
Net increase/(decrease) in cash and cash equivalents	(39,072)	34,709
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	180,294	131,421

STATEMENT OF THE INTERIM DIRECTORS' REPORT AS AT 31 MAY 2021

The undersigned, Giancarlo Nicosanti Monterastelli, as Chief Executive Officer, and Marco Pacini, as the manager in charge of preparing the Unieuro Group's corporate and accounting documents, hereby certify, also considering the provisions of Article 154-bis, paragraphs 3 and 4 of Legislative Decree No. 58 of 24 February 1998:

They attest

That the Interim Directors' Report as at 31 May 2021, corresponds to the Company's documentary findings, books and accounting records.

14 July 2021

Giancarlo Nicosanti Monterastelli Chief Executive Officer

Marco Pacini The Officer responsible for preparing the accounting and corporate documents