Press releases

Arnoldo Mondadori Editore S.p.A. announces receipt of the following statement:
“Further to the reading of Silvio Berlusconi’s last will and testament, Marina Berlusconi, chairman of the board, and Pier Silvio Berlusconi, director, inform that no shareholder will exercise overall individual indirect control of Fininvest S.p.A., previously exercised by their father himself.

The notary who read out the will is implementing the related legal requirements in the coming hours.”

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the draft Parent Company and Group consolidated financial statements at 31 December 2021 presented by CEO Antonio Porro.

2021 HIGHLIGHTS
In 2021, the Group was able to open a new chapter in its growth path, while achieving a stronger operating and financial standing.
As proof of its ability to pursue development opportunities, in 2021 Mondadori completed the acquisition of D Scuola – together with Rizzoli Libri the biggest investment in the last 15 years -, which has enabled the Group to gain a leadership position also in the school textbook publishing market and to give substance to its strategy of increasing focus on the core business of books.
This strategic approach also includes further transactions announced during the year: the acquisition of 50% of A.L.I. – Agenzia Libraria International – and DeA Planeta Libri, as well as a further reduction in the exposure to print magazines.

“In 2021 the soundness of our choices rewarded the Mondadori Group with consolidated results above guidance, even though already revised upwards during the year”, pointed out Antonio Porro, Chief Executive Officer of the Mondadori Group. “The buoyant trend of the relevant markets has in fact allowed us to seize an important growth opportunity and, together with greater operating efficiency, has led to a strong increase in both profitability and cash generation. This has brought us the best net result of the last 10 years and a net financial position that has returned to positive again after more than 15 years. The favourable economic backdrop and the financial strength of our Group have therefore paved the way for a return, after 10 years, to a shareholder remuneration policy”, concludes Porro.

PERFORMANCE AT 31 DECEMBER 2021
In 2021, consolidated revenue amounted to € 807.3 million, up by 8.5% versus € 744 million in the prior year, driven by the positive trend that permeated all areas of business, the Books and Retail areas specifically, which benefited in particular from the buoyancy of the Books market.

Adjusted EBITDA in 2021 came to € 105.7 million, up by € 7.7 million versus 2020 (€ 98.1 million); this performance reflects, on the one hand, the positive trend in revenue recorded by all business areas and, on the other, the ongoing efforts to curb operating and structural costs implemented by Management.
The reduction versus 2020 in the ratio of fixed costs (overheads and payrolls) on consolidated revenue enabled the Group to confirm its margins to over 13%: net of the relief received to aid museum activities in both years, the Group’s margin would have increased to 12.7% from 12.1%.

EBITDA, amounting to € 91.1 million versus € 84.6 million in 2020, improved by € 6.5 million, despite higher non-recurring expense of € 1.1 million, attributable mainly to restructuring costs recognized in the Media and Corporate & Shared Services areas.

In 2021, EBIT amounted to € 45.2 million, improving strongly – by over € 30 million – versus 2020, thanks to the mentioned operating dynamics, but mostly to the presence in the result at 31 December 2020, of higher write-downs for a total of approximately € 22 million.

Consolidated profit before tax came to € 38.6 million versus € 1.6 million in 2020.
On top of that, the following items also contributed to the significant improvement of approximately € 37 million:

• the reduction of approximately € 1.6 million in financial expense, due mainly to lower average debt and a lower average interest rate as a result of the renegotiation of the lines of credit completed in May 2021, as well as the recognition of certain impairments of receivables at 31 December 2020;
• the strong improvement in the results of associates (consolidated at equity).

The Group’s net profit, after minority interests, came to € 44.2 million, a sharp increase of approximately € 40 million versus € 4.5 million recorded in 2020.

Despite the sharp increase in taxable income, tax components for the year close at a positive € 5.6 million: this is attributable to net non-recurring tax income – deriving from the process of realigning the tax amounts of trademarks and goodwill to their respective statutory amounts – of approximately € 19 million.

The Mondadori Group’s net financial position (before IFRS 16) at 31 December 2021, before outlays for the acquisition of D Scuola, after more than 15 years has returned to positive territory and is equal to € 37.4 million, a strong improvement – by over € 50 million – versus € -14.8 million at 31 December 2020.

Considering the effects of the extraordinary transaction – completed on 16 December 2021 – and the equity and financial consolidation of the acquiree, the Group’s net financial position (before IFRS 16) stood at € -94.8 million, beating expectations that had estimated net financial debt at year end at approximately € 100 million.
IFRS 16 NFP stood at € -179.1 million (IFRS16 impact € -84.3 million) versus € -97.6 million at 31 December 2020.

At 31 December 2021, the cash flow from operations for the last twelve months came to a positive € 79.3 million; the cash flow from ordinary operations (after outlays for financial expense and tax), equal to € 68.2 million (+33.3% versus 2020), allows the Group to continue on the path of strengthening its financial structure, confirming the business’s continued and growing ability to generate cash.
The total free cash flow generated by the Mondadori Group in 2021 exceeded € 52 million, up by 28% versus € 40.7 million in 2020.

At 31 December 2021, Group employees^[1] amounted to 1,810 units, down by approximately -2% versus 1,847 units at December 2020, despite the increase in the workforce following the acquisition of Hej! (net of which the reduction would be -2.5%); this decrease is the result of continued efforts to increase the efficiency of the individual business areas.

BUSINESS OUTLOOK
The positive results, the good business outlook and the further improvement in operating performance and cash generation capacity, paint a picture of a very solid Group, allowing it to look forward with greater confidence to the results achievable in the new year, despite the recent challenges posed by the increase in energy prices and the purchase of raw materials, paper first and foremost.

From a strategic point of view, the Company will continue to strengthen its core business and therefore its leadership in the Books area, increasing its relevance and impact on the overall business.

This path will see the Mondadori Group both expand horizontally through entry into new segments of book publishing, including contiguous areas, and continue and consolidate the process of vertical integration launched through the recent acquisitions in the field of book promotion and distribution.

The Group will concurrently continue to develop its digital skills and range of products, and to rationalize its non-strategic activities.

From an operating point of view, the Group’s business-financial targets that follow refer to a scope that includes the transactions concluded in 2021, therefore the consolidation of D Scuola^[2] and the deconsolidation of the activities referring to the titles sold; these forecasts, instead, do not include any negative impact from the current context of geo-political instability, and are based on the absence of significant changes in the developments of the health emergency and resulting further discontinuities and slowdowns in economic activities and consumption at a global level.

Income Statement
Against this backdrop, reasonable estimates point to a mid-single digit increase in revenue in 2022
and adjusted EBITDA up by more than 20%.
On a like-for-like basis, these estimates would translate into a top-line and low single-digit margin growth, confirming the ongoing cost containment actions aimed also at offsetting in 2022 the negative impact of the increase in costs relating to raw materials and energy consumption.

Net profit in 2022 is expected to grow double-digit, despite the absence of the significant tax component^[3], amounting to approximately € 19 million, which had benefited net profit in 2021, thanks also to non-recurring expense much lower than the figure recorded in 2021.

Cash Flow and Net Financial Position
In 2022, the Group is expected to confirm the significant cash generation capacity shown in recent years:

• Cash Flow from ordinary operations is reasonably expected to be basically in line with the 2021 figure due, on the one hand, to the positive contribution of D Scuola, and, on the other, to a “one-off” increase in the Group’s capital expenditure deriving:
  – in the school segment, from a stronger and richer product range and publishing catalogue;
  – in the Retail area, from the project on the renovation of the flagship store in Piazza Duomo, Milan, which will see the light in the second half of the year;
• this points to an estimate of a Free Cash Flow for 2022 – before payout of the dividend but net of the forecasts on cash outflows from the extraordinary transactions announced – in the region of € 40/45 million and a Group net debt (IFRS16) of less than 1.1x Adjusted EBITDA (0.6x before IFRS16).

The financial solidity reached allows the Group to continue its path of virtuous development, especially in the book business, also through M&As: therefore, the Group will continue, also in the current year, to pursue further growth opportunities through acquisitions, in a resolute and active way.

After more than 10 years, the Group has seen a return to solid conditions for a renewed shareholder remuneration policy with the intent – for the next three years – of distributing 40% of Cash Flow from Ordinary Operations per year, maintaining a minimum floor equal to the Dividend Per Share of 2021. During this period, the Board of Directors, when proposing the distribution to the Shareholders’ Meeting, will in any case take account of the general macroeconomic scenario, any business plans and investment requirements, as well as the expected cash flows that will affect the Group’s equity and financial structure.

PERFORMANCE OF BUSINESS AREAS

• BOOKS

2021 showed a book market growth of 14.7%^[4] versus 2020 and 18.5% versus 2019, a year still unscathed by the distorting effects of the pandemic.

The Group was able to benefit from this market buoyancy: the Trade Books area saw an increase in sell-out in terms of value of approximately 10% versus 2020, and was once again able to retain its leadership at national level, with a market share of 23.7%^[5], also confirmed by the presence of 5 titles in the list of the 10 bestselling books of the year.

In the school textbooks segment, the Group achieved a steady adoption market share (22.1%^[6]), proof of the excellent results achieved and the quality of the editorial offering of the Mondadori Education and Rizzoli Education publishing houses. Including the acquisition of D Scuola, the pro forma 2021 market share would stand at 32.9%, giving the Group a leadership position also in the school textbooks publishing market.

In 2021, revenue from the Books area amounted to € 465 million, up by approximately 10% versus € 422.9 million in the prior year, broken down as follows:

• +10.6% in the Trade area, which published 2,495 titles in the period (versus 2,193 in 2020), returning production to pre-pandemic levels.
• +9.4% in the Educational segment, which benefited from increased revenue from both the school textbooks segment (+4.2%) and Rizzoli International Publications (+24.1%).
• +5.2% in the distribution of third-party publishers.

Adjusted EBITDA in the Books area came to € 92.6 million in 2021, improving by approximately € 5 million versus € 87.5 million in 2020, thanks to the strong revenue growth that more than offset the lower relief paid to Electa (approximately € 5 million) in the museum segment versus the prior year.
Profitability achieved by the Books area in 2021 was approximately 20%.

• RETAIL

As mentioned earlier, the books market grew by 14.7%^[7] in 2021 versus 2020, driven mainly by the physical channel. Against this backdrop, Mondadori Retail’s market share stood at 11.4%, propelled by the outstanding performance of the physical network of directly-managed stores and franchises.

The 2021 income statement figures show a strong growth in revenue and margins in the area, thanks to the renewal and development process launched in recent years, which improved operating and management performance.

Revenue amounted to € 173.9 million, up by € 20.2 million (+13.1%) versus € 153.7 million in the prior year, as a result of the positive performance of the book product (+16.7%), which now accounts for more than 80% of revenue^[8] in the area. Specifically:

• directly-managed stores saw a strong recovery in revenue (+20.2% versus the prior year), thanks to the strategy of focusing on the core business of books and the abovementioned network development and maintenance activities;
• the franchised channel, composed mainly of proximity stores located in small towns, continued its progression, increasing by +9% versus the prior year;
• revenue from the Bookclub returned to growth (+5.3%), while revenue from the online channel settled at € 15.6 million, down versus the prior year but improving by approximately 12% versus 2019.

In 2021, the area recorded significant growth in adjusted EBITDA, which stood at € 5.1 million (€ +3.9 million versus 2020 and up also versus 2019).

This improvement is attributable to the strong ongoing renewal and development of the network of physical stores, to careful cost management and a thorough review of the organization and processes, as well as the constant work on product innovation and enrichment of the editorial offer, accompanied by new services and communication formats for customers and partners.
The structural actions adopted over the past few years have brought a strong turnaround in the company’s operating and financial performance, with results that are on the rise also versus 2019.

• MEDIA

The Media area reported revenue of € 206.6 million in 2021, up by 4.5% versus € 197.6 million in the prior year.
Specifically:

• circulation revenue was down by 7.1%, showing a performance in line with the relevant market, with a market share of 1%, steady versus 2020 (approximately 20% net of the two titles sold at end 2021) ²¹;
• revenue from add-on products was down by 15.8% versus 2020, hit by the negative impact of the lower availability of DVD titles due to the absence of significant film releases caused by the ongoing pandemic;
• advertising revenue grew by approximately 27% overall (+15% excluding the contribution of the acquisition of Hej!):
  – digital activities grew by 40%, thanks also to the contribution of AdKaora and the consolidation of Hej! (+18% excluding this acquisition);
  – advertising sales on print magazines rose by approximately 10%, thanks also to the rebound in advertising investments.
  Mention should be made that the percentage of digital revenue on total advertising revenue is over 62% (from 57% in 2020), confirming Mondadori Media’s leadership position in digital and social media and the decreasing dependence of the business unit’s revenue on print advertising sales.
• Other revenue, which includes revenue deriving from distribution activities, posted a 10% increase versus the prior year, reflecting growth in the distribution activities of third-party publishers in the newsstand channel.

Adjusted EBITDA in the Media area amounted to € 12.4 million, up by more than 50% versus 2020 (€ 7.9 million), and also higher than the € 11.3 million recorded in 2019, driven by the development of digital activities and, in the print area, the recovery of advertising sales and the continued measures to contain operating costs, which brought an increase in profitability: in fact, the overall EBITDA margin improved by two percentage points, rising from 4% in 2020 to approximately 6%.
Specifically, digital activities, including Hej!, contributed approximately € 10 million to the overall result, also as a result of a percentage margin of over 20%.

PERFORMANCE OF ARNOLDO MONDADORI EDITORE S.P.A.
The Parent Company’s income statement for the year ended 31 December 2021 shows the same profit as the consolidated financial statements, amounting to € 44.2 million (€ 4.5 million in 2020), due to the adoption of the equity method to measure the Company’s investments in the separate financial statements.

Revenue, amounting to € 41.1 million, was down by approximately € 4 million versus the prior year, due primarily to a changed scope of the costs of the central units charged back to subsidiaries.

Adjusted EBITDA deteriorated from € -0.9 million to € -5.4 million, attributable mainly to the abovementioned reduction in chargebacks to subsidiaries.
2021 includes negative non-ordinary items totaling € 6 million, attributable mainly to provisions for restructuring costs.
Amortization and depreciation in 2021, amounting to € 9.5 million, was basically steady versus 2020 (€ 9.9 million).
2021 includes lower net financial expense for a total of € 0.7 million.

The positive contribution from the equity measurement of investments amounted to € 65.3 million, a sharp increase versus € 13.2 million in the prior year, due mainly to the write-back of the subsidiaries Mondadori Libri S.p.A. and Mondadori Media S.p.A..

The Parent Company’s net profit, amounting to € 44.2 million (versus € 4.5 million in 2020), benefited from the tax income of € 3.2 million recognized in 2021 (€ 8.6 million in 2020 following recognition of the “Patent box” relief for € 5.2 million).

DIVIDEND DISTRIBUTION PROPOSAL OF € 0.085 PER ORDINARY SHARE
As repeatedly mentioned, the favourable economic backdrop and the financial solidity achieved by the Group have paved the way for a return to a shareholder remuneration policy: based on the results of 2021, the Board of Directors has proposed to the next Shareholders’ Meeting, convened on 28 April 2022, the distribution of a unit dividend of € 0.085 for each ordinary share (net of treasury shares) outstanding at the record date, for a total of approximately € 22.1 million^[9], equal to a pay-out of 50% of the consolidated net profit and a dividend yield of 4.2% (at 31 December 2021).
The dividend will be paid, in accordance with the provisions of the “Regulation of the markets organized and managed by Borsa Italiana S.p.A.”, from 25 May 2022 (payment date), with ex-coupon (no. 21) date on 23 May 2022 (ex date) and with the date of entitlement to payment of the dividend, pursuant to Article 83-terdecies of the TUF (record date), on 24 May 2022.

SIGNIFICANT EVENTS AFTER YEAR-END 2021
On 25 February 2022, the Mondadori Group announced that it had received notice from the Antitrust Authority of the authorization to acquire from De Agostini Editore S.p.A. a 50% stake in the share capital of DeA Planeta Libri S.r.l..
The Authority’s go-ahead triggered the fulfilment of the suspensive condition of the agreement on the sale of the stake; the sale will therefore be fully implemented on the closing date, scheduled by March, as from which the company will be known as De Agostini Libri S.r.l..
On 7 March 2022, the Mondadori Group announced that it had received notice from the Antitrust Authority of the authorization to acquire a 50% stake in A.L.I. S.r.l. – Agenzia Libraria International, specialized in the distribution of books.
Following authorization from the above Authority, the transaction will be fully implemented on the closing date, which is scheduled to take place by April.

PROPOSED RENEWAL OF THE AUTHORIZATION TO PURCHASE AND DISPOSE OF TREASURY SHARES
Following expiry of the previous authorization resolved upon by the Shareholders’ Meeting on 27 April 2021, with the approval of the financial statements at 31 December 2021, the Board of Directors will propose to the next Shareholders’ Meeting the renewal of the authorization to purchase and dispose of treasury shares with the aim of retaining the applicability of law provisions in the matter of any additional buyback plans and, consequently, of seizing any investment and operational opportunities involving treasury shares.
Below are the key elements of the Board of Directors’ proposal:

• Motivations
  The motivations underlying the request for the authorization to purchase and sell treasury shares refer to the opportunity to attribute to the Board of Directors the power to:
  – use the Treasury Shares purchased or already in the Company portfolio as compensation for the acquisition of interests within the framework of the Company’s investments;
  – use the treasury shares purchased or already held in portfolio against the exercise of option rights, including conversion rights, deriving from financial instruments issued by the Company, its subsidiaries or third parties and to use the treasury shares for lending, exchange or transfer transactions or to support extraordinary transactions on the Company’s capital or financing transactions that imply the transfer or sale of treasury shares;
  – undertake any investments, directly or through intermediaries, including for the purpose of containing abnormal movements in share prices, stabilizing share trading and prices, supporting the liquidity of the share on the market, in order to foster the regular conduct of trading beyond normal fluctuations related to market performance, without prejudice in any case to compliance with applicable statutory provisions;
  – rely on investment or divestment opportunities, if considered strategic by the Board of Directors, also in relation to available liquidity;
  – dispose of treasury shares to service share-based incentive plans set up pursuant to Article 114-bis of the TUF, and plans for the free allocation of shares to employees or members of the governing bodies of the Company or to Shareholders.
• Duration
  The authorization to purchase treasury shares runs from the date of any resolution approving the proposal by the Shareholders’ Meeting, until the Shareholders’ Meeting called to approve the financial statements at 31 December 2022 and, in any case, for a period no more than 18 months.
  The authorization to dispose of treasury shares is requested for an unlimited period, given the absence of time limits pursuant to current regulations and the opportunity to allow the Board of Directors to make use of the maximum flexibility, also in terms of time, to carry out any disposal of shares.

• Maximum number of purchasable treasury shares
  The authorization would allow the purchase, including in more than one tranche, of ordinary shares of Arnoldo Mondadori Editore S.p.A., with a par value of € 0.26 each, in one or more tranches in an amount freely determinable by the Board of Directors – up to a maximum number of shares – also taking into account of the ordinary shares held, directly and indirectly, in the portfolio from time to time – of no more than 10% overall of the share capital, in accordance with Article 2357, paragraph 3, of the Italian Civil Code.

• Criteria for purchasing treasury shares and indication of the minimum and maximum purchasing cap
  Purchases shall be made in compliance with Article 132 of the TUF, 144-bis, paragraph 1 letter b) of the Issuer Regulation, and on regulated markets or multilateral trading systems, according to the operating criteria established in the organization and management regulations of the same markets, which do not allow the direct matching of buy orders against predetermined sell orders, and also in compliance with any other applicable law, including EU law. Additionally, share purchase transactions may also be carried out in the manner envisaged in Article 3 of EU Delegated Regulation no. 2016/1052 in order to benefit, if the conditions are met, from the exemption under Article 5, paragraph 1, of EU Regulation no. 596/2014 on market abuse with regard to inside information and market manipulation.
  Regarding the disposal of treasury shares, disposals may be made, on one or more occasions and even before having terminated the maximum number of purchasable treasury shares, either by selling them on regulated markets or according to other trading methods in compliance with the law, including EU law, in force and with the Admitted Market Practices, if applicable.

  Under the proposed authorization, the minimum and maximum purchase price shall be determined at a unit price not lower than the official Stock Exchange price of Mondadori shares on the day preceding the purchase transaction, reduced by 20%, and not higher than the official Stock Exchange price on the day preceding the purchase transaction, increased by 10%.
  In any event – except for any different price and volume determinations resulting from the application of the conditions set forth in the Admitted Market Practices – such price shall be identified in accordance with the trading conditions set forth in Delegated Regulation (EU) no. 1052 of 8 March 2016.

  In terms of consideration, sales transactions or other acts of disposition of treasury shares shall be carried out:
  – if executed in cash, at a price no lower than 10% of the reference price recorded on the MTA – Euronext Milan – organized and managed by Borsa Italiana S.p.A. in the trading session prior to each single transaction;
  – if executed as part of any extraordinary transactions in accordance with financial terms to be determined by the Board of Directors on the basis of the nature and characteristics of the transaction, also taking account of the market performance of Mondadori shares;
  – if executed to service the Performance Share Plans adopted by the Company in compliance with the terms and conditions set out in the resolutions of the Shareholders’ Meeting that establish the Plans and the related regulations.

To date, Arnoldo Mondadori Editore S.p.A. holds a total of no. 1,049,838 treasury shares, equal to 0.402% of the share capital.

For further information on the proposed authorization for the purchase and disposal of treasury shares, reference should be made to the Directors’ Explanatory Report, which will be published within the time limits and in the manner prescribed by applicable regulations.

GRANTING OF SHARES UNDER THE 2019-2021 PERFORMANCE SHARE PLAN: INFORMATION PURSUANT TO ART. 84-BIS, PARAGRAPH 5 CONSOB REGULATION NO. 11971/1999
The Board of Directors, based on the final assessment of the Performance Targets underlying the Plan, and having heard the Remuneration and Appointments Committee, resolved to allocate a total of no. 311,848 Arnoldo Mondadori Editore S.p.A. shares to 8 beneficiaries, in implementation of the provisions contained in the “2019-2021 Performance Share Plan” established by the Board of Directors on 14 March 2019 and subsequently adopted by the Shareholders’ Meeting on 17 April 2019 (the “2019-2021 Plan”).
Mention should be made that the 2019-2021 Plan takes the form of a share granting plan and grants its beneficiaries the right to receive, free of charge, shares in the Company provided that, at the end of a reference period of three financial years, the performance targets set in the same Plan have been achieved.
The 8 beneficiaries of the 2019-2021 Plan are the Chief Executive Officer and 7 managers identified by name by the Chief Executive Officer, as delegated by the Board of Directors.
The characteristics of the 2019-2021 Plan are explained in detail in the Directors’ Report to the Shareholders’ Meeting of 17 April 2019 and in the information document contained therein, available on www.gruppomondadori.it, Governance section, to which reference should be made.
Attached is the information required by Schedule 7 of Annex 3A to CONSOB Regulation no. 11971/1999 to account for the granting of shares in the context of the 2019-2021 Performance Plan.

PROPOSED ADOPTION OF A 2022-2024 PERFORMANCE SHARE PLAN
The Board resolved, on a proposal from the Remuneration and Appointments Committee, and in keeping with the introduction of the performance share approved last year for the medium/long-term remuneration of executive directors and key management personnel, to submit to the approval of the Ordinary Shareholders’ Meeting, the adoption of a 2022-2024 Performance Share Plan, in accordance with Article 114-bis of Legislative Decree no. 58 of 24 February 1998, intended for the Chief Executive Officer, the CFO – Executive Director and a number of Company managers who have an employment and/or directorship relationship with the Company or with its subsidiaries on the granting date of the shares.

With the adoption of the Plan, the Company aims to encourage Management to improve medium to long-term performance, in terms of both industrial performance and growth in the value of the Company.
The Plan envisages the assignment to the beneficiaries of rights to the free allocation of company shares, subject to the achievement of specific performance targets set and measured at the end of the three-year performance period.
These targets are structured to include both shareholder remuneration indicators and management indicators functional to raising the share value, ensuring maximum alignment of Management remuneration and the creation of value for the Company, as well as indicators of a non-operating/financial nature.
For details on the proposed adoption of the 2022-2024 Performance Share Plan, the beneficiaries and the main characteristics of the Regulations of the Plan, reference should be made to the Information Document drawn up by the governing body, pursuant to Article 84-bis and annex 3A of the Issuer Regulation, and to the Explanatory Report, which will be published within the time limits and in the manner prescribed by applicable regulations.

CONSOLIDATED NON-FINANCIAL STATEMENT PURSUANT TO LEGISLATIVE DECREE 254/2016
Under Legislative Decree 254/2016, the Board of Directors’ 2021 Report on Operations of the Mondadori Group is also composed of the Consolidated Non-Financial Statement (NFS), a qualitative-quantitative description of the non-financial performance of the Company, associated with environmental, social, and staff-related issues, as well as those regarding respect for human rights, and the fight against corruption and bribery, which are relevant given the activities and characteristics of the Company. The NFS was prepared in accordance with GRI Standards: Core option, and includes benchmark KPIs related to GRI G4 “Media Sector Disclosure”.
With regard to 2021, the Mondadori Group has updated its materiality analysis, consistent with the principles set out by the GRI Sustainability Reporting Standards (GRI Standards) and the reporting scopes laid down by Legislative Decree 254/2016.
With a view to continuous improvement of the process, in 2021 the stakeholder engagement activity was expanded by involving employees and teachers, who were given a specific online questionnaire on sustainability issues.
The document also contains relevant information in line with ESMA’s recommendations for the 2021 reporting year, and includes references required by Regulation (EU) 2020/852 related to the recent introduction of the EU Taxonomy.

The findings from the reporting include a number of tangible actions regarding social, governance and environmental issues. These include: the creation of the position of Chief Diversity Officer for the implementation of strategies and projects aimed at promoting diversity, equity and inclusion; in keeping with the measures adopted to combat the spread of COVID-19, the possibility offered to employees and associates to carry out and repeat diagnostic screenings free of charge; access, as part of the New Competencies Fund (NCF), to a training and professional development path intended as a strategic lever to encourage and strengthen internal skills and competencies and the attraction of young talents.
During the year no cases of corruption or bribery involving the Company or its employees were reported, and no legal action was initiated or concluded against the Group or its employees for cases of corruption or reports made within the whistleblowing system.
In 2021, the Mondadori Group once again paid special attention to environmental issues and the specific impacts associated with the life cycle of paper products, energy efficiency measures and the reduction of climate-changing emissions: an approach that guides the Company in the implementation of its business activities, from the purchase of certified paper to the efficient management of points of sale. As for the sourcing of raw materials for the printing of publishing products, the Group opts for the use of paper certified under the two main schemes applied worldwide, PEFC and FSC, whose percentage reached 99.9% of the total during the year.

SUSTAINABILITY PLAN GUIDELINES
The Mondadori Group has launched its first-ever Sustainability Plan, which identifies short, medium and long-term targets and actions to improve performance in social, governance and environmental terms.
The reflection process led to the identification of the areas and strategic lines of sustainability on which the Group intends to work in the future through the achievement of targets set on an annual basis and periodically updated.
The 3 relevant macro areas – defined below – and the respective guidelines identified for 2022, reflect the Group’s identity, its mission and its role as a publisher:

Social: enhancing people, content and places for education and culture

• To become a role model in the field of diversity, equity and inclusion, enhancing and contributing to the well-being of our people, through welfare tools and skills development.
• To promote culture and quality, equitable, and inclusive education that fosters pathways to lifelong learning.
• To create, conceive and develop valuable content and affordable, ESG-friendly products.
• To support cultural outposts for social development through the enhancement of bookstores, schools, museums, social channels, events and partnerships.

Governance: promoting sustainable business success

• To pursue sustainable business success by promoting the integration of ESG issues in governance, business plans and the operating model, also by strengthening the mechanisms for listening to stakeholders to develop paths of ongoing improvement.
• To maintain the highest standards for protecting and managing risks and opportunities along the value chain.

Environment: disseminating environmental culture and mitigating impacts on ecosystems

• To spread environmental culture, also through education aimed at an increasingly sustainable development and lifestyle.
• To mitigate environmental impacts throughout the product life cycle, by fostering the protection of biodiversity and reducing climate-changing emissions.

The results for the year ended 31 December 2021, approved on today’s date by the Board of Directors, will be presented by the Mondadori Group Management to the financial community in a webcast presentation scheduled today at 3:30 PM.

The corresponding documentation will be available on 1Info (www.1info.it), www.borsaitaliana.it and www.gruppomondadori.it (Investors). Journalists will be able to follow the presentation in listening mode only, by connecting to the following telephone number +39028020911 and via web https://www.c-meeting.com/web3/join/M37DCPDPQUB3KL. At the end of the meeting, a dedicated session is scheduled where questions may be submitted to management.

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 – fourth quarter;
4. Group cash flow;
5. Arnoldo Mondadori Editore S.p.A. balance sheet;
6. Arnoldo Mondadori Editore S.p.A. income statement;
7. Arnoldo Mondadori Editore S.p.A. statement of cash flows;
8. Glossary of terms and alternative performance measures used;
9. Information pursuant to Schedule 7 of Annex 3a to CONSOB Regulation no. 11971/1999

[1] The workforce at 31 December 2021 does not include D Scuola’s headcount, but does include employees from the two titles, the sale of which became effective on 1 January 2022.

[2] Excluded are the transactions that were under Antitrust scrutiny at 31 December 2021 (acquisition of 50% of A.L.I. and 50% of DeA Planeta, sale of 51% of Press-di).

[3] Derived from the tax realignment of intangible assets.

[4] GfK, December 2021 (figures in terms of market value; 52-week survey in 2021 vs. 53 weeks in 2020)

[5] GfK, December 2021 (figures in terms of market value)

[6] ESAIE, 2021 (number of adopted sections)

^[7] GFK (in terms of value)

^[8] Product revenue excluding Club revenue

[9] Rough estimate based on the number of shares outstanding at the date of this Report.

The Mondadori Group announces the signing of an agreement on the acquisition from De Agostini Editore S.p.A. – owner of the entire share capital – of a 50% stake in DeA Planeta Libri S.r.l., to be renamed De Agostini Libri S.r.l., specialized in trade books with focus on the children’s and non-fiction segments.

The corporate governance structure entitles the Mondadori Group to fully consolidate the company.

The scope of the deal includes Libromania S.r.l., wholly-owned by De Agostini Libri and active in the promotion of third-party publishers: the agreements between the parties include put&call options, exercisable in second half 2022, which entitle the Mondadori Group to acquire 100% of Libromania.

In 2021, De Agostini Libri is expected to record consolidated revenue of approximately € 12.6 million, while EBITDA is forecast at break even.

The total maximum value of the transaction, taking account of the 100% valuation of Libromania, has been set at € 4.5 million.

Thanks to the acquisition, the Mondadori Group, – consistent with its strategy of increasing focus on the core business of books – forms a partnership with a publishing house that boasts a rich history and tradition, as well as solid know-how.

While the transaction in itself is irrelevant for the purposes of Antitrust reporting obligations, in accordance with the relevant legislation, it is subject to the Authority’s authorization, given the involvement of the same parties (the Mondadori Group and De Agostini Editore) in the De Agostini Scuola deal.

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the draft Parent Company and Group consolidated financial statements at 31 December 2020 presented by CEO Ernesto Mauri.

2020 HIGHLIGHTS
2020 was marked by the effects of the COVID-19 health emergency and the resulting application from March of containment measures that greatly curtailed economic activities and the businesses in which Mondadori operates and is a leader^[1], leading to a severe economic crisis.

Against this backdrop, the Mondadori Group was able, on the one hand, to benefit from the resilience shown by the Books market – today the major business component, contributing 92% to the Group’s profitability – and, on the other, to take a series of targeted actions in a timely and effective manner.

These actions were aimed both at guaranteeing its employees safe working conditions – also by encouraging smart working – and at allowing business continuity.

In order to protect Group profitability, an effective plan was launched to contain operating and structural costs of approximately € 48 million, which enabled the company to increase efficiency and sustain profitability even in a severely deteriorated context.

The measures adopted by Management included social shock absorbers, further actions to contain payroll costs – such as a freeze on pay policies, the use of holidays, a hiring freeze -, significant savings on discretionary spending, such as marketing and advertising, as well as the renegotiation of lease agreements on the network of bookstores.

More specifically, mention should be made that the books market in 2020 showed an extraordinary resilience: following the gradual reopening of bookstores after the first lockdown, the segment witnessed a steady recovery, peaking in an approximately 17% growth in the fourth quarter (versus the same period of 2019); with regard to the full year, the market increased by 3.3%.

A strong contribution to the buoyancy of the books market came from the development of the e-commerce channel, which saw double-digit growth in 2020, and from the increased penetration of digital books (e-books and audio-books), which made for 7.4% of total segment revenue.

PERFORMANCE AT 31 DECEMBER 2020
Taking account of the situation of general crisis surrounding the Group, the results achieved in 2020 are far higher than those initially indicated and forecast and are truly outstanding, in the face of the restrictions imposed by the emergency situation.

Consolidated revenue amounted to € 744 million, down by 15.9% versus € 884.9 million in 2019. Net of the change in the scope of consolidation of the Media area from the disposal of the five titles at end 2019, revenue fell by approximately 14%, due mostly to the effects of COVID-19.

Adjusted EBITDA amounted to € 98.1 million, down by € 12.3 million versus 2019 (€ 110.4 million). This performance reflects both the significant effects of the quick response and countermeasures implemented by the Group to tackle the consequences of COVID-19 – which enabled it to curb operating and structural costs by approximately € 48 million – and the grants acknowledged for the exhibitions suspended, cancelled or postponed due to the pandemic.

With regard to the Group as a whole, special mention should be made of the profitability percentage, amounting to 13.2% versus 12.5% recorded in 2019, proof of the effectiveness of the operational efforts made.

EBITDA amounted to € 84.6 million, down by approximately € 18 million versus € 102.9 million in the prior year, due to the above trends and higher non-recurring negative items totaling € 6 million.

EBIT amounted to € 14.8 million, down by approximately € 48 million versus 2019, due to higher amortization, depreciation and write-downs for a total of approximately € 30 million: mention should be made of the write-down of TV Sorrisi e Canzoni, other brands and goodwill for a total of € 26.5 million, in addition to the start of the amortization process of TV Sorrisi e Canzoni (€ 3.5 million). The write-off, resulting from the impairment test, is attributable mainly to the strong discontinuity in the relevant markets of the magazines business, which accelerated the downward trend in advertising sales, relating in particular to traditional print activities, and to circulation trends in the newsstands and subscriptions channels.

Consolidated profit before tax came to € 1.5 million versus € 50.6 million in 2019. In addition to the above, the drop was affected also by the greater financial expense (from € 2.2 million to € 4.1 million) from the recognition of two positive components in 2019: income related to the adjustment of amortized cost under IFRS 9 and a substitute tax refund.

The adjustment of the amount of the remaining investment in Reworld Media to the stock market price at 31 December 2020 (€ 3.17 versus € 2.75 at 31 December 2019), together with the sale of the company’s shares in the fourth quarter of the year, resulted in the recognition of a capital gain of € 0.6 million.

The result of the associates (consolidated at equity) came to a negative € 7.3 million, improving however versus 2019, thanks also to the halved investment in the company that publishes Il Giornale (SEE), although largely offset by the further deterioration in the result of the other investments in the Media area (Attica Publications, SEEC) and of Mediamond, due to the economic trend.

The Group’s net profit, after minority interests, came to € 4.5 million^[2] versus € 28.2 million in 2019 (which included € -2.6 million from the discontinued operations of Mondadori France).

The net financial position before IFRS 16 at 31 December 2020 stood at € -14.8 million, a sharp improvement versus € -55.4 million at end 2019, due to the significant cash generation recorded in the year.

The IFRS 16 net financial position stood at € -97.6 million and includes the financial payable from the application of IFRS 16, totaling € 82.8 million.

Cash flow from ordinary operations amounted to € 51.2 million, up versus € 48.4 million in 2019 (continuing operations), due also to the grants^[3] received, confirming the ability of the business to steadily generate cash, even in a highly deteriorated context.

Group employees amounted to 1,845 units, down by approximately 9% versus 2,018 units at 31 December 2019, as a result of the continued efforts to increase the efficiency of the individual business areas.

BUSINESS OUTLOOK
The ability demonstrated by the Mondadori Group in 2020 to react promptly to a strongly deteriorated context, as well as the financial solidity shown by the capital position at year end, give reasons, from an operational point of view, to be optimistic all in all on the future development of the business and the results that the Group can achieve in the new year.

From a strategic point of view, the Group has all the managerial and financial resources required to continue along the path of strengthening its core businesses, of expanding into new segments in or adjacent to publishing, and of rationalizing, if possible, non-strategic activities consistently pursued in recent years, including through M&A operations.

More specifically, in 2021 the Mondadori Group intends to continue to consolidate its leadership in the Books area – both in the school textbooks and Trade publishing segments, increasing its relevance and impact on the Group’s overall activities – and to complete its skills and solutions in the digital area.

As for the Group’s operating-financial targets, referring to a business scope unchanged from today’s:

• Revenue and EBITDA

In line with the outlined strategy and in light of the relevant context, the operating targets for 2021 envisage estimates pointing to a slight growth in revenue (low single-digit) and an adjusted EBITDA that reflects margins between 11% and 12%, in a context – in the absence of the grants received in 2020 – that shows a substantial stability of the Group’s operating profit.

This is the result of a renewed effort to contain costs aimed at countering the lack of temporary measures, relating primarily to payroll costs, which brought benefits to the Group last year.

• Net profit

The net result in 2021 is expected to grow strongly due also to two “one-off” effects:

• the impact on the 2020 results of the write-down of certain balance sheet items, which is currently not expected to repeat in the new year;
• the likely resort by the Group to tax redemption on part of the intangible asset, which would give rise to recognition of a positive tax component.
• Business Units

The outlook for the individual Business Units is as follows:

• Trade books: the area is expected to operate in a low growing market with a competitive publishing plan that should enable it to achieve higher growth rates than the market and, therefore, to increase its market share. The increase in operating costs attributable, as mentioned, mainly to the lack of social shock absorbers, cannot be totally neutralized by the efficiency measures planned by Management, consequently, eating away, albeit moderately, the operating profit generated by the business unit;
• School textbooks: the forecast of greater changes in book adoptions authorizes expectations on market and revenue growth for the business unit. The more subdued growth (versus the Trade area) in operating costs is neutralized by the cost-cutting policies implemented by Management, allowing the area to keep profitability basically steady;
• Museums: the easing of COVID-19 restrictions on the management of museum activities gives reasons to suggest a modest “restart” and a moderate improvement in revenue and profitability, net of compensation and grants received in 2020;
• Retail: the deep organizational and process review, the rationalization strategy on the portfolio of stores, the continued focus on the book product as part of a broader streamlined offering are expected to bring a sharp increase in profitability;
• Media: recovery of both the print and digital advertising market versus 2020; with overall revenue of the area in slight decline, percentage profitability basically steady thanks to the continued optimization of the structures, and the continued strengthening of the digital area.
• Cash Flow and Net Financial Position

In 2021, the Group is expected to confirm the cash-generating capacity shown in recent years, in a 2020 year marked by adverse events. Specifically, forecasts on the new year indicate that cash flow from ordinary operations will range between € 40 million and € 45 million.

These forecasts suggest, in the absence of transformational acquisitions and excluding the impacts of the adoption of the accounting standards under IFRS 16, a positive consolidated net financial position at year end.

Conversely, taking account of the impact of IFRS 16, indications point to a Group financial debt no greater than 0.8x adjusted EBITDA.

As already mentioned, financial strength gives reasons to believe that during the year the Group will be able to firmly and actively pursue any acquisition opportunities that may arise, as well as to pave the way for a return to a shareholder remuneration policy from 2022, applied to the net result of 2021.

PERFORMANCE OF BUSINESS AREAS

• BOOKS

Owing to the COVID-19 emergency and the relating health measures adopted, at the end of the first half, the Trade Books market had lost 10.1% in terms of value versus 2019, the result of a reduction generated mainly in March (-29.2%) and April (-45.8%).

The strong growth witnessed in the third quarter (+8.4% versus 2019) and especially in the fourth quarter (+16.8% versus 2019) helped the market make a strong recovery, materializing at the end of the year in a 3.3% increase in terms of value^[4], driven mainly by the double-digit growth of the e-commerce channel.

Against this backdrop, the Mondadori Group retained its leadership position with a 24.8% market share.

In 2020, 4 titles from the Group’s publishing houses ranked among the top ten bestselling books in terms of value of the year, and 10 titles among the top twenty^[5].

In particular: “Fu sera e fu mattina” by K. Follett (Mondadori) in first position overall, “Insieme in cucina” by B. Rossi (Mondadori Electa), sixth, “Come un respiro” by F. Ozpetek and “La misura del tempo” by G. Carofiglio (Einaudi), ninth and tenth respectively.

In the school textbooks segment, whose market suffered an estimated 7% decline due to the pandemic^[6], the Mondadori’s Group publishing houses achieved a market share of 22.1%, higher than in 2019, thanks to the positive results of the 2020 adoption campaign.

Revenue in the area in 2020 amounted to € 422.9 million, down by 11.6% versus € 478.4 million of the prior year. Specifically:

• the Trade area fell by 5.6%;
• the Educational area dropped by 16.7%, due to the interruption of museum activities: owing to the restrictions to contain the pandemic, the area saw its operations severely impacted by the closure of sites and exhibitions, and by the virtual collapse of tourist travel also throughout the summer season.

In the last quarter of the year, however, museum activities were able to benefit from grants which partly offset, at the margin level, the effects of the closures of archaeological sites and the suspension of exhibitions, and other measures to contain the contagion.

Revenue from the sale of e-books and audiobooks, which accounted for 7.8% of total publishing revenue in 2020, rose sharply (+27.1%), driven by the lockdown period (March-May) which curtailed operations of the physical channel. Listening hours of the audiobook catalogue jumped by over 87% versus 2019, while downloads of e-books increased by 21.9%.

Adjusted EBITDA in the Books area stood at € 87.5 million versus € 94.5 million in 2019, down mainly as a result of the negative trend of revenue from the Trade area and museum activities, only partly offset by the grants received which, net of the related provisions made, amounted to approximately € 8 million.

Reported EBITDA amounted to € 84.8 million versus € 94 million in 2019, with a trend consistent with the above dynamics.

EBIT amounted to € 69.4 million versus € 81.4 million in 2019, dropping more due partly to higher amortization and depreciation recognized in 2020 resulting from higher investments related to the creation of school textbooks in the Educational area.

• RETAIL

As previously mentioned, the books market (which generates over 80% of revenue^[7] in the area) showed significant growth in 2020 versus 2019 (+3.3%^[8]), driven mainly by the double-digit increase in sales in the e-commerce channel, which benefited from the restrictions imposed on the physical channels by the COVID-19 emergency: during the year, the authorities imposed the closure from 12 March 2020 until early May (first lockdown) of physical bookstores throughout the Country, as well as the points of sale located in shopping centres, for several public holidays and pre-holidays and on weekends in the last quarter of the year (second lockdown).

In 2020, as a result of the above government measures, the Retail area reported revenue of

€ 153.7 million, down by € 33.2 million (approximately -18%) versus € 186.9 million in 2019, of which approximately half related to products other than Books.

If in the first six months of the year, sales were 27.5% lower than in the same period of 2019, in the second half of the year, Mondadori Retail saw its performance improve (-10.2% versus 2019), due in particular to the strong rebound of the Book product. This rebound was achieved mostly in the third quarter, which recorded basically steady revenue versus the prior year, while the final months of the year were affected by the introduction of new restrictions.

With regard to the trend of revenue by channel, mention should be made of the improved performance of franchised stores versus the network of directly-managed stores, whose operations were impacted more by the restrictive measures imposed by the authorities, and the significant growth of online operations (+47.7% versus 2019).

Despite the sharp decline in revenue, Mondadori Retail’s adjusted EBITDA in 2020 came to a positive € 1.3 million, down only by € 3.8 million versus 2019.

A result achieved thanks to heightened maintenance and renewal of the network of physical stores (opening of 18 franchised stores and 2 directly-managed stores), careful cost management and a deep organizational and process revision carried out in the second half of 2019 and continued even during the harshest period of the health emergency.

Reported EBITDA amounted to € –2.7 million (versus € +2.9 million in 2019), due to extraordinary items, which mainly include restructuring costs and closure of a dispute related to IMU tax for 2013 – 2019.

EBIT (which includes, under IFRS 16, among the cost components, imputed depreciation relating to directly-managed stores) amounted to € -13 million (versus € -7.7 million in 2019) and was equally impacted by the above extraordinary components.

• MEDIA

In 2020, the advertising market posted an overall 15.3% decline, heavily affected by the impact of the COVID-19 health emergency. All channels fell during the period, including digital -0.8% and magazines -36.6%^[9].

The digital advertising segment alone showed a clear reversal from third quarter 2020, growing by approximately 12% in the fourth quarter versus the same period of the prior year.

In 2020, the magazines circulation market the in newsstands and subscriptions channels, dropped by 11.8%^[10]. The add-on segment reported a negative -17.5% for add-ons bundled with magazines^[11].

Against this backdrop, the Mondadori Group retained its position as Italy’s leading multimedia publisher: in print, with a circulation market share of 24.2%^[12] and 10.2 million readers (6.8 million of whom women)^[13]; on the web, with a reach in December of 83.5% and approximately 34 million unique users in December 2020^[14]; in social media, with an aggregate fan base of 36.5 million people and 106 profiles^[15].

In 2020, the Media area recorded revenue of € 197.6 million (-23% versus € 256.6 million in 2019; -17.5% net of the titles sold at end 2019).

In the fourth quarter of the year, the drop was 18.2% (approximately -12.8% on a like-for-like basis), with a strong upswing in digital operations which grew by 17.3% (+20.8% on a like-for-like basis) versus fourth quarter 2019.

Specifically, in 2020:

• advertising revenue was down by a total of approximately 28%; this is the form of revenue most affected by the ongoing health emergency, which led to the cancellation in 2020 of an important event such as the Salone del Mobile. Net of scope discontinuities, the reduction would be 23%, with the print segment down -41% and digital advertising sales basically steady (+0.3% versus 2019).

In the last quarter of the year, against the persisting decline, albeit mitigated, in revenue from print media (down by approximately -22% on a like-for-like basis), revenue from digital advertising grew by approximately 21%, as already mentioned.

• circulation revenue (newsstands and subscriptions) was down by approximately 24%, due both to the disposal of the above five titles and the impact of COVID-19; on a like-for-like basis, the fall would be approximately 14%.
• revenue from add-on products fell by approximately 26% versus 2019 (down by approximately -24% net of the disposal of the five titles).

In 2020, digital revenue as a percentage of the business unit’s total advertising revenue amounted to 57% (from 42% in 2019).

Adjusted EBITDA in the Media area amounted to € 7.9 million in 2020, down by approximately € 3.3 million versus € 11.3 million in 2019.

The sharp drop in revenue was alleviated by the effective measures to contain operating costs, which curbed their negative impact on profitability, and by the excellent result of digital operations, which generated higher margins than in 2019.

Against slightly declining revenue, digital operations in fact recorded a growth in adjusted EBITDA, up from € 7 million to € 7.2 million, with a margin of over 20%.

In the last quarter of 2020, Mondadori Media recorded adjusted EBITDA of € 4.7 million, down by € 1.1 million versus the same period of the prior year, but recovering versus the trend seen in the first nine months of the year due to the combined effect of:

• the positive performance of digital advertising, which contributed in the quarter under review to an increase in margins of approximately € 1 million versus fourth quarter 2019
• the abovementioned continued cost containment actions, which partly offset the decline in profitability of print operations versus fourth quarter 2019.

Reported EBITDA amounted to € 3.7 million versus € 9.4 million in 2019.

EBIT came to € –30.6 million versus € 1.1 million, due to the start of amortization of TV Sorrisi e Canzoni (for a total annual amount of € 3.5 million) and the concurrent non-recurring write-downs of the title, other brands and goodwill for a total of € 26.5 million, which impacted only on this area.

PERFORMANCE OF ARNOLDO MONDADORI EDITORE S.P.A.
As from 1 January 2020, all the activities referring to the print and digital magazines, as well as the investments in the Magazines Italy area, were transferred to Mondadori Media S.p.A. (100% owned by Arnoldo Mondadori Editore S.p.A.). For a clearer understanding and comparison of results, the Company’s income statement at 31 December 2020 is also compared with the income statement of the prior year, which is presented pro forma to take account of the changed scope due to the contribution of assets and the disposal of titles in December 2019.

The Parent Company’s income statement at 31 December 2020 shows the same profit as in the consolidated financial statements of € 4.5 million (€ 29.6 million in 2019), due to the fact that the Company has chosen to use the equity method to measure its investments in the separate financial statements.

Revenue, amounting to € 45.1 million, was up versus € 38.5 million of the prior year, due mainly to the accounting of revenue recognized for services provided to the company set up in 2020, Mondadori Media S.p.A. (the Corporate and Shared Services business area and the Magazines area were included in the same company, Arnoldo Mondadori Editore S.p.A. in 2019).

Adjusted like-for-like EBITDA dropped slightly from € -0.4 million to € -0.9 million, resulting mainly from higher costs related to labour management during the COVID-19 pandemic.

The year 2020 includes net negative extraordinary items of € 3.3 million, attributable mainly to M&A costs versus € 3 million in 2019.

The Company’s net profit, after tax income of € 8.6 million recognized in 2020, which includes the tax receivable arising from the use of the “Patent box” facility of € 5.2 million, amounted to € 4.5 million (versus € 29.6 million in pro forma 2019).

The Board of Directors of Arnoldo Mondadori Editore S.p.A. has convened the Ordinary Shareholders’ Meeting on Tuesday 27 April 2021 in first call to approve the financial statements for the year ended 31 December 2020 and, if required, in second call for Wednesday 28 April 2021.

PROPOSED ALLOCATION OF THE PARENT COMPANY’S NET PROFIT TO THE EXTRAORDINARY RESERVE
The Board of Directors will propose to the Shareholders’ Meeting, called on Tuesday 27 April 2021 in first call (in second call on Wednesday 28 April 2021), to fully allocate to the extraordinary reserve the net profit resulting from the financial statements for the year ended 31 December 2020 of Arnoldo Mondadori Editore S.p.A., equal to € 4,502,600.02.

SIGNIFICANT EVENTS AFTER YEAR-END
On 29 January 2021, with a view to further strengthening its foothold in the digital world, the Group completed the acquisition of Hej!, a company that specializes in tech advertising, a sector where Mondadori already operates successfully through AdKaora, a leading media agency in the field of mobile advertising and proximity marketing.

On 15 February 2021, the Group completed the sale of its investment in Reworld Media (from the original 16.3% stake to 3.2% at 31 December 2020), realizing an overall gain of approximately € 1.1 million.

PROPOSED RENEWAL OF THE AUTHORIZATION TO PURCHASE AND DISPOSE OF TREASURY SHARES
Following the expiry of the previous authorization resolved upon by the Shareholders’ Meeting on 22 April 2020, with the approval of the financial statements at 31 December 2020, the Board of Directors will propose to the next Shareholders’ Meeting the renewal of the authorization to purchase and dispose of treasury shares with the aim of retaining the applicability of law provisions in the matter of any additional buyback plans and, consequently, of seizing any investment and operational opportunities involving treasury shares.

Below are the key elements of the Board of Directors’ proposal:

• Motivations

The motivations underlying the request for the authorization to purchase and sell treasury shares refer to the opportunity to attribute to the Board of Directors the power to:

• to use the treasury shares purchased as consideration in the acquisition of interests as part of the Company’s investment policy;
• to use the treasury shares purchased against the exercise of option rights, including conversion rights, deriving from financial instruments issued by the Company, its subsidiaries or third parties and to use the treasury shares for lending, exchange or transfer transactions or to support extraordinary transactions on the Company’s capital or financing transactions that imply the transfer or sale of treasury shares;
• to undertake any investments, directly or through intermediaries, including for the purpose of containing abnormal movements in share prices, stabilizing share trading and prices, supporting the liquidity of the share on the market, in order to foster the regular conduct of trading beyond normal fluctuations related to market performance, without prejudice in any case to compliance with applicable statutory provisions;
• to rely on investment or divestment opportunities, if considered strategic by the Company, also in relation to available liquidity;
• to dispose of treasury shares as part of share-based incentive plans pursuant to Article 114-bis of the TUF, and of plans for the free allocation of shares to employees or members of the governing or supervisory bodies of the Company or of an associate or to Shareholders.
• Duration

The authorization to purchase treasury shares is set to last until the approval of the financial statements for the year ending 31 December 2021, while the authorization to sell is requested to last for an unlimited period, given the absence of provisions in this regard pursuant to the provisions in force and the opportunity to allow the Board of Directors to make use of the maximum flexibility, also in terms of time, to carry out the acts of disposal of the shares.

• Maximum number of purchasable treasury shares

The new authorization would allow the purchase, including in more than one tranche, of ordinary shares of Arnoldo Mondadori Editore S.p.A., with a par value of € 0.26 each, in one or more tranches in an amount freely determinable by the Board of Directors – up to a maximum number of shares – also taking into account the ordinary shares held, directly and indirectly, in the portfolio from time to time – of no more than 10% overall of the share capital, in accordance with Article 2357, paragraph 3, of the Italian Civil Code.

• Criteria for purchasing treasury shares and indication of the minimum and maximum purchasing cap

The purchases would be made in compliance with the principle of equal treatment of shareholders under Article 132 of the TUF, in accordance with any of the procedures set out in Article 144-bis of the Issuer Regulation, to be identified from time to time, and any other applicable regulations, as well as, where applicable, the market practices allowed from time to time in force.

Additionally, share purchase transactions may also be carried out in the manner envisaged in Article 3 of EU Delegated Regulation no. 2016/1052 in order to benefit, if the conditions are met, from the exemption under Article 5, paragraph 1, of EU Regulation no. 596/2014 on market abuse with regard to inside information and market manipulation.

As far as disposal transactions are concerned, the authorization would allow the adoption of any appropriate method to fulfill the purposes pursued – including the use of treasury shares to service stock incentive plans and/or the transfer of real and/or personal rights and/or stock lending – to be carried out either directly or through intermediaries, in compliance with the relevant laws and regulations in force.

Without prejudice to the fact that purchases of treasury shares would be made in accordance with the time limits, conditions and requirements established by the applicable Community legislation and by the Admitted Market Practices, the minimum and maximum purchase price would be determined for a unit price not lower than the official Stock Exchange price of Arnoldo Mondadori Editore S.p.A. shares on the day preceding the purchase transaction, reduced by 20%, and not higher than the official Stock Exchange price on the day preceding the purchase transaction, increased by 10%.

However, in terms of purchase prices, the additional conditions set forth in Article 3 of the above EU Delegated Regulation 2016/1052 would apply.

With regard to the provisions of Article 2357, paragraph 1, of the Italian Civil Code, purchases would in any case be made within the limits of the available “extraordinary reserve” as shown in the last duly approved financial statements.

In any case, purchases would be made, in terms of definition of volumes and unit prices, in accordance with the conditions governed by Article 3 of EU Delegated Regulation 2016/1052, and in particular:

• no shares shall be purchased at a price higher than the higher between the price of the last independent trade and the price of the highest current independent bid on the trading venue where the purchase is carried out;
• in terms of volumes, no more than 25% of the average daily trading volume of Arnoldo Mondadori Editore S.p.A. shares shall be purchased in the 20 trading days prior to the dates of purchase.

Purchases instrumental in the support to market liquidity shall also be made in accordance with the conditions provided by the admitted market practices.

To date, Arnoldo Mondadori Editore S.p.A. holds a total of no. 1,838,326 treasury shares, equal to 0.703% of the share capital.

For further information on the proposed authorization for the purchase and disposal of treasury shares, reference should be made to the Directors’ Explanatory Report, which will be published within the time limits and in the manner prescribed by applicable regulations.

GRANTING OF SHARES UNDER THE 2018-2020 PERFORMANCE SHARE PLAN: DISCLOSURE PURSUANT TO ARTICLE 84-BIS, PARAGRAPH 5 OF CONSOB REGULATION NO. 11971/1999
The Board of Directors, on the proposal of the Remuneration and Appointments Committee, resolved to grant, effective from 14.5.2021, a total of no. 878,347 Arnoldo Mondadori Editore S.p.A. shares to 8 beneficiaries, in implementation of the provisions contained in the “2018-2020 Performance Share Plan” established by the Board of Directors on 13 March 2018 and subsequently approved by the Shareholders’ Meeting on 26 April 2018 (the “2018-2020 Plan”).

Mention should be made that the 2018-2020 Plan takes the form of a share granting plan and grants its beneficiaries the right to receive, free of charge, shares in the Company provided that, at the end of a reference period of three financial years, the performance targets set in the 2018-2020 Plan have been achieved.

The 8 beneficiaries of the 2018-2020 Plan are the Chief Executive Officer and 7 managers identified by name by the Chief Executive Officer, as delegated by the Board of Directors.

The characteristics of the 2018-2020 Plan are explained in detail in the Directors’ Report to the Shareholders’ Meeting of 26 April 2018 and in the information document contained therein, available on mondadori.it, Governance section, to which reference should be made.

Attached is the information required by Schedule 7 of Annex 3A to CONSOB Regulation no. 11971/1999 to account for the granting of shares in the context of the 2017-2019 Performance Plan.

The Board of Directors, on the favourable opinion of the Remuneration Committee, approved the granting of an accelerated vesting schedule on the 2019-2021 Performance Share Plan to the Chief Executive Officer, who has decided to end office, as a more favourable condition in line with the provisions of the relevant Regulation in the event of good leaving for the specific case. Accordingly, the Chief Executive Officer will be granted no. 770,142 shares effective 14.5.2021. A return condition applies in the event that the overall results of the Plan, upon approval of the 2021 financial statements, are not in line with the targets set out in the Plan.

With regard to the prior notice of 10 November on Ernesto Mauri’s decision to end his experience as Chief Executive Officer of the Mondadori Group, the Board of Directors resolved to integrate, in terms of duration and territorial scope of application, a non-compete agreement already established during his office, in reason of the protection of Group interests, also on an international level, taking account of the priority and confidentiality needs regarding the revision of strategic priorities also following the impact of the pandemic on the relevant markets.

A supplementary agreement was finalized on a gross consideration of € 800,000, with a non-compete clause extended to the territory of the European Union and until April 2023, approved by the Board of Directors on the favourable opinions of the Remuneration Committee and the Related Party Committee.

The above agreement complies also with the parameters and limits payable of consideration for the assumption of non-compete obligations governed by the Remuneration Policy for 2021 approved by the Board of Directors.

In accordance with the above, the effectiveness of the agreement is subject to approval, pursuant to Article 123 ter of the TUF, of Section One of the Remuneration Policy by the Shareholders’ Meeting called on 27 April.

PROPOSED ADOPTION OF A 2021-2023 PERFORMANCE SHARE PLAN
The Board resolved, on a proposal from the Remuneration and Appointments Committee, and in keeping with the introduction of the performance share approved last year for the medium/long-term remuneration of executive directors and key management personnel, to submit to the approval of the Ordinary Shareholders’ Meeting, the adoption of a 2021-2023 Performance Share Plan, in accordance with Article 114-bis of Legislative Decree no. 58 of 24 February 1998, intended for the Chief Executive Officer who will be appointed by the Board of Directors after the Shareholders’ Meeting, the CFO – Executive Director and a number of Company managers who have an employment and/or directorship relationship with the Company or with its subsidiaries on the grant date of the shares.

With the adoption of the Plan, the Company aims to encourage Management to improve medium to long-term performance, in terms of both industrial performance and growth in the value of the Company.

The Plan envisages the right for beneficiaries to receive a bonus in the form of Company shares, subject to the achievement of specific targets set and measured at the end of the three-year performance period from 2021 to 2023.

These targets are structured to include both shareholder remuneration indicators and management indicators functional to raising the share value, ensuring maximum alignment of Management remuneration and the creation of value for the Company.

For details on the proposed adoption of the 2021-2023 Performance Share Plan, the beneficiaries and the main characteristics of the Regulations of the Plan, reference should be made to the Information Document drawn up by the governing body, pursuant to Article 84-bis and annex 3A of the Issuer Regulation, and to the Explanatory Report, which will be published within the time limits and in the manner prescribed by applicable regulations.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
The Board of Directors resolved to comply with the Corporate Governance Code for Listed Companies published by the Corporate Governance Committee in line with the best practices of listed issuers.

The Board also resolved to transpose the Code by the end of the current year and will provide disclosure to the market in the corporate governance report to be published during 2022.

The Board of Directors also approved on today’s date the Guidelines on the qualitative and quantitative composition deemed optimal of the Board of Directors (hereinafter the “Guidelines”), as well as the Policy on the criteria for assessing the independence requirements of directors, including the quantitative and qualitative criteria for assessing the relevance of the relationships indicated in Recommendation 7 letters c) and d) of the Corporate Governance Code.

The above documentation is made publicly available on the website www.mondadori.it Governance section. The Guidelines are also made publicly available on the authorized storage mechanism 1info (www.1info.it).

REGULATION ON INCREASED VOTING RIGHTS
Notice is given that the Regulation on increased voting rights, as amended by the Board of Directors’ meeting held today, in order to bring the Regulation in line with the amendments to the Bylaws adopted by the company on 4 March 2021, as well as with the legislative and regulatory changes regarding Post Trading, is publicly available on the website www.gruppomondadori.it Governance section.

PUBLICATION OF DOCUMENTS
Arnoldo Mondadori Editore S.p.A. hereby announces that the notice of call of the Annual General Meeting, to be held on Tuesday 27 April 2021 in first call and, if required, in second call on Wednesday 28 April 2021, will be made publicly available at the registered office, at the authorized storage mechanism 1info (www.1info.it) and on the website www.gruppomondadori.it (Governance section), together with the Directors’ explanatory reports, in accordance with Article 125-ter of the TUF, on the following items on the agenda to be discussed in ordinary session: financial statements at 31 December 2020 and resolutions relating to the allocation of the result for 2020 of Arnoldo Mondadori Editore S.p.A.; authorization to purchase and dispose of treasury shares pursuant to the combined provisions of articles 2357 and 2357-ter of the Italian Civil Code; appointment of the Board of Directors; appointment of the Board of Statutory Auditors; resolutions, pursuant to Article 114-bis of the TUF on the granting of financial instruments

Also made available, in the above manners, the Information Document on the 2021-2023 Performance Share Plan, prepared in accordance with Annex 3A, under the provisions of art. 84-bis of the Issuer Regulation.

The notice of call of the AGM was published today also in the daily newspaper indicated in the notice.

The additional AGM documentation will be made available, in the manners above, within the time limits of current laws.

CONSOLIDATED NON-FINANCIAL STATEMENT PURSUANT TO LEGISLATIVE DECREE 254/2016
Under Legislative Decree 254/2016, the Board of Directors’ 2020 Report on Operations of the Mondadori Group is also composed of the Consolidated Non-Financial Statement, a qualitative-quantitative description of the non-financial performance of the Company, associated with environmental, social, and staff-related issues, as well as those regarding respect for human rights, and the fight against active and passive corruption, which are relevant given the activities and characteristics of the Company.

With regard to 2020, the Mondadori Group has updated its materiality analysis, in accordance with the principles set out by the GRI Sustainability Reporting Standards (GRI Standards), including the “Media Sector Disclosures”, defined in 2016 and 2014 respectively by the Global Reporting Initiative (GRI).

With a view to continuous improvement of the process, in 2020 the stakeholder engagement activity was expanded by involving the customers of Mondadori Store bookstores, who were given an online questionnaire.

In accordance with the recommendations of ESMA and CONSOB, the document presents an analytical description of the actions readily taken by the Mondadori Group for the necessary prevention to protect the health of its employees and associates, to guarantee its customers access to products and services during the lockdown period and to support the bookstores and newsstands chains.

The results for the year ended 31 December 2020, approved on today’s date by the Board of Directors, will be presented by the Mondadori Group Management to the financial community in a webcast presentation scheduled today at 3:30 PM.

The corresponding documentation will be available on 1Info (www.1info.it), www.borsaitaliana.it and www.gruppomondadori.it (Investors).

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):

• Consolidated balance sheet;
• Consolidated income statement;
• Consolidated income statement – fourth quarter;
• Group cash flow;
• Arnoldo Mondadori Editore S.p.A. balance sheet;
• Arnoldo Mondadori Editore S.p.A. income statement;
• Arnoldo Mondadori Editore S.p.A. statement of cash flows;
• Glossary of terms and alternative performance measures used;
• Information pursuant to Schedule 7 of Annex 3a to CONSOB Regulation no. 11971/1999

[1] From 12 March up to the end of April, the adoption of government measures to contain the pandemic led to the closure of bookstores throughout Italy, with the resulting suspension of most of the activities related to the Group’s Retail business.
[2] It should be noted that the 2020 result benefited from the recognition of tax income of € 5.5 million related to the tax receivable from the “Patent box” facility.
[3] Pursuant to Decree M.D. 521 16/11/2020 “further allocation of a portion of the emergency fund for companies and cultural institutions”, intended to provide grants to art exhibition operators.
[4] GFK, December 2020 – sell-out figures in terms of market value (53 Weeks in 2020 vs. 52 Weeks in 2019)
[5] GFK, December 2020 (ranking in terms of cover value)
[6] Databank, June 2020 (revenue in terms of value net of channel discount)
[7] Product revenue excluding Club revenue
[8] GFK (in terms of value)
[9] Nielsen, December 2020, net of search, social, classified and OTT
[10] Internal source: Press-di, December 2020 (in terms of value)
[11] Internal source: Press-di, December 2020 (in terms of value)
[12] Internal source: Press-di, December 2020 (newsstands + subscriptions channel) in terms of value
[13] Press-di, December 2020 (newsstands + subscriptions channel) in terms of value; Audipress 2020/III
[14] Comscore, December 2020
[15] Shareablee, December 2020 + internal processing on Pinterest and TikTok figures

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 2020 presented by CEO Ernesto Mauri.

HIGHLIGHTS
The year 2020 was inevitably marked by the effects of the health emergency brought by the spread of COVID-19.
In the first half of the year, in fact, the gradual and increasingly widespread application from March of restrictive measures to social and economic activities significantly curtailed most of the activities related to the businesses where the Mondadori Group operates as a leader.

In order to address this situation, the Group has implemented a series of actions aimed at ensuring working conditions in total safety for its employees, encouraging smart working, allowing the continuation of activities and the containment of operating costs, with the aim of offsetting the operating and financial impact from the measures adopted by the authorities.
Against this backdrop, the book market has shown solid resilience and a strong recovery:

• in the Trade segment, following the gradual reopening of bookstores in May, the segment has witnessed a steady recovery, growing by 8.4%[1] in the third quarter versus the same period of 2019, reducing the loss to -3.8%[2] versus the prior year.
• as far as school textbooks are concerned, the segment managed to come out almost unharmed from the lockdown, since the period in which the restrictive measures were in force was concurrent to the promotional phase of the texts to be adopted and subsequently marketed during the summer period.

PERFORMANCE IN THIRD QUARTER 2020
In light of the outlined context, the Group’s operating and financial profile in the third quarter of the year is as follows:

• revenue amounted to € 253 million, down by 9.3% versus € 279 million in the same period of 2019 (-7.9% on a like-for-like basis), recovering strongly versus the first half of the year, despite the failed restart of the activities that gravitate around the management of museums, exhibitions and cultural assets.
  Specifically:
  – revenue in the Books Area was down by 7%, but recovering sharply from the -21% drop in first half 2020, as the recovery in the Trade segment, whose revenue grew by 13% in the third quarter, and the positive performance of the adoption campaign for school textbooks only partly offset the negative trend in museum activities;
  – revenue in the Retail Area decreased by approximately 5%, improving however from -27.5% in the first half of the year, a period impacted by the closure of bookstores for roughly two months, thanks to the recovery recorded by the book market from May.
  – revenue in the Media Area posted a 20% loss (approximately -14% on a like-for-like basis in terms of titles), with digital activities in particular on the rise, up on a like-for-like basis by approximately 7% during the quarter.

• adjusted EBITDA (including the IFRS 16 effect), amounting to € 60 million versus € 61.6 million in the prior year, was basically steady, thanks to the targeted measures to support activities and contain costs implemented by the Group across all the business areas.
  Mention should be made in this regard of the strong improvement in margins in the third quarter under review, which rose to 23.7%.
  More specifically:
  – the Books Area posted a result in the period that was € 5.8 million lower than the same quarter of the prior year, due largely to the difficulties reported by the museum business;
  – the Retail Area, on the other hand, saw its performance increase by € 0.8 million versus third quarter 2019, thanks to the cost saving plan and the rationalization of the store and product portfolio;
  – the Media Area equally recorded a significant improvement in margins (from € -1.4 million to € +2.1 million), thanks to the careful cost containment policy.

• the Group’s Net Result ended with a positive € 43 million, up by 72.2% versus € 25 million in the prior year, due partly to the write-back of Reworld Media shares held (€ 7.5 million) and the tax contribution from a tax receivable relating to the use of the “Patent box” (€ 5.5 million).

Cash flow from ordinary operations in the context of continuing operations over the last 12 months amounted to € 40.8 million versus € 36.7 million at 30 June, confirming the Group’s quick response and the ability of the business to steadily generate cash, even in a highly deteriorated context;

Net debt (no IFRS 16) stood at € -82.3 million at 30 September 2020, improving sharply versus € -110.4 million in the same period of 2019 (€ +28.1 million). Including the effects of the application of IFRS 16, net debt stands at € -170.4 million.

The gradual recovery of the business and the financial situation at the end of the third quarter, together with the Group’s medium-term outlook, provide reasons to maintain a positive attitude towards future developments, albeit in an economic scenario that is marked by the health emergency, and to be confident in the Group’s ability to continue to strengthen its capital and financial position.

CONSOLIDATED RESULTS AT 30.09.2020
In first nine months 2020, the Group’s consolidated revenue amounted to € 541.9 million, down by 17.8% versus € 658.9 million in the prior year (net of the changed scope of consolidation of the Media Area from the disposal of the five titles, the decrease would be approximately -16%, due basically to the effects of COVID-19).

Adjusted EBITDA in the period amounted to € 71 million, down by € 12.4 million versus first nine months 2019 (€ 83.4 million); this positive performance, the result of a trend in the third quarter basically in line with the prior year, reflects the significant effects of the quick response and countermeasures taken by the Group to tackle the consequences of COVID-19, which curbed the drop in revenue and reduced operating costs by approximately € 45 million.
Special mention should be made of profitability, equal to 13.1%, higher than the prior year and proof of the effectiveness of the operational efforts made by the Group.

EBITDA amounted to € 65.1 million versus € 78.4 million in the prior year, in line with the mentioned dynamics.

EBIT at 30 September 2020 amounted to € 28.9 million, down by € 21.2 million versus 30 September 2019, due mainly to the trend of the abovementioned components and to the extraordinary write-down and amortization of a number of titles for a total of € 7.8 million.

Consolidated profit before tax amounted to € 19.6 million versus € 41.5 million in first nine months 2019.

The Group’s net profit, after minority interests, came to € 18 million versus € 23.1 million in first nine months 2019 (which also included € 1.1 million from the discontinued operations of Mondadori France), a sharp upswing versus the first half of the year.

 Group employees at 30 September 2020 amounted to 1,913 units, down by approximately 9% versus 2,092 units at 30 September 2019.

BUSINESS OUTLOOK
The positive performance recorded in the third quarter by all the Group’s businesses, despite the caution inevitably brought by the scenario of uncertainty arising from the pandemic and the potential impact on the Christmas season, increases confidence on exceeding the targets set by the Group when it had approved the half-year results.

Revenue and EBITDA
With revenue confirmed to fall as expected between 16% and 18% in the year in progress versus 2019 – current estimates on adjusted EBITDA show margins in the upper part of the previously forecast range, therefore equal to 12%, the result of the following trends that are expected to mark the business units:

• Trade Books: market on the upswing and profitability holding ground;
• School Textbooks: steady market and profitability basically steady;
• Museums: the business model and the cost-cutting measures aim at a substantial operating breakeven, despite the drastic drop in revenue;
• Retail: book market and physical channels on the upswing; the deep organizational and process review and the rationalization strategy on the portfolio of stores are expected to help profitability recover;
• Media: digital advertising market on the upswing and a positive, albeit declining, profitability.

Cash Flow and Net Financial Position
Additionally, with regard to the Group’s financial debt, one can reasonably expect the positive cash generation of the business to continue over the final months of the current year which, together with a lower estimate of restructuring requirements, will allow the Group to significantly reduce the net financial position at end 2020 versus the prior year.

PERFORMANCE OF BUSINESS AREAS

• BOOKS

In the third quarter, the strong growth recorded by the Trade books market (+8.4% versus the same period of the prior year) produced a strong recovery, which reduced the overall decline to 3.8% at 30 September 2020 versus the prior year.

In the first nine months of the year, the Group placed 3 titles in the top ten bestsellers in terms of value^[3], retaining its leadership with a 24.6% market share.
Subsequently, the Group strengthened the relevance of its publishing plan with the publication in September and October of titles by a number of bestselling authors, including the new novel by Ken Follett, ranking first in the top twenty bestsellers[4], where the Group holds seven positions.

In first nine months 2020, revenue in the Books Area amounted to € 316.1 million versus € 366 million in the same period of the prior year (-13.6%).
Specifically:

• revenue in the Trade Books segment totaled € 144.1 million, down by -6.8% versus € 154.6 million in 2019, due to the effects of the COVID-19 health emergency. Mention should be made of the 13% increase in the third quarter versus the same period of 2019, confirming the post lockdown recovery, due partly to the shift in the launch of a number of new titles following the reprogramming and revision of the publishing plan.
  Revenue from e‐book and audiobook sales (approximately 8.6% of total publishing revenue) was up sharply in the lockdown period, closing the first nine months with a 29% increase versus the prior year, bucking the trend of sales of physical books.

• revenue in the Educational Books segment, amounting to € 167.4 million, was down by 18.6% versus € 205.7 million recorded in the same period of 2019, on a like-for-like basis net of the transfer of Electa’s trade books BU to Mondadori Libri S.p.A. in December 2019. The drop is attributable mainly to the museum segment, which had its operations severely impacted by the closure of sites and exhibitions owing to the measures to contain the pandemic, and by the virtual collapse of tourist travel also throughout the summer season.
  In the school textbooks segment, mostly unscathed by the effects of the pandemic, the Mondadori Group’s publishing houses achieved a market share of 22.1%, up versus the prior year, confirming the positive results of the adoption campaign in 2020.

In first nine months 2020, adjusted EBITDA of the Books Area amounted to € 67.5 million versus € 78.6 million in 2019, down due mainly to the above negative trend in revenue from the museum activities.

EBIT amounted to € 55.8 million versus € 68.5 million in nine months 2019.

• RETAIL

As mentioned, the Book market (over 80% of revenue^[5] in the Retail Area) recorded a minor fall in the first nine months (-3.8%^[6]) versus the same period of the prior year, due to the urgent measures that led to the closure of physical bookstores throughout the country from 12 March 2020 until the beginning of May.
The months following the reopening were particularly vibrant for the book market, which grew by 9.6% in the period from June to September.
Against this backdrop, Mondadori Retail’s market share stood at 11.7%.

In the first nine months, revenue in the Retail Area amounted to € 102 million versus € 126.6 million in the same period of the prior year (-19.4%), due to the abovementioned anti-COVID-19 measures.
In the third quarter, Mondadori Retail recorded an excellent performance: the decline in revenue versus the same period of the prior year amounted to -4.8% (-27.5% in first half), driven by the strong recovery in book sales, which were basically equal to the same period of 2019 (-0.6%).

In terms of sales channel performance, the third quarter saw strong results come from franchised bookstores and an improvement in the figures of directly-managed stores.
The online channel (15% of total revenue in the area) continued to grow, up by +48.8% at 30 September 2020.

Despite the steep drop in revenue, Mondadori Retail in the first nine months managed to curb the reduction in IFRS 16 adjusted EBITDA, which amounted to € -0.5 million versus € +0.8 million in the same period of 2019.
A result achieved thanks to careful cost management and a deep organizational and process revision carried out in the second half of 2019 and continued even during the harshest period of the health emergency.
With the exception of the lockdown months, Mondadori Retail showed a steady improvement in profitability throughout the year: in the months before lockdown, adjusted EBITDA was € 0.3 million higher than in the same period of 2019, while in the following months (June-September) the improvement amounted to € 1.6 million.
In the third quarter in particular, adjusted EBITDA increased by € 0.9 million versus the prior year to € 2.3 million.

IFRS 16 EBIT amounted to € -9.4 million (versus € -7.3 million at 30 September 2019).

• MEDIA

In the August surveys, the advertising market recorded an overall drop of -22%, suffering heavily in all channels from the negative effects of the health emergency: magazines lost -40.1% and digital -9.2%[7]. The digital channel alone recorded a remarkable turnaround in July and August, up by approximately 24% versus the same two-month period of 2019;

In terms of circulation, the Italian magazine market fell by -12.8%. In this context, the Mondadori Group’s market share stood at 24%[8].

At 30 September 2020, revenue in the Media Area amounted to € 144.1 million versus € 191.2 million in 2019 (-24.7%); net of the disposal in December 2019 of the five titles, the drop would be -19.1%.
In the third quarter alone, the drop in revenue was -19.9% (-14% on a like-for-like basis), with digital activities on a strong upswing, up on a like-for-like basis by approximately 7% in the quarter.

Specifically, in first nine months 2020:

• circulation revenue was down by -25%, due to both the disposal of the five titles and the COVID-19 impact (-15% net of discontinuity);
• revenue from add-on products fell by approximately -22% versus 2019, due partly to a different scheduling of planned releases (-20% net of the disposal of the five titles);
• advertising revenue fell by a total of approximately -37%; this is the form of revenue most affected by the ongoing health emergency, which has, among other things, led to the cancellation of an important event such as the Salone del Mobile and a reduction in proximity marketing solutions (AdKaora); net of the discontinuity of the scope, the fall would be -32%.
  In the third quarter alone, against the persisting decline in sales linked to print media, revenue from digital advertising sales grew by over 7%, with this component now making for 56% of total advertising revenue. 

  In terms of digital activities, mention should be made that in the period under review, the Mondadori Group retained its position as the leading multimedia publisher in Italy, on the web with an 81% reach (32.4 million unique users in August)[9] and in social media with an aggregate fan base of 34.5 million spread across 105 social profiles[10].

Adjusted EBITDA in the Media Area amounted to € 3.2 million, down by approximately € 2 million versus first nine months 2019 (€ 5.5 million).
The sharp drop in revenue was alleviated by the effective measures to contain operating costs, which curbed their negative impact on profitability.
In third quarter alone, Mondadori Media recorded adjusted EBITDA of € +1.2 million, improving significantly versus the result in the same period of 2019 (€ -1.4 million) thanks to the positive trend of digital advertising, the partial recovery of add-on sales, and the abovementioned cost containment measures.

EBIT amounted to € -9.5 million versus € -1.4 million, due mainly to the trend of the abovementioned components and to the extraordinary write-down and amortization of a number of titles for a total of € 7.8 million.

*

Additionally, the Board of Directors took note with regret of Ernesto Mauri’s decision to end his experience as CEO of the Mondadori Group by completing his term with the natural expiry of the company’s governing bodies and the approval of the financial statements scheduled in April 2021.

Mr. Mauri provided the reasons for his decision by explaining to the Board that he believes he has fulfilled the strong path of strategic re-launch and repositioning, marked by the financial recovery and solid results achieved, laying the foundations for the current Management – in total continuity – to push the Mondadori Group into a new phase of development.

In line with the strategic transformation that the Company has undergone in recent years, which has witnessed a gradual focus on its core business – Books – the Board of Directors, on the proposal of Chairman Marina Berlusconi, resolved to appoint Antonio Porro, current CEO of Mondadori Libri, as the future CEO of the Mondadori Group.
Mr. Porro’s nomination, in accordance with the outcome of the succession plan adopted by the Board of Directors, will be submitted to the Shareholders, who will submit the lists for the appointment of the new Board to the Shareholders’ Meeting next April.

*

SIGNIFICANT EVENTS AFTER FIRST NINE MONTHS 2020
On 14 October 2020, the Mondadori Group sold 8.5% of the share capital of Reworld Media. As a result of the transaction, the stake held in the French company is now 7.8%.
On 20 October 2020, the Mondadori Group completed the disposal of 25% of the share capital of Stile Italia Edizioni S.r.l. to La Verità, which already held the remaining 75%.

The documentation relating to the presentation of the results at 30 September 2020, is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company website www.gruppomondadori.it.

 The Interim Management Statement at 30 September 2020 approved by the Board will be available at the Company’s registered office, on the authorized storage mechanism 1Info (www.1info.it) and on www.gruppomondadori.it (Investors section) on 11 November 2020.

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 pdf file):

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, figures in terms of value, September 2020
[2] GFK, figures in terms of value, September 2020
[3]GFK, September 2020 (ranking in terms of cover value)
[4] GFK, Week 40-42 2020 (ranking in terms of cover value)
^[5] Product revenue excluding Club revenue
^[6] GFK, September 2020 (in terms of value)
[7] Nielsen, cumulative figures at August 2020
[8] Internal source: Press-di, figures at August 2020 (newsstands + subscriptions channel) in terms of value
[9] Comscore (August 2020)
[10] Shareablee and internal processing (September 2020)

Grazia, il magazine del Gruppo Mondadori diretto da Silvia Grilli, da sempre portavoce di temi di attualità, lancia il numero speciale dal titolo Non dimentichiamoci del pianeta. Un numero in cui Grazia ha chiamato a raccolta esperti e attivisti affinché la battaglia e l’impegno contro il surriscaldamento globale non passino in secondo piano, dopo che il Covid-19 ha costretto tutti gli Stati a rivedere le loro priorità.

“Durante la quarantena abbiamo visto la natura ripren­dere i suoi spazi, i cieli ritornare tersi, gli animali circolare in città, i parchi diventare rigogliosi, il mare improvvisamente cristallino. L’assenza di traffico ha aiutato il taglio delle emissioni ma, con la fase 2, le macchine hanno ripopolato le nostre città, la plastica di mascherine e guanti riaffollato l’ambiente e il monouso tanto sotto accusa prima del Covid-19 è ritornato ora la regola. Il 5 giugno è la Giornata mondiale dell’Ambiente e l’8 quella degli Oceani, dedicata ai mari minacciati dalla plastica e dall’inquinamento. Noi di Grazia abbiamo colto le ricorrenze per creare questo numero speciale e ricordare ai leader mondiali l’impegno di proteggere l’ambiente”, ha dichiarato il direttore Silvia Grilli.

Tra le tante interviste in questo numero speciale i lettori troveranno l’opinione di Greta Thunberg, l’ecoattivista che ha portato il mondo in piazza per chiedere misure urgenti per l’ambiente. Poi l’emergenza sanitaria ha rallentato la sua campagna e lei stessa si è ammalata. Ora, però, la 17enne svedese è pronta per la sua nuova sfida: «Surriscaldamento globale e Covid», dice a Grazia «sono due crisi che devono essere gestite insieme».

Solo nel prossimo mese nel mondo verranno usati almeno mezzo miliardo di guanti monouso e un miliardo di mascherine. Una quantità di plastica che, se non smaltita correttamente, inquinerà città e mari. Esperti e attivisti spiegano al magazine come evitare il danno ecologico.

E ancora il tema dell’eco-femminismo: dalle attiviste africane che piantano alberi alle paladine della Foresta Amazzonica. Perché dove le donne rivendicano i loro diritti anche la protezione dell’ambiente fa un passo avanti.

Grazia accompagnerà le lettrici tra parchi naturali e riserve marine dove l’uomo ha rinunciato a sfruttare il patrimonio naturale: un viaggio nel Corcovado, una piccola Amazzonia nel cuore dell’America Centrale, dove piante e animali vivono in armonia lontani da minacce e inquinamento.

Il magazine racconta in questo numero i nuovi professionisti, figli della rivoluzione ecologica: giovani agricoltori che coltivano grazie a un’app, ingegneri che progettano palazzi capaci di produrre energia invece di consumarla, maghi della matematica che proteggono chi vive nelle aree a rischio studiando il clima.

Trovano spazio anche le creative digitali più influenti, pronte a curare il mondo con un nuovo stile, coloro che usano Instagram per parlare di abiti, cosmetici e cibo sostenibile e lanciano sfide ambientali ai follower.

«Magari non sarò io a cambiare la terra, ma farò di tutto perché ci riesca mio figlio Leo» dice Alessandro Gassmann a Grazia. Lo abbiamo visto fare la raccolta differenziata, pulire le strade di Roma e lanciare appelli contro chi sottovaluta i disastri ambientali. L’attore si confida con il settimanale cercando di fare un bilancio al termine di questo periodo di lockdown con uno sguardo ai tempi che verranno.

Milano dovrebbe diventare una città dove ciò che serve sia raggiungibile in meno di 15 minuti, con quartieri organizzati come piccole metropoli e nuovi modi di vivere gli spazi aperti. Il sindaco Giuseppe Sala parla a Grazia delle trasformazioni, tecnologiche ed ecologiche, necessarie all’indomani della pandemia. E spiega perché ha dedicato un libro ai cittadini che con le loro azioni cambiano il mondo in meglio.

Anche Sylvia Earle, pioniera delle oceanografe lancia il suo messaggio e a Grazia dice: «La Terra ha infinite risorse: se smettiamo di abusarne, si riprenderà».  Così come Joaquin Phoenix, attore premio Oscar e anche eco attivista che non si ferma mai. Durante l’emergenza coronavirus ha distribuito pasti vegani, chiesto di adottare mucche e denunciato gli allevamenti intensivi e i mercati di carne. «Perché la vita di ogni essere vivente», dice, «è connessa a quella di tutta la Terra.

In questo numero speciale non mancano moda e bellezza Eco: un servizio dedicato ai capi naturali scattato al Giardino botanico di Adelaide in Australia e una rubrica con gli accessori realizzati con la paglia, corda e  tela. La sezione della bellezza suggerisce alle lettrici i prodotti che tengono conto dell’ambiente sulla base di studi e progetti a salvaguardia di coltivazioni e specie in pericolo.