2008

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 2008 as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

The market scenario

As is well known, there was a further worsening of the macro-economic scenario in the last three months of 2008. Indeed, the downturn was worse than the already pessimistic forecasts and the crisis that affected the financial sector at an international level had a serious impact on the productive sectors, on employment and on consumer spending in industrialised countries, as well as slowing growth in developing countries. Confirmation of the depth of the current recession comes also from the extremely negative perceptions regarding the evolution of the situation in the short to mid-term, with an inevitable impact on investments and spending. Also in Italy, where the banking system has been less exposed to assets risks than other European countries and the United States, the crisis has, nevertheless, had a serious effect on the real economy, with a fall in GDP of 1%, something not seen since 1975.

For Mondadori and its markets of reference, the following observations can be made:

– in Italy, while there was not an acceleration in the downturn in both circulation and add-on sales, the Group’s market share remained essentially unchanged. On the advertising front, investments, in the last part of the year, saw a marked fall. Meanwhile, the volume of business in the book sector, in which the Mondadori Group consolidated its position of absolute leadership, remained essentially unchanged;

– in France the downward trend in advertising continued, while magazine circulation, both newsstand sales and subscriptions, were in line with the previous year.

MANAGEMENT RESULTS AT 31 DECEMBER 2008

As communicated to the market in October 2008, Mondadori sold 80% of the share capital of Mondadori Printing S.p.A. to Gruppo Pozzoni; a comparison between the Mondadori Group’s consolidated revenues and gross operating profit in December 2008 and the figures for the previous year are consequently also represented on a like-for-like basis, excluding. Consequently, the results, both for 2007 and 2008, of printing activities sold with effect on the company’s accounts from the month of November 2008 and, therefore, consolidated for only ten months of 2008.

Consolidated revenues for 2008 came to €1,819.2 million (-7.1% on the €1,958.6 million of 2007).On a like-for-like basis, the fall was of 6%. While, net of the add-on sales, turnover recorded a fall of 2.5%.

Consolidated gross operating profit for the year amounted to €249.2 million (-7.3% compared with the €268.9 million in the previous year). As a proportion of revenues, the figure is 13.7%, in line with 2007.

Excluding the activities of Mondadori Printing, the difference in operating profit was -€2.7 million (-1.2%), essentially due to: the positive business performance (+€6.5 million); a fall in add-on sales (-€13.3 million); increased investments in business development (-€7.9 million); higher organisational restructuring costs (-€4.7 million) and increased capital gains (+€16.7 million).

Consolidated operating profit came to €203.5 million, (-9.6% on the €225.2 million of 2007), with amortizations and depreciations of fixed assets of €31.1 million (€36.5 million in 2007) and of intangible assets of €14.6 million (€7.2 million in 2007).

As a proportion of revenues, as shift from 11.5% in 2007 to 11.2%.

Consolidated profit before taxation amounted to €151.4 million (-20.1% compared with the €189.5 million of 2007). Net financial charges increased by €16.4 million due to the higher cost of debt (around €6 million), lower returns on financial assets (around €8.3 million, partly due to writedowns) and financial charges for actualization of the deferred part of the payment for Mondadori Printing (€2.1 million).

Consolidated net profit on 31 December 2008 amounted to €97.1 million (-13.8% compared with €112.6 million in the previous year).

Gross cash flow for came to €142.8 million, compared with €156.3 million in 2007.

The net financial position went from -€535.3 million at the end of 2007 to -€490.3 million on 31 December 2008; during the period payments for tax of €80.4 million and dividends of €83.8 million were made, while the positive financial effect of the sale of 80% of Mondadori Printing S.p.A. amounted to €121.4 million.

THE BUSINESS AREAS

· Books

Against a general background of falling consumer spending, the performance of the trade segment of the Italian book market in 2008 was essentially in line with that of 2007 (-0.6% in terms of value, for medium to large sized bookstores: source Nielsen Bookscan).

In this context the Mondadori Book Division confirmed, by a wide margin, its leadership, with a market share of 28.8%; total revenues amounted to €434.3 million (-2.4% on the €445 million of the previous year).

The slight downturn in revenues, largely the result of a marked fall in the sale of rights for add-on sales initiatives, would, therefore, net of add-on sales, be -1.1%.

During the period Mondadori maintained the excellent levels of profitability of the previous year, with a gross operating profit, as a proportion of revenues of 19.1%.

In 2008 the Group published 2,695 new titles (compared with 2,742 in 2007) and 5,225 reprints (5,242 in 2007), a total of 53.4 million copies, compared with 54.6 million in 2007.

Among the Group’s publishing houses, Edizioni Mondadori recorded 2008 revenues of €144 million (+4.7% compared with €137.6 million the previous year). Of note during the year was the success of two first-time authors whose books sold more than one million copies: Paolo Giordano, winner of the Strega Prize with his novel La solitudine dei numeri primi and Roberto Saviano with the long seller Gomorra, first published in 2006. Also of note was the new novel by Margaret Mazzantini, Venuto al mondo, which sold more than 300,000 copies. There were also good results for Idi di marzo by Valerio Massimo Manfredi (250,000 copies) and Storia di neve by Mauro Corona (100,000 copies).

Einaudi generated revenues for the year of €51.7 million, an increase of 3.6% on the €49.9 million of 2007. This increase was the result of excellent sales through the bookshop and large-scale retail channels, thanks to the very positive sales of numerous books with average and high print runs.

With a market share of 13.4%, Mondadori Education in 2008 maintained a significant position in the educational market and leadership in the primary school textbook segment: net sales revenues generated by the company in the period amounted to €86.1 million (-1.1% on the €87.1 million of the previous year).

· Magazines

The Magazine Division generated consolidated revenues in 2008 of €949.8 million (-9.3% on the €1,047.7 million of 2007).

Italy

Mondadori maintained in 2008 its position of absolute pre-eminence, with revenues in Italy of €575.7 million (-12.5% compared with €657.8 million in 2007); net of add-on sales, the fall was of 4.4%.

Performace during the year was characterised by the following phenomena

– A fall in circulation revenues of 5.1%, in line with the market of reference;

– A marked decline in add-on sales (-28.6%) in line with the sector, but with good levels of profitability;

– A fall in advertising revenues of 5.3%, in a market that fell by 7.1%: it is a downturn that was especially marked in the second half of the year.

Among women’s titles, Donna Moderna consolidated its leadership; in newsmagazines, Economy saw a significant increase in its newsstand sales.

In the TV listings segment, which has been hit by a generalised fall in circulation, TV Sorrisi e Canzoni bucked the trend by maintaining weekly sales of more than one million copies. In the entertainment segment, Chi remained the most vivacious magazine with sales in line with 2007. In the up market women’s segment, while Grazia and Flair recorded more limited circulation, sales were still in line with the previous year and they had a marked penetration in the advertising market. Good results were recorded by both the cooking and design titles.

France

In 2008 Mondadori France generated total revenues of €374.1 million (-4.1% compared with the €389.9 million of 2007).

Circulation revenues by Mondadori France, which account for 70% of the total, remained at the level of the previous year (+0.6% on a like-for-like basis, net of the sale of niche title in the Sport e Loisirs area), thanks also to the positive performance of the leading titles, as Closer that confirmed its leadership in its segment; there was a positive performance in the up market segment Haut de gamme, in which Mondadori has Biba, and as a consequence of re-designs on a number of titles in the Femme Grand Public segment. There was a drop, in line with the market, for TV titles.

On the add-on sales front, the initiatives launched by the company during the year generated an increase in revenues of 7.2% compared with the previous year, but with the negative contribution being the result of a market that is structurally still not ready for development.

The revenues of Mondadori France from the sale of advertising saw a downturn of 14.5% in 2008, in line with a market in considerable difficulty; on a comparable basis the fall was of 12.3%.

The company, which is also penalised by its poor presence in the up-market segment, the only sector that grew compared with the previous year, did, in any case, safeguard its market share.

In terms of profitability Mondadori France in 2008 generated a gross operating profit, as a proportion of revenues, of 10.5% (12.5% net of add-on sales), thanks also to the ongoing control and reduction of costs that have generated savings in industrial distribution and labour costs.

International activities

2008 was characterised by intense number of new launches of the Mondadori Group titles in international markets, including Flair in Austria, Casaviva in Greece, Bulgaria and Serbia, Sale e Pepe in Romania, Grazia Casa in Croatia. The Grazia network expanded during the period to include new editions in India and Australia, both of which generated positive results from the first months of publication.

During the year the stage was set for the launch of Grazia in China and Casaviva in India, which went ahead in the first quarter of 2009.

Overall, at the end of the year, the Mondadori titles in world markets numbered nineteen, with revenues from licensing and commissions from the sale of advertising up by 30% on 2007.

There were also positive results from the Greek subsidiary Attica, leader in circulation and advertising in Greece and with a significant presence also in Romania and Bulgaria.

· Advertising

Mondadori Pubblicità ended the year with revenues of €331 million (-5.3% on the €349.5 million of 2007). Thanks to a good performance in the first half of the year, the company was able to at least partially offset the marked downturn in the market in the second half.

In particular, in a magazine market that lost 7.3%, the company recorded sales on its portfolio of titles of €242.6 million (-4.8%).

In the radio market, meanwhile, which showed an overall increase of 2.3%, R101 saw its advertising revenues grow by 23.9%. There was also a significant increase in advertising sales for the Group’s web sites (+27%), in a market that grew by 13.9%.

• Grafica

As mentioned above, the consolidated revenues from the Group’s printing activities refer only to the first ten months of the year. During this period there was a marked downturn in turnover, which came to €316.3 million (-28.1% on the €439.9 million of 2007).

This fall was the result of, in addition to two fewer months of business, the loss of the contribution of Mondadori Education that had been present in 2007, a marked reduction in magazine paginations and a sharp fall in the market for add-on sales.

• Direct marketing

In 2008 Cemit Interactive Media recorded revenues of €22.3 million, a fall of 6.7% on the €23.9 million of the previous year, while maintaining an excellent level of profitability (+18.4%).

• Retail

Total revenues by the Retail Division in 2008 amounted to €194.5 million (+6.2% on the €183.2 million of 2007). During the period the Group’s network of stores reached 434 units, making it Italy’s most extensive network of sale outlets for editorial products.

Mondadori Retail S.p.A. generated 2008 revenues of €128 million (+2.7% on the €124.6 million of 2007). During the year, having completed the integration of the ex-Messaggerie Musicali, there was an increase in the number of outlets (up to 30 from the 29 in 2007) and a simultaneous rationalisation of the chain.

Mondadori Franchising S.p.A. generated revenues of €66.5 million (+13.7% on the €58.5 million of 2007). During the period there was an increase in the number of bookstores, from 212 in 2007 to 227 in December 2008, while the number of Edicolè outlets rose from 136 in 2007 to 177 in 2008. Of note was also the testing of and formats were, including a children’s bookshop and a new form of franchising that combines the traditional bookshop and the book club.

• Radio

In 2008 R101 recorded net revenues of €14.8 million (+31% on the €11.3 million of 2007), which corresponds to gross advertising sales of €21.8 million (+23.9% on the €16 million of 2007), in a market that grew by just 2.3%.

In terms of ratings, the Mondadori Group’s radio reached an average daily audience of 2.1 million listeners, an increase of 7%, confirming its position among the top six Italian commercial radio stations, with around 8.4 million listeners over the 7-days.

RESULTS OF THE PARENT COMPANY ARNOLDO MONDADORI EDITORE S.P.A.

The Annual Report of the parent company, Arnoldo Mondadori Editore SpA, for the year to 31 December 2008, shows a net profit of €66.2 million (€90 million on 31 December 2007).

FORECAST FOR THE FULL YEAR

As is known, figures for consumer spending in the first months of the current year, in all the principal economic sectors, show a further decline compared to the end of 2008 and a climate of great uncertainty means that also investments are down or, at least, postponed.

In the previous year, the Mondadori Group was able to safeguard its levels of profitability thanks to the diversification of the business and, above all, to cost cuts, in anticipation of the growing crisis.

For a 2009 that is already heavily influenced by the consequences of the general situation in the publishing sector and the impact of technological changes, the company will continue to pursue cost savings, organisational simplification and the re-engineering of processes, also through the specific allocation of dedicated investments.

The trend in revenues in the first months of the year and the objective difficulty in foreseeing developments and the evolution in consumer spending and investments, especially in advertising, over the coming months, suggest a prudent approach in forecasting the company’s performance in 2009, which, in any case, is not expected to be at the same level as the previous year.

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PROPOSAL FOR THE ALLOCATION OF THE NET PROFIT FOR THE YEAR 2008

The Board of Directors will propose to the Annual General Meeting of the Shareholders, to be held on 29 April 2009 (on first calling, or 30 April on second calling), the allocation of the entire net profit for the year to 31 December 2008 of Arnoldo Mondadori Editore S.p.A., amounting to €66,197,031.51 to an extraordinary reserve.

Given the lack of clear signs of an improvement in the market, the Board’s proposal to not distribute a dividend for 2008 is aimed at allowing Mondadori to maintain its financial solidity, maintain the necessary levels of investment in products, finance the reorganisation process, and to ensure that the company is ready to take advantage of possible opportunities deriving from a recovery in the economic cycle.

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PROPOSAL TO THE SHAREHOLDERS FOR A STOCK OPTION PLAN FOR THE THREE-YEAR PERIOD 2009-2011

Following the termination of the Stock Option plan for the previous three-year period 2006-2008, the Board of Directors have resolved, following the recommendations of the Remuneration Committee, to propose to the Annual General Meeting of the Shareholders, to be held on 29 April 2009 (on first calling, or 30 April on second calling) a Stock Option Plan for the three-year period 2009-2011, as per Art 114 bis of Legislative Decree, 58/1998.

The purpose of the Plan is essentially to give the company and its subsidiaries access to a tool with which to promote loyalty and render the management more directly involved in the results.

In conformity with art. 114 bis of legislative decree N°58 of 24 February 1998, the fundamental characteristics of the Plan to be approved by the shareholders are as follows:

Participants in the Plan

Participants in the Plan will be identified by the Board of Directors from: managers of the company or its subsidiaries with functions critical for the attainment of the group’s strategic objectives; directors of the company and its subsidiaries; journalists of the company and its subsidiaries with the position of editor or co-editor; managers of the holding company who carry out their function in the interest of the company.

Participants may therefore also include “relevant subjects” belonging to the categories, as at Art. 152 sexies, para. 1, C.1), C2) of CONSOB Regulation 11971/1999.

Implementation of the Plan

The Plan is organised in annual allocations to the participants of options, which are personal and non-transferable, for the acquisition of shares of the company, held in the portfolio or through subsidiary companies. Implementation of the plan is subordinate to the attainment of the company’s performance objectives as determined by the Board of directors following the recommendations of the Remuneration Committee. Exercise of the allocated options will be further subordinate to a lock-up period and will be possible only within a defined period.

Criteria for the determination of the purchase price of shares

The price of such shares will be calculated on the basis of the arithmetical average of the reference price of Mondadori ordinary shares, in the period measured by the Borsa Italiana that goes from the date of allocation to the same day of the previous month.

Subject to the approval by the AGM, Board of directors will define, in the light of the above, Regulations for the implementation of the Stock Option Plan.

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RE-ATTRIBUTION OF POWERS AS PER ARTT. 2443 AND 2420 TER OF THE CIVIL CODE

Following the expiry of the five-year attribution of powers made by the Shareholders’ Meeting of 2004, the forthcoming AGM (the extraordinary part), to be held on 29 April 2009 (on first calling, or 30 April on second calling), will be asked to approve the re-attribution of powers to the Board of Directors to resolve capital increases and the issue of convertible bonds, as per artt. 2443 and 2420 ter of the Civil Code.

The new powers are in line with the previous expiring powers, both in terms of duration (five years, in accordance with current legislation) and for the maximum sums (a nominal €78 million and €260 million respectively).

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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.

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The results of 2008 will be outlined by the deputy chairman and chief executive, Maurizio Costa, and the CFO, Carlo Maria Vismara, at a meeting with the financial community to be held today at 2.30 pm at the company’s headquarters in Segrate.

With regard to press reports concerning the supposed sale of the business activities of the educational sector, Arnoldo Mondadori Editore S.p.A. would like to make it clear that no such plan exists, nor are any negotiations underway.

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 30th September 2008, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO

From the beginning of the second half of 2008, as feared, the effects on the real economy of the financial and macroeconomic problems that hade emerged in the preceding period began to be felt and had an immediate and somewhat violent impact on consumer spending. A period of recession is now almost certain, and it is difficult to forecast either the quantitative impact or duration.

In Italy that characterising element of the general situation in the market of reference for the Mondadori Group has been a further marked decline in advertising investments, while there has been a continuation, without particular variations, in the slowdown in circulation and add-on sales. The growth recorded by books in the first months of the year has also come to a halt.

In France, magazine circulation has fallen, but also here it is advertising that has been most affected by the situation of uncertainty about prospects in the short term.

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2008

Despite such a difficult context, the Mondadori Group confirmed its capacity on the revenue front, recording a gross operating profit – net of add-on sales – that was higher than that of the corresponding nine-month period of the previous year, notwithstanding ongoing investments in business development.

This has been made possible by paying close attention to operating costs and efficiencies in all areas of the company that has enabled the Group, also in the third quarter, despite a fall in revenues due to the economic situation, to increase its margins compared with the same period of the previous year.

Consolidated revenues for the first nine months of 2008 came to €1,368.1 million, a fall of 5.1% compared with the €1,441.7 million in the first nine months of 2007 (-1.5% net of add-on sales).

Consolidated gross operating profit at 30 September 2008 came to €168.8 million, a fall on 9.8% on the €187.1 million of the same period of the previous year (+1.8% net of add-on sales). As a proportion of revenues, a fall to 12.3% from the 13% of the same period of 2007.

Net of the impact of add-on sales (-€20.8 million) and non-recurring factors (increased capital gains: +€3 million; personnel: -€1.5 million due to the application of new regulations on leaving entitlements in 2007 and extraordinary charges), operating margin would have grown by €1 million due to improved business results (+€7.2 million) and increased investments in development activities (-€6.2 million).

Consolidated operating profit at 30 September 2008 came to €137.5 million, a fall of 11% on the €154.5 million of the same period of 2007, with amortizations and depreciations of tangible and intangible assets for a total of €31.3 million (€32.6 million in 2007); as a proportion of revenues, a fall from the 10.7% of 2007 to 10.1% this time.

Consolidated profit before taxation amounted to €104.5 million, a fall of 19.8% on the €130.3 million of the first nine months of 2007, with an increase of €8.8 million in net financial charges, essentially due to the increased cost of borrowing (around €4.7 million) and lower returns from financial investments (around €3.1 million) and the IAS regulations regarding leaving entitlements (€1 million).

Consolidated net profit at 30 September 2008 came to €58.8 million, a fall of 16.1% on the €70.1 million for the same period of the previous year.

Gross cash flow in the first nine months of 2008 amounted to €90.1 million, compared with €102.7 million in the first nine months of 2007.

The Group’s net financial position at 30 September 2008 showed a deficit of €644.5 million, compared to a deficit of €535.3 million at the end of 2007. During the period income taxes of €65.5 million and dividends of €83.8 million were paid out.

RESULTS OF THE BUSINESS AREAS

• Libri

In the first nine months of 2008 the Book Division generated revenues of €316.5 million, a fall of 3% on the €326.4 million of the same period of 2007 (-1.8% net of the contribution of the sale of rights for add-on sales initiatives).

During the period the Group confirmed its leadership in the trade segment with a marked advantage over its main competitors, despite a period of recession and a general decline in consumer spending. Particularly positive results were recorded by Edizioni Mondadori, that saw its market share increase by a full percentage point, and Einaudi, which confirmed its position as Italy’s second-largest publisher. In the first nine months of the year, the Turin-based publisher generated net revenues of €37 million, an increase of 5.4% on the same period of 2007.

Among the important events during the period was the exceptional success of La solitudine dei numeri primi, the first novel by a new writer, Paolo Giordano, which also won the 2008 Premio Strega, and has sold more than 800,000 copies; among the long sellers, of special note was Gomorra by Roberto Saviano, which reached one and a half million copies.

• Magazines

The Magazine Division generated revenues of €725.5 million in the period, a fall of 8.4% on the €791.8 million at 30 September 2007, largely due to the fall in add-on sales (net of add-on sales, the fall in the Division’s total revenues would be of just 3%).

Italy

Revenues generated in Italy in the first nine months of 2008 amounted to €440.9 million, a fall of 12.5% compared with the €504 million of the same period of 2007.

The shortfall in revenues is attributable to the following factors:

– weakness in circulation revenues (-5.2%) in line with the reference market, marked by a decline in all segments of the business;

– as already indicated, a marked fall (-29.9%) in revenues from add-on sales, in line with the main competitors. The on-going decline in this type of activity has necessitated a stricter selection of the initiatives in order to maintain significant margins while reducing the risks of failure.

– a downturn in magazine advertising (-2.1%) which, after an encouraging start in the first quarter, saw an abrupt slowdown, above all from the summer period.

On the circulation side, Mondadori consolidated its market share, maintaining its position of absolute leadership. The best performances were recorded in the news segment with Panorama, in women’s weeklies with Donna Moderna and in the up-market segment by Grazia and Flair, which also performed well on the advertising front.

France

In the first nine months of the year Mondadori France generated revenues of €284.6 million, essentially in line (-1.1%) with the €287.8 million of the same period of 2007.

Over the same period, the company continued its efforts to reduce costs, generating important savings on both the production and distribution fronts.

The circulation revenues of Mondadori France remained at the levels of the previous year (+0.1%). In particular Closer and Biba recorded excellent performances; Modes & Travaux and Top Santé held up well, as did Le Chasseur Français and Télé Star Jeux, following their re-launches, while difficulties continued in the TV guides segment. Overall, also subscription revenues remained at the levels of the previous year, thanks to marked increases for Closer and Auto Plus.

On the advertising side, France saw a continuation in the third quarter of the marked slowdown in advertising sales.

Mondadori France, while safeguarding its market share, was particularly penalised by a downturn in sales in the Femme Grand Public, TV and auto segments; while results were positive in the people and up-market segments, driven by strong growth in the circulation of Closer and Biba.

In this context, Mondadori France in the first nine months of the year recorded advertising revenues of €75 million, an 8.4% fall on the €81.9 million of the same period of the previous year.

International activities

During the period there was a continuation in the rise in revenues from the international editions of Mondadori titles. The network, which as of 30 September had reached 15 units, either licensing agreements or joint-ventures, expanded further in October with the launch of Sale&Pepe in Romania, Grazia Casa in Croatia and Casaviva in Bulgaria, followed in November by the launch of a Serbian edition.

• Advertising

Mondadori Pubblicità recorded revenues for the period of €244.7 million, a fall of 1.6% on the €248.8 million of the first nine months of the previous year.

After a positive first half, the third quarter saw a reflection, albeit to a lesser degree, of the worrying downturn in the market as a whole in the period.

As regards individual titles, there was expansion for the Grazia “system” (+9%) and a positive trend for Flair as well as TV Sorrisi e Canzoni and Panorama, despite a critical moment for the segments typically characterised as “male”. In other media, there was further consolidation in radio with a substantial (+33.3%) increase for R101, while in the Internet area, in line with the market, there was an excellent performance by the web site www.donnamoderna.com.

• Printing

The situation at 30 September 2008 saw a significant fall in revenues compared with the same period of the previous year, due to a general decline in the market.

During the third quarter there was a further marked reduction in pages due to the sudden arrest in advertising compared with the first half, and there was a confirmation of the slowdown in the market for newspaper and magazine supplements.

In the first nine months of the year the Printing Division recorded total revenues of €281.2 million, in fall of 15.6% on the €333.3 million of the same period of the previous year, mainly due to the absence of activities for Mondadori Education, that were present in 2007.

As for other areas, the market for catalogues and commercial products was stable and in line with expectations; illustrated books showed signs of recovery in the volume of printing in Europe, compared to the Far East, and interesting printing contracts for the American market.

There was a slight increase in the cost of paper in the period, in particular for the paper used in the printing of magazines. Utilisation of plant capacity was lower than the budget, despite a significant reduction in outsourcing.

• Direct marketing

In the first nine months of the year Cemit operated in an increasingly difficult market, characterised by reductions in communication investments. During the period the company recorded revenues of €15.9 million, a fall of around 7% on the €17.1 million of the same period of the previous year, while maintaining a good level of profitability thanks to an improvement in the mix, which was more focused of higher value added activities and the ongoing control of costs.

• Retail

Total revenues from the Retail Division in the first nine months of 2008 came to €128.6 million, an increase of 7.3% compared with the €119.9 million of the same period of the previous year.

Mondadori Franchising recorded revenues of €44.2 million, an increase of 13.3% on the €39 million of the same period of 2007, thanks above all to new affiliations. The company’s expansion programme continued during the period raising the number of its outlets to a total of 369, making it Italy’s largest network of outlets for the sale of editorial products, of which 212 are bookshops (205 on 30 September 2007) and 157 Edicolè newsstands (117 at the same point of 2007).

Mondadori Retail revenues in the first nine months of the year came to €84.4 million, an increase of 4.3% on the €80.9 million of the same period of 2007. During the period the number of directly controlled outlets rose to 30.

• Radio

The net revenues of R101 in the first nine months of the year amounted to €11.1 million, a 50% increase on the €7.4 million of the same period of 2007, and corresponding to gross advertising revenues of €16 million (€12 million at 30 September 2007).

The good audience ratings for the station were confirmed in the period, reaching an average daily audience of 2.1 million (+4.85% in the 5th Audiradio cycle compared to the same period of the previous year), in a slightly falling market.

SIGNIFICANT EVENTS AFTER THE CLOSE OF THE PERIOD

Sale of 80% of Mondadori Printing S.p.A.

As previously communicated on 14 October, Arnoldo Mondadori Editore signed a preliminary contract for the sale of 80% of the subsidiary Mondadori Printing S.p.A. to the Gruppo Pozzoni. The value of the transaction was defined on the basis of an enterprise value for 100% of Mondadori Printing of €145 million. The impact of the operation on the consolidated net financial position of the Mondadori Group will be of €123 million.

The operation should be seen in the context of a general trend toward consolidation and concentration among the qualified players that characterises the printing sector at an international level in response to new competitive pressures, overcapacity and a fall in demand.

The agreement gives to the Gruppo Pozzoni an option to buy the remaining 20% of Mondadori Printing, that may be exercised from December 2011, at a cost determined by the fair market value of the company on the date of the operation. Mondadori will retain an option to sell the same 20%, from January 2017, at a price to be determined by the abovementioned criteria.

The agreement also includes an 8-year printing contract – renewable on terms in line with the best market benchmarks – guaranteeing Mondadori an improvement in terms of costs and the maintenance of high standards of quality.

The terms of the operation and the signing of the preliminary contract are subject to the approval of the Italian Competition Authority.

EXPECTATIONS FOR THE FULL YEAR

The current economic and financial situation is marked by exceptional factors and consequent uncertainties that cannot be compared to the past. Both the scale and, above all, the timing with which critical factors become evident, make it difficult to make forecasts about both the medium and the short term.

What is clear is that, even in these recent difficult months, the Mondadori Group has been able to face the inevitable downturn in business with results that are in line with the best expectations, and even better than the previous year, if the add-sales are excluded. At the same time, the company has created the conditions for further improvements in efficiency through an industrial partnership in printing.

As a result, it is possible to confirm, in line with the projections made at the time of the report on the first half of the year to 30 June, that, the management results for the core business, excluding add-on sales activities, at the end of 2008 are in line with those of the previous year.

§

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

Arnoldo Mondadori Editore today announced that it has signed a preliminary contract for the sale of 80% of the share capital of its subsidiary Mondadori Printing S.p.A. to Pozzoni Group.

The transaction price was defined on the basis of an enterprise value for 100% Mondadori Printing of €145 million. The impact of the operation on the Mondadori Group’s consolidated net financial position will be in the region of €123 million.

The operation should be seen in the context of the general trend that increasingly characterises the printing sector at an international level: in which there is a growing tendency towards consolidation and aggregation among the most qualified operators in a market that is undergoing deep structural changes as a result of new competitive pressures, over-capacity in terms of production and a downturn in demand.

The agreement gives Pozzoni Group an option to acquire a further 20% stake in Mondadori Printing, to be exercised from December 2011 at a cost determined by the fair market value of the company at the time of the exercise of the option. Mondadori will retain an option to sell the same 20% stake from January 2017 at a price to be determined by the above mentioned criteria.

The agreement also includes a eight-year printing contract – renewable on terms in line with the best market benchmarks – guaranteeing Mondadori an improvement in terms of costs and the maintenance of high standards of quality. Additional continuity will be guaranteed by the confirmation of the current managing director of Mondadori Printing.

Mondadori Printing S.p.A. is the Mondadori Group company in which the activities of the Printing Division are concentrated, with four plants in Italy – located in Verona, Cles (TN), Pomezia (RM) and Melzo (MI) – and one in Spain at Toledo.

For the year ended 31 December 2007 the Mondadori Printing Division recorded revenues of €439,9 million and in the first half of 2008 the Division generated total revenues of €196,1 million.

Pozzoni Group is one of the most important players in the printing business and comprises 10 operating companies, nine plants (located in the provinces of Milan, Bergamo, Vicenza, Padua and Naples). In 2007, the company recorded consolidated revenues of €166 million, 20% of which from foreign sales.

With this operation Pozzoni Group completes its development strategy based on acquisitions and places the company among the leading European printers in terms of both revenues and staff.

The terms of the operation and the signing of the preliminary contract are subject to the legal notifications to the Italian Competition Authority.

Following the exclusive negotiation agreement, that was announced on 25 June, Arnoldo Mondadori Editore S.p.A. has today formalised the sale to Sofimav of two specialised titles published by Mondadori France.

The operation is part of ongoing activities aimed at focusing the company’s portfolio of titles in France in the up-scale and mass market segments.

The magazines involved in this transaction, for which a price of €1.3 million has been agreed, are La Pêche et les Poissons and Pêche Mouche.

Arnoldo Mondadori Editore SpA today announced the resignation of Achille Frattini as Member of the Board of Auditors, citing regulatory restrictions on multiple memberships of such boards in listed companies.

Frattini had been re-elected a Full Member of the Board of Auditors for the three-year period 2006 – 2008 by the company’s AGM on 26 April 2006, on the only list to be presented, that of the shareholder Fininvest SpA.

Francesco Antonio Giampaolo, who had already been appointed as Substitute Member on that same list, now replaces Achille Frattini as Full Member of the Board of Auditors.

Francesco Antonio Giampaolo was born at Orta Nova in Foggia province on 15 February 1943. He graduated in Economics and Business from Milan’s Catholic University of the Sacred Heart in 1969, and started work as Accounting Organisation and Procedures Manager in a major Milanese industrial firm. Mr Giampaolo has been a Registered Business Practitioner since 1975; his practice is entirely devoted to the corporate sphere and he has accumulated many years’ experience in legal, business and financial affairs. As technical adviser to the bench at the Court of Milan, he has carried out a number of commissions in addition to providing routine advice and valuations; he was made an Official Auditor in 1983, and for over twenty years has sat on or chaired Boards of Auditors in medium-sized and large companies in industry, commerce, finance and insurance.

Mondadori thanked Achille Frattini for his valuable contribution and professional advice over many years.

The Board of Directors of Arnoldo Mondadori S.p.A. met today to examine and approve the management report for the first six months of the year to 30th June 2008, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

The market scenario

The first six months of 2008 saw a sharpening of the uncertainties in the short and medium term and an acceleration in price increases for fast moving consumer goods, with a negative impact on consumer and investor confidence.

Over the last two months, in the reference market for the Mondadori Group in Italy, the downturn in magazine circulation was accompanied by a slowdown in advertising expenditure; at the same time, there was a continuation of the decline in add-on sales during the period, while the book market displayed encouraging signs of growth.

In France, magazine circulation remained essentially stable, while advertising investments were down compared to the same period of 2007.

Group performance in the period to 30 June 2008

When comparing the results for the period with those at 30 June 2007 the same considerations made at the end of the first quarter apply: the essential stability in business profitability and the growing performance of Radio R101 have made it possible to amply compensate for the investments made in development (digital and international activities), while the impact of the decline in add-on sales has been marked the effects are expected to be less significant in the second half of the year, given that at 30 June 2007 Mondadori had already generated 65% of the result for the entire year.

Consolidated revenues for the first half of 2008 came to €930.1 million, a fall of 3.2% compared with the €960.6 million in the first half of 2007. Net of add-on sales, revenues were up by 1.1%.

Consolidated gross operating profit at 30 June 2008 came to €104.5 million, compared with the €119.6 million of the same period of the previous year a fall of 12.6%. As a proportion of revenues a fall to 11.2% from the 12.4% of 2007.

Net of add-on sales (-€15.6 million compared with 30 June 2007) and discontinuous non-recurring factors (higher capital gains of €0.6 million; lower personnel costs of -€2.9 million due to the application of new regulations governing leaving entitlements in 2007 and other extraordinary charges) the difference in the operating margin at 30 June 2008 would be +€2.8 million, due to improved business performance business (+€6.8 million) and increased investments in businesses under development (-€4 million).

Consolidated operating profit at 30 June 2008 came to €83.8 million, a fall of 14.4% on the €97.9 million of the same period of 2007, with amortizations and depreciations of tangible and intangible assets for a total of €20.7 million (€21.7 million in 2007); as a proportion of revenues, a fall from the 10.2% of 2007 to 9% this time.

Consolidated profit before taxation amounted to €64.2 million, a fall of 25.3% on the €85.9 million of 2007, with an increase of €7.6 million in net financial charges, essentially due to the increased cost of borrowing (around €4.5 million) and lower returns from financial investments (around €2.7 million).

Consolidated net profit at 30 June 2008 came to €36.7 million, a fall of 20.6% on the €46.2 million for the same period of the previous year.

Gross cash flow in the first half of 2008 amounted to €57.4 million compared with €67.9 million in the first six months of 2007.

The Group’s net financial position at 30 June 2008 showed a deficit of €680.1 million compared to a deficit of €535.3 million at the end of 2007. During the period income taxes of €54 million and dividends of €83.8 million were paid out.

Results of the business areas
• Books

During the first half of 2008 the Book Division generated revenues of €192.7 million, in line with the €192.8 million of the same period of 2007. Net of add-on sales, revenues were up by 1.7%.

During the first six months of the year the Mondadori Group confirmed its leadership in the trade segment, increasing its share to 28%[1], with a marked advantage over its main competitors; in the large-scale retail channel the estimated share is more than 35%[2].

Among the various publishing houses in the Group, there were positive results for the first half for Edizioni Mondadori, which recorded revenues of €68.3 million, (+0.4%) and Mondadori Education which recorded sales of €15.1 million, (+4.9%). Einaudi confirmed net revenues for the first six months of 2008 of €26,4 million, in line with those of the same period of 2007.

• Magazines

During the period the Magazine Division generated revenues of €514.4 million, a 6.3% fall on the €549 million of the same period of 2007.

Italy

The first half of the year has seen a generalised downturn in the market in which the Division operates. A marked fall in consumer spending has consequently also affected the magazine sector, and most particularly and in a predominant manner, the add-on sales phenomenon, which is clearly well on the way to being progressively downsized. To a lesser extent, circulations in almost all segments have continued to display a certain weakness. Advertising, after an initially promising first quarter, was subject to a sharp downturn.

Revenues generated by the Magazine Division in Italy in the first half of 2008 amounted to €319.9 million, a 9.9% fall compared to the €355 million of the same period of last year.

This result was determined by the following factors:

– A sharp reduction in revenues from add-on sales (-24.4%) in a market that in the first five months of the year fell by 26%, and whose overall value has halved compared with the record levels of 2005;

– A fall in circulation revenues of 5.1%, essential due to a reduction in volumes sold (-3.3% on comparable basis);

– A growth in advertising revenues of 1.3% thanks to the performance of leader titles, in an already falling market (-0.7% to May with further falls expected in June).

During the period Mondadori has put in place a number of actions in key segments. The most important include:

– the relaunch of Panorama, in February, with good results in terms of circulation and, in particular, advertising;

– strong support, in a highly competitive market, for TV guides, the results of which have so far been satisfactory;

– the relaunch of Donna Moderna, to mark the weekly’s 20th anniversary, which has achieved wide consent from both readers and advertisers;

– the relaunch of Grazia, completed in June with very satisfactory results, aimed at focusing and further strengthening the magazine’s elements of quality in the fashion area;

– the development of internet activities that have involved a number of titles, in particular Donna Moderna, with the web launch at the end of June of a new hub dedicated to women;

– a strong and sharper control of costs in all areas, which has made it possible to reduce the impact of the fall in revenues.

As already mentioned, in the context of a general slowdown, Mondadori recorded a fall in circulation revenues of 5.1% (-3.3% on a comparable basis, considering the closure of Star+TV, Per Me and Creare). There was an improvement, however, compared with the same period of last year, of the competitive position of Grazia, Chi, Tv Sorrisi e Canzoni, Donna Moderna (with a circulation more than double that of its competitors) and Panorama, which confirmed its leadership in its segment, both in terms of circulation and, to a marked degree, in advertising sales. The positive performance of Flair, Casaviva, Casabella and Interni should also be noted.

France

In the first half of 2008 the activities of the Magazine Division in France generated consolidated revenues of €194.5 million, an increase of 0.3% on the €194 million of the same period of 2007.

In general, in a context in which circulations remained essentially in line with the previous year and advertising was affected by a period of difficulty, Mondadori France nevertheless managed to hold on to its market share.

On the circulation side, the Group’s titles acheived good results thanks to redesigns and relaunches completed during the period. Of particular note was the exceptional performance of Closer, which confirmed its leadership position in the segment.

There was a fall in the sale of advertising space in consumer magazines in France of 2.1% in terms of volume at the end of May 2008 (source: TNS-MI), while the reference market for Mondadori France saw a fall of -3.9%. Bucking this trend was the upscale segment (+5.1%), in which Mondadori is not yet present.

The advertising revenues of Mondadori France in the first six months of the year came to €53.5 million, compared with the €57.2 million of the same period of last year (-6.5%).

In particular, television titles have been affected by a reduction in investments by large-scale retailers and direct marketing. There were also difficulties for women’s titles, while those in the car segment showed signs of improvement compared to the first quarter of the year, with a result in line with the same period of 2007.

As already announced, June 30 saw the closing of an agreement for the sale to Motor Presse France, of six specialised titles published by the Mondadori France Group. This operation is part of the plan for the rationalisation of the Mondadori France portfolio, with a focus on the development of segments with high potential also in terms of advertising, such as the upscale (and activities have continued for the launch of a magazine in this segment) and the mass-market segments.

International activities

During the period there was a further improvement in the already notable performance of international activities. In particular Grazia UK confirmed its position as the publishing phenomenon of the moment, marking itself out even more in a market showing clear signs of a downturn.

Advertising planning for the first issues of Grazia Australia, launched on July 21, was way beyond expectations; while there were also excellent initial results for Grazia India (where a contract has also been signed for the launch of Casaviva, the Group’s leading interiors title) and the now consolidated joint venture with Sanoma, which publishes Grazia and Interni in Russia; excellent performances were also recorded by Flair Austria and Casaviva Greece.

• Advertising

In the first half of 2008 Mondadori Pubblicità recorded revenues of €178.2 million (+1% on the €176.4 million of the first half of 2007), with a performance above the market average, despite the significant slowdown of the second quarter.

Advertising sales for magazines were sustained by a good performance for weeklies, with significant increases being recorded above all by Grazia (up more than 10%) and Tv Sorrisi e Canzoni (+10%); Panorama performed well (+1.6%); while Donna Moderna and Chi remained stable; among the monthlies, there were stand out performances by Flair (+5%) and the specialised titles in the upscale Design and Interiors segment, which were up by around 10%.

In other media, in a difficult half year for il Giornale (-18%), there was a particularly positive performance on the internet (+15%), with an absolutely stand out performance by the new Donna Moderna site. There was also a significant increase in radio, with R101 which, with a growing audience, saw its advertising grow by 43.9% compared with the first half of 2007, and well above the market trend.

• Printing

In the first six months of 2008 the Printing Division generated revenues of €196.1 million, a 11.8% fall against the €222.4 million of the same period of the previous year. On a comparable basis, excluding the printing activities for Mondadori Education, no longer managed in 2008, the fall would be 7.4%.

The fall in like-for-like revenues was the result of a marked downturn in printing contracts for add-on sales initiatives for both the Group and third parties and the exceptional increase in the value of the euro against the dollar and the pound, while in terms of volume, the foreign market for catalogues and commercial products remained essentially stable.

During the period the cost of paper increased by between 1 and 2%, while energy costs (gas and electricity) continued to increase substantially.

The level of plant use was satisfactory and in line with the budget, having significantly reduced outsourcing activities; this was made possible also by the full use of recent investments which are now fully operational.

• Direct marketing

In the first half of 2008 Cemit Interactive Media generated revenues of €12 million, a 9.1% fall compared with the €13.2 million of the previous year. The sales mix has improved, in favour of activities with greater added value.

Continuing cost controls, along with a organisational structure review, has made it possible to safeguard levels of profitability in a difficult market context.

• Retail

Revenues from the Retail Division in the first half of 2008 rose to €86.2 million from the €77.8 million of 2007, an increase of 10.8% compared with the same period of the previous year.

Mondadori Franchising recorded first half revenues of €28.3 million (+18.7% compared with the €23.8 million in the first half of 2007). The network development programme continued during the period which, with 209 bookstores (compared with 191 on 30 June 2007) and the 152 Edicolè outlets (compared with 104 at the same point of the previous year), is now the most extensive in Italy for editorial products.

Mondadori Retail generated first half revenues in 2008 of €58 million, an increase of 7.6% on the €53.9 million of 2007, despite a difficult context for consumer spending in the non-food sector.

Following the opening of the new Multicenter store in Marcianise (CE), the company now has 29 outlets and has focused on the integration of the former Messaggerie Musicali (Mondadori Shop) stores and the rationalisation of the chain.

• Radio

During the first half of 2008 gross advertising revenues for Radio R101 amounted to €11.8 million, which corresponds to a net figure of €8.2 million, and increase of 54.7% on the €5.3 million of the same period of the previous year.

In an essentially stable market in terms of audience, in the first half of 2008 R101 reached a daily average of 2.1 million listeners, a 7% increase compared with the first half of 2007. Over the seven-day period, Radio R101 confirmed its position among the top six Italian commercial radio stations with more than 8.8 million listeners.

Expectations for the full year

In the second quarter of the year the market saw an intensification of the same critical elements that characterised the first. Of particular relevance was the negative effect of the real and perceived situation in terms of consumer spending and investment.

In this context the Mondadori Group has set in motion actions to safeguard the profitability of its core business, establishing further and significant efficiency objectives, and has continued with growing commitment, its development policy for new activities both in Italy and abroad.

Mondadori’s demonstrable managerial competence and leadership position in its reference markets are expected to allow the company, despite the difficult situation, to confirm its management results, net of the downturn ion add-on sales, a decline which shows no sign of ending in the short term.

§

As per article IA.2.9.3 n.4 of Rules for the Regulation of Markets, it should be noted that the following bonded loans are due to expire in the eighteen months subsequent to 30 June 2008:

Date of issue: 20/10/2003;

Amount: €109,900,000 corresponding to n°. 1,099 bonds of a value of €100,000 each, convertible in ordinary shares of Arnoldo Mondadori Editore S.p.A.;

Issuer: Mondadori International S.A., wholly owned by Arnoldo Mondadori Editore S.p.A.;

Guarantor: Arnoldo Mondadori Editore S.p.A.;

Date of expiry: 20/10/2008.

§

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. today announced the completion of the exclusive negotiation agreement – previously communicated to the market on 29 April – formalised today with the sale to Motor Presse France of six specialised titles published by Mondadori France group.

Under the terms of the agreement the activities relative to the publication of Le Cycle; l’Officiel du Cycle de la Moto et du Quad; Bateaux; Golf Européen, Golf Magazine and Guide Bel-air have been transferred, along with some support structures.

The final price of the transaction has been agreed at €8.3 million.

Arnoldo Mondadori Editore S.p.A. has defined an agreement for exclusive negotiations, with the French publisher Sofimav, for the sale of the specialist titles La Pêche et les Poissons and Pêche Mouche (2007 revenues: circa €2 million). In France and in Spain Sofimav is the publisher of magazine titles in the leisure sector (Plongée Magazine, Apnéa, Balades, la pêche de la truite, la pêche des carnassiers, Sanglier Passion, Bécasse Passion, Buceadores).

This is a continuation of the widely announced rationalisation of the Mondadori France portfolio which will increasingly focus on upscale and mass market titles.

Implementation of the negotiation agreement is subject to the completion of the consultation procedure with the works council foreseen by French legislation.

The Board of Directors of Arnoldo Mondadori S.p.A. today approved a proposal by the company’s Remuneration Committee for the assignment for the year 2008 of the options pertaining to the stock option plan deliberated by the AGM of 26 April 2006 and referring to the three-year period 2006/2007/2008.

In particular, the Board defined the assignment of a total of 2,850,000 options to a total of 69 beneficiaries.

The plan is based on the annual assignment of options, which are personal and non-transferable, for the acquisition of Mondadori ordinary shares held by the company in its Treasury Stock – in the ratio of one share (regularly held) for each option exercised – at an exercise price of not less than the arithmetical average of the reference price for Mondadori shares in the period from the date of assignment of the options to the same day of the previous calendar month. The exercise of options may only be made in a single operation, in the exercise period subsequent to the stipulated thirty-six month vesting period.

This document contains the information, for the year 2008 and with specific reference to the assignments agreed today by the Board of Directors, required by the terms of Art: 84 bis, Para 5, of the CONSOB regulation n° 11971/1999 and subsequent modifications (“Issuers’ Regulations”).

Such information is provided, where applicable, according to the outline 7 of tf attachment 3 A of the Issuers’ Regulations.

TERMS USED

The terms listed below and used in this document may be defined as follows:

Assignment 2008: the allocation to beneficiaries of options for 2008 deliberated by the Board of Directors on 19 June 2008;

Treasury Stock: ordinary shares of Arnoldo Mondadori Editore S.p.A. with a nominal value of €0.26 for each share, traded in the blue chip segment of the electronic stock market managed by Borsa Italiana S.p.A., and held by the company as treasury stock as per Art. 2357 of the civil code;

Beneficiaries: the persons identified by the Board of Directors on 19 June 2008 as beneficiaries of the options for the year 2008;

Options: the right, personal and non-transferable, given to beneficiaries by the Board of Directors on 19 June 2008 and exercisable for the acquisition of shares from the treasury stock in the ratio of one share (regularly held) for each option exercised;

Exercise period: the period from 20 June 2011 to 19 June 2014, the period in which, exclusively in a single operation, options may be exercised;

Plan: the stock option plan, established, as per Art. 114 bis of Legislative Decree n° 58 of 24 February 1998, by the company’s Annual General Meeting of 26 April 2006 and referring to the three-year period 2006/2007/2008;

Exercise price: the price of €4.565, for purchase by the beneficiaries, for the exercise of each option allocated. The exercise price was determined by the Board of Directors on 19 June 2008 and corresponds to the arithmetical average of the reference price for Mondadori shares in the period from the date of assignment of the options to the same day of the previous calendar month;

Company: Arnoldo Mondadori Editore S.p.A., corporate address – Via Bianca di Savoia 12, Milan.

1. Beneficiaries

1.1 Names of beneficiaries who are members of the board of directors, or better, the management board of the issuer of financial instruments, of holding companies of the issuer and any companies directly or indirectly controlled by it.

1.2 Categories of employees or associates of the issuer of financial instruments and any holding or subsidiary companies of the same.

The Plan is aimed at beneficiaries to be identified by the Board of Directors, in response to proposals by the Remuneration Committee, from among those in the following categories:

– executives of the Company and its subsidiaries with functions having a relevant impact on the achievement of the Mondadori Group’s strategic objectives;

– directors of the Company and its subsidiaries;

– journalists employed by the Company with the role of editor or co-editor of a title;

– managers of the holding company with an executive role that is carried out in the interests of the Company.

The Plan is of “particular relevance” under the terms of Art. 114 bis of Legislative Decree. 58/1998 and Art. 84 bis para.2 of Issuers’ Regulations in that it foresees, among the possible beneficiaries identified, persons that:

a) are members of the board of directors of the Company;

b) are executives of the Company with regular access to privileged information and the powers to take management decisions that could impact on the evolution and future prospects of the Company.

With regard to the assignments for 2008, those indicated who are currently members of the board of directors of the Company are:

Marina Berlusconi – Chairman

Maurizio Costa – Deputy Chairman and Chief Executive

Carlo Maria Vismara – Director

1.3 Names of beneficiaries who are part of the following groups:

1.3 a) beneficiaries with executive functions, indicated in Art. 152-sexies, para 1, c)-c.2 in the share issuing compan

Not applicable.

1.3 b) persons with executive functions in directly or indirectly held subsidiary companies of a share issuer, when the book value of the stake in the aforementioned subsidiary company corresponds to more than fifty percent of the assets of the share issuer, as declared in the most recently approved annual report, as indicated in Art. 152-sexies, para. 1, c)-c.3

Not applicable

1.3 c) individuals with a controlling interest in the share issuer, who are employees or provide their professional services to the share issuer

Not applicable

1.4 a) description and number, of all of the executives with access to privileged information and with the powers to take management decisions that could impact on the evolution and future prospects of the share issuer, as indicated in Art. 152-sexies, para. 1, c)-c.2

There are 9 executives among the beneficiaries of the assignment for 2008 with regular access to privileged information and the powers to take management decisions that could impact on the evolution and future prospects of the Company, as indicated in Art. 152-sexies, para. 1, c)-c.2 in the Issuers’ Regulations.

These executives – the heads of the business divisions and the central functions of the Company – fall within the description of relevant individuals identified by the board of directors and subject, as per Art. 114 para. 7 of D.Lgs. 58/1998, to the obligations for the communication of operations involving shares issued by the Company or other financial instruments linked to the shares.

1.4 b) description and number, of all of the executives with access to privileged information and with the powers to take management decisions that could impact on the evolution and future prospects of directly or indirectly held subsidiary companies of a share issuer, when the book value of the stake in the aforementioned subsidiary company corresponds to more than fifty percent of the assets of the share issuer, as declared in the most recently approved annual report, as indicated in Art. 152-sexies, para. 1, c)-c.3

Not applicable.

1.4 c) description and number of any other categories of employee or associate for which the Plan foresees different characteristics plan.

Not applicable.

1.4 d) in cases in which, with regard to stock options, for persons indicated in a) and b) exercise price is foreseen that is different from that for persons in the two categories, it is necessary to indicate separately those under a) and/or b), and their names

Different characteristics are not foreseen in the Plan for the categories of beneficiaries and, in particular, the exercise price for Options, which are determined by the criteria indicated in para. 4.19 below, are the same for all beneficiaries

2. The motivations for the Plan

2.1 The aims to be achieved by the application of the Plan

The reasons that underlie the Company’s adoption of the Plan are essentially to:

– provide the Company and its subsidiaries with a way of building loyalty among the management and aimed at focusing on the commitment to the attainment of strategic objectives;

– allow management itself, and therefore the Company, to develop an orientation toward the process of value creation.

The scale of the Options to be allocated to each of the Beneficiaries is established by the board of directors, in response to proposals by the Remuneration Committee.

Contextually, the board of directors has established – in line with the criteria outlined in para. 4.19 below – the exercise price and has deliberated the allocation of Options.

The Plan is extended across a period of time of three years (2006/2007/2008) and foresees periods for the exercise of Options subsequent to each year of reference of the plans. Such periods begin after a vesting period of 36 months from the date of the allocation of Options. The length of this last period, as well as being imposed by fiscal regulations with a view to recognising favourable fiscal conditions, is considered appropriate to the realisation of the Plan’s incentive and loyalty objectives.

2.2 Key variables, also in the form of performance indicators considered for the allocation of plans based on financial instruments

The implementation of the Plan, in terms of the effective exercising of the Options allocated to the Beneficiaries, is subordinate – as is outlined in para. 4.5 below – to the achievement of annual performance objectives of business and/or financial nature.

Exercise conditions are applicable to all Beneficiaries and there are therefore no different or particular conditions for different categories of Beneficiary

2.3 Elements underlying the determination of the scale of rewards based on financial instruments, or better, the criteria for its determination

The number of Options awarded to individual Beneficiaries has been determined by evaluating the effective capacity of each individual to effectively impact the attainment of results, on the basis of experience, competence and role within the Company.

2.4 Underlying reasons for the eventual allocation of compensation plans based on financial instruments not issued by the issuer of financial instruments, such as holding or subsidiary companies or third parties; where such instruments are not traded on regulated markets information concerning the criteria used to determine their attributable value

Not applicable.

2.5 Evaluations concerning significant implications of a fiscal or accounting nature that have affected the determination of the Plans

The structure of the Plan was conditioned by current fiscal legislation, in particular:

• the Art. 9, para. 4, a) of the TUIR, determined the calculation of the exercise price for Options, which is equal to the “normal value” of shares when Options are allocated;
• the Art. 51, para. 2-bis of the TUIR, imposed the stipulation of a minimum vesting period of 36 months subsequent to the allocation of Options

2.6 Eventual support for the Plan by the special Fund to provide incentives for employees of the Company, as per Art. 4, para. 112, of law n°350 of 24 December 2003

The Plan receives no support from the special Fund to provide incentives for employees of the Company, as per Art. 4, para. 112, of law n°350 of 24 December 2003

3. Approval process and timing for the allocation of instruments

3.1 / 3.2 The powers and functions attributed by the Shareholders to the board of directors for the implementation of the Plan/indication of those appointed to administer the Plan, their function and competence

As already stated, the Plan was established by and ordinary general meeting of the Shareholders of Arnoldo Mondadori Editore S.p.A. on 26 April 2006. The AGM attributed the functions for the management of the Plan to the board of directors, which operates with the support and in response to the proposals of the Remuneration Committee.

In particular, the board of directors, in agreement with the Remuneration Committee:

a) approves the regulations for the implementation of the Plan and any eventual modifications;

b) presents Plans to the AGM for approval in general outline and any eventual modifications of a significant nature;

c) identifies, in line with the categories indicated by the AGM, the Beneficiaries;

d) allocates Options to the identified Beneficiaries;

e) determines the exercise price for Options in line with the normal value of the shares;

f) identifies and quantifies, for each year length, the performance objectives to be reached before Options may be exercised and verifies that such objectives have effectively been attained;

g) regulates all emerging rights and/or rectifies the conditions of allocation in cases where extraordinary operations are effected on the Company’s share capital as per para. 4.23 below.

3.3 Any existing procedures for the revision of the Plan also in response to changes in the basic objectives

With the exception of that outlined in para. 4.23 below, no procedures are foreseen for the revision of Plan in response to changes in the basic objectives.

Any eventual substantial changes to the Plan that may become necessary in the light of changed business conditions and new Group objectives will be proposed by the board of directors to a General Meeting of the Shareholders.

3.4 Description of the way in which the availability and allocation of the financial instruments underlying the Plan are determined

Allocated Options include the right to purchase – in the ratio of one share (regularly held) for each option exercised – Mondadori ordinary shares already in the portfolio or to be acquired on the basis of authorisation from, in the most recent case, the AGM of 22 April 2008, as per Art. 2357 of the civil code and Art. 144-bis of the Issuers’ Regulations.

3.5 Role of each director in the determination of the characteristics of the mentioned Plans; any grounds for conflicts of interest on the part of directors involved

The characteristics and guidelines for the Plan have been drawn up by the Remuneration Committee and presented to the board of directors before, in turn, being presented to a General Meeting of the Shareholders.

It should be noted that the deliberations of the board of directors concerning, in particular, the identification of Beneficiaries and the allocation of Options, have been adopted:

– in line with the relative proposals made by the Remuneration Committee, which is made up of three non-executive directors who are also not Beneficiaries of the plan;

– with the abstention of interested directors.

3.6 Date decided by the competent body for the approval of the Plan by the Shareholders and any eventual proposal to the aforementioned body formulated by an eventual remuneration committee

The establishment of the Plan for 2006/2007/2008 was presented for approval to the AGM of 26 April 2006 following the decision taken by the board of directors on 14 March 2006 on the basis of the proposal made by the Remuneration Committee on 9 March 2006.

3.7 Date decided by the competent body for the assignment of instruments and any eventual proposal to the aforementioned body formulated by an eventual remuneration committee

The board of directors decided the date for the assignment of Options for the year 2008, indicating also the exercise price, on 19 June 2008 on the basis of the proposal made by the Remuneration Committee on 12 June 2008.

3.8 Market price, recorded on the aforementioned dates, for the financial instruments underlying the Plan, if traded on regulated markets

The market price (reference price) for Mondadori shares recorded on the dates as indicated in paras. 3.6 and 3.7 above, were as follows:

Date Reference price 09/03/2006 7.934 14/03/2006 8.027 12/06/2008 4.288 19/06/2008 3.911

3.9 In the case of plans based on financial instruments traded on regulated markets, in what terms and on what basis does the issuer take account, in the context of the identification of the timing for the allocation of the instruments in pursuance of such plans, of the possible temporal coincidence between:

i) such allocation and eventual decisions taken in this regard by the remuneration committee, and

ii) the circulation of eventual relevant information, as per Art. 114, para. 1; for example, in the case where such information are:

1. a. not already published and liable to have a positive impact on market prices, or even
2. b. already published and liable to have a negative impact on market prices

With regard to the timing of the allocation of Options, reference is made to the dates of the deliberations with which, as indicated above, the board of directors, following a proposal by the Remuneration Committee determined the exercise price for Options and allocated Options to the persons identified as Beneficiaries.

Such deliberations were not adopted at the same time as relevant information was published, as per Art. 114, para. 1 of D. Lgs. 58/1998, in order to avoid significant interference between the impact of such information on market share prices and the definition of the exercise price of the Options.

It should also be noted that the exercise price for Options is in any case defined on the basis of the average share price recorded over a significant period of time, as per Art. 9, para. 4, a) of the TUIR, as is outlined in more detail in para. 4.19 below, thereby reducing the effect of eventual unexpected increases or decreases in the share price.

4. Characteristics of the instruments attributed.

4.1 Description of the form in which plans for compensation based on financial instruments are structured;

The instruments attributed are in the form of Option rights that can be exercised, exclusively in a single operation, and in the exercise period indicated below, for the subsequent purchase, with the obligation for physical delivery, of Mondadori ordinary shares from treasury stock, in the ratio of one share for every Option exercised. In consequence, a stock option.

4.2 / 4.3 / 4.4 Indication of the period for the effective implementation of the plan, with reference also to eventual alternative cycles foreseen / terms of the plan / maximum number of financial instruments, also in the form of options, assigned in every fiscal year for each individual nominated or category indicated

The following table shows, for the assignment for 2008 agreed by the board of directors on 19 June 2008, the number of Options allocated:

– to Beneficiaries who are also currently members of the board of directors of the Company;

– to all of the executives who are Beneficiaries of the Plans who have regular access to privileged information and the powers to take management decisions that could impact on the evolution and future prospects of the Company, indicate in Art. 152 sexies, para 1, c)-c.2 of the Issuers’ Regulations;

– to all Beneficiaries of other categories as indicated in 1.2 (executives of the Company and its subsidiaries with functions having a relevant impact on the achievement of the Mondadori Group’s strategic objectives, including journalists employed by the company and its subsidiaries with the role of editor or co-editor of a title).

Also indicated is the exercise price – determined according to the criteria outlined in para. 4.19 below – and the exercise period.

Year of reference Name/Category Options allocated Allocation date Exercise price Exercise period 2008 Marina Berlusconi – Chairman 360,000 19.6. 2008 4.565 20.6.2011/19.6.2014 2008 Maurizio Costa – Chief executive 450,000 19.6.2008 4.565 20.6.2011/19.6.2014 2008 Carlo Maria Vismara – Director 70,000 19.6.2008 4.565 20.6.2011/19.6.2014 2008 All of the executive Beneficiaries indicated in Art. 152 sexies, para 1, c)-c.2 of the Issuers’ Regulations 550,000 19.6.2008 4.565 20.6.2011/19.6.2014 2008 All Beneficiaries of other categories (executives of the Company and its subsidiaries with functions having a relevant impact on the achievement of the Mondadori Group’s strategic objectives, including journalists employed by the company and its subsidiaries with the role of editor or co-editor of a title). 1,420,000 19.6.2008 4.565 20.6.2011/19.6.2014

4.5 Terms and conditions for the implementation of the plan, specifically whether the attribution of instruments is subordinate to the verification of certain conditions, or better, the achievement of determined results, also performance based; description of such conditions and results

The regulations for the Plan foresee that the board of directors identify the effective conditions for the exercise of Options attributed to the Beneficiaries with reference to the attainment of performance objectives of a business and/or financial nature on annual basis.

Satisfaction of the conditions for exercising Options is verified by the board of directors, for each year of the length of the Plan, within the first six months of the subsequent year to which the Options pertain.

The board, in agreement with the Remuneration Committee, has identified, as conditions for the exercise of Options, the attainment of performance objectives based on ROE and free-cash flow.

The conditions for exercise apply to all Beneficiaries of the Plans and there are therefore no different conditions for other categories of Beneficiary.

4.6 Indications of any eventual restrictions affecting the attributed instruments or on the instruments deriving from the exercise of options, with particular reference to the terms within which the subsequent transfer to the same company or to third parties is permitted or forbidden

Allocated Options are personal and non-transferable and not available “inter vivos” and may not be pawned or used as a guarantee for the Company or for third parties.

There are no restrictions on the availability of the shares deriving from the exercise of Options.

4.7 Description of any eventual conditions in regard to the attribution of the plans in the case in which beneficiaries effect hedging operations that make it possible to neutralise any restrictions on the sale of financial instruments allocated, also in the form of options, or instruments deriving from the exercise of options

Further to what is stated in para. 4.6 above, no specific conditions are foreseen in regard to the attribution of the plans in the case in which beneficiaries effect hedging operations that make it possible to neutralise any restrictions on the sale of Options attributed.

4.8 Description of the effects determined by a termination of the professional relationship

The effects determined by a termination of the professional relationship with persons identified as Beneficiaries are as follows:

– in the case of retirement during the period of validity of the Plan, Beneficiary retains the right to exercise, in the exercise period, any exercisable Options;

– in the case of the death of a Beneficiary, the conditions outlined above apply to the legal heirs of the Beneficiary.

– in the case of a professional relationship terminated by the voluntary resignation or the rightful dismissal, for grave misconduct or violation of duty, good faith and loyalty undermining the basis underlying the Plan, the Beneficiary loses all rights, with the consequence that all exercisable Options attributed under the terms of the Plan and not yet exercised will be immediately and automatically extinguished, without any right of indemnity or compensation of any kind.

– in the case of a professional relationship terminated for reasons other than those outlined above, the board of directors will determine, as and when appropriate, what line should be taken on exercisable Options.

In cases where the Beneficiary is a director of the Company or of a subsidiary, as per Art. 2359 of the civil code., of Arnoldo Mondadori Editore S.p.A., the following will apply:

(i) in the case where a director voluntarily resigns from the board or the directorship is lawfully revoked, as per Art. 2383 of the civil code., the Beneficiary will lose all rights, with the result that all exercisable Options allocated to the director and not yet exercised will be automatically extinguished without any right of indemnity or compensation of any kind;

(ii) in the case of the end of the mandate for a director, as per Art.. 2382 of the civil cod., the board of directors will determine, as and when appropriate, what line should be taken on exercisable Options;

(iii) in the case where a director’s mandate is terminated for reasons other than those stated above at (i) and (ii) or for expiry of the mandate, the Beneficiary will retain the right to exercise any exercisable Options.

4.9 Indications of other eventual causes of annulment

Further to the provisions regarding the exercise period for Options, in the case of a sale to third parties of the control of a subsidiary of Arnoldo Mondadori Editore, the exercise of Options allocated to Beneficiaries who are employees or directors of the said company must be completed within 30 days of announcement being made to the Beneficiaries of the sale of control. After this period the exercisable Options allocated to such Beneficiaries on the basis of the Plan will be considered automatically extinguished without any right of indemnity or compensation of any kind.

4.10 Motivations concerning the eventual possibility of “redemption”, by the company, of the financial instruments that are the object of the plan, as per Art. 2357 and ff. of the civil code; the beneficiaries of such redemption indicate whether this would apply only to specific categories of employee; the effects of the termination of the professional relationship on such a redemption

Not applicable.

4.11 Eventual loans or other subsidies that may be applied for the purchase of shares, as per Art. 2358, para. 3 of the civil code

Not applicable.

4.12 Indications regarding the evaluation of charges that the company expects to meet on the date of allocation, determinable on the basis of the terms and conditions already outlined, for the total amount and in relation to each instrument in the plan

According to the terms of IFRS 2, stock options are evaluated at fair value at the moment of allocation. Given the regulations governing the Plan, fair value is determined using a binomial model.

Such benefits are booked as personnel costs during the period of service, consistently with the vesting period and starting from the date of allocation and balanced under net assets in the item “Reserve for stock options”.

The benefits recognised directly by the parent company Arnoldo Mondadori Editore S.p.A. to employees/directors of subsidiary companies are book as an increase in cost of the relative stake holding, and balanced under net assets in the item “Reserve for stock options”.

Subsequent to the date of allocation, a change in the number of options will involve an adjustment to the overall cost of the Plan to be booked as indicated above. At the end of each year the fair value of each Option previously determined is neither reviewed or updated, but remains definitively acquired and booked under net assets; on the same date, meanwhile, there is an updating of the estimate of the number of shares that will mature by the expiry date ( and therefore the number of employees that will have the right to exercise the Options). Changes in the estimate may lead to an adjustment in the “Reserve for stock options”” booked to the income statement between personnel costs or a reduction in the item “Equity holdings” if relative to benefits recognised to employees/directors of subsidiary companies.

When Options are exercised the part of the “Reserve for stock options” relative to the options exercised is reclassified under “Share premium reserve”; the part of the “Reserve for stock options” relative to cancelled options, or un-exercised options at the expiry date, is reclassified under “Other reserves”.

The parameters used for the numerical calculation of binomial tree for the 2008 allocations are as follows:

Year of allocation 2008 Exercise price of option 4.565 Life of option (residual years) 6 Current price of underlying shares at the date of allocation in € 3.911 Expected share price volatility 35% Dividend yield 8.9491% Interest rate without risk for the duration of the option 5.15%

4.13 Indication of eventual dilutory effects determined by compensation plans

Not applicable in that the Plan does not involve a capital increase for the Company

4.14 Eventual limits foreseen for the exercise of voting rights and the attribution of rights on assets

No limits are foreseen for the exercise of voting rights and for the attribution of rights on assets referring to shares purchased as a result of the exercise of Options.

4.15 In the case where shares are not traded on regulated markets, all useful information for an overall evaluation of the attributed value

Not applicable.

4.16 Number of financial instruments underlying each option

Each Option attributed gives the right to the acquisition of one Share.

4.17 Expiry of Options

Options expire on the first day subsequent to the term of the exercise period as indicated in the table at 4.2 above. Options that are not exercised by this date are cancelled and consequently no longer carry any rights for Beneficiaries.

4.18 Exercise procedures, timing and conditions

Options may be exercised, in a single operation, exclusively in the exercise period that begins from the expiry of the specific vesting period of 36 months from the date of the allocation of Options, as indicated in the table at 4.2 above.

4.19 Exercise price of options and the procedure and criteria for its determination, in particular concerning:

a) the formula used for the calculation of the exercise price in relation to the fair market value, and

b) the procedure for the determination of the market price used as the reference price for the determination of the exercise price

The exercise price for Options has been determined by the board of directors – as outlined in para. 3.7 above – in line with Art. 9, para. 4, a) of the TUIR, with reference to the “normal value” of the Shares, and corresponds to the arithmetical average of the reference price for Mondadori shares in the period from the date of assignment of the options to the same day of the previous calendar month.

The exercise price for Options is indicated in the table at 4.2 above.

4.20 In the case of the exercise price not being equal to the reference price determined as indicated at 4.19.b above (the fair market value), what are the reasons for the difference

Not applicable.

4.21 Criteria for which different exercise price would apply to the various individuals and categories of Beneficiary

Not applicable.

4.22 In the case in which the financial instruments underlying the options are not trade don regulated markets, an indication of the attributed value of the underlying instruments or the criteria for determining such value

Not applicable.

4.23 Criteria for adjustments made necessary as a result of extraordinary capital operations and other operations involving changes in the number of underlying instruments (capital increases, extraordinary dividends, reverse splits or splits in underlying shares, mergers and disposals, conversion operations in other categories of shares etc.)

In the case of the following extraordinary operations, the board of directors, with a view to maintaining unaltered the economic aspect of the allocated Options, will proceed, when conditions allow, to adjusting the exercise price and/or the number of Shares in relation to the Options not yet exercised:

(a) operations for reverse splits or splits;

(b) operations for free capital increases;

(c) operations for paid capital increases with the issue of shares, of shares linked to warrants, convertible bonds or bonds convertible with warrants;

(d) mergers or disposals;

(e) operations for capital reductions.

In the case of any of the above, and always assuming appropriate conditions, the board of directors will proceed with the adjustment of the acquisition price according to widely accepted rules practiced by financial markets, making use of standard adjustments and nominating an independent expert to make a judgement on the correctness of the method used for the adjustment to the price and the result obtained. Such adjustment, as well as the judgement of the independent expert, will be communicated in writing to the Beneficiaries.

Segrate, 19/6/2008