2012

The Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, met on today’s date to examine and approve the consolidated financial statements and the parent company financial statements as at December 31, 2012. Following to Maurizio Costa’s resignations from the post of Vice-President and CEO – as already disclosed to the market on last February 28 – the Board of Directors coopted Ernesto Mauri, appointing him CEO.

“Mr. Mauri has a complex but clear mission: giving further thrust to reorganize and improve our activities, and introduce strong elements of innovation and change”, said the President Marina Berlusconi. “In the name of the entire Board, I extend to him my best wishes to continue the excellent job he has accomplished so far within Mondadori at the highest level of responsibility”, she concluded.

THE MARKET SCENARIO

As we know, global economy and, in particular, the economy in the euro zone, continued to worsen also in the second half of 2012.

In Italy GDP posted a further drop (-2.4%) on an annual basis, unprecedented in the last twenty years. Also the unemployment rate, which rose from 8.4% to 10.7% in just one year, hit a peak since 1993, while consumer spending decreased by 3.8%.

In France, where the economic situation seems less difficult though also showing a rising unemployment rate (from 9.4% in 2011 to 10.2%) and consumer spending and GDP equal to zero growth, the values of Mondadori activities in the markets of reference proved less negative.

GROUP PERFORMANCE FOR THE YEAR ENDED AT DECEMBER 31, 2012

The Mondadori Group closed 2012 with a 6% reduction in revenues and EBITDA 49% lower than in the previous year; impairment on assets equaled euro 194.3 million, thus showing a negative result in the income statement at euro -167.3 million, which net of impairment would have instead been positive for euro 12 million.

Net consolidated revenues amounted to euro 1,416.1 million, down 6% against euro 1,507.2 million of 2011. Net of the consolidation of the EMAS joint venture (Editions Mondadori Axel Springer S.n.c.) in Mondadori France, the revenue reduction would have been equal to 8.6%.
Consolidated EBITDA amounted to euro 66.5 million, down 49% against euro 130.4 million of the previous year.
Excluding non-recurring items and restructuring costs, the reduction in EBITDA would have been equal to 38.9%.

Consolidated EBIT was negative for euro 151.6 million (against euro +103.8 million in 2011) after impairments for euro 194.3 million, mainly attributable to the goodwill of Mondadori France (euro 140 million) and the R101 radio station (euro 46.3 million). Amortizations and depreciations for the year totaled euro 25.1 million (euro 23.3 million in 2011).

Consolidated pre-tax profit was equal to euro -173.8 million, (euro 82.7 million in 2011) with financial charges amounting to euro 22.2 million (euro 20.5 million in 2011).

Consolidated net profit was negative at euro -167.3 million against euro + 49.6 million in 2011; net of impairments, 2012 would have closed with a consolidated net profit equal to euro 12 million.

As for balance sheet items, consolidated net equity equaled euro 433.8 million against euro 608.9 million of the previous year; the Group’s net financial position posted euro -267.6 million, up euro 67.8 million against 2011 also as a result of the transfer, completed in November, of the 50% interest owned in Random House Mondandori to Bertelsmann for a price equal to euro 54.5 million.

Information on personnel

At December 31, 2012 the Group employees with a permanent or temporary employment contract amounted to 3,703 people and the cost of personnel amounted to euro 290.4 million.

On a like for like basis, that is, net of the integral consolidation of the French joint venture Editions Mondadori Axel Springer S.n.c., personnel values dropped by 1.3%.

In fact, the final cost of personnel takes into account the already mentioned transaction with Emas, the merger into Arnoldo Mondadori Editore S.p.A. of the former joint-venture Mondadori Rodale, and a higher fund allocation for the restructuring started in the year of reference and is lower than 1.4%.

In addition to the ongoing rationalization and efficiency actions constantly implemented since 2009 in all Group companies, the results obtained are mainly attributable to specific re-organization actions started in the Direct area and, specifically, to the approval of a new restructuring plan that is expected to be completed by April 2014 for 152 redundant graphic-publishing workers belonging to Arnoldo Mondadori Editore S.p.A., Mondadori Pubblicità S.p.A. and Press-Di Distribuzione Stampa e Multimedia S.r.l..

Since, for bureaucratic reasons, they were implemented only in the second half of the year, these actions had only a limited economic and quantitative impact on the financial year of reference.

These efficiency actions have been combined with company development and rationalization actions aimed at favoring the Group’s growth strategy, with a view to enhancing the Group’s presence in the digital segment and internationally. In this respect, the establishment of Mondadori International Business S.r.l. is particularly relevant.

In the Direct area, where a rationalization process was started long ago on all points of sale, a negotiation table was opened last December 2012 for the definition of job security agreements for the employees of the offices of Mondadori Direct S.p.A. in Milan, Brescia and Rimini, for a total of 239 people. A similar job security agreement was reached for Mondadori Iniziative Editoriali S.p.A..

For Cemit Interactive Media S.p.A., an agreement was reached to reduce the number of jobs through redundancy payments and mobility.

In addition, it should be noted that in December 2012, also in Arnoldo Mondadori Editore S.p.A. Magazines area, negotiations were opened with the trade unions representing the journalists, for the purpose of examining the consequences of the shutting down of five magazines and the re-organization of the publisher’s remaining editorial staff. Negotiations are still underway.

RESULTS BY BUSINESS AREA

· BOOKS

In 2012 the trade book market decreased both in terms of copies (-6.9%) and value (-7.8%) against 2011 (source Nielsen) with a lower improvement than expected in the last month of the year. This reduction hit all the channels cross-sectionally: bookstores, hypermarkets and e-commerce.

In this context, the Mondadori Group increased its market share in terms of value (27.6%), confirming its leadership in the trade book segment.

In 2012 revenues from the Mondadori Books segment amounted to euro 370.6 million, down 4.8% against euro 389.1 million in the previous year.

Among the Group’s trade book publishers, in 2012 Edizioni Mondadori increased its market share in terms of value (14.1% against 13.3% in 2011), thanks to the excellent performance of a few publications: four titles ranked among the ten best sellers in 2012 and 43 were in the top 100.

Particularly important to Mondadori was the increase in foreign fiction, with the erotic trilogy by E.L. James, Cinquanta sfumature di grigio, Cinquanta sfumature di nero and Cinquanta sfumature di rosso, which exceeded 3,300,000 copies sold in Italy and 130,000 e-book downloads, the first, third and fourth, respectively, in the best seller lists for the year.

Mondadori also won the most prestigious Italian literary prizes, including the Strega Prize in July 2012 with Inseparabili by Alessandro Piperno, and the Campiello Prize, in September 2012, with La collina del vento by Carmine Abate.

Ken Follett’s new book, L’inverno del mondo, posted an excellent performance, coming in sixth in the 2012 general ranking, with over 300,000 copies sold and over 40,000 e-book downloads, as did the long-awaited second book by Paolo Giordano, Il corpo umano, printed in 300,000 copies.

In the educational segment, in 2012 Mondadori maintained a significant position in the school text book segment with a 12.8% market share.

During the year of reference Mondadori Education made massive investments: from a publishing perspective to update text books, and from a technological standpoint to produce books in digital format.

E-Book
Mondadori is market leader in the e-book segment with a market share of approximately 40%. In 2012 1.2 million books of the Group’s trade publishers were downloaded, with a 2% incidence on the net revenues of the hard copy product.

Among the most successful e-books, included in a catalogue of 4,000 titles in total, in addition to the trilogy Cinquanta sfumature, the following are worth noting: L’inverno del mondo by Ken Follett, La Dieta Dukan by Pierre Dukan, Steve Jobs by Walter Isaacson, 1Q84 by Haruki Murakami, the Hunger Games trilogy and the first book of the Diabolik series.

In relation to store performance, we should not overlook the sales results achieved by the Kobo platform in just a few months from its launch in the Italian market at the beginning of the last quarter of 2012.

· MAGAZINES ITALY
In an extremely dire economic scenario (the market is showing a 13.6% drop in value on a like for like basis), Mondadori magazines in 2012 posted revenues equal to euro 383.9 million in Italy, down 16.3% against euro 458.8 million of the previous year.

This result does not only reflect the negative economic performance, but also the effects of the structural changes that the segment of periodic publications has gone through in recent years, mainly linked to the evolution of the digital media and the different use of information and content, especially by the younger target.

Investments in advertising, decreasing in all channels with the exception of Internet (+5.3%), posted heavier reductions in printed magazines and papers (-17.6% for newspapers, -18.4% magazines), despite the introduction of new magazines compared to the previous year (source Nielsen)..

The circulation market was characterized by the launch of low cost products, addressed to a mass target, with relevant effects on the estimated reduction of the overall value of sales of magazines at newsstands (-10.5%, -13.6% compared with an equal number of magazines, internal source).

The results obtained in the Magazines Italy Area show different performances:

• revenues from circulation (-13.5%) were penalized by a significant drop both in the newsstand segment and subscriptions, as well as a lower number of copies sold in on-pack activities;
• revenues from the sales of add-ons, including co-editions, (-18,3%) were penalized by a drop in the sales of home videos, publishing products and gadgets, though still maintaining a good margin and the market leadership (34%);
• revenues from advertising in Mondadori magazines registered a 21.2% decrease despite the ongoing growth of Internet (+37.4%) and international (+17.1%).

International activities

International activities, concentrated since October 31, 2012 in the newly established Mondadori International Business S.r.l., carrying out licensing, syndication and advertising activities.

Licensing: in 2012 the aggregate revenue result generated by Grazia International Network- with over 20 editions all over the world – rose 8% against 2011, with a further possible increase expected in 2013 following the launch of Grazia Korea (bi-monthly) and Grazia Spain (weekly) in February 2013. As to the other international editions of Mondadori magazines, the launch of the German edition of Flair is worth noting, published by the Klambt Group in August 2012.

Syndication and photorights: this activity includes the sale of images produced by Mondadori and/or third parties, for which Mondadori acts as an agent, to a hundred of different publishers in more than forty countries.

Advertising: revenues from advertising grew by 17.1% against 2011 thanks also to the expansion of the activities in the French and Swiss markets, extending the company’s reach also to other product categories.

The Mondadori Group also owns interests in Greece, China and Russia:

– Attica Publications posted dropping revenues by 3% against 2011: considering the extremely difficult economic scenario, the performance was satisfactory and allowed the company to post a positive pre-tax result. The crisis in Greece and competitors’ difficulties enabled Attica to considerably increase its market share, obtaining benefits deriving from its leadership position.

– Mondadori Seec Advertising Co Ltd, exclusive concessionaire for the collection of advertising for the Chinese edition of Grazia, launched in 2009, posted a 56% revenue growth in 2012 against the previous year. This result enabled it to close the financial year with profits one year ahead of schedule.

– Mondadori Independent Media LLC, publisher of Grazia in Russia, closed 2012 at break-even thanks to the good performance of investments in advertising, which registered a 21% growth against the previous year.

Revenues generated from the international network of the magazines under licensing agreement and investments amounted to more than euro 160 million, up 9% against 2011.

· ADVERTISING
The continuing deterioration of the general economic situation has had a predictable impact on investment in advertising, which closed out the worst year in the past two decades (-14.3%). The market, in fact, dropped well below a value of euro 8 billion for the first time since 2003 at current prices and in real terms, down to the levels of 1991.

As already mentioned, the sharpest decline was seen in the print media, with newspapers (-17.6%) and magazines (-18.4%, reaching -21.4% if comparing the same number of publications to 2011), the sectors in which Mondadori Pubblicità S.p.A. mainly operates.

Advertising on the radio channel was also down considerably: after a positive start in 2012, advertising volumes dropped 10.2% compared to the previous year.

Internet was the only channel posting positive numbers (+5.3%), though showing signs of a sharp slowdown in the last months of the year.

In this scenario, every single segment has suffered a sharp cut in advertising investments.

Though facing increasingly aggressive competition in terms of prices, Mondadori Pubblicità paid close attention to pricing, in an attempt to reinforce the value of the publications it represents in concession.

In 2012, the company posted revenues at euro 172.9 million, down 21.4% against euro 219.9 million of 2011: all sectors were hit by the crisis, including Cosmetics, Interior Design and Automotive.

In particular:
– revenues from advertising for the Mondadori magazines were down 22.6% as a result of the negative performance of both monthlies and weeklies;
– revenues from advertising on the Radio channel dropped by 14.9%. This was largely due to cost containment policies on the part of clients from the sectors that had historically been the most important, such as Automotive, Consumer Goods and Telecommunications.

Increases in both volume and revenues from clients in the Fashion and Design sectors were not enough to counterbalance the reduction in investments by the traditional radio advertisers.

In 2012, the Mediamond S.p.A. joint venture registered an overall increase in revenues equal to 63.4%; the main web sites of the Mondadori Group are in constant growth: www.donnamoderna.com (+22%), www.grazia.it (+43%) and www.panorama.it (+22%), while RTI, TgCom (+10.5%) and Sport Mediaset (+53%) are also growing. Advertising for the www.videomediaset.it web site, which was added to the portfolio in January 2012, also posted strong growth figures.

· MAGAZINES FRANCE

The magazines market in France posted a reduction of 5.4% in value for circulation at newsstands (internal source) and lower investments from advertising by 4.9% in value (source: Kantar Media).

In this difficult scenario, Mondadori France obtained good results in 2012: revenues totaled euro 381.6 million, up 9.6% against euro 348.1 million in the previous year. On a like for like basis, excluding the integral consolidation of the Editions Mondadori Axel Springer S.n.c. joint venture, revenues would have shown a 2.2% drop in the period.

The ongoing improvement of products, combined with constant attention to cost containment policies, enabled the company to post a 16.5% increase in EBITDA against 2011, topping euro 38.9 million with a 10.2% incidence on revenues.

However, impairments amounting to a total of euro 140 million, including impairment on magazines and goodwill, had a strong impact on EBIT.

Revenues from advertising: from this standpoint, revenues on a like for like basis registered a 2.4% reduction against the previous year; in terms of volume, the decrease amounted to 1.4% in a market that showed a 5.7% overall drop (source: Kantar Media).

In the second half of the year, the advertising market showed a downturn against the first half, which had closed with results essentially in line with 2011.

In this context, Mondadori advertising revenues increased for the fourth consecutive year in terms of volume, consolidating its second position.

This excellent result reflects the growing trend of women’s magazines, including Grazia (+7.2%), Biba (+10.8%) and Pratique Modes & Traveaux (+9.1%), and the steady performance of the other publications despite the definitely unfavourable market scenario.

Revenues from circulation: revenues from circulation (newsstands and subscriptions), making for approximately 70% of the total revenues of Mondadori France, registered a reduction (-2.2% on a like for like basis).

Based on circulation audits DSH, the circulation of magazines in 2012 decreased by 4.3% in terms of copies. Mondadori registered a 3.6% reduction. For the third consecutive year Mondadori France outperformed the market.

In terms of value, sales at newsstands dropped 5% in the period. This reduction is in line with the market trend (-5.4% in the period; internal source).

Subscriptions, which rose by 0.5% against 2011, have increased by 10% over the last five years, making for 33.6% of Mondadori France revenues with over three million subscribers.

The key factors underlying the good performance of magazine circulation are ongoing innovation and publishing quality including product restyling and the launch of brand extension initiatives on the magazines.

Digital: in 2012, Mondadori France accelerated its investments in this area, targeting a 28% increase in revenues and a 67% increase in the audience, reaching 4.5 million single hits in 2012, against 2.7 million hits of 2011 (source: Nielsen).

It should be noted that at the end of August 2012, Mondadori France acquired a 60% interest in Naturabuy.fr, a leading web site for classifieds and personals, auction sales and a boutique for products associated with free time and, specifically, hunting and fishing. Last year Mondadori France also acquired the majority stake in AutoReflex.com, a web site featuring car ads.

· DIRECT

In 2012 the main products offered by the Mondadori Direct S.p.A. network registered sharp drops in revenues: books (-8%), dvd-films (-18%) and music (-14%) were all down, with the exception of gift boxes and consumer electronics, which grew respectively by 6.5% and 6% (source: GFK).

Advertising investments by companies in the traditional direct marketing channels, like door to door, mailings, inserts and telemarketing, have been in decline for several years, a logical consequence of technological innovation and the progressive replacement of these channels with web-based communication, mainly e-mail marketing and social media.

In this context, the revenues of the Direct area dropped by 5.8% to euro 261.8 million against euro 278 million of 2011.

In 2012 the top management concentrated on the following areas:
– activities related to the rationalization of sale points, which diminished by 31 units to a total of 597 sale points, in line with company policies targeting the integration of the various formats;
– further development of customer loyalty initiatives using the Mondadori Card, whose numbers have more than doubled in a year (units 700,000);
– redefinition of the strategies for retail, both hard copy and digital, with the creation of the inMondadori trademark as an umbrella brand, comprising all product and service sale formats offered, including e-commerce;
– signing of a partnership agreement with Kobo Inc. for the exclusive Italian distribution rights to the new Kobo e-reader, in various versions and formats.

· RADIO

In 2012, advertising revenues from the Radio channel, certified by Nielsen, decreased by 10.2%, with a downward trend that worsened over the course of the year (in June -5.5%, in September -8.1%, in December -10.2%).

In this context, R101 closed 2012 with a drop in advertising revenues of -13.7% compared to 2011, ascribable to a significant cut in investments by the key clients in the Automotive, Consumer Goods and Telecommunications sectors, which together accounted for more than 50% of its total revenues. Including revenues from the web site and other initiatives launched during the course of the year, total revenues were down 14.7% from euro 16.3 million in 2011 to euro 13.9 million in 2012.

EBIT reflected the effects of the reduced value of the frequencies assigned for a total of euro 46.3 million as a result of the impairment process and based on the opinion drafted by an independent professional consultant.

In terms of listeners, R101 is one of the leading commercial radio stations in Italy, with about 2.1 million listeners on an average day (source: Eurisko Radio Monitor, January-December panel) and more than 11.3 million per week (source: Eurisko Radio Monitor, February-December panel); the data on the average fifteen-minute segment for the last quarter were also very positive, posting an 18% increase over the first half of 2012 (source: Eurisko Radio Monitor).

The digital growth of R101 in 2012 was also significant: the web site reached an average of 200,000 single users per month and averaged more than 1.4 million page views per month.

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RESULTS OF PARENT COMPANY ARNOLDO MONDADORI EDITORE S.P.A.
The Annual Report of the parent company, Arnoldo Mondadori Editore SpA, for the year ended at December 31, 2012 shows a net loss of euro 39.6 million against net profits of euro 55.3 million in 2011.

The decrease was due to dropping revenues from publishing activities, particularly in the magazines area, where revenues plummeted, both in terms of number of copies sold and the sale of add-ons, as well as in the sale of advertising space.

EBITDA reflected the business trend, down from euro 48.5 million in 2011 to euro 3.9 million in 2012.

This reduction aggregates trademark depreciation for euro 1.4 million and the depreciation of Monradio (R101 frequency) for euro 46.3 million. The net balance of profits and losses from investments, including dividends received and impairments in 2011 was equal to a positive euro 35.4 million and a negative euro 30.8 million in 2012.

§

PROPOSAL TO COVER THE LOSSES FROM THE FISCAL YEAR BY UTILIZING A PORTION OF THE SHARE PREMIUM RESERVE

The Board of Directors will submit to the Shareholders’ Meeting, called on April 23, 2013 on first call (April 24 on second call) a proposal to entirely cover the losses of the 2012 fiscal year, equal to euro 39,574,943.13, through the utilization of the share premium reserve for the corresponding amount.

§

PREDICTABLE EVOLUTION

The trend in the first months of 2013 continues to be strongly negative, with an impact on the company’s main sectors of activity.
Cost reduction measures implemented in recent years have allowed Mondadori to post positive results in 2012, before impairments. However, given the difficult scenario in which the Group is currently operating in all sectors of activity, for the purpose of recovering profitability in the medium term, the Group intends to implement the following measures with even greater emphasis:

• rationalization of the structure and reduction of industrial costs, resulting in greater flexibility in responding to the changing levels of demand;
• actions necessary to consolidate high value added business lines and the recovery of profitability in the area of Italian Magazines, with the ultimate aim of further reinforcing the Group’s competitive position and make the most of any new opportunities, also in the digital area.

Realization of the above objectives will require massive financial and economic investments; for 2013 a lower EBITDA than in 2012 is expected.

RENEWAL OF THE AUTHORIZATION TO PURCHASE AND DISPOSE OF TREASURY SHARES

Following expiry of the previous authorization resolved by the Shareholders’ Meeting on April 19, 2012, upon the approval of the financial statements at December 31, 2012, the Board of Directors will submit to the next Shareholders’ Meeting the proposal for the renewal of the authorization to purchase Treasury Shares for the purpose of maintaining the legal requirement for possible buyback plans applicable and, consequently, the possibility of taking advantage of investment opportunities on its Treasury Shares.

It should be noted that the Shareholders’ Meeting of April 19, 2012 had authorized purchases, also taking the shares already in portfolio into account, up to a cap equal to 10% of the company’s share capital, represented by n. 24,645,834 ordinary shares.

Considering the total of n. 13,555,209 shares already directly or indirectly owned as at the date of the Shareholders’ Meeting, the authorization provided for the possibility of purchasing max. another n. 11,090,625 Treasury Shares.

In relation to the authorization of April 19, 2012 Arnoldo Mondadori Editore S.p.A. purchased a total of n. 1,398,291 Treasury Shares, corresponding to 0.56% of the company’s share capital on the Mercato Telematico Azionario (screen-based stock exchange).

Following completion of the aforementioned transactions, the total number of Treasury Shares comprehensively owned by the company, either directly or indirectly, is equal to n. 14,953,500 corresponding to 6.067% of the company’s share capital, of which n. 10,436,014 directly in Arnoldo Mondadori Editore S.p.A.’s portfolio and n. 4,517,486 owned by its subsidiary Mondadori International S.p.A.

Pursuant to article 2357 ter of the Italian Civil Code, the Shareholders’ Meeting will also be submitted an authorization to dispose of Treasury Shares purchased or already in the Company’s portfolio.

Here below are the main items underlying the proposal made by the Board of Directors:

• Reasons

The reasons underlying the request for the authorization to purchase and dispose of Treasury Shares make direct reference to the opportunity of giving the Board of Directors the power to:

– use the Treasury Shares purchased or already in the Company’s portfolio in relation to the exercise of rights, including conversion rights, deriving from financial instruments issued by the Company, its subsidiaries and third parties;
– use the Treasury Shares purchased or already in the Company’s portfolio to pay for the acquisition of interests within the framework of the Company’s investment policy;
– possibly dispose, if considered strategic for the Company, of investment opportunities also in relation to the Company’s available liquidity;
– dispose of Treasury Shares in relation to the exercise of options for the purchase of the same shares attributed to the beneficiaries of the Stock Option Plans established by the Shareholders’ Meeting;

• Duration

Until the approval of the 2013 financial statements.

• Maximum number of repurchasable shares

The renewed authorization refers to the purchase of max. another n. 9,692,334 shares (3.933% of the Company’s share capital) which, taking into account the Treasury Shares already owned either directly or indirectly by the Company as above indicated, would enable the Company to reach the cap of 10% of the Company’s share capital, in line with the previous authorization coming to expiry.

• Criteria for purchasing Treasury Shares and indication of the minimum and maximum purchasing cap

Purchases shall be made on the regulated markets pursuant to article 132 of Italian Legislative Law n. 58 of February 24, 1998 and article 144 bis, paragraph 1, letter B of Consob Regulation n. 11971/99 according to the operating criteria established in the organization and management regulations of the same markets, which do not allow the direct combination of the purchase negotiation proposals with pre-determined sale negotiation proposals.

The minimum and maximum purchase amount would be determined under the same conditions established in the previous Shareholders’ Meetings and, therefore, at a unit price not lower than the official Stock Exchange price of the day preceding the purchase transactions, decreased by 20%, and not higher than the Stock Exchange price of the day preceding the purchase transactions, increased by 10%.

In terms of prices and daily volumes, the purchase transactions would in any case be completed in compliance with the conditions established in EC regulation n. 2273/2003.

Today at 3pm, at the Company’s headquarters in Segrate, the Mondadori Group top management will present the results for 2012, approved on today’s date by the Board of Directors, to the financial community.

The entire documentation is available on the web site www.gruppomondadori.it (Investor Relations Section) and from Borsa Italiana S.p.A..

The CV of Mr Ernesto Mauri is available in the Governance section of our website www.gruppomondadori.it.

The executive manager responsible for the preparation of the company’s accounts, Carlo Maria Vismara, declares that, pursuant to aricle. 2, 154 bis of the Finance Consolidation Act, 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, 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 2013:

• Wednesday 20 March 2013: meeting of the Board of Directors for the approval of the Annual Report for the year ended 31 December 2012;
• Tuesday 14 May 2013: meeting of the Board of Directors for the approval of the 1st Quarter Report to 31 March 2013;
• Tuesday 30 July 2013: meeting of the Board of Directors for the approval of the Interim Report to 30 June 2013;
• Thursday 14 November 2013: meeting of the Board of Directors for the approval of the 3rd Quarter Report to 30 September 2013.

The Annual General Meeting of the Shareholders for the approval of the Annual Report for the year ended 31 December 2012 will be held on Tuesday 23 April 2013, on first calling, or Wednesday 24 April 2013, on an eventual second calling.

Analysts’ presentations of the results for the full year to 31 December 2012, the interim report to 30 June 2013 and the reports on the first and third quarters of 2013 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.

Arnoldo Mondadori Editore S.p.A. has announced that, following the receipt of authorization by the Spanish antitrust body, the details were finalised today based on the contract signed with Media Finance Holding (Bertelsmann Group) on 5 November. The said contract, which has already been communicated to the market, concerns the sale of 50% of the share capital of the Spanish registered company Random House Mondadori S.A..

The value of the transaction has been defined at a total of €54.5 million, including cash, which will have a positive impact on the consolidated income statement estimated at around €2.8 million.

From 6 December Silvia Grilli will be the new editor of Grazia.

Grilli, who has a degree in modern languages from the Cà Foscari University in Venice, began her professional career at La Notte, L’Indipendente and il Giornale, before being appointed news editor of Anna in 1998 and managing editor of Cosmopolitan in 2000. She has also been a contributor to Il Foglio, Epoca and a number of foreign titles, including The Guardian, The New York Observer and The New York Sun. In 2001 she was a special correspondent for Panorama and co-editor of Grazia in 2005, becoming editor in chief the following year. At the beginning of 2007 she moved to the United States as “editor at large” for all of the Mondadori titles. In November of the same year she was appointed deputy editor of Panorama.

Mondadori wishes to thank Vera Montanari for the constant commitment and passion shown in her time with the company; thanks to her professionalism and experience Grazia has both strengthened its position as a women’s fashion and news magazine of excellence and note and become a point of reference for elegance and style, not only in Italy, but also internationally, where the brand is now present with a network of 21 editions.

The Board of Directors of Arnoldo Mondadori SpA met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first nine months of the year to 30th September 2012, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO
During the third quarter all the main indicators pointed to a continued worsening of the economy. Italy continues to feel the continuing effects of a deep recession and there are no signs of a turnaround in the short term.
With regard to the markets of reference for the Mondadori Group:
– book sales continued to fall (-7.8%) across all the distribution channels, with a particularly disappointing performance in the paperback segment;
– according to the figures up to the end of August, in magazines the downward trend continued both in circulation (-11.5%) and advertising (-16.2%), while in the add-ons market there was no end to the decline that began some years ago (-20.7%);
– in France newsstand magazine sales were down by -5.3%; with subscriptions stable (official figures to September are not yet available); due to a significant reduction in advertising investments in recent months advertising revenues for the period to September were down by 4.2% (-0.5% to May).

GROUP PERFORAMCE IN THE PERIOD TO 30 SEPTEMBER 2012
Consolidated revenues amounted to €1,028.4 million, a fall of 7.5% compared with €1,112 million for the same period of 2011. Excluding the consolidation of Editions Mondadori Axel Springer Snc by Mondadori France, the reduction in revenues would be of 10.3%.

Consolidated gross operating profit amounted to €63.1 million, a fall of 39.7% on the €104.6 million of the previous year. The reduction was partly due to lower non-recurring income and higher costs for restructuring sustained in 2012 compared with last year.

Consolidated operating profit amounted to €44.6 million, compared with €87.8 million last year, with amortizations and depreciations of tangible and intangible assets of €18.5 million (€16.8 million in 2011).

Consolidated profit before taxation came to €32 million, compared with €71.3 million in the same period of last year. During the period financial charges amounted to €12.6 million, an improvement of €3.9 million compared with 2011.

Consolidated net profit for the period totalled €16.1 million, (after minority interest of €1.3 million) compared with €44.1 million in the same period of the previous year.

Gross cash flow in the first none months of 2012 amounted to €34.6 million, compared with €60.9 million in 2011.

The Group’s net financial position went from -€335.4 million at the end of 2011 to -€346 million on 30 September 2012 (-€380.6 million on 30 September 2011).
Significant facts following the end of the third quarter included the signing on 5 November of the agreement for the sale to the Bertelsmann Group of the company’s 50% stake in Random House Mondadori, a book publisher based in Barcelona and operating in the Spanish and Latin American markets. The operation, with a value of €54.5 million, is subject to approval by the Spanish antitrust authorities and should be concluded before the end of the year.

Information regarding personnel
As of 30 September 2012, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,743. On a like-for-like basis, staff numbers were down by 66 (-1.7%) and the cost of labour by 3%, also taking account of start-up and restructuring costs.

With regard to the scope of consolidation, it should be noted that the figures for 2012 include the staff, and related costs, of Editions Mondadori Axel Springer Snc, which in 2011 was consolidated using the net equity method. Similarly, the total number of employees of Italian companies was reduced by 32 and the Parent Company increased due to the incorporation of Mondadori Editorial Wellness S.r.l. and a number of intercompany transfers.

It should also be noted that on 5 October 2012 a Ministerial Decree recognised and approved the “state of crisis” and the resulting restructuring plan for the companies Arnoldo Mondadori Editore S.p.A., Mondadori Pubblicità S.p.A. e Press-Di Distribuzione Stampa e Multimedia S.r.l..
The implementation of the aforementioned plan, which is expected to be completed by April 2014, involves 152 employees on printing-editorial contracts and will permit a further reduction in labour costs from November 2012.

RESULTS OF THE BUSINESS AREAS

• BOOKS

Compared with the same period of 2011, in the first nine months of the year, the trade book market saw a continuing fall in the bookstore channel, both in the number of copies sold (-7.1%, source: Nielsen) and in terms of value (-8.1%, source: Nielsen), also due to poor sales of paperbacks. The downturn also affected the large-scale retail and online channels.
In this context, the Mondadori Group confirmed its leadership in the market of reference (27.7% in terms of value, source: Nielsen), and with 6 of the top 10 best selling titles in the period and 45 of the top 100.

During the period, revenues from book sales amounted to €261.6 million, a fall of 6.7% compared with the €280.5 million of the same period of the previous year.

As regards the performance of the Group’s trade publishing houses in the third quarter, Edizioni Mondadori has reached a market share of 14.1% in terms of value (+1.3% compared with the same period of 2011), thanks also to the full effects of the success of the EL James Fifty Shades trilogy, which in just over three months sold 2,400,000 copies in Italy, and for several weeks holding the first, second and third places in the best-sellers list.
In the genre fiction area, in September Mondadori was the first company in the world to publish the highly anticipated second novel of The Century Trilogy, L’inverno del mondo by Ken Follett with an initial print run of 450,000 copies. Within a few days, the book reached the top of the best-sellers list, doubling the results of the first volume of the trilogy, La caduta dei giganti, published two years ago.
There was also great satisfaction for the victory in the two most prestigious Italian literary prizes: the Premio Strega, 2012, awarded to Alessandro Piperno with Inseparabili (80,000 copies sold) and the Premio Campiello 2012, which was won by Carmine Abate with La collina del vento (40,000 copies in September alone).
A strong publishing programme is confirmed for the final quarter with the arrival of new titles from, among others, Paolo Giordano, Valerio Massimo Manfedi, Luciana Littizzetto, Michael Connelly, Stephen King, Murakami Haruki and Ian McEwan.

On the Educational side, Mondadori is the third largest operator with a market share of 12.8%. During the period the company has developed technological solutions that allow for greater flexibility of use, regardless of the operating system or device, and a greater integration of digital products.

In the ebook market, Mondadori is the leader with a market share of around 40%. The third quarter of 2012 showed a significant increase in sales, especially in the August, which recorded average daily downloads of more than 5,000.
The E.L. James trilogy alone recorded more than 90,000 downloads in the quarter. Romantic Fiction also performed well, which includes the digital version of the “Category” titles (published in print form only for newsstands) and the series Emozione degli Oscar Mondadori. There was an excellent start for the new book by Ken Follett L’inverno del mondo. Finally, also of note was the launch of the new digital series “Mondadori XS”.

• MAGAZINES ITALY

The worsening of the economic and financial crisis and increased uncertainty over the short and medium term have had a marked influence on the dynamics of the markets in which Mondadori operates. Particularly in the last quarter, there was an additional reduction in revenues from both the sale of magazines and advertising, only partially offset by the results in the three summer months of add-on sales.

In the first nine months of 2012 the area generated revenues of €298.6 million, a fall of 15% compared to the €351.1 million euro in the first nine months of 2011.

There were varying trends among the various activities included in this aggregate.
– circulation revenues, penalised by the downturn in subscriptions and newsstand sales, and despite a reduction in average prices, were down by 10.8%;
– revenues from add-on sales (-18.3%), were down less than in the first half;
– advertising revenues were down by 20.7%, in a very difficult market with some significant changes, such as the temporary suspension of publication of Flair and the closure of Economy;
– revenues from International Activities (licensing +6.7%, advertising sales for the network +27.1%) and net revenues from Mondadori sites (around +40%, net for the publisher) performed well and are growing rapidly.

In terms of circulation, in the period Mondadori recorded a fall of 10.8%, in line with the market, excluding the additional copies of the new weeklies and monthlies (Source: internal estimate). Despite these new launches, the market recorded a downturn of more than 6%.
In particular, an analysis of circulation figures for the year showed that the usual seasonal upturn in summer sales of magazines was as marked as usual.

In a context characterised by a sharp slowdown in advertising in all media, the Internet advertising market showed a growth of 11% compared with the same period of 2011. At the same time the sites of the main Mondadori magazines ​​ performed much better than the market in terms of traffic and advertising, allowing an increase in revenues of 39.3%.

• ADVERTISING

The performance of the advertising market to August 2012 showed an overall downturn of 10.5% compared with the same period of 2011, and was also down on the first half of 2012 (-9.5%).
This negative trend affected all media: television (10.9%), radio (-7.4%), outdoor (-12.5%), cinema (-22.4%), direct mail (-15.7%), newspapers (-13.9%) and magazines (-16.2%).
The only exception was the Internet, which did not grow as fast as in previous years.

In the first nine months of 2012 Mondadori Pubblicità recorded revenues of €129.1 million, a fall of 21.8% from the €165 million of 2011.
The magazines published by Mondadori saw a downturn of 22.3%, due to a negative performance in almost all sectors, as well as the temporary suspension of the publication of Flair.
The aggregate figure, which includes revenues from third-party publishers of newspapers and joint ventures, showed an overall decline of 26.7%. This trend in revenues was due in equal measure to the contribution of both monthly and weekly titles.
With regard to the advertising sales for the two radio stations in the portfolio, the company recorded a fall of 11.3%.

During the first nine months Mondadori Pubblicità attempted to respond to the market by developing the organisation and management of events involving the company’s most important brands, and increasing revenues in this area by 85% compared with the first nine months of 2011.
As for the internet, Mediamond continued to record strong growth in revenues in the period (+63.7% compared with 2011), thanks to the positive performance of Donnamoderna.com (+16%), Grazia.it (+60%) and Panorama.it (+36%) for the RTI there was a good performance for TGcom24 (+15%) and SportMediaset (+53%) and rapidly expanding sales for VideoMediaset.

• MAGAZINES FRANCE

Mondadori France ended the first nine months of 2012 with revenues of €284.5 million, up 9.6% from the €259.6 million of the same period of 2011, on a comparable basis (i.e. excluding the effects of the change in the method of consolidation of the joint venture Editions Mondadori Axel Springer Snc), revenues were down by 2.3%.
The continued focus on editorial quality and costs made it possible to report an increase in the gross operating margin of 5.9% compared with 30 September 2011, taking it to €27 million euro.

Advertising revenues: In a market that – contrary to an essentially stable situation in the first six months of the year – saw a sudden downturn in the third quarter with an overall reduction of 4.2% over the nine months, revenues for Mondadori France titles (on a like-for-like basis) were down by 1.9% compared with the same period last year, mainly due to the trend in the upscale women’s segment, which includes the weekly Grazia (+6.6%) and the monthly Biba (+8.4%), and L’Auto Journal (+7.1%), Sport Auto (+7.2%) and Mode & Travaux (+7.1%).

Circulation revenues generated by Mondadori France, which include both newsstand sales and subscriptions (70% of total revenues), were slightly down at the consolidated level (-2.3% on a like-for-like basis). The trend in newsstand sales (-5%) was in line with the market (-5.3%) compared with the first nine months of last year, whereas for subscriptions (33.8% of revenues), Mondadori France, with a portfolio of more than three million customers, continued to grow (+0.7% compared with the same period of 2011).
Several titles saw an increase in copies sold: 351,000 copies Biba (+6.7%), L’Ami des Jardins, 159,000 copies (+7.9%), Modes & Travaux 437,000 copies (+1.4%); Grazia, launched in 2009, confirmed its success with an increase of 3.4% to 193,000 copies.

In the first nine months of the year investments in the digital sector continued, both to increase the audience for existing sites and their presence on the new devices, and to diversify the offer and explore new opportunities through new acquisitions.

International Activities
The company’s international activities, transferred to the new company Mondadori International Business, created as part of the corporate restructuring project previously announced to the market following the approval of the interim report for the period to 30 June 2012, continued their development: the Grazia International Network now has 19 editions, in addition to Italy, and will be expanded before the end of this year by Grazia Poland and in 2013 by Grazia Korea and Grazia Spain. In addition, in August the company also saw the launch of Flair Germany.

On the advertising front, in the first nine months of 2012 sales in the Italian market, in the fashion and furniture sectors, of €4.8 million euro, an increase of 27.1% compared with the same period of 2011. Of particular note was the excellent performance of Grazia France, Grazia UK, Grazia Russia and Grazia Germany (+54% compared with 2011).

As regards investments, Mondadori is present in:
– Greece, Bulgaria and Serbia through its stake in Attica Publications that, despite the serious crisis, has achieved results in line with the previous year, thanks to a strong growth in market share, cost cutting and the success of add-on sales;
– China, with the joint-venture Mondadori SEEC Advertising Co. Ltd., the exclusive advertising sales company for Grazia China, which ended the first nine months of 2012 with revenues of €7.8million (+57% compared with the same period of 2011);
– Russia, which with an edition of Grazia that in the first nine months of 2012 performed better than the market (revenues +17% compared with 2011).

• DIGITAL

Following a change in the organisational structure of the Group, the figures relating to digital activities in the first nine months of the year are booked, in line with internal reporting procedures, as follows:
– for publishing activities, e-books, properties, subscriptions and online advertising, in the business areas of reference, i.e., Books, Magazines Italy and Magazines France;
– for e-commerce activities, conducted through the web site Bol.it (from November inMondadori.it) and online Bookclubs, in Direct;
– for diversification activities and investment to support the business, gambling, applications and CRM, in Other Business.

• DIRECT

In order to counter the recessionary economic environment a process of rationalization of the network of book shops was begun in the first half, which saw the closure of the Milan Berchet store and some smaller stores, and a development plan for new sources of revenue through the expansion of the range of products.

Total revenues amounted to €169.5 million (-11% compared to the €190.4 million at 30 September 2011 (it should be noted that the main economic indicators for 2011 have been restated to include the figures for activities conducted through Bol.it attributed to the business with effect from the beginning of the year).
Revenues can be broken down as follows:
– retail sales and other revenues, down due, as well as to general market conditions, the closure of some stores, during the second half of 2011 and first half of 2012 and a new commercial approach;
– direct marketing sales, down overall as a result of cutbacks in investments by companies, a significant reduction of consumer spending and shifts in buying habits of the benefit to retailers;
– sales form e-commerce activities, managed by the site Bol.it, down as a result of the contingent market phase and changes in the competitive scenario.

In early October, following the partnership signed with Kobo Inc., Mondadori launched in Italy the series of eReaders made by the Canadian group, to be sold online and through the network of stores (350 stores which will rise to 500). Among the objectives of this operation:
– the achievement of a market share for ebooks significantly greater to that for printed books;
– to be the only operator in the world, market leader in trade publishing, with a physical and digital retail system integrated and brought together under a single brand inMondadori and high quality eReading devices on an open platform.

• RADIO

At 30 September 2012, radio advertising revenues in Italy recorded a downturn of 8.1% compared with last year, following a decline in the first half of 5.5% and an even bigger drop in the third quarter (-14.6%, Source: FCP Assoradio).
During the period advertising sales for R101 generated net revenues of €10.3 million, down 12% on the €11.7 million of the same period of 2011.

EXPECTATIONS FOR THE FULL YEAR
In the third quarter figures for production, consumer spending and investments confirmed the trend of a gradual worsening of the economic situation. Moreover, it is not at present possible to predict when or how there might be a reversal of this trend.

In the current market situation in which Mondadori operates we only not repeat what was stated in the interim financial statements, regarding:
– the Group’s priorities: i.e. the continuous improvement of product quality, the development of digital activities and the international network of magazines, and continued commitment to the review of processes and structures for the reduction of operating costs;
– the forecast of the level of operating profitability, which will be less than the previous year also in the last quarter.

ADHERENCE TO THE PROCESS OF SIMPLIFIED RULES ADOPTED BY CONSOB REGULATION N. 18079 OF 20 JANUARY 2012§
Notice is hereby given that, pursuant to art. 3 of Consob resolution no. 18079 of 20 January 2012, the Board of Directors of Arnoldo Mondadori Editore SpA resolved, in relation to the provisions of Articles. 70, paragraph 8, and 71, paragraph 1-bis of Consob Regulation no. 11971/99, to make use, with effect from today, of the possibility to waive its obligations to publish information as foreseen by the aforementioned Consob Regulation regarding significant operations such as mergers, spin-offs, capital increases by contribution in kind, acquisitions and disposals.

§

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 interim report for the period to 30 September 2012 will be available at the company’s corporate headquarters, Borsa Italiana S.p.A. and on the web site www.gruppomondadori.it (Investor relations section) from today.
Also today, the company will publish on the web site www.gruppomondadori.it (Investor relations section) and www.borsaitaliana.it, the presentation made to analysts of the results for the period to 30 September 2012.

Arnoldo Mondadori Editore S.p.A. has announced – with immediate effect and reporting to the deputy chairman and chief executive Maurizio Costa – the following changes in the organizational structure and responsibilities:

– the newly created Magazine Area will be headed by Ernesto Mauri; which will oversee the Magazines (Italy) Department, to be managed by Carlo Mandelli, and Mondadori France, which will remain the responsibility of Ernesto Mauri the current chairman and general manager. The creation of a Magazine area for the control of the domestic and French markets is based on the need for a greater focus on quality and product development, as well as structural and process efficiencies.
The changes facing magazines in this period demand extensive know-how in this area and an ability to identify new ways of integrating print and digital.
The decision to give to Ernesto Mauri this great responsibility is in line with his long experience with Mondadori and in the consumer magazine sector in Italy and France, and demonstrated by the recent excellent results achieved in the management of Mondadori France;

– Mondadori International Business, the company newly established as part of the corporate rationalization project previously announced to the market following the approval of the interim report for the period to 30 June 2012, will be headed by Stefano De Alessandri who will become the chairman and managing director. At the same time Zeno Pellizzari will be appointed general manager of the company. Mondadori’s foreign expansion in the magazine sector, through both joint ventures and licensing agreements in 25 countries, must now proceed with a plan for further growth also through new international alliances.

– Monradio, the company that manages the radio broadcasting activities of R101, will be also headed by Stefano De Alessandri, who has been appointed managing director.
Mondadori will intensify its commitment in the radio market which, despite the downturn in advertising investments, remains among the sectors with most potential.

Arnoldo Mondadori Editore S.p.A. today announced that it has signed a preliminary agreement for the sale to Media Finance Holding (Bertelsmann Group) of its entire stake, equal to 50% of the share capital, of the Spanish company Random House Mondadori S.A..

Established in 2001 as a joint venture with the Bertelsmann Group, Random House Mondadori operates in the trade books market in Spain and in the main Latin American countries, in particular Mexico, Argentina, Colombia, Uruguay and Chile.
In the year ended 31 December 2011, Random House Mondadori generated consolidated revenues of €110.3 million (€55.9 million to 30 June 2012).

The transaction value, comprising the purchase price and cash, has been determined at €54.5 million, with a positive impact on the consolidated income statement, in terms of a capital gain, estimated at €2.8 million.

The agreement will allow the Mondadori Group to further consolidate and focus investment and resources on its priority objectives as indicated during the process for the approval of the company’s interim financial statements.
With regard to books, this operation is part of the already outlined strategy focused on the acceleration of growth in both the trade and education sectors with an integrated model for print paper and digital, which includes the recent introduction in the Italian market of the Kobo eReaders and the forthcoming launch of a self-publishing platform.
Mondadori is also developing a unified distribution model under a single brand, inMondadori, which combines offline and online bookstores, e-commerce and physical retail, in a multiplatform system for the management of all the different sales channels.

Completion of the operation and the execution of the preliminary contract are subject to approval by the Spanish antitrust authorities, which is expected by the end of the year.

With regard to rumours that appeared in the press today, concerning the supposed contribution of advertising sales activities to Publitalia ’80, Mondadori wishes to underline that such a hypothesis is entirely without foundation.

Marina Bigi will be the new editor of Tu Style from 2 November.

Marina Bigi, 54, is from Milan, and after completing her studies at the Istituto Europeo di Design (IED) in Milan, she joined Rizzoli as a copywriter. She began her journalistic career in 1985 on the staff of Anna, before moving in 1989 to the weekly Bella. After a number of years at the monthly Pratica, in 1996 she re-joined the staff of Bella as deputy editor. In 1998 she was appointed editor of the monthly Vera and subsequently, in 2003, of Vogue Gioiello and Vogue Pelle. In 2008 she moved to Mondadori as a consultant and head of fashion and beauty for Tu Style and Chi, before being appointed, in 2011, deputy editor of Tu Style, while maintaining her role on the weekly Chi.

Mondadori wishes to thank Maria Elena Viola for the professionalism and enthusiasm she has demonstrated over the years.

Mondadori has announced the publication of its Sustainability Report for the year 2011. The document, which is available online at www.gruppomondadori.it – ​​in the “Sustainability” section, provides an account of the performance and the main initiatives of the Mondadori Group in Italy in terms sustainable development.

The process, launched by Mondadori with the creation of its Sustainability Committee and the preparation of a social report for internal dissemination and use, has led to the publication of the first public document in which the Group gives an account of its approach to issues of social responsibility.

“For over a hundred years Mondadori has been a publishing house driven by a passion for the craft of publishing, a curiosity about new tastes and trends and the courage to innovate. We are part of the history and culture of our country and we have always been aware of the role of responsibility that each company and especially a company engaged in culture, has with respect to the broader community,” Maurizio Costa, deputy chairman and chief executive of the Mondadori Group.
“With the Sustainability Report our relationship with all our stakeholders is enhanced with a tool for dialogue and reflection that will help both them and us to continue to pursue growth while continuing to respect the values ​​that have always guided us,” Costa concluded.

The presentation of the issues and the data in the 2011 Sustainability Report has been made in accordance with the guidelines of the Global Reporting Initiative (GRI – version G 3.1 with application-level C+) and reviewed by an external company. In line with this, Mondadori’s Code of Ethics has been revised, to take account of new demands and needs of all its stakeholders.

The “Sustainability” section of the company’s web site www.gruppomondadori.it also includes a presentation of the Group’s environmental policy, in terms of its vision and objectives for a reduction of the environmental impact associated with their activities, promoting, among other things, a responsible use of natural resources.