Corporate

The Board of Directors of Arnoldo Mondadori Editore S.p.A. met today, under the Chairmanship of Marina Berlusconi, to examine and approve the consolidated balance sheet and management report for the year to 31st December 2009 as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

The market scenario

2009 saw the full effects of the international financial crisis that was the forerunner to a recession that has severely undermined on the real economy, with a well-documented impact on production, consumer spending and employment.

During the year economic indicators continued to worsen, with an inevitable knock-on effect on corporate decisions, not merely on costs, but also and above all on investments, penalising any possible recovery which continued to be seen as difficult and far off.

Brief outline of business trends

In the sectors in which Mondadori operates the really critical element was the trend in advertising investments in magazines, which resulted for the Group in a sharp fall in revenues, despite sales, both in France and Italy, being better than the reference markets.

In the magazine sector Mondadori in Italy, thanks to the quality of its titles, was able to hold circulation relatively steady, while the market for add-on sales continued the expected sharp fall. In France, where a review of the product portfolio was completed, positive circulation figures were confirmed, also thanks to the contribution of subscriptions. At the end of August, the weekly women’s title Grazia was launched, with better than expected results, both in terms of sales and advertising.

In a book market which in Italy showed a slight tendency to buck the prevailing trends in consumer spending, Mondadori produced results, both in terms of revenues and profitability, in line with 2008, which was a record year due to the number of bestsellers, thanks to the publication of a number of successful new titles.

There was increased attention for the activities of other business. R101, the group’s radio station, in the last months of the year saw an upturn in advertising sales, anticipating what is hoped will be a recovery in 2010. There was a particularly intense expansion of the retail sector thanks to franchising agreements and a further push was given to the digital area, both for book sales and in magazines with sites for the main titles in Italy and France, as well as advertising sales, also through new joint ventures.

Significant events during the year

In addition to a sharp focus on the business, as indicated above, Mondadori’s reaction to an extraordinarily complex and negative market situation included a number of specific operations:

• the sale of 80% of the printing business, finalised at the end of 2008, a year in which there was a marked improvement in the financial position and consistent capital gains. In 2009 the partnership generated the expected positive impact, both in terms of the maintenance of standards of printing quality and flexibility, and reductions in costs;
• the continuation, with increased commitment, of a four-year plan for operating cost reductions begun in 2008 and centred on actions on cost structures, without sacrificing product quality, and a wide-ranging restructuring programme, both in Italy and in France.

The plan, that has already generated cost savings during 2009 of around €110 million, aims, by the end of 2011, to achieve total savings, on a like-for-like basis of €170 million;

• debt restructuring, begun and completed during 2009, led in the final months of the year to an improvement in the financial flexibility of the business, with the expansion of covenants and the extension of terms on credit lines from banks.

GROUP PERFORMANCE IN THE YEAR TO 31 DECEMBER 2009

An outline of the results for the year 2009 will include the effects of some of the operations described above, particularly in the differences with 2008, in terms of capital gains and restructuring charges. Consequently, what follows is an indication of normalized operating profit, excluding the effects of the changes mentioned above.

Consolidated revenues in 2009 came to €1,540.1 million, a fall of 15.3% on the €1,819.2 million of 2008. On a like-for-like basis, excluding the printing business sold last year, revenues (€1.695,3 million in 2008) were down by 9.2% (only -2.6% in the last quarter of the year).

Consolidated gross operating profit for 2009 amounted to €106.2 million, a fall of 57.4% on the €249.2 million of the previous year.

Excluding the results from the printing business (on a like-for-like basis), capital gains and charges for organisational restructuring, normalized consolidated gross operating profit came to €133.1 million, a fall of 34.3% on the €202.7 million of 2008; a reduction essentially due to the downturn in advertising revenues and investments for the launch of Grazia in France; the impact of these two factors were mitigated by the growing results of efforts to reduce operating costs.

In this regard, it is worth underlining that in the last quarter of 2009 the fall was of 8.5% (-€4.8 million) compared with the same period of the previous year, which provides a clear indication of a significant slowdown in the downward trend.

Consolidated operating profit for 2009 amounted to €71.8 million, a 64.7% fall on the €203.5 million of 2008, with amortizations and depreciations on tangible assets of €13.4 million (€31.1 million in 2008) and intangibles of €20.9 million (€14.6 million in 2008).

Consolidated pre-tax profit came to €63.9 million, a fall of 57.8% on the €151.4 million of 2008, with an improvement of €44.2 million in net financial charges, the result of the lower cost of money, as well as lower average indebtedness and capital gains from debt restructuring activities (€14.5 million).

Consolidated net profit for 2009 amounted to €34.3 million, a 64.7% reduction on the €97.1 million (around €32 million of which from capital gains) of the previous year.

Consolidated gross cash flow (net profit plus amortizations) at 31 December 2009 came to €68.7 million compared with €142.8 million in 2008.

The consolidated net financial position went from -€490.3 million at the end of 2008 to -€372.9 million on 31 December 2009, an improvement of €117.4 million; compared with 30 September 2008 (i.e. before the sale of 80% of Mondadori Printing) the improvement was of €271.6 million.

Information concerning personnel

On 31 December 2009 permanent and temporary contract staff employed by the companies of the Group amounted to 3,750 (3,925 on 31 December 2008).

The consolidated figure, therefore, shows a fall of 175 (-4.5%), obtained through a block on turnover and efficiency policies related to the launch of the restructuring plan.

Personnel costs for 2009 came to €302.8 million, a fall of 15% compared with the previous year. However, the figure is not comparable in that the figure for 2008 includes, for ten months, the printing business. In fact, excluding the labour costs for Mondadori Printing and costs related to restructuring, the reduction was of 8%.

As already indicated, the Group will pursue, both in Italy and France, a reorganisation plan, begun in 2008, with the aim of achieving further significant efficiency gains by the end of 2011.

THE BUSINESS AREAS

· Books

The Mondadori Book Division recorded total revenues in 2009 of €425.7 million, compared with €434.3 million in the previous year (-2%); excluding add-on sales, the fall was of 1%.

During 2009 the Group published 2,449 new titles (2,695 in 2008) and 5,137 reprints (5,225 in 2008), a total of 51.6 million copies, compared with 53.4 million in previous year.

Over the year the Mondadori Group confirmed its leadership position, with a 28.4% market share in terms of value, an with a clear advantage over its competitors. The slight fall in the Group’s overall share was due to the expected downturn by Edizioni Mondadori compared with 2008, a year that was positively conditioned by the success of Paolo Giordano, winner of the Premio Strega with La solitudine dei numeri primi. Of note, compared with the previous year, was the growth in the market share of Einaudi, which, once again in 2009, was Italy’s second largest publishing house.

As regards the performance of the individual companies, Edizioni Mondadori generated revenues of €142 million, a slight fall on the previous year (-1.4%). Two new titles published in 2009 met with particular success among readers: Il simbolo perduto by Dan Brown, published in October, sold more than a million copies in just over two months (and became the year’s biggest selling title). There was also great success for Il tempo che vorrei by Fabio Volo, which in just over a month sold over 600,000 copies. Of particular note was Venuto al mondo by Margaret Mazzantini, winner of the Premio Campiello Letteratura. Published in November 2008, the novel had sold, by the end of 2009, a total of more than 500,000 copies. Remaining with Italian fiction, the exceptional sales of La solitudine dei numeri primi by Paolo Giordano continued which, two years after it was first published, has now sold more than 1,300,000 copies in Italy, and been published in 30 foreign translations.

In foreign fiction there was continued success for Marina by Carlos Ruiz Zafon (340,000 copies); of note in non-fiction was the book by Bruno Vespa, Donne di cuori, which sold more than 300,000 copies, making it the year’s top selling non-fiction title. Also the Strade Blu series saw continued success, especially with Roberto Saviano, with Gomorra and La bellezza e l’inferno.

During the period revenues at Einaudi amounted to €50.2 million (-2.9%). The fall was mainly due to a downturn in revenues for the sale of rights for add-on sales initiatives. Among the publisher’s series good performances were recorded Italian fictions (+27%), also as a result of the award of the Premio Strega to Tiziano Scarpa for Stabat Mater (over 140,000 copies), and by Economici (+5.3%). Other successful titles during the period included: Che la festa cominci by Niccolò Ammaniti (300,000 copies), Un luogo incerto and Scorre la Senna by Fred Vargas (a total of over 180,000 copies), Il museo dell’innocenza by Orhan Pamuk (55,000 copies).

Revenues at Sperling & Kupfer were up by 11.5% compared with the previous twelve months, reaching €23.2 million. Actions to re-focus the offer, begun in 2008, continued with a further containment in the number of new titles and copies produced. Among the biggest hits were Il gioco delle verità by Sveva Casati Modignani (170,000 copies).

In 2009 Piemme generated net revenues of €44.4 million (-8.8%). This result was achieved thanks to the excellent performance of the religion and paperback lines, that compensated for an expected downturn in fiction, determined by hard cover sales of Hosseini.

Revenues at Mondadori Electa during 2009 came to €40.3 million, a 5.4% fall on the previous year.

Mondadori Education generated net revenues of €81.7 million (-5.1%), maintaining a significant position in the school textbook sector, with a market share of 13.3%, and confirming its leadership position in the primary school segment.

· Magazines Italy

2009 was strongly characterised by the effects of the crisis in the second half of 2008 which continued to affect also the year just ended.

The fall in consumer spending affected all sectors of print media, impacting readers propensity to buy and, even more markedly, the level of advertising investment in traditional media. In terms of circulation, there was not so much a fall in the number of buyers as a downturn in the frequency of buying.

The fall in advertising revenues was, in turn, affected by both a fall in volumes and an inevitable reduction in ad rates. It should be noted, however, that Mondadori titles outperformed the market, in particular in the most relevant segment, that of weeklies.

In this difficult context, which in any case saw a strong reaction by Mondadori in terms of initiatives and management, the revenues of the Division in Italy came to €494.3 million, a fall of 14.1% compared with the €575.7 million of 2008.

This was largely due to the following phenomena:

• a fall in circulation revenues (-3.6%) mainly the result of a reduction in volumes and only in part compensated by cover price increases;
• a marked slump in add-on sales (-18.4%) which, while sustained by a significant increase in the number of initiatives, recorded an expected fall in average sales per single operation;
• a substantial downturn in advertising revenues (-27.1%) split across, albeit unevenly, all advertising sectors and almost all titles.

Actions taken to face this unfavourable market situation included the support and development of titles, with a priority on actions aimed at improving efficiency and reducing operating and structural costs.

In the last quarter of 2009 the Group was also engaged in the implementation of an ambitious corporate restructuring plan, made possible by agreements reached with the unions in August and October for the adoption of measures foreseen by current norms to be applied at times of crisis, as well as individual incentives, affecting both graphics/layout and journalistic staff.

In terms of circulation, in a market that was a downturn of around 7%, Mondadori confirmed its leadership with a share of around 35%.

In the women’s segment Donna Moderna maintained its circulation revenues thanks also to an increase in the cover price introduced at the beginning of the year, while in the market area Grazia more than confirmed the sales levels of 2008. Of special note were the sales of Tu Style, so radically redesigned as to be considered an authentic “launch”, that drove circulation to 190,000 copies (+45%), increasing circulation revenues by 30%.

In the newsmagazine segment Panorama underlined its position of pre-eminence by further expanding the gap from competitors.

In the TV guides segment, which has been suffering from a long-term decline in circulation, the various titles in the Mondadori portfolio resisted rather well. In particular TV Sorrisi e Canzoni which, thanks to both a cover price increase during the year and constant efforts to renew the title, saw a very contained fall in circulation (-3%).

Among monthly titles there were particular problems with titles in the interiors and design segments (-5% in circulation revenues) while cookery titles performed well, showing growth in both circulation and revenues.

There were also promising prospects for Flair which, after its July relaunch, saw an encouraging increase in newsstand sales.

In add-on sales, that have been particularly relevant in the past for the profitability of a number of publishing groups, there was a continuation of the negative trend (-22.1%). Mondadori nevertheless generated significant revenues, performing slightly better than the market (-18.4%), and confirming its position as market leader, also with respect to the leading national daily newspapers.

Digital

Mondadori is active online with 47 web sites that cover all of the Group’s activities, with 2009 revenues that recorded growth of 13%, in a market that grew by 5.1% (Source: Nielsen).

Particularly positive was the performance of the Group’s sites for women, including Donnamoderna.com, Starbene.it, Grazia.blog.it and Cosmopolitan.it. Leadership in the segment will be further strengthened in 2010 with the GraziaMagazine.it site, launched in February.

International activities

During 2009 the international activities of Mondadori magazines generated total revenues of €118.5 million.

Thanks to a good performance by titles, and in particular an excellent performance by Grazia UK, licensing revenues were up by 15.4%; there was also a sharp increase in revenues from advertising for titles in the network (+34.4%), which partly compensated the fall in syndication revenues.

During the year the intense activities for the launch of new international editions continued: Grazia arrived in China, France, Thailand and Indonesia; Flair in the Czech Republic, Slovakia, Slovenia and Hungary, and Casaviva in India. Despite the overall economic-financial crisis, and the specific difficulties facing the media, the initial indications form these new initiatives are very positive and ahead of expectations.

In February 2010 the ‘Grazia International Network’ expanded again with the launch of the German edition of the magazine.

The subsidiary Attica was affected in Greece and the Balkans by cutbacks in advertising expenditure, but a sharp focus on containing costs was able to counterbalance the fall in revenues (-16.2%).

Among the international editions produced by the Group’s joint ventures, special mention should be given to Grazia Russia and Grazia China, launched in February 2009, that achieved higher than expected levels of circulation, in the face of advertising revenues that were affected by the international economic downturn.

• Magazines France

The Magazine Division in France generated 2009 revenues of €343.5 million, a fall of 8.2% compared with the €374.1 million of the previous year. On a like-for-like basis, i.e. net of titles sold and new launches, the fall was of 6.6%.

During the period the activities of Mondadori France were characterised by the following:

• the launch, at the end of August, of the weekly Grazia France, the upscale women’s title that from its first issues was well received both by readers and by the advertising market. Average circulation reached 180,000 copies (Source: OJD 2009), compared with an initial target of 160,000; while on the advertising side, Grazia France remained at an average of 32 pages per issue (+50% on the target), with a portfolio of upscale clients (fashion and cosmetics);
• the grouping of the magazines Auto-Journal and Sport Auto in the EMAS joint venture, that publishes the weekly Auto Plus, means that it will become the leading publisher in the auto segment in France and a vital point of reference for advertisers in the sector;
• a company reorganisation plan that foresees the cessation of publication of six titles (Mixte, Caméra Video, Le Photographe, ADDX, FHM and La Nouvelle Revue du Son et du Home Cinema) in line with the policy of focusing on more mass market titles, will also make it possible to realise significant cost reductions;
• a plan to optimise costs concerning the company’s offices will be completed in 2010.

These changes, along with significant measures related to the restructuring of the company, had a negative impact at the operating level during the year of around €28 million.

Circulation revenues at Mondadori France, which include newsstand sales and subscriptions (around 70% of the total), were down by 6% (-4.9% on a like-for-like basis).

In detail, newsstand sales fell by 8.9%, while subscriptions were in line with the previous year. According to DFP (Diffusion France Payée) figures, the company saw a shortfall in terms of copies of 1.8%, outperforming the market (-3.5%). Among the best performing titles were the monthlies Biba, Science&Vie Junior, Modes et Travaux and Top Santé, and the weekly Télé Star which was the top performer in the TV guides segment.

2009 was particularly difficult for the advertising market in France, with investments down by 13% (in terms of volume, Source: TNS). Mondadori, meanwhile, performed better than the market with a fall of 10.3% in terms of volume, thanks to the aforementioned launch of Grazia and a good performance by Biba in the upscale monthly segment, recording revenues of €81.6 million (-13.8% compared with the previous twelve months).

· Advertising

Mondadori Pubblicità ended 2009 with revenues of €250.4 million, compared with the €331 million of 2008 (-24.4%), proving able to at least partially contain the slump recorded in the first months of the year, thanks to a decidedly better second half in the markets of reference. The market share in magazines covered by the advertising company in 2009 was of around 26.6% (Source: Nielsen).

The results of 2009 were also characterised by two changes:

– total sales were impacted by the absence, in the last two months of the year, of the titles published by Società Europea di Edizioni S.p.A. (Il Giornale and its supplements);

– the inclusion of sales for Radio Kiss Kiss from the month of March 2009.

The magazine portfolio, essentially unchanged with respect to 2008, recorded a performance that, while decidedly negative (-27.6%), was nevertheless better than the market of reference, despite a slump in some key sectors for the company, including fashion, furnishings, cosmetics, as well as auto, telecoms, finance and FMCGs. This result was made possible thanks to the weekly titles, while monthlies were in line with the market.

Sales for radio in 2009 were above the trend in the market, where R101 ended the year with a fall of 6.4%, but included sales for Radio Kiss Kiss, which entered the portfolio in March 2009, increasing the company’s revenues in the sector to a total of €25.5 million.

On the Internet front, there was a substantial recovery in the summer months, with the Donnamoderna.com site recording an increase in revenues of 13.8%.

Mediamond, the joint-venture between Mondadori Pubblicità S.p.A. and Publitalia ‘80 S.p.A. for online advertising online, began operations in January 2010 and currently can count on a product portfolio that every month reaches around 8 million unique users with 600 million page views.

• Direct marketing

In 2009 the market for direct marketing saw a downturn of 15.8% (Source: Nielsen in terms of value). In this context Cemit Interactive Media reacted by identifying new clients and new operations, which had greatest success among a number of important Italian companies in the consumer. financial-insurance, automotive and non-profit sectors. All of which made it possible to contain the fall in revenues to 6.3%, closing at €20.9 million, compared with €22.3 million in 2008.

• Retail

The total revenues of the Retail Division in 2009 amounted to €194 million, essentially in line (-0.3%) with the €194.5 million of 2008, with different trends in the two halves of the year: the first six months closed with a fall of 3.6%, while the second half recorded growth of 2.4%.

Mondadori Franchising recorded 2009 revenues of €74.2 million, an increase of 11.6% on the €66.5 million of 2008. During the period the company continued with its expansion programme, and the network now has the largest number of outlets for the sale of editorial products in Italy, with 249 bookshops (227 in December 2008) and 203 Edicolè (177 in December 2008).

Mondadori Retail generated revenues in 2009 of €119.8 million (-6.4%), compared with €128 million in 2008. A revenues breakdown shows that trends were different for different categories of goods. Editorial products remained essentially unchanged, stationery and gifts grew while there was a fall in IT and audio-video.

The network continued to expand in 2009 with the opening of three new outlets (Rome, Turin and Palermo), bringing the total to 23 bookstores and 9 Multicenters.

• Radio

Advertising investments in radio market during 2009 were down by 7.7% on the previous year (Source: Nielsen). The excellent performance in the last quarter went a long way to rebalancing the sharp slump in the first months of the year. It also raises hopes for 2010 and confirms the value and the credibility of radio as an effective advertising media.

2009 net revenues at R101 amounted to €13.8 million (-6.8%), compared with €14.8 million in 2008, and correspond to advertising sales of €16.9 million (-6.4% on the €18.1 million of 2008).

I terms of ratings, R101 confirmed its position as the 5th most popular commercial radio network in Italy among those who have participated in the new Audiradio diary panel, with a daily average of around 2 million listeners and around 6.2 million over 7 days, reaching a pool of around 9 million listeners over 28 days.

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

The Annual Report of the parent company, Arnoldo Mondadori Editore S.p.A., for the year to 31 December 2010, shows a net profit of €53.2 million (€66.2 million on 31 December 2008), while gross operating profit came to €43.6 million (€97.9 million in 2008).

The last indicator was particularly affected by the negative performance of the Magazine Division, which was in difficulty in terms of circulation, saw a further fall in the market for add-on sales and for a severe downturn in advertising.

FORECAST FOR THE FULL YEAR

There were no significant changes in prevailing market trends in the first two months of the current year compared with the previous year in terms of consumer spending and , above all, in advertising investments. It is there fore reasonable to presume that there will be a continuing period of uncertainty before any solid recovery.

Given this situation, significant importance should be given to the Mondadori Group’s commitment to reducing operating costs, with the pursuit of measures additional to those that already in the fourth quarter of 2009 allowed the company to record a level of profitability close to that of the same period of the previous year.

The strategic priorities on which the company will focus during the year will include a further focus on product quality and the management of the core business, alongside investments in growth areas, above all digital.

Over the short term it remains difficult to make detailed forecasts for the markets in which Mondadori operates. It is, however, possible to estimate that, unless there is a downturn in the current trends in advertising investments, the company will be able to improve the level of operating profitability compared with last year.

§

PROPOSAL FOR THE DESTINATION OF NET PROFIT FOR THE YEAR ENDED 31.12.2009

The Board of Directors agreed to propose to the Annual General Meeting of the Shareholders, called for 27 April 2009 (or 28 April on second calling), the deposit of the entire net profit for the year ended on 31 December 2009 of Arnoldo Mondadori Editore S.p.A., equal to €53,179,772.38, to the extraordinary reserve.

The proposal of the Board of Directors not to pay out a dividend for 2009 is consistent with the context indicated in the forecast for the full year and will also to allow the company to successfully complete the ongoing process of reorganisation and to pursue the activities indicated above.

§

SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD ALREADY COMMUNICATED TO THE MARKET

On 8 February 2010, Arnoldo Mondadori Editore S.p.A. signed a preliminary agreement with Società Holding Industriale di Grafica S.p.A. for the acquisition of 50% of the share capital of Mondolibri S.p.A., 50% of which is already owned by Mondadori in a joint-venture with Direct Group Bertelsmann.

§

DECLARATION BY THE EXECUTIVE RESPONSIBLE FOR THE COMPANY’S ACCOUNTS

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 results of 2009 will be outlined by the deputy chairman and chief executive, Maurizio Costa, and the CFO, Carlo Maria Vismara, at a meeting with the financial community to be held today at 14.30 pm at the company’s headquarters in Segrate.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 22 and 26 February 2010, the company bought a total of 390,000 shares (corresponding to 0.15033% of the company’s share capital) on the automated share market at an average price of € 2.74347 per share, for a total of € 1,069,954.70, in the context of the authorisation of the company’s AGM, held on 29 April 2009 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

Date N° of shares bought Weighted average price 22/02/2010 70,000 2.77189 23/02/2010 80,000 2.74986 24/02/2010 80,000 2.72590 25/02/2010 80,000 2.73052 26/02/2010 80,000 2.74275

 

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 17,850,101 of the company’s shares (or 6.88051% of the share capital).

The subsidiary Mondadori International S.A. helds a further 4,517,486 shares (corresponding to 1.7413% of the share capital).

Consequently, as of today the total number of shares held now amounts to 22,367,587 (or 8.62183% of the share capital).

***

It should be noted that the authorisation issued by the Shareholders 2009 limits the purchase of the company’s own shares to a maximum of 10% of the share capital, taking account of the shares already held in the portfolio by both the company and its subsidiaries. Given that 10% of the company’s share capital amounts to 25,942,983 ordinary shares and that the company, on the date of the authorisation issued by the AGM already held, either directly or indirectly through the subsidiary Mondadori International S.A., a total of 20,097,587 shares, the Shareholders consequently authorised the eventual buy back of an additional maximum of 5,845,396 ordinary shares, corresponding to 2.253% of the share capital.

The authorisation will expire on the approval by the AGM of the company’s accounts for the year to 31 December 2009.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that acquisition operations has been conducted in line with the norms foreseen by the EU regulation 2273/2003; in terms of daily volumes the company did not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

The Board of Directors of Arnoldo Mondadori Editore S.p.A. will ask the forthcoming Annual General Meeting of the Shareholders to renew authorisation to effect share buy backs, following the expiry with the approval of the Annual Report for the year to 31 December 2009, authorisation already granted by the AGM of 29 April 2009, which had defined a limit of up to 10% of the share capital.

The Annual General Meeting of the Shareholders, scheduled for 27 April 2010 (or 28 April on an eventual second calling) will also be asked to authorise the use of shares involved in such buy back operations or already in the company’s portfolio, as per art. 2357 ter of the Civil Code.

The highlights of the Board of Directors’ proposal are as follows:

• Underlying motivation

The underlying reason for the request for authorisation to effect buy backs and make use of company shares is that it will allow the Board of Directors to:

– use company shares for the exercise of options for the purchase of shares assigned to participants in the stock option plans put in place by the Shareholders;

– use company shares, either bought or in the portfolio, for the exercise of rights, also conversion rights, deriving from financial instruments issued by the company, its subsidiaries or third parties;

– use company shares, either bought or in the portfolio, as part or whole payment in any eventual acquisitions or equity investments that fall within the company’s stated investment policy;

– take advantage, where and when considered strategic for the company, of investment opportunities, also in relation to available liquidity.

• Duration

The validity will extend to the approval of the Annual Report for the financial year 2010.

• Cap on the number of shares that may be bought

The proposed new authorisation relates – also in consideration of the increase in the number of shares that may be bought introduced by current legislation – a limit of 15% of the company’s share capital, taking account of the shares already held in the portfolio by both the company and its subsidiaries.

In particular, given that 15% of the company’s share capital corresponds to 38,914,474 shares and that the company currently holds, either directly or indirectly a total of 22,207,587 of its own shares, corresponding to 8.56% of the share capital, the new authorisation would give the Board the faculty to buy back a further 16,706,887 ordinary shares, corresponding to 6.44% of the share capital (taking account also of any eventual reduction resulting from further acquisitions made in the context of the current Shareholders’ authorisation).

• Method of acquisition and the price range

Buy backs would be effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.

Consequently, the corresponding minimum and maximum price of sale will be determined at the same conditions that applied to previous authorisations agreed by the Shareholders, i.e. at a unit price not less than the official market price on the day prior to any operation, less 20%, and not more than the official market price on the day prior to any operation, plus 10%.

In terms of price and daily volumes, acquisition operations will in any case be conducted in line with the norms foreseen by the EU regulation 2273/2003.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 15 and 19 February 2010, the company bought a total of 1,035,000 shares (corresponding to 0.39895% of the company’s share capital) on the automated share market at an average price of € 2.73130 per share, for a total of € 2,826,899.35, in the context of the authorisation of the company’s AGM, held on 29 April 2009 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

Date N° of shares bought Weighted average price 15/02/2010 200,000 2.68858 16/02/2010 205,000 2.70299 17/02/2010 210,000 2.74544 18/02/2010 210,000 2.76253 19/02/2010 210,000 2.75427

 

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 17,460,101 of the company’s shares (or 6.73018% of the share capital).

The subsidiary Mondadori International S.A. helds a further 4,517,486 shares (corresponding to 1.7413% of the share capital).

Consequently, as of today the total number of shares held now amounts to 21,977,587 (or 8.47150% of the share capital).

***

It should be noted that the authorisation issued by the Shareholders 2009 limits the purchase of the company’s own shares to a maximum of 10% of the share capital, taking account of the shares already held in the portfolio by both the company and its subsidiaries. Given that 10% of the company’s share capital amounts to 25,942,983 ordinary shares and that the company, on the date of the authorisation issued by the AGM already held, either directly or indirectly through the subsidiary Mondadori International S.A., a total of 20,097,587 shares, the Shareholders consequently authorised the eventual buy back of an additional maximum of 5,845,396 ordinary shares, corresponding to 2.253% of the share capital.

The authorisation will expire on the approval by the AGM of the company’s accounts for the year to 31 December 2009.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that, in terms of price and daily volumes, acquisition operations are conducted in line with the norms foreseen by the EU regulation 2273/2003, and that, in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

Arnoldo Mondadori Editore S.p.A. has today announced that, in the period between 8 and 12 February 2010, the company bought a total of 845,000 shares (corresponding to 0.32571% of the company’s share capital) on the automated share market at an average price of €2.63538 per share, for a total of €2,226,900.15, in the context of the authorisation of the company’s AGM, held on 29 April 2009 (previously communicated as per Art. 144 bis of Consob regulation 11971/1999), to effect share buy back operations.

The details of the operations, as conducted daily, are indicated below:

Date N° of shares bought Weighted average price 08/02/2010 80,000 2.63072 09/02/2010 175,000 2.63247 10/02/2010 185,000 2.60498 11/02/2010 200,000 2.66217 12/02/2010 205,000 2.64100

Following these operations and taking account of the shares already in the portfolio, Arnoldo Mondadori Editore S.p.A. now directly holds 16,425,101 of the company’s shares (or 6.33123% of the share capital).

The subsidiary Mondadori International S.A. helds a further 4,517,486 shares (corresponding to 1.7413% of the share capital).

Consequently, as of today the total number of shares held now amounts to 20,942,587 (or 8.07254% of the share capital).

***

It should be noted that the authorisation issued by the Shareholders 2009 limits the purchase of the company’s own shares to a maximum of 10% of the share capital, taking account of the shares already held in the portfolio by both the company and its subsidiaries. Given that 10% of the company’s share capital amounts to 25,942,983 ordinary shares and that the company, on the date of the authorisation issued by the AGM already held, either directly or indirectly through the subsidiary Mondadori International S.A., a total of 20,097,587 shares, the Shareholders consequently authorised the eventual buy back of an additional maximum of 5,845,396 ordinary shares, corresponding to 2.253% of the share capital.

The authorisation will expire on the approval by the AGM of the company’s accounts for the year to 31 December 2009.

In line with the Shareholders’ authorisation, buy backs are effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.

It should also be noted that, in terms of price and daily volumes, acquisition operations are conducted in line with the norms foreseen by the EU regulation 2273/2003, and that, in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

Arnoldo Mondadori Editore S.p.A. today stipulated a preliminary contract with Società Holding Industriale di Grafica S.p.A. for the acquisition of 50% of the share capital of Mondolibri S.p.A., of which Mondadori already holds 50% as part of a joint venture with DirectGroup Bertelsmann.

The transaction value of this deal is €6.75 million.

With this acquisition Mondadori will increase its stake in the company to 100%.

Mondolibri, a leading player in the mail order book market and one of Italy’s most important online retailers, is comprised of two divisions: Book Clubs, which is in the mail order sale of editorial and multimedia products through book clubs alongside more than 70 retail outlets and a web platform, and Bol.it, an on-line shop for editorial and multimedia products.

In 2008, Mondolibri generated total revenues of €82 million, of which €19 million deriving from e-commerce.

The operation will give the Mondadori Group complete control of Mondolibri, offering, on the one hand, significant opportunities for synergies with the Mondadori bookshop chain; and, on the other hand, the autonomous management of Bol.it, an important, strategic and fast-growing channel for online sales.

The effective completion of the operation is subject to necessary approval by the relevant competition and media authorities.

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., its calendar of corporate events for the current year:

• Tuesday 23 March 2010: meeting of the Board of Directors for the approval of the Annual Report for the year ended 31 December 2009;
• Tuesday 11 May 2010: meeting of the Board of Directors for the approval of the 1st Quarter Report to 31 March 2010;
• Thursday 29 July 2010: meeting of the Board of Directors for the approval of the Interim Report to 30 June 2010;
• Thursday 11 November 2010: meeting of the Board of Directors for the approval of the 3rd Quarter Report to 30 September 2010.

The Annual General Meeting of the Shareholders for the approval of the Annual Report for the year ended 31 December 2009 will be held on Tuesday 27 April 2010, on first calling, or Wednesday 28 April 2010, on an eventual second calling.

Analysts’ presentations of the results for the full year to 31 December 2009, the interim report to 30 June 2010 and the reports on the first and third quarters of 2010 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.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first nine months of the year to 30th September 2009, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO

Market indicators show that also the third quarter on 2009 was negative, both at a national and international level and only in September were there some signs of confidence which had a positive impact on financial markets and real consumer spending.

In the Mondadori Group’s markets of reference, advertising investments were sharply down both in Italy and France, albeit to a lesser extent, with no clear indications about future trends.

In the magazine sector the fall in circulation was slightly less than in previous months, particularly in Italy (-7.7% in terms of volume in August); in France the greater weight of subscriptions contributed to a higher level of stability (-5.7% in terms of value in August).

In line with the first months of 2009, there was a continuation of the generalised decline in add-on sales (around -25%), an area which in Italy has seen a dramatic slump compared with recent years.

The book market recorded growth in terms of volume of 1.9%, and stability in terms of volume, with a previous year that was characterised by a greater number of bestsellers.

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2009

Also in the third quarter of 2009, the results of the Mondadori Group were strongly conditioned by a marked reduction in advertising revenues, the impact of which was mitigated by the increasing effects of activities aimed at containing management costs.

During the quarter the conditions were also put in place for forthcoming organisational restructuring activities, through agreements with trade unions regarding both editorial and journalistic staff.

On a like-for-like basis, excluding non-recurring elements and development and restructuring costs, profit for the third quarter amounted to €46 million, a 26.9% fall on the same period of 2008.

Consolidated revenues to 30 September 2009 came to €1,114.3 million, a fall of 18.6% on the €1,368.1 million in 2008 (-11.4% on a like-for-like basis, excluding the activities of Mondadori Printing).

Consolidated gross operating profit amounted to €68.2 million, a 59.6% fall compared with the €168.8 million of the previous year, corresponding to 6.1% as a proportion of revenues (12.3% in 2008).

Excluding the contribution of the activities of Mondadori Printing the difference in operating profit shows a fall of 55.1%: this is essentially due to a lower level of profit from the business (-€57 million, of which -€8.6 million from add-on sales); higher investments for business development (-€7.8 million); and changes from non-recurring items (extraordinary items, restructuring charges) of -€19.1 million.

Consolidated operating profit came to €50 million, a fall of 63.6% compared with the €137.5 million of the same period of 2008, with amortizations and depreciations of tangible and intangible assets for a total of €18.2 million (€31.3 million to 30 September 2008); as a proportion of revenues, a fall from the 10.1% of 2008 to 4.5% this time.

Consolidated profit before taxation amounted to €50 million, a fall of 52.2% on the €104.5 million of the first nine months of 2008, with net financial charges for 2009 at zero, compared with €33 million in the previous year; this improvement was also due to extraordinary income, as well as lower indebtedness and a fall in the cost of borrowing.

Consolidated net profit came to €27.1 million, a 53.9% reduction on the €58.8 million of the same period of last year.

Gross cash flow in the first nine months of 2009 amounted to €45.3 million, compared with €90.1 million in 2008.

The Group’s net financial position at 30 September 2009 showed a deficit of €416.9 million, an improvement on the -€490.3 million at the end of 2008.

On 30 September 2009 the personnel employed by the companies of the Group totalled 3,853 (3,925 on 31 December 2008). Compared with the first nine months of last year, on a like-for-like basis – i.e. excluding Mondadori Printing – the reduction totalled 145, essentially thanks to efficiency gains and a block on turnover.

On 24 September 2009 a meeting was held at the Ministry of Labour and Social Policy in Rome where an agreement was signed with trade unions to proceed with requests for early retirement for a maximum of 181 employees of Arnoldo Mondadori Editore S.p.A. and Mondadori Pubblicità S.p.A. with printing/editorial contracts. A similar agreement is currently being defined for journalists in the Magazine Division of Arnoldo Mondadori Editore S.p.A..

Labour costs of €217.9 million (€271.5 million to 30 September 2008) were down by 19.7%; on a comparable basis (excluding Mondadori Printing and restructuring costs) the reduction was of 7.7%.

In Italy company has put in place an important restructuring plan essentially based on the use of a range of instruments made possible by the definition of new organisational models. The plan will also benefit from the application of Law N° 416/81 concerning early retirement for all those who have matured, or will mature, in the period 2009-2011, the necessary requirements. This plan will, on a like-for-like basis, lead to a fall in the payroll at the end of 2011 of 21%.

In France the results in terms of reorganisation have been achieved both through management actions and the sale/closure of titles. Such rationalisation activities will continue in line with agreements that are currently being defined.

RESULTS OF THE BUSINESS AREAS[1]

· Books
In the first nine months of 2009, in the context of an economic recession and general slump in consumer spending, the publishing houses of the Mondadori Group recorded revenues of €306 million, a fall of 3.3% on the €316.5 million of the same period of 2008. During the period the Division confirmed its clear leadership with a market share of 28% (excluding large-scale retail).

Concerning the individual publishing houses, Edizioni Mondadori in the first nine months of 2009 recorded revenues €88.4 million, a fall of 5.5% compared with the previous year.

Significant titles published during the period included, Venuto al mondo by Margaret Mazzantini which in early September won the 47th Campiello Literary Prize (450,000 copies). There was also great success for La bellezza e l’inferno (350,000 copies) by Roberto Saviano, Marina by Carlos Ruiz Zafon (300,000 copies), the latest legal thriller by John Grisham, Il ricatto (200,000 copies).

During the period Einaudi generated revenues of €34.5 million, a fall of 6.8% compared with the same period of 2008. In particular the bookstore channel and large-scale retail saw a fall of 5.2%, due above all to a lower level of re-orders and higher levels of returns. Part-works were down by 14.9%; and the sale of rights for add-on sales was down by 19.2%.

In terms of new titles, Einaudi saw excellent results from the winner of the last Strega Prize, Stabat Mater by Tiziano Scarpa (more than 130,000 copies), and Un luogo incerto by Fred Vargas (115,000 copies).

Sperling & Kupfer recorded revenues of €19.1 million (+13% on the same period of the previous year). Significant new titles during the period included Il gioco delle verità by Sveva Casati Modignani (180,000 copies), top of the Nielsen bestsellers list for Italian fiction for five weeks.

In the first nine months of 2009 Piemme generated net revenues of €33.7 million, a fall of 9.9% on the same period of the previous year, characterised by the presence of the bestsellers by Khaled Hosseini; the first nine months of 2009 were compensated by the good performance of some new titles, including the thriller by Michael Connelly, Il cerchio del lupo (85,000 copies), and the launch in paperback of Il cacciatore di aquiloni by Hosseini (145,000 copies).

Mondadori Electa recorded revenues of €29.6 million, a slight increase (+1.4%) compared with the first 9 months of 2008. The company has felt the impact of the downturn in some of the market segments in which it operates, including the bookstore channel and add-on sales, compensated by activities in the cultural heritage sector and contract publishing.

In the first nine months of 2009 Mondadori Education generated revenues of €68 million, a fall of 4.1% on the same period of the previous year, and confirmed its position as the second player in terms of market share in the market for textbook adoptions.

· Magazines Italy

The third quarter saw a continuation of the difficulties affecting Italian and international publishing that began in the second half of 2008, albeit at a slightly reduced level. In particular, Mondadori saw an improvement in circulation in the summer months and even advertising was able to contain the downward trend thanks to a series of special initiatives.

Revenues generated by the Division in the period amounted to €368.6 million, a fall of 16.4% on the €441 million of the same period of the previous year 2008. In particular, the decline in the third quarter was of 6.7%.

The decline over the first nine months was the result of:

– a fall in circulation (-4.7%), in line with the market of reference; with a more reassuring performance in the third quarter (-2.5%);

– an ongoing downsizing of revenues from add-on sales (-26.3%), albeit less marked than for other magazine publishers and with better results in the summer period (-1.8%) compared with the same quarter of 2008.

– Continuing slump in advertising revenues (-26.9%, with a fall of 16.1% in Q3), characterised by both a reduction in volumes and a decrease in tariffs.

In terms of the circulation of its titles, Mondadori maintained both its market share and leadership: of note were the summer performances of Chi, TV Sorrisi e Canzoni and TV guides in general (Guida TV and Telepiù), Donna Moderna, Grazia; while Tu Style, relaunched at the beginning of the year, continued to grow.

On the add-on sales front, Mondadori, that covers the sector mainly with operations linked with TV Sorrisi e Canzoni, Panorama, Donna Moderna and collectable products, reported results in line with expectations, with initiatives aimed at families and younger targets, a home video series, music and, finally, a number of purely collectable operations.

There was a marked increase in revenues from Mondadori web sites compared with the previous year (+12.2%), thanks to the performance of Donnamoderna.com (+34%), which was markedly ahead of the market (+5.2%, Source: Nielsen to September), reaching, at the end of the period, 1.5 million unique users and 20 million page views (Source: Nielsen Netview).

International activities

In the first nine months of the year licensing revenues for Mondadori titles continued to grow, recording and increase of 15.1%, despite a crisis that also at an international level has had an impact on the revenues of the individual editions and relative royalties.

In October the ‘Grazia International Network’ saw the launch of a new edition of Grazia in Thailand, which will be followed up by the end of the year with a new edition in Indonesia, which will be the fifteenth edition around the world. To the success of Grazia should be added the good performance of the licences for Casaviva, Sale&Pepe, Interni and Flair, which since October is also present in The Czech Republic, Slovakia, Slovenia and Hungary, as well as Austria.

During the period the subsidiary Attica was affected in Greece and the Balkan countries by the reduction of advertising budgets, while managing to react to the substantial fall in revenues (around -30% compared with the previous year) with a detailed policy for containing costs.

· Magazines France

The Magazine Division in France generated total revenues in the first nine months of 2009 of €254.8 million, a fall of 10.4% on the €284.5 million of the same period of the previous year. On a like-for-like basis, in other words net of the titles sold in 2008, the fall was of 7.4%.

At the end of August Mondadori launched Grazia France, which, from the first issues, performed well ahead of expectations, both in terms of circulation and advertising.

After the excellent results obtained by the magazine in the launch phase, Grazia confirmed an excellent newsstand performance also in the subsequent period, with an average sale of more than 180,000 per issue for the first 11 issues. There was an average of 30 advertising pages, thanks to adhesion of a range of important up-market advertisers, not only French.

On the circulation front, in France newsstand sales saw a fall of 5.7% (Source: NMPP/TP, to the end of August). In this context the newsstand circulations of Mondadori France, which account for around 70% of the total, recorded a fall of 4.8%, almost one point better than the market; on a comparable basis the fall was of 2.4%.

Subscriptions, meanwhile, were up, confirming their role as a stable and important source of revenues.

On the advertising front, the magazine market in France remained at the negative levels recorded in the previous months, with a slight improvement in the summer (-14% in terms of volume in the first eight months; Source: TNS_MI). The advertising revenues of Mondadori France came to €59.3 million, a 20.9% fall; on a like-for-like basis the figure was 15.9%.

In an extremely difficult market, Mondadori France continued to pursue efficiencies in its industrial activities (paper and printing) and to reduce marketing, distribution and general costs. The introduction in 2009 of a number of projects, including the launch of Grazia, the reorganisation of the business and the ongoing review of the titles, are an extremely important process for Mondadori France that will enable the company to emerge from the current economic crisis with better prospects for the future.

· Advertising

Mondadori Pubblicità ended the first nine months of the year with revenues of €181.6 million, a fall of 25.8% on the €244.7 million of the previous year, thanks to a significant capacity to react more effectively than the market; the overall fall in sales in the third quarter was held at around 17%, partially closing the gap opened up in the first half, which ended down by 29.1%.

Thanks to a number of initiatives launched by Mondadori Pubblicità, the radio stations and magazines in the portfolio generated results that made it possible to contain the decline compared with its competitors. Among the weeklies, special mention should be given to the performance, in terms of pages, of Tu Style, Panorama and Grazia, a result that was obtained in a market that continues to suffer from downturns in key sectors for Mondadori (fashion, interiors, cosmetics and FMCGs).

During the first months of the year a series of projects were also developed aimed at reinforcing the company’s presence and valorising the assets in the portfolio. These included:

– the creation of a Development Network, with the precise objective of acquiring new clients;

– the incorporation of Mediamond, a new sales company for online advertising, jointly owned by Mondadori Pubblicità and Publitalia ’80, as previous announced on the last 22th July.

• Direct Marketing

In the first nine months of 2009 the Direct Marketing sector in Italy recorded a fall of 17.9% (Nielsen data to September) in line with the trend in the first half of the year.

During the period Cemit generated revenues of €13.8 million, a fall of 13.2%, which was lower than the market, compared with the €15.9 million of the same period of the previous year.

The fall was mainly due to the slowdown in investments by industry, especially the automotive sector, the impact of which was contained by careful management of costs

• Retail

The Retail Division felt the effects in the first nine months of the year of the generalised decline in consumer spending, while in the third quarter there was substantial stability compared with 2008. This allowed Mondadori to end the period with revenues for the division of €126.4 million, a slight fall of 1.7% on the €128.6 million of last year.

Mondadori Retail generated revenues of €76.9 million, down by 8.9% on the €84.4 million of the same period of last year. Despite this shortfall in revenues, profitability was improved thanks to a marked reduction in overall costs, also achieved through the renegotiation of rental contracts on 40 directly controlled sales outlets.

Mondadori Franchising recorded revenues of €49.5 million, an increase of 12% on the €44.2 million of the first nine months of 2008, thanks to the ongoing development of the chain which has become, in terms of the number of outlets, Italy’s most extensive network for the sale of editorial products with 239 bookshops (212 on 30 September 2008) and 191 Edicolè outlets (157 on 30 September 2008).

• Radio

During the first nine months of the year the radio advertising market showed an improvement, compared with the first six months of 2009 (-14% to September; -17.5% to July; Source: Nielsen), with the first tentative signs of recovery in the month of September. In this context R101 generated revenues of €9.7 million, (-12.6%) compared with the €11.1 million of the corresponding period of 2008.

In terms of ratings, R101 confirmed in the 4th two-month period of 2009 its position as the 5th national commercial network (Source: Audiradio, listeners over 28 days).

EXPECTATIONS FOR THE FULL YEAR

During the third quarter there were no significant changes to the trends in the markets of reference for the Mondadori Group. Furthermore, there are no reasons to believe that there will be any short-term turnaround in such trends, especially as far as the advertising market, the decline in which is expected to continue at a marked level until the end of the year.

The results achieved in terms of cost reductions, thanks to action taken on processes and structures, have allowed the Mondadori Group to maintain a good level of profitability in its core business and to continue to invest in development.

Of special relevance was the launch, at the end of August, of Grazia France, which, while involving significant investments, has proved rewarding in terms of results, with both circulation and advertising revenues ahead of expectations.

The final quarter of the year will also see the Group engaged in the implementation of an ambitious restructuring plan, made possible by recent agreements reached with trade unions, that will involve the editorial and journalistic structures and will lead to significant savings already in the coming year.

The effects of the decline in revenues, in particular in advertising, the area with greatest impact on profitability, ongoing investments in development and the commitment to cost reductions, involving reserves for the restructuring process, will lead to a significant reduction operating profit compared with last year.

§

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

§

The report for the period to 30 September 2009 is made available, as per current legislation, at the company’s corporate headquarters, Borsa Italiana S.p.A. and on the web site www.gruppomondadori.it

[1] 1 It should be noted that on 1 January 2009 IFRS principle 8 came into force, replacing IAS 14, concerning the communication of figures for each significant business in which the Group operates. The application of this new principle has led to the publication of figures pertaining to activities managed by the Mondadori France subsidiary separately from those of the Magazine Division as a whole, even though it is a part. Consequently, in order to make like-for-like comparisons, it has been necessary to re-publish also the figures for the third quarter of 2008.

Moreover, following the sale of 80% of Mondadori Printing, in November 2008, the section that included the figures relative to the Group’s printing activities is no longer significant in the terms of IFRS 8 and, as a result, such figures have been aggregated with those booked under Other business. The same classification has been applied for the figures for 2008.

Arnoldo Mondadori Editore S.p.A. has announced that, as per Art. 70 para 5 of the Consob regulation n. 11971/1999 and in addition to documentation already filed on last 11th September, is available at the company’s headquarters, Borsa Italiana S.p.A. and on the web site www.gruppomondadori.it (Investor Relations section) the minutes of the Board of Directors Meeting hold on 15th October 2009 for the plan to merge approval.

The Board of Directors of Arnoldo Mondadori Editore S.p.A. passed a resolution today at the proposal of the Remuneration Committee to assign the options related to the Stock Option Plan set up for the year 2009 by the Shareholders’ Meeting on 29 April 2009, with a duration covering the three years 2009/2010/2011. In particular, the Board decided on allocation of a total of 2,300,000 options relating to 47 total beneficiaries.

The Plan is set up on annually assigning to beneficiaries personal and non-transferrable options for purchase of ordinary Mondadori shares held by the company as treasury shares – in the ratio of one share (regular dividend rights) for every option exercised – at an Exercise price corresponding to the arithmetic average of the reference prices of the Mondadori share recorded during the period starting from the assignment date of the options to the same day of the previous calendar month. Exercise of the options is allowed exclusively all together and at once, in the strike periods subsequent to the start date of the thirty-six month vesting periods.

With specific reference to the option assignments resolved today by the Board of Directors for the year 2009, below is the information required under Article 84 bis, paragraph 5 of the CONSOB Regulation no. 11971/1999 as amended (the “Issuers Regulation”).