1Q

BoD approves results at 31 march 2022

In first quarter 2022, the Mondadori Group continued its efforts, on a like-for-like basis[1], to increase profitability; owing to the seasonal nature of the school publishing business, the positive contribution of  D Scuola will be felt more in the second half of the year.

  • Net revenue € 153.1 million: up by 5.7% versus 31.03.2021; net of the consolidation of D Scuola, the increase is +2.9%
  • Adjusted EBITDA € -1.1 million; net of the consolidation of D Scuola, the item closes at € +2.4 million, improving by € 1.3 million versus 31.03.2021
  • Group net result € -11.4 million; on a like-for-like basis, the result is € -7.1 million, recovering strongly versus 31.03.2021
  • Continued solid cash flow generation, net of the acquisition of D Scuola:
    – LTM cash flow from ordinary operations up slightly at € 68.9 million;
    – LTM free cash flow improves to reach € 57.5 million
  • NFP before IFRS 16 at € -135.8 million; excluding the effects of the acquisition of D Scuola, the NFP before IFRS 16 closes at € +9.6 million, improving sharply versus € -47.9 million at 31.03.2021

 

OUTLOOK: GUIDANCE FOR 2022 CONFIRMED

  • Mid-single-digit growth of revenue
  • Adjusted EBITDA up by more than 20%
  • Double-digit growth of net result
  • Cash flow from ordinary operations in line with 2021
  • Free cash flow in the region of € 40/45 million (before payout of the dividend) including the transactions already announced
  • NFP IFRS 16 less than 1.1x adjusted EBITDA.

START OF SHARE BUYBACK PROGRAM TO SERVICE THE SHARE PERFORMANCE PLANS

 

[1] Net of the consolidation of D Scuola, effective as from 1 January 2022.

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 31 March 2022 presented by CEO Antonio Porro.

I° QUARTER 2022 HIGHLIGHTS
In first quarter 2022, the Group – excluding the contribution from the newly-consolidated D Scuola – continued its efforts to increase profitability, spurred by the positive trend in revenue across all business areas and careful management of operations implemented in the prior quarters, which led to greater structural efficiency. The Mondadori Group concurrently confirmed its ability to guarantee steady and solid cash flow generation.

“The performance we recorded in the first quarter, and the process of continued strengthening implemented so far, allow us to confirm for 2022 the estimates previously announced, despite the uncertain economic and geopolitical context”, emphasized Antonio Porro, CEO of the Mondadori Group. “The solidity of our business model and our continued ability to generate cash flow put us in a position to continue to focus on and grow in our core business of books: a target that we have successfully pursued to date also through a series of major acquisitions”, concluded Porro.

PERFORMANCE AT 31 MARCH 2022
In the first quarter of the current year, the contribution of D Scuola, fully consolidated as from 1 January 2022, is irrelevant owing to the seasonal nature of the Education business which, in the first half of the year, records only the costs of creating editorial content as well as the expense from the promotional activities to support the adoption campaign, postponing the recognition of revenue from the sale of school textbooks to the second half of the year.

In first quarter 2022, consolidated revenue amounted to € 153.1 million, increasing by 5.7% versus      € 144.8 million in the prior year; net of the consolidation of D Scuola, Group revenue would have recorded a like-for-like growth of 2.9%, thanks to the contribution of all business areas, of the Retail area in particular.

Adjusted EBITDA for the period under review amounted to € -1.1 million. Excluding the result for the period of D Scuola, adjusted EBITDA came to a positive € 2.4 million, as the company, which operates in the school textbooks segment, recognizes a loss in the first part of the year due to the seasonal nature of the business: on a like-for-like basis, the Group recorded an improvement in profitability of € 1.3 million versus first quarter 2021, driven by the positive performance of the Books and Retail segments.

Group EBITDA came to € -0.7 million, or on a like-for-like basis to € +2.8 million: a comparison with the results of the prior year (€ 0.2 million) shows a clear improvement, thanks to the abovementioned business performance, and to the positive contribution from non-recurring items.

EBIT at 31 March 2022 stood at € -12.2 million (€ -6.6 million on a like-for-like basis). The comparison with 2021 shows:

  • an improvement of € 2.4 million on a like-for-like basis, due to the mentioned trends;
  • a deterioration of € 3.3 million in the overall scope, due to the consolidation of amortization and depreciation and the effects of the Purchase Price Allocation process from the acquisition of D Scuola.

The consolidated loss before tax amounted to € -14.4 million; on a like-for-like basis, the figure amounted to € -8.8 million, improving by 3 million versus € -12.1 million in the first three months of 2021.

Financial expense rose by € 0.3 million, due to the higher average gross debt recorded in the quarter following the acquisition of D Scuola.

The Group’s net result, after minority interests, amounted to € -11.4 million; on a like-for-like basis, the figure closes at € –7.1 million, a clear improvement versus € -10.2 million in the first three months of 2021. Mention should be made that in the first quarter of the year, the Group usually recognizes a net loss at a consolidated level, due to the seasonal nature of the Education business.

At 31 March 2022, the net financial position before IFRS 16 stood at € -135.8 million (€ -217.4 million including the IFRS 16 impact).

Excluding the effects of the acquisition of D Scuola, the net financial position before IFRS 16 stood at a positive € 9.6 million, improving significantly by over € 57.5 million versus the debt at 31 March 2021 (€ 47.9 million), attributable to the significant cash flow generation recorded in the last twelve months: including the impact of IFRS 16, the NFP stood at a negative € 69.9 million, due to the recognition of an additional financial payable of € 79.5 million.

The LTM cash flow from ordinary operations (after outlays for financial expense and tax), excluding D Scuola, amounted to € 68.9 million, allowing the Group to continue to strengthen its financial structure.

D Scuola, consolidated as from January 2022, reported a negative cash flow of € 13.3 million in the first quarter, in line with the seasonal nature of the school business which, in the first half of the year, records only the costs and expenditure for the development and publication of texts marketed in the second half.

The LTM Free Cash Flow at 31 March 2022 amounted to € 57.5 million, improving further versus the figure at 31 December 2021. Including the impact of the acquisition of D Scuola for approximately € 135 million, the Free Cash Flow of the overall scope recorded outlays of approximately € 88 million.

At 31 March 2022, Group employees amounted to 1,883 units, up by 2.4% versus 1,838 units at 31 March 2021 (+45 units), due primarily to the inclusion of D Scuola staff (totaling 127 units). On a like-for-like basis, therefore excluding both the contribution of the newly-consolidated company and the effects of the sale of the titles in the Media area in December 2021, the drop would come to approximately 2.3%, the result of the continued efforts to increase the efficiency of the individual business areas.

BUSINESS OUTLOOK
In light of the results achieved in the first few months and in the absence of any future material deterioration in the geopolitical context, for the full year 2022, the Group believes it can confirm the estimates previously disclosed, despite the critical issues arising from the increase in costs for the procurement of raw materials, primarily paper, and for energy consumption.

That said, the Group expects for:

  • Earnings: continued resilience of the business model
    – mid-single-digit growth of revenue;
    – Adjusted EBITDA up by more than 20%;
    – double-digit growth of the net result, thanks also to significantly lower non-recurring expense than the figure recorded in 2021, despite the fact that net profit in 2021 had benefited from a significant tax component[1] of approximately € 19 million.
  • Cash Flow and Net Financial Position: continued strong cash generation:
    – Cash Flow from ordinary operations: in line with 2021, as a result of the positive contribution from D Scuola, offsetting the “one-off” increase in Group capital expenditure, arising:
       – in the school segment, from the project to integrate D Scuola and from a stronger and richer product range and publishing catalogue in the school segment;
    – in the Retail area, from the plan on the relocation and renovation of the flagship store in Piazza Duomo in Milan, which will see conclusion in the final part of the year;
  • Free Cash Flow in the region of € 40/45 million (before payout of the dividend), which includes the expected cash outflows from extraordinary transactions announced;
  • Group net financial debt (IFRS 16) less than 1.1x Adjusted EBITDA (0.6x before IFRS 16).

The financial solidity reached allows the Group to continue its path of development, especially in the books business, also through M&As: therefore, the Group will continue to pursue its unwavering commitment, also in the current year, to further growth opportunities through acquisitions.

PERFORMANCE OF BUSINESS AREAS

  • BOOKS

In first quarter 2022, after the remarkable growth seen in 2021, the books market witnessed a consolidation phase marked by a slight decline in sales (-1.6% in terms of value and -0.6% in terms of volume)[2] versus the same period last year.
Even if we exclude from the measurements those segments currently untapped by the Mondadori Group, i.e. professional and, most importantly, comics, which are continuing to see strong growth close to 50% this year, the market continued to remain moderately weak, dropping (in terms of value) by 2.3% versus 2021.

Group revenue in the Trade segment, which fell slightly, was affected, on the one hand, by this trend of the relevant market and, on the other, by the scheduling of the publishing plan, which envisages the release of the major titles in the second half of the year, closing at € 52.3 million, down by approximately 6% versus € 55.9 million in first quarter 2021, which had benefited from the extraordinary success of “Il sistema. Potere, politica, affari: storia segreta della magistratura italiana” by A. Sallusti and L. Palamara (Rizzoli).

Nonetheless, the Group confirmed its undisputed leadership with a market share of 23% in the Trade segment (including the share of De Agostini Libri, consolidated as from 1 April 2022).

With regard to the school textbooks segment, mention should be made that this is a highly seasonal business, so revenue generated in the first three months typically accounts for less than 5% of the annual figure. In first quarter 2022, the activities recorded total revenue of € 9 million: on a like-for-like basis net of D Scuola, revenue was basically steady versus the prior year (€ 4.9 million in first quarter 2021).

Overall, revenue in the Books area as a whole in the first three months of 2022 amounted to € 76.2 million, up by 6.5% versus € 71.6 million in the first three months of 2021, due mainly to the consolidation of D Scuola. On a like-for-like basis excluding the contribution of the recently-acquired company, growth stood at 0.7%, thanks in particular to the strong increase achieved by the publishing house, Rizzoli International Publications, and the upswing in Electa’s museum activities.

Adjusted EBITDA amounted to € -2.1 million, including the negative contribution of D Scuola, owing to the seasonal nature of the school textbooks business: net of these effects, adjusted EBITDA would stand at € 1.5 million versus € 0.6 million in first quarter 2021, improving by 0.8 million, pushed by the positive performance of the publishing house Rizzoli International Publications and the upswing in Electa’s museum business.

  • RETAIL

As indicated earlier, in the first three months of the year, the books market recorded a slight drop versus first quarter 2021 (-1.6%[3]): this trend had no adverse effect on the performance of the physical channel which, due also to the pandemic-related restrictions that had restrained its activities in 2021, reported a growth versus the same period of the prior year.

Against this backdrop, the market share of Mondadori Retail reached 10.8%, driven by the remarkable performance of physical stores, which benefited from a positive comparison with the prior year.

In the first quarter, the Retail area posted revenue of € 37.2 million, up by € 3.8 million (approximately +11.5%) versus € 33.4 million in the same period of the prior year.

The ongoing development and renovation of existing stores and the focus on the core business of books have enabled the Mondadori Store network to further consolidate its role in the market, as shown by the strong improvement in Books revenue (€ +3.5 million), which is higher at the end of the first quarter even than in the pre-COVID period.

Specifically:

  • directly-managed stores reported a sharp increase in revenue (+49.9% versus the prior year), due to the abovementioned strategy of focusing on the book product and network development activities;
  • the franchised channel too, composed mainly of proximity stores located in small towns, continued its progression, increasing by +3.2% versus the same period of the prior year;
  • the online channel declined, reflecting the market trend.

The Retail area recorded a positive and sharply growing adjusted EBITDA of € +0.3 million (€ +0.7 million versus the first three months of 2021). This target was achieved thanks to the strong growth in revenue, the deep transformation of the business unit as a whole, the ongoing renewal and development of the network of physical stores, as well as careful cost management and a thorough review of the organization and processes.

  • MEDIA

In first quarter 2022, the Media area recorded revenue of € 47.1 million, basically steady versus € 46.8 million in the same quarter of the prior year, but up by 9.2% on a like-for-like basis of portfolio of brands (excluding the effect of the deconsolidation of the titles sold at end 2021).

Specifically:

  • digital activities, which now account for 20% of the area’s total revenue, increased significantly by over 31% versus first quarter 2021 (+36.8% on a like-for-like basis of brands), driven by the strong performance of AdKaora.
    Digital advertising revenue as a percentage of total advertising revenue now represents 77% (up from 66% in first quarter 2021);
  • traditional print activities, excluding the magazines sold at end 2021, improved by 3.4%, thanks to the positive circulation performance of television titles, which bucked the market trend.

 Adjusted EBITDA in the Media area stood at € 2 million, steady versus the first three months of 2021 as a result of:

  • in the print area, the continuing measures to contain operating costs, which offset the increase in industrial costs;
  • in the digital area, growth in activities in the MarTech segment, despite the higher editorial and development costs incurred for the launch of the new social magazine “The Wom”.


START OF SHARE BUYBACK PROGRAM TO SERVICE THE 2022-2024, 2021-2023 AND 2020-2022 SHARE PERFORMANCE PLANS
The Board of Directors of Arnoldo Mondadori Editore S.p.A. approved the start of a share buyback program, under Article 5 of Regulation (EU) no. 596/2014, to be executed in accordance with the terms and conditions, already disclosed to the public, resolved by the Ordinary Shareholders’ Meeting of 28 April 2022 which, among other things, authorized:

  • the purchase and disposal of treasury shares for a maximum amount of up to 0.265% of the share capital, which is intended to provide the Company with the no. 693,878 shares required over the three-year period to meet the obligations under the 2022-2024 Performance Share Plan established by the same Shareholders’ Meeting, pursuant to Article 114-bis of the TUF;
  • the continuation of the buyback program to service the 2020-2022 Performance Share Plan and the 2021-2023 Performance Share Plan in the manners and within the limits set out in the relevant Regulations.

Pursuant to Delegated Regulation (EU) 2016/1052, details of the buyback program are shown below:

Purpose of the plan
The sole purpose of the program is the buyback of Arnoldo Mondadori Editore S.p.A. treasury shares to service the 2022-2023 Performance Share Plan, the 2021-2023 Performance Share Plan and the 2020-2022 Performance Share Plan.

Maximum amount in cash allocated to the program
Buybacks will be made at a minimum unit price not lower than the official Stock Exchange price on the day before the purchase transaction, reduced by 20%, and at a maximum unit price not higher than the official Stock Exchange price on the day before the purchase transaction, increased by 10%. The volumes and unit purchase prices will, however, be defined in accordance with the conditions governed by Article 3 of EU Delegated Regulation 2016/1052. Specifically, no shares may 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, daily purchase amounts will not exceed 25% of the daily average volume of Mondadori shares traded over the 20 trading days before the dates of purchase.

Maximum number of shares to purchase
Purchases will regard a maximum of no. 410,000 ordinary shares (equal to 0.156%) of the share capital, taking account of the treasury shares already held in the Company’s portfolio, to service the 2022-2024 Performance Share Plan, the 2021-2023 Performance Share Plan and the 2020-2022 Performance Share Plan, in the manners and within the limits set out in the relevant Regulations.
The maximum total amount of shares under the program is therefore within the limits of 10% of the share capital indicated by the Shareholders’ Meeting of 28 April 2022, taking account also of the no. 1,049,838 treasury shares, equal to 0.402% of the share capital, already held by the Company.

Duration of the program
The buyback program runs from 12 May 2022 and will end by the Shareholders’ Meeting to approve the financial statements for the year ending 31 December 2022, which coincides with the expiration of the authorization to purchase treasury shares approved by the Shareholders’ Meeting on 28 April 2022.
The buyback program may be renewed upon further authorization by the shareholders.

Buyback procedures
The buyback program will be coordinated and executed by an authorized intermediary, who will make the purchases independently, with no influence from Arnoldo Mondadori Editore S.p.A. as regards the timing of the purchases.

Buybacks will be made pursuant to the combined provisions of Article 132 of Legislative Decree no. 58/1998 and of Article 5 of Regulation (EU) 596/2014, Article 144-bis of the Issuer Regulation, and the EU and national legislation on market abuse (including Delegated Regulation (EU) 2016/1052), in accordance with the resolutions of the above Shareholders’ Meeting of 28 April 2022.

Any subsequent changes to the buyback program will be promptly disclosed by the Company.
The transactions made will be disclosed to the market in the manners and within the time limits of applicable law.

For information on the above Performance Share Plans, reference should be made to the information documents prepared pursuant to Article 114-bis of Legislative Decree no. 58/1998 and to Article 84-bis of CONSOB Regulation no. 1197/1999 and available on the website www.gruppomondadori.it (Governance section) and at the authorized storage mechanism 1Info (www.1Info.it).

2022-2024 PERFORMANCE SHARE PLAN: ASSIGNMENT OF RIGHTS
The Board of Directors, having heard the Remuneration Committee, resolved on the assignments to the beneficiaries of the rights relating to the 2022-2024 Performance Share Plan, established by resolution of the Shareholders’ Meeting of 28 April 2022.
Information regarding the beneficiaries and the number of rights assigned are shown – by name, for the beneficiaries who are members of the Board of Directors, and in aggregate form for the other beneficiaries – in the table attached, prepared in compliance with Box 1, Schedule no. 7 of Annex 3A of the Issuer Regulation.
The terms and conditions of the Plan are set out in the Directors’ Explanatory Report to the Shareholders’ Meeting of 28 April 2022 and in the Information Document prepared pursuant to Article 84-bis, paragraph 1 of the Issuer Regulation, available on the website www.gruppomondadori.it Governance section and on the storage mechanism www.1info.it to the contents of which reference should be made.

PUBLICATION OF THE MINUTES OF THE SHAREHOLDERS’ MEETING

Arnoldo Mondadori Editore S.p.A. informs that the minutes of the Ordinary Shareholders’ Meeting held on 28 April 2022 are available on the authorized storage mechanism 1Info (www.1info.it), in the Governance section of the Company website www.gruppomondadori.it and at the Company’s registered office.

The Interim Management Statement at 31 March 2022 will be made available today on the authorized storage mechanism 1Info (www.1Info.it), in the Investors section of the Company website www.gruppomondadori.it and at the Company’s registered office.

The presentation of the results at 31 March 2022, approved today by the Board of Directors is available, on 1Info (www.1info.it), on www.borsaitaliana.it and on www.gruppomondadori.it (Investors section). A Q&A session will be held in conference call mode at 4.30 pm for the financial community, attended by the CEO of the Mondadori Group, Antonio Porro, and the CFO, Alessandro Franzosi. Journalists will be able to follow the meeting in listening mode only, by connecting to the following phone number +39.02.8020927 or via web at: https://hditalia.choruscall.com/?calltype=2.

 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. Group cash flow;
  4. Glossary of terms and alternative performance measures used;
  5. Information pursuant to Schedule 7 of Annex 3a to CONSOB Regulation no. 11971/1999.

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

[2] GFK, March 2022

[3] GFK (in terms of value)

BoD approves results at 31 March 2020

After the first two months of activity aligned with forecasts, March was affected by the COVID-19 health emergency, marking the performance in the first quarter of the year:

  • Revenue € 135.3 million: -18.9% versus € 166.8 million in first quarter 2019 (-17.1% on a like-for-like basis)
  • Adjusted EBITDA: € -3.1 million versus € 1.7 million in first quarter 2019
  • EBIT: € -14 million versus € -7.2 million in first quarter 2019
  • Result from continuing operations: € -19.1 million versus € -7.9 million in first quarter 2019, due also to the net impact of € 5.2 million from the adjustment to market value of the Reworld Media shares held
  • NFP before IFRS 16: € -96.9 million, improving by approximately 46% versus € -179.3 million in first quarter 2019; NFP IFRS 16: € -193.9 million

BUSINESS OUTLOOK

The uncertainty of the macroeconomic and sector scenarios does not allow, as things stand, for the development of a new and reliable guidance

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 31 March 2020 presented by CEO Ernesto Mauri.

HIGHLIGHTS OF FIRST QUARTER 2020
In 2020, after the first two months of activity aligned with Group forecasts, the performance in March was inevitably marked by the adverse effects of the health emergency brought by the spread of COVID-19.

Starting from the first ten days of March, in fact, the gradual and increasingly widespread application of restrictive measures to social and economic activities has significantly curtailed part of the activities in the businesses where the Group operates as a leader.

Specifically, as from 12 March, the application of government measures has led to the closure of the physical channel of bookstores across the Country, with immediate direct effects on the performance of the Group’s Retail business.

At the same time, Trade book sales have fallen sharply, limited as they are to the e-commerce channel alone (which in turn is restricted to the above products) and, to a much lesser extent, to the large retailers channel.

The emergency measures have concurrently led to the closure of museums, archaeological parks and bookstores across all Italian regions, with a resulting reduction in activities, therefore in revenue, of the Group companies operating in these areas.

Lastly, the Media[1] business too has recorded declines following closure of part of the newsstands in Italy and the decrease in advertising sales.

The Mondadori Group has set up and implemented a series of activities to mitigate the effects of the economic juncture, through actions to contain operating and personnel costs.

In order to reduce the impacts on the business areas, the Company has:

  • taken steps to contain and cut operating costs also by renegotiating contracts and reviewing rates;
  • promoted the use of outstanding holidays and the procedures for social safety nets;
  • resolved on the reduction of the variable remuneration of Group Management for 2020;
  • placed particular emphasis on the management of the Group’s working capital (with specific actions on customers and suppliers).

More specifically, for the different business activities:

  • in the Trade Area, the editorial programmes have been reshaped and rescheduled, with a plan to phase out “minor” titles;
  • in the Education Area, actions have been taken to curb or eliminate the costs related to the stoppage and canceling of museum and archaeological park activities;
  • in the Media Area, a strict policy has been adopted to reduce the production costs of the various titles;
  • in the Retail Area, during the lockdown period, a plan has been implemented to reduce overheads relating to the points of sale.

PERFORMANCE AT 31 MARCH 2020
In light of the extraordinary emergency situation that materialized in March, the Mondadori Group performed as follows in first quarter 2020:

  • consolidated revenue amounted to € 135.3 million, down by 18.9% versus € 166.8 million in the same period of 2019 (-17.1% on a like-for-like basis, net of the change in the scope of consolidation from the disposal of the five titles in December 2019). The downturn is attributable mainly to the effects of COVID-19;
  • adjusted EBITDA in the period under review amounted to € -3.1 million, down by € -4.8 million versus € 1.7 million in 1° quarter 2019. The decline is due mainly to the effects of COVID-19, obviously also considering the first positive effects of the actions taken;
  • EBITDA amounted to € -4.2 million, down versus € 1.1 million in the first quarter of the prior year;
  • EBIT amounted to € -14 million, down versus € -7.2 million at 31 March 2019, due to the dynamics of the above components and to higher amortization, depreciation and write-downs, which rose to € 9.8 million from € 8.4 million in 1° quarter 2019.
  • the consolidated result before tax amounted to € -23.8 million versus € -9.2 million in first quarter 2019;
  • the result from continuing operations amounted to € -19.1 million versus € -7.9 million in first quarter 2019, due to the net impact of € 5.2 million from the adjustment to market value of the Reworld Media shares held;
  • the Group’s net result amounted to € -19.1 million versus € -3.5 million in 1° quarter 2019 (which had also included the temporarily positive result of € 4.9 million from discontinued operations, in addition to the above net impact of € 5.2 million relating to Reworld Media shares);
  • the net financial position before IFRS 16 stood at € -96.9 million, improving sharply by approximately 46% versus € -179.3 million at 31 March 2019, as a result of the disposal of Mondadori France (€ 62.8 million) and of the cash generation from ordinary operations in the context of continuing operations in the last 12 months, equal to € 45.8 million versus € 48.5 million at 31 December 2019;
  • the IFRS 16 net financial position stood at € -193.9 million and includes the IFRS 16 impact of € -97 million.

The Group’s financial situation and medium-term prospects, despite the significant stress put on the entire global economic system in this specific historical juncture, allow it to maintain a positive attitude towards future developments, albeit in a partly and inevitably affected economic scenario for 2020.

At 31 March 2020, Group employees in the context of continuing operations totaled 1,942 units, down by 8% versus 2,111 units at March 2019 (excluding the employees of Mondadori France at 31 March 2019), as a result of the disposal of the five titles and efficiency gains in the individual business areas.

Update on COVID-19 measures
Since 23 February 2020, the Group has taken immediate action to implement all the preventive measures required to protect the health of its employees and associates, in accordance with the provisions of the Ministry of Health and in conjunction with the company health officer, and to reduce the impact of the health emergency on the performance of the business areas.
Additionally, the Group is constantly monitoring the situation and providing updates on developments, also in order to guarantee the entire company population real-time access to information that is essential for the safe performance of work activities.

For such reason, the Mondadori Group has:

  • set up a cross-functional Crisis Committee with workers’ representatives to indicate the urgent measures needed and coordinate actions taking account of the specific nature of each company area;
  • from the onset further encouraged smart working, enabling almost all workers to do so, with a physical presence only of staff tasked with monitoring the sites;
  • published and made available to the entire company population a Company Anti-Contagion Protocol, containing the principles and rules adopted and to adopt;
  • fitted itself with the necessary personal and corporate protective equipment, distributed sanitizers to the company population, and installed spray dispensers inside the premises;
  • arranged for workplace sanitation in coordination with the company health officer, the relevant authorities, the Safety Managers and the Workers’ Trade Union Representatives;
  • carried out training on how to behave in order to perform remote activities safely, through online workshops and webinars;
  • introduced new services for employees and associates, including a website that is permanently accessible with all the necessary information, a dedicated email address to submit specific questions and requests, and psychological counselling desks both online and within the company;
  • assessed the adequacy of the measures taken to comply with the principles of privacy

Disclosure on this activity has been provided to the corporate control bodies and Internal Committees, also in order to receive guidance on the strategies to adopt, both in the initial phase of the health emergency and in preparing the gradual return of workers to the sites.

BUSINESS OUTLOOK
Given the poor visibility of the possible range of scenarios produced by the effects of COVID-19, macroeconomic and sector estimates predict downturns in the Group’s relevant markets that are clearly unmeasurable at this time.
For this reason, as things stand, the elements that contribute to the development of forecasts for the year remain highly uncertain: in particular, how the pandemic evolves and how demand reacts amid the potential materialization of a severe recession.

This highly unstable backdrop does not allow for the development of a new and reliable guidance.

In order to alleviate the effects of the current economic juncture, the Group has implemented measures to reduce costs and select investments and has prepared for recovery, providing adequate safety standards consistent with regulatory guidance.

The Group has also started an analysis of the organization models and processes to make the most of the current experiences and use them to gain ongoing benefits in terms of efficiency of a number of adopted and planned solutions (e.g. digitization, computerization and smart working most of all).

PERFORMANCE OF BUSINESS AREAS

  • BOOKS

In Italy until February, the trade book market had decreased by -1.1% versus the same period of 2019; in March, the decline grew to -29.3%, reaching -9.6%[2] at the end of the first quarter.

This abnormal downturn in demand over the last month of the quarter is linked to the COVID-19 emergency and the related health measures, which led, among other things, to the total closure of independent bookstores and book chains from the second ten days of March.

Despite the sharp increase of the e-commerce channel, the only channel actually operating in the second half of March, sell-out figures obviously witnessed a slump.

Against this backdrop, the Mondadori Group retained its leadership position, with a total market share of 23.4% in the trade area and 4 titles appearing in the top ten bestselling books in terms of value in the first three months of the year: La misura del tempo by Gianrico Carofiglio (Einaudi); Le fantafiabe di Luì e Sofi by Me contro Te (Mondadori Electa); In cucina con voi! by Benedetta Rossi (Mondadori Electa); Una gran voglia di vivere by Fabio Volo (Mondadori).

In the first three months of 2020, the Area’s revenue amounted to € 58.2 million, down by 17.1% versus
€ 70.2 million in first quarter 2019. Specifically:

  • in the Trade Area, revenue amounted to € 39.1 million (€ 48.2 million in 2019), down by 19.1%, due to the abovementioned effects of the COVID-19 health emergency. The closure of the Bookstores and Chains channels in the second half of March made it clearly impossible to supply a significant part of the market (approximately 65% of the total). Despite the increases recorded in the e-commerce channel, the impact on revenue was heavy.

The Group set aside the planned launch of new titles, rescheduling them by pushing back the planned publications. The editorial programmes remain, however, basically confirmed, albeit with a different timing and the phase out of a number of minor titles.

  • in the Educational segment, marked in the first quarter by the seasonal nature of the school textbooks business (with most of revenue generated from June to October), revenue amounted to € 16.7 million on a like-for-like basis, down by -10.2% versus € 18.6 million in the same period of 2019. The downturn in revenue, amounted approximately to € 2 million, is due largely to the museum business, which was impacted by the adverse effects of the COVID-19 health emergency, with urgent measures that led to the gradual closure from the beginning of March of the museums, archaeological parks and bookstores in which Electa operates.

Revenue from the sale of ebooks and audiobooks increased by +26% versus the same period of 2019, accounting for almost 10% of total revenue for the period (6% in 2019). The audiobook component accounted for approximately 13% of total digital revenue, up from 7% in 2019.

These increases in revenue are attributable to the situation generated by COVID-19 and the previously mentioned constraints on the distribution and marketing of physical books.

In the first quarter of the year, adjusted EBITDA amounted to € -4.5 million versus € -0.2 million in 2019.

EBITDA amounted to € -5.2 million versus € -0.3 million in 2019.

In the period under review, the Area recorded an EBIT of € -8.3 million versus € -2.8 million in 2019.

  • RETAIL

In first quarter 2020, the book market (which accounts for over 80% of revenue[3] in the Retail Area) suffered, as mentioned, a decline (-9.6%[4]) versus the same period of the prior year, due to the COVID-19 emergency.

Specifically, the quarter was negatively impacted by the urgent measures to contain the COVID-19 contagion, which led to the closure of physical bookstores throughout the country from 12 March 2020.

Against this backdrop, the market share of Mondadori Retail stood at 10.9%, operating in the final part of the quarter through the online channel alone.

In the first three months of the year, revenue in the Retail Area amounted to € 31.1 million, down by 24.8% versus € 41.3 million in the same period of the prior year, due to the abovementioned government COVID-19 measures. Specifically, considering March alone, sales were -65.8% lower than in 2019; the online channel bucked the trend (+13.5%) and grew by approximately +130% in March.

In the first quarter of the year, adjusted EBITDA amounted to € -1.2 million versus € -0.5 million in the same period of 2019, due to the mentioned drop in revenue.

At 29 February, the business unit’s adjusted EBITDA improved by € +0.3 million versus the same period of the prior year, thanks to careful cost management and the deep organizational and process review implemented in the second half of 2019.

At the end of the quarter, EBITDA amounted to € -1.3 million (versus € -0.6 million in the first three months of 2019).

In the period under review, the Area recorded an EBIT of € -3.8 million (versus € -3.2 million in first quarter 2019).

In the first two months of 2020, the Group’s relevant markets, still unscathed by the COVID-19 emergency, showed the following trends[6]:

  • in terms of advertising, a growth in digital channels (+4.8%) and a decline in magazines (-12.2%);
  • in terms of circulation, a drop in magazines of -8.8%.

Against this backdrop, the Group retained its leadership position with a 23.3% market share in terms of value[7].

The market, especially advertising, inevitably suffered in March from the ripple effects of the COVID-19 health emergency.

In first quarter 2020, the Media Area recorded revenue of € 50.6 million, down by 19.6% versus
€ 63 million in 2019 (-14.8% net of the disposal of the five titles). In the first two months of the year, the drop in revenue in the Media Area on a like-for-like basis was in line with the guidance and the performance of the relevant market, amounting to approximately -10%.[8]

Specifically, in the period under review, the Area performed as follows:

  • circulation revenue was down by 23%, a performance affected both by the disposal of the five titles and by the COVID-19 impact; net of these discontinuities, the estimated decline was around -10%.
  • advertising revenue decreased by 24% in total and -20% on a like-for-like basis. Approximately 60% of the drop is attributable to COVID-19 and can be estimated at € 1.8 million, including the decline in revenue from proximity marketing solutions (AdKaora) virtually halted by the lockdown.

Digital revenue as a percentage of total advertising revenue was approximately 48% (up from 42% in 2019).

  • distribution activities and other revenue fell by 10% versus the prior year (-9.9% net of discontinuities in 2019).

The Mondadori Group retained its position as the leading multimedia publisher in Italy: on the web, with an 84% reach and approximately 33 million unique users in March[9]; in social media, with an aggregate fan base of 32 million[10]; in magazines, with 16 million readers per month.

Adjusted EBITDA amounted to € 2 million in the first quarter of the year, down slightly versus 1° quarter 2019 (€ 2.6 million), due to the effective measures to contain operating costs.

EBITDA amounted to € 1.8 million versus € 2.3 million in 2019.

In the period under review, the Area recorded an EBIT of € -0.1 million versus € 1 million.

NEW EXECUTIVE DIRECTOR CO-OPTED
The Board of Directors, which met today, resolved to co-opt Alessandro Franzosi as executive director, in view of the position to hold as Chief Financial Officer of the Mondadori Group as from 4 June, as announced on 23 March.

The new executive director was co-opted following the resignation of Oddone Pozzi from the role of director, effective as from 22 April.

Additionally, as from June 4, Alessandro Franzosi will concurrently hold the position of Financial Reporting Manager, pursuant to Article 24 of the Bylaws and Article 154 bis of Legislative Decree 568/1998. The appointment will be effective until expiry of the term of office of the Board of Directors or until a different resolution is passed.

Based on the information available to the Company, to date Alessandro Franzosi holds no shares of the Company.

His professional profile is available on the website www.gruppomondadori.it, Governance section.

The documentation relating to the presentation of the results at 31 March 2020, is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company’s website www.gruppomondadori.it.

The Interim Management Statement at 31 March 2020 will be made available on the authorized storage mechanism (www.1Info.it) and in the Investors section of the Company’s website www.gruppomondadori.it by today’s date.

PUBLICATION OF THE MINUTES OF THE SHAREHOLDERS’ MEETING
Arnoldo Mondadori Editore S.p.A. informs that the minutes of the Ordinary Shareholders’ Meeting held on 22 April 2020 are available on the authorized storage mechanism (www.1info.it) and in the Governance section of the Company’s website www.gruppomondadori.it.

The Financial Reporting Manager – Oddone Pozzi – 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;
  • Group cash flow;
  • Glossary of terms and alternative performance measures used.

[1] As from 1 January 2020, the activities referring to Mondadori Group magazines and websites, as well as the equity investments in the Magazines Italy Area, were transferred to the wholly-owned subsidiary Mondadori Media S.p.A.

[2] GFK, March 2020 (figures in terms of market value). As a result of the COVID-19 health emergency and closure of the physical channel of Bookstores and Chains, GFK has temporarily suspended the presentation of sell-out figures by channel.  The relating breakdown is, therefore, unavailable at this time.

[3] Product revenue excluding Club revenue

[4]GFK (in terms of value)

[5] As from 1 January 2020, all the activities referring to Mondadori Group magazines and websites, 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.).

[6]Nielsen, cumulative figures at February 2020

[7] Internal source: Press-di, figures at February 2020 (newsstands + subscriptions channel) in terms of value

[8] Management Reporting

[9] Comscore (March 2020)

[10] Storyclash (March 2020)

BoD approves results at 31 March 2019

The results of the Interim Management Statement at 31 March 2019 have been prepared showing Magazines France amounts under “Adjusted result from discontinued operations” [1]

  • Consolidated revenue € 166.8 million versus € 177.7 million at 31 March 2018;
  • Adjusted EBITDA (before IFRS 16) improves by € 0.5 million reaching € -2.2 million at 31 March 2019;
  • EBITDA (before IFRS 16) increases by € 3.3 million reaching € -2.8 million at 31 March 2019;
  • Adjusted net result from continuing operations improves by € 5 million reaching € -8.4 million at 31 March 2019;
  • Group result improves strongly by € 10.1 million reaching € -3.5 million at 31 March 2019;
  • Group net financial position (before IFRS 16) improves in the 12 months by € 42.6 million as a result of the steady generation of cash flow from ordinary operations amounting to € -179.3 million

Targets for continuing operations in 2019 confirmed

  • Slight drop in revenue;
  • Single-digit growth of adjusted EBITDA (before IFRS 16);
  • Strong growth in net result (forecast in the range of € 30-35 million);
  • Cash flow from ordinary operations forecast at approximately € 45 million, creating sustainable conditions for a possible future return to a dividend

[1] In 2019, the “Adjusted result from discontinued operations” included the net result of Mondadori France in the current year, together with the recognition of the fair value adjustment of assets being sold, to reflect the negotiations in progress, previously measured at value in use. This item also includes the financial expense held by the Parent Company, but attributable to Mondadori France and charged to the latter under the intercompany loan agreement (approximately € 0.7 million). The “Adjusted result from continuing operations” and the “Adjusted result from discontinued operations” therefore differ by this amount from the amounts of the statements attached to this document (equal to € 5.6 million in 1Q 2019 and € 0.7 million in 1Q 2018), prepared in accordance with IFRS international accounting standards. To enable a like-for-like comparison, 2018 figures have been restated accordingly.

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 31 March 2019[1] presented by CEO Ernesto Mauri.

PERFORMANCE AT 31 MARCH 2019

Consolidated revenue in first quarter 2019 came to € 166.8 million versus € 177.7 million in the prior year, partly as a result of the change in the scope of consolidation (€ 5.6 million) of the Magazines Italy area (-3.1% on a like-for-like basis).

Adjusted EBITDA[2] (before IFRS 16) came to € -2.2 million, up by approximately € 0.5 million versus € -2.8 million in the prior year.

IFRS 16 adjusted EBITDA came to € 1.7 million and includes the IFRS 16 impact of € +3.9 million.

Consolidated EBITDA (before IFRS 16) increased by approximately € 3.3 million versus the prior year, from € -6.2 million to € -2.8 million. The improvement includes the growth in adjusted EBITDA and strong reductions in restructuring costs recorded in the quarter.

IFRS 16 EBITDA amounted to € 1.1 million and includes the IFRS 16 impact of € +3.9 million.

EBIT (before IFRS 16) improved significantly to € -7.6 million versus € -11.2 million at 31 March 2018, as a result of the dynamics of the above components, and includes amortization, depreciation and write-downs of € 4.7 million, slightly lower than the prior year.

IFRS 16 amortization and depreciation amounted to € 3.6 million.

IFRS 16 EBIT amounted to € -7.2 million and includes the IFRS 16 impact of € +0.4 million.

The consolidated result before tax came to € -9.2 million, improving sharply versus € -14.6 million and includes:

  • the decrease in financial expense (from € -0.6 million to € +0.1 million), as a result of an average interest rate lower than the prior year (from 1.3% to 1%), and of a lower average net debt;
  • a positive effect of € 0.5 million from the reimbursement of a substitute tax paid in prior years under the loan agreement;
  • improved performance by associates (consolidated at equity) of € 1 million.

The adjusted net result from continuing operations improved significantly (€ +5 million) and amounted to € -8.4 million versus € -13.4 million at 31 March 2018.

Mondadori France generated net revenue for the period of € 67.6 million (€ 75.6 million in first quarter 2018) and adjusted EBITDA of € 2 million (€ 3.3 million in first quarter 2018).

The net result from discontinued operations came to a positive € 4.9 million and includes the positive effect of the fair value adjustment of Mondadori France, at 31 March 2019, of € 5.8 million.

The Group’s net result was € -3.5 million, improving strongly by € 10.1 million.

At 31 March 2019, the net financial position (before IFRS 16) stood at € -179.3 million, a sharp improvement of € 42.6 million, as a result mainly of cash generated from ordinary operations of continuing operations of € 50.9 million.

The IFRS 16 net financial position stood at € -286.4 million and includes the IFRS 16 impact of
€ -107.1 million.

At 31 March 2019, with regard to continuing operations, Group employees amounted to 2,111 units, down by approximately 8% versus 2,283 units at March 2018, as a result of the sale of Inthera S.p.A., of Panorama and of efficiency gains in the individual business areas, and net of the 713 units of Mondadori France.

Cost of personnel[3] amounted to € 39.4 million, down by approximately 9% versus the same period of 2018.

BUSINESS OUTLOOK[4]

The Group will continue its strategic repositioning and further focus on its core businesses, in particular by consolidating its leadership in the Books Area, completing the sale of Mondadori France and identifying new areas of development.

In line with the outlined strategy and in light of the current relevant context, including the performance in the first quarter, the operating targets for 2019, based on the current scope, allow the Group to confirm, at a consolidated level, a slight decrease in revenue and a single-digit growth of adjusted EBITDA before IFRS 16 versus 2018.

The net result from continuing operations in 2019 is expected to be significantly higher than last year (in the range of € 30-35 million).

Cash flow from ordinary operations in 2019 is forecast at approximately € 45 million, creating sustainable conditions for a possible future return to a dividend.

PERFORMANCE OF BUSINESS AREAS

  • BOOKS

In the first quarter of the year, the Trade Books market grew by 0.8%[5], despite the comparison with first quarter 2018, which had included the positive effects of Easter sales.

The Mondadori Group retained its market leadership position in the period, with an overall 25% Trade share.

Revenue from the Books Area amounted to € 70.2 million (-4.6% versus € 73.6 million in first quarter 2018), as a result of the different scheduling of the publishing plan.

Revenue from the Education Area was in line with last year.

Adjusted EBITDA (before IFRS 16) in the Books Area amounted to € -0.4 million, improving versus the same period of the prior year (€ -0.7 million), as a result of the ongoing improvement in operations.

IFRS 16 adjusted EBITDA amounted to € -0.2 million and includes the IFRS 16 impact of approximately € +0.2 million.

Reported EBITDA (before IFRS 16) amounted to € -0.6 million, improving versus € -1 million at 31 March 2018.

IFRS 16 reported EBITDA amounted to € -0.3 million and includes an impact of € +0.2 million.

  • RETAIL

In the first quarter of the year, the Retail Area recorded revenue of € 41.3 million (€ -4.4% versus
€ 43.2 million at 31 March 2018), due partly to the unfriendly schedule which, in 1° quarter 2019, did not include sales made during the Easter holidays, as in 2018.

The analysis of revenue by channel shows in particular:

  • a +0.6% growth in direct bookstores, as a result of the opening of two new stores (on a like-for-like basis in terms of stores: -5.2%);
  • megastores (approximately -16%), due mainly to the drop in Consumer Electronics sales (on a like-for-like basis in terms of stores: -14.6%);
  • a slight drop by franchised bookstores (-1.7%; on a like-for-like basis in terms of stores -3.1%);
  • online channel (-7.5%);
  • a slight drop by the clubs versus the prior year.

In first quarter 2019, adjusted EBITDA (before IFRS 16) was € -2.5 million versus € -1.9 million at 31 March 2018. The performance is due partly to the unfriendly schedule which, in 1° quarter 2019, did not include sales made during the Easter holidays.

IFRS 16 adjusted EBITDA came to € -0.5 million and includes the IFRS 16 impact of approximately
€ +2 million.

Reported EBITDA (before IFRS 16) amounted to € -2.6 million versus € -2.1 million at 31 March 2018.

IFRS 16 reported EBITDA amounted to € -0.6 million and includes an impact of approximately € +2.0 million.

  • MAGAZINES ITALY

The Italian magazines market contracted both in terms of advertising (-13.1%[6]) and circulation (-13.5%[7]).

In first quarter 2019, revenue generated by the Magazines Italy Area came to € 63 million: -10.2% versus € 70.1 million in first quarter 2018 (-2.5% net of the disposals of Inthera and Panorama).

Specifically:

  • the performance of circulation revenue (-18%) was affected by the sale of Panorama (-12.6% on a like-for-like basis). The Group’s market share in terms of value in the period was 28.4%[8].
  • regarding total print + web advertising revenue (-10%), the digital segment recorded a growth of approximately 10% (-20.7% in print sales; -15.8% excluding Panorama also in 1° quarter 2018).

The percentage of digital revenue on the total increased to 42% (versus 35% in first quarter 2018);

  • revenue from add-on products grew by +7.4% versus first quarter 2018 (+19% excluding Panorama in 1° quarter 2018);
  • the performance of distribution activities and other revenue (-7.8% versus the prior year) was affected by the sale of Inthera S.p.A. (+10% on a like-for-like basis).

The Mondadori Group retained its position as Italy’s leading digital publisher, with a reach of 75% and 29.5 million unique users in the quarter[9].

Adjusted EBITDA (before IFRS 16) from Magazines Italy amounted to a positive € 2.6 million, increasing versus the same period of the prior year (€ 2.1 million), as a result of the ongoing improvement in the digital area and actions aimed at reducing operating and structural costs.

IFRS 16 adjusted EBITDA amounted to € 2.6 million.

Reported EBITDA (before IFRS 16) amounted to a positive € 2.3 million, an improvement versus
€ -0.8 million at 31 March 2018, as a result of lower restructuring costs.

IFRS 16 reported EBITDA amounted to € 2.3 million.

  • MAGAZINES FRANCE (discontinued operations)

In first quarter 2019, revenue from Mondadori France amounted to € 67.6 million versus € 75.6 million in first quarter 2018.

Specifically:

  • circulation revenue (80% of total) fell by 5.9% versus the prior year, with newsstand sales down by -7.1% and subscriptions by -4.6%;
  • total advertising revenue (print+digital) fell by 18.2% versus the same period of 2018, with the print segment (87% of total) down by -17.3%.

Adjusted EBITDA amounted to € 2 million versus € 3.3 million in the first quarter of the prior year.

Reported EBITDA amounted to € 2.1 million versus € 3.2 million in first quarter 2018.

SIGNIFICANT EVENTS AFTER FIRST QUARTER 2019

On 19 April 2019, following the procedure to inform and negotiate with the French trade unions as set out by law, Arnoldo Mondadori Editore S.p.A. signed an agreement for the sale of its subsidiary Mondadori France S.A.S. to Reworld Media S.A.

As a result of the deal, Mondadori will hold from an 8% to 9% interest in the share capital of Reworld Media S.A.

The documentation relating to the presentation of the results at 31 March 2019, is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company’s website www.gruppomondadori.it.

The Interim Management Statement at 31 March 2019 will be made available at the Company’s registered office, on the authorized storage mechanism (www.1Info.it) and in the Investors section of the Company’s website www.gruppomondadori.it by the end of today.

PUBLICATION OF THE MINUTES OF THE SHAREHOLDERS’ MEETING AND BYLAWS

Arnoldo Mondadori Editore S.p.A. announces that the minutes of the Ordinary and Extraordinary Shareholders’ Meeting of 17 April 2019, together with the amended version of the Bylaws, are available at the Company’s registered office, at the authorized storage mechanism(www.1info.it) and on the Company’s website www.gruppomondadori.it (Governance section).

The Financial Reporting Manager – Oddone Pozzi – hereby declares, pursuant to art. 154 bis, par. 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):

  • Consolidated balance sheet;
  • Consolidated income statement;
  • Group cash flow;
  • Glossary of terms and alternative performance measures used.

[1] As of 1 January 2019, the Group has adopted the new IFRS 16 – Leases. The new standard provides a new definition of lease (operating leases) and introduces a criterion based on the control (right of use) of an asset to distinguish leases from service contracts, the differences lying in: the identification of the asset, the right to replace the asset, the right to essentially receive all the financial benefits arising from the use of the asset, and the right to control the use of the asset underlying the contract. The standard introduces a single lessee accounting model, by which an asset under an operating lease is recognized in assets with an offsetting financial liability. P/L will no longer record lease payments as operating/general costs, rather the depreciation of the booked asset and the financial expense implicit in the lease payment. An exception to this accounting model are leases regarding low-value assets and those with a term of 12 months or less.
[2] This document, in addition to the statements and conventional financial measures required by IFRS, presents a number of reclassified statements and alternative performance measures in order to better evaluate the operating and financial performance of the Group, the definition of which is explained in the section “Glossary of terms and alternative performance measures used”.
[3] Cost of enlarged personnel includes costs for collaborations and temporary employment
[4] Before application of IFRS 16.
[5]  Source: GFK, March 2019 (figures in terms of market value)
[6] Source: Nielsen, cumulative market figures at March 2019: magazines -13.1%; +3% digital.
[7] Internal source: Press-Di, cumulative figures in terms of value at February 2019 (newsstands + subscriptions).
[8] Internal source: Press-Di, cumulative figures in terms of value at February 2019 (newsstands + subscriptions)
[9] Source: comScore, January – March 2019

BoD approves interim management statement at 31.03.2018

  • Consolidated revenue € 253.4 million: -6.7% versus € 271.6 million at 31.03.2017
  •  Adjusted EBITDA[1] € 0.5 million versus € 4 million at 31.03.2017
  • Net result € -13.6 million versus € -9.2 million at 31.03.2017
  • Net financial position € -221.9 million: improving by 22.5% versus € -286.2 million at 31.03.2017 as a result of the Group’s positive cash generation from ordinary operations

2018 targets

  • Consolidated revenue slightly down;
  • Adjusted EBITDA basically steady;
  • Profit down due to less positive non-recurring items;
  • Cash flow from ordinary operations: forecast at around € 55-60 million, improving from previous € 50 million estimate

[1] This document, in addition to the statements and conventional financial measures required by IFRS, presents a number of reclassified statements and alternative performance measures in order to better evaluate the operating and financial performance of the Group, the definition of which is explained in the section “Glossary of terms and alternative performance measures used”.

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 31 March 2018[1] presented by CEO Ernesto Mauri.

GROUP PERFORMANCE IN FIRST QUARTER 2018

The Group’s performance in first quarter 2018 was affected by the trends of the relevant markets: growth of books on the one hand, a continuing decline in magazines on the other.

Consolidated revenue amounted to approximately € 253.4 million, down by 6.7% versus € 271.6 million in the prior year, due mainly to the performance of the Magazines areas, affected by the acceleration of the negative trends of the relevant markets, in terms of both circulation and advertising, and by a different timing of a number of initiatives. Revenue from the Books Area grew by 1%, driven in particular by the positive performance of the Educational area.

Adjusted EBITDA in first quarter 2018 amounted to € 0.5 million (versus € 4 million in first quarter 2017) – the drop referring to Magazines Italy (down by € 4.4 million) where the ongoing actions to cut operating and structural costs only partly mitigated the decline in revenue triggered by the trend of the traditional markets.

Additionally, the different timing of a number of initiatives (related mainly to events) versus the prior year increased the decline even further. The Books Area, instead, reported a sharp rise, thanks to further operating efficiencies arising from the integration of Rizzoli Libri, and to lower logistics costs following the outsourcing process completed in 2017.

Consolidated EBITDA (down from € 2.3 million to € -3 million) reflects the operating drop, amplified by higher restructuring costs in the quarter versus the same period of 2017, attributable again to the performance of Magazines Italy.

Consolidated EBIT at 31 March 2018 came to € -10.7 million versus € -5.6 million at 31 March 2017, and includes amortization, depreciation and impairment losses of € 7.7 million, down versus € 8 million in the prior year.

The consolidated result before taxes came to € -14.9 million versus € -9.5 million at 31 March 2017, and included:

  • the sharp drop in financial charges (from € 3.4 million to € 1.5 million), as a result of an average interest rate that has more than halved versus the prior year (from 4.86% to 2.19%), and of a lower average net debt;
  • a negative performance by associates (consolidated at equity), down from
    € -0.5 million to € -2.8 million, due in particular to Mach2 Libri, active in the distribution of books in the Large Retailers channel and put into liquidation on 15 March 2018.

The net result came to € -13.6 million versus € -9.2 million at 31 March 2017.

The Group’s net financial position at 31 March 2018 stood at € -221.9 million, improving by 22.5% versus € -286.2 million at 31 March 2017, as a result of the Group’s positive cash generation from ordinary operations of € 64.9 million.

At 31 March 2018, cash flow from operations in the last twelve months came to a positive
€ 85.3 million; cash flow from ordinary operations (after outlays for financial charges, management of investments and taxes for the period) came to € 64.9 million, confirming the path of improvement of the Group’s business and financial performance.

The cash flow from extraordinary operations came to € -0.7 million.

At 31 March 2018, Group employees amounted to 3,035 units, down by 5.6% versus 3,214 units at 31 March 2017, as a result of the disposal of the logistics activities in May 2017, and of the ongoing restructuring and efficiency improvement measures involving each of the Group’s business areas. Net of the outsourcing of logistics, the drop would amount to 2.6%.

BUSINESS OUTLOOK

In light of the current relevant context and the results achieved in the first months of the year, the forecasts on 2018, on a like-for-like basis, previously disclosed to the market, can be reasonably confirmed: a slight drop in consolidated revenue; adjusted EBITDA basically steady; profit down versus 2017, which had included positive non-recurring items, and cash flow from ordinary operations forecast in a range between € 55-60 million, improving from the previous forecast of € 50 million.

BUSINESS AREAS

  • BOOKS

The Trade Books market in the first three months of the year grew by +4.1%[2], due also to the time gap of the Easter holidays from the corresponding period of 2017. At April, the market grew by approximately 1%.

Against this backdrop, Mondadori Libri retained its market leadership position with an overall 27.7% share in Trade[3].

In the period under review, the Group holds the top three positions in the ten bestselling books in terms of value, and has placed a total of eight titles in the ranking: Quando tutto inizia by Fabio Volo (Mondadori); Storie della buonanotte per bambine ribelli 2 by Francesca Cavallo and Elena Favilli (Mondadori); Origin by Dan Brown (Mondadori); Il morso della reclusa by Fred Vargas (Einaudi); Storie della buonanotte per bambine ribelli by Francesca Cavallo and Elena Favilli (Mondadori); Darker. Cinquanta sfumature di nero raccontate da Christian by E. L. James (Mondadori); Sono sempre io by Jojo Mojes (Mondadori) and La grande truffa by John Grisham (Mondadori).

Revenue in first quarter 2018 amounted to € 73.4 million, up by 1% versus € 72.6 million in the same period of 2017, driven by the positive performance of school textbooks in the Educational Area and by the management and organization of Mondadori Electa exhibitions.

In Trade, revenue in the first three months fell by 7% versus the same period last year, due mainly to the continued strategy of selective production of new titles, aimed at increasing profitability, and to the drop affecting the Large Retailers channel where the Group holds a significant market share.

Adjusted EBITDA of the Books Area came to € -0.8 million, improving significantly versus      € -2.9 million in the same period last year, as a result of further operating efficiencies arising from the integration of Rizzoli Libri, of the management streamlining process undertaken in recent years, relating in particular to the reduction in published titles and relating average number of copies, and of lower logistics costs following the outsourcing process completed in 2017.

EBITDA amounted to € -1 million, confirming the above growth versus the prior year (€ -3.1 million at 31 March 2017).

  • RETAIL

In the first three months of the year, the Retail Area posted revenue of € 43.2 million, up by 0.9% versus the same quarter of the prior year (€ 42.9 million), with Books growing by 3.6% (approximately 82% of total revenue), thanks also to the friendly schedule which in 2018 included sales made during the Easter holidays.

The analysis by channel shows the following:

  • a 4% increase by directly-managed bookstores, driven by the positive performance of Books (+2.5% on a like-for-like basis in terms of stores);
  • a 7% drop by Megastores, due not only to the shrinking sales in Consumer Electronics, but also to the closure of the Palermo and San Pietro all’Orto stores (+5%, considering the sale of books alone, on a like-for-like basis in terms of stores);
  • a 5% increase by Franchised bookstores;
  • a 10% growth by the online channel;
  • a drop by the book clubs, in line with last year’s trend.

In the first three months of the current year, Mondadori Retail improved its adjusted EBITDA to reach € -1.9 million versus € -2.1 million at 31 March 2017, driven by the first results of the rationalization project regarding directly-managed stores, despite the targeted reduction in consumer electronics product sales.

EBITDA came to € -2.1 million, rebounding sharply versus the three months of 2017 (€ -2.9 million), as a result of lower restructuring costs.

  • MAGAZINES ITALY

In the first quarter of the year, the magazine market in Italy fell sharply both in terms of circulation[4], with particular regard to the sale of add-on products, and of advertising[5].

Against this backdrop, revenue from Magazines Italy amounted to € 70.2 million, down by 13.6% versus € 81.2 million in the same period of 2017. Specifically:

  • circulation revenue lost 8.4%, performing slightly better than the relevant market (newsstands and subscriptions);
  • advertising revenue (print + web) fell by 11.6%; web advertising sales were steady versus first quarter 2017, while print sales also reflect the different timing of a number of initiatives linked to local-based events (the Panorama d’Italia tour in particular);
  • revenue from add-on products dropped sharply (approximately -30%) versus the same period of 2017;
  • Press-Di distribution and revenue towards third parties was basically steady versus the prior year (-0.8%).

The Mondadori Group retains its market leadership position in the period, with a 30.8% share in terms of value[6]. The unique audience reached 17.6 million users/month[7], up by 7% versus first quarter 2017, making the Mondadori Group, once again, Italy’s top traditional publisher also in the digital business.

Adjusted EBITDA in the Magazines Italy Area closed with a negative trend at € 2.1 million versus € 6.6 million in first quarter 2017, due mainly to the drop in revenue triggered by the trend of the relevant markets, only partly alleviated by the ongoing cost actions, and to the different planning of a number of initiatives. The digital area continued to improve and confirmed the increase in adjusted EBITDA also in the reporting period.

The Area’s reported EBITDA (€ -0.8 million from € 6.5 million) deteriorated further, due to the higher restructuring costs in the period from the necessary accelerated structural reduction process.

  • MAGAZINES FRANCE

In first quarter 2018, revenue from Mondadori France amounted to € 75.6 million, down by 6.3% versus € 80.7 million in the same period of 2017.

Specifically:

  • circulation revenue (75% of the total) posted a 6% drop versus the previous year;
  • advertising revenue was down by an overall -9.2% versus the same period of 2017: print (86% of total advertising revenue), fell by 2%, less than the relevant market trend[8].

Adjusted EBITDA came to € 3.3 million, down from € 3.6 million in the first three months last year. Net of the contribution in first quarter 2017 of NaturaBuy (sold in May 2017), the result was basically steady, thanks to the effective actions launched in 2017 to contain industrial costs, and to the reorganization of the advertising and digital teams that started to produce benefits, fully offsetting the decline in revenue triggered by the trend of the markets.

Reported EBITDA amounted to € 3.2 million, up by approximately 7% versus first quarter 2017, as a result of lower restructuring costs incurred.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

As announced on 24 April 2018, the Ordinary Shareholders’ Meeting appointed the Board of Directors, composed of 14 members, and the Board of Statutory Auditors, who will remain in office for three years until the approval of the financial statements for the year ending 31 December 2020.

On 2 May 2018, an agreement was concluded on the transfer to HCI Holding of 100% of the share capital of Inthera S.p.A., specialized in strategy, planning and development of content & data driven marketing solutions, CRM, database analysis and management.

The Board of Directors of Arnoldo Mondadori Editore meeting today also reviewed the binding offers received from European Network on the acquisition of the weeklies Tustyle and Confidenze.
The Board concurrently resolved to authorize the CEO to carry out the activities for completing the transaction, which falls into the repeatedly announced strategy of focusing the product portfolio on core brands with greater profitability and multi-channel development potential.

The documentation relating to the presentation of the results at 31 March 2018, is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company’s website www.gruppomondadori.it.

The Interim Management Statement at 31 March 2018 will be made available at the Company’s registered office, on the authorized storage mechanism (www.1Info.it) and in the Investors section of the Company’s website www.gruppomondadori.it by the end of today.

PUBLICATION OF THE MINUTES OF THE SHAREHOLDERS’ MEETING

Arnoldo Mondadori Editore S.p.A. informs that the minutes of the Ordinary Shareholders’ Meeting held on 24 April 2018 are available at the Company’s registered office, on the authorized storage mechanism (www.1info.it) and in the Governance section of the Company’s website www.gruppomondadori.it.

The Financial Reporting Manager – Oddone Pozzi – hereby declares, pursuant to art. 154 bis, par. 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. Group cash flow;
  4. Glossary of terms and alternative performance measures used.

[1] Beginning from 1 January 2018 (and to provide a consistent presentation, also for 2017), the Group has adopted the new IFRS 15 – Revenue from Contracts with Customers – revenue recognition standard, which applies to all contracts stipulated with customers, with the exception of those that fall within the scope of application of other IAS/IFRS standards such as leases, insurance contracts and financial instruments. The new IFRS 15 presents revenue and costs differently, with no effect on EBITDA. Beginning from 2018, the result generated by associates (consolidated at equity), previously classified in adjusted EBITDA, is shown under EBIT; for consistency, 2017 has been reclassified accordingly

[2] Source: GFK, March 2018, figures in terms of value

[3] Source: GFK, March 2018, figures in terms of value

[4] -9.3% in terms of value (Internal source: Press-Di, cumulative figures at February 2018 newsstands + subscriptions)

[5] -11% (Source: Nielsen, cumulative figures at March 2018)

[6] Internal source: Press-Di, cumulative figures at March 2018 newsstands + subscriptions

[7] Source: Audiweb, January-February 2018 average figure

[8] (-9.9%. Kantar Media, cumulative figures in terms of value at February)

  • Consolidated revenue 261.1 million euro: +2.5% versus 254.8 million euro at 31.03.2016; -5.8% excluding Rizzoli Libri
  • Adjusted EBITDA[1]: +8.3% excluding Rizzoli Libri;due to the seasonal nature of Rizzoli’s school textbooks business, 3.5 million euro versus 10.1 million euro at 31.03.2016
  • Net result: excluding Rizzoli Libri, improving to -1.6 million euro; due to the seasonal nature of Rizzoli’s school textbooks business, -9.2 million euro versus -1.8 million euro at 31.03.2016;
  • Net financial position: -286.2 million euro versus -224.9 million euro at 31.03.2016 due to the acquisitions made in 2016; (-263.6 million euro at end 2016)

2017 targets confirmed

  • Revenue basically steady;
  • “High-single digit” growth in adjusted EBITDA;
  • 30% improvement in net profit;
  • Net debt down with debt/adjusted EBITDA ratio at 2.2/2x.

[1] EBITDA adjusted is gross operating profit net of income and expenses of a non-ordinary nature (Glossary: Annex 4).

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Report on Operations at 31 March 2017 presented by CEO Ernesto Mauri.

GROUP PERFORMANCE IN 1Q17

In 1Q17, the Mondadori Group continued, excluding the effects of the acquisition of Rizzoli Libri, on the path of operational improvement that had started in prior years, reporting an 8.3% increase in adjusted EBITDA and a further progress in LTM cash flow from ordinary operations, which reached 51 million euro.

The consolidation of Rizzoli Libri drove revenue up by 2.5% versus the prior year; EBITDA of the overall scope has little bearing on the performance of the entire year since the negative contribution of Rizzoli Libri (outside the scope in 1Q16) is attributable to the seasonal nature of the Education business, which includes in the first quarter costs for the creation of editorial content, as well as expenses to promote the campaign on school textbooks adoption, while revenue is typically recorded in the second and third quarters of the year.

The Mondadori Group consolidated revenue in 1Q17 amounted to 261.1 million euro, up by 2.5% versus 254.8 million euro in 1Q16; excluding the contribution of Rizzoli Libri, Group revenue dropped by 5.8%, due mainly to the performance of all the business areas.

On a comparable basis[1], adjusted EBITDA grew by 8.3% – with a percentage on revenue increasing from 4% to 4.6% – especially in the Books (+8.2%) and Magazines Italy areas (from 6.4 million euro to 6.6 million euro). Consolidated performance followed the pattern of the past 2 years.

Including the result of Rizzoli Libri, EBITDA amounted to 3.5 million euro, as a result, as mentioned, of the negative contribution of -7.4 million euro, attributable to the typical seasonal nature of the Education business in the first quarter of the year.

Consolidated EBITDA, On a comparable basis, improved by approximately 9% (from 8.5 million euro to 9.3 million euro) confirming the Group’s continued efficiency recovery. Consolidated EBITDA came to 1.8 million euro.

Consolidated EBIT in 1Q17 amounted to -6.1 million euro and includes amortization, depreciation and impairment of 8 million euro, up versus 5.5 million euro in 1Q16; the item includes the amortization of Banzai Media goodwill (0.5 million euro) and the amortization of capitalized expenses of the Rizzoli Libri school business (1.1 million euro).

On a comparable basis, EBIT amounted to a positive 2.7 million euro.

The consolidated result before taxes came to -9.5 million euro and includes financial costs of 3.4 million euro, down versus the prior year – despite an increase in average net debt of approximately 50 million euro following the outlays for the acquisition of Rizzoli Libri – for a more efficient use of the Group’s credit lines.

Accordingly, the net result came to -9.2 million euro.

Excluding Rizzoli Libri, financial costs dropped by 31% (from 3.6 million euro to 2.5 million euro), producing a net result of -1.6 million euro, improving versus -1.8 million euro at 31 March 2016.

The Group’s net financial position at 31 March 2017 came to -286.2 million euro versus -224.9 million euro at 31 March 2016 (-263.6 million euro in 2016).

At 31 March 2017, cash flow from operations in the last twelve months came to a positive 96 million euro (76.6 million euro excluding Rizzoli Libri); cash flow from ordinary operations (after outlays for financial charges and taxes for the period) came to 64.8 million euro; excluding Rizzoli Libri, cash flow from ordinary operations amounted to 51 million euro, improving versus 48.4 million euro at 31 December 2016.

Cash flow from extraordinary operations came to 126.1 million euro, as a result of capital expenditure net of disposals (130.4 million euro), restructuring costs (approximately 17 million euro), and cash-ins from prior-years’ taxes (21 million euro).

At 31 March 2017, Group employees amounted to 3,214 units, up (+7.1%) following the extraordinary transactions made over the last 12 months; net of these transactions, Group employees would be down by -5%.

BUSINESS OUTLOOK

In light of the current relevant context and the Group’s performance in the first quarter, it is reasonable to confirm the previously disclosed estimates for 2017 versus the 2016 pro-forma figures[2] that indicate steady revenue and a “high single-digit” growth of adjusted EBITDA, with a resulting improvement in profit margins. Likewise, net profit for the year is confirmed to rise sharply by approximately 30%.

Net debt at end 2017 is estimated to drop versus 31 December 2016, with a debt/adjusted EBITDA ratio at 2.2/2x.

BUSINESS AREAS

  • BOOKS

The Trade Books Area of Mondadori Libri was once again market leader in the first quarter, increasing its overall share to 28% following the acquisition of the Rizzoli Libri brands (Rizzoli, BUR and Fabbri Editori)[3].

In the period under review, the Group held the first two positions in the ranking of the best-selling titles in terms of value (Storie della buonanotte per bambine ribelli. 100 vite di donne straordinarie by F. Cavallo and E. Favilli, and L’arte di essere fragili. Come Leopardi può salvarti la vita by A. D’Avenia), and put 4 titles in the first ten (Il labirinto degli spiriti by C. R. Zafòn in sixth place and La ragazza del treno by P. Hawkins in seventh).

In 1Q17, the Area’s revenue amounted to 80.3 million euro, up by an overall 26.6% versus 63.4 million euro in 1Q16, as a result of the consolidation of Rizzoli Libri:

  • Trade revenue grew by 15.9% versus 1Q16 (Rizzoli Libri contributed 8.6 million euro);
  • Educational revenue was marked, as mentioned, by the seasonal factors of the school textbooks business; despite that, the segment’s revenue, on a like-for-like basis, increased by 12.2% versus 1Q16; doubling, including Rizzoli Libri;
  • revenue generated by circulation activities and other services provided in favour of third publishers, amounting to 10.7 million euro, was up by 13% versus 1Q16, as a result of the consolidation of Rizzoli Libri.

On a like-for-like basis, Mondadori Libri’s adjusted EBITDA increased by 8.2% to 4.5 million euro versus 1Q16 (4.1 million euro), driven also by the good performance of Electa. Rizzoli Libri had a negative impact of -7.4 million euro in the quarter on the Books Area’s EBITDA, as a result of the mentioned typical seasonality factors of the school textbooks business. EBITDA, including the effects of the consolidation of Rizzoli Libri, amounted to -3.3 million euro (4.2 million euro on a like-for-like basis versus 4 million euro at 31 March 2016).

  • RETAIL

In 1Q17, the Retail Area achieved revenue of 42.9 million euro, down by 3.5% versus 44.4 million euro in 1Q16.

The analysis by channel in the reporting period shows the following: a 1.6% drop by Megastores, due mainly to the shrinking sales in Consumer Electronics; an 8% drop by direct bookstores; a negative performance of Franchised Bookstores down by 8.8%; an approximately 43% increase in the online segment, driven by the sales from the government’s “Culture Bonus” for 18 year olds (“18app”).

In 1Q17, Mondadori Retail’s adjusted EBITDA came to -2.1 million euro, deteriorating versus

-1.8 million euro reported in 1Q16, due also to the negative contribution of the Rizzoli bookstore.

EBITDA came to -2.9 million euro (-1.8 million euro in 1Q16), as a result of restructuring costs (0.8 million euro).

  • MAGAZINES ITALY

In 1Q17, the Mondadori Group retained its leadership position in the magazine market, with a 32.7% circulation share in terms of value[4].

Revenue from Magazines Italy amounted to 72.2 million euro[5], down by 8% versus 78.4 million euro in 1Q16. Specifically:

  • circulation revenue fell (-10.7%), basically in line with the relevant market trend[6] in both the newsstand and subscription channels;
  • advertising revenue (print+web) increased by 4%, driven by the contribution of the consolidation of Banzai Media activities, bringing the percentage of digital revenue in Italy to approximately 26% of the total; considering print advertising sales in Italy alone (on a like-for-like basis of titles and barter deals for goods), the performance (-5.6%) is in line with the market trend at February[7];
  • revenue from add-on products fell sharply, in line with the segment’s trend, versus 1Q16, which had benefited from the strong performance of a number of Home-Video and CD products;
  • distribution and revenue towards third publishers managed by Press-Di dropped at a more moderate pace (-4.1%) than the market[8], thanks to the ongoing commitment to developing third-publisher portfolios.

In 1Q17, the Mondadori Group reached a unique audience of 16.6 million users/month[9] versus 8.9 million/month in February 2016 (up by 4% versus end 2016), also retaining its position as Italy’s leading digital publisher. A position corroborated by comScore surveys, which reported a Group audience of 24.3 million unique users/month at February 2017.

As part of the integration and development projects regarding Group brands, March saw the start of the first brand extension initiative with the launch of the monthly magazine Giallo Zafferano.

Adjusted EBITDA improved by approximately 3%, rising from 6.4 million euro to 6.6 million euro, driven mainly by the benefits from the integration of the teams and digital products acquired from Banzai Media. The Area’s EBITDA confirmed the growth trend (increasing from 6.3 million euro to 6.5 million euro).

  • MAGAZINES FRANCE

In 1Q17, revenue from Mondadori France amounted to 72.4 million euro, down by 6.2% versus 77.1 million euro in 1Q16:

  • circulation revenue (76% of the total) lost 3.7% versus 1Q16: specifically, the subscription channel (54% of circulation revenue) dropped by 2.5%; the newsstand channel (-3.9%) outperformed the relevant market trend[10]. In 1Q17, Mondadori France launched Mellow, a new women’s lifestyle monthly.
  • advertising revenue (print+digital) was down by 12.7% versus 1Q16, due mainly to the digital business (making for 17% of total advertising revenue).

In the reporting period, Mondadori France’s market share stood at 10.2%[11], making it the third top player on the magazine advertising market.

The digital readers (web, mobile & tablet) of Mondadori France magazines reached 11.9 million unique users[12], up by approximately +3% versus 1Q16.

Adjusted EBITDA came to 3.6 million euro, down versus 4.3 million euro in 1Q16. The drop is mainly attributable to the downturn in advertising revenue generated by the Digital Area.

EBITDA, amounting to 3 million euro, was down by 20.3% versus 3.7 million euro in 1Q16.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

On 28 April 2017, the Mondadori Group concluded an agreement on the disposal of the business units involved in the logistics activities of Mondadori Libri and Mondadori Retail to CEVA Logistics Italia S.r.l. for the amount of 0.5 million euro. Additionally, the agreement envisages the disposal of the Verona-based site used for these activities to AKNO Trading S.r.l. (property company part of the AKNO Group, industrial partner of the CEVA Group) for a consideration of 6 million euro; and the conclusion of an exclusive agreement for the supply by CEVA Logistics Italia of logistics services to the Mondadori Group’s Books and Retail areas for a period of 9 years.

The disposal of the site produced a gain before taxes of 4.2 million euro, already included in the guidance for 2017 (with no impact on estimated adjusted EBITDA which, by definition, excludes non-recurring income).

On 2 May 2017, the Mondadori Group announced that its subsidiary Mondadori France, following the purchase of the 20% minority interest in the share capital, had completed the disposal of 100% of NaturaBuy SAS; the marketplace of small ads and the purchase/sale of hunting, fishing and outdoor items was acquired by NextStage, a private equity fund based in Paris. The disposal of 100% of NaturaBuy amounts to 12.2 million euro, based on an enterprise value of 10.5 million euro. The disposal of this asset produced a gain before taxes of 4.3 million euro, strongly contributing to the achievement of the net profit and net financial position targets set in the guidance previously disclosed to the market, which could be revised in the current year (with no impact on estimated adjusted EBITDA which, by definition, excludes non-recurring income)

The documentation relating to the presentation of the results at 31 March 2017, is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company’s website www.gruppomondadori.it.

The Interim Report on Operations at 31 March 2017 will be made available at the Company’s registered office, on the authorized storage mechanism (www.1Info.it) and in the Investors section of the Company’s website www.gruppomondadori.it by the end of today

The Executive Manager responsible for the drafting of the corporate accounting documentation, Oddone Pozzi, hereby declares, pursuant to Art. 154 bis, par. 2, of the Finance Consolidation Act, that the accounting documentation contained in this press release corresponds to the Company’s accounting entries, books and results.

Annexes (see attached pdf):

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

[1] On a comparable basis excludes the contribution of Rizzoli Libri, which was outside the scope of consolidation in 1Q16. This scope includes, instead, the contribution of Banzai Media, merged by incorporation in the parent Arnoldo Mondadori Editore S.p.A., with accounting effects as from 1 January 2017.

[2] Pro-forma figures: consolidation of Rizzoli Libri and Banzai Media assumed as from 1 January 2016; revenue of approximately 1,280 million euro and adjusted EBITDA of approximately 100 million euro.

[3] Source: GFK, March 2017 (sell-out figures in terms of market value)

[4] Internal source: Press-di, cumulative figures at February 2017 (newsstands + subscriptions in terms of cover price)

[5] Following the merger by incorporation of Banzai Media S.r.l. in Arnoldo Mondadori Editore S.p.A. – concluded on 10 January 2017 and with accounting and tax effects as from 1 January 2017 – and the integration of its digital activities, the scope acquired in 2016 is no longer recognized in 2017.

[6] -12.2%. Internal source: Press-di, cumulative figures at February 2017 (newsstands + subscriptions in terms of cover price)

[7] -6.4% Source: Nielsen, cumulative figures at February 2017

[8] Source: ADS, figures in terms of copies, February 2017

[9] Source: Audiweb, at February 2017

[10] -8.1%: Internal source Mondadori France, figure at March 2017

[11] Source: Kantar Media, figures in terms of volume at January 2017

[12] Source: Mediametrie Netratings – Nielsen, January-February 2017 average figure

BoD approves interim report at 31.03.2016

  • Consolidated net revenue up by 2.2%, rebounding strongly versus previous quarters: 254.8 million euro at 31 March 2016 versus 249.2 million euro in 1Q15
  • Consolidated EBITDA +22.1%: 8.5 million euro at 31 March 2016 versus 7 million euro at 31 March 2015
  • Group net result from continuing operations recovers sharply: -1.8 million euro at 31 March 2016, improving by over 50% versus -3.7 million euro at 31 March 2015
  • Group net financial position drops significantly: -224.9 million euro versus -319.2 million euro at 31 March 2015

§

Outlook for the current year:

  • Revenue up by 14% versus 2015;
  • Operating EBITDA increasing by 30%;
  • The net financial position, including the effects of the Rizzoli Libri and Banzai Media Holding transactions and the planned disposals, in accordance with the provisions of the Antitrust Authority, is expected to increase versus end 2015, with a NFP/EBITDA ratio of around 3.5x/3.6x, much lower than the bank covenant of 4.5x

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Report at 31 March 2016 presented by CEO Ernesto Mauri.

GROUP PERFORMANCE AT 31 MARCH 2016
Mondadori Group enjoyed a rather positive start to the year, even more rewarding if considering the persisting volatile macroeconomic environment.

Specifically, after almost four years, revenue grew versus the prior year (before the foregoing acquisitions), a performance which confirmed, along with the improvement in EBITDA for the ninth consecutive quarter, the success of the measures adopted over the past two years, paving the way to accomplishing the targets set for the full year and to the new phase of the Group’s development.

In 1Q16, consolidated net revenue amounted to 254.8 million euro, up by 2.2% versus 249.2 million euro in 1Q15, rebounding strongly versus previous quarters (+0.8% on a like-for-like basis, including revenue from the Mondadori Scienza magazines[1]).

EBITDA before non-recurring items rose by 15.3% to 10.1 million euro from 8.8 million euro in 1Q15, with a percentage on revenue up from 3.5% to 4%. The consolidation of Mondadori Scienza as of 1 July 2015 resulted in a negative contribution in the quarter of 0.1 million euro.

Consolidated EBITDA improved by 22.1%, settling at 8.5 million euro versus 7 million euro in 1Q15, a performance that, thanks also to lower restructuring costs and fewer extraordinary items, confirms the Group’s efficiency gains from the industrial and organizational review actions launched and implemented over the past two years.

Consolidated EBIT in 1Q16 amounted to 3.1 million euro, improving by approximately 45% versus 2.1 million euro in 1Q15, thanks to the abovementioned growth in EBITDA, despite the increase in depreciation and amortization (5.4 million euro versus 4.9 million euro at 31 March 2015).

Consolidated result before taxes amounted to -0.5 million euro versus -2.4 million euro at 31 March 2015; in 1Q16, financial costs amounted to 3.6 million euro, decreasing sharply (-19%) versus 4.4 million euro in 1Q15, as a result of the reduced average net debt in the period and average total cost of debt. Tax costs in the period came to 0.9 million euro, basically in line with 1Q15 (0.8 million euro).

Consolidated net result from continuing operations, after minority interest, amounted to -1.8 million euro, improving by over 50% versus the loss of 3.7 million euro at 31 March 2015. The Group’s net result at 31 March 2016, net of the result from discontinued operations of the Radio Area (-1 million euro in 1Q15), amounted to -1.8 million euro, improving by 2.9 million euro versus 1Q15.

The Group’s net financial position at 31 March 2016 came to -224.9 million euro, improving significantly versus -319.2 million euro at 31 March 2015, as a result of the Group’s twelve-month cash generation from ordinary operations (48.4 million euro) and extraordinary operations (45.9 million euro).

At 31 March 2016, cash flow from operations in the last twelve months came to a positive 71.7 million euro; cash flow from ordinary operations (after outlays for financial charges and taxes for the period) came to 48.4 million euro, continuing the rising trend of the six previous quarters. Cash flow from extraordinary operations came to a positive 45.9 million euro, due mainly to the cash-ins from the disposals completed over the past 12 months, amounting to 58.4 million euro, relating to the transfer of 80% of Monradio (September 2015), of 50% of the Harlequin Mondadori joint venture (September 2015), and of a property in Rome (December 2015).

BUSINESS AREAS

  • BOOKS

In 1Q16, Mondadori Group retained its leadership position with a 22.9% share of the trade market (GFK, March 2016).

In the period under review, the Books Area posted revenue of 63.4 million euro, rising sharply (+13.3%) versus 56 million euro in 1Q15.

Specifically, the Trade Area grew by 16.9%, driven by the ongoing positive trend in the sales of titles launched in late 2015, and by the enthusiastic response from the public of the new titles distributed during the year, as proven by the sales charts: in the first three months of the year, the Group held the top three positions in the ranking of the best-selling titles in terms of copies, and boasted 5 titles in the 10 top best-selling books.

Revenue from Educational books improved by 17.7% versus 1Q15, driven by the growth of Mondadori Electa.

EBITDA, net of non-recurring items, surged (over 50%) versus 1Q15 to settle at 4.1 million euro, driven by the increase in revenue from the targeted publishing policy, which also led to a cut in new titles produced, and from greater efficiency in managing operating processes, achieved following the deep organizational and product review implemented since 2015 in the Trade segment.

  • MAGAZINES ITALY

In 1Q16, Mondadori Group retained its leadership position in the magazine market, with a 32.7% share (Internal source: Press-di, at February 2016).

In the period under review, revenue from the Magazines Italy Area amounted to 78.5 million euro, up by 0.8% versus 77.9 million euro in 1Q15 (-3.7% on a like-for-like basis).

Specifically:

  • circulation revenue grew by 3.7%, due mainly to the contribution of the consolidation of the Mondadori Scienza titles;
  • revenue from add-on products dropped by 1.8% versus 1Q15;
  • revenue from advertising sales was basically in line with 1Q15 (-0.3%); Traffic data showed an overall audience rate of 8.9 million unique users (Audiweb, February 2016) versus 6.9 million in February 2015 (+29%).
  • distribution and revenue towards third publishers rose slightly (+1.4%) versus 1Q15, thanks to the ongoing commitment to developing third-publisher portfolios;
  • international activities achieved revenue of 2.8 million euro, basically in line with 1Q15 (2.8 million euro);
  • revenue from digital marketing services (3.3 million euro), transferred to Magazines Italy on 1 January 2016[2], grew by 5.2%, as a result of the gradual expansion of the range of offers that had started in 2015.

EBITDA for the Magazines Italy Area, net of non-recurring items, improved considerably by approximately 11%, rising from 6.2 million euro to 6.8 million euro, driven by the positive revenue trend after a long chain of negative quarters, and by the effective review of the publishing structure and of promotional activities, implemented while retaining the traditional focus on the publishing quality of the titles. The quarter saw a significant reduction in industrial costs, achieved also as a result of the renegotiation of printing contracts.

  • MAGAZINES FRANCE

In 1Q16, Mondadori increased its market share in France to 10.3% (Kantar Media, figures in terms of volume at February 2016), confirming its position as the second-largest player in the magazine advertising market.

In the reporting period, revenue from Mondadori France amounted to 77.1 million euro, down by 3.5% versus 79.9 million euro in 1Q15 (on a like-for-like basis in terms of publications, revenue would show a drop of 2%, basically confirming the -1.9% of 2015).

Specifically:

  • circulation revenue (making for 74% of the total) lost 3.4% versus 1Q15: revenue from subscriptions (53% of circulation revenue) was basically steady (-0.2%, +0.6% on a like-for-like basis), partly offsetting the drop by the newsstand channel (-7.5%), confirming the opportunity to continue investments in this channel;
  • advertising revenue edged down by an overall 0.7% versus 1Q15, as a result of the positive trend in digital revenue, which increased by over 20% (accounting for approximately 20% of the total), offsetting almost entirely the drop in print advertising (-6.9%).

The total number of readers of Mondadori France magazines reached 9.9 million unique users (Médiamétrie Netratings, February 2016), up by approximately 13% versus the same period of 2015.

EBITDA, net of non-recurring items, came to 4.3 million euro, down by 8.4% versus 1Q15, due mainly to M&A costs (0.4 million euro). In keeping with the positive performance of 2015, digital activities enjoyed positive margins in 1Q16, increasing versus 1Q15.

  • RETAIL

In 1Q16, the Retail Area revenue rose to 44.4 million euro, up by +0.8% versus 44.1 million euro in 1Q15, thanks mainly to the growth of the franchised channel (+3.7% on a like-for-like basis), to direct bookstores (+4.5% on a like-for-like basis) and to the basically steady performance of Megastores, which more than offset the structural decline of the book clubs (-10.4%) and the drop in the online segment (-10.1%), due primarily to the reduction in special offers designed to improve profitability.

In 1Q16, Mondadori Retail EBITDA, net of non-recurring items, came to -1.8 million euro, improving slightly versus -1.9 million euro in 1Q15.

OUTLOOK FOR THE YEAR
The Group’s positive performance in the first quarter confirmed the expectations previously announced on a like-for-like basis; including the effects of the completion of the Rizzoli Libri transaction (consolidated as from 1 April 2016), and of the agreement on the acquisition of Banzai Media Holding (the contribution of which will be included basically in the second part of the year), it is reasonable to expect for the current year a growth of around 14% in revenue versus 2015 and of approximately 30% in operating EBITDA.

These estimates include the expected synergies in the current year from the integration of Rizzoli Libri, but exclude the contribution of Marsilio Editori and the Bompiani BU, which will be disposed of within the established deadlines, therefore not consolidated, in accordance with the provisions of the Antitrust Authority on 23 March 2016.

The net financial position, including the effects of both extraordinary transactions and of the planned disposals, is expected to increase versus 31 December 2015, with a NFP/EBITDA ratio of around 3.5x/3.6x, lower than the bank covenant of 4.5x.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

CLOSING OF THE ACQUISITION OF RCS LIBRI
As previously disclosed to the market on 14 April 2016, Mondadori Group, following the go-ahead from the relevant Authorities, completed the acquisition of RCS Libri S.p.A. (today Rizzoli Libri S.p.A.) through its subsidiary Mondadori Libri S.p.A., in execution of the agreement signed and disclosed to the market on 4 October 2015. The scope of the transaction includes the entire equity interest (99.99%) held by RCS MediaGroup S.p.A. in RCS Libri S.p.A., including the underlying subsidiaries, and the exclusive ownership of all the trademarks in the books segment, including Rizzoli. The price of the transaction, which incorporates certain contractual adjustments, is 127.1 million euro, settled in cash through a dedicated credit line made available to the Group.

Under specific contractual clauses, the price may be subject to adjustments of up to +/-5 million euro, if certain financial targets are met in 2015, as resulting in the 2015 financial statements of RCS Libri S.p.A., which will be determined and disclosed in accordance with the contractual agreements. The agreement also provides for an earn-out of up to 2.5 million euro to RCS MediaGroup S.p.A., based on the achievement in 2017 of specific results in the Books Area of Mondadori Group.

AGREEMENT ON THE ACQUISITION OF BANZAI MEDIA HOLDING
As previously disclosed to the market on 10 May 2016, Arnoldo Mondadori Editore S.p.A., following the meeting of the Board of Directors chaired by Marina Berlusconi, signed an agreement with Banzai S.p.A. on the acquisition of Banzai Media Holding S.r.l., the vertical content division of the Banzai Group.

The transaction provides Banzai Media Holding an enterprise value of 45 million euro, split up into a fixed component of 41 million euro and an earn-out of 4 million euro.

The acquisition price at closing – net of an estimated net normalized financial debt of 16.4 million euro (including financial payables to the parent Banzai S.p.A. and 3.3 million euro for deferred price components related to certain investments) – is 24.6 million euro. The earn-out will be paid to Banzai S.p.A. if certain established results for the 2016-2018 three-year period are met.

§

Mention should be made that, following entry into force of Legislative Decree no. 25 of 15 February 2016, which implemented the latest European regulations on transparency requirements, the previous disclosure obligations of quarterly results to the market no longer apply. The interim report on operations of Arnoldo Mondadori Editore S.p.A. at 31 March 2016, and the following ones, are, therefore, to be considered prepared on a voluntary basis by the Company.

The interim report on operations at 31 March 2016 will be made available at the Company’s registered office, on the authorized storage device (www.1Info.it) and on www.gruppomondadori.it (Investor Relations section), within the time limits previously provided by law. The documentation relating to the presentation of the results at 31 March 2016, will be made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investor Relations section of the Company’s website www.gruppomondadori.it.

§

The Executive Manager responsible for the drafting of the corporate accounting documentation – Oddone Pozzi – hereby declares, pursuant to Art. 154 bis, par. 2, of the Finance Consolidation Act, that the accounting documentation contained in this press release corresponds to the Company’s accounting entries, books and results.

[1] Consolidated as from 1 July 2015 following the acquisition by Mondadori of 50% of the Gruner+Jahr/Mondadori S.p.A. joint venture, today Mondadori Scienza S.p.A.

[2]On 1 January 2016, following reorganization, Digital Marketing Services were transferred to Magazines Italy (previously included in Other Business, Corporate and Digital Innovation); accordingly, the Area’s income statement has been reclassified, for information sake, also in the same quarter of 2015

The Board of Directors approved the interim report at 31.03.2015

CONSOLIDATED NET REVENUES AT EURO 251.7 MILLION: -6.2% AGAINST EURO 268.3 MILLION OF 31.03.2014

EBITDA BEFORE NON RECURRING ITEMS AT EURO 7.5 MILLION UP 48.8% AGAINST EURO 5 MILLION OF 31.03.2014

CONSOLIDATED EBITDA AT EURO 5.9 MILLION: +4.7% AGAINST EURO 5.6 MILLION OF 31.03.2014

CONSOLIDATED NET RESULT NEGATIVE FOR EURO 4.7 MILLION UP AGAINST THE LOSS OF EURO 6.4 MILLION OF 31.03.2014

NET FINANCIAL POSITION AT EURO -319.2 MILLION REMARKABLY UP AGAINST 31.03.2014 (EURO -396.5 MILLION) DUE TO THE SIGNIFICANT CASH GENERATION REGISTERED IN THE LAST TWELVE MONTHS (EURO -291.8 MILLION AT 31.12.2014)

CONFIRMED PROJECTED SHARP INCREASE IN EBITDA FOR 2015; ESTIMATED UPTURN IN NET FINANCIAL POSITION

  • Consolidated net revenues at  Euro 251.7 million: -6.2% against Euro 268.3 million of 31.03.2014
  • EBITDA before non recurring items at Euro 7.5 million up 48.8% against Euro 5 million of 31.03.2014
  • Consolidated EBITDA at Euro 5.9 million: +4.7% against Euro 5.6 million of 31.03.2014
  • Consolidated net result negative for Euro 4.7 millionup against the loss of Euro 6.4 million of 31.03.2014
  • Net financial position at Euro -319.2 million remarkably up against 31.03.2014 (Euro -396.5 million) due to the significant cash generation registered in the last twelve months (Euro -291.8 million at 31.12.2014)
  • Confirmed projected sharp increase in EBITDA for 2015; estimated upturn in net financial position

The Board of Directors of Arnoldo Mondadori Editore S.p.A., held on today’s date and chaired by Marina Berlusconi, examined and approved the interim report at 31 March 2015 presented by the CEO Ernesto Mauri.

GROUP PERFORMANCE AT 31 MARCH 2015
In the first quarter of 2015 net consolidated revenues amounted to euro 251.7 million,
down 6.2% against euro 268.3 million of the same period in 2014.

Consolidated EBITDA totalled euro 5.9 million, up 4.7% against euro 5.6 million of 31 March 2014. The recovery in profitability is even more significant net of non-recurring items (reflecting a negative impact on the result of the quarter for approximately euro 1.5 million mainly due to restructuring costs); EBITDA before non-recurring items registered growth by over 48%, increasing from euro 5 million of the first quarter of 2014 to euro 7.5 million of the first quarter of 2015, with a percentage incidence on revenues rising from 1.9% to 3%.

This performance is the result of the implementation of a rigorous policy targeting the reduction of the main cost items:

  • reduced cost incidence on sold items obtained in the majority of the business areas: specifically in the Books Area due to a more effective management of operating processes, and in the Retail Area;
  • the reduction in fixed costs is essentially consistent with the reduction in revenues and was obtained through the implementation of a cost containment policy on third party services and rents;
  • the number of employees at 31 March 2015 (3,083 employees) was reduced by 187 people (-5.7%) against the first quarter of the previous year, due to the ongoing re-organization of the company structures; cost of personnel dropped consequently by 6.7%.

The result obtained confirms, with a remarkable acceleration, the Group’s improved efficiency resulting from the actions undertaken in the last two years, aimed at re-defining the industrial structure and organization.

In the first quarter of 2015 consolidated EBIT amounted to euro 0.7 million, up against euro 0.1 million posted in the same period of the previous year, as a result of increased EBITDA and reduced amortization and depreciation (from euro 5.5 million to euro 5.2 million).

Consolidated profit before taxes is negative for euro 3.8 million against euro -5.9 million at 31 March 2014; in the first quarter of 2015, financial costs amounted to comprehensively euro 4.4 million, considerably down against euro 6 million of the same period of the previous year, as a result of reduced average net debt for the period and average total cost.

Consolidated net result, after minority interest, is negative for euro 4.7 million, up against a loss of euro 6.4 million registered at 31 March 2014.

The Group’s net financial position at 31 March 2015, equal to euro -319.2 million, increased substantially against euro -396.5 million of 31 March 2014 as a result of the significant Group’s cash generation in the last twelve months and it includes the effects of the seasonal fluctuations typical of the business (euro -291.8 million at 31 December 2014).

At 31 March 2015, cash flow from operations in the last twelve months is positive for euro 56.6 million (euro 47.2 million at 31 December 2014); cash flow deriving from operations (after outlays relative to financial costs and taxes for the period) is equal to euro 28.6 million, continuing the rising trend registered in the two previous quarters (euro 18.8 million at 31 December 2014 and euro 9.8 million at 30 September 2014).

Cash flow from extraordinary operations is positive for euro 48.7 million (euro 52.6 million in 2014) despite outlays for restructuring costs (euro 18 million) and is mainly attributed to the Company’s capital increase transaction (June 2014) and the capital gain deriving from the transfer of an asset in the retail area (December 2014).

BUSINESS AREAS

  • BOOKS

In the first quarter of 2015 the trade Books market in Italy posted a 2.9% reduction (GFK at March): in this context the Mondadori Group confirmed its leadership with a 24.9% market share, essentially maintaining the share in line with the previous year. In the period the Group has 4 titles in the ranking of the 10 bestselling books.

In the first quarter of 2015 revenues in the Books Area amounted to euro 55.8 million, down 1.8% against euro 56.8 million of the same period in 2014.

Revenues from e-books grew by 23% against 31 March 2014.

EBITDA of the Area dropped from euro 1.3 million in the first quarter of 2014 to euro 0.3 million as a result of a greater incidence of restructuring costs (euro 2.3 million in 2015 against euro 0.2 million in 2014), mainly concentrated in the first part of the year; net of non-recurring items, despite dropping revenues, EBITDA increased by 87.8%, up from euro 1.4 to euro 2.7 million, as a result of a more effective management of operating processes deriving from the radical revision of the Trade Area. Concurrently, the actions aimed at reducing fixed costs and cost of personnel have continued.

  • MAGAZINES ITALY

As for magazines Mondadori confirms its leadership with a 31.8% market share.

In the first quarter of 2015 overall revenues of the Magazines Italy Area – which, following the transfer of advertising sales activities to Mediamond, also includes the activities of the Advertising Area – amounted to euro 74.6 million, down 11.9% against euro 84.7 million of the first quarter of 2014 (-11.2% on a like-for-like basis).

Revenues from circulation – down 11.3% (-9.8% on a like-for-like basis) – was influenced by the rigorous policy implemented for the selection of the most profitable initiatives, a different scheduling of add-on sale activities and, also, by the performance of the markets of reference.

Revenues from advertising sales in the printed media dropped by 5.7% (-5.1% on a like-for-like basis) against a market dropping by 6.2% (source Nielsen, data at February); advertising sales in web sites (-5.1%) showed a performance essentially in line with the trend registered in the market of reference (-5.3%: source Nielsen; data at February).

Revenues from international activities posted a performance essentially in line with the previous year (+0.2%).

In the period Grazia Turkey was launched, which increased to 24 the number of the international editions of the magazine. After one year of publication, the first international edition of Il mio Papa was launched last March in Germany (with circulation also in the German area of Switzerland, Austria and Liechtenstein). As of today’s date agreements for a total of 10 international editions of the magazines have been stipulated.

EBITDA of the Area dropped from euro 6.9 million to euro 6.3 million, down 9.2% due to advertising sales, whose margin was reduced by euro -1.5 million against euro -0.6 million of the first quarter of the previous year in which non-recurring items, amounting to approximately euro 1 million, reflected the effect of the transfer transaction to Mediamond; net of non-recurring items, EBITDA of the Area increased by 9.5% as a result of the important re-organization implemented in the editorial and operating structures, despite the significant revenue reduction determined by market conditions and the implementation of rigorous policies for the selection of projects.

  • MAGAZINES FRANCE

In France, the magazines market showed a dropping trend for advertising sales (-7.7%; source Kantar Media, data at February) and circulation (newsstand channel -6.5% at March; internal source). In this context revenues of Mondadori France amounted to euro 79.9 million, down by 2.2% against euro 81.7 million of the first quarter of 2014.

The reduction in revenues, reflecting market performance, was mitigated by the positive performance of subscriptions (+0.4%) and increased advertising sales in the digital area (+26%).

Reported EBITDA, equal to euro 4.8 million, was down by 7.2% (euro -0.4 million) against the first quarter of 2014.

Mondadori France continued the process for the rationalization of structures and the implementation of the policy targeting editorial cost containment. These actions are expected to be maintained throughout 2015 with a view to further adjusting the organization to the changes occurred in the market, limiting also the impact of the increased mail tariffs associated with the management of subscriptions and a few investments in promotions.

Net of non-recurring items, EBITDA is down by euro 1.1 million against the first quarter of the previous year, the period benefiting from the “Hollande scoop” by the Closer magazine.

  • RETAIL

In the first three months of 2015, the Retail Area posted revenues of euro 44 million, down by 6.8% against euro 47.2 million of the same period of the previous year, also as a result of the transfer completed in 2014 of the flagship store located in corso Vittorio Emanuele in Milan.

The breakdown of store revenues shows the predominance of books (77% of the total) with a better performance than the reference market by approximately 1 percentage point.

The revenues of the channels showed the positive performance of direct bookstores (+4%), a slight reduction in the franchising segment (-3.2%), a steady performance of Megastores net of the transfer of the flagship store of corso Vittorio Emanuele in Milan, and an increase in online sales (+12%), while the performance of the Bookclubs continued to reflect the expected structural downturn (-13.5%)

In the period Mondadori Retail posted EBITDA, net of non-recurring items, equal to euro -1.9 million, sharply up (+44.1%) against euro -3.4 million of the corresponding period in 2014.

This increase, compared to the first three months of 2014, cut across the majority of the sales channels.

Reported EBITDA improved remarkably against the same period of the previous year, when it included restructuring costs for euro 0.3 million.

  • RADIO

In the first three months of 2015, R101, though posting reduced advertising sales compared to 2014 (gross advertising sales equal to -4.8%), reached total revenues for euro 2.9 million, up 9.5% against euro 2.6 million of the first quarter of 2014, including revenues relative to the television channel that started operations in June of last year.

EBITDA, net of non-recurring items, negative for euro 1.3 million (euro 1.2 million in the first quarter of 2014), reflected higher costs of promotion of the television channel, compensated by the cost reduction actions implemented in the technical and artistic area.

EBITDA including non-recurring items increased from euro -1.2 million of the first quarter of 2014 to euro -1.1 million of the first quarter of 2015, benefiting from the positive contribution deriving from the transfer of a transmission system for euro 0.2 million.

  • DIGITAL

In the quarter total revenues from digital activities were up 9.3% against 31 March 2014 (euro 12.6 million against euro 11.5 million at 31 March 2014). The incidence of digital activities on the Group’s total revenues grew to 5% against 4.3% of the first quarter of last year.

Digital marketing services, including the integration of traditional direct marketing services offered by Cemit with those promoted by Kiver, posted revenues of euro 3.1 million, down from euro 3.4 million of 2014 as a result of delayed orders relative to Cemit traditional activities and only partially compensated by the launch of digital and multimedia products.

Purely digital activities cutting across all business areas posted increased revenues by 16% against the first quarter of 2014.

OUTLOOK FULL YEAR 2015
Based on the Group’s performance in the first months of 2015 and the optimization actions targeted to operating processes and cost structure of all business areas, as well as the measures aimed at mitigating the downturn in revenues resulting from market performance, it is reasonable to confirm the 2015 estimate of a sustained growth in Group’s operating EBITDA as already indicated in the presentation of the financial statements at 31 December 2014. In parallel, activities focused on a rigorous evaluation of the possible disposal of the Group’s non-core assets are continued.

Consistently with the description above and notwithstanding the higher investments and eventual changes in the Digital area, the net financial position is also expected to improve towards 2014 year end.

This interim report at 31 March 2015 is made available at the Company’s legal offices, on the authorized storage device (www.1Info.it) and on www.gruppomondadori.it (Investor Relations section). The minutes of the ordinary Shareholders’ Meeting held on 23 April 2015 is also made available at the Company’s legal offices, on the authorized storage device (www.1Info.it), and on www.gruppomondadori.it (Governance section ). The documentation relating to the presentation of the results for the interim report at 31 March 2015, will be made available through the authorised storage mechanism 1Info (www.1info.it) and in the Investor Relations section of the company’s website www.gruppomondadori.it

The Executive Manager responsible for the drafting of the corporate accounting documentation – Oddone Pozzi – hereby declares, pursuant to Art. 154 bis, par. 2, of the Finance Consolidation Act, that the accounting documentation contained in this press release corresponds to the Company’s accounting entries, books and results.

Board of Directors approves interim report for the first quarter of 2014

  • Consolidated revenues of €268.3 million: -8.3% on the €292.7 million at 31 March 2013 (-6.5% on a like-for-like basis)
  • Strong growth in gross operating profit thanks to action on the products and cost structure: €5.6 million compared with the -€4.6 million at 31 March 2013
  • Consolidated net loss of  -€6.4 million compared with -€15.3 million at 31 March 2013
    Confirmation of the forecast for a marked improvement in profitability for the full year 2014

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first quarter of the year to 31 March 2014, as presented by the Chief Executive, Ernesto Mauri.

THE MARKET SCENARIO

At the macroeconomic level, there were still no signs of an improvement in Italy or France, the countries of reference for the Mondadori Group, in the first months of the year.

In particular, there was a continued downturn in both the book and consumer magazine markets compared with the same period of the previous year.

In Italy:
– the trade books market was down both in terms of copies sold and value (-6.8% and -5.3% respectively);
– in the two-month period January-February the magazine market was affected by a further decline in advertising spending (-14.7%): and both circulation and add-on sales were also down, by -12.8% and -19.3% respectively.

In France:
– circulation, only in the newsstand channel, was down by 8.1%;
– advertising was down by 10% (internal data).

MONDADORI IN THE FIRST QUARTER 2014

The consolidated revenues of the Mondadori Group were down by 8.3% to €268.3 million: on a like-for-like basis, taking account of the attribution from 1 January 2014 of the advertising sales to Mediamond, consolidated on a net equity basis, the reduction was of -6.5%.

Despite the difficult context, all of the Mondadori businesses – in particular Magazines Italy – performed better than in the corresponding period of the previous year, with the single exception of books that will have a much stronger editorial programme in the second half of the year.

The activities carried out in the period on the products and the results of actions taken to cut operating costs have resulted in an improved consolidated EBITDA that was up €10.2 million on the same period of 2013 (+€ 5.6 million in 2014 compared with -€4.6 million in 2013).

Moreover, net of non-recurring items, there was also an improvement in gross operating profit, which rose from €0.1 million to €5 million.

The results achieved to date with the marked reductions in operating costs, which have focused on industrial, logistical and editorial costs, make it possible to forecast an improvement in the savings objectives indicated in the plan (€100 million by the end of 2015). In terms of personnel, in the first quarter there was a further reduction of 166 people (-4.8%) and the total headcount is currently 356 down on the figure at 31 March 2013 (-9.8%).

GROUP PERFORMANCE IN THE PERIOD TO 31 MARCH 2014

The following table presents an overview of the figures for the first quarter of 2014. It should be remembered that the figures are not comparable due to the contribution of the advertising sales business activity of Mondadori Pubblicità S.p.A. to Mediamond S.p.A., which became effective from 1 January 2014.

Consolidated net revenues came to €268.3 million, a fall of 8.3% on the €292.7 million of Q1 2013; net of the effects of the contribution of the advertising sales business the fall was of 6.5%.

Consolidated gross operating profit net of non-recurring items showed an improvement of €5 million, compared with the €0.1 million of the previous year.

Consolidated gross operating profit rose to €5.6 million, compared with a loss in the same period of the previous year of €4.6 million.

Consolidated profit before taxation showed a loss of -€5.8 million (-€15.6 million in 2013) with amortisations of €5.5 million (€6 million in 2013) and financial charges of €5.9 million (€5 million in 2013).

There was a consolidated net loss for the period of €6.4 million, compared with -€15.3 million in 2013.

The Group’s net financial position shows a deficit of €396.5 million, compared with -€363,2 million at 31 December 2013, but in any case lower than the same period of last year. The period was significantly affected by the restructuring costs of the previous year and investments in the educational area.

Information regarding personnel

At 31 March 2014 permanent and temporary staff in the companies of the Group, totalled 3,270 and total labour costs for the period amounted to €59.3 million (-16.7% million compared with €71.2 million on the same period of 2013).

Total like-for-like headcount, taking account of the integration of advertising sales in Mediamond (that involved the transfer of 45 employees), was down by 8.7% (or 311 units); labour costs, also net of the impact of restructuring, was down by 11% (or €7.7 million).

These reductions are the result of a range of reorganisation and restructuring operations, begun between 2012 and 2013, the effects of which are being felt month by month.

Two other operations, finalised in March, should also be noted: the sales of the magazine titles Ciak and PC Professionale and the closure of the Mondadori Direct logistics centre in Brescia with the consequent concentration of operations at the Mondadori book depot in Verona.

· BOOKS
In the first quarter of 2014, there was a downturn in the trade books market, both in terms of copies sold and revenues (-6.8% and -5.3% respectively; Source: Nielsen), compared with the same period of 2013.

The Mondadori’s market share remained stable, confirming the Group’s market leadership.

First quarter revenues for the area came to €56.8 million, a 10.1% fall on the €63.2 million in Q1 2013.

In trade books, the Group’s first quarter performance, with revenues down by 9.6% on 2013, was affected by evident difficulties in certain channels, in particular large-scale retail, and in the paperback segment, as well as an editorial programme that was not especially strong.

In any case, the list of the top selling 2,500 titles in the quarter, which accounts for 42% of the market in terms of copies, saw the Mondadori Group accounting for over a third, thanks to positive results in both bookstores and large-scale retail. In the top 10 bestsellers list for the quarter, the Mondadori Group was responsible for the publication of 4 titles.

Also of significance in the trade area was the launch, at the beginning of May, of the first ten titles in the Flipback format, a new book product that is one of the most important new editorial initiatives of the year thanks to the particularly innovative characteristics: the size, the paper and the way in which it is read.

In e-books, the growing trend in download revenues continued (+57% on the previous).

As regards educational books, the first quarter was characterised by the seasonality of the business and consequently revenues in the period were not significant.

The trend in the market of reference and the consequent trend in revenues of the Book Area resulted in a fall in gross operating margins compared with the first quarter of 2013. However, the effect of the downturn was mitigated thanks to specific efforts to reduce costs in a number of areas, in particular production and logistics. The figures for the first quarter were significantly affected also by the investments to reconfigure the Mondadori Education catalogue, that markedly increased the number of new titles produced during the period.

· MAGAZINES ITALY
The first three months of 2014 saw the evident effects of the rationalisation policy for the magazine portfolio (the closure of the titles published by the joint-venture ACI-Mondadori and the sale of PC Professionale and Ciak), continuing improvements to product quality (the relaunch of CasaFacile and redesign of Panorama) and the launch of a new weekly Il mio Papa.

All of this, along with the cost reductions made in recent years and, in particular, in 2013, resulted in a marked improvement in gross operating profit, which rose from 2.6 to €7.5 million compared with the first quarter of 2013, despite the fall in revenues.

The Magazines Italy Area generated Q1 2014 revenues of €81.3 million, an 8.4% fall on the €88.8 million of Q1 2013.

In particular:
– circulation revenues for Mondadori titles were affected by the negative scenario and, despite out-performing the market (-12.8%: internal data: Press-Di), were down by 5.6%, net of titles closed or sold;
– advertising revenues were down by 7.4%, in a market that lost 14.7% (Source: Nielsen, February);
– there was substantial growth in advertising sales for the web sites of the magazine brands (+24%), despite a market that was down by 6.3% (Source: Nielsen, February);
– add-on sales contained the decline in revenues to 14.4%, in a market that lost 19.3% (internal data: Press-Di).

International activities

Mondadori International Business ended the first quarter of 2014 with revenues that were in line with those of the previous year. The slight fall in revenues from royalties related to licensing was compensated by bigger commissions on advertising sales made on behalf of foreign partners in the Italian market (total sales in the quarter were up by 9% on the same period of 2013).

Among the editions launched in the last year, of particular note is the performance of the first edition of Icon, distributed in Spain in partnership with Gruppo Prisa since last November. In terms of advertising sales, Mondadori International Business has expanded the number of foreign publishers for which it operates as an agent.

In terms of investments, Mondadori Seec Advertising Co. Ltd, the advertising sales company for Grazia China, recorded a 12% growth in advertising revenues in the first three months of 2014 compared with the same period of 2013 and from April the frequency has been increased to weekly; Mondadori Independent Media, the joint-venture that publishes Grazia in Russia, recorded first quarter revenues in line with the previous year, despite the difficult political situation in the country that in part had an impact on advertising spending; Attica Publications, Greece’s leading magazine publisher and a major radio broadcaster, benefitted in the first quarter in advertising sales that were up compared with 2013 (+5% in print and +4% on radio).

· MAGAZINES FRANCE
The Magazines France Area generated Q1 revenues of €81.7 million, a slight reduction (-1.6%) on the €83 million of Q1 2013; given the change of scope, due to the sale of Le Film Français in December 2103 and an additional issue in 2014, compared with the previous year, of Télé-Star, Télé-Poche and Auto-Plus, the fall in revenues is steady at 2.2%.

In the first quarter of the year circulation revenues, which account for around 73% of the total for the period, were stable (-0.1% on a like-for-like basis). Like-for-like newsstand sales were down by 1.4%, an excellent result given the current state of the market (-8.1% at the end of March; Source: Mondadori France Diffusion): of particular note were the sales of the weekly Closer (+25% in terms of volume) and the monthlies Pleine Vie (+24%) and Top Santé (+25%) and the positive reactions to the recent launch of new products, such as 750g, Slam and Histoire & Jeux. Subscription revenues, meanwhile, were stable (-0.8% on a on a like-for-like basis).

In terms of advertising sales, in the context of a difficult market (-10%; internal source), Mondadori recorded a 10.5% drop in revenues, on a like-for-like basis.

In the first quarter of 2014, Mondadori France, significantly increased its digital revenues (+41.3% on 2013); the growth came from the activities of the properties (+40.6%) as well as from the pure player NaturaBuy (+46%). There was also a significant increase in traffic, with 7.8 million uniques, also as a result of the scoop by Closer.

Advertising sales for the sites, managed internally since January 2014, recorded 39% growth in the first quarter and now accounts for 9% of the total advertising revenues of Mondadori France.

A number of initiatives launched in recent years now make it possible to realise significant economies of scale, in particular with regard to overheads, industrial costs and the cost of managing subscriptions, making it possible to increase gross operating profit, despite a fall in revenues.

In terms of cost reductions, efforts continue to improve efficiency, in particular, in the first months of the year, a voluntary redundancy plan was introduced (with the aim of reducing the headcount by between 10% and 15% in 3 years) and well as a plan to bring the entire staff together under one roof (in December 2014).

· ADVERTISING
The consolidated figures from the area are not comparable given that, as already mentioned, from 1 January 2014, the advertising sales business of Mondadori Pubblicità S.p.A., a subsidiary of Arnoldo Mondadori Editore SpA, were contributed to Mediamond SpA, the 50-50 joint-venture set up in 2009 by Mondadori Pubblicità SpA and Publitalia ’80 SpA. For Mondadori this operation was part of a wider process of innovation of the business model that will contribute to the further affirmation of the Group’s leadership thanks to a new approach, supported by significant synergies and models of offer more suited to the new conditions of the market.

The revenues from the activities of the current Mondadori Pubblicità amounted to €3.9 million; which, on a like-for-like basis and net of the business contributed to Mediamond, were slightly up.

Gross operating profit, that includes the pro-quota results of Mediamond, showed a marked improvement compared with the first quarter of 2013, highlighting the positive effects of the aforementioned operation.

In particular, the first quarter revenues of Mediamond, which is consolidated on an equity basis, taking account of the revenues generated by Mondadori Pubblicità in the same period of 2013, were up by 12.3%.

Specifically:
– the print and radio segments (the part contributed by Mondadori Pubblicità) recorded an increase in revenues of 8.5% (-7.4% for print, compared with a market average of -14.7% at the end of February, and revenues that more than doubled for radio, also as a result of the big changes compared with the previous year following the addition to the portfolio of new radio stations, including Radio Italia, from mid-April 2013, Radionorba and Radio Subasio, at the end of 2013, and Radio Sportiva, from the beginning of 2014);
– advertising sales for the web increased by 24% in a market that was down by 6.3% (Source: Nielsen, February).

  • RETAIL

The market of reference for the Retail Area was particularly affected by negative trends of the book market and of consumer electronics, which saw a general downturn in the period, with the single exception of e-readers, that saw double-digit growth, but always within strict limits.

In Q1 2014 Retail Area – which as 19 directly-owned bookstores, 315 franchised bookstores, 186 edicolè, 8 multicenters and 21 club bookstores, and the e-commerce activities of InMondadori.it – generated revenues of €47.2 million, a fall of 6.9% on the €50.7 million of the same period of 2013.

Of particular note during the period was the market share of Retail Area in the book sector which rose from 13.7% in 2013 to 14.3% in 2014, also as a result of renewed communication and promotional activities.

There was a continuation of the negative trend in the club channel that has seen a fall in revenues of around 20%. And, finally, also the sales generated through the InMondadori.it site were down by 4.7%.

In terms of gross operating profit, compared with the same period of last year, the franchise channel remained profitable and the directly-owned outlets (bookstores and multicenters) saw a consistent recovery in margins thanks to the closure of a number of non-profitable bookstores.

In the club channel, the effects deriving from the rationalisation of the network of stores and recruitment efforts made it possible to maintain a level of profitability comparable to that of the previous year.

Also the e-commerce channel benefitted in the first quarter from the reductions in structural costs.

In the context of a generalised recession, a number of activities have already been put in place aimed at the recovery of market share and profitability. In particular:
– the progressive revision of the network and the format of the stores;
– communication activities and advertising aimed at sustaining sales and building market share, in particular for books;
– the ongoing rationalisation of Club recruitment activities (-13%);
– strict cost controls on the management of sales outlets and the renegotiation of rents;
– ongoing reorganisation efforts: the application of solidarity contracts (20% compared with 10% in 2013) at the central offices in Milan and Rimini and the exit from the activities of the business of the management of logistics for the club and on-line channels, now run by the parent company.

  • RADIO

After a significant downturn in 2013, the advertising market in Italy started the year weakly, recording a further slide, in February (Source: Nielsen) of 4.3% with all media in negative territory with the sole exception of radio, which grew by 7.5%.

In this context, advertising sales for R101 generated revenues of €2.6 million, in line with the same period of the previous year.

Thanks to a series of actions to review and optimise the structures and the different timing of promotional support and communication, gross operating margins while remaining negative, nevertheless improved.

The end of March, confirming the importance attributed to the radio station within the Group, saw the presentation of the new R101 with a renewed editorial line, a new logo, a new pay off “the Music” and a series of new features for listeners. These changes were accompanied by intense promotional activities in support of the new format, with the launch of partnerships with TV programmes and the reinforcement of links with Italian and international music, thanks to the involvement with tours by a number of internationally renowned artists and groups

  • DIGITAL

During 2013 the Digital Innovation Area was set up with the aim of not only accelerating growth in the digital market, but also structuring the processes of innovation and identifying new business development opportunities. The new structure is engaged in the development of marketing services and e-commerce activities, as well as providing support for the activities of Cemit Interactive Media SpA.

In the first months of 2014, in line with already established programmes, efforts continued to strengthen the various teams with the hiring of new resources dedicated to CRM, the spread of the Mondadori loyalty card, marketing services and the technological development of new projects to provide direct support for existing digital activities inside the book, magazine and retail areas.

During the period, the activities of the recent acquisition Anobii was included in the scope of the area.

In the first quarter of the year turnover remained stable compared with the first months of 2013, as a result, on the one hand, of significant growth in e-books (+57%) and the web sites of the Italian magazine titles (+24%) – including Donnamoderna.com (+23.8%), Grazia.it (+43.5%) and Panoramauto.it (+5.2%) – and in France (+39%); and, on the other hand, a reduction in the revenues of Cemit and inMondadori.it.

EXPECTATIONS FOR THE FULL YEAR

In a market context that is still not showing signs of improvement, the positive results of the first quarter, the result of actions taken on the products, the reorganisation and cost reductions, make it possible to forecast a higher level of profitability (EBITDA) for the full year than 2012, confirming what was already stated at the time of the presentation of the 2013 Annual Report.

***

The Board of Directors of Mondadori also approved the 2013 Sustainability Report, prepared according to the guidelines of the GRI standard G3.1, with the application level B+.

***

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

The documentation relating to the presentation of the results for the first quarter of 2014 is available at the company’s registered office, on the web site www.borsaitaliana.it and on the web site www.gruppomondadori.it (Investor relations section).

Board of Directors approves interim report for the first quarter of 2013

  • Consolidated revenues of €292.7 million: -10.8% compared with the €328.1 million at 31 March 2012
  • Consolidated gross operating loss of €4.6 million (break even net of restructuring costs) compared with a gross operating profit of €15.2 million at 31 March 2012
  • Consolidated net loss of €15.3 million: compared with a net profit of €2.6 million at 31 March 2012
  • Net financial position of -€310.6 million compared with -€301.8 million at 31 March 2012 and -€267.6 million at the end of 2012
  • Cost cutting and restructuring plan extended: with target savings of €100 million by 2015

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first three months of the year to 31st March 2013, as presented by the chief executive, Ernesto Mauri.

THE MARKET SCENARIO
As in previous months, the first quarter of 2013 was characterised by a difficult and uncertain global economic situation. In Italy the prolonged recession continued, with all the main macroeconomic indicators of production, consumer spending and employment levels worsening.

Also in France, there has been a gradual deterioration of the economy, particularly in terms of GDP, which is expected to fall this year, and unemployment, which had already increased significantly in 2012.

The markets in which the Group operates were affected in the period by the current crisis, with marked declines in circulation and magazine advertising sales; also the book market in Italy saw a downturn ​​decrease, albeit to a lesser extent.

GROUP PERFORMANCE IN THE PERIOD TO 31st MARCH 2013
Consolidated revenues amounted to 292.7 million, a fall of 10.8% on the €328.1 million at 31st March 2012.

The consolidated gross operating loss amounted to 4.6 million (break even net of restructuring costs), compared with a gross operating profit of €15.2 million in the same period of the previous year, by also excluding the positive non-recurring items of 2012, the difference, on a like-for-like basis, would be -€5.2 million.

The consolidated operating loss amounted to 10.6 million, compared with an operating profit of €9.1 million in the first quarter of 2012, with amortizations and depreciations of tangible and intangible assets of €6 million (€6.1 million in 2012).

Consolidated pre-tax losses came to 15.6 million, compared with a pre-tax profit of €4.7 million in the same period of last year. During the quarter financial charges amounted to €5 million, compared with €4.4 million in 2012.

The company made a consolidated net loss in the period of €15.3 million, compared with a net profit of €2.6 million at 31st March 2012.

Gross cash flow in the first three months of 2013 amounted to –€9.3 million, compared with €8.7 million in the first quarter of 2012.

The Group’s net financial position went from -€267.6 million at the end of 2012 to -€310.6 million at 31st March 2013 (-€301.8 million at 31 March 2012).

Information regarding personnel
As of 31st March 2013, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,626, a fall of 3.7% (-138 positions) compared with the same period of last year. In the first quarter of 2013 alone, there was a reduction in the headcount of 77.

Similarly, during the first three months of 2013, personnel costs were reduced by 2.5% (-7.5% net of higher restructuring charges) to €71.2 million. The figure for 2012 has been adjusted to take account of the new measures introduced by IAS 19 that came into effect from 1st January 2013, and backdated. In particular, the principle foresees the booking of gains and losses regarding the calculation of severance indemnities in the “Comprehensive income statement”, rather than under “Personnel costs”.

The reduction in headcount and costs is due, essentially, to the effects of the restructuring processes underway, both in the Direct area and, above all, in the companies affected by the early retirement plan that began in October 2012: the parent company Arnoldo Mondadori Editore S.p.A., Mondadori Pubblicità S.p.A. and Press-Di Distribuzione Stampa and Multimedia S.r.l.

Across the Group, both in Italy and in France, the policy of reducing fixed costs through widespread efforts to improve organisational efficiency and specific actions for the simplification of hierarchical levels continues.

· BOOKS
In the first quarter of 2013, the trade books market declined both in terms of both copies (-3.1%) and value

(-4.1%) compared with the first quarter of 2012 (source: Nielsen).

In this context, the Mondadori Group confirmed its leadership with a market share of 25.7% in terms of value (source: Nielsen).

Total revenues generated by the Books Area came to €63.2 million, a fall of 1.6% compared with the first quarter of 2012.

Regarding the performance of the Group’s publishing houses, it should be noted that in the first quarter of 2013 a different editorial programme was developed for Edizioni Mondadori, with the publication in the second and fourth quarter of stronger tiles, including the highly anticipated new novel by Dan Brown, Inferno, published today across the world.

Einaudi ended the first quarter of 2013 with revenues up by 5.2% compared with the same period of last year, and a market share of 6% in bookstores.

At the end of the period Mondadori Electa recorded an increase in revenues of 24.5% compared with the first quarter of 2012: mainly thanks to the success of the exhibition Constantine 313 AD and the excellent performance bookshop revenues.

E-book revenues have doubled since last year, with an excellent performance by romantic fiction and the new book by John Grisham L’ex avvocato. Among the publishing activities was the launch of the series “Quanti” by Einaudi and the digitisation of the work of Gabriele D’Annunzio to mark the anniversary of his birth.

· MAGAZINES ITALY

The difficult macro-economic situation coupled with political uncertainty in the country continue to strongly affect the consumer magazine market, which is experiencing negative trends very similar to the last quarter of 2012. In February, the advertising market saw overall decline in value of 16.5%, with magazines suffering a 21.6% fall (source: Nielsen).

Compared with the first quarter of 2012, there was a distinct lack of homogeneity in the performance of the Mondadori Group’s Magazines Italy area, in particular, there was the closure of Economy, the transformation into a supplement of Flair and a different number of issues for Tv Sorrisi e canzoni, Telepiù and GuidaTV.

The overall decline in revenues in the Area was 14.9%, from €104.3 million in the first quarter of 2012 to €88.8 million this time.

– Circulation revenues were down compared with the previous year, albeit to a lesser degree: 14.1%

(-11% on a like-for-like basis). Among the titles in the portfolio, Chi – after a year-end and January 2013 downturn – improved its circulation in the months of February and March, to settle at a level ​​similar to the previous year.

Donna Moderna, Grazia and TuStyle, after changes, between December and early February, in their respective editors, were all re-launched at the same time last week, with the aim of reaffirming and consolidating Mondadori’s absolute leadership in women’s magazines.

Tv Sorrisi e canzoni remains Italy’s most popular weekly, with sales of 720,000 copies, despite a slight decline (-5%) compared with 2012.

Panorama saw a fall off, even due to the change underway in the circulation mix, but the basic version of the magazine has maintained a positive trend compared with the previous year.

– On the advertising side, the most affected by the current economic climate, revenues in the first quarter of the year saw a like-for-like fall of 22.1% (nominal -23.9%).

– With regard to add-on sales, Mondadori saw a fall of 11, 8%, with a performance that was better than the market which was in sharp decline (-19.1% in terms of value, internal source): the fall in revenues for Mondadori was the result of a precise decision to rationalise the initiatives to minimise the financial risks, with a strong increase in profitability.

– During the first quarter of 2013, the web sites of the Group’s main magazine titles performed very well with an increase in advertising revenue of 10.4%, a performance far superior to that of the market (+5%, source: Nielsen February), and traffic.

In particular, Donnamoderna.com, which grew strongly in March (source: Shinystat), with 11 million unique users remains at the top of women’s sites, Grazia.it, with 1 million uniques; Panorama.it, with 3.2 million unique users; and Panoramauto.it which also has 1 million unique users.

The negative trends in the magazine market, which began in 2009 and worsened in 2012, have led the company to implement a reorganisation plan for the rationalisation of the product portfolio and a review of editorial processes with the closure of 4 monthlies and the television programming unit, resulting in a total of 87 redundancies in the editorial departments of Mondadori.

To this plan should be added the project for the further rationalisation of costs, including industrial costs.

At the same time, work began on the re-launching and repositioning of some titles, including those dedicated to interiors and, after the end of the quarter, of the three most important women’s titles, with the aim of further strengthening Mondadori’s leadership.

International activities
The Group’s international activities, concentrated in the company Mondadori International Business, ended the first quarter of 2013 with an increase in revenues of 12.7% on the previous year.

Licensing: growth was driven by launch in the past 12 months in new editions in the Grazia International Network (South Africa, Poland, Spain and Korea), which contributed to an increase in revenues from royalties (+18.3%).

Advertising: in the first quarter of 2013 advertising sales on behalf of international partners was in line with the previous year thanks to the appeal of the network, which recorded a significantly better performance than the market of reference.

Investments:
– Mondadori Seec Advertising Co. Ltd, the exclusive advertising sales company for Grazia in China, recorded first quarter revenue growth of 17% over the same period of 2012;
– Mondadori Independent Media, publisher of Grazia in Russia, recorded first quarter revenue growth of 3% compared with 2012;
– Attica Publications, confirmed its leadership in Greece, despite the deepening crisis among its competitors. Despite a declining advertising market compared with 2012 (-15% in magazines, -30% in radio and TV), Attica generated results that were in line with the same period of 2012, due to the benefits from the restructuring plan put in place in 2011 (and continued in 2012), and diversification.

Total revenues generated by the Grazia International Network amounted to €27.9 million, an increase of 7.5% on the first quarter of 2012.

· ADVERTISING

Advertising expenditure in the first two months of the year was down by 16.5% compared with 2012, confirming the difficulties recorded in the previous 12 months.

Television continued the negative trend of 2012 (-16.1%), with the exception of a good performance by digital channels. In other media radio was in decline (-17.3%), despite a January almost in line with 2012, as was direct mail (-19%), while outdoor and Internet were up (+5%), even if there are now some signs of a slow down. For print media in general, the situation remains very negative and in line with the last quarter of 2012, an indication that the crisis that has hit Italy in particular shows no sign of loosening its grip. Newspapers were down by -26.1%, while magazines the decline was slightly lower (-21.6%), but with decidedly negative estimates for March and April.

The decline in advertising spending is continuing in all sectors that invest in magazines: there was a sharp drop in the fashion, interiors and auto sectors, while FMCGs, after two years of marked decline, seems to suffer less.

Mondadori Pubblicità ended the first quarter of 2013 with total revenues of €29.9 million, down 29.5% compared with the €42.4 million in the same period of 2012.

Due to the uncertain economic situation in the country, Mondadori weeklies have been affected by the downturn in revenues of its clients and a fall in advertising spending by the top spenders in the main sectors, with the exception of Tv sorrisi e canzoni and TuStyle; for Mondadori monthlies the decline was more modest, also because of the performance of magazines such as Flair, Icon and Interni, which suffered less than the market average, and the positive trend in the cooking system, also thanks to the good performance of the large-scale retail sector;

Radio advertising revenues were down by 25%, in particular R101 was down by -18.8%;

Internet advertising continued to grow (with Mediamond recording an increase of 38% compared with the first quarter of 2012), with excellent results for all the main Mondadori sites.

· MAGAZINES FRANCE

In an economic context that remains challenging, Mondadori France ended the first quarter of 2013 with consolidated revenues of €83 million. On a like-for-like basis, taking into account that the weeklies Télé Star, Télé Poche and Auto Plus benefited in the first quarter of 2012, from an extra issue compared with the first three months of 2013, revenues were down by 9.6%, rather than the nominal -12%.

Circulation revenues in the period, which account for about 72% of the total, were down by 8.1%, with the same number of issues (nominal -10.3%).

Newsstand sales, with the same number of issues, was down by 7.6%, in line with the market (-7.5%; internal source). Strikes at Presstalis, the main operator in distribution, also had an impact on sales.

The brand extension strategy hascontinued in 2013, with the entry into the portfolio of new products tested last year, including Faits Divers à la Une, Des Chiffres et des Lettres, Jeux Closer and Closer-C’est leur histoire. In addition, the Closer increased its spinoffs with the successful launch in February of Closer Teen, the first issue of which sold 58,000 copies.

Always having editorial quality as a priority, the formulas of Grazia, Modes & Travaux, Nous Deux and Sport Auto, have all been updated, and will be followed during the year by the redesign of Auto-Journal and Auto-Plus.

The monthly Science & Vie celebrated its centenary with a special issue enhanced by the re-publication of the first issue which appeared on 1st April 1913.

The last weeks of the first quarter also saw the launch of Nostalgie Jeux, a games magazine produced in collaboration with the radio station Nostalgie, and in the wellness area Vital. A new cooking magazine will be launches soon called 750g, in collaboration with the site www.750g.com.

Finally, the Syndicat des Editeurs de Presse Magazine (S.E.P.M.) awarded Biba for a distinguished “10 years of success.”

Advertising revenues, net of barters and with the same number of issues, were down by 10.3% (nominal -16.1%).

At the market level (source: Kantar Media in February) there was a 7.4% decline in volumes which for Mondadori in the same period was -5.8%.

In the first quarter, Mondadori France continued to invest in digital, where it is present with an aggregate audience of 5 million unique visitors (source: Nielsen). The volume of business rose by 20% in the first quarter, thanks, among other things, to the success of the sites Autoplus.fr, Closermag.fr and Science-et-vie.com, the launch of the new Télé Star and Auto-Journal apps for iPad, the new version of Grazia and Sport Auto for iPad.

Finally, with regard to the recent acquisitions, the site NaturaBuy.fr continued to grow with an increase in transactions of 24% compared with 2012.

· DIRECT

Total revenues generated by the Direct Area Direct in the first quarter of 2013 amounted to €55.8 million, down 4.5% from €58.4 million in the same period of 2012.

The critical economic situation, the continuing decline in consumer spending and the ongoing downturn in the book market (the Area’s main ​​activity) required continuous efforts to reduce costs, review the network and diversify the offer.

In particular, work was done to rationalise the network (now comprising 570 points of sale) with the closure of 12 stores. On a like-for-like basis the directly-controlled bookstore chain, however, saw an increase of revenues of 3%, while the multicentre stores and the chain of franchised outlets maintained an essentially stable performance compared with the previous year.

Work also continued on product diversification and the development of the inMondadori multi-channel strategy, aimed at integrating in a single online and off-line system, which will be completed during the year.

Cemit, the company that operates in direct marketing, in the first quarter of 2013 generated revenues that were in line with those of the previous year, despite operating in a market in marked and sustained decline.

· RADIO

The advertising market in Italy ended the first quarter with a sharp decline in all media (-16.5% in February, source: Nielsen) with the exception of the Internet (+5%), in particular Radio in February saw a fall of 17.3% (January -2.2% and February -27.7%).

In this context, advertising sales for R101, reflecting the heavy decline in the main sectors – Auto, Business (mostly Telecommunications and Finance) and FMCGs (which alone in the quarter account, for 85% of sales) – ended the period in line with the negative trend of the market, with revenues of €2.6 million (advertising revenues for radio, the website and other initiatives), a fall of 18.8% on the €3.2 million euro in the first quarter of 2012.

EXPECTATIONS FOR THE FULL YEAR

In the markets in which Mondadori operates the first quarter of the year confirmed a worsening trend and also at a general level there were no indications of recovery in the short term.

In this context, as already indicated in the presentation of the financial statements at 31st December 2012, the company will pursue a series of activities aimed at recovering profitability in the businesses suffering most, also with a significant process of structural reorganisation and cost reduction, with the investment of important financial and economic resources.

For these reasons the level of profitability of the Group for the year 2013 is expected to be lower than last year.

§

EXTENSION OF THE COST REDUCTION AND REORGANISATION PLAN
Starting in May, Mondadori will accelerate on the organisational review and cost reduction plan in order to achieve a level of profitability compatible with the new size of the markets of reference and to consolidate the company’s leadership in its competitive sector.

The aim of the project, which will be coordinated by a Steering Committee under the direct guidance of the chief executive Ernesto Mauri, is to improve the functioning of the organisational structures to increase the effectiveness of business operations and expand the target of savings to €100 million by 2015.

§

The board of directors also approved the 2012 Sustainability Report, in compliance with the GRI guidelines, with the application level B+.

§

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

§

The report for the first quarter of 2013, approved by the board of directors, will be available at the company’s registered office, Borsa Italiana SpA and on the web site www.gruppomondadori.it (Investor relations section) from today, as will the documentation for the presentation of the first quarter results.

§

The minutes of the Ordinary and Extraordinary Shareholders’ Meeting of 23 April 2013 are available today at the company’s registered office, Borsa Italian SpA and www.gruppomondadori.it (in the Governance section).

Board of Directors approves interim report for the first quarter of 2012

  • Consolidated revenues of €328.1 million: -7.4% compared with the €354.3 million at 31 March 2011
  • Gross operating profit of €15 million: -31.2% compared with the €21.8 million at 31 March 2011
  • Consolidated pre-tax profit of €2.4 million: -52% on the €5 million at 31 March 2011
  • Net financial position of -€301.8 million, an improvement of €33.6 million compared with the end of 2011

The Board of Directors of Arnoldo Mondadori SpA met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first three months of the year to 31st March 2012, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO
In the first quarter of 2012 saw the full confirmation of the elements of structural crisis in the economy, especially in Europe: falling GDP, rising unemployment and the decline in consumer spending have unfortunately worsened compared with the latter part of 2011; the markets a sectors of reference for Mondadori, particularly in Italy, felt the impact of this situation, and were significantly in decline during the period.

GROUP PERFORAMCE IN THE PERIOD TO 31 MARZO 2012
Against this background, in the first three months of 2012 the Mondadori Group’s consolidated revenues were down by 7.4% compared with the same period of last year, in line with the final quarter of 2011.

In terms of profitability, despite a marked fall in consolidated operating profit due to the decline in revenues, Q1 ended with a positive net profit thanks to the lower impact of financial charges and taxation.

Over the coming months, development will continue in digital activities more closely related to the Group’s publishing identity – products, brands, communities – and the process of restructuring carried out in recent years will be extended to face a market situation in which, at present, there are no signs of recovery.

Consolidated revenues amounted to 328.1 million, compared with €354.3 million in the first quarter of 2011.

Consolidated gross operating profit (EBITDA) came to 15 million, compared with €21.8 million in the same period of the previous year.

Consolidated operating profit amounted to 8.9 million, compared with €16.3 million in the first quarter of last year, with amortizations and depreciations of tangible and intangible assets of €6.1 million (€5.5 million in Q1 2011).

Consolidated profit before taxation came to 4.5 million, compared with €10.9 million in the same period of last year. During the quarter financial charges amounted to €4.4 million, an improvement of €1 million compared with 2011.

Consolidated net profit for the period totalled 2.4 million, compared with €5 million in the same period of the previous year.

Gross cash flow in the first three months of 2012 amounted to €8.5 million, compared with €10.5 million in Q1 2011.

The Group’s net financial position at 31 March 2012 stood at -€301.8 million, an improvement of €33.6 million on the -€335.4 million at the end of 2011.

Information regarding personnel
As of 31 March 2012, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,764, compared with 3,674 in March 2011. On a comparable basis, considering that the first quarter of last year did not include the 120 employees of the companies AME Editoriale Wellness, Glaming and Emas (France), now consolidated, the overall figure would show a reduction of 30.

This, in general, confirms the ongoing efficiency policy aimed at the structural containment of labour costs, the effects of which will extend even beyond the formal end of the Restructuring Plan in 2011.

RESULTS OF THE BUSINESS AREAS

· BOOKS

For the first time, the trade book market saw a marked fall both in the number of copies sold (-10.8%, source: Nielsen) and in terms of overall value (-11.8%, source: Nielsen) in the first quarter of 2012 compared with the same period of 2011, with decline recorded in all channels: bookshops, large-scale retail and online.
Moreover, this trend is even more marked in an analysis of the bestsellers: during the period, the top ten bestsellers recorded a fall of 7.8% in terms of copies and more that double that (-16%) in terms of value; figures that confirm, among other things, the fall in the average price of the biggest selling books.
There are many reason for this situation, some of which were outlined in the Annual Report, including the current recession and the Levi Law on book pricing (which was enacted in September 2011 and places limits on discounting and the number and timing of promotional campaigns).

During the first three months of 2012, despite difficult market conditions, the Mondadori Group nevertheless confirmed its leadership in the trade book sector with a market share of 25.7% in terms of value (source: Nielsen).
During the period, revenues from book sales amounted to €64.2 million, a fall compared with the €78 million of the first quarter of 2011.

The trade books area expects to see an improvement in revenues starting in the second quarter of the year, thanks to a rich publication programme that over the coming months will include new titles by important authors such as Ken Follet, John Grisham, Luciana Littizzetto, Niccolò Ammaniti and Stephen King.

Among the Group’s publishing houses, Edizioni Mondadori maintained its leadership in the trade books sector during period leadership with a market share of 13%. Among the significant initiatives in the first quarter was the launch of the new series Libellule, high quality, short literary fiction by successful authors, sold at a standard price of €10.
Einaudi ended the first quarter of 2012 with a market share of 4.8%, down by about one percentage point compared with 31 March 2011, a period in which the company benefited from the publication of important new titles, including Libertà by Jonathan Franzen, and a longer paperback promotional campaign.
Despite tough trading conditions, Sperling & Kupfer recorded a positive result in bookshops that raised its market share from 2.3% in terms of value in 2011 to 2.9% this year, with the Sperling & Kupfer, Frassinelli and Mondadori Informatica imprints.
Piemme confirmed a total market share of 3.9%, up by 0.3% compared with the first quarter of 2011.
Revenues generated by Mondadori Electa, which were down compared with the first three months of the previous year, were affected by the general trend in most of the segments of the market in which the company operates, in particular in the cultural heritage area.
Compared with the first quarter of 2011, revenues generated by Mondadori Education were stable, in a period that, as usual, has a minimal impact on the company’s yearly sales.

In ebooks, the first quarter was extremely positive for Mondadori’s trade books publishers: the number of downloads in Q1 2012 was higher than the whole of 2011, thanks to an offer of over 3,000 catalogue titles, also including new products and not just digital versions of print editions.

· MAGAZINES ITALY

The difficult macro-economic situation continued to have a big impact on the magazine market in Italy, with a consequently negative effect on advertising revenues (-11% source: Nielsen to February), circulation (-9.1% in terms of copies, -12.5% on a like-for-like basis; internal figures) and add-on sales (-24.8% in terms of value; internal figures).

Mondadori saw an overall decline in revenues in the area, from €121.9 million in the first quarter of 2011 to €104.3 million this time.

In particular revenue trends during the period showed that:
– circulation (-9.1%), was penalised by a sharp fall in copies sold with add-ons and subscriptions, and buy a slowdown in investments in support of some titles, which had a particular impact on overall performance in the first three months;
– revenues from add-on sales (-25,8%), mainly due to a different scheduling of initiatives for collections and books, and a fall in volumes in home video;
– advertising (-11.2%), due, in particular, to a negative performance negative in weekly family and news titles, while advertising sales in the international sector and online was up by 50%.

Sales of Mondadori titles were down by 12.5%, a figure that is in line with the dynamics of the like-for-like market, i.e. excluding new titles published since the first quarter of 2011.
The particularly poor sales performance in the first quarter is explained by a series of factors, including the economic crisis, the launch of new low-cost titles, the new system for ADS certification (circulation audit) which has modified the monthly planning of publishers’ marketing investments, and the increase in postal charges.

Regarding the companies efforts to support its titles and in response to the ongoing trends, Chi was re-launched at the end of March with a new editorial formula and layout, and accompanied by a significant investment in advertising and a cut-price offer. Similar activities have also begun for Panorama, the result of which will be launched on 31 May, TV Sorrisi e Canzoni, Starbene and Grazia. By the end of 2012 the programme, begun at the end of 2010, for the complete review of Mondadori’s portfolio of titles will be completed.

Properties
During the first quarter of 2012, the web sites of the company’s main titles performed particularly well, both in terms of traffic and advertising sales (+30% compared with March 2011), in a market that grew by 12.3% first two months, compared with the same period of 2011 (Nielsen: source Fcp-Assointernet including Display, performance and classified/directories).
Of particular note was the performance of Grazia.it with revenues up by 79.1%, Panorama.it (+56.5%) and Donnamoderna.com (+16.3%).

· ADVERTISING

The advertising market in the first two months of the year fell by 5.7% (source: Nielsen) compared with 2011, confirming the downward trend of investments in all media, with the exception of the Internet, albeit at a slower rate lower than in 2011: television showed a significant decrease (-6.9%), newspapers were down by -5.3%, while for magazines the fall was even more significant (-11%) among other media, radio was down by -5.1%.

As in 2011, the reduction in space is continuing in areas such as interiors, FMCGs and cars, with an impact also being felt in fashion (-7%) and cosmetics (-8%), which in 2011 performed well, while, in contrast were the pharmaceutical, media/publishing and finance sectors, whose weighting is limited.

Mondadori Pubblicità ended the first quarter with total revenues of €42.4 million, down compared with the €49.5 million in the same period of 2011.

Mondadori magazines have closed the first quarter with a fall of 12.7%, in a very complicated and competitive environment and a strong sensitivity on the part of advertisers to the price factor.

In particular:
– weeklies were affected by the economic crisis and the high level of uncertainty in the advertising market, even in the early part of 2012, family and news titles were the most severely affected;
– monthlies saw a smaller fall, thanks to the success of Panorama Icon; Interni also had good performance despite the negative trend in the interiors segment in the first quarter of 2012.
It should be noticed that the difficulties faced by Mondadori monthly titles is mainly due to a not significant presence in women’s fashion, which, as well as being the segment by far of most value, in terms of the total market performed positively in the period.

Also in recent months Mondadori Pubblicità is attempting to maintain average prices compared with 2011, especially for Panorama, Grazia and Chi.

Advertising revenue for radio rose by 3.4%, despite a poor start to February, down by 5.1% (source: Nielsen), sales were particularly strong for Radio Kiss Kiss.

With regard to the activities by the company in the first quarter, there was great success for the first 2012 edition of Milan Fashion Design, which saw the involvement of 17 fashion brands and 12 main partners and sponsors, the initiative enabled Mondadori Pubblicità to consolidate such activities on the territory.
During 2012, the company will organise other events to attract new clients, ensuring a positive return for the initiatives.

The Internet market saw an excellent performance by the joint venture Mediamond, with overall growth of 40% compared with 2011 due to the already mentioned positive trends of Grazia.it, Panorama.it, and Donnamoderna.com, the steady growth of TgCom (+27.3%) and Sport Mediaset (+19.5%). Overall, the scope of the sites sold by Mediamond was enhanced in 2012 with the addition of RTI’s Videomediaset and Skuola.net.

· MAGAZINES FRANCE

Mondadori France ended the first quarter of 2012 with consolidated revenues of €94.3 million, an increase on the €82.6 million of the same period of the previous year (€93.3 million at 31 March 2011 on a comparable basis, taking account of the consolidation of the joint-venture EMAS).

At a consolidated level, circulation revenues, that include both newsstand sales and subscriptions, were more or less in line with those of the first quarter of 2011 (-0.6% on a like-for-like basis) and account for 71% of total revenues.
In particular, subscriptions – that are an important asset (34.3% of total revenues) – were up by 3.1% on the same period of 2011, while newsstand sales were down by 4.2%, in line with the market of reference (-4.4%).

Innovation and editorial quality continue to be the key factors in the positive performance of the magazines published by Mondadori France; in the first quarter of the year significant re-designs were completed for Biba, Modes & Travaux and Auto Journal and the brand extension policy for the titles was continued with the launch of the quarterly AutoPlus Classiques, a change in the frequency of AutoPlus Occasion, and the magazines in the Science&Vie system.

On a comparable basis, advertising sales during the period were up by 2.7% on the same period of the previous year, with a better-than-market performance (0.7%).

This excellent result is explained above all by the positive performance of “haut de gamme” women’s titles: the weekly Grazia (+14.7%) and the monthly Biba (+21.3).
Among the various initiatives of Mondadori France in the digital sector during the period, the most significant included the creation of a shared technological platform for all of the sites, the launch of an iPad version of AutoPlus and the inclusion of the company’s titles in the offer of the various digital newsstands present in the market (Relay.fr, Lekiosque.fr, Zinio.com).

International activities
Total revenues in the first three months showed a marked increase (+8%) on the same period of last year, in particular in:
– advertising, thanks to a dedicated team focused on the fashion and interiors segments, sales in Italy for the editions of Grazia published in France, the UK, Germany and Russia were up by around 20%;
– licensing, with the continuing international development of Grazia: following the launch in Slovenia (March 2012), May will see the launch of the twentieth edition (including Italy), in South Africa by Media 24, the country’s leading publisher.
During the first three months of the year revenues amounted to around €40 million, an increase of 12% on the first quarter of 2011, with forecasts for the whole of 2012 of more than €170 million.

With regard to the joint-ventures, Mondadori is present in:
– China with Mondadori Seec Advertising Co. Ltd, the exclusive licensee for advertising sales for the local edition of Grazia. The magazine, launched in February 2009, continued the excellent performance recorded in 2011 ending the first quarter of 2012 with a 55% increase in revenues compared with the same period of 2011. Given this rapid growth and the potential of the Chinese market, Mondadori is now studying new projects, the first of which should see the light of day in the coming months;
– Russia with an edition of Grazia that has just celebrated its fifth anniversary and increased its revenues in the first quarter of 2012 by 30% compared with the same period of last year;
– Greece, Bulgaria and Serbia with Attica Publications, which, despite the ongoing crisis in the Greek market, recorded a performance in line with expectations, thanks also to benefits deriving from the restructuring plan implemented in 2011.

· DIGITAL

Digital activities during the quarter can be summarised as follows:
– editorial activities, ebooks, properties, subscriptions and online advertising, within the businesses of reference Books, Magazines Italy and Magazines France;
– e-commerce activities, through the web site www.bol.it, and online bookclubs, for Direct;
– diversification and business support activities, gambling, applications and CRM, with Other Businesses.
In the first quarter of 2012 all of the above activities generated total revenues of €10.9 million.

· DIRECT

Total revenues generated by the Direct area in the first three months of 2012 amounted to €58.4 million, on the €64.1 million of the same period of 2011, adjusted to include within the scope or reference the e-commerce activities of Bol.it.

In the context of the economic recession, amplified in the book market by a generalised fall in average prices and a reduction in promotional activities, action was taken to recovery profitability and generate new sources of revenue. These included he rationalisation of the bookshop chain, the expansion of the range of products to include the Emporio Mondadori and BoxForYou brands, and the development of “corners” in partnership at large-scale retail outlets.

The proprietary bookshops generated revenues in the period that were down by more than 13%; of these, the multicenter formula held back the slide to 2.5%, on a like-for-like basis.
The franchise network, meanwhile, saw a fall of revenues of around 7%.
In the Club bookshops chain, the conversion of directly-owned sales outlets into the franchising formula continued; which explains a fall in revenues in this area of 23%.
Bookclub activities recorded revenues that were in line with those of 2011; Cemit generated first quarter revenues of 5 million, a 3.8% fall, in a market that was down by -5% (source: Nielsen).

 

  • RADIO

In the first three months of 2012, revenues in the Italian radio market were down by 5.1% (source: Nielsen); in this context R101 performed better than the market with Q1 2012 revenues of €3.2 million, a slight fall on the €3.3 million of the first quarter of 2011.
In terms of output, the first quarter of 2012 was characterised for R101 by the ongoing process of renewal at the station with the launch of new shows, the expansion of the team of presenters and the strengthening of the schedule, particularly at weekends.

EXPECTATIONS FOR THE FULL YEAR
Unfortunately, the first three months of the year confirmed the most pessimistic forecasts on the scale of the current economic crisis and the effects of economic and financial policy measures introduced by a number of countries, particularly in Europe on production, investment, employment and consumer spending.

The time required for a market recovery is currently impossible to predict: and with regard to the businesses of the Mondadori Group, there has been a further general decline in business volumes, compared with the already markedly negative levels in the final quarter of 2011.

Regarding the activities in which the Group will be engaged in the coming months, the priorities remain those outlined in the Annual Report: to defend the leadership in Italy, consolidation in France and international growth for the brands; the development of digital activities related to the core business; actions to reduce operating costs, with even greater impact than that achieved in the previous three years.

Also in terms of the results expected for the current year, as stated during the presentation of the 2011 Annual Report, in the absence of any short term reversal in market trends, the Group does not expect to achieve the same levels of profitability as last year.

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

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The report for the first quarter of 2012 will be available at the company’s corporate headquarters, Borsa Italiana SpA and on the web site www.gruppomondadori.it (Investor relations section) from today