Corporate

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 30 September 2021 presented by CEO Antonio Porro.

HIGHLIGHTS
In first nine months 2021, thanks also to the buoyancy of the books market, the Mondadori Group recorded a significant growth in revenue and EBITDA across all business areas, and a strong increase in profitability at a consolidated level.

The overall improvement in results puts the Company in a position to pursue further growth opportunities, with a view to increasing focus more and more on its core business of books.

“The good performance recorded also in the third quarter bears witness to the healthy conditions of our company and to our stronger operating and financial standing marked by growing profitability”, said Antonio Porro, CEO of the Mondadori Group.
“These results, together with the positive trend of our core markets, allow us to make an upward revision of the targets we had set for the end of the year.
We carry this momentum into 2022 with an even more solid presence in the books segment: on the one hand, with a consolidated leadership in the Trade area; on the other, with a stronger leading role in school textbooks publishing thanks to the acquisition of De Agostini Scuola.
A growth plan complemented today by the major investment in the books distribution of third-party publishers, thanks to the acquisition of 50% of A.L.I.- Agenzia Libraria International”, concluded Porro.

PERFORMANCE AT 30 SEPTEMBER 2021
In first nine months 2021, consolidated revenue amounted to € 588.9 million, up by 8.7% versus  € 541.9 million of the prior year, thanks to the positive performance of all the business areas and, in particular, of the Books and Retail areas, which benefited from the buoyancy of the Books market.

Adjusted EBITDA came to a positive € 85 million, increasing by € 14 million versus € 71 million in first nine months 2020.
This performance reflects, on the one hand, the positive trend in revenue recorded by all business areas and, on the other, the ongoing efforts to curb operating and structural costs implemented by management.
The reduction in the ratio of fixed costs (overheads and payroll costs) to consolidated revenue enabled the Group to achieve a significant improvement in its margins, which rose to 14.4% from 13.1% in 2020.

The Group’s performance in the first nine months is even more striking when compared with the same period of 2019: despite a € 70 million drop in revenue, adjusted EBITDA rose by more than € 1 million versus € 83.4 million in first nine months 2019.

Group EBITDA, amounting to € 80.5 million, improved versus the € 65.1 million recorded in the same period of 2020, as a result of the abovementioned trends and dynamics, and to lower non-ordinary expense of € 1.4 million versus € 3.2 million in the same period of the prior year, which recorded a provision for charges arising from a tax dispute.

EBIT amounted to € 52 million, up by more than € 23 million versus € 28.9 million in the same period of 2020, due to the dynamics of the abovementioned operating components, to lower amortization and depreciation totaling € 2.1 million, and to the presence, in the result at 30 September 2020, of write-downs of € 5.8 million relating to TV Sorrisi e Canzoni and the goodwill of a number of other titles in the Media area.

Consolidated profit before tax amounted to € 44.8 million versus € 19.6 million in first nine months 2020. On top of that, the following items also contributed to the significant improvement of approximately € 25 million:

• the reduction of approximately € 1 million in financial expense (down from € 3.2 million to € 2.2 million), due primarily to a lower average debt and a lower average interest rate;
• the improvement of approximately € 2 million in the results of associates (consolidated at equity), thanks in particular to the performance of the joint venture Mediamond.

The Group’s net profit, after minority interests, came to € 49.4 million, a sharp increase of € 31.4 million versus € 18 million recorded in first nine months 2020.
Despite the growth in profit before tax, the tax components for the period show a positive operating balance of € 4.6 million, due to the effect of net non-recurring income of approximately € 19 million, from the completion of the process of realigning the tax amounts of trademarks and goodwill to their respective statutory amounts.

The net financial position before IFRS16 at 30 September 2021 stands at € -27.3 million, a significant improvement of € 55 million versus € -82.3 million at 30 September 2020, as a result of the strong cash generation from ordinary operations recorded in the last 12 months (€ 70.7 million including outlays for financial expense and tax).
The IFRS 16 net financial position stands at € -111.6 million and reflects the recognition of the financial payable from the application of IFRS16.

At 30 September 2021, Group employees amounted to 1,814 units, down by 5.3% from 1,916 resources at 30 September 2020, despite the increase in headcount following the acquisition of Hej! (net of which the reduction would be -5.8%).

PERFORMANCE IN THIRD QUARTER 2021
In third quarter 2021, consolidated revenue amounted to € 268.5 million, up by 6.1% versus € 253 million of the prior year, thanks to the positive contribution of all business areas.

Adjusted EBITDA came to € 63.5 million, increasing by € 3.5 million versus € 60 million of third quarter 2020, which basically reflects the positive performance of consolidated revenue, especially in the Books area.

EBIT too, amounting to € 51.8 million, improved by approximately € 6 million, up by over 12% versus the same quarter of 2020, driven by the performance of the abovementioned components and by lower amortization and depreciation during the period.

The Group’s net profit, after minority interests, came to € 45 million versus € 43 million of third quarter 2020.
The comparison with the prior year is affected not only by the above trend in operating profit, but also by the following additional elements (which have an opposite effect):

• in third quarter 2020, the recognition of the write-up of the investment in Reworld Media (fully sold in February 2021), amounting to € 7.5 million;
• non-recurring tax income of € 9.8 million in third quarter 2021, from the completion of the tax realignment process.

AGREEMENT ON THE ACQUISITION OF 50% OF THE BOOKS DISTRIBUTION COMPANY OF THIRD-PARTY PUBLISHERS A.L.I. – AGENZIA LIBRARIA INTERNATIONAL
The Mondadori Group announced today that it has entered into an agreement on the acquisition of a 50% stake in the share capital of A.L.I. S.r.l. – Agenzia Libraria International, a group that has been operating in books distribution for over 50 years now, boasting a portfolio of more than 80 publishing houses.

Thanks to the deal, the Mondadori Group establishes a partnership that enables it to strengthen its position in the books distribution area: a constantly evolving market requiring ongoing improvement of customer service levels.
The founders of A.L.I., the Belloni family, who retain a 50% stake, will continue to manage operations, continuing the path of growth and success enjoyed by the company so far.

The price, which will be paid in cash at the closing date, has been set at € 10.8 million.
The deal also envisages the signing of put&call option agreements whereby the Mondadori Group has the option to acquire the additional 50% of A.L.I. in two different tranches by 30 July 2025.
In 2020, A.L.I. reported consolidated revenue of € 40 million, EBITDA of € 4.6 million and net profit of € 3 million (in accordance with Italian accounting standards).
At 31 December 2020, the net financial position (cash) stood at a positive € 5.9 million.

The scope of the transaction also includes a number of subsidiaries operating in the publishing fields.
Completion of the acquisition is subject to the authorizations of law from the competent Antitrust authority.

BUSINESS OUTLOOK

The positive performance recorded also in the third quarter of the year by all business areas, the continued strong cash flow generation, as well as the improved trend forecast for the books market throughout the year, allow the Group to look forward with increased optimism to its development in the coming months, and therefore to increase – based again on the current scope – the estimates previously disclosed for the current year.

 Performance targets:

• consolidated revenue is expected to grow single-digit (from low single-digit);
• adjusted EBITDA – in percentage terms – is forecast to be over 13% of consolidated revenue (compared with the previous estimate of an EBITDA margin of 12%), therefore to reach over € 100 million;
• the net result for 2021 is confirmed on a sharp rise, propelled by the improvement in operations and by the non-recurring benefits from the tax realignment of intangible assets already recorded.

 Cash Flow and Net Financial Position:
Additionally, with regard to the Group’s financial debt, one can reasonably estimate a further increase in cash flow from ordinary operations, bringing it to a range between € 60 and 65 million (from the previous forecast between € 50 and 55 million), a Free Cash Flow of approximately € 50 million and, therefore, the achievement – before the impacts from the adoption of IFRS 16 – of a positive consolidated net financial position at year end equal to approximately € 35 million.

As previously anticipated, the financial strength achieved by the Group has paved the way for a possible return to a shareholder remuneration policy from 2022 (applied to the net result of 2021).

The above forecasts, drawn up on the basis of the current scope, may be updated upon completion of the acquisition of De Agostini Scuola.

PERFORMANCE OF THE BUSINESS AREAS AT 30 SEPTEMBER 2021

• BOOKS

In the first nine months of the current year, the Trade books market recorded an overall growth of 3%[1] versus the same period of the prior year; in the third quarter, the increase was 7%, consolidating the positive trend that had started in second half 2020.
If the comparison with 2020 is affected by the lockdown, which impacted on the operation of almost all sales channels in the months of March and April 2020, the comparison with 2019 bears more significance to the extraordinary trend that the Books market is experiencing: growth in the first nine months of the year versus the same period of 2019 amounted, in fact, to 20.6%.

Against this backdrop, the Mondadori Group saw an increase in sell-out in terms of market value of approximately 19%, which allowed it to retain its undisputed leadership in the Trade segment with a 23.4% market share[2].

In the School textbooks segment, the Mondadori Group’s publishing houses kept their market share steady at 22.1%, in line with the prior year, thanks to the positive results of the 2021 adoption campaign.

In first nine months 2021, revenue in the Books area amounted to € 348.7 million, up by 10.3% versus € 316.1 million in the same period of 2020, driven in particular by the increase recorded by the Trade area (+14.5%), the positive performance of the school textbook publishers (+5%, due also to a different monthly schedule of revenue from 2020, which had seen a delayed return to school), and the significant growth of Rizzoli International Publications (+27.6%).

Revenue from the sale of e–books and audiobooks, which accounted for approximately 7.4% of total publishing revenue, fell by 3.5%, while sales of physical books were instead on the rise. Versus 2019, this revenue grew instead by approximately 25%.

Adjusted EBITDA in the Books area amounted to € 79.4 million versus € 67.5 million in the same period of 2020, an improvement of approximately € 12 million, thanks to the abovementioned positive trend of revenue in the Trade and Education segments and of Rizzoli International Publications, and to the relief received by Electa in the museum segment and booked in the first nine months (approximately € 3 million, net already of certain provisions).

The profitability achieved by the Books area, amounting to 22.8% at 30 September 2021 (versus 21.3% in the same period of 2020), is even more worthy of notice when compared to the profitability recorded in the first nine months of 2019, equal to 21.5%, since the current year is still impacted by the drastic drop in volumes and margins from museum activities.

• RETAIL

In the first nine months of the year, Mondadori Retail achieved revenue of € 114.3 million, up by 12.1% versus € 102 million in the same period of 2020.
Sales of books, which account for 84% of total revenue for the area, rose by 15.8%.

Performance in the opening months of 2021 was affected by the anti-COVID measures, which severely curtailed sales activities, especially of directly-managed stores located in large cities and shopping malls.
In the second half of the period under review, thanks to the gradual lifting of social distancing measures, directly-managed PoS reported a sharp recovery in revenue, enabling them to close the first nine months with an increase of approximately 9% versus the prior year.
The franchised channel, composed mainly of proximity stores located in small towns, showed greater resilience and responsiveness, enabling it to record a growth of approximately 26% versus the same period of the prior year.
The gradual reopening of bookstores led to a decline in the activities of the online channel, which posted a 24% drop in revenue during the period; versus 2019, revenue improved, instead, by 13.1%.

Mondadori Retail reported a strong increase in adjusted EBITDA, which came to € 1.7 million, up by € 2.2 million versus the same period of 2020, and an improvement versus the same period of 2019 (€ 0.8 million).
This result is attributable to the deep transformation of the Area, the ongoing renewal and development of its network of physical stores, as well as careful cost management and a thorough review of the organization and processes.

• MEDIA

In the first nine months of the year, the Media area posted revenue of € 150 million, up by 4.1% versus € 144.1 million in the same period of the prior year.

Advertising revenue grew by approximately 32% overall (+18% excluding Hej!), and grew even further in the third quarter by 39% (+23% on a like-for-like basis) versus the same period of 2020. Against this backdrop:

• advertising revenue on digital brands increased by 20% on a like-for-like basis (+44% including Hej!). A point worth mentioning is that digital revenue today accounts for 60% of total advertising revenue, confirming Mondadori Media’s leadership position in the digital field, in segments marked by high commercial value.

• advertising sales on print brands increased by approximately 16%, benefiting from the comparison with a period negatively affected by the pandemic.

Circulation revenue was down by 5.8%, with a more moderate drop (-4%) for television titles, which account for approximately 50% of revenue in this segment.
Against this backdrop, with results that outperformed the relevant market (-6.9%[3]), the Group’s market share rose to 23.9%1³.

Revenue from add-on products dropped by approximately 18% versus the first nine months of 2020, but with a reversal of the trend in the third quarter this year (+2.5%), thanks in particular to the presence of a number of successful initiatives in the music segment.

Other revenue, which includes revenue from distribution activities, increased by 9.5% versus the prior year, reflecting both the positive performance of international editions (Grazia in particular) and growth in newsstand distribution and subscriptions of third-party publishers.

Adjusted EBITDA in the Media area amounted to € 7.8 million, up sharply versus € 3.2 million in the first nine months of 2020, thanks in particular to the development of digital activities, the recovery of print advertising sales and the continued efforts to curb operating costs, which contributed to the increase in profitability: the overall EBITDA margin improved from 2% to approximately 5% in first nine months 2021.

SIGNIFICANT EVENTS AFTER FIRST NINE MONTHS 2021
On 8 November 2021, the Mondadori Group announced it had received notice from the Antitrust Authority of the authorization to acquire 100% of De Agostini Scuola S.p.A..
The provision envisages the adoption of appropriate behavioural measures, as indicated by the Authority and shared by the Mondadori Group, to safeguard the competitiveness of the school textbooks market, including, in particular, the commitment to continue to keep De Agostini Scuola separated until 31 December 2024.
These remedies confirm the rationale of the acquisition, the business development plan and the potential for value creation initially estimated by the Group.
The Authority’s go-ahead triggers the fulfilment of the suspensive condition attached to the agreement on the sale of the investment in De Agostini Scuola; the sale will therefore be fully executed on the closing date, scheduled to take place later this year.

§

The results at 30 September 2021, approved today by the Board of Directors, will be presented to the financial community by the Mondadori Group CEO Antonio Porro and CFO Alessandro Franzosi at a conference call scheduled today at 4:30 pm.
The relevant documentation will be concurrently available on the website www.gruppomondadori.it (Investors section) and on 1Info (www.1info.it).

Journalists will be able to follow the presentation, in listening mode only, by connecting to the dedicated number +39.028020927, and via the web in audio mode by registering at the link https://hditalia.choruscall.com/?calltype=2&info=company.

§

The Financial Reporting Manager – Alessandro Franzosi – hereby declares, pursuant to Article 154 bis, paragraph 2, of the Consolidated Finance Law, that the accounting information contained herein corresponds to the Company’s records, books and accounting entries.

 Annexes (in the complete pdf):

1. Consolidated balance sheet;
2. Consolidated income statement;
3. Consolidated income statement – III quarter;
4. Group cash flow;
5. Glossary of terms and alternative performance measures used.

[1] GFK, September 2021 (figures in terms of market value)

[2] GFK, September 2021 (figures in terms of value)

[3] Internal source: Press-di, August 2021, in terms of value

The Mondadori Group announces that it has received notice from the Antitrust Authority of the authorization to acquire 100% of De Agostini Scuola S.p.A. as disclosed last 12 July.

The provision envisages the adoption of appropriate behavioural measures, as indicated by the Authority and shared by the Mondadori Group, to safeguard the competitiveness of the school textbooks market, including, in particular, the commitment to continue to keep De Agostini Scuola separated until 31 December 2024.
These remedies confirm the rationale of the acquisition, the business development plan and the potential for value creation initially estimated by the Group.

“We are really delighted to be able to go ahead with the acquisition of De Agostini Scuola, a deal consistent with our strategy of focusing on our core business of books”, said Antonio Porro, CEO of the Mondadori Group. “The investment – the most relevant made in the last 15 years – will allow us to open up a new chapter in the path of growth of our Group and to achieve a leadership position in the school publishing market”, concluded Porro.

The Authority’s go-ahead triggers the fulfilment of the suspensive condition attached to the agreement on the sale of the investment in De Agostini Scuola; the sale will therefore be fully executed on the closing date, scheduled to take place later this year.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 27 to 30 September 2021, of no 132,499 ordinary shares (equal to 0.051% of the share capital) at an average unit price of €1.8311 for a total amount of €242,623.46.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting of 27 April 2021, and as part of the purchase programme to service the 2021-2023, 2020-2022 and 2019-2021 Performance Share Plans, the start of which was approved by the Board of Directors on 13 May 2021 (as per the disclosure made on the same date also pursuant to Article 144 bis of CONSOB Regulation 11971/99, and to Article 5 of EU Regulation 596/2014).

The following table details the purchases made per day in the above period of Arnoldo Mondadori Editore S.p.A. ordinary shares, ISIN Code IT0001469383:

The purchases were made through the authorized intermediary Equita Sim S.p.A. (LEI Code 815600E3E9BFBC8FAA85), independently and with no influence from the Issuer as regards the timing of the purchases.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no 1,049,838 treasury shares, corresponding 0.402% of the share capital, of which 860,000 purchased in execution of the Program, which was completed on 30 September 2021 after reaching its maximum reference amount.

Purchases in detail in the complete pdf.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 20 to 24 September 2021, of no 133,682 ordinary shares (equal to 0.051% of the share capital) at an average unit price of €1.8226 for a total amount of €243,654.57.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting of 27 April 2021, and as part of the purchase programme to service the 2021-2023, 2020-2022 and 2019-2021 Performance Share Plans, the start of which was approved by the Board of Directors on 13 May 2021 (as per the disclosure made on the same date also pursuant to Article 144 bis of CONSOB Regulation 11971/99, and to Article 5 of EU Regulation 596/2014).

The following table details the purchases made per day in the above period of Arnoldo Mondadori Editore S.p.A. ordinary shares, ISIN Code IT0001469383:

The purchases were made through the authorized intermediary Equita Sim S.p.A. (LEI Code 815600E3E9BFBC8FAA85), independently and with no influence from the Issuer as regards the timing of the purchases.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no 917,339 treasury shares, corresponding 0.351% of the share capital.

Purchases in detail in the complete pdf.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 13 to 17 September 2021, of no 113,780 ordinary shares (equal to 0.044% of the share capital) at an average unit price of €1.8336 for a total amount of €208,627.85.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting of 27 April 2021, and as part of the purchase programme to service the 2021-2023, 2020-2022 and 2019-2021 Performance Share Plans, the start of which was approved by the Board of Directors on 13 May 2021 (as per the disclosure made on the same date also pursuant to Article 144 bis of CONSOB Regulation 11971/99, and to Article 5 of EU Regulation 596/2014).

The following table details the purchases made per day in the above period of Arnoldo Mondadori Editore S.p.A. ordinary shares, ISIN Code IT0001469383:

The purchases were made through the authorized intermediary Equita Sim S.p.A. (LEI Code 815600E3E9BFBC8FAA85), independently and with no influence from the Issuer as regards the timing of the purchases.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no 783,657 treasury shares, corresponding 0.300% of the share capital.

Purchases in detail in the complete pdf.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 6 to 10 September 2021, of no 129,225 ordinary shares (equal to 0.049% of the share capital) at an average unit price of €1.8319 for a total amount of €236,724.17.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 30 August to 3 September 2021, of no 33,589 ordinary shares (equal to 0.013% of the share capital) at an average unit price of €1.8674 for a total amount of €62,724.10.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting of 27 April 2021, and as part of the purchase programme to service the 2021-2023, 2020-2022 and 2019-2021 Performance Share Plans, the start of which was approved by the Board of Directors on 13 May 2021 (as per the disclosure made on the same date also pursuant to Article 144 bis of CONSOB Regulation 11971/99, and to Article 5 of EU Regulation 596/2014).

The following table details the purchases made per day in the above period of Arnoldo Mondadori Editore S.p.A. ordinary shares, ISIN Code IT0001469383:

The purchases were made through the authorized intermediary Equita Sim S.p.A. (LEI Code 815600E3E9BFBC8FAA85), independently and with no influence from the Issuer as regards the timing of the purchases.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no 540,652 treasury shares, corresponding 0.207% of the share capital.

Purchases in detail in the complete pdf.

Arnoldo Mondadori Editore S.p.A. hereby informs that the Half-Year Financial Report at 30 June 2021, comprising the Independent Auditors’ report, is now available at the Company’s registered office, at the authorized storage mechanism 1info (www.1info.it) and on the website www.gruppomondadori.it (Investors section).

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Half-Year Report at 30 June 2021, presented by the CEO of the Mondadori Group, Antonio Porro.

“In the first half of the year, the Mondadori Group achieved remarkable results on the revenue and profitability front. All our areas, from Books to Retail to Media, played their part in this performance and grew versus the prior year, the digital component in particular. The Books area improved significantly and increased its margins versus 2019,” stressed Antonio Porro, CEO of the Mondadori Group. “The greater operating efficiency and improved financial performance we achieved in the second quarter too – continued the CEO – together with highly reassuring signs from the books market, give us reasons to confirm our year-end estimates and to look forward with confidence to the evolution of the Group in future years. Against this backdrop, the acquisition of De Agostini Scuola is further proof of our will to focus on the core business of books, in line with the medium-term strategic guidelines set”, concluded Porro.

HIGHLIGHTS OF FIRST HALF 2021

With regard to the core markets of the Mondadori Group, in first half 2021 books witnessed a buoyant trend, growing by 36.8%[1] versus the same period of 2020.
This performance consolidates the positive trend that had started in the first quarter of the current year, driven again by a greater propensity to read and purchase.
The growth of the books market is even more extraordinary if compared to the first six months of 2019[2], still totally unaffected by the pandemic and increasing by 23% versus this period.

PERFORMANCE AT 30 JUNE 2021

At 30 June 2021, consolidated revenue of the Mondadori Group amounted to € 320.4 million, up by 10.9% versus € 288.9 million of the prior year, thanks in particular to the strong growth in the Books and Retail areas, driven by the buoyancy of the market.

Adjusted EBITDA in first half 2021 amounted to € 21.5 million, up by approximately € 10.6 million versus € 11 million in the first six months of 2020: this positive performance reflects, on the one hand, the good trend of revenue recorded in the period by all business areas and, on the other, the ongoing efforts to curb operating and structural costs that enabled the Group to achieve a significant improvement in its margins (from 3.8% to 6.7%).

Group EBITDA came to € 19 million, more than double the € 8.4 million recorded in the prior year, showing a clear improvement attributable to the abovementioned phenomena and trends. In the period under review, non-recurring expense amounted to € 2.5 million, in line with the figure for the same period of the prior year.

In first half 2021, EBIT came to operating breakeven (€ 0.2 million), an improvement of over € 17 million versus € -17.2 million in the same period of 2020, attributable to the trend of the above ordinary components, to lower amortization and depreciation for a total of € 1.3 million, and to the presence in the result at 30 June 2020 of write-downs of € 5.8 million, relating to certain publications in the Media area.

The consolidated result before tax amounted to € -5.1 million versus € -30.9 million in first half 2020.
The significant improvement is also explained by:

• the reduction of approximately € 2 million in financial expense, due to a lower average interest rate, in addition to the reduction in ancillary expense;
• the effects of the sale of the investment in Reworld Media, completed in February 2021, which resulted in the recognition of a capital loss of € 0.4 million[3] in first quarter 2021, with a positive change of € 6.2 million versus a capital loss of € 6.6 million recorded at 30 June 2020;
• the result for the period of associates (consolidated at equity), which closed at € -3.1 million.

Tax items for the period came to a positive € 9.4 million (€ 5.9 million at 30 June 2020), despite the increase in taxable income, due to net non-recurring income of € 9 million deriving from the start of the process of realigning the tax amounts of trademarks and goodwill to their respective statutory amounts.

The Group’s net profit, after minority interests, came to € 4.4 million, a significant recovery versus the loss of € -25 million in first half 2020 (and also versus the loss of € 1.9 million at 30 June 2019), following the operational improvement and the abovementioned positive tax components.

The net financial position before IFRS 16 at 30 June 2021 stood at € -68.3 million, down drastically by 47.5% versus € -130.1 million at 30 June 2020, as a result of the significant generation of cash flow from ordinary operations recorded in the last 12 months, amounting to € 68.5 million, which confirms the positive path taken to strengthen the Group’s financial structure.
The IFRS 16 net financial position amounted to € -155.1 million and includes the recognition of the financial payable from the application of IFRS 16 equal to approximately € 87 million.

Group employees at 30 June 2021 amounted to 1,829 units, down by 5.2% versus 30 June 2020, despite the workforce absorbed following the acquisition of Hej! (net of which the reduction in the workforce would be -5.8%), due primarily to the efficiency measures that continued across all the business areas.

BUSINESS OUTLOOK

The positive performance recorded in the first half of the year, driven in particular by the strong growth trend of the Books area, as well as the continued cash flow generation, allow the Group to be optimistic about its operating performance and to confirm at a consolidated level – and on the basis of the current scope of consolidation – the previously disclosed estimates.

Performance targets:

• consolidated revenue for 2021 is forecast to grow slightly (low single-digit);
• adjusted EBITDA – in percentage terms – is estimated at around 12% of revenue;
• the net result for 2021 is confirmed on a sharp rise, propelled by the improvement in operations as well as the tax realignment of intangible assets, which in the first half enabled the recognition of an initial non-recurring positive tax component; additionally, mention should be made that the result for 2020 was negatively impacted by the write-down of certain balance sheet items.

Cash Flow and Net Financial Position
Additionally, with regard to the Group’s financial debt, one can reasonably confirm the estimates of cash flow from ordinary operations ranging between € 50 and € 55 million, therefore the achievement – before the impacts from the adoption of IFRS 16 – of a positive consolidated net financial position at year end.
As previously anticipated, the financial strength achieved by the Group has paved the way for a possible return to a shareholder remuneration policy from 2022, applied to the net result of 2021.
The above forecasts, drawn up on the basis of the current scope, may be updated upon completion of the acquisition of De Agostini Scuola, subject to the authorizations of law from the Antitrust authority.

PERFORMANCE OF THE BUSINESS AREAS IN FIRST HALF 2021

• BOOKS

As previously indicated, in the first half of the year the Trade books market posted a sharp growth of 36.8%[4] versus the same period of 2020, strengthening the trend that had started in the second half of the prior year, driven also by limited access to other forms of entertainment.

Against this backdrop, the Books area saw an increase in sell-out in terms of market value of 30.7%, enabling the Mondadori Group to confirm its undisputed leadership in the Trade segment (market share of 23.7%).

As proof of the quality of the publishing plan, mention should be made that during the first six months of the year, the Group placed 4 titles in the top ten bestsellers in terms of value[5]: Il sistema. Potere, politica, affari: storia segreta della magistratura italiana by Alessandro Sallusti and Luca Palamara (Rizzoli), which was the chartbuster in the opening months of the year, ranking firmly at the top; La disciplina di Penelope by Gianrico Carofiglio (Mondadori); Io sono Giorgia by Giorgia Meloni (Rizzoli); Insieme in cucina. Divertirsi in cucina con le ricette di «Fatto in casa da Benedetta» by Benedetta Rossi (Mondadori Electa). Additionally, Donatella Di Pietrantonio’s Borgo Sud, published by Einaudi in 2020, came second in the Strega in 2021.

Revenue in the Books area in first half 2021 amounted to € 168.9 million, up by 15.8% versus € 145.9 million in first half 2020.

The Trade segment gave a strong push to the result, with revenue of € 109.5 million, a significant increase versus both first half 2020 (+21.7%) and first half 2019 (+2.5%), unaffected by the pandemic.

During the period, revenue from the sale of e-books and audiobooks amounted to approximately 7.3% of total Trade revenue, with a catalogue of over 28,300 digital titles.

In first half 2021, revenue in the Educational segment amounted to € 55.8 million, up by 5.7% versus the same period of 2020: the positive sales performance of Rizzoli International Publications (+39.3%) and the increased turnover from school products (up by 3.9% versus 30 June 2020) allowed a recovery from the effects of the contraction of Electa’s revenue, caused by the closure during the pandemic of exhibitions and archaeological sites.

Adjusted EBITDA in the Books area came to € 19.8 million versus € 10.9 million in first half 2020, an improvement of € 8.9 million thanks to the positive trend in revenue, as well as to the relief received by Electa in the museum segment (approximately € 3 million, net already of certain provisions).
Profitability was up also versus first half 2019 (€ 16.2 million), making the performance of the Books area even more remarkable.

• RETAIL

Overall, in the first six months of the year the Retail area was able to benefit from the strong growth trend in the books market, although overall performance was negatively impacted by the government measures that caused severe restrictions on sales activities at least until mid-May.
As a result of the easing of restrictions, the physical market witnessed a recovery, and consequently Mondadori Retail saw its revenue grow: specifically, June also saw an increase versus June 2019 (approximately +3%), with a positive performance of the Book product of over 11%, despite a reduction in the network of stores versus June 2019.

At 30 June 2021, the Retail area recorded revenue of € 69.8 million, up by € 10.8 million (+18.3%) versus € 59 million in the same period of the prior year, driven by the positive performance of Book product sales (approximately +22% versus the same period of 2020).
Revenue in second quarter 2021 alone increased by approximately +30% versus second quarter 2020.

A breakdown of the various business segments of Mondadori Retail shows the following:

• directly-managed stores experienced a more modest growth (+12%) versus the prior year, affected by their location mainly in large populated areas, which are particularly exposed to both competition from online sales and the reduction in tourist flows;
• on the other hand, the franchised channel, composed mainly of proximity stores located in small towns, grew strongly by approximately 42%, boosted again by the excellent performance of the book product;
• the online channel posted revenue of € 7.3 million versus € 10.4 million in first half 2020, down due to the easing of restrictions on the operation of the physical market.

Adjusted EBITDA of Mondadori Retail amounted to € 0.4 million, a strong improvement versus € -2.8 million in the same period of 2020.
This improvement is the result of the company’s strong efficiency measures, the ongoing renewal and development of its network of physical stores, as well as careful cost management and a thorough review of the organization and processes.

• MEDIA

In the first five months of 2021, the core markets of the Media area showed, versus the same period of the prior year:

• a significant increase in advertising investments in the digital segment, amounting to +27.2%, versus -2.9%[6] on the magazine front;
• an 8.1% drop[7] in the magazine circulation market;
• a 22.1% decline[8] of add-ons bundled with

Against this backdrop, the Mondadori Group’s circulation market share stood at 23.7%, up slightly versus May of the prior year,1³ due to a slightly better performance than the core market.

In the first six months of 2021, the Media area of the Mondadori Group, which confirmed its position as Italy’s leading multimedia publisher, generated revenue of € 97.4 million, up by 1.7% versus € 95.8 million in the same period of the prior year. Specifically:

• advertising revenue reached € 28.8 million, up by approximately 28% overall (+16% excluding the contribution of the acquisition of Hej!).
  Considering the second quarter alone, the increase is over 50% versus the same period of 2020 (+41% on a like-for-like basis):
  – digital activities grew by 25.7% on a like-for-like basis while, including the contribution of the newly-acquired Hej!, the increase stands at approximately 48% versus the first half of the prior year. A point worth mentioning is that digital revenue now accounts for 63% of total advertising revenue (from 54% in first half 2020).
  – print advertising sales increased by approximately 5%.

• circulation revenue was down by 4%, with television titles and the CasaFacile brand performing better.
• revenue from add-on products fell by approximately 27%, but with a more moderate decline in the second quarter (-16.6%), a trend due primarily to the success of musical initiatives last year and the reduced availability of film releases on DVD.
• other revenue, which includes revenue from distribution activities, rose by 1%.

Adjusted EBITDA in the Media area amounted to € 4.5 million, up sharply versus the first six months of 2020 (€ 2 million), thanks in particular to the development of digital activities and the continued efforts to curb operating costs, which contributed to the increase in profitability of print activities: the overall EBITDA margin stood at 5%, improving versus 2% in first half 2020.

2021-2023 PERFORMANCE SHARE PLAN: ASSIGNMENT OF RIGHTS
The Board of Directors, having heard the Remuneration Committee, resolved on the assignments to the beneficiaries of the rights relating to the 2021-2023 Performance Share Plan, established by resolution of the Shareholders’ Meeting of 27 April 2021.
Information regarding the beneficiaries and the number of rights assigned are shown – by name, for the beneficiaries who are members of the Board of Directors, and in aggregate form for the other beneficiaries – in the table attached, prepared in compliance with Box 1, Schedule no. 7 of Annex 3A of the Issuer Regulation.
The terms and conditions of the Plan are set out in the Directors’ Explanatory Report to the Shareholders’ Meeting of 27 April 2021 and in the Information Document prepared pursuant to Article 84-bis, paragraph 1 of the Issuer Regulation, available on the website www.gruppomondadori.it Governance section and on the storage mechanism www.1info.it to the contents of which reference should be made.

SIGNIFICANT EVENTS AFTER FIRST HALF 2021
On 12 July 2021, the Mondadori Group signed an agreement with De Agostini Editore S.p.A. – following the negotiations disclosed on 1 July – for the acquisition of 100% of De Agostini Scuola S.p.A., one of Italy’s top school textbook publishers.
The transaction is consistent with the strategy – repeatedly announced by Mondadori – of focusing on the core business of books, in which the Group boasts a longstanding leadership in Trade and is one of the top school textbook players.
The value of the transaction has been defined on the basis of an Enterprise Value of € 157.5 million, equal to 7.4 times the reported EBITDA recorded by De Agostini Scuola in 2020. The price will be defined on the basis of the average normalized net financial position over the 12 months before the closing date.
De Agostini Scuola posted in 2020 revenue of € 70.8 million, reported EBITDA of € 21.4 million, with a margin of 30%, and net profit of € 12.2 million. At 31 December 2020, the net financial position (net cash) stood at a positive € 20.8 million.
Completion of the transaction is subject to the authorizations of law from the competent Antitrust authority.

The results at 30 June 2021, approved today by the Board of Directors, will be presented to the financial community by the Mondadori Group CEO Antonio Porro and CFO Alessandro Franzosi at a conference call scheduled today, 29 July 2021, at 3pm.

The relevant documentation will be concurrently available on the website www.gruppomondadori.it (Investors section) and on 1Info(www.1info.it).

Journalists will be able to follow the presentation, in listening mode only, by connecting to the dedicated number +39.028020927, and via the web in audio mode by registering at the link https://hditalia.choruscall.com/?calltype=2&info=company.

The Financial Reporting Manager – Alessandro Franzosi – hereby declares, pursuant to Article 154 bis, paragraph 2, of the Consolidated Finance Law, that the accounting information contained herein corresponds to the Company’s records, books and accounting entries.

Annexes (in the complete pdf):

1. Consolidated balance sheet;
2. Consolidated income statement;
3. Consolidated income statement – II quarter;
4. Group cash flow;
5. Glossary of terms and alternative performance measures used.
6. Information pursuant to Schedule 7 of Annex 3a to CONSOB Regulation no. 11971/1999

[1] GFK, June 2021 (figures in terms of market value)

[2] The comparison with 2020 is affected by the closure enforced on all bookstores from March: from 12 March until the end of April, the government measures applied to contain the pandemic led in fact to the closure of bookstores across the Country; in the early stages, the online channel too had to apply restrictions on book deliveries due to the need to prioritize the distribution of staple goods.

[3] The monetization of this investment generated a total gain (2019-2021) of € 1.1 million versus the original subscription value.

[4] GFK, June 2021 (figures in terms of market value)

[5] GFK, June 2021 (ranking in terms of cover value)

[6] Nielsen, May 2021

[7] Internal source: Press di, May 2021, in terms of value

[8] Internal source: Press di, May 2021, in terms of value

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 5 to 9 July 2021, of no 25,265 ordinary shares (equal to 0.009% of the share capital) at an average unit price of €1.6596 for a total amount of €41,929.79.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting of 27 April 2021, and as part of the purchase programme to service the 2021-2023, 2020-2022 and 2019-2021 Performance Share Plans, the start of which was approved by the Board of Directors on 13 May 2021 (as per the disclosure made on the same date also pursuant to Article 144 bis of CONSOB Regulation 11971/99, and to Article 5 of EU Regulation 596/2014).

The following table details the purchases made per day in the above period of Arnoldo Mondadori Editore S.p.A. ordinary shares, ISIN Code IT0001469383:

The purchases were made through the authorized intermediary Equita Sim S.p.A. (LEI Code 815600E3E9BFBC8FAA85), independently and with no influence from the Issuer as regards the timing of the purchases.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no 507,063 treasury shares, corresponding 0.194% of the share capital.

Purchases in detail in the complete pdf.