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Arnoldo Mondadori Editore S.p.A. today announced, as per Art. 2.6.2 of the regulations governing markets organised and managed by Borsa Italiana S.p.A., the corporate events scheduled for 2015:

– Thursday 12 March 2015: meeting of the Board of Directors for the approval of the Annual Report for the year ended 31 December 2014;

– Tuesday 12 May 2015: meeting of the Board of Directors for the approval of the 1st Quarter Report to 31 March 2015;

– Tuesday 28 July 2015: meeting of the Board of Directors for the approval of the Interim Report to 30 June 2015;

– Thursday 5 November 2015: meeting of the Board of Directors for the approval of the 3rd Quarter Report to 30 September 2015.

The Annual General Meeting of the Shareholders for the approval of the Annual Report for the year ended 31 December 2014 will be held on Thursday 23 April 2015.

Analysts’ presentations of the results for the full year to 31 December 2014, the interim report to 30 June 2015 and the reports on the first and third quarters of 2015 will be held on the dates, as indicated above, of the respective meetings of the Board of Directors.

Any eventual changes will be promptly communicated to the market.

Segrate, 21 January 2015 – The Board of Directors of Mondadori Libri S.p.A., held on today’s date, resolved upon the following appointments: Ernesto Mauri Chairman; Enrico Selva Coddè, Gian Arturo Ferrari, Antonio Porro and Oddone Pozzi Directors.

Specifically – reporting to the Group’s CEO Ernesto Mauri – Enrico Selva Coddè is appointed Managing Director of Mondadori Libri S.p.A. for the Trade area and Antonio Porro is confirmed Managing Director of the Educational area.

Gian Arturo Ferrari, Deputy Chairman of Mondadori Libri S.p.A., will work in co-operation with Enrico Selva, Managing Director of the Trade area, for the implementation and publication of the publishing programmes.

“This configuration enables a more functional structure aiming at potentially further developing a strategically key business for us as we hold a leadership position with a 26% market share in the Trade area and a 13% market share in the Educational area”, underlined Ernesto Mauri, CEO of Mondadori Group.

“The scenario of the publishing market is still declining and this means that we need to increasingly keep our focus on innovation and management efficiency, while streamlining processes with a view to increasing profitability in a strategically key sector for our company”, Mauri continued. “The new organization, which I am proud of also for the excellence of its professional competencies, will enable the management to use all leverages to achieve the projected results”.

Born in Milan in 1961 and with two degrees (engineering and philosophy), Enrico Selva Coddè began his career at Olivetti in 1987, where he worked in planning and logistics until 1991, the year he first joined Mondadori.

Until 1999 he worked at Mondadori as Head of Human Resources in the Direct Marketing, Advertising and Magazines areas. From 1999 to 2002 he was Head of Operations at Rizzoli Newspapers.

In 2002 he returned to Mondadori Group as General Manager of Giulio Einaudi editore; later he was appointed Managing Director holding the office from 2003 to 2008.

He was then appointed Head of Human Resources, Organization and IT of the Mondadori Group and since July 2014 he is Vice President of FIEG and President of FIEG category of large-scale magazine publishers.

Born in Milan in 1965, Antonio Porro has a degree in economics and business administration from the Catholic University of Milan. He began his career with Mondadori in the early 1990s as Head of project development. He then joined Telecom Italia covering positions with growing responsibility for over ten years, up from the Business Division to the International Division.

In January 2009 he returned to Mondadori as Head of the Group’s Mergers & Acquisitions. In June 2011 he was appointed General Manager of the Educational area and subsequently he was appointed Chairman and Managing Director of Mondadori Education S.p.A. and Mondadori Electa S.p.A., offices that are confirmed to him by today’s Board resolution.

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It should be noted that the stakes owned in the publishing houses operating in the Trade, Arts and Educational areas – Edizioni Piemme S.p.A. (100%), Giulio Einaudi editore S.p.A. (100%), Mondadori Education S.p.A. (100%), Mondadori Electa S.p.A. (100%), Sperling & Kupfer Editori S.p.A. (100%), Harlequin Mondadori S.p.A. (50%) – and in the company operating in the distribution area – Mach 2 Libri S.p.A. (34.91%) – were contributed to Mondadori Libri S.p.A., which started operations on 1 January 2015.

At 31 December 2013 the Books area of the Mondadori Group posted revenues for a total of euro 334.3 million with EBITDA at euro 46.2 million.

The Board of Directors of Arnoldo Mondadori Editore S.p.A., which met today under the chairmanship of Marina Berlusconi, has approved the operation presented by the chief executive Ernesto Mauri for the incorporation of a new wholly-owned company to be called Mondadori Libri S.p.A.

Specifically, the new company will bring together all of the business activities of Arnoldo Mondadori Editore S.p.A. concerning:

• the assets, liabilities and contractual relations relative to the publishing and distribution activities currently undertaken by the books area;
• the stakes of book publishing companies in the trade, art and educational sectors – Edizioni Piemme S.p.A. (100%), Giulio Einaudi editore S.p.A. (100%), Mondadori Education S.p.A. (100%), Mondadori Electa S.p.A. (100%), Sperling & Kupfer Editori S.p.A. (100%), Harlequin Mondadori S.p.A. (50%) – as well as the company operating in the distribution sector Mach 2 Libri S.p.A. (34.91%).

The operation will not involve any changes to the overall profile of the underlying businesses and operating characteristics of the Group.

The contribution will also facilitate the creation of a more functional corporate structure for the potential realisation, with a view to development, of partnership and merger opportunities aimed at exploiting economies of scale and scope; the operation also enables the use of all the operating, economic and financial levers by the management of the Area.

The contribution will carried out in line with current accounting levels, and with no impact on the Group’s consolidated figures, on the basis of a net book value of €99.4 million.

The contribution will be formalised before the end of 2014, and will be effective from 1 January 2015.

As of 30 September 2014, the Books Area recorded revenues of €238.9 million, EBITDA of €35.8 million and operating profit (EBIT) of €33.7 million.

Related parties
With regard to the “Regulations concerning operations with related parties” adopted by CONSOB with resolution n.17221 of 12 March 2010 and subsequent modifications, it should be noted that the operation is not subject to the provisions of such Regulations, pursuant to Art. 14, para. 2, and the relative procedures adopted by Arnoldo Mondadori Editore S.p.A.. Specifically, the operation involves wholly-owned companies for which there are no interest of related parties that can be defined as relevant in line with the criteria defined by the procedures.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first nine months of the year to 30 September 2014, as presented by the Chief Executive, Ernesto Mauri.

THE MARKET SCENARIO
The international macroeconomic situation continues to be characterised by a progressive slowdown in emerging economies and relative stability in mature markets.

The sectors in which the Mondadori Group operates have begun to show, in both Italy and France, progressively less marked declines that in recent periods.

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2014
The Mondadori Group’s figures to 30 September 2014 confirm, with a more marked acceleration, the improvement and recovery in profitability already seen in the first half of the year; in particular, the third quarter, with revenues essentially in line with those of the previous year, recorded a net profit for the first time after a prolonged period (seven quarters) of negative results.

In this market context, during the first nine months of 2014 the Group recorded consolidated revenues of €859.6 million, a fall of 4.8%, taking account of the contribution of the advertising sales activities to Mediamond S.p.A., finalised in January 2014 (-7.7% on the €931.2 million recorded on 30 September 2013).

The fall in revenues was contrasted also by higher reductions in operating costs, down by some €86 million, which made it possible to significantly improve EBITDA, which was up to €36 million from the €8.9 million of the previous year.

A contribution of over 50% was made to this performance by the Magazine area (Italy and France), the result of a combination of improved efficiency through action taken on the product, reductions in operating costs and lower restructuring charges.

Consolidated operating profit came to €18.8 million, compared with a loss of -€9.6 million in 2013, with amortizations and depreciations of tangible and intangible assets of €17.2 million (€18.5 million in the first 9 months of 2013).

Profit before taxation amounted to €1 million, compared with a loss of -€26.2 million in the previous year; during the period, financial charges amounted to €17.8 million (€16.6 million in the same period of 2013).

After minority interest, there was a consolidated net loss of -€7.5 million, compared with a loss of -€32.3 million for the same period of 2013.

The company also recorded a positive cash flow over the last twelve months of €49.5 million, deriving from a positive ordinary cash flow of €9.8 million and an extraordinary flow of €39.7 million, the latter mainly the result of a capital increase approved in June and the impact of the contribution of advertising activities to Mediamond.

Consequently, on 30 September 2014, there was a marked improvement in the net financial position which totalled -€327.4 million, compared with -€363.2 million at the end of 2013 (-€376,9 million on 30 September 2013).

RESULTS OF THE BUSINESS AREAS

· BOOKS

There was a continuation of the negative trend of the first half of the year in the trade books market, in both the bookstore and large-scale retail channels, with third quarter revenues down – compared with the same period of 2013, albeit less marked – by 0.9% in terms of value (Source: Nielsen, to September).

Over the nine months, the trade book market was down by 4.3% in terms of value (Source: Nielsen, to September). The fall, always in terms of value, was more marked in the large-scale retail channel (13.5%, Source: Nielsen, to September).

Total revenues generated by the Book area in the first nine months of 2014 amounted to €238.9 million, an increase of 2% on the €234.2 million of same period of 2013. There was also a positive trend in the third quarter, with an increase, compared with the same period of the previous year, of 10.2%.

The publishing houses of the Mondadori Group also confirmed their overall leadership with a market share of 26% (excluding large-scale retail): during the reporting period, the Group published 11 of the titles in the list of the 25 best-selling books.

In the trade books area, revenues in the first nine months of the year have been affected by both the dynamics of the market and the different publishing schedule that foresees the publication of titles by the most established authors in the latter part of the year.

September saw the arrival of the first of the most significant titles due for publication before the end of the year, Ken Follett’s I giorni dell’eternità, which was an immediate absolute best-seller (120,000 copies in just 15 days).

With regard to the digital e-book market, the Group’s share remains stable at around 40%, with an offer of some 8,000 titles.

In the educational area, the Group recorded a rise in revenues in the first nine months of 2014, compared with 2013, as a result of a positive performance in primary school adoptions.

There was also an increase in revenues in the museum area thanks to the excellent performance in the management of museum concessions, the organisation of exhibitions and relative publishing activities, as well as the management of museum stores.

EBITDA was down to €35.8 million from the figure for 2013 (€39 million) due to the different mix in revenues resulting from the significant rise in third-party distribution with lower percentage profitability; in particular, the educational area saw an increase in gross operating profit of more than 10% compared with the previous year.

· MAGAZINES ITALY

In the third quarter of the year there was a further downturn in the markets of reference compared with the same period of 2013, albeit less marked than in the first two quarters: in the reporting period there was a fall in circulation of 8.7% (internal figures to August) and advertising was down by 8.7% (Source Nielsen, to September).

In this context, the Magazines Italy area saw a continuation of the trend of the first half of the year with a better-than-market performance in both circulation and advertising. Mondadori also confirmed its leadership position with a market share (in terms of value) of 32.2%, up from 30.5% on 30 September 2013.

Total revenues for the Area amounted to €227.5 million, a fall of 10.1% on the €253.1 million of 2013 (-8.7% on a like-for-like basis, taking account of titles closed and sold).

The revenues generated by Mondadori magazines were affected by the negative trend in the markets of reference but, nevertheless, recorded a better-than-market performance.

In particular:
– circulation revenues were down by 8.4% (-6.2% on a like-for-like basis);

– advertising revenues for Mondadori brands (web + print) were down by 7% on the previous year;

– while revenues from add-ons were down compared with the first nine months of 2013, there was an increase in the percentage of profitability;

– the Mondadori web sites saw revenues increase by 4.1%, compared with the same period of 2013, thanks to the performance of Grazia.it (+34.9%) and Donnamoderna.com (+1.1%), in an Internet market that recorded average growth of 0.1% (Source: Nielsen, to September). There was also a positive performance in terms of traffic compared with 2013 for Grazia.it (+49%), Donnamoderna.com (+34%) and Panorama.it (+9.5%).

Despite the fall in revenues, there was a marked improvement in EBITDA, which went from -€9.7 million to +€4.2 million.

Considering the efficiencies deriving from the action taken on the product and efforts to reduce operating and structural costs in the Magazines Italy Area, along with the positive impact of the reorganisation of advertising sales in Italy, in the first nine months of the year the Group saw an overall improvement in aggregate EBITDA for the two activities of €19.2 million.

The revenues of Mondadori Pubblicità amounted €7.6 million and cannot be compared with the same period of 2013 due to the contribution of the advertising sales activity to Mediamond, the 50-50 joint-venture between Mondadori Pubblicità and Publitalia ’80.

International Activities

In the first nine months of the year, Mondadori International Business S.r.l. recorded an increase in revenues compared with the same period of 2013 of around 6%, thanks to the consolidation of the editions of the Grazia International Network, now operating in 23 countries; the launch, in November 2013, of the first international licence for the male lifestyle title Icon, and advertising sales in Italy for the Spanish daily El Pais, since October 2013.

The Grazia International Network received an additional boost with the very recent launch of Graziashop.com, an integrated e-commerce fashion platform that will enable the Grazia community around the world, made up of 17 million readers and 16 million unique users per month, and fashion enthusiasts everywhere, to buy selected items from many of the world’s most fashionable boutiques.

• MAGAZINES FRANCE

During the reporting period, the markets of reference in France continued to record a downward trend, both in newsstand circulation (-8% internal figure to August) and advertising sales (-8.6%, internal re-elaboration of Kantar Media data to August). In this context, Mondadori France recorded a better-than-market performance in circulation.

In the first nine months of 2014 the consolidated revenues of Mondadori France came to €254.2 million, down 3.3% on the €262.9 million at 30 September 2013; on a like-for-like basis, taking account of the sale of Le Film Français at the end of 2013 and the different number of issues of some titles, the downturn was just 2.3%.

There was a split in advertising sales revenues between print and the web; print was down by 12.5% (-10.3% like-for-like), but improving when compared with the first half of the year; while the web grew by 36% (like-for-like).

The aggregate figure for advertising revenues therefore shows a downturn of 6,5% compared with the same period of 2013.

Circulation revenues, that make up 70% of the total, were down by 1.4% (-1% like-for-like):

– sales from the newsstand channel fell by 5.5% (5.4% like-for-like), compared with a reference market that was down by 8%, also as a result of the significant performance of Top Santé (+19%), Pleine Vie (+10%) and Closer (+6%).

– subscription sales were down by 1.5% (-0.7% like-for-like).

In the first nine months of 2014 digital activities, on a like-for-like basis, saw a significant rise in revenues (+37%), due to the development of NaturaBuy, advertising sales and the sale of digital copies.

Despite the fall in revenues, there was a 2.3% increase in the Area’s EBITDA (€22.3 million compared with the €21.8 million of the first nine months of 2013), also as a result of the rationalisation of the structure and reductions in editorial and industrial costs and overheads. This process, begun in previous quarters, will continue with a view to adapting the organisation to the transformations taking place in the market.

Since January 2014 digital advertising sales have been managed by specially created cross-title structures.

Some of the web sites have been updated and further developed with new functions for tablets and smartphones: these changes have been positively received by the audience that has now reached 6.6 million unique users, +26% compared with 2013 (Source: Nielsen, to August), with a peak of 7.8 million in January; on mobile there was an increase in unique users of 77% on 2013 (Source: Nielsen, to July).

Activities and efforts continued to create new efficiencies with a plan for voluntary redundancies that will reduce the size of the staff, and a plan to have the whole staff on a single site in the first months of 2015.

• RETAIL

The retail continued to feel the effects of the weakness in consumer spending. In this context, the channel that was best able to contain the fall in revenues was the chains, unlike independent book shops and large-scale retailers.

The overall revenues of the Area continued to suffer from the stagnation in consumer spending and in the first nine months of the year amounted to €144.9 million, a 5.5% fall on the €153.4 million of the same period of 2013, despite some signs of a recovery compared with the first half of the year, which was down by 8.9% on the previous year.

A breakdown of revenues by product type shows that:

– books were the preeminent product, accounting for 75% of the total: in fact, book sale were 9 percentage pints better than the market of reference (-4.3% in terms of value), enabling Mondadori Retail to increase its market share from 13.4% to 14.7%;

– sales of consumer electronics continued to fall faster than the sector in general;

– the book club channel continued its negative trend, with a downturn in revenues in the period of around 20%;

– online sales, on the mondadoristore.it web site were up by around 4%.

The trend in book sales helped to mitigate the negative impact on the Area’s EBITDA (-€6 million, compared with -€6.8 million in the first nine months of 2013), deriving from the fall in revenues from the book clubs and sales of consumer electronics.

When compared with the first nine months of 2013, the figure, if broken down by type of outlet, shows an improvement in directly-owned bookstores, stable for franchise outlets and in decline in the multicenters.

Given the ongoing recession, actions, already implemented in the first half, continued with the aim of recovering profitability.

In particular:

– progressive revision of the network, with the rationalisation of outlets and formats, in order to develop a new concept bookstore of the future;

– efforts to improve the assortment, supported by promotional activities, communication and advertising;

– the continuation of activities for the reorganisation of operating processes and staffing structures.

Mondadori Store was recently awarded Italy’s 2014-2015 Insegna dell’Anno (Retailer of the Year) as the bookstore chain offering the best customer experience in terms of price, assortment and service.

• RADIO

After a decidedly positive start, the radio market in the first nine months of 2014 experienced a downturn that led to a fall of -3.1% (Source: Nielsen, to September).

In this context, advertising sales for R101, in the first nine months of 2014, confirmed the trend of the first half, performing worse than the market.

The radio’s revenues, including those related to the web site and other initiatives, were down by 12,4% to €7.8 million (€8.9 million in the first nine months of 2013).

EBITDA (-€4.2 million compared with -€3,1 million in the first nine months of 2013) was affected by the negative trend in advertising sales and higher promotional and communication costs during the station’s re-launch phase in the early months of the year.

The main actions taken during 2014 to build the audience and offset the negative trend in the market, included:

– the repositioning of R101, partner of the concerts of leading Italian and international artists;

– an institutional television campaign aimed at strengthening the station’s brand awareness;

– the redesign of the layout and content of the r101.it web site and the release of the station’s new app;

– the enhancement of the music offer with the launch, with a view to creating an integrated system with the radio, of R101 TV, channel 66 on the digital terrestrial platform.

DIGITAL

In recent months the Digital Innovation area has continued its efforts aimed at consolidating the central structure, updating the platform for the management of users and contacts, as part of the CRM system, and technological enhancements aimed and a broader valorisation of the Group’s editorial content.

During the reporting period, revenues from purely digital activities in Italy and France rose, overall, by 8.7%, while revenues from marketing services (Cemit) were down compared with the first nine months of 2013.

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Information regarding personnel

At 30 September 2014, permanent and temporary staff in the companies of the Group, totalled 3,194, a fall of 242 (-7%) compared to the end of 2013 and 345 (-9.7%) compared with September 2013.

Net of extraordinary operations that have modified the scope of the Group, the reduction in headcount was 6.3% compared with the end of 2013 and 9% compared with the previous twelve months.

In the first nine months of the year, labour costs, net of extraordinary operations and lower restructuring costs, were down by 8.1% compared with 2013.

§

Financial position and equity

The net financial position at 30 September 2014 improved by €35.8 million compared with 31 December 2013 and by €49.5 million, compared with the same period of the previous year.

Over the past year, there was a positive ordinary cash flow of €9.8 million as a result of the optimisation of the management of net working capital, which offset outflows for investment.

The first nine months of the year, also affected by the seasonal nature of the sector, recorded a normal cash absorption of €8.6 million (-€82.5 million in the first nine months of 2013) and an extraordinary cash flow of €44.4 million, of which €31.1 million resulting from the capital increase concluded in June; the net balance of the acquisition and disposal of assets takes account of the effects of the contribution to Mediamond and an advance amounting to €12 million, relating to the sale of an asset, the completion of which is expected by the end of the year.

§

FULL YEAR 2014 OUTLOOK

In a market that continues to be characterized by signs of weakness, although less marked than in the first half of the year, the actions taken by the Group – regarding the strategic rationalisation of the business portfolio, along with the constant commitment to reducing both operating and structural costs, as well as the excellent performance recorded by the Magazine Area, in Italy and France – have enabled the Group to improve during the year its capacity to generate financial resources.

In view of the current context and the above-mentioned actions, which will continue also in the last quarter of the year, for the full year 2014, it is reasonable to confirm the forecast, already announced, of an EBITDA for the Group higher than that of 2012, and of a consolidated net result at breakeven.

In line with the trend recorded in the first nine months of the year, it is expected by year end a significant improvement in the Group’s Net Financial Position compared with 2013.

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The executive responsible for the preparation of the company’s accounts, Oddone Pozzi, 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 documentation relating to the presentation of the results to 30 September 2014 is available from the authorised storage system 1info (www.1info.it) and www.borsaitaliana.it and www.gruppomondadori.it (in the Investor Relations section).

PUBLICATION OF THE INTERIM REPORT FOR THE PERIOD TO 30 SEPTEMBER 2014
The interim report for the period to 30 September 2014, duly approved by the board of directors, will be available from today at the company’s headquarters, the authorised storage system 1info (www.1info.it), www.borsaitaliana.it and www.gruppomondadori.it (in the Investor Relations section).

Arnoldo Mondadori Editore S.p.A. has announced that the meeting of the company’s Board of Directors for the approval of the interim results for the period to 30th September 2014, has been postponed from 12th November 2014 to Thursday 13th November 2014. On the same date a conference call with analysts will take place to present the results to 30th September 2014.

Arnoldo Mondadori Editore S.p.A. has announced that the half-yearly report for the period to 30 June 2014, as approved by the Board of Directors on 31 July, together with the external auditors’ report, is now available at the company’s headquarters, on the authorised storage resource 1Info (www.1info.it), on www.gruppomondadori.it (in the Investor Relations section) and on www.borsaitaliana.it.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first half of the year to 30 June 2014, as presented by the chief executive, Ernesto Mauri.

THE MARKET SCENARIO

In the first six months of the year, the markets in which the Group operates continued to decline compared with the same period of the previous year.

In particular in Italy:

– the book sector saw a downturn of 9% in terms of copies and 6.6% in terms of value compared with the first half of 2013 (Source: Nielsen, figures to 14 June);
– the magazine market saw a fall in circulation of 9.6% (internal data to May), a slump of 14.3% in add-on sales (internal data to May) and a fall in advertising sales of 11.6% (Source: Nielsen, figures to May);

Meanwhile in France:

– magazine circulation was down in the newsstand channel by 8.1%;
– advertising sales were down 9.4% on the same period of 2013 (figures to May: internal data for circulation and Kantar Media for advertising).

GROUP PERFORMANCE IN THE PERIOD TO 30 JUNE 2014

In a context characterised by a marked decline, the Mondadori Group recorded a 10.3% fall in consolidated revenues for the period to €549.2 million, compared with €612.3 million in the first half of 2013; on a like-for-like basis, taking account of the contribution, effective from 1 January 2014, of the advertising sales activities to Mediamond S.p.A., a company consolidated on an equity basis, the reduction was 7%.

Consolidated gross operating profit came to €14.9 million, an increase of €20.2 million compared with the loss of €5.3 million in the first six months of 2013, thanks to the impact of actions on the product, cost reduction efforts and a fall in non-recurring charges. The Magazine area made a decisive contribution to this marked improvement given that, after years of continuous decline, it recorded a total gross operating profit (Italy and France) amounted to €26.3 million, an increase of 50.3%.

This particularly positive result, in excess of expectations, is the result of actions on the product and a reduction in operating costs, which were down by around €70 million (-13.1%).

Consolidated gross operating profit net of non-recurring items amounted to €15.4 million, an increase of 8.5% compared with the €14.2 million of the previous year.

Consolidated operating profit came to €3.6 million, a marked improvement on the -€17.7 million of the first half of 2013, with amortisations of tangible and intangible assets of €11.3 million, compared with €12.4 million in 2013.

Pre-tax profit and consolidated net profit, amounting respectively to -€8.7 million (-€28.2 million in the first half of 2013) and -€11 million (-€27.1 million in the first half of 2013), include higher financial charges due, in part, to higher interest rates resulting from the renegotiation of credit lines concluded in November last year, as well as a higher average level of debt.

The Group’s net financial position on 30 June 2014 showed a deficit of -€368.9 million, an improvement on the situation in the first quarter of the year (-€396.5 million) and in line with the same period of 2013 (-€367.3 million) and at 31.12.2013. In addition to the seasonality of some of the Group’s businesses, the net financial position was affected by expenditure for restructuring and a recovery in investments and benefitted from an influx of €31 million from the placement of a total of 29,953,500 ordinary shares completed in the month of June.

RESULTS OF THE BUSINESS AREAS

• BOOKS

In the second quarter of the year the trade books segment felt the impact of the negative economic situation that has slowed down the recovery in consumer spending and the buying of books. This resulted in a further fall in the market which (to June) recorded a fall of 9% in terms of copies and 6.6% in terms of value (Source: Nielsen, figures to 14 June); in the second quarter the fall, in value terms, was of -8% (-5.3% in Q1). The downturn was more marked in the large-scale retail channel and independent bookshops that were down, respectively, by 15% and 7.5% (Source: Nielsen, figures to 14 June).

Substantially confirming the company’s market leadership, the share of the Mondadori Group’s publishing houses was 25.5% (excluding large-scale retail sales), a slight fall compared with the same period of last year that was positively affected by the performance of the bestsellers E l’eco rispose by Khaled Hosseini and Inferno by Dan Brown.

First half revenues generated by the Book area amounted to €128.5 million, a 4.1% fall on the €134 million of the previous year.

The fall in revenues and margins was determined by the aforementioned market trend as well as a different publishing schedule which, compared with 2013, will feature an absolutely significant launch of titles for the Christmas period as well as the publication of new works by the well-know authors in the second half, including, Follett, Grisham, Cornwell, Corona, Littizzetto and Camilleri.

Regarding to e-books, revenues were up by almost 13% compared with the first half of 2013 thanks to a catalogue that is continuously expanding and that currently includes over 7,000 titles.

The fall in revenues had an impact on gross operating profit compared with the first half of 2013. However, targeted actions aimed at cutting costs in different areas, in particular production and logistics, made it possible to mitigate the impact (from €9.8 million in the first half of 2013 to €5.4 million on 30 June 2014).

• MAGAZINES ITALY

In a generally uncertain climate, the second quarter saw a continuation of the downturn, albeit at a less marked level than the previous year.

In this context the Magazines Italy area – faced with an overall fall in revenues of 9.9% (-8.3% on a like-for-like basis, considering titles that were closed or sold) that amounted to €160.3 million, compared with €177.9 million in the first half of 2013 – recorded a significant increase in gross operating profit, which rose from €3.6 million to €11 million in the first half of 2014 due to the focus on the segments in which the Group is leader (fashion, well-being, cooking), the launch of new titles (Il mio Papa), the redesign of Panorama and actions aimed at the structural reduction of industrial, editorial and photographic costs, as well as labour costs.

Revenues from Mondadori titles were particularly hit by the negative trends in the markets of reference, but the Mondadori Group nevertheless managed to increase its market share in terms of value to 33.2%, compared with 32.6% in the first half of last year.

In particular:

– circulation revenues fell by 5.9% on a like-for-like basis, in a market that was down by 9.6%;
– gross advertising revenues were down by 8.5% on a like-for-like basis, in a market that was down by 11.6%;
– advertising sales for the web sites of the magazine brands recorded growth of 12.8% on a like-for-like basis compared with the same period of 2013, bucking the trend of a market that was down by 2.1% (Source: Nielsen, to May). Particularly positive results for the web sites Donnamoderna.com (+8.4%) and Grazia.it (+55.9%);
– in a market that in the first five months saw a fall of 14.3% in terms of value (internal source: Press-Di), add-on sales were down by 19.8%, following the decision to select and rationalise initiatives but, by comparison, affected also by the excellent performance achieved in 2013.

International activities

In the first half of 2014 Mondadori International Business recorded a 10% growth in revenues compared with the previous year. The increase was mainly attributable to the Grazia network which now has 23 editions around the world, the launch, last November, of the first international edition under licence of Icon and advertising sales in Italy since last October on behalf of El Pais, Spain’s leading daily newspaper.

In May, as part of the development of the digital activities of the Grazia International Network, it is worth underlining the acquisition of the marketplace London-Boutiques.com, an operation that is part of a more extensive project to launch, in the second half of the year, a global e-commerce platform using the Grazia brand.

With regard to holdings, Attica Publications, leader in the Greek magazine and radio broadcasting markets, after a positive first quarter, saw a fall in advertising revenues; Mondadori Seec Advertising Co. Ltd, the exclusive advertising sales company for the edition of Grazia published in China, saw an increase in revenues of 14% compared with the first half of 2013 and from April, the frequency of publication increased from monthly to weekly; Mondadori Independent Media LLC, the publisher of Grazia in Russia, closed the first half of the year with a fall in advertising revenues of 4%.

• MAGAZINES FRANCE

In the first half of 2014 the markets of reference in France saw a further decline, both in terms of newsstand sales (-8.1%; internal data to May) and advertising (-9.4%; internal figures based on Kantar Media data, to May).

Mondadori France performed decidedly better than the market keeping the fall to 2% in a market that was down by 8.1% and reporting growth of 50.6% in internet activities.

First half consolidated revenues generated by Mondadori France amounted to €169.9 million, -4% on the €176.9 million in the first half of 2013; on a like-for-like basis, considering the sale of Le Film Français finalised at the end of 2013 and the different number of issues of some titles, the fall was of 3.7%.

There was a marked difference in the performance of advertising revenues on print and for online: while the former saw a fall of 13.5% (-11% on a like-for-like basis), the latter were up by 49.3%, (51.1% on a like-for-like basis), as a result of which, digital sales now account for 10% of the total.

The advertising sales company remained among the main players in the market with a 10.5% share in terms of volume (Source: Kantar Media), making it the second player in the market.

Circulation revenues, that account for over 70% of total revenues, were down by 1.5% (-1,1% on a like-for-like basis):

– newsstand sales were down by 2%; some of the main titles, including Closer, Pleine Vie and Top Santé, saw growth of more than 10%;
– subscriptions remained stable thanks to the strong performance of Télé-Star, Pleine Vie and Top Santé.

During the first half Mondadori France launched a number of new products, such as Le Journal de Lucky Luke, Slam, Histoire & Jeux and Fort Boyard, and completed the redesign of L’Auto-journal Évasion, Diapason, Modes & Travaux, Science & Vie, Top Santé, Grazia and Closer, placing more focus on editorial quality.

The many activities carried out in recent quarters, and still ongoing, have made it possible, as indicated above, to launch new titles and realise significant reductions in editorial, industrial and general costs and thereby widely compensating for the fall in revenues.

Gross operating profit was up by 10.1% to €15.3 million from €13.9 million in the first half of 2013.

With regard to digital activities, since January 2014 advertising sales have been exclusively managed internally, cross-tile editorial teams have been created and some of the main properties have been updated and further enhanced with new functions for tablets and smartphones.

These efforts have had a positive impact on the audience which, in April, the latest Nielsen figures available, had reached 6.5 million unique users (+26% on 2013), with a peak of 7.8 million in January; while on mobile, the increase in unique users was 67% compared with 2013 (Source: Nielsen, to April).

Activities are also continuing aimed at creating new efficiencies, in particular, a plan has been introduced for the reduction of the structure along with a project for the rationalisation of the locations.

• ADVERTISING

The figures for the area are not comparable given that, as already mentioned, from January 2014, the advertising sale activities of Mondadori Pubblicità S.p.A., a subsidiary of Arnoldo Mondadori Editore S.p.A., were contributed to Mediamond S.p.A., a 50-50 joint-venture set up in 2009 by Mondadori Pubblicità S.p.A. and Publitalia ’80 S.p.A..

Revenues generated by the current Mondadori Pubblicità came to €5.8 million, a fall on the revenues generated by comparable activities in the first half of 2013 for the reasons outlined above.

Gross operating profit, that also includes the pro-quota results of Mediamond, consolidated on an equity basis, saw an improvement compared with the first half of 2013 (up from -€3.5 million to -€1.9 million), highlighting the first positive effects of the operation.

The revenues of Mediamond S.p.A. saw an overall increase of 1.8%.

The Mondadori brands (magazines and web) recorded a like-for-like reduction of 6.7% compared with 2013. In particular:

– the fall in advertising revenues for magazine titles amounted 8.5%, in a market of reference that was down by -11.6% (Source: Nielsen, to May);
– advertising revenues for the web sites was up by 12.8% in a segment that was down by 2.1% (Source: Nielsen, to May).

• RETAIL

Also in the first half of the year the retail market continued to show signs of weakness in consumer spending. With regard to the products sold, the book segment saw a fall of 6.6%, in terms of value, during the period, a situation that worsened in the second quarter also as the result of a lack of bestsellers. The channel that was best able to contain the downturn in revenues was the bookshop chains channel, compared with independent bookshops and large-scale retail outlets.

In the non-book area, there was growth only in gift-boxes, mobile phones and e-readers, while consumer electronics showed a general slowdown.

The 2013 figures have been reclassified to take account of the configuration introduced in the Retail area from September 2013, when Cemit Interactive Media S.p.A. was included under Other businesses and Corporate.

In the first half of 2014 the Retail area recorded revenues of €92.6 million, an 8.9% fall compared with the €101.7 million of the same period of 2013.

A breakdown of revenues by category shows that books – the most important, accounting for 74% of the total – had the best performance (+3.5%) compared with the market of reference, while consumer electronics continued to record a fall greater than the general trend in the sector.

The negative trend in the club channel continued with a fall in revenues of 20% and, finally, also online sales through inMondadori.it were also down (by around -4%).

The impact on gross operating profit (-€5.5 million from the -€6.1 million to 30 June 2014) of the reduction in revenues from the clubs and the consumer electronics segment was more than compensated by the positive performance of books and the effects of cost reductions.

To contrast the generally recessive economic environment actions, already underway in the first quarter and aimed at recovering profitability, continued. In particular:

– a progressive review of the network with actions to rationalise the sales outlets (the opening of a directly-owned and run bookstore in a new shopping mall, the Nave de Vero, near Marghera, and the closure of a number of franchise outlets), and formats for the development of a new concept for the bookshop of the future;
– the rebranding of the entire network; a new offer, above all in consumer electronics; co-marketing activities with important partners in the banking and telecoms sectors;
– the maintenance of promotional, communication and advertising initiatives to support sales and gain market share for books;
– the continuation of reorganisation efforts with the application of a solidarity procedure (20% compared with 10% in 2013) at the offices in Milan and Rimini.

• RADIO

After a positive start in the first quarter, the second quarter the radio market saw a phase of turbulence that had an impact on the performance of di R101.

Revenues generated by R101 in the first half amounted to €5.9 million, -13.2% compared with the €6.8 million at 30 June 2013

Gross operating profit (which went from -€1.6 million to -€2.7 million) was affected not only by the negative trend in revenues, but also by higher promotional and communication investments made in the second quarter to support the re-launch of the station.

Such efforts in the first half included, the launch at the end of March of the new R101, confirming greater engagement with sports events and partnerships with music events alongside national and international artists and their summer tours; the redesign of the look and content of the web site www.r101.it and the launch in June of the TV channel, on the digital terrestrial channel 66.

The launch of the TV platform, integrated with the radio station and other digital supports, will make it possible to offer a wide-ranging entertainment system.

• DIGITAL

The first half of 2014 saw the completion of the first step in strengthening the central control of the Digital Innovation area with the arrival of new and specialised resources. This has made it possible to give a greater impulse to digital projects functional to the different business units.

Total revenues were slightly down due to the fall in sales of marketing services (Cemit), while purely digital activities increased by 9.2% compared with the first half of 2013, as a result of the increase in e-books (+13%), the web sites of magazines in Italy (advertising revenues +12.8%) and France (advertising revenues +51.1%).

***

Information regarding personnel

As of 30 June 2014, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,213, a reduction of 361 (-10.1%) compared with 12 months previously and 223 (-6.5%) compared with December 2013.

Gross of extraordinary items, personnel costs (mounting to €117.4 million in the first six months) showed a significant fall (-20.7%) compared with the figures for the first half of 2013.

The significant fall in the headcount is attributable to important restructuring actions taken between the end of 2012 and last year, and is also influenced some imbalances in the scope of the company. Net of these extraordinary operations, compared with the situation in June 2013, the number of personnel was in any case down by 324 (-9.2%). The cost of personnel on a like-for-like basis, and net of restructuring charges was down by 10.9%.

***

EXPECTATIONS FOR THE FULL YEAR

In a market that still shows no clear signs of improvement, the positive performance in the first half – better than expected and the result of actions taken on the product, reorganisation and the reduction of costs, as well as the excellent performance of Magazines, both in Italy and France – makes it possible to estimate for the full year a level of gross operating profit higher than that of 2012, confirming what was stated during the presentation of the 2013 Annual Report and the Report on QI 2014.

Also the second half of the year will see a continuation of the management initiatives aimed at improving the organic capacity of the Group to generate financial resources and actions aimed at the sale/realisation of non-strategic assets, with a view to reinforcing access to the resources necessary for investment.

The net financial position is expected to be significantly better than the level in 2013.

***

The executive responsible for the preparation of the company’s accounts, Oddone Pozzi, 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 documentation relating to the presentation of the results for the first half of the year to 30 June 2014, will be made available through the authorised storage mechanism 1Info (www.1info.it), in the Investor Relations section of the company’s website www.gruppomondadori.it, on www.borsaitaliana.it and at the company’s corporate offices.

Following the entire subscription of the capital increase of a nominal €3,900,000 through the issue of 15,000,000 new ordinary shares with a nominal value of €0.26 each, as resolved by the board of directors on 17 June 2014, the share capital of Arnoldo Mondadori Editore S.p.A. is currently €67,979,168.40 and comprises 261,458,340 ordinary shares, with a nominal value of €0.26 each (statement, pursuant to Art. 2444 of the Civil Code, filed today with the Register of Companies in Milan).

The modified Articles of Association indicating the new share capital is available from the company’s website www.gruppomondadori.it (in the Governance section) and at the authorised storage facility 1Info (www.1Info.it).

Enclosed is the “Model for the communication share capital modifications” (Model 1) as per Art. IA.2.3.4. of “Instructions and Regulations for Markets Organised and Managed by Borsa Italiana S.p.A.”.

The minutes of the meeting of the board of directors held on 17 June, concerning the capital increase and pursuant to Articles 2443 and 2441 para. 4, second clause, of the Italian Civil Code, is now available at the company’s headquarters and the authorised storage resource 1Info along with the detailed directors’ report, the report by the external auditors Deloitte & Touche S.p.A. and the updated Articles of Association.

The documentation is also published in the Governance section of the website www.mondadorigroup.com and on www.borsaitaliana.it.

This Press Release is not for publication, distribution or circulation, either directly or indirectly, in the United States, Canada, Australia, Japan and South Africa or in any other country where the offer or sale would be prohibited in compliance with applicable laws.

Following the press release issued yesterday, 17 June, Arnoldo Mondadori Editore S.p.A. has announced the completion of the private placement of a total of 29,953,500 ordinary shares with a nominal value of €0.26 each at a price per share of €1.06 and a total value of €31,750,710.

The overall offer can be broken down as follows:

(i) 15,000,000 new ordinary shares with regular dividend rights, equal to 6.09% of the share capital before the operation, deriving from a capital increase divisible for a maximum nominal amount of €3,900,000, with the exclusion of option rights pursuant to Art. 2441 para. 4, second clause of the Civil Code, as resolved by the board of directors on 16 June 2014 in partial implementation of the powers authorised by the Extraordinary Shareholders Meeting of 30 April 2014 pursuant to Art. 2443 of the Civil Code;

(ii) 14,953,500 shares held by the company as Treasury Stock, equal to 6.07% of the share capital.

The placement, which was managed by Banca IMI and UniCredit Corporate & Investment Banking in the role of Joint Bookrunners, was effected by means of an Accelerated Book Building procedure targeted exclusively at “qualified investors” in Italy and foreign institutional investors, pursuant to Regulation S of the United States Securities Act of 1933, and subsequent modifications, and in the United States, restricted to “Qualified Institutional Buyers” pursuant to Rule 144A of United States Securities Act of 1933, and subsequent modifications, with the exclusion of any other country in which the placement would be prohibited by law.

The operation will be completed with the delivery of shares and payment of the amounts due on 23 June 2014.

On completion of the operation, the share capital of Arnoldo Mondadori S.p.A. will amount to €67,979,168.40 divided in 261,458,340 ordinary shares with a nominal value of €0.26.

As part of the operation, Mondadori is committed to a lock-up period of 120 days, in line with market practice for similar operations.

* * *

This Press Release is published for information purposes only, in accordance with Italian law, and should not be construed as an investment proposal, and, in any case, may not be used or considered as an offer to sell nor an invitation or offer to buy or sell to the public financial instruments by Arnoldo Mondadori Editore S.p.A..

The documentation regarding the offering of shares referred to in this press release will not be subject to approval by CONSOB or any other competent authority in Italy or abroad in accordance with applicable law and, therefore, the shares subject to the offer may be offered, sold or distributed in Italy and in other Member States of the European Economic Area which have implemented the Directive 2003/71/EC (the “Prospectus Directive”) (each, a “Relevant Member State”), subject to exemption from the provisions of the law and regulations governing public offerings, exclusively to “qualified” investors (as defined in Article 2(1)(e) of the Prospectus Directive, in accordance with the laws and regulations for implementation adopted respectively by each relevant member state, including, with regard to Italy, Article 26, first paragraph, letter b) of CONSOB regulation 16190 of 29 October 2007, and as referred to in Article 34-ter, first paragraph, letter b) of CONSOB Regulation 11971 of 14 May 1999, and subsequent modifications; herein the “Qualified Investors”), and outside of Italy and the Relevant Member States, to institutional investors in accordance with the provisions of Regulation S (“Regulation S”) in the U.S. Securities Act of 1933, and subsequent modifications (the “U.S. Securities Act”) and, in the United States, for “Qualified Institutional Buyers”, pursuant to Rule 144A of the U.S. Securities Act.

In the United Kingdom, this Press Release will be distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to financial investments as per Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, and subsequent modifications (the “Order”) or (ii) as per Article 49, second paragraph, letters a) to d) of the Order or (iii) to anyone to whom this announcement may be lawfully transmitted under applicable law (collectively, “Relevant Persons”).

This Press Release is not for distribution, directly or indirectly, in the United States (as defined in Regulation S), Canada, Australia, Japan or South Africa or any other country in which the offer or sale of such shares would be prohibited by law.

This Press Release does not constitute or form part of, an offer for sale to the public of financial instruments or a solicitation to buy financial instruments. The financial instruments mentioned herein have not been, and will not be subject to registration under the U.S. Securities Act or in Australia, Canada, Japan and South Africa or in any other country where the offer or sale would be subject to the approval of local authorities or in any case prohibited by law. The financial instruments mentioned in this Press Release may not be offered or sold in the United States of America or to US persons, unless they are registered pursuant to the US Securities Act, or hold an exemption to registration applicable under the terms of the US Securities Act.

This Press Release is not, and will not be, mailed or otherwise forwarded, distributed or sent in or from, the United States of America or in, or from, any other country where such distribution is unlawful, or intended for publication for general circulation in those countries, and the Target (including custodians, nominees and trustees) are forbidden from mailing or otherwise forwarding, distributing or sending this Press Release in, or from, the United States of America or to, or from any other country where such distribution is unlawful, or to publications with a general circulation in such countries.