Price sensitive

Oddone Pozzi was today appointed Chief Financial Officer of the Mondadori Group and will be in charge of the Finance, Procurement and Information Technology department, reporting to Ernesto Mauri, Chief Executive of Mondadori Group; Oddone Pozzi has also been appointed to the board of directors, replacing Carlo Maria Vismara who has resigned.

Born in Varese in 1963, Oddone Pozzi graduated in economics from Bocconi University in Milan. In NCR Italy since 1989, with increasing responsibilities, locally and internationally in both financial and management areas, he was appointed Director of Administration Italy.

In 1998 he joined Sisal Group as Group Director of Administration. Later in 2000, Oddone Pozzi entered Camuzzi Group as Group Director of Administration, Planning & Control and Information Technology and in 2002 in Enel Gas he was appointed Director of the Administration, Planning and Control, Real Estate and Information Technology.

In 2004 he joined Ventaglio Group as Group Chief Financial Officer in charge of Administration, Finance, Planning and Control as well as Information Technology and Investor Relations.

In 2006 he was appointed Co-Chief Executive Officer of Giochi Preziosi Group with powers to Administration, Planning & Control, Finance, Human Resources, Logistics, Information Technology and Legal and Corporate Affairs.

This Press Release is not for publication, distribution or circulation, either directly or indirectly, in the United States, Canada, Australia, Japan and South Africa or in any other country where the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.

The board of directors of Arnoldo Mondadori Editore S.p.A. has approved the offering of a maximum of 29,953,500 ordinary shares, to be effected by means of a private placement reserved exclusively for “qualified investors” in Italy and foreign institutional investors, in accordance with the provisions of Regulation S in the U.S. Securities Act of 1933, and subsequent modifications and, in the United States, for “Qualified Institutional Buyers”, pursuant to Rule 144A of the U.S. Securities Act of 1933, and subsequent modifications any case, with the express exclusion of any other country in which the placement would be prohibited by applicable laws (“Target”).

The approved operation is functional to finding new resources in the capital market in order to strengthen the financial structure in support of the development objectives of the Group.

The proposed operation will also enable the company to expand, while limiting the dilutive effects for existing shareholders, of the shareholder base.

The overall offer can be broken down as follows:

(i) a maximum of 15,000,000 new ordinary shares with regular dividend rights, equal to 6.09% of the current share capital, 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 today 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.

Both the new and Treasury Stock shares will be offered as part of the private placement, by means of an Accelerated Book Building (ABB), reserved to the Target.

To this end, with regard to the operation, the company appointed Banca IMI and UniCredit Corporate & Investment Banking, as Joint Bookrunners.

The definitive price for the new shares, which will be the same as that for the sale of treasury stock, will be determined at the conclusion of the book building process, in compliance with the criteria resolved by the board of directors as well as in compliance with the dispositions of Art. 2441, para. 4, second clause of the Civil Code regarding the exclusion of option rights within a limit of 10% of the share capital.

The book building process will begin immediately and may be concluded at any time. The final terms will be promptly communicated to the market.

In the context of the operation, Mondadori has made commitments 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, 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, 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.

Arnoldo Mondadori Editore S.p.A. has announced that the interim report for the first quarter of the year to 31 March 2014 is now available at the company’s corporate offices, on www.borsaitaliana.it and www.gruppomondadori.it (Investor Relations section).

Also available to the public at the company’s corporate offices, on www.borsaitaliana.it and www.gruppomondadori.it (Governance section), are the minutes of the ordinary and extraordinary sessions of the Annual General Meeting of the Shareholders held on 30 April 2014, together with the modified text of the Articles of Association.

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 quarter of the year to 31 March 2014, as presented by the Chief Executive, Ernesto Mauri.

THE MARKET SCENARIO

At the macroeconomic level, there were still no signs of an improvement in Italy or France, the countries of reference for the Mondadori Group, in the first months of the year.

In particular, there was a continued downturn in both the book and consumer magazine markets compared with the same period of the previous year.

In Italy:
– the trade books market was down both in terms of copies sold and value (-6.8% and -5.3% respectively);
– in the two-month period January-February the magazine market was affected by a further decline in advertising spending (-14.7%): and both circulation and add-on sales were also down, by -12.8% and -19.3% respectively.

In France:
– circulation, only in the newsstand channel, was down by 8.1%;
– advertising was down by 10% (internal data).

MONDADORI IN THE FIRST QUARTER 2014

The consolidated revenues of the Mondadori Group were down by 8.3% to €268.3 million: on a like-for-like basis, taking account of the attribution from 1 January 2014 of the advertising sales to Mediamond, consolidated on a net equity basis, the reduction was of -6.5%.

Despite the difficult context, all of the Mondadori businesses – in particular Magazines Italy – performed better than in the corresponding period of the previous year, with the single exception of books that will have a much stronger editorial programme in the second half of the year.

The activities carried out in the period on the products and the results of actions taken to cut operating costs have resulted in an improved consolidated EBITDA that was up €10.2 million on the same period of 2013 (+€ 5.6 million in 2014 compared with -€4.6 million in 2013).

Moreover, net of non-recurring items, there was also an improvement in gross operating profit, which rose from €0.1 million to €5 million.

The results achieved to date with the marked reductions in operating costs, which have focused on industrial, logistical and editorial costs, make it possible to forecast an improvement in the savings objectives indicated in the plan (€100 million by the end of 2015). In terms of personnel, in the first quarter there was a further reduction of 166 people (-4.8%) and the total headcount is currently 356 down on the figure at 31 March 2013 (-9.8%).

GROUP PERFORMANCE IN THE PERIOD TO 31 MARCH 2014

The following table presents an overview of the figures for the first quarter of 2014. It should be remembered that the figures are not comparable due to the contribution of the advertising sales business activity of Mondadori Pubblicità S.p.A. to Mediamond S.p.A., which became effective from 1 January 2014.

Consolidated net revenues came to €268.3 million, a fall of 8.3% on the €292.7 million of Q1 2013; net of the effects of the contribution of the advertising sales business the fall was of 6.5%.

Consolidated gross operating profit net of non-recurring items showed an improvement of €5 million, compared with the €0.1 million of the previous year.

Consolidated gross operating profit rose to €5.6 million, compared with a loss in the same period of the previous year of €4.6 million.

Consolidated profit before taxation showed a loss of -€5.8 million (-€15.6 million in 2013) with amortisations of €5.5 million (€6 million in 2013) and financial charges of €5.9 million (€5 million in 2013).

There was a consolidated net loss for the period of €6.4 million, compared with -€15.3 million in 2013.

The Group’s net financial position shows a deficit of €396.5 million, compared with -€363,2 million at 31 December 2013, but in any case lower than the same period of last year. The period was significantly affected by the restructuring costs of the previous year and investments in the educational area.

Information regarding personnel

At 31 March 2014 permanent and temporary staff in the companies of the Group, totalled 3,270 and total labour costs for the period amounted to €59.3 million (-16.7% million compared with €71.2 million on the same period of 2013).

Total like-for-like headcount, taking account of the integration of advertising sales in Mediamond (that involved the transfer of 45 employees), was down by 8.7% (or 311 units); labour costs, also net of the impact of restructuring, was down by 11% (or €7.7 million).

These reductions are the result of a range of reorganisation and restructuring operations, begun between 2012 and 2013, the effects of which are being felt month by month.

Two other operations, finalised in March, should also be noted: the sales of the magazine titles Ciak and PC Professionale and the closure of the Mondadori Direct logistics centre in Brescia with the consequent concentration of operations at the Mondadori book depot in Verona.

· BOOKS
In the first quarter of 2014, there was a downturn in the trade books market, both in terms of copies sold and revenues (-6.8% and -5.3% respectively; Source: Nielsen), compared with the same period of 2013.

The Mondadori’s market share remained stable, confirming the Group’s market leadership.

First quarter revenues for the area came to €56.8 million, a 10.1% fall on the €63.2 million in Q1 2013.

In trade books, the Group’s first quarter performance, with revenues down by 9.6% on 2013, was affected by evident difficulties in certain channels, in particular large-scale retail, and in the paperback segment, as well as an editorial programme that was not especially strong.

In any case, the list of the top selling 2,500 titles in the quarter, which accounts for 42% of the market in terms of copies, saw the Mondadori Group accounting for over a third, thanks to positive results in both bookstores and large-scale retail. In the top 10 bestsellers list for the quarter, the Mondadori Group was responsible for the publication of 4 titles.

Also of significance in the trade area was the launch, at the beginning of May, of the first ten titles in the Flipback format, a new book product that is one of the most important new editorial initiatives of the year thanks to the particularly innovative characteristics: the size, the paper and the way in which it is read.

In e-books, the growing trend in download revenues continued (+57% on the previous).

As regards educational books, the first quarter was characterised by the seasonality of the business and consequently revenues in the period were not significant.

The trend in the market of reference and the consequent trend in revenues of the Book Area resulted in a fall in gross operating margins compared with the first quarter of 2013. However, the effect of the downturn was mitigated thanks to specific efforts to reduce costs in a number of areas, in particular production and logistics. The figures for the first quarter were significantly affected also by the investments to reconfigure the Mondadori Education catalogue, that markedly increased the number of new titles produced during the period.

· MAGAZINES ITALY
The first three months of 2014 saw the evident effects of the rationalisation policy for the magazine portfolio (the closure of the titles published by the joint-venture ACI-Mondadori and the sale of PC Professionale and Ciak), continuing improvements to product quality (the relaunch of CasaFacile and redesign of Panorama) and the launch of a new weekly Il mio Papa.

All of this, along with the cost reductions made in recent years and, in particular, in 2013, resulted in a marked improvement in gross operating profit, which rose from €2.6 to €7.5 million compared with the first quarter of 2013, despite the fall in revenues.

The Magazines Italy Area generated Q1 2014 revenues of €81.3 million, an 8.4% fall on the €88.8 million of Q1 2013.

In particular:
– circulation revenues for Mondadori titles were affected by the negative scenario and, despite out-performing the market (-12.8%: internal data: Press-Di), were down by 5.6%, net of titles closed or sold;
– advertising revenues were down by 7.4%, in a market that lost 14.7% (Source: Nielsen, February);
– there was substantial growth in advertising sales for the web sites of the magazine brands (+24%), despite a market that was down by 6.3% (Source: Nielsen, February);
– add-on sales contained the decline in revenues to 14.4%, in a market that lost 19.3% (internal data: Press-Di).

International activities

Mondadori International Business ended the first quarter of 2014 with revenues that were in line with those of the previous year. The slight fall in revenues from royalties related to licensing was compensated by bigger commissions on advertising sales made on behalf of foreign partners in the Italian market (total sales in the quarter were up by 9% on the same period of 2013).

Among the editions launched in the last year, of particular note is the performance of the first edition of Icon, distributed in Spain in partnership with Gruppo Prisa since last November. In terms of advertising sales, Mondadori International Business has expanded the number of foreign publishers for which it operates as an agent.

In terms of investments, Mondadori Seec Advertising Co. Ltd, the advertising sales company for Grazia China, recorded a 12% growth in advertising revenues in the first three months of 2014 compared with the same period of 2013 and from April the frequency has been increased to weekly; Mondadori Independent Media, the joint-venture that publishes Grazia in Russia, recorded first quarter revenues in line with the previous year, despite the difficult political situation in the country that in part had an impact on advertising spending; Attica Publications, Greece’s leading magazine publisher and a major radio broadcaster, benefitted in the first quarter in advertising sales that were up compared with 2013 (+5% in print and +4% on radio).

· MAGAZINES FRANCE
The Magazines France Area generated Q1 revenues of €81.7 million, a slight reduction (-1.6%) on the €83 million of Q1 2013; given the change of scope, due to the sale of Le Film Français in December 2103 and an additional issue in 2014, compared with the previous year, of Télé-Star, Télé-Poche and Auto-Plus, the fall in revenues is steady at 2.2%.

In the first quarter of the year circulation revenues, which account for around 73% of the total for the period, were stable (-0.1% on a like-for-like basis). Like-for-like newsstand sales were down by 1.4%, an excellent result given the current state of the market (-8.1% at the end of March; Source: Mondadori France Diffusion): of particular note were the sales of the weekly Closer (+25% in terms of volume) and the monthlies Pleine Vie (+24%) and Top Santé (+25%) and the positive reactions to the recent launch of new products, such as 750g, Slam and Histoire & Jeux. Subscription revenues, meanwhile, were stable (-0.8% on a on a like-for-like basis).

In terms of advertising sales, in the context of a difficult market (-10%; internal source), Mondadori recorded a 10.5% drop in revenues, on a like-for-like basis.

In the first quarter of 2014, Mondadori France, significantly increased its digital revenues (+41.3% on 2013); the growth came from the activities of the properties (+40.6%) as well as from the pure player NaturaBuy (+46%). There was also a significant increase in traffic, with 7.8 million uniques, also as a result of the scoop by Closer.

Advertising sales for the sites, managed internally since January 2014, recorded 39% growth in the first quarter and now accounts for 9% of the total advertising revenues of Mondadori France.

A number of initiatives launched in recent years now make it possible to realise significant economies of scale, in particular with regard to overheads, industrial costs and the cost of managing subscriptions, making it possible to increase gross operating profit, despite a fall in revenues.

In terms of cost reductions, efforts continue to improve efficiency, in particular, in the first months of the year, a voluntary redundancy plan was introduced (with the aim of reducing the headcount by between 10% and 15% in 3 years) and well as a plan to bring the entire staff together under one roof (in December 2014).

· ADVERTISING
The consolidated figures from the area are not comparable given that, as already mentioned, from 1 January 2014, the advertising sales business of Mondadori Pubblicità S.p.A., a subsidiary of Arnoldo Mondadori Editore SpA, were contributed to Mediamond SpA, the 50-50 joint-venture set up in 2009 by Mondadori Pubblicità SpA and Publitalia ’80 SpA. For Mondadori this operation was part of a wider process of innovation of the business model that will contribute to the further affirmation of the Group’s leadership thanks to a new approach, supported by significant synergies and models of offer more suited to the new conditions of the market.

The revenues from the activities of the current Mondadori Pubblicità amounted to €3.9 million; which, on a like-for-like basis and net of the business contributed to Mediamond, were slightly up.

Gross operating profit, that includes the pro-quota results of Mediamond, showed a marked improvement compared with the first quarter of 2013, highlighting the positive effects of the aforementioned operation.

In particular, the first quarter revenues of Mediamond, which is consolidated on an equity basis, taking account of the revenues generated by Mondadori Pubblicità in the same period of 2013, were up by 12.3%.

Specifically:
– the print and radio segments (the part contributed by Mondadori Pubblicità) recorded an increase in revenues of 8.5% (-7.4% for print, compared with a market average of -14.7% at the end of February, and revenues that more than doubled for radio, also as a result of the big changes compared with the previous year following the addition to the portfolio of new radio stations, including Radio Italia, from mid-April 2013, Radionorba and Radio Subasio, at the end of 2013, and Radio Sportiva, from the beginning of 2014);
– advertising sales for the web increased by 24% in a market that was down by 6.3% (Source: Nielsen, February).

• RETAIL

The market of reference for the Retail Area was particularly affected by negative trends of the book market and of consumer electronics, which saw a general downturn in the period, with the single exception of e-readers, that saw double-digit growth, but always within strict limits.

In Q1 2014 Retail Area – which as 19 directly-owned bookstores, 315 franchised bookstores, 186 edicolè, 8 multicenters and 21 club bookstores, and the e-commerce activities of InMondadori.it – generated revenues of €47.2 million, a fall of 6.9% on the €50.7 million of the same period of 2013.

Of particular note during the period was the market share of Retail Area in the book sector which rose from 13.7% in 2013 to 14.3% in 2014, also as a result of renewed communication and promotional activities.

There was a continuation of the negative trend in the club channel that has seen a fall in revenues of around 20%. And, finally, also the sales generated through the InMondadori.it site were down by 4.7%.

In terms of gross operating profit, compared with the same period of last year, the franchise channel remained profitable and the directly-owned outlets (bookstores and multicenters) saw a consistent recovery in margins thanks to the closure of a number of non-profitable bookstores.

In the club channel, the effects deriving from the rationalisation of the network of stores and recruitment efforts made it possible to maintain a level of profitability comparable to that of the previous year.

Also the e-commerce channel benefitted in the first quarter from the reductions in structural costs.

In the context of a generalised recession, a number of activities have already been put in place aimed at the recovery of market share and profitability. In particular:
– the progressive revision of the network and the format of the stores;
– communication activities and advertising aimed at sustaining sales and building market share, in particular for books;
– the ongoing rationalisation of Club recruitment activities (-13%);
– strict cost controls on the management of sales outlets and the renegotiation of rents;
– ongoing reorganisation efforts: the application of solidarity contracts (20% compared with 10% in 2013) at the central offices in Milan and Rimini and the exit from the activities of the business of the management of logistics for the club and on-line channels, now run by the parent company.

• RADIO

After a significant downturn in 2013, the advertising market in Italy started the year weakly, recording a further slide, in February (Source: Nielsen) of 4.3% with all media in negative territory with the sole exception of radio, which grew by 7.5%.

In this context, advertising sales for R101 generated revenues of €2.6 million, in line with the same period of the previous year.

Thanks to a series of actions to review and optimise the structures and the different timing of promotional support and communication, gross operating margins while remaining negative, nevertheless improved.

The end of March, confirming the importance attributed to the radio station within the Group, saw the presentation of the new R101 with a renewed editorial line, a new logo, a new pay off “the Music” and a series of new features for listeners. These changes were accompanied by intense promotional activities in support of the new format, with the launch of partnerships with TV programmes and the reinforcement of links with Italian and international music, thanks to the involvement with tours by a number of internationally renowned artists and groups

• DIGITAL

During 2013 the Digital Innovation Area was set up with the aim of not only accelerating growth in the digital market, but also structuring the processes of innovation and identifying new business development opportunities. The new structure is engaged in the development of marketing services and e-commerce activities, as well as providing support for the activities of Cemit Interactive Media SpA.

In the first months of 2014, in line with already established programmes, efforts continued to strengthen the various teams with the hiring of new resources dedicated to CRM, the spread of the Mondadori loyalty card, marketing services and the technological development of new projects to provide direct support for existing digital activities inside the book, magazine and retail areas.

During the period, the activities of the recent acquisition Anobii was included in the scope of the area.

In the first quarter of the year turnover remained stable compared with the first months of 2013, as a result, on the one hand, of significant growth in e-books (+57%) and the web sites of the Italian magazine titles (+24%) – including Donnamoderna.com (+23.8%), Grazia.it (+43.5%) and Panoramauto.it (+5.2%) – and in France (+39%); and, on the other hand, a reduction in the revenues of Cemit and inMondadori.it.

EXPECTATIONS FOR THE FULL YEAR

In a market context that is still not showing signs of improvement, the positive results of the first quarter, the result of actions taken on the products, the reorganisation and cost reductions, make it possible to forecast a higher level of profitability (EBITDA) for the full year than 2012, confirming what was already stated at the time of the presentation of the 2013 Annual Report.

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The Board of Directors of Mondadori also approved the 2013 Sustainability Report, prepared according to the guidelines of the GRI standard G3.1, with the application level B+.

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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 documentation relating to the presentation of the results for the first quarter of 2014 is available at the company’s registered office, on the web site www.borsaitaliana.it and on the web site www.gruppomondadori.it (Investor relations section).

The Annual General Meeting of the Shareholders of Arnoldo Mondadori Editore S.p.A., met today under the Chairmanship of Marina Berlusconi, to examine the Group’s consolidated financial statements that show a consolidated net loss of €185.4 million and to approve the company’s Annual Report for the year ended 31 December 2013. The Annual General Meeting also deliberated, in line with a proposal resolved by the board of directors, to make up the entire net loss for the period of the parent company, amounting to €314,970,500.44, by drawing the corresponding sum from reserves.

The Shareholders also passed resolution on the following items on the agenda:

RENEWAL OF AUTHORISATION FOR THE BUY-BACK AND UTILISATION OF TREASURY SHARES

Following the expiry of the term fixed for the authorisation issued at the Annual General Meeting of 23 April 2013, 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, during the period of the previous authorisation, the company bought made no buy-backs or utilisations of company shares.

The total number of shares comprising treasury stock held by Arnoldo Mondadori Editore SpA is currently 14,953,500 (6.067% of the share capital).

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 directly holds a total of 14,953,500 shares, the new authorisation consequently foresees the possible acquisition by the Board of Directors of an additional 9,692,334 ordinary shares, or 3.933% 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 2273/2003, 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 company shares will remain valid until the AGM for the approval of the Annual Report for the year to 31 December 2014, and in any case, for a period of not more than 18 months from the date of the Shareholders’ resolution.

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REMUNERATION REPORT

The Shareholders approved the policy outlined in the first section of the Remuneration Report, for fiscal 2014, regarding the compensation of directors and executives with strategic responsibilities.

RENEWAL AND ATTRIBUTION OF POWERS TO THE BOARD OF DIRECTORS PURSUANT TO ARTICLES 2443 AND 2420-TER OF THE CIVIL CODE

In extraordinary session, the Shareholders adopted, in line with the proposals of the Board of Directors, resolutions, pursuant to the terms of Articles 2443 and 2420-ter of the Civil Code, regarding the powers of the Board to effect a capital increase and issue convertible bonds.

Specifically the Shareholders resolved:
– the renewal of powers already granted to the Board of Directors by the Shareholders on 29 April 2009 and due to expire at the end of its five-year term, regarding, in accordance with Articles 2443 and 2420-ter of the Italian Civil Code, the attribution of powers to the Board of Directors to increase, with no expectation of excluding option rights, the share capital by a maximum nominal amount of €78,000,000 and to issue convertible bonds for a maximum nominal amount of €260,000,000. The renewal was approved at the same conditions as that about to expire and not used by the Board for a further period of 5 years, in line with the maximum term foreseen by law;
– the attribution to the Board of Directors, for the same five-year period, of additional power to increase the share capital, within the limit of 10% of the existing share capital and excluding option rights, in accordance with Articles 2443 and 2441, clause 4, second paragraph, of the Civil Code.

The resolutions for renewal and granting of powers are motivated by the opportunity to maintain and attributing to the Board of Directors the authority to implement, more effectively, efficiently and flexibly, with respect to the resolutions of the Extraordinary Shareholders’ Meeting, capital transactions aimed at strengthening the financial structure to support the development objectives of the Group, and specifically, as previously disclosed to the market, both the consolidation of business lines with higher added value and a recovery of profitability in the magazine area through both external lines and, in particular, in the digital area.

With specific reference to the powers to effect a capital increase with the exclusion of option rights within the limit of 10% of the existing share capital, an offer addressed to third parties could constitute a valuable way of increasing the free float and make it possible to maintain at all times an adequate level of liquidity, or be functional for the entry into the capital of the company of accredited investors, while limiting the dilutive effects for existing shareholders.

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 2013, the Directors’ Report and the statements pursuant to Article 154 bis paragraph 5 of 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. (www.borsaitaliana.it) and on the web site www.mondadorigroup.com (in the “Governance” section).

Likewise, the company has also published the report on corporate governance and the ownership structure, with reference to 2013, and the Report on Remuneration pursuant to Art. 123-ter of Legislative Decree n.58/1998.

Arnoldo Mondadori Editore SpA has announced that Directors’ reports on the following items on the agenda of the Ordinary and Extraordinary Shareholders’ Meeting, to be held on 30 April 2014 (2 May, on second call) are available at the Company’s registered office, as well as Borsa Italiana SpA and on www.gruppomondadori.it (in the Governance section):

– To authorise the board of directors to buy back and utilise ordinary shares, in line with articles 2357 and 2357-ter of the Italian Civil Code.

– Proposal to attribute to the Board of Directors powers pursuant to Articles 2443 and 2420-ter of the Civil Code:

• Renewal of the authorisation to the Board of Directors, pursuant to Art. 2443 of the Civil Code, of the right to increase, on one or more occasions, the share capital, reserved holding option rights, within a period of five years from the date of the resolution, for a maximum nominal amount of €78,000,000; and the consequent amendment of Art. 6.6 of the Articles of Association and related resolutions.
• Renewal of the authorisation to the Board of Directors, pursuant to Art. 2420-ter of the Civil Code, of the right to issue, in one or more occasions, convertible bonds, within a period of five years from the date of the resolution, for a maximum nominal amount of €260,000,000; and the consequent amendment of Art. 6.6 of the Articles of Association and related resolutions.
• Attribution to the Board of Directors, pursuant to Art. 2443 of the Civil Code, of the right to increase, on one or more occasions, the share capital, within the period of five years from the date of the resolution, with the exclusion of option rights pursuant to Art. 2441, paragraph 4, second sentence, of the Civil Code, through the issue of a number of shares not exceeding 10% of the total number of shares comprising the share capital of Arnoldo Mondadori Editore on the date of the exercise of such powers and for a nominal amount not more than €20,000,000; and the consequent amendment of Art. 6.6 of the Articles of Association and related resolutions.

Further documentation concerning the AGM will be made available in the manner described above, within the period foreseen by current legislation.

The notice calling the AGM, along with the agenda, has been published today on www.gruppomondadori.it (in the Governance section) and in the newspaper specified in the notice

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 2013 as presented by the chief executive, Ernesto Mauri.

MARKET SCENARIO
The macroeconomic situation in Italy in 2013 was once again characterised by a marked downturn in the main economic indicators that were even worse than the already dramatic decline recorded in 2012.

Only in the final quarter of the year were there some signs of a modest recovery in economic activity, albeit in an unfavourable climate due also to the lack of dynamism in some emerging countries’ economies.

This recessionary situation, combined with significant technological and structural changes in the sectors in which the Group operates had a significant impact, in particular in Italy where:

– the book market saw a fall in terms of value of -6.2% (-13.8% in the last two-years);
– the magazine market was severely affected by the ongoing slump in advertising expenditure, down by 23.9% (-38% in the period 2012-2013) while also circulation was down in value terms by 11.2% (-23.3% in the last two-years); while the decline in add-on sales was even more marked: -23.4% (-35.2% in the last two-years).

Also in France the economic picture was affected by the general crisis in the Eurozone: specifically:

– the magazine market in which Mondadori France operates recorded a marked fall compared with the previous year, especially in advertising -9.2% (-13.7% in the last two-years); while also circulation was down in terms of value by 6,7% (-11.7% in the period 2012-2013).

2013 AT MONDADORI

2013 was a year of change for the Mondadori Group as, in response to the market scenario outlined above, the Group embarked on a series of fundamental operations, both in terms of organisation and operating processes, aimed at bring the cost structure into line with the revenues trends of the traditional businesses and to ensure adequate resources to the excellence of the products and for businesses in development.

Organisational changes have affected almost the whole of the Group, with the redefinition of the responsibilities of both central and business functions and the renewal of most of the first line management.

As part of efforts to reduce operating costs, the “change of pace” plan, which foresees overall savings of €100 million by the end of 2015, touched on all cost items: among the most significant among the many measures introduced have been reductions in industrial costs (paper and printing), editorial costs and logistics (office space, retail outlets and distribution).

During the year total headcount (3,436 at year end), both permanent and temporary contracts, was down by 267 (-7.2% of the total on 31 December 2012) both through the ongoing review of organisational structures and extraordinary restructuring initiatives in all of the companies of the Group: excluding non-recurring costs related to restructuring, total personnel costs in 2013 were 10.1% lower than the previous year.

GROUP PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2013
The consolidated financial statements for 2013 also feature:

– restructuring costs and other non-recurring charges of €61.9 million, mostly attributable to reorganisation activities;

– write-downs of €145.4 million, following the impairment process that has aligned assets and holdings to values that conform to the current market situation.

Below, are the consolidated results for the year 2013, compared with the figures for the previous year, that have been adjusted as a result of the application of the new IAS 19: the income statement to 31.12.2012 shows an improvement in gross operating profit of €1.6 million and in net profit of €1.2 million compared with the previous year.

Consolidated net revenues came to €1,275.8 million, a fall of 9.9% on the €1,416.1 million in 2012.

Consolidated gross operating profit, net of non-recurring items came to €49.1 million, a 32.2% reduction on the €72.4 million of the previous year: non-recurring items not included refer to restructuring costs of €50.4 million (€18.8 million in 2012) and other charges of €11.5 million (income of €14.5 million in 2012).

Consolidated gross operating profit showed a loss of €12.8 million, compared with a profit in the previous year of €68.1 million.

The consolidated operating loss for the year came to -€183.1 million (-€149.9 million in 2012) following impairments of €145.4 million (€194.3 million in 2012).

The impairments refer to Mondadori France for €99.3 million (€140 million in 2012), R101 for €31.1 million (€46.3 million in 2012) and related investments and other assets for €15 million (€8 million in 2012). Amortizations in the year amounted to €24.9 million (€25 million in 2012).

Consolidated pre-tax losses for the year amounted to -€207.3 million (-€172.1 million in 2012) with financial charges of €24.2 million (€22.2 million in 2012).

The consolidated net loss came to -€185.4 million, compared with -€166.1 million in 2012.

The Group’s net financial position showed a deficit of -€363.2 million, compared with a deficit of -€267.6 on 31 December 2012, a result of the impact of financial outlays related to the restructuring process carried out during the year.

It should be pointed out that in November 2013 all of the Group’s credit lines were renegotiated.

THE BUSINESS AREAS

• BOOKS

The 2013 revenues of the Book Area amounted to €334.3 million, a 9.8% fall on the €370.6 million of 2012.

Trade books confirmed their leadership with a market share of 27%, with an editorial programme that enabled the Group’s brands (imprints) to have an average of 10 titles among the top 20 bestselling books of the year and to be in the top position for 23 weeks out of 52.

In terms of profitability, comparison with 2012 was particularly tough due to the “Fifty shades” phenomenon, which significantly stimulated margins; there was a very positive trend in the development of e-books (+70%) with 2 million downloads and the number of titles available in a digital format has now risen to almost 6,000 with a market share of over 40%.

It was a successful year for the educational and art books sector: with the educational area increasing its market share, after years of decline, to 13%, thanks to an extensive and appealing offer at all school levels while in the art publishing segment, thanks to the management and organisation of exhibitions, there was an increase in revenues in the year of 12.7%.

The importance of the Group’s activities in these sectors is underlined by the increase in profitability, despite a difficult market environment.

• MAGAZINES ITALY

The Magazines Italy area saw the biggest concentration of reorganisation and cost reduction activities during the year. These were focused on industrial costs and all the items that come under editorial costs, as well as personnel reductions.

In terms of the products, with the closure of 4 titles the Group’s portfolio was strengthened while the reorganisation of the editorial departments for TV guides and the wellness segments made it possible to confirm the Group’s leadership market (38%) through the re-launch of the main titles.

2013 revenues for the area amounted to €326.1 million, a 15.1% reduction on the €383.9 million of 2012 (-13.7% on a like-for-like basis). In particular:

– circulation revenues (-7% on a like-for-like basis) were penalised by a fall in newsstand sales and subscriptions;
– revenues from add-on sales (-13.7%) – while down, for a strategic decision to focus on the rationalisation of the initiatives – maintained their market leadership, with a more than 40% share and a high level of profitability;
– advertising revenues for Mondadori titles (-24.5% on a like-for-like basis) were affected by a decline in both weeklies and monthlies.

The performance of the Group’s leading web sites was very positive with revenues rising by 7.3% in a market that was down by 1.8%. In particular, Donnamoderna.com confirmed its position as the second most popular web site for women in terms of unique users (an annual average of 4.5 million, an increase of 20%), Grazia.it also saw its audience grow by 28% while the percentage growth of other sites were even higher.

With regard to the Group’s international activities, which continue to grow significantly, Mondadori International Business recorded revenues of €10.2 million, an increase of around 10% on 2012.

The number of editions of Grazia rose to 23 following the launch of the magazine during the year in Spain, Korea and Mexico. The year also saw the launch of Icon in Spain, distributed with El Pais.

Despite the difficult market conditions, the aggregate revenues generated by the international network came to €154.8 million, a fall of 4.2% compared with 2012.

In this context, advertising revenues came to €10.6 million, a rise of 14%, thanks also to an expansion of the international client portfolio.

Regarding the investments, there was an excellent revenue performance by the joint venture in China (+18%) while the Russian JV was essentially stable. Meanwhile, despite a negative performance during the year (-11%), Attica Publications recorded a reversal in the trend in the final quarter.

• ADVERTISING

The most important organisational change for the Group, implemented in 2013 and effective from the beginning of 2014, was the contribution of the advertising sales for magazines and radio (R101 and other radio stations under licence) to Mediamond, the joint venture with Publitalia ’80, that already managed the sale of advertising for the Mondadori web sites, as well as those of R.T.I. and a number of third parties

As a result of this operation, Mediamond is now Italy’s most complete advertising sales company, able to offer an integrated commercial package for print, web and radio, with the creation of a radio network that is the leader in the market with an daily average of 9.7 million listeners.

Thanks to this operation the Group will have a greater capacity to face a market that is expected to continue to decline, also in 2013, and in which all segments have shown negative trends.

2013 revenues generated by Mondadori Pubblicità amounted to €141.6 million, a fall of 18.1% on the €172.9 million of 2012. In Particular:

– advertising sales for magazines of the Mondadori Group were down by 29.7% on 2012; the figure was -23.6% on a like-for-like basis, essentially in line with the market;
– advertising sales for radio in 2013 were up by 41.8% thanks mainly to the acquisition of the sales contract for Radio Italia, to which were added Radio Subasio and Radio Norba;
– with regard to the Internet, the joint venture Mediamond generated revenues of €45.4 million (+21.6% on 2012) with results that were substantially better than the market.

• MAGAZINES FRANCE

Despite a market that has been in decline for two years, the Magazines France area continued and intensified efforts in brand extensions and to reduce costs that resulted in the maintenance of a still good level of profitability, with total revenues in 2013 amounted to €353.9 million, a fall of 7.3% on the €381.6 million of 2012.

In an advertising scenario strongly conditioned by the economic crisis (-6.2% in terms of volume, Source: Kantar Media), the sales company of Mondadori France performed better than the market (-4.5% in terms of volume) and saw its market share rise to 11% (+0.2%), confirming its position as France’s second magazine advertising sales company. The women’s haut de gamme titles (Grazia and Biba) remained the most important advertising segment for the Group, with revenues that were 32.9% of the total.

Circulation sales from newsstands and subscriptions, which account for around 70% of total revenues, were down by 6.1%. In particular, newsstand revenues fell by 6.8%, in line with the market of reference.

In the digital sector, there was a significant increase in the average audience of the Group’s sites (+25%), with unique users in December totalling 6.3 million, while at the same time revenues grew by 23.8%.

For the future, the company is pursuing further reductions in costs and during 2013 a project was launched to the digitisation of the editorial teams which will enable the editorial staffs to work with a single production flow and to make use of content produced across all platforms, print and digital.

• RETAIL

The retail area in 2013 generated revenues of €225 million, a fall of 8.2% on the €245.2 million of 2012. The year was characterised by a number of important changes:

– in terms of management, with the arrival of significant professional figures with established experience in the sector, followed by an extensive review of the structure;
– the closure of outlets and the development of higher potential locations;
– the expansion of the “non-book” assortment (stationery, toys, own label) and IT products also related to reading (e-readers), along with an ever-more complete offer of books (160,000 titles);
– the loyalty project, with the development of the Mondadori Card, of which 1,150,000 had been issued by the end of the year.

Particular attention has also been given to cost reductions through a simplification of the corporate and organisational structures, the renegotiation of rental agreements and a review of the logistical chain (offices and warehouses).

• RADIO

Also at R101 2013 was a year of change with a market in continuous decline (-9.3%) during which the reduction in budgets in important sectors (auto, large-scale retail, telecoms) had a significant impact.

In this context R101 recorded revenues of €11.3 million, a fall of 18.7% on the €13.9 million of 2012.

Confirming the strategic role R101 has for the Mondadori Group, the alliance with radio Italia has been consolidated and reinforced. Following the launch of the advertising concessions, in 2014 the relationship was extended to cover also programming and marketing, which has been entrusted to professionals from the sector in order to further enhance the identity of R101 in the Italian radio market.

On 25 March the creation of the new R101 was announced, with the presentation to the market of a completely revised editorial line, new commercial policies and partnerships with television programmes and important sporting events.

• DIGITAL

Similarly important in structural terms, a business model was defined in 2013 that envisages Digital as the cross-company driver for all of the Group’s activities, and consequently led to the hiring of specific new competencies aimed at enhancing the Group’s technological know-how, editorial content and the development of new activities.

Digital-based revenues at the end of 2013 amounted to €60.2 million (-4.3% compared with the €63 million in 2012), and included activities in the various areas of the Group, including the e-books published by the Trade Books area (+70%), the Group’s main sites in Italy (+7.3%), and in France (+23.8%) and the e-commerce site inMondadori.it (which saw a slowdown in sales).

RESULTS OF THE PARENT COMPANY ARNOLDO MONDADORI EDITORE S.P.A.
The Annual Report of the parent company Arnoldo Mondadori Editore S.p.A. on 31 December 2013 shows a loss of €315 million, higher than that of the previous year, which came to €39.6 million, essentially due to:

– the results of the Group’s businesses, in the difficult market environment of reference;
– organisational changes, involving the top management, editorial structures – in particular for magazines – and central functions, that resulted in significant non-recurring costs;
– the non receipt of dividends from the companies of the Group due to the poor results of the previous year;
– as well as the process of evaluation of the recoverable value of subsidiary and associated assets which, for the second consecutive year, resulted in significant impairment losses for a total of around €275 million.

FORECAST FOR THE FULL YEAR
In a market that is still not showing clear signs of a reversal in the trend, the performance of the Group’s businesses in the first months of 2014 is ahead of expectations: in addition to the positive results of the businesses and editorial products, there is also evidence of the effects of the reorganisation efforts and cuts in operating costs made in 2013.

This, and the substantial reduction of non-recurring charges in the current year, make it possible to estimate for the end of the year substantial growth in gross operating margins and higher than in 2012.

Among the most important new initiatives in the first three months of 2014 were:

– the launch of Il mio Papa, the world’s first weekly entirely dedicated to the Holy Father which, after the great success of the first issue, sold over 300,000 copies of the second;
– the acquisition of the brand and assets of the social reading service of Anobii Ltd, a platform with over a million users around the world, of which more than 300,000 in Italy;
– the scoop by the French weekly Closer about President François Hollande that sold a record number of more than 600,000 copies. The magazine has confirmed its position as the main point of reference among people titles in the country;
– the launch of the new R101, with a completely new editorial line and the presentation of new commercial partnerships;
– the launch of a revamped Panorama the first issue of which had 110 advertising pages, 40 of which for the fashion sector.

GUIDELINES OF THE 2014-2016 PLAN: CONSOLIDATED GROSS OPERATING PROFIT AT THE END OF THE PERIOD OF MORE THAN €100 MILLION
The macroeconomic scenario for the current year doesn’t appear to offer much that is different from last year, if not an inversion of the trend in GDP. Meanwhile, an improvement, in a situation that remains volatile, is expected in 2015-2016.

With regard to the trends in the main markets in which the Mondadori group operates, it is possible to foresee a further downturn, albeit at a slower pace than in the last three years.

In this context Mondadori – thanks to the action taken in 2013 – aims to achieve a level of profitability at the end of 2016, in terms of consolidated gross operating profit (EBITDA), of more than €100 million, with all businesses showing an improving trend and in profit.

Further efficiency measures, the revision of processes and cost reductions affecting all areas of the Group’s business will be of fundamental importance.

For the core businesses, the focus will concern:

• Books:

– Trade: confirmation of undisputed leadership in printed books;
– Education: a continuation of the upward trend in market share.

There will also be a big development in digital thanks to the strength of the catalogue of the Group’s publishing houses: in terms of revenues, there will be a rise from the current 5% to 16% of the total of the area and with higher margins on e-books than those on the physical product.

• Magazines & Advertising:

– continued efforts to renew the product portfolio aimed at consolidating leadership in all segments;
– rationalisation of editorial structures and integration with digital;
– Properties: profitable in both Italy and France from 2016;
– full effect of the integration of advertising sales in Mediamond, with a consequent recovery of market share.

• International Network:

– increase in the number of editions of Grazia and other titles in emerging markets;
– possibility of developing e-commerce activities for all 23 editions around the world of Grazia;
– activities in China: in April 2014 Grazia goes weekly, with significant effects on circulation growth and, particularly, advertising sales;
– brand extension activities built around the Grazia brand.

• Retail:

– big development of the franchising network and a process of rationalisation of sales outlets;
– optimisation of logistics (office space and distribution);
– diversification of the offer with an expansion of the assortment to include stationery, toys and food.

• Radio:

– full effects of the change of management at R101 and the capitalising, in terms of a further increase in advertising revenues, of the radio network of Mediamond that today has a daily average of over 9.7 million listeners.

With regards to digital:

the Digital Innovation area will be a cross-company driver for all of the Group’s businesses with the aim of tripling the proportion of digital revenues to 13% at the end of 2016.

In addition to completing the organisation with the most suitable professional skills and the transformation of the Group through the inclusion and integration of new businesses and technologies, the focus will be on:

– growth and the reinforcement of digital activities in existing businesses: e-books, properties and e-commerce;
– diversification and development of new revenue streams in non-traditional activities (marketing services);

– searching for partnership with third parties and acquisitions that are strategic and synergic with the core business.

***

THE RESIGNATION OF THE CFO CARLO MARIA VISMARA EFFECTIVE FROM 31 MAY 2014

The Board of Directors has accepted the resignation submitted by Carlo Maria Vismara from his position as chief financial officer, and director of procurement and information systems, as well as the manager in charge of preparing the corporate accounts, and his position as a member of the board.

The decision by Vismara is related needs of a personal and family nature no longer compatible with the continuation of the full professional commitment required by a management role of such primary importance.

In order to ensure proper coordination and completion of activities related to the approval of the 2013 Annual Report and the interim report for the first quarter of 2014, the resignation will be effective from the Board of Directors already scheduled for the coming 13 May to approve the management report for the period to 31 March 2014 and, in any case, by the 31 May of this year.

The Directors expressed deep regret for the decision of Carlo Maria Vismara and expressed their gratitude and appreciation for the highly professional contribution made by him in more than eight years with the Mondadori Group.

***

PROPOSAL TO COVER OF THE LOSS OF THE YEAR FROM AVAILABLE RESERVESThe Board of Directors will propose to the Shareholders’ Meeting convened for 30 April 2014 on first calling (2 May, on second calling), to settle in full the loss for the year to 31 December 2013 of €314,970,500.44 through the use of reserves as follows:

• for €170,624,621.21 entirely through the use of the share premium reserve, following the allocation from the share premium reserve to the extraordinary reserve of the restriction on the availability of the amount corresponding to the book value of the treasury shares, defined in line with the provisions of art. 2357 I, final para. of the Civil Code;
• for €5,334,814.39 entirely through the use of the reserve for capital grants, included under “Other reserves and retained earnings”;
• for a total of €51,132,983.35 entirely through the use of the following retained earnings, included under “Other reserves and retained earnings”:

Legal Reserve 675 of 12/08/1977 equal to €351,348.61;
Legal Reserve 904 of 16/12/1977 equal to €750,738.83;
Legal Reserve 124/1993, art. 13 equal to €159,607.90;
Merger reserve equal to €43,998,556.21;
Reserve for waived dividends equal to €5,872,731.80;

• for a total of €10,802,729.52 through the partial use of the available resources of the IAS/IFRS Reserve, included under “Other reserves and retained earnings”;
• for €77,075,351.97 through the partial use of the available resources of the Extraordinary Reserve, included under “Other reserves and retained earnings”.

PROPOSAL FOR THE RENEWAL OF AUTHORISATION FOR THE BUY-BACK AND UTILISATION OF COMPANY SHARES
Following the expiry on 31 December 2013 of the term fixed by the authorisation issued at the Annual General Meeting of 23 April 2013, the board of directors resolved to ask the forthcoming Annual General Meeting of the shareholders to renew authorisation to effect share buy-backs, giving the board the possibility of seizing eventual investment opportunities or operations based on the company’s shares.

It should be noted that, taking account of the shares previously in the portfolio, at the AGM of 23 April 2013, the shareholders authorised the acquisition of up to 10% of the share capital, which amounts to 24,645,834 ordinary shares.

Given the total of 14,953,5000 shares already directly or indirectly held at the date of the AGM – of which 10,436,014 are held directly in the portfolio of Arnoldo Mondadori Editore SpA and 4,517,486 by the subsidiary Mondadori International SpA – the authorisation consequently provided an option to buy an additional maximum of 9,692,334 shares.

Subsequent to the authorisation issued on 23 April 2013, Arnoldo Mondadori Editore SpA made no acquisitions or use of said shares, either directly or indirectly.

Consequently the number of shares held remains unchanged at 14,953,5000, or 6.067% of the share capital. It should also be noted that, as a result of the merger, by incorporation of Mondadori International SpA, completed during 2013, the total number of shares held are now in the portfolio of Arnoldo Mondadori Editore SpA.

The Shareholders will also be asked to authorise, pursuant to Art. 2357 ter of the Civil Code, the use of shares acquired or already in the company’s portfolio.

What follows is an outline of the proposal to be put to the Shareholders:

• Underlying motivation

The motivation for the request for authorisation to buy and use company shares is to provide the board of directors with the possibility:

– 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.

• Duration

Until the approval of the Annual Report for the year 2014.

• Cap on the number of shares that may be bought

The authorisation refers to a limit of 10% of the share capital, in line with the previous authorisation that is about to expire. Given, as indicated above, that the company currently holds, directly or indirectly, a total of 14,953,500 shares, the new authorisation consequently foresees the possible acquisition of an additional 9,692,334 ordinary shares, or 3.933% of the share capital.

• 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 2273/2003.

***

PROPOSED RENEWAL AND ATTRIBUTION OF POWERS TO THE BOARD OF DIRECTORS PURSUANT TO 2443 AND 2420 TER OF THE CIVIL CODE

The board of directors will propose to the Shareholders’ Meeting called for 30 April 2014, in extraordinary session, the adoption of the resolutions referred to in Articles 2443 and 2420 of the Civil Code, relating to powers of the board to increase the share capital and to issue convertible bonds.

Specifically, the board will ask the Shareholders to:

– renew the powers already granted to the board of directors by the Extraordinary Shareholders’ Meeting of 29 April 2009, which is due to expire at the end of the five-year term, in accordance with Art . 2443 and 2420 of the Civil Code, of attribution for the board of directors to increase, without excluding option rights, the share capital by a maximum nominal amount of €78,000,000 and to issue convertible bonds for a maximum nominal amount of €260,000,000 . The renewal is proposed under the same conditions as the authorisation about to expire and not used by the board, for a further period of 5 years, which corresponds to the maximum term foreseen by law.
– attribute to the board of directors, for the same five-year period, additional power to increase the share capital within a limit of 10% of the existing share capital and excluding the right of option, as per Articles 2443 and 2441, paragraph 4, second sentence, of the Civil Code.

The proposals for the renewal and granting of such powers are motivated by the opportunity to maintain and attribute to the board of directors the authority to implement, with greater speed and flexibility with respect to the resolutions of an Extraordinary Shareholders’ Meeting, any capital transactions aimed at strengthening the financial structure of the company in support of the development objectives of the Group, represented, as previously disclosed to the market, both in terms of the consolidation of the business lines with higher added value and improved profitability in the magazine sector, as well as growth in particular in the digital area.

With specific reference to the powers exercisable for any eventual capital increase with exclusion of option right to a limit of 10% of the existing share capital, it should be noted that any offer made to a third party may be a valuable tool to increase the free float and enable the company to maintain an adequate level of liquidity of the shares, or be functional for the entry into the capital of accredited investors, while limiting the dilutive effects for existing shareholders.

_______

Today at 3pm, at the company’s headquarters in Segrate, the management of the Mondadori Group will present the results for 2013 approved today by the board of directors, to the financial community.

All relative documentation is available on the web site www.mondadorigroup.com (in the Investor Relations section) and from Borsa Italiana S.p.A. (www.borsaitaliana.it).

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.

Arnoldo Mondadori Editore S.p.A. has announced that the modifications, requested by Consob, to the Disclosure Document published on 21 November 2013, have been made and the document is now available at the company’s headquarters, at Borsa Italiana and on www.gruppomondadori.it (in the Governance section).

The document refers to the operation with related parties concerning the contribution of the business activities regarding the sale of advertising for magazines and radio stations by the subsidiaries Mondadori Pubblicità S.p.A. and Mediamond S.p.A.

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 2014:

– Thursday 27 March 2014: meeting of the Board of Directors for the approval of the Annual Report for the year ended 31 December 2013;

– Tuesday 13 May 2014: meeting of the Board of Directors for the approval of the 1st Quarter Report to 31 March 2014;

– Thursday 31 July 2014: meeting of the Board of Directors for the approval of the Interim Report to 30 June 2014;

– Wednesday 12 November 2014: meeting of the Board of Directors for the approval of the 3rd Quarter Report to 30 September 2014.

The Annual General Meeting of the Shareholders for the approval of the Annual Report for the year ended 31 December 2013 will be held on Wednesday 30 April 2014.

Analysts’ presentations of the results for the full year to 31 December 2013, the interim report to 30 June 2014 and the reports on the first and third quarters of 2014 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.