Corporate

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 2023:

• Thursday 16 March 2023: meeting of the Board of Directors for the approval of the Annual Report for the year ended 31 December 2022;
• Wednesday 10 May 2023: meeting of the Board of Directors for the approval of the Interim Management Statement at 31 March 2023;
• Tuesday 1 August 2023: meeting of the Board of Directors for the approval of the Half-Year Report at 30 June 2023;
• Wednesday 8 November 2023: meeting of the Board of Directors for the approval of the Interim Management Statement at 30 September 2023.

The Annual General Meeting of the Shareholders for the approval of the Annual Report for the year ended 31 December 2022 will be held on first calling on Thursday 27 April 2023 (Friday 28 April in second call, if any).

Presentations to the financial community of the results for the full year at 31 December 2022, the Half-Year Report at 30 June 2023 and the Interim Management Statements at 31 March 2023 and at 30 September 2023 will be held on the dates, as indicated above, of the respective meetings of the Board of Directors.

Any changes will be promptly communicated to the market.

Mention should be made that Arnoldo Mondadori Editore S.p.A., as a company listed on the Euronext STAR segment of Borsa Italiana, will publish the Interim Management Statements at 31 March 2023 and at 30 September 2023 – pursuant to art. 2.2.3, par. 3, of the Borsa Italiana Regulations – within 45 days after the end of the first and third quarters of the year (with exemption from the publication of the interim report on the fourth quarter if the annual financial report 2022, together with the other documents referred to in art. 154-ter, par. 1, of the Finance Consolidation Act, is made available within 90 days after year end).
The structure, information and procedures for the publication of the documents are unchanged from the Interim Management Statements previously published pursuant to former Article 154-ter, paragraph 5, of the Finance Consolidation Act.

The Mondadori Group announces the conclusion today, through its subsidiary Mondadori Libri S.p.A., of the acquisition of a further 25% stake in A.L.I. S.r.l. – Agenzia Libraria International, operating in the distribution of books.

The transaction – which raises the Mondadori Group stake in A.L.I. to 75%, which will be subject to full consolidation as of 1 January 2023 – takes place in execution of the agreements defined and disclosed last 11 May 2022 upon acquisition of an initial 50% stake, effective earlier than the date originally scheduled for 28 February 2023.

The provisional price, paid entirely in cash, is approximately € 9.5 million and was determined, as already disclosed to the market, on the basis of an average 2021-2022 EBITDA and the positive net financial position (cash) of the scope covered by the transaction, which at 31 December 2022 amounted to € 17.8 million (preliminary figure).

Additionally, the defined agreements give the Mondadori Group the right to acquire the remaining 25% in A.L.I., at a price to be determined on the basis of an average 2023-2024 EBITDA, through put&call options exercisable by 30 July 2025.

The transaction is consistent with the path of vertical integration in the books market, with a view to the gradual strengthening in the promotion and distribution activities of third-party publishers.

The Mondadori Group announces the execution today by the subsidiary Mondadori Media S.p.A. of the contract for the disposal to Reworld Media S.A. – signed last 22 November and disclosed to the market on the same date – of the print and digital publishing operations of the Grazia and Icon brands, as well as the related international licensing network.

 The execution of the transaction took place with the transfer of the business unit heading the operations disposed of to a newly-incorporated company and the concurrent disposal to Reworld Media of 100% of the share capital of the transferee.

The Mondadori Group announces that it has received notification today from the Offices of the Presidency of the Council of Ministers of the resolution not to exercise the special powers under Law Decree 21/2012 regarding the disposal to Reworld Media S.A. of the operations under the Grazia and Icon brands, as disclosed last 22 November.

The measure, which in essence authorizes the disposal of the above operations, triggers the fulfilment of the suspensive condition attached to the sale agreement, which will therefore be fully executed on the closing date.

The completion of the transaction will be promptly disclosed to the market.

The Mondadori Group announces that, on today’s date, the subsidiary Mondadori Media S.p.A. exercised the put option, previously disclosed to the market last 20 October, and, as a result of it, signed the agreement that regulates the disposal to Reworld Media S.A. of the print and digital publishing operations of Grazia and Icon as well as the related international network.

The consideration for the transaction, as previously disclosed, is € 8.5 million, including € 2 million as earn-out conditional on the achievement of certain financial results in 2023 by the operations disposed of. The price – to be paid in cash at the closing date – was defined on the basis of an Enterprise Value of € 11 million (including earn-out), net of the difference between the average net working capital over the last 12 months and the net working capital at the closing date.

In 2021, the above-mentioned activities generated revenue of approximately € 18 million.

Completion of the transaction – subject to the outcome of the assessment procedure under Law Decree 21/2012 by the Offices of the Presidency of the Council of Ministers – will take place through the transfer by Mondadori Media of the business operations to be disposed of to a newly-incorporated company and the subsequent disposal to Reworld Media of 100% of the share capital of the transferee.

In accordance with the provisions of law, the procedure with the trade unions was accomplished.

Segrate, 10 November 2022 – Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 30 September 2022 presented by CEO Antonio Porro.

HIGHLIGHTS

The current year has seen the Mondadori Group firmly pursue the strategic path of reshaping its business portfolio, on the one hand, by developing and strengthening its presence in book publishing and, on the other, by tapering its exposure to the magazines segment, with a focus on brands with greater multimedia potential.

“The results of these first nine months clearly show the positive impacts from our repositioning plan: the operating-financial metrics grow strongly, with a sharp improvement in revenue and margins across all business areas on a like-for-like basis”, said Antonio Porro, CEO of the Mondadori Group. “These elements, plus the positive performance of the books market, allow us, despite the higher costs of the main inputs, to further increase our estimates on the trend of revenue and margins at end 2022”, concluded Porro.

PERFORMANCE AT 30 SEPTEMBER 2022

Consolidated revenue in first nine months 2022 amounted to € 678.2 million, up by 15.2% versus € 588.9 million in the prior year.

Net of the consolidation of D Scuola, effective 1 January 2022, Group revenue grew by 3.8%, thanks to the performance of the Books and Retail areas and despite the additional asset disposals involving the Media area: net of the effects from the changed consolidation scope, Group revenue on a like-for-like basis in the first nine months of the current year would have grown by 5.8%.

Adjusted EBITDA came to a positive € 115.5 million; excluding the result of D Scuola in the period, adjusted EBITDA closes with a positive € 94.1 million.

As a result, the Group showed an overall improvement in profitability in excess of € 30 million versus € 85 million in 2021, growing by 35.8%, one third of which attributable to the positive performance across all business areas, Books and Retail in particular, and approximately two thirds from the contribution of D Scuola (€ 21.4 million).

Group EBITDA came to € 114.5 million (€ 93 million net of D Scuola), recording an even stronger improvement of € 34 million (+42.2% versus € 80.5 million at 30.09.2021), as a result of the abovementioned phenomena and dynamics and of the positive trend of non-ordinary items in the period.

EBIT closed at a positive € 78 million versus € 52 million at 30.09.2021, improving by € 26 million, or up by 50%, partly dampened by the effects of the Purchase Price Allocation process related to the acquisition of D Scuola.

Net of the amortization/depreciation resulting from this process, consolidated EBIT of the new scope would grow by approximately € 29 million (+55% versus 30.09.2021).

Excluding the contribution of D Scuola, the improvement would amount to € 11.3 million, attributable to the abovementioned operational dynamics.

Consolidated profit before tax came to € 75.8 million (€ 61.2 million excluding the contribution of D Scuola), increasing by almost 70% versus € 44.8 million in the same period of 2021. This growth benefits also from the improvement in the result of the associates, amounting to € 3.5 million, arising from the disposal of the investment in Monradio, from profit for the period of Attica, and from the accounting of the share of the result of A.L.I..

Total financial expense for the period, amounting to €2.8 million, improved by € 1.1 million, despite the higher average debt and the increase in ancillary expense from the outstanding pool loan, due to the accounting for IFRS 16 purposes of a non-recurring income of approximately € 1.5 million resulting from the early termination and renegotiation, as of July 2022, of the lease contract for the Segrate HQ.

Group net profit, after minority interests, amounted to € 58.3 million (€ 47.9 million excluding the net profit of D Scuola), up by 18% versus € 49.4 million in first nine months 2021, which had benefited however from a non-recurring income of € 18.7 million from the realignment of the tax amounts of trademarks and goodwill to their respective statutory amounts.

Neutralizing the one-off tax income of 2021, net profit in first nine months 2022 would be up by approximately 90% versus the prior year.

The net financial position before IFRS 16 stood at € -173.4 million and includes, in addition to the effects of the acquisition and consolidation of D Scuola, the debt arising from the acquisitions of A.L.I. and Star Comics, as well as the return to dividend distribution.

Including the IFRS 16 impact of € 62.3 million – down from 30.09.2021 due mainly to the renegotiation of the lease contract for the Segrate HQ – the NFP stood at € -235.7 million.

The LTM cash flow from ordinary operations (after cash out for financial expense and tax), amounting to € 71.4 million, allows the Group to continue to strengthen its financial structure.

D Scuola, consolidated as from January 2022, contributed a negative € 1.5 million to the cash flow for the period, consistent with the seasonal nature of the school publishing business.

Mention should be made that the generation of cash flow from ordinary operations benefited from the revaluation, amounting to € 10.1 million at 30 September 2022, of derivative instruments related to interest rate risk hedges applied to drawdowns of the pool loan taken out in May 2021.

The total Free Cash Flow in the past 12 months amounted to a positive € 9.5 million.

At 30.09.2022, Group employees amounted to 1,895 units, up by 4.5% versus 1,814 units at 30.09.2021 (+81 units), due primarily to the inclusion of D Scuola resources (totaling +127 units). Neutralizing the effect of all scope changes – namely, the acquisitions of D Scuola, De Agostini Libri and Star Comics, and the disposals of titles and assets in the Media area – the Group workforce would drop by approximately 1%, thanks to the continued efforts to increase the efficiency of individual business areas and functions.

PERFORMANCE IN THIRD QUARTER 2022

In the third quarter, consolidated revenue amounted to € 323.1 million, increasing by 20.3% versus € 268.5 million in the prior year; net of all the effects from changes in the scope, Group revenue would have recorded a like-for-like growth of +3.4% in the third quarter.

Adjusted EBITDA came to a positive € 88 million, up by over € 24 million (+38.5%) versus 2021.

Excluding the contribution of D Scuola, adjusted EBITDA came to € 65.7 million, increasing by
€2.1 million versus third quarter 2021, or by +3.4%. This improvement is attributable in particular to the positive performance of the Books segment, which benefited also from the consolidation of Star Comics as of third quarter 2022, and the Retail segment.

Group EBITDA came to € 87.7 million (€ 65.4 million without D Scuola), improving by € 26.2 million (+42.7%) versus the prior year, attributable to the business phenomena mentioned earlier, and to the positive trend in non-ordinary items, especially in the Corporate and Media areas.

EBIT came to a positive € 74.8 million, improving by approximately € 23 million versus third quarter 2021. The like-for-like comparison (excluding the contribution of approximately € 20 million from D Scuola) with 2021 shows an increase of € 3 million (+5.8%), despite higher amortization and depreciation resulting from increased expenditure made in the last 12 months.

Group net profit, after minority interests, amounted to € 55.5 million, up by 23.2% versus € 45 million in third quarter 2021; excluding the contribution of D Scuola and net of tax items, which in third quarter 2021 had benefited from a net non-recurring income of approximately € 9.8 million, net profit in third quarter 2022 would increase by 17% versus the third quarter last year.

BUSINESS OUTLOOK

In light of the positive operating-financial trend seen in the first nine months of the year, and despite the geopolitical uncertainty and the persisting problems arising from the increase in costs for raw materials, paper in particular, and for energy consumption, for the full year 2022 the Group believes:

• to be able to improve the estimate of:
  • Revenue, forecast to grow high single-digit (from mid single-digit);
  • Adjusted EBITDA, forecast to increase by 25% or more (from over 20%).

given the positive performance recorded by the Book product in the third quarter, as well as the consolidation of the Star Comics publishing house in the second half of the year;

• to be able to confirm at the consolidated level the other previously disclosed estimates.

Specifically:

• Double-digit growth of net profit, thanks also to significantly lower restructuring costs and to the improved results of associates versus 2021;
• Cash Flow from Ordinary Operations in line with 2021;
• Free Cash Flow in the region of € 10/15 million (before dividend);
• Group net financial debt (IFRS 16) at 1.3x adjusted EBITDA.

PERFORMANCE OF BUSINESS AREAS

• BOOKS

Following the remarkable growth seen in 2021, the year 2022 has witnessed a consolidation phase of the books market, which was basically steady in terms of both value (+0.1%) and volume (+0.1%) versus the same period last year[1].

Against this backdrop, Mondadori Group publishing houses posted a 2.4% growth in sell-out, the result of a gradually improving performance: in the third quarter in particular, the Group recorded a 14.6% increase in sell-out versus the market’s approximately +4% increase.

Thanks to these results, the Group was able to retain its domestic leadership, with its market share growing to 26.9%.

In the period under review, the Group retained a leadership position in the school textbooks segment, with a market share including D Scuola at 32.3%, a slight decline versus 32.9% in the prior year, fully attributable to the primary school segment, marked by greater volatility and lower profitability.

In first nine months 2022, revenue in the Books area stood at € 443.4 million, up by 27.2% versus € 348.7 million in first nine months 2021, driven by the positive performance of the Trade publishing houses and the consolidation of D Scuola.

Considering only the like-for-like scope of 2021, revenue in the Books area grew by 5.5%.

Specifically:

• revenue from Trade amounted to € 4 million, up by 11.2% versus € 200.9 million in the same period of 2021, driven by the positive performance recorded by all publishing houses, the upswing of Electa’s activities, and the consolidation of De Agostini Libri and Star Comics;
• total revenue from Education amounted to € 7 million, up by 48.2% versus first nine months 2021, due mainly to the changed consolidation scope related to the consolidation of the publishing house D Scuola, which contributed € 67.5 million to revenue for the period. On a like-for-like basis, revenue was up slightly (+1.4%) versus the same period of 2021 (€ 144.2 million), due to the early availability of a number of textbooks and the resulting accounting of the related revenue versus the prior year.

Adjusted EBITDA of the Books area in first nine months stood at € 107.9 million, up by more than
€ 28 million including the contribution of D Scuola (€ 21.4 million in the period under review).

Net of D Scuola, adjusted EBITDA on a like-for-like basis would come to € 86.4 million versus € 79.4 million in the same period of 2021, an improvement of over € 7 million (approximately +9%), thanks in particular to the positive trend of revenue and to the higher contribution of relief granted to museum activities, amounting to approximately € 3 million.

• RETAIL

In a basically steady domestic books market (+0.1%^[2]) versus 2021, the physical channel continued to grow versus the same period of the prior year, no longer burdened by the restrictions brought by the COVID-19 emergency.

Against this backdrop, in the first nine months, the market share of Mondadori Retail increased by 1.4% to reach 12.6%, driven by the outstanding performance of physical stores.

Revenue from the area totaled € 126 million, improving by € 11.6 million (+10.2%) versus € 114.3 million in the same period last year.

The ongoing development and renovation of existing stores and the focus on the core business of books have enabled the Mondadori Store network to consolidate its role on the market, as shown by the solid growth in revenue from the Book product (+13.6%), which is higher at the end of the third quarter even than in the pre-COVID period.

Specifically:

• directly-managed stores reported a sharp upswing in revenue (+35.3% versus the prior year), due to the abovementioned strategy of focusing on the book product and network development activities;
• the franchised channel continued its progression, increasing by +4.9% versus the same period of the prior year.

Adjusted EBITDA closed with a positive figure and up significantly to € 4.1 million (€ +2.4 million) versus € 1.7 million in first nine months 2021.

The structural actions put in place in recent years have brought a strong turnaround in the area’s operating and financial performance, as already seen by last year’s results. This target was achieved thanks to the deep transformation of the company, the ongoing renewal and development of the network of physical stores, as well as careful cost management and a thorough review of the organization and processes. All this complemented by constant work on product innovation and the expansion of the product range.

• MEDIA

The Media area recorded revenue of € 135.3 million in first nine months 2022, dropping by 9.8% versus € 150 million in the same period of the prior year, but increasing by 3.1% on a like-for-like basis (excluding the effect of the deconsolidation of the titles sold at end 2021 and the distribution activities of Press-di).

Specifically:

• digital activities, which now account for 24% of the area’s total revenue, rose sharply by +16% (+21.8% on a like-for-like basis of brands);
• traditional print activities on a like-for-like basis were down by approximately 3%.

Adjusted EBITDA in the Media area amounted to € 9.3 million, up versus € 7.8 million in first nine months 2021, the result of two opposing trends that marked the two segments of the area:

• the print area improved, thanks to higher income from FuoriSalone 2022, the accounting of a € 1.9 million tax receivable recognized on paper consumption, and the continued actions to curb operating costs launched in prior years;
• the digital area, instead, saw its result fall, attributable to one-off editorial and development costs incurred for the launch of The Wom and the lower performance of digital brand advertising sales, only partly offset by the strong trend recorded by the MarTech segment.

Significant events after 30 September 2022

As previously disclosed to the market, on 20 October the subsidiary Mondadori Media S.p.A. was granted by Reworld Media S.A. the option to sell to it the business unit related to the Grazia and Icon brands through a put option.

The scope of the option includes the print and digital publishing activities of the two titles, as well as the relating international network that ensures the brands’ overall presence in over 20 countries with licensed publications.

In 2021, these activities generated revenue of approximately € 18 million.

Based on the terms for exercising the option, the consideration for the scope in question is € 8.5 million, including € 2 million as earn-out conditional on the achievement of certain financial results in 2023 by the activities disposed of. The consideration was defined on the basis of an Enterprise Value of € 11 million (including earn-out), net of the difference between the average net working capital over the last 12 months and the net working capital at the closing date.

The Mondadori Group, pursuant to the provisions of law, will launch the consultation procedure with the trade unions, following which the option will become exercisable.

The decisions taken, as a result of the ongoing assessments, on the exercise of the option and any further phases, terms and conditions of the process underlying the transaction will be promptly disclosed to the market.

The transaction – the possible completion of which will also be subject to the outcome of the assessment procedure by the Offices of the Presidency of the Council of Ministers referred to in Law Decree 21/2012 – would be in line with the Mondadori Group’s strategic path of increasing focus on the core business of books and brands with greater potential for multimedia exploitation.

The presentation of the results at 30 September 2022, approved today by the Board of Directors, is available on 1Info (www.1info.it), on www.borsaitaliana.it and on www.gruppomondadori.it (Investors section). A Q&A session will be held in conference call mode at 4.30 pm for the financial community, attended by the CEO of the Mondadori Group, Antonio Porro, and the CFO, Alessandro Franzosi. Journalists will be able to follow the meeting in listening mode only, by connecting to the following  phone number +39.02.8020927 or via web at: https://hditalia.choruscall.com/?calltype=2&info=company 

The Interim Management Statement at 30 September 2022 is made publicly available by today through the authorized storage mechanism 1Info (www.1info.it), on www.gruppomondadori.it (Investors section) and at the registered office.

The Financial Reporting Manager – Alessandro Franzosi – hereby declares, pursuant to Article 154 bis, paragraph 2, of the Consolidated Finance Law, that the accounting information contained herein corresponds to the Company’s records, books and accounting entries.

Annexes:

1. Consolidated balance sheet;
2. Consolidated income statement;
3. Consolidated income statement – III quarter;
4. Group cash flow;
5. Glossary of terms and alternative performance measures used.

[1] GFK, September 2022 (Week 39)

^[2] GFK (in terms of value)

The Mondadori Group announces that on today’s date, Reworld Media S.A. has granted a put option through which its subsidiary Mondadori Media S.p.A. is entitled with the right to sell its Grazia and Icon business operations.

The perimeter underlying the option includes the print and digital operations of the two brands, as well as the relating international network comprising over 20 geographies with licensed publications.
In 2021, the perimeter recorded revenue of approximately € 18 million.

Under the terms of the put option, the Purchase Price has been set at €8,5 million, of which € 2 million as earn-out subject to the achievement of certain financial results in 2023, and is based on an Enterprise Value of the perimeter equal to € 11 million (including earn-out), net of the difference between the average net working capital of the last 12 months and the net working capital at closing date.

The Mondadori Group, pursuant to the provisions of law, will launch the consultation procedure with the trade unions, following which the option could be exercised.

Following the ongoing assessments, Mondadori Group will promptly disclose to the market any decision made relating to the exercise of the option and any further steps, terms and conditions of the process underlying the transaction.

The deal – the possible completion of which will also be subject to the outcome of the assessment procedure by the Offices of the Presidency of the Council of Ministers referred to in Law Decree 21/2012 – would be in line with the Mondadori Group’s repositioning strategy of increasing focus on the core business of books and on brands with greater potential for multimedia exploitation.

Arnoldo Mondadori Editore S.p.A. hereby informs that the Half-Year Financial Report at 30 June 2022, comprising the Independent Auditors’ report, is now available at the Company’s registered office, at the authorized storage mechanism 1info (www.1info.it) and on the website www.gruppomondadori.it (Investors section).

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Half-Year Report at 30 June 2022 presented by CEO Antonio Porro.

“In the first half of the year, our performance was highly positive, and all the business areas contributed to the result, with revenue gaining momentum especially in the second quarter”, emphasized Antonio Porro, Chief Executive Officer of the Mondadori Group. “These results, as well as a continually meticulous management of operations, have allowed us to increase overall profitability and cash generation. Improved operating performance, coupled with the Group’s continued capital strengthening, have laid the groundwork for confirming the 2022 targets and continuing the path of strategic reshaping, despite the uncertain economic and political scenario on a domestic and international level”, concluded Porro.

PERFORMANCE AT 30 JUNE 2022
In first half 2022, consolidated revenue amounted to € 355.1 million, increasing by 10.8% versus € 320.4 million in the prior year; net of the consolidation of D Scuola, Group revenue recorded a like-for-like growth of 5.7%, thanks to the contribution of all business areas, of the Retail and Books areas in particular.

Adjusted EBITDA came to a positive € 27.6 million versus € 21.5 million in first half 2021; excluding the result for the period of D Scuola, adjusted EBITDA came to a positive € 28.4 million as the company, which operates in the school textbooks segment, recorded a loss in the first part of the year due to the seasonal nature of the business; on a like-for-like basis, the Group improved profitability by € 6.9 million versus first half 2021, driven by the positive performance of all business areas, by the Books and Media areas in particular.

Group EBITDA stood at € 26.8 million versus € 19 million in first half 2021; on a like-for-like basis, the figure of € 27.6 million shows a strong improvement, attributable to the abovementioned phenomena, as well as to the positive dynamics of non-ordinary components.

 EBIT came to a positive € 3.2 million (€ 8.5 million on a like-for-like basis). The comparison with 2021 shows:

• an improvement in the overall scope of € 3 million, impacted by the consolidation of D Scuola’s amortization/depreciation and the effects of the Purchase Price Allocation process;
• an improvement on a like-for-like basis of € 3 million.

Financial expense increased by € 1.3 million, due mainly to the recognition in 2021 of a one-off income from the application of IFRS 9 to the terms of the pool loan signed by the Group in May 2021.

Consolidated profit before tax amounted to € 0.5 million; on a like-for-like basis, the figure shows a profit of € 5.8 million, improving by € 10.9 million versus € -5.1 million in first half 2021.
Also contributing to this increase was the improvement of over € 3 million in the results of the investees attributable to the sale on 1 January 2022 of the investment in Monradio (which usually recorded losses), the improved results for the period of Attica, as well as the start of the accounting for the share of profits of A.L.I., of which the Group completed the acquisition of 50%.

Group net profit, after minority interests, amounted to € 2.8 million; on a like-for-like basis, it amounted to € 6.7 million, improving by € 2.3 million versus € 4.4 million in first half 2021, despite the fact that last year had benefited from net non-recurring positive tax components of approximately € 9 million, resulting from the realignment of the tax amounts of trademarks and goodwill to their respective statutory amounts.

The Net Financial Position before IFRS 16 stood at € -205.8 million (€ -285.1 million including IFRS 16). On a like-for-like basis, it stood at € -48.4 million, improving strongly by € 20 million versus the net debt of € 68.3 million recorded at 30 June 2021, despite the cash out from the payment of dividends and the acquisition of A.L.I.

On a like-for-like basis, the LTM cash flow from ordinary operations (after outlays for financial expense and tax) amounted to € 70.6 million, allowing the Group to continue to strengthen its financial structure through the continued and growing ability of the businesses to generate cash.
D Scuola reported a negative cash flow of € 25.2 million in the first half, reflecting the seasonal nature of the school business which, in the first half of the year, records the costs and expenditure for the development and publication of texts marketed in the second half.

LTM Free Cash Flow on a like-for-like basis came to € 41.9 million and includes mainly outlays for restructuring costs of € 10.6 million and approximately € 14 million for acquisitions.

At 30 June 2022, Group employees amounted to 1,917 units, up by 4.8% versus the 1,829 units at 30 June 2021, following the inclusion of the workforce of D Scuola and of De Agostini Libri. Excluding the contribution of companies consolidated from 2022 and the effects of the disposal of titles in the Media area that took place in December 2021, the decline would be approximately 1.7%.

BUSINESS OUTLOOK
In light of the positive operating-financial trend recorded in the first half of the year, and thanks also to the relief received by Electa for its museum activities^[1], the Group believes that it can confirm, for the full year 2022, the previously disclosed estimates at the consolidated level, despite the geopolitical uncertainty and the persisting problems arising from the increase in costs both in the procurement of raw materials, paper in particular, and for energy consumption.

The Group thus expects:

• Earnings: continued resilience of the business model
  – mid-single-digit growth of revenue
  – adjusted EBITDA up by more than 20%
  – double-digit growth of the net result, thanks also to significantly lower restructuring costs and to the improved results of investees versus 2021.

• Cash Flow/Net Financial Position: continued strong cash generation
  – Cash flow from ordinary operations in line with 2021;
  – Free Cash Flow in the region of € 10/15 million (including outlays for the announced acquisitions and before dividend payout);
  – Group net financial debt (IFRS 16) at 1.3x Adjusted EBITDA.

The Mondadori Group continues to prioritize sustainability issues and to pursue its efforts to achieve the ESG goals set.

PERFORMANCE OF BUSINESS AREAS

• BOOKS

Following the remarkable growth seen in 2021, first half 2022 witnessed a consolidation phase of the books market, with a slight drop in terms of value (-1.8%) and volume (-1.4%) versus the same period of 2021^[2].
Excluding from the scope of the books market the comic books segment – still untapped by the Group in the first half of the year and whose growth rate in the period stood at 27.1% – the decline versus first half 2021 is 3.4% (in terms of value).

Against this backdrop, the Mondadori Group’s performance steadily improved, thanks to a publishing plan that concentrated the publication of the most successful titles in the second quarter, and enabled the Group to retain its domestic leadership with a 24.3% market share (26.1% considering the consolidation of Edizioni Star Comics, whose acquisition was completed last 1 July)

Additionally, on 7 July, thanks to Einaudi, the Group won the 76th edition of the Strega Prize with Spatriati by Mario Desiati and placed three other titles from 2nd to 4th place: Quel maledetto Vronskij by Claudio Piersanti for Rizzoli; E poi saremo salvi by Alessandra Carati, a debut fiction writer for Mondadori; Niente di vero by Veronica Raimo for Einaudi.

In first six months 2022, revenue in the Books area stood at € 196 million, up by 16% versus           € 168.9 million in first six months 2021, driven by the positive performance of the trade publishers (+2.2%), which grew by 9% in the second quarter, the sharp increase of Rizzoli International Publications (+10.7%), the upswing in Electa’s activities, as well as the consolidation of D Scuola.
Considering the scope of the Books area on a like-for-like basis alone, excluding the contribution of D Scuola, revenue grew by 6.1%.

Revenue from the school textbooks business amounted to € 49.6 million, up by 38.5% versus € 35.8 million in first half 2021, due to the abovementioned change in the scope following the consolidation of the D Scuola publishing house.
On a like-for-like basis, revenue was down by € 3 million (-8.2%), as a result of the delay in supplies to a number of top accounts, whose recovery is expected in July.

Adjusted EBITDA in the Books area stood at € 23.8 million including the continued negative contribution of € 0.8 million at 30 June of D Scuola, owing to the seasonal nature of the school textbooks business: net of this effect, adjusted EBITDA on a like-for-like basis stood at € 24.7 million, an improvement of € 4.8 million versus € 19.8 million in first half 2021.
The result can be attributable to the abovementioned positive trend of Trade publishers and the performance of Electa, which benefited from the upswing in museum and concession-related activities and higher relief (€ 6.3 million versus approximately € 3 million in first half 2021), which more than offset lower revenue in the Education segment.

• RETAIL

In the first six months, the Retail area posted revenue of € 77.6 million, up by € 7.8 million (+11.2%) versus € 69.8 million in the same period of the prior year.
The ongoing development and renovation of existing stores and the focus on the core business of books have enabled the Mondadori network of bookstores to consolidate its role in the market, as shown by the solid growth in revenue from the Book product (€ +7.7 million), which is higher at the end of the first half even than in the pre-COVID period.

A breakdown of the main channels of Mondadori Retail shows the following:

• directly-managed stores reported a sharp increase in revenue (+45.7% versus the prior year), due to the abovementioned strategy of focusing on the book product and network development activities, and to the restrictions on activities in 1° half 2021 brought by the anti-COVID measures;
• the franchised channel, composed mainly of proximity stores located in small towns, continued its progression, increasing by +3.8% versus the same period of the prior year.

Thanks to the remarkable performance of physical stores, the market share of Mondadori Retail in the Italian books market grew to 11.8%.

In the first half of the year, adjusted EBITDA came to a positive € 1.4 million, up strongly versus approximately € 1 million in first six months 2021, as a result of revenue growth and continued cost containment, renovation and development of the physical network of stores, and despite higher rental and utility costs incurred by directly-managed stores in the six months under review.

• MEDIA

The Media area recorded revenue of € 98.2 million in first six months 2022, increasing by approximately 1% versus € 97.4 million in the same half of the prior year; on a like-for-like basis of portfolio of brands (excluding the effect of the deconsolidation of the titles sold at end 2021), the growth was 10%:

• digital activities, which now account for 22% of the area’s total revenue, rose sharply in the second quarter by 22% (+27.5% on a like-for-like basis of brands). Thanks to this growth, digital revenue as a percentage of total advertising revenue stood at 67% of the total (up from 63% in first half 2021);
• traditional print activities, excluding the titles sold at end 2021, grew by 5%.

The Group’s market share in terms of circulation, as a result of a performance – on a like-for-like basis of portfolio of titles – that outdid the relevant market, stood at 21.3%, up versus 20.5% in May of the prior year.

The Media area’s adjusted EBITDA stood at € 7.8 million, up strongly versus first six months 2021, thanks to the remarkable performance of the print area which, in the second quarter, in addition to benefiting from the continued cost-curbing measures, was able to account for both the margin from the FuoriSalone event (which in 2021 took place in the second half of the year) and for a tax credit recognized on paper consumption that allowed it to offset the increase in the related cost incurred in the period.

With regard to the Warning Notice to listed issuers published by CONSOB on 19 May 2022, concerning the effects on the operating and financial situation resulting from the Russia-Ukraine war, the Mondadori Group clarifies:

• to have no “direct” impacts, as it has no production sites in the affected area, nor does this area represent an outlet market for publishing production or services offered by the Group;
• to have “indirect” impacts, due to the increase in prices of raw materials, energy and transportation.

With regard to such increased costs, the Group has taken measures to alleviate their impact, and has put in place further remedies to achieve efficiencies, such as to achieve in the first half of the year in all business areas growing results versus the relevant forecast figures and to confirm the outlook for the entire year.

The presentation of the results at 30 June 2022, approved today by the Board of Directors is available, on 1Info (www.1info.it), on www.borsaitaliana.it and on www.gruppomondadori.it (Investors section). A Q&A session will be held in conference call mode at 4.30 pm for the financial community, attended by the CEO of the Mondadori Group, Antonio Porro, and the CFO, Alessandro Franzosi. Journalists will be able to follow the meeting in listening mode only, by connecting to the following  phone number +39.02.8020927 or via web at: https://hditalia.choruscall.com/?calltype=2&info=company.

The Financial Reporting Manager – Alessandro Franzosi – hereby declares, pursuant to Article 154 bis, paragraph 2, of the Consolidated Finance Law, that the accounting information contained herein corresponds to the Company’s records, books and accounting entries.

Annexes (in the complete pdf):

1. Consolidated balance sheet;
2. Consolidated income statement;
3. Consolidated income statement – II quarter;
4. Group cash flow;
5. Glossary of terms and alternative performance measures used.

 * The operating and financial figures at 30 June 2022 are also shown on a like-for-like basis excluding D Scuola for greater comparability versus the prior year. Additionally, as already seen for the first quarter, at 30 June 2022, the contribution of D Scuola, fully consolidated as from 16 December 2021, was heavily marked by the seasonal nature of the Education business which, in the first half of the year, records the costs of creating editorial content, as well as the expense from the promotional activities to support the adoption campaign, postponing the recognition of the most significant portion of revenue from the sale of school textbooks to the second half of the year. 

^[1] Emergency Fund for Enterprises and Cultural Institutions for the Relief of Art Exhibition Organizers, decree published on 27 May 2022 granting the subsidies provided by Ministerial Decree 428 no. 227 of June 2021.

^[2] GFK, June 2022

The Mondadori Group announces the completion today of the disposal to Artoni Group S.p.A. and SRH S.r.l. – two of the leading local distributors of daily newspapers and magazines – of 51% of the share capital of Press-di Distribuzione Stampa e Multimedia S.r.l.; the company is wholly owned by Mondadori Media S.p.A. and is active in the national distribution of newspapers and magazines for the Mondadori Group and for over 90 third-party publishers.

The transaction will not envisage changes in the contractual terms and conditions already applied to distribution activities, and is intended to increase efficiency and achieve synergies through a vertical integration process in the sector by involving specialized players; additionally, Righel Anglois will continue to hold his position as CEO.
The transaction continues the path of shortening the distribution chain to protect, digitize and strengthen the “last mile”, with an increasing support to newsstands, which are the most tangible and important interface with readers for publishers of newspapers and magazines.

The disposal of 51% of Press-di, which contributed approximately € 29 million to the Mondadori Group’s consolidated revenue in 2021, envisages a consideration of € 1.5 million; the transaction will produce no material operating, financial or business effects and will have no impact on the Group’s guidance for 2022 as disclosed to the market.