Price sensitive

The Board of Directors of Arnoldo Mondadori SpA met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first three months of the year to 31st March 2012, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO
In the first quarter of 2012 saw the full confirmation of the elements of structural crisis in the economy, especially in Europe: falling GDP, rising unemployment and the decline in consumer spending have unfortunately worsened compared with the latter part of 2011; the markets a sectors of reference for Mondadori, particularly in Italy, felt the impact of this situation, and were significantly in decline during the period.

GROUP PERFORAMCE IN THE PERIOD TO 31 MARZO 2012
Against this background, in the first three months of 2012 the Mondadori Group’s consolidated revenues were down by 7.4% compared with the same period of last year, in line with the final quarter of 2011.

In terms of profitability, despite a marked fall in consolidated operating profit due to the decline in revenues, Q1 ended with a positive net profit thanks to the lower impact of financial charges and taxation.

Over the coming months, development will continue in digital activities more closely related to the Group’s publishing identity – products, brands, communities – and the process of restructuring carried out in recent years will be extended to face a market situation in which, at present, there are no signs of recovery.

Consolidated revenues amounted to €328.1 million, compared with €354.3 million in the first quarter of 2011.

Consolidated gross operating profit (EBITDA) came to €15 million, compared with €21.8 million in the same period of the previous year.

Consolidated operating profit amounted to €8.9 million, compared with €16.3 million in the first quarter of last year, with amortizations and depreciations of tangible and intangible assets of €6.1 million (€5.5 million in Q1 2011).

Consolidated profit before taxation came to €4.5 million, compared with €10.9 million in the same period of last year. During the quarter financial charges amounted to €4.4 million, an improvement of €1 million compared with 2011.

Consolidated net profit for the period totalled €2.4 million, compared with €5 million in the same period of the previous year.

Gross cash flow in the first three months of 2012 amounted to €8.5 million, compared with €10.5 million in Q1 2011.

The Group’s net financial position at 31 March 2012 stood at -€301.8 million, an improvement of €33.6 million on the -€335.4 million at the end of 2011.

Information regarding personnel
As of 31 March 2012, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,764, compared with 3,674 in March 2011. On a comparable basis, considering that the first quarter of last year did not include the 120 employees of the companies AME Editoriale Wellness, Glaming and Emas (France), now consolidated, the overall figure would show a reduction of 30.

This, in general, confirms the ongoing efficiency policy aimed at the structural containment of labour costs, the effects of which will extend even beyond the formal end of the Restructuring Plan in 2011.

RESULTS OF THE BUSINESS AREAS

· BOOKS

For the first time, the trade book market saw a marked fall both in the number of copies sold (-10.8%, source: Nielsen) and in terms of overall value (-11.8%, source: Nielsen) in the first quarter of 2012 compared with the same period of 2011, with decline recorded in all channels: bookshops, large-scale retail and online.
Moreover, this trend is even more marked in an analysis of the bestsellers: during the period, the top ten bestsellers recorded a fall of 7.8% in terms of copies and more that double that (-16%) in terms of value; figures that confirm, among other things, the fall in the average price of the biggest selling books.
There are many reason for this situation, some of which were outlined in the Annual Report, including the current recession and the Levi Law on book pricing (which was enacted in September 2011 and places limits on discounting and the number and timing of promotional campaigns).

During the first three months of 2012, despite difficult market conditions, the Mondadori Group nevertheless confirmed its leadership in the trade book sector with a market share of 25.7% in terms of value (source: Nielsen).
During the period, revenues from book sales amounted to €64.2 million, a fall compared with the €78 million of the first quarter of 2011.

The trade books area expects to see an improvement in revenues starting in the second quarter of the year, thanks to a rich publication programme that over the coming months will include new titles by important authors such as Ken Follet, John Grisham, Luciana Littizzetto, Niccolò Ammaniti and Stephen King.

Among the Group’s publishing houses, Edizioni Mondadori maintained its leadership in the trade books sector during period leadership with a market share of 13%. Among the significant initiatives in the first quarter was the launch of the new series Libellule, high quality, short literary fiction by successful authors, sold at a standard price of €10.
Einaudi ended the first quarter of 2012 with a market share of 4.8%, down by about one percentage point compared with 31 March 2011, a period in which the company benefited from the publication of important new titles, including Libertà by Jonathan Franzen, and a longer paperback promotional campaign.
Despite tough trading conditions, Sperling & Kupfer recorded a positive result in bookshops that raised its market share from 2.3% in terms of value in 2011 to 2.9% this year, with the Sperling & Kupfer, Frassinelli and Mondadori Informatica imprints.
Piemme confirmed a total market share of 3.9%, up by 0.3% compared with the first quarter of 2011.
Revenues generated by Mondadori Electa, which were down compared with the first three months of the previous year, were affected by the general trend in most of the segments of the market in which the company operates, in particular in the cultural heritage area.
Compared with the first quarter of 2011, revenues generated by Mondadori Education were stable, in a period that, as usual, has a minimal impact on the company’s yearly sales.

In ebooks, the first quarter was extremely positive for Mondadori’s trade books publishers: the number of downloads in Q1 2012 was higher than the whole of 2011, thanks to an offer of over 3,000 catalogue titles, also including new products and not just digital versions of print editions.

· MAGAZINES ITALY

The difficult macro-economic situation continued to have a big impact on the magazine market in Italy, with a consequently negative effect on advertising revenues (-11% source: Nielsen to February), circulation (-9.1% in terms of copies, -12.5% on a like-for-like basis; internal figures) and add-on sales (-24.8% in terms of value; internal figures).

Mondadori saw an overall decline in revenues in the area, from €121.9 million in the first quarter of 2011 to €104.3 million this time.

In particular revenue trends during the period showed that:
– circulation (-9.1%), was penalised by a sharp fall in copies sold with add-ons and subscriptions, and buy a slowdown in investments in support of some titles, which had a particular impact on overall performance in the first three months;
– revenues from add-on sales (-25,8%), mainly due to a different scheduling of initiatives for collections and books, and a fall in volumes in home video;
– advertising (-11.2%), due, in particular, to a negative performance negative in weekly family and news titles, while advertising sales in the international sector and online was up by 50%.

Sales of Mondadori titles were down by 12.5%, a figure that is in line with the dynamics of the like-for-like market, i.e. excluding new titles published since the first quarter of 2011.
The particularly poor sales performance in the first quarter is explained by a series of factors, including the economic crisis, the launch of new low-cost titles, the new system for ADS certification (circulation audit) which has modified the monthly planning of publishers’ marketing investments, and the increase in postal charges.

Regarding the companies efforts to support its titles and in response to the ongoing trends, Chi was re-launched at the end of March with a new editorial formula and layout, and accompanied by a significant investment in advertising and a cut-price offer. Similar activities have also begun for Panorama, the result of which will be launched on 31 May, TV Sorrisi e Canzoni, Starbene and Grazia. By the end of 2012 the programme, begun at the end of 2010, for the complete review of Mondadori’s portfolio of titles will be completed.

Properties
During the first quarter of 2012, the web sites of the company’s main titles performed particularly well, both in terms of traffic and advertising sales (+30% compared with March 2011), in a market that grew by 12.3% first two months, compared with the same period of 2011 (Nielsen: source Fcp-Assointernet including Display, performance and classified/directories).
Of particular note was the performance of Grazia.it with revenues up by 79.1%, Panorama.it (+56.5%) and Donnamoderna.com (+16.3%).

· ADVERTISING

The advertising market in the first two months of the year fell by 5.7% (source: Nielsen) compared with 2011, confirming the downward trend of investments in all media, with the exception of the Internet, albeit at a slower rate lower than in 2011: television showed a significant decrease (-6.9%), newspapers were down by -5.3%, while for magazines the fall was even more significant (-11%) among other media, radio was down by -5.1%.

As in 2011, the reduction in space is continuing in areas such as interiors, FMCGs and cars, with an impact also being felt in fashion (-7%) and cosmetics (-8%), which in 2011 performed well, while, in contrast were the pharmaceutical, media/publishing and finance sectors, whose weighting is limited.

Mondadori Pubblicità ended the first quarter with total revenues of €42.4 million, down compared with the €49.5 million in the same period of 2011.

Mondadori magazines have closed the first quarter with a fall of 12.7%, in a very complicated and competitive environment and a strong sensitivity on the part of advertisers to the price factor.

In particular:
– weeklies were affected by the economic crisis and the high level of uncertainty in the advertising market, even in the early part of 2012, family and news titles were the most severely affected;
– monthlies saw a smaller fall, thanks to the success of Panorama Icon; Interni also had good performance despite the negative trend in the interiors segment in the first quarter of 2012.
It should be noticed that the difficulties faced by Mondadori monthly titles is mainly due to a not significant presence in women’s fashion, which, as well as being the segment by far of most value, in terms of the total market performed positively in the period.

Also in recent months Mondadori Pubblicità is attempting to maintain average prices compared with 2011, especially for Panorama, Grazia and Chi.

Advertising revenue for radio rose by 3.4%, despite a poor start to February, down by 5.1% (source: Nielsen), sales were particularly strong for Radio Kiss Kiss.

With regard to the activities by the company in the first quarter, there was great success for the first 2012 edition of Milan Fashion Design, which saw the involvement of 17 fashion brands and 12 main partners and sponsors, the initiative enabled Mondadori Pubblicità to consolidate such activities on the territory.
During 2012, the company will organise other events to attract new clients, ensuring a positive return for the initiatives.

The Internet market saw an excellent performance by the joint venture Mediamond, with overall growth of 40% compared with 2011 due to the already mentioned positive trends of Grazia.it, Panorama.it, and Donnamoderna.com, the steady growth of TgCom (+27.3%) and Sport Mediaset (+19.5%). Overall, the scope of the sites sold by Mediamond was enhanced in 2012 with the addition of RTI’s Videomediaset and Skuola.net.

· MAGAZINES FRANCE

Mondadori France ended the first quarter of 2012 with consolidated revenues of €94.3 million, an increase on the €82.6 million of the same period of the previous year (€93.3 million at 31 March 2011 on a comparable basis, taking account of the consolidation of the joint-venture EMAS).

At a consolidated level, circulation revenues, that include both newsstand sales and subscriptions, were more or less in line with those of the first quarter of 2011 (-0.6% on a like-for-like basis) and account for 71% of total revenues.
In particular, subscriptions – that are an important asset (34.3% of total revenues) – were up by 3.1% on the same period of 2011, while newsstand sales were down by 4.2%, in line with the market of reference (-4.4%).

Innovation and editorial quality continue to be the key factors in the positive performance of the magazines published by Mondadori France; in the first quarter of the year significant re-designs were completed for Biba, Modes & Travaux and Auto Journal and the brand extension policy for the titles was continued with the launch of the quarterly AutoPlus Classiques, a change in the frequency of AutoPlus Occasion, and the magazines in the Science&Vie system.

On a comparable basis, advertising sales during the period were up by 2.7% on the same period of the previous year, with a better-than-market performance (0.7%).

This excellent result is explained above all by the positive performance of “haut de gamme” women’s titles: the weekly Grazia (+14.7%) and the monthly Biba (+21.3).
Among the various initiatives of Mondadori France in the digital sector during the period, the most significant included the creation of a shared technological platform for all of the sites, the launch of an iPad version of AutoPlus and the inclusion of the company’s titles in the offer of the various digital newsstands present in the market (Relay.fr, Lekiosque.fr, Zinio.com).

International activities
Total revenues in the first three months showed a marked increase (+8%) on the same period of last year, in particular in:
– advertising, thanks to a dedicated team focused on the fashion and interiors segments, sales in Italy for the editions of Grazia published in France, the UK, Germany and Russia were up by around 20%;
– licensing, with the continuing international development of Grazia: following the launch in Slovenia (March 2012), May will see the launch of the twentieth edition (including Italy), in South Africa by Media 24, the country’s leading publisher.
During the first three months of the year revenues amounted to around €40 million, an increase of 12% on the first quarter of 2011, with forecasts for the whole of 2012 of more than €170 million.

With regard to the joint-ventures, Mondadori is present in:
– China with Mondadori Seec Advertising Co. Ltd, the exclusive licensee for advertising sales for the local edition of Grazia. The magazine, launched in February 2009, continued the excellent performance recorded in 2011 ending the first quarter of 2012 with a 55% increase in revenues compared with the same period of 2011. Given this rapid growth and the potential of the Chinese market, Mondadori is now studying new projects, the first of which should see the light of day in the coming months;
– Russia with an edition of Grazia that has just celebrated its fifth anniversary and increased its revenues in the first quarter of 2012 by 30% compared with the same period of last year;
– Greece, Bulgaria and Serbia with Attica Publications, which, despite the ongoing crisis in the Greek market, recorded a performance in line with expectations, thanks also to benefits deriving from the restructuring plan implemented in 2011.

· DIGITAL

Digital activities during the quarter can be summarised as follows:
– editorial activities, ebooks, properties, subscriptions and online advertising, within the businesses of reference Books, Magazines Italy and Magazines France;
– e-commerce activities, through the web site www.bol.it, and online bookclubs, for Direct;
– diversification and business support activities, gambling, applications and CRM, with Other Businesses.
In the first quarter of 2012 all of the above activities generated total revenues of €10.9 million.

· DIRECT

Total revenues generated by the Direct area in the first three months of 2012 amounted to €58.4 million, on the €64.1 million of the same period of 2011, adjusted to include within the scope or reference the e-commerce activities of Bol.it.

In the context of the economic recession, amplified in the book market by a generalised fall in average prices and a reduction in promotional activities, action was taken to recovery profitability and generate new sources of revenue. These included he rationalisation of the bookshop chain, the expansion of the range of products to include the Emporio Mondadori and BoxForYou brands, and the development of “corners” in partnership at large-scale retail outlets.

The proprietary bookshops generated revenues in the period that were down by more than 13%; of these, the multicenter formula held back the slide to 2.5%, on a like-for-like basis.
The franchise network, meanwhile, saw a fall of revenues of around 7%.
In the Club bookshops chain, the conversion of directly-owned sales outlets into the franchising formula continued; which explains a fall in revenues in this area of 23%.
Bookclub activities recorded revenues that were in line with those of 2011; Cemit generated first quarter revenues of 5 million, a 3.8% fall, in a market that was down by -5% (source: Nielsen).

• RADIO

In the first three months of 2012, revenues in the Italian radio market were down by 5.1% (source: Nielsen); in this context R101 performed better than the market with Q1 2012 revenues of €3.2 million, a slight fall on the €3.3 million of the first quarter of 2011.
In terms of output, the first quarter of 2012 was characterised for R101 by the ongoing process of renewal at the station with the launch of new shows, the expansion of the team of presenters and the strengthening of the schedule, particularly at weekends.

EXPECTATIONS FOR THE FULL YEAR
Unfortunately, the first three months of the year confirmed the most pessimistic forecasts on the scale of the current economic crisis and the effects of economic and financial policy measures introduced by a number of countries, particularly in Europe on production, investment, employment and consumer spending.

The time required for a market recovery is currently impossible to predict: and with regard to the businesses of the Mondadori Group, there has been a further general decline in business volumes, compared with the already markedly negative levels in the final quarter of 2011.

Regarding the activities in which the Group will be engaged in the coming months, the priorities remain those outlined in the Annual Report: to defend the leadership in Italy, consolidation in France and international growth for the brands; the development of digital activities related to the core business; actions to reduce operating costs, with even greater impact than that achieved in the previous three years.

Also in terms of the results expected for the current year, as stated during the presentation of the 2011 Annual Report, in the absence of any short term reversal in market trends, the Group does not expect to achieve the same levels of profitability as last year.

§

The executive responsible for the preparation of the company’s accounts, Carlo Maria Vismara, declares that, as per art. 2, 154 bis of the Single Finance Text, the accounting information contained in this release corresponds to that contained in the company’s formal accounts.

§

The report for the first quarter of 2012 will be available at the company’s corporate headquarters, Borsa Italiana SpA and on the web site www.gruppomondadori.it (Investor relations section) from today

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 3 and 11 May 2012, the company bought a total of 402,400 its own shares (corresponding to 0.16% of the company’s share capital) on the automated share market at an average price of € 1.08816 per share, for a total of € 437,876.35 in the context of the authorisation of the company’s AGM, held on 19 April 2012 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

Date N° of shares bought Weighted average price 3/05/2012 71,900 1.06811 4/05/2012 70,700 1.05681 7/05/2012 40,000 1.08309 8/05/2012 50,000 1.09643 9/05/2012 67,000 1.09837 10/05/2012 35,000 1.11636 11/05/2012 67,800 1.11437

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 9,440,123 its own shares. A further 4,517,486 Mondadori shares are hold by the subsidiary Mondadori International S.p.A..

Consequently, as of today the total number of shares held now amounts to 13,957,609 corresponding to 5.663% of the share capital.

***

It should be noted that the Shareholders on 19 April 2012 authorised the buy back of a further 11,090,625 company shares, with respect to the shares already held, either directly or indirectly on the date of the authorisation issued by the AGM, bringing the total up to the limit of 10% of the share capital.

The authorisation is valid until the meeting for the approval of the Annual Report for the year to 31 December 2012.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree 58/1998 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that, in line with the norms foreseen by the EU regulation 2273/2003, the daily quantities of purchase does not exceed 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated in the 20 trading days prior to the dates of purchase.

The Annual General Meeting of the Shareholders of Arnoldo Mondadori Editore S.p.A., which met today under the Chairmanship of Marina Berlusconi, approved the company’s Annual Report for the year ended 31 December 2011 and deliberated, in line with a proposal resolved by the board of directors on 19 March, to attribute to the extraordinary reserve the company’s entire net profit for the year to 31 December 2011, which amounted to €55,342,667.63.
Given the current economic scenario, and despite a net profit for 2011 higher than that for 2010, the decision not to distribute a dividend for 2011 is aimed at reinforcing the company’s assets and financial structure.

In his report to the shareholders, the deputy chairman and chief executive Maurizio Costa outlined the highlights of the group’s performance during 2011, already announced on 19 March.

The Shareholders also passed resolution on the following:

APPOINTMENT OF THE BOARD OF DIRECTORS
The Shareholders appointed the members of the Board of Directors: Marina Berlusconi (Chairman), Maurizio Costa, Pier Silvio Berlusconi, Carlo Maria Vismara, Pasquale Cannatelli, Bruno Ermolli, Roberto Poli, Roberto Briglia, Martina Forneron Mondadori, Marco Spadacini, Angelo Renoldi, Carlo Sangalli, Cristina Rossello and Mario Resca.
The entire Board of Directors was elected on the basis of a single list presented to the Shareholders by the majority shareholder Fininvest S.p.A.
The Board will serve for three years until the AGM to approve the Annual Report for the year to 31 December 2014.

Within the Board of Directors appointed by the Shareholders the directors Martina Mondadori, Angelo Renoldi, Mario Resca, Cristina Rossello, Carlo Sangalli and Marco Spadacini also meet the requirements of independence, foreseen by art. 148, paragraph 3, of Legislative Decree 58/1998.
After the Shareholders’ Meeting, the Board of Directors met and also determined that the aforementioned directors were also compliant with independence requirements foreseen by the Code of Conduct for listed companies.

The Board of Directors confirmed Maurizio Costa as Deputy Chairman and Chief Executive, attributing to him all the relative powers for the management of the company.

The Board also appointed the members of:
– Control and Risks Committee: Angelo Renoldi (Chairman), Marco Spadacini and Mario Resca;
– Remuneration and Appointments Committee: Marco Spadacini (Chairman), Bruno Ermolli and Carlo Sangalli.
Carlo Maria Vismara was also confirmed in the role of manager responsible for preparing the financial reports.

APPOINTMENT OF THE BOARD OF STATUTORY AUDITORS AND ITS CHAIRMAN
The Board of Statutory Auditors, appointed by the Shareholders for the years 2012-2014, is made up by: Ferdinando Superti Furga (Chairman), Francesco Antonio Giampaolo and Franco Carlo Papa (standing auditors), Ezio Maria Simonelli and Francesco Vittadini (substitute auditors).
The entire Board of Statutory Auditors was appointed on the basis of a single list presented to the Shareholders by majority shareholder Fininvest S.p.A.

RENEWAL OF AUTHORISATION FOR THE BUY-BACK AND UTILISATION OF COMPANY SHARES
Following the expiry of the term fixed for the authorisation issued at the Annual General Meeting of 21 April 2011, the shareholders renewed authorisation to effect share buy-backs, up to a limit of 10% of the share capital. The shareholders also authorised, as per Art. 2357 of the Civil Code, the use of shares involved in such buy back operations or already in the company’s portfolio.
It should be noted that, with regard to the previous authorisation, the company bought from the market a total of 4,159,114 shares, corresponding to 1.68% of the share capital, at a total cost of €7,135,831.86.

By taking account of the shares previously in the portfolio, the total number of shares comprising treasury stock is now 13,555,209 (5.50% of the share capital), of which. 9,037,723 are held directly in the Arnoldo Mondadori Editore S.p.A. portfolio and 4,517,486 are held by the subsidiary Mondadori International S.p.A.

In line with the provisions of art. 144 bis of Consob regulation 11971/1999, what follows is an outline of the buy-back programme authorised by the Shareholders:

1. Underlying motivation
– to use company shares, either bought or in the portfolio, for the exercise of rights, including conversion rights, deriving from financial instruments issued by the company, its subsidiaries or third parties;
– to use company shares, either bought or in the portfolio, as part or whole payment in any eventual acquisitions or equity investments that fall within the company’s stated investment policy;
– to take advantage, where and when considered strategic for the company, of investment opportunities, also in relation to available liquidity;
– to use company shares for the exercise of options for the purchase of shares assigned to participants in the stock option plans put in place by the shareholders.

2. Cap on the number of shares that may be bought
The authorisation refers to a limit of 10% of the share capital, or 24,645,834 shares. Given, as indicated above, that the company currently holds, directly or indirectly, a total of 13,555,209 shares, the new authorisation consequently foresees the possible acquisition of an additional 11,090,625 ordinary shares, or 4.50% of the share capital.

3. Method of acquisition and price range
Buy backs would be effected on regulated markets as per art. 132 of Legislative Decree n. 58 of 24 February 1998 and art. 144 bis, para. 1,B of Consob Regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.
The corresponding minimum and maximum price of sale will therefore be determined at the same conditions that applied to previous authorisations agreed by the Shareholders, i.e. at a unit price not less than the official market price on the day prior to any operation, less 20%, and not more than the official market price on the day prior to any operation, plus 10%.
In terms of price and daily volumes, acquisition operations will in any case be conducted in line with the norms foreseen by the EU regulation 2273/2005, in particular:
– the company will not buy shares at a price greater that the highest price of the last independent operation and the price of the highest current independent offer on the regulated market where the acquisition is made
– in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

Any operations that are effected will be communicated to the market as per the terms of art. 87 bis of Consob Regulation 11971/1999.

4. Duration
The authorisation for the buy-back and utilisation of own shares will remain valid until the AGM for the approval of the Annual Report for the year to 31 December 2012, and in any case, for a period of not more than 18 months from the date of the Shareholders’ resolution.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 2 and 5 April 2012, the company bought a total of 300,292 its own shares (corresponding to 0.12% of the company’s share capital) on the automated share market at an average price of € 1.2867 per share, for a total of € 386,386.49 in the context of the authorisation of the company’s AGM, held on 21 April 2011 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

Date N° of shares bought Weighted average price 02/04/2012 100,300 1.30259 03/04/2012 50,000 1.31605 04/04/2012 70,000 1.28606 05/04/2012 79,992 1.24900

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 9,037,723 its own shares. A further 4,517,486 Mondadori shares are hold by the subsidiary Mondadori International S.p.A..
Consequently, as of today the total number of shares held now amounts to 13,555,209 corresponding to 5,50% of the share capital.

***

It should be noted that the Shareholders on 21 April 2011 authorised the buy back of a further 16,546,887 company shares, with respect to the shares already held, either directly or indirectly on the date of the authorisation issued by the AGM, bringing the total up to the limit of 10.52% of the present share capital.
The authorisation is valid until the meeting for the approval of the Annual Report for the year to 31 December 2011.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree 58/1998 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that, in line with the norms foreseen by the EU regulation 2273/2003, the daily quantities of purchase does not exceed 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated in the 20 trading days prior to the dates of purchase.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 26 and 30 March 2012, the company bought a total of 512,000 its own shares (corresponding to 0.20% of the company’s share capital) on the automated share market at an average price of € 1.31627 per share, for a total of € 673,929.73 in the context of the authorisation of the company’s AGM, held on 21 April 2011 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

Date N° of shares bought Weighted average price 26/03/2012 102,000 1.31596 27/03/2012 103,000 1.32971 28/03/2012 101,000 1.32168 29/03/2012 102,000 1.30668 30/03/2012 104,000 1.30741

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 8,737,431 its own shares. A further 4,517,486 Mondadori shares are hold by the subsidiary Mondadori International S.p.A..

Consequently, as of today the total number of shares held now amounts to 13,254,917 corresponding to 5,378% of the share capital.

***

It should be noted that the Shareholders on 21 April 2011 authorised the buy back of a further 16,546,887 company shares, with respect to the shares already held, either directly or indirectly on the date of the authorisation issued by the AGM, bringing the total up to the limit of 10.52% of the present share capital.

The authorisation is valid until the meeting for the approval of the Annual Report for the year to 31 December 2011.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree 58/1998 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that, in terms of price and daily volumes, acquisition operations are conducted in line with the norms foreseen by the EU regulation 2273/2003, and that, in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

Arnoldo Mondadori Editore S.p.A. has announced that the annual financial report, comprising the draft financial statements and consolidated financial statements for the year ending 31 December 2011, the Directors’ Report and the statements pursuant to Article 154a paragraph 5 of the Legislative Decree n.58/1998, together with the reports of external auditors and statutory auditors are available from today at the headquarters of the company, at Borsa Italiana S.p.A. and on www.mondadorigroup.com site (in the “Governance” section).
Likewise, in the same manner, the company has also published the report on corporate governance and the ownership structure, referring to 2011, and the Report on Remuneration pursuant to Art. 123-ter of Legislative Decree n.58/1998.

Arnoldo Mondadori Editore S.p.A. has announced that lists of nominations for the appointment of both the board of directors and the board of statutory auditors, as filed by Fininvest S.p.A., that holds 53.06% of the share capital, along with the documentation required by Consob Regulation No.11971/1999 and the company’s Articles of Association, are now available at the company’s registered office, at the Italian Stock Exchange (Borsa Italiana S.p.A.) and www.gruppomondadori.it (in the section Governance).

Following the candidates in the lists.

Candidates for appointment to the board of directors:

1. Marina Berlusconi

2. Maurizio Costa

3. Pier Silvio Berlusconi

4. Carlo Maria Vismara

5. Pasquale Cannatelli

6. Bruno Ermolli

7. Roberto Poli

8. Roberto Briglia

9. Martina Forneron Mondadori*

10. Marco Spadacini*

11. Angelo Renoldi*

12. Carlo Sangalli*

13. Cristina Rossello*

14. Mario Resca*

(*) Candidates with the necessary requisites for appointment as independent directors.

Candidates for appointment to the board of statutory auditors

Office of standing auditor:

1. Ferdinando Superti Furga

2. Francesco Antonio Giampaolo

3. Franco Carlo Papa

Office of substitute auditor:

1. Ezio Maria Simonelli

2. Francesco Vittadini

Please note that the Annual General Meeting of the Shareholders for the appointment of directors and statutory auditors has been called for 19 April 2012 (20 April on second calling).

MINORITY SHAREHOLDERS FAIL TO PRESENT LISTS FOR THE BOARD OF STATUTORY AUDITORS

With reference to the lists for the appointment of statutory auditors, it should be noted, pursuant to Art. 144 octies, para. 2 of CONSOB Regulation 11971/1999, that before the legal deadline for the filing of lists (26 March 2012) only a list submitted by the majority shareholder Fininvest S.p.A. had been filed.

Consequently, in accordance with Art. 144 sexies, para. 5 of Consob Regulation 11971/1999, the period within which additional lists may be deposited at the registered offices of Arnoldo Mondadori Editore S.p.A. for appointment of statutory auditors is extended until 29 March 2012 and the percentage of the share capital required for the submission of lists is reduced from 2.5% to 1.25%.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 19 and 23 March 2012, the company bought a total of 420,000 its own shares (corresponding to 0.17% of the company’s share capital) on the automated share market at an average price of € 1.33442 per share, for a total of € 560,455.88 in the context of the authorisation of the company’s AGM, held on 21 April 2011 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

date N° of shares bought Weighted average price 19/03/2012 66,000 1.42355 20/03/2012 77,000 1.36783 21/03/2012 88,000 1.33770 22/03/2012 91,500 1.30298 23/03/2012 97,500 1.27424

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 8,225,431 its own shares. A further 4,517,486 Mondadori shares are hold by the subsidiary Mondadori International S.p.A..
Consequently, as of today the total number of shares held now amounts to 12,742,917 corresponding to 5,17% of the share capital.

***

It should be noted that the Shareholders on 21 April 2011 authorised the buy back of a further 16,546,887 company shares, with respect to the shares already held, either directly or indirectly on the date of the authorisation issued by the AGM, bringing the total up to the limit of 10.52% of the present share capital.
The authorisation is valid until the meeting for the approval of the Annual Report for the year to 31 December 2011.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree 58/1998 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that, in terms of price and daily volumes, acquisition operations are conducted in line with the norms foreseen by the EU regulation 2273/2003, and that, in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the Chairmanship of Marina Berlusconi, to examine and approve the consolidated balance sheet and management report for the year to 31st December 2011 as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

MARKET SCENARIO

In the second half of 2011 the global economic situation, and in particular in the countries in the euro zone, continued to shown strong signs of difficulty. In Italy the economy outlook deteriorated significantly during the autumn, marking the beginning of recession. This has had a negative impact on industrial production and investment, resulting in a consequent decline in consumer spending. Also in France the main macroeconomic indicators in 2011 showed a negative trend compared with the previous year.
The macroeconomic performance in the markets of reference for the Mondadori Group, in Italy and France, was affected by these negative trends, with a significant deterioration in the final quarter.

GROUP PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2011

In this context, the Mondadori Group ended 2011 with consolidated net revenues of €1,509.8 million, a fall of 3,1% on the €1,558.3 million of 2010.

Consolidated gross operating profit came to €130.4 million, a fall of 7% compared with the €140.2 million of the previous year, as a proportion of revenues 8,6% compared with 9% in 2010. Excluding non-recurring positive items and investments in the development of the digital business, the reduction in gross operating profit was 3.3%.

Consolidated operating profit amounted to €103.8 million, down 9.1% from the €114.2 million in 2010, with depreciation and amortization of tangible and intangible assets of €26.6 million (€26 million in 2010).

Consolidated pre-tax profit came to €82.7 million, down 8.4% on the €90.3 million in 2010, with lower borrowing costs of €3.4 million and higher investment charges of €0.6 million.

Consolidated net profit came to €49.6 million, up 17.8% compared with the €42.1 million for the previous year, during which, however, there was an additional tax charge for previous years’ taxes of €8.7 million.

Gross cash flow for 2011 amounted to €76.2 million, compared with €68.1 million in 2010.

The Group’s net financial position showed a deficit of €335.4 million, an improvement of €7 million from the end of 2010, after dividend payments of €40.3 million during the year.

Information concerning personnel
On 31 December 2011 employees, permanent and determined, pursuant to the Group companies, consists of 3,664 units compared to 3,649 at the end of 2010.
2011 saw the conclusion of early retirement plans authorised by the government, which have seen the exit over two years of 233 employees, including both publishing and journalistic staff. There was a similar situation in France where the implementation of the so-called “social plan” has resulted, over two years, in the departure of 74 employees.
Overall, the restructuring plan announced in 2009, of which the above-mentioned ministerial programme was an important but not exclusive part, has been successfully completed.

THE BUSINESS AREAS

• BOOKS

In 2011, the trade book market in Italy has remained stable in terms of copies sold, while there was a decline of 1.4% in terms of value (source: Nielsen).
As regards the distribution channels, the slowdown of large-scale retailers was particularly critical, where the shortfall over the year was -7.9%, with a peak -20.3% in December. This figure is even more striking when one considers the performance of the ten best-selling titles: in terms of value in 2011 saw a decline of 48% in the top ten compared with the same figure as recorded in 2007.

In this context, Mondadori confirmed its leadership in the trade book market with a market share of 26.5% in terms of value (source: Nielsen).
In particular, 43 titles featured among the top 100 bestsellers of the year. Among these, Le prime luci del mattino by Fabio Volo, Nessuno si salva da solo by Margaret Mazzantini, the Steve Jobs biography by Walter Isaacson, published by Mondadori, and Tre atti e due tempi by Giorgio Faletti, published by Einaudi, respectively, were first, fourth, eighth and tenth in the overall rankings of the year.

Revenues generated by the Books area amounted to €389.1 million, a fall of 6% compared with the €413.9 million in the previous year.
Gross operating profit, despite the lower revenues cited above, was substantially in line with the high level of 2010, thanks to a focused policy of costs controls and the positive contribution of subsidiaries.
In the Paperback sector the most significant initiative was the launch of new series called NumeriPrimi °, which involved all the publishing houses of the Group – Edizioni Mondadori, Einaudi, Piemme, Sperling & Kupfer – and the publication of the most successful titles in large format and quality paperbacks.
In the first ten months, NumeriPrimi° achieved sales of two million copies, with particularly success in the large-scale retail channel.

2011 was undoubtedly important for Books in terms of digital publishing, with the normal operation of Mondadori’s digital distribution platform and, in the second half of the year, the arrival in the Italian market of the major international e-book retailers. During 2011 Mondadori introduced over 3,000 e-books, recording quarter of sales from the Mondadori platform.
The Christmas period saw the highest average sales of the year with peaks of more than 4,000 downloads per day. Among the best sellers, also in the digital format, were new titles by Walter Isaacson, Fabio Volo, Giorgio Faletti and Margaret Mazzantini, as well as backlist titles such as Miglio 81 by Stephen king.
The objective is to digitise the entire catalogue of the group, around 15,000 titles by 2014.
In the school textbooks segment, the digitization programme of the catalogue is already 90% complete, with about 1,300 titles already available in e-book format.

• MAGAZINES ITALY

The current challenging macroeconomic environment continues to have a strong impact on the consumer magazine market in Italy, adversely affecting advertising revenues (-3.7% magazines; source: Nielsen), circulation (- 5% in terms of copies and -7.2% on a comparable basis; internal figures) and add-on sales (-0.5% in terms of value; internal figures). In addition to the effects of the economic situation are the structural changes, related to the digital evolution that is underway, which is having a negative impact on print products, to which especially younger readers are showing less and less interest.
Mondadori has acted to address the situation and has to achieved a performance that is better than the competition and strengthened its position as market leader (33.3%), as can be seen from the continued growth of the number of readers of the Group’s weekly and monthly titles that total some 35 million, or 82% of the total (Audipress 2011/III). In particular, the latest Audipress survey shows that Mondadori’s “audience” was up by 1.6% on the previous period.
In a markedly recessive context, the performance of the Magazines Italy area saw a fall in total revenues of 2.7%, from €471.40 million to €458.8 million.
In particular, Mondadori titles suffered most from the recessive phase in the market and ended the year with a shortfall in revenues of around 5%, due to a reduction in:
– circulation revenues (-4.7%), the effect of a sharp decline in subscriptions (-15%) and fewer copies sold with add-ons (-11%);
– revenues from sales of add-ons (-2.4%), mainly because of a decline in sales of music products. However, the Group’s leadership in the segment (35%) was maintained, with continued high level of profitability and in line with the previous year;
– advertising revenues were down by 3.8%, with a particularly poor performance in the weekly family titles and newsmagazines.This was partly offset by a positive trend in women’s magazines.
The results show, however, a significant increase that is also attributable to the capital gain realized on the sale of the stake in Hearst Mondadori Editoriale Srl. Even excluding the aforementioned non-recurring items, there was still growth in gross operating profit.

Properties
During 2011, Mondadori took a series of important steps with the Group’s web properties associated with the main magazine titles, achieving significant results, both in terms of advertising sales and traffic.
The results for 2011 should therefore be considered positive, with an improvement in all indicators at rates higher than the market, in particular advertising (+47.7% compared with +12.3% for the market as a whole; Nielsen) and growth in the number of unique users, over 6.6 million, an increase of 23.5% on the previous year. This trend benefited from positive performances by www.grazia.it (+73%), www.panorama.it (+63%) and www.donnamoderna.com (+27%). Also of note was the rapid growth of www.panoramauto.it, which was launched in the second half of the year.

• ADVERTISING

Market trends in advertising spending in Italy in 2011 saw an overall fall of 3.8% (source: Nielsen), confirming that the global financial crisis and the downturn in GDP have had a noticeable effect on all media with the sole exception of the internet.
Television was down by 3.1%. There was a significant decline in Radio (-7.8%) and newspapers (-7.7%), while magazines saw a smaller decline of -3.7%, with a particularly bad performance in the final quarter (-8.2%).
The slowdown in advertising has involved all the main sectors of the magazine advertising market except cosmetics and fashion.

In 2011 Mondadori Pubblicità recorded an overall fall in sales compared with 2010, ending the year with revenues of €219.9 million, compared with €233.9 million in 2010.
In terms of the magazine advertising, the fall in sales was due to the particularly negative performance in certain sectors such as FMCGs and interiors. In particular, the weeklies were hit hard, despite the good performance of Grazia (+3.2%) and Tu Style (+11.1%) and the substantial stability of Donna Moderna, the other weeklies of the Group were down on the previous year.
For monthlies meanwhile, the decline was less marked (-1.2%), thanks to the resilience of interiors and cooking titles and to the success of Panorama Icon, which was launched in April 2011 and enabled the Group to strengthen its position in the male fashion segment and Mondadori Pubblicità to offer a product which meets the needs of companies operating at the high-end of the market.
During 2011 Mondadori Pubblicità maintained a continuous focus on the trend in average prices compared to 2010, with stability for Donna Moderna, Grazia and Tu Style among the weeklies, and growth in the interiors and cooking monthlies, sometimes at the expense of volume.

Radio advertising revenues (R101 and Radio Kiss Kiss) grew by 0.7% due largely to the performance of the new organisational model of Mondadori Pubblicità from May 2011; there was a particularly positive trend for R101 in a market that saw a fall in spending of 7.8% (source: Nielsen).

In the Internet market the excellent results achieved by Mediamond, with overall growth of 56% compared to 2010, was the result of a positive performance by the main sites of the Group and the considerable success of TgCom (+59%) and Sport Mediaset (+30.2%) of the RTI Group.
Overall, the Mediamond portfolio was enhanced in 2011 with the addition of www.ilgiornale.it with sales that were above expectations.
After just two years Mediamond now sells advertising for vertical 30 sites, with 11.5 million unique users per month, as well as a considerable number of case studies with leading companies in its sectors of reference.

• MAGAZINES FRANCE

The magazine market in France, both in terms of circulation and advertising revenues, suffered a marked slowdown in the last part of the year, although less significant than in Italy. During the year, advertising, in terms of value was, essentially unchanged compared with the previous year while circulation saw a fall of 4.2%.
In this contexts, Mondadori France recorded growth in earnings thanks to positive performances by all of its titles.

The consolidated revenues for the year came to €348.1 million, up 1.1% on the €344.2 million of the previous year.
Gross operating profit was up by 16.8% on the previous year, thanks to a good performance in magazines and, in particular, the improvement of Grazia, as well as lower manufacturing costs and overheads.

Advertising revenues were up 3.3% to €85.4 million. This excellent performance is due mainly to strong growth in the upscale women’s titles, in particular the weekly Grazia (+34%) and the monthly Biba (+10%), which now account for 33.6% of total advertising revenues (27.2% in 2010).
It should also be noted that Grazia is now the second largest magazine in the market in terms of advertising pages (2,495 pages, up 39%). Even in terms of circulation, Grazia confirmed its success since the launch, growing by 3.1% to 184,000 copies.

In terms of circulation, which accounts for 69% of the total, revenues increased by 1.3%, to €239.5 million,, of particular relevance was the subscription channel, which accounted for 32.5% of total sales.
During the year a number of activities were launched focused on innovation and quality, key factors in the positive performance achieved in terms of circulation: in particular the launch of new formats for seven titles and the launch of the quarterly Guerres & Histoire.
The most successful titles include Modes & Travaux, which has become the leading title in its segment; among women’s magazines, Top Santé and Closer, which have strengthened their positions; in the popular science segment, Science & Vie and Science & Vie Junior continue to grow.
Mondadori France is the leader in the car sector with the weekly magazine Auto Plus and the bimonthly Auto-Journal.
Biba recorded the strongest growth among all of its competitors, with 326,000 copies (+4.5% compared with 2010).

International Activities
Despite some signs of a slowdown due to the ongoing global economic situation, the International Activities area confirmed the positive trend of previous years. Despite difficulties in terms of both consumer and advertising spending, the Group has responded with continuous expansion and geographic diversification and consolidating its position in major emerging markets such as China, Russia and the Asian market. The annual turnover of International Activities was over €160 million. Spearheading this growth is Grazia, a brand with a strong international success that now forms a network of twenty editions with editions in four continents.

Licensing: the end of 2011, there was a total of 27 international editions: seventeen of Grazia, seven of Casaviva, one of Flair, one of Interni, and one of Sale&Pepe. The different editions of Grazia generated a combined revenues of €107 million (+20% compared with 2010) with expectations of further growth for 2012, also thanks to the launch of new editions.

Advertising: thanks to a dedicated team focused on the fashion and interiors segments, in 2011 on the Italian market Mondadori generated advertising revenues of €6.8 million (+49% compared with 2010).

With regard to investments, Mondadori in active in China with its joint venture Mondadori SEEC Advertising Co Ltd: Grazia China, launched in February 2009, has already proved a great success (with revenues of €7.1 million, +87% compared with 2010). Given the rapid growth and potential of the Chinese market, Mondadori has several new projects currently under consideration, the first of which should be announced in the coming months.
Grazia Russia, which celebrated its fifth anniversary in March, during 2011 recorded revenues of €4.1 million, up 20% on an already positive 2010.
Despite the dramatic economic crisis in Greece, Attica Publications expects to be able to derive competitive advantages over its competitors.

• DIRECT

The Direct Area, which manages the retail and direct marketing businesses, conducts its activities through:
– a network of outlets across the country, comprising at the end of 2011 of 628 outlets (22 directly operated and 307 franchised book shops; 9 Multicenters; 213 Edicolè franchises, 18 directly managed Book club and 59 franchised stores):
– Cemit, the market leader in diversified strategies for the design and development of one- to-one communication and CRM.

Revenues in 2011 came to €265.5 million, a fall of 1.4% compared with the €269.2 million of 2010. The figures are not comparable due to changes in the scope, including the acquisition of the whole of Mondolibri SpA. On a like-for-like basis, the shortfall would be around 5% compared with the previous year.

The Multicenter outlets and bookshops, clubs and directly managed outlets, were all penalised by marked downturns that were as high as 12%, only the franchises and Edicolè outlets maintained a positive trend in revenues.
Also Cemit, which suffered significantly from the overall decline in investments in direct marketing, ended the year with a fall in revenues of 24%.
Faced with these difficulties, the company has increased its focus on costs, which explains the merger of Mondadori Franchising S.p.A. and Mondolibri S.p.A. with Mondadori Retail S.p.A., which changed its name to Mondadori Direct SpA, in the middle of the year.

• RADIO

R101, the Group’s radio station, generated revenues of €16.3 million, up by 12.4% compared with the €14.5 million of 2010, thanks to the performance of the car, food, media/publishing and telecommunications sectors, which account for approximately 50% of total turnover.
The market figures for total Radio advertising in 2011 however showed a fall of 7.8% compared with 2010 (source: Nielsen).

The increase in revenues for R101, as well as the alignment of the publisher’s share with other businesses of the Group, is also attributable to the performance of the sales network, which passed from a dedicated network to the more general representation of the entire sales force of Mondadori Pubblicità, which facilitated the entry of many new clients.

• DIGITAL

Revenues generated by the Digital Area came to €17.2 million, an increase of 63.8% compared with the €10.5 million of 2010. The turnover from digital publishing, e-commerce, diversified activities and IT infrastructure development and databases, amounted to €44.2 million, an increase of 23.5% on 2010.
The digital publishing activities primarily refer to e-books, self-publishing, online bool clubs, properties and digital advertising.

In e-commerce in 2011, the business was mainly through www.bol.it sites, which are focused on the sale of books, CDs, DVDs and e-books, which recorded growth in the number of orders (+23%) and the number of unique users (+42%), and www.abbonamenti.it, which manages both print and digital subscriptions.
CRM activities in 2011 saw the creation of the Mondadori Customer Data Base, a single structure which brings together all of the customers of the different business units and the development of information processes for the reconciliation of customers of the different companies of the Group.

RESULTS OF THE PARENT COMPANY ARNOLDO MONDADORI EDITORE S.P.A.
The Annual Report of the parent company, Arnoldo Mondadori Editore SpA, for the year to 31 December 2011 shows a net profit of €55.3 million (€51.7 million on 31 December 2010), while gross operating profit came to €48.5 million (€70.8 million in 2010).
These economic indicators show a contrasting trend; gross operating profit was affected by the significant decline in sales in both books and magazines, where both revenue from sales of copies and from advertising was down compared with 2010.
Also of significance, in absolute terms, was the total investments in digital activities that are still in the start-up phase.
Net profit, meanwhile, benefited from higher returns from the management of investments that, in 2011, included a capital gain of around €10 million from the sale of the company’s stake in Hearst Mondadori Editoriale Srl and a reduction in taxes including, in 2010, a non-recurring charge of €8.7 million, resulting from the adherence to the definition of pending tax disputes, established by Law N° 73 of 22 May 2010, and regarding a dispute with the tax authorities in Milan for the year 1991.

PROPOSAL FOR THE DESTINATION OF NET PROFIT FOR THE YEAR ENDED 31.12.2011
The Board of Directors agreed to propose to the Annual General Meeting of the Shareholders, called for 19 April 2012 (or 20 April on second calling), to devolve to the extraordinary reserve the full amount of the net profit for the year ended 31 December 2011, which amounted to €55,342,667.63
Given the current market scenario and despite the increase in net profit for 2011 compared with that for 2010, the proposal of the Board of Directors not to distribute a dividend for 2011 is aimed at strengthening the financial structure.

FORECAST FOR THE FULL YEAR
In the first two months of the year trends related to consumer spending in general, and in particular in the markets of interest to Mondadori, remain significantly negative, in line with the closing months of 2011.
There are currently no signals of a turnaround that could significantly alter the trend, at least in the first half of the year. Similarly, there is also reduced visibility, also in the short term, with regard to the advertising market.
During 2012 the company’s priorities will be to maintain a firm hold on the Group’s leadership in magazines and books in Italy, the consolidation of the successes in France, the development of digital activities, both in books (e-books) and other areas, the expansion and diversification of the international activities, and the continuation of efforts to reduce operating costs in order to contain the negative impact of rising production costs.
In such a problematic scenario, and despite the abovementioned actions, it is currently difficult for the Group to achieve the same levels of profitability as in 2011.

Arnoldo Mondadori Editore S.p.A. has announced that illustrative reports by the directors pertaining to the following items on the agenda for the company’s forthcoming ordinary Annual General Meeting on 19 April 2012 (20 April on an eventual second calling) are now available at the company’s corporate offices, Borsa Italiana S.p.A. and on www.gruppomondadori.it (in the Governance section):
– authorisation to buy back and utilise ordinary shares, in line with articles 2357 and 2357-ter of the Italian Civil Code;
– appointment of the board of directors;
– appointment of the board of statutory auditors for the financial years 2012/2013/2014.

Further documentation pertaining to the AGM will be made available to the public, as above, in compliance with current legislation.

Notice of the ordinary Annual General Meeting and the agenda are available on www.gruppomondadori.it (in the Governance section).