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Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 30 September 2023 presented by Chief Executive Officer Antonio Porro.

“The Mondadori Group has recorded excellent results and a sharp increase in profitability in the first nine months of 2023, attributable to the pursuit of a meticulous management of operations, the contribution of recent acquisitions and the synergy arising from their integration, which allowed for an improvement in the performance of all business areas and a capital strengthening of the Group. We can therefore confirm what was announced on 29 June in terms of expected results for the ongoing year, namely an economic and financial improvement”, said Antonio Porro, CEO of the Mondadori Group.

Performance at 30 September 2023

Consolidated revenue for the first nine months of 2023 amounted to € 679.9 million versus € 678.2 million in the first nine months of 2022, growing by 0.3%. Like-for-like, organic revenue growth came to 1.1%.

Adjusted EBITDA for the first nine months of 2023 was € 129.3 million, an increase of around € 14 million on the € 115.5 million recorded for the same period in 2022.

Netting the results for the respective periods in question of the reliefs and contributions respectively paid, the growth recorded by Group’s EBITDA would exceed € 17 million.

All business areas contributed to the result, especially the Trade BOOKS Area, due in particular to the effect of the consolidation of the results of the recently acquired companies, the Education BOOKS Area and the RETAIL Area.

Group EBITDA for the first nine months of the current year amounted to € 131.5 million, compared to € 114.5 million at 30 September 2022, an improvement of approximately € 17 million attributable to the operating dynamics and the recognition in the current year, in the MEDIA Area, of the net capital gain resulting from the sale of the titles Grazia and Icon (and the related international network).

Thanks to the positive performance of all business areas, the Mondadori Group’s EBIT for the first nine months of 2023, positive for € 90.5 million, showed an improvement of € 12.5 million compared to 2022. The result was achieved despite the booking of approximately € 4 million in higher depreciation/amortisation resulting from the greater investments made in the last 12 months, the consolidation of new companies (€ +1.0 million) and the accounting effects of the PPA (Purchase Price Allocation) process (€ +1.2 million compared to the first nine months of 2022).

Neutralising extraordinary items and the impact of the PPA process related to the companies acquired in the last 24 months, Adjusted EBIT would amount to € 92.1 million, up by more than € 10 million (+12.9%) compared to the same period of the previous year.

Financial expense grew by over € 3 million, of which around € 2 million as a result of the higher cost of debt.

The consolidated result before tax was positive at € 87.1 million, an improvement of about € 11 million compared to € 75.8 million in the first nine months of 2022. The over € 2 million improvement in the profits of associates, in addition to the information already noted, contributed to this performance, particularly as a result of the update in the fair value measurement of the investment in the company A.L.I. and the recognition of a capital gain of € 0.4 million from the sale of the residual investment in SEE, the publishing company of Il Giornale.

The Group’s net profit at 30 September 2023, after minority interests, was positive for € 66.3 million and showed a significant improvement of € 8 million (around 14%) versus € 58.3 million recorded in first nine months of 2022.

Tax costs in the period totalled € 20.5 million versus € 17.6 million at 30 September 2022 due to the higher pre-tax result.

The Group’s capital structure grew stronger still: the Net Financial Position excluding IFRS 16 at 30 September 2023 amounted to € -152.3 million (net debt), an improvement of over € 20 million versus € -173.4 million at 30 September 2022, as a result of the relevant cash generation of the business and despite the cash-out relating to acquisitions made during the last 12 months and the distribution of dividends in May 2023 for around € 29 million.

The IFRS 16 Net Financial Position came to € -223.9 million, from € -235.7 million recorded at 30 September 2022, including an IFRS 16 component of € -71.6 million.

At 30 September 2023, cash flow from ordinary operations in the last 12 months came to € 64.6 million, while cash flow from extraordinary operations was negative for € 13.2 million.

Consequently, LTM Free Cash Flow at 30 September 2023 was positive for € 51.4 million, confirming the Group’s capacity to finance its growth policy by external lines.

Performance of Business Areas

Trade Books Area

Following the consolidation phase of 2022, 2023 showed further growth in the book market for 2.3% (in terms of value) and a substantial stability in terms of volume compared to 2022. The third quarter in particular showed a 1.6% increase in terms of value (source: GFK, September 2023).

In this context, the Mondadori Group’s publishers recorded growth of 2.2% in the first nine months, which is in line with the reference market, despite the third quarter of 2022 having benefited from a strong publishing plan. Thanks to this performance, Mondadori has consolidated its national leadership position, with a market share which, in September 2023, remained stable at 27.3%.

Revenue in the first nine months of 2023 in the Trade BOOKS Area stood at € 268 million, increasing by 14% compared to the same period in 2022.

Adjusted EBITDA in the first nine months of 2023 amounted to € 41 million: net of reliefs relating to Electa’s museum activities (€ 6.4 million), which had benefited in 2022, the area recorded growth of 23% (€ 7.6 million), largely attributable to the contribution of the newly acquired companies in the current year.

The profitability at 30 September 2023 achieved by the Trade BOOKS Area was approximately 15%, showing improvement on the same period in 2022, excluding the contribution of the reliefs (14%).

Education Books Area

The Mondadori Group’s publishing houses in the context of school textbooks achieved a market share (adoption) of 32%, substantially stable compared to the figure reported in the previous year, with growth in the secondary school segment (upper and lower secondary schools) and a decrease in primary, characterised by higher volatility and lower profitability.

In the first nine months of 2023, the school textbooks business reported overall revenue of € 215.5 million (€ 213.7 million in the corresponding period of 2022), increasing by 0.8% despite a partial delay in the distribution activities.

In particular, an analysis of the trend by school level shows how revenue from first- and second-level secondary school – accounting for 80% of the area’s revenue – has grown by around 3%, with a trend offset by the decrease recorded by primary school (-7.9% compared to the same period in 2022), in line with the adoption trend reported. As expected, the sales of third-party publishers distributed by Rizzoli Education fell by 7%.

Adjusted EBITDA of the Education BOOKS Area in the first nine months of the year stood at € 73.9 million, a clear improvement compared to € 68.1 million in the corresponding period of financial year 2022 (+8.5%), mainly due to a different and more favourable mix of revenue and a lower percentage of product cost and promotional costs.

Retail Area

As already mentioned, the book market in Italy in the first nine months reported a 2.3% growth compared to the same period in 2022; in this context, the physical channel grew by +4.8% while the online channel declined (estimated at -1.6%), even if gradually recovering in the third quarter of 2023 compared to the figure from the corresponding period of 2022.

In the first nine months of 2023, Mondadori Retail recorded a 5.7% increase in book sell-out in stores; thanks to this overperformance, driven by excellent performance reported by physical stores, Mondadori Retail’s market share stood at 13% of the total market, +0.4% on 30 September 2022, and almost came to 20% of the physical market.

In the first nine months of the year, the RETAIL Area reported revenue of € 133.4 million, up by € 7.4 million (+5.9%) versus 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 consolidate its role in the market, as demonstrated by the solid growth in revenue from the book product.

An analysis of sales by channel shows a further increase in revenue from directly-managed bookstores (+12.8% compared to the same period in the previous year) and franchisee bookstores (+4.0% compared to 30 September 2022) and, at the same time, a decline in the Online and Bookclub channels.

As far as the product categories are concerned:

• the book area was the main component of revenue (more than 80% of the total), up comprehensively by +6.6% compared to 2022, driven by the excellent performance of physical stores;
• Extra-Book sales were on a positive trend (+14.7% versus the first nine months of 2022) confirming the excellent signs arising in the last year, due to the growth in the stationery, games, gifts and music.

The RETAIL Area had a positive Adjusted EBITDA of € 8.3 million, a value that has doubled compared to the figure for the first nine months of 2022 (€ +4.2 million).

Media Area

In the first nine months of 2023, the MEDIA Area recorded revenue of € 101.5 million, a reduction of approximately 25% on the same period of the previous year. On a like-for-like basis (thus excluding the effect of the deconsolidation of the titles sold at the beginning of 2023 and of Press-di’s distribution activities), this reduction is smaller by around 6% thanks to the performance of near stability achieved in the third quarter of the year and shows different trends in the two digital and print components.

The Digital Area, which accounts for over 37% of the area’s overall revenue, showed an increase in advertising revenue of around 20%, deriving in particular from the positive performance of MarTech; the Print Area fell by around 16%, mainly due to the significant drop in add-on sales in the period.

In the first nine months of 2023, the Mondadori Group retained its position as Italy’s top multimedia publisher: in print with 13 titles and 9 million readers; on the web with 12 brands and approximately 27.7 million average unique users per month; on social media with 100 profiles and a fanbase of around 100 million.

In the magazine segment, the Group’s market share (in terms of circulation) stood at 20.3%, up slightly – with a like-for-like portfolio of titles – versus the figure in the same period of 2022 (19.8%), due to improved performance on that of the reference market.

Adjusted EBITDA in the MEDIA Area amounted to € 10.3 million, up by around 10% compared to the first nine months of 2022, mainly attributable to the traditional activities – which benefited from a contribution to offset the costs incurred by the publisher for the distribution of periodicals (€ 2.8 million) – which more than offset the decrease in the margin on sales of collateral items; in the Digital Area, Adjusted EBITDA is essentially stable on the same period in 2022 thanks to higher advertising revenue, despite the higher costs incurred for launching new initiatives tied to the influencer marketing segment and the deconsolidation of the result related to the digital activities of the titles sold.

Performance in Third Quarter 2023

Consolidated revenue for the third quarter of 2023 amounted to € 317.6 million (versus € 323.1 million the prior year), showing a slight decline compared with the same period of 2022 (-1.7%). Like-for-like, organic revenue performance recorded -1.2%.

Adjusted EBITDA for the third quarter of 2023 was € 91.1 million, an increase of almost € 3 million on the € 87.9 million recorded for the third quarter of 2022.

In the third quarter of 2023, EBIT closed with a positive € 76.5 million, showing an improvement of € 1.8 million.

Neutralising extraordinary items and the impact of the PPA process, Adjusted EBIT would stand at € 77.8 million, up by around € 2 million from € 75.9 million in the third quarter of 2022.

Outlook for the year

The forecasts previously communicated to the market on 29 June 2023 are confirmed, and reported in full below.

Income Statement

• single-digit revenue growth;
• high single-digit/low double-digit growth in Adjusted EBITDA, with margins expected to range between 16% and 17%;
• approximately 20% growth in net profit.

Cash Flow and Net Financial Position

• ordinary cash flow is expected to range between € 65 and 70 million, showing an increase of up to 15% compared to the figure from 2022;
• the Group’s net financial debt (IFRS 16) is confirmed to come in, at end FY 2023, as 1.0x adjusted EBITDA, down from 1.3x at end 2022.

The presentation of the results at 30 September 2023, 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 4.00 pm for the financial community, attended by the CEO of the Mondadori Group, Antonio Porro, and the CFO, Alessandro Franzosi. Journalists will be able to follow the meeting in listening mode only, by connecting to the following phone number +39.02.8020927 or via web at: https://hditalia.choruscall.com/?calltype=2&info=company.
The Financial Reporting Manager – Alessandro Franzosi – hereby declares, pursuant to Article 154 bis, paragraph 2, of the Consolidated Finance Law, that the accounting information contained herein corresponds to the Company’s records, books and accounting entries.

Annexes in the complete pdf:

1. Consolidated Statements of Financial Position
2. Consolidated Income Statement
3. Consolidated income statement – III quarter
4. Group cash flow
5. 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 30 September 2020 presented by CEO Ernesto Mauri.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PERFORMANCE OF BUSINESS AREAS

• BOOKS

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

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

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

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

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

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

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

• RETAIL

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

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

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

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

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

• MEDIA

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

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

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

Specifically, in first nine months 2020:

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

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

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

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

*

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

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

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

*

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

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

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

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

Annexes (in the pdf file):

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

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

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 30 September 2015[1] presented by the CEO Ernesto Mauri.

GROUP PERFORMANCE AT 30 SEPTEMBER 2015

In the first nine months of 2015 consolidated net revenues totalled euro 817.1 million, down 4.1% against euro 851.9 million in the corresponding period of 2014.[2]

Consolidated EBITDA was up 21.3% at euro 48.8 million against euro 40.2 million at 30 September 2014, also as a result of the positive contribution of non-recurring items (specifically the capital gain generated by the transfer of 50% of the interest held in the Harlequin Mondadori joint venture). EBITDA net of non-recurring items shows profitability up by nearly one percentage point: EBITDA before non-recurring items was up 10%, from euro 43.6 million in the first nine months of 2014 to euro 48 million in 2015,[3] with an incidence on revenues rising from 5.1% to 5.9%.

This performance is the result of a rigorous and focused management policy that holds research and the continuous improvement of editorial products as its key objective. In particular:

• reduced incidence of the cost of goods sold by over 2% (from 41% to 38.7% of revenues), resulting in a better performance in all business areas and, specifically, in the Books area due to a more effective management of operating processes and to a targeted pricing policy, and, in the Magazines Italy area, due to effective publishing revision actions;
• the rising incidence of variable costs on revenues from 19.9% to 21.7% is mainly attributable to the Magazines France area and is referred to increased mail tariffs for subscriptions;
• the reduction in fixed costs (-8.8% against the first nine months of 2014) exceeded the reduction in revenues and was obtained through a cost containment policy implemented in all corporate areas;
• employee headcount at the end of the period (3,090 people) was down by 3.3% against the same period in 2014 due to the ongoing review of the organizational structures in Italy and in France (the reduction on a like-for-like basis would be equal to -5.6%).

Quarter after quarter, these results confirm the greater efficiency achieved by the Group as a result of the industrial and organizational review implemented over the last two years and achieved despite the difficult market scenario.

Consolidated EBIT in the first nine months of 2015 amounted to euro 30 million, up approximately 25% against euro 24 million of 2014 as a result of the abovementioned increased EBITDA, despite increased amortization and impairment deriving from the devaluation of the interest held in the Greek Attica Publications subsidiary (in the Magazines Italy area) equal to euro 4 million.

Consolidated profit before taxes is positive for euro 16.1 million against euro 6.2 million at 30 September 2014; in the first nine months of 2015, financial costs amounted to euro 13.7 million, considerably down against euro 17.8 million of the same period of the previous year, as a result of reduced average net debt for the period and average total cost of debt. Taxes in the period totalled euro 7.7 million (euro 8 million in 2014).

Consolidated net result from continuing operations, after minority interest, was positive for euro 6.6 million, up by over euro 10 million against a loss of euro 3.8 million registered at 30 September 2014. The result from discontinued operations in the first nine months of 2015, negative for euro 9.4 million, includes the period net result of the Radio Business area (up from euro -3.8 million at 30 September 2014 to euro -3.1 million), as well as the depreciation of Monradio operations for euro 6.3 million. The Group’s net result at 30 September 2015, after the result from discontinued operations, amounted to euro -2.8 million, up euro 4.7 million against the loss recorded in the previous year (euro -7.5 million), despite the inclusion of the depreciation of Monradio operations for euro 6.3 million.

The Group’s net financial position at 30 September 2015 was equal to euro -243.6 million, considerably up against euro-327.4 million of 30 September 2014 as a result of the Group’s cash generation over the last twelve months, equal to euro 83.8 million, deriving both from ordinary operations (euro 34.4 million) and extraordinary operations (euro 49.4 million).

At 30 September 2015, cash flow from operations in the last twelve months was positive for euro 59.9 million; ordinary cash flow (after the cash-out relative to financial charges and taxes for the period) was equal to euro 34.4 million, continuing the positive trend registered in the previous three quarters. Cash flow from extraordinary operations was positive for euro 49.4 million mainly as a result of the capital gain generated by the disposals completed in the period, amounting comprehensively to euro 56.4 million (of which euro 45.1 million include the transfer of 80% of Monradio and 50% of the Harlequin Mondadori joint venture).

BUSINESS AREAS

BOOKS
In the first nine months of 2015 the Trade Books market posted a 2% overall reduction, though showing a progressive improvement quarter after quarter.

In this context, Mondadori Group confirmed its leadership position with a 25% market share (25.9% at 30.09.2014; source GFK).

In the period the Group had 5 titles in the 10 top best-selling books in the first nine months of 2015 (Grey, La ragazza del treno, Cinquanta sfumature di grigio, La vigna di Angelica, Storia di una ladra di libri) and La ferocia by Nicola Lagioia (Einaudi) won the Strega Prize for 2015.

In the first nine months of 2015, revenues in the Books area amounted to euro 232.7 million, down 2.6% against euro 238.9 million of the same period in 2014. In particular:

• revenues from the Trade Books area registered a sharper decline than the market, also due to the performance of the large retail channel and the Paperback segment and, above all, due to a selective publishing policy aimed at increasing profitability;
• Educational Books posted growing revenues by 5.8% against the same period of 2014, mainly due to the management of museum concessions and the positive performance of school textbooks (+2%). In the period the Group confirmed its position as the third top player in the market of school textbooks.

Revenues from the download of e-books rose by 19% against the previous year, in line with the trend recorded in the first half of 2015, with a 7.3% share of digital sales on the total (5.3% at 30 September 2014).

EBITDA, net of non-recurring items and despite reduced revenues, remained essentially steady compared to the previous year, totalling euro 35.5 million as a result of a more effective management of operating processes deriving from the radical reorganization process and product revision implemented in the Trade Area, including actions aimed at reducing the number of titles and the average number of copies but still maintaining research and continuous improvement in the quality of the publishing programme.

Reported EBITDA for the area was equal to euro 39.6 million, up from euro 34.8 million recorded in the first nine months of 2014. It includes the capital gain equal to euro 7.6 million deriving from the transfer of the interest held in the Harlequin Mondadori joint venture (completed on 30 September 2015) and a higher incidence of restructuring costs compared to last year (euro 3.5 million in 2015 against 0.6 million in 2014).

MAGAZINES ITALY
In Italy, despite the negative scenario recorded in the market in terms of both circulation (newsstand channel in August: -7.2%; internal source) and sales from advertising (source: Nielsen in August: -3.6%), Mondadori confirmed its position as market leader with a 32% market share in circulation (slightly up from 31.8% recorded in August 2014).

Overall revenues of the Magazines Italy area amounted to euro 224 million, down by 3% (-5% on a like-for-like basis, net of the acquisition of 50% of Gruner+Jahr/Mondadori completed on 1 July 2015) against euro 231 million at 30 September 2014. In particular:

• revenues from circulation decreased by 3% (-7.3% on a like-for-like basis), also due to the rigorous policy adopted in the selection of the most profitable promotional initiatives in subscription and newsstand channel;
• revenues from advertising sales in the print+web segment of Mondadori brands in Italy dropped by 4% (-5% on a like-for-like basis); more specifically, advertising sales in the print media posted a 5.5% reduction on a like-for-like basis, while web advertising was up 0.3%, performing better than the reference market trend (-2.1% source: Nielsen, in August);
• revenues from add-on products decreased by 6.8% (-8.1% on a like-for-like basis), showing a progressive recovery in the third quarter.

EBITDA of the Magazines Italy area, net of non-recurring items, posted a remarkable improvement, going from a loss of euro 0.4 million to a positive value of euro 4.1 million,[4] as a result of the effective review of the publishing and operating organization as well as of promotional activities. Despite the downward revenue trend determined by market conditions and by the implementation of targeted project selection policies the Group managed to maintain both its traditional publishing quality and its market leadership.

Reported EBITDA confirmed the growth trend, rising from euro 0.4 million to euro 3.3 million as a result of the above mentioned actions and of the progressive recovery of advertising sales, even if the previous year benefited from non-recurring items amounting to approximately euro 1 million, deriving from the contribution to Mediamond. The overall contribution of the international operations consolidated at equity was positive for euro 1.2 million, in line with the same period of the previous year.

Traffic data showed an overall audience rate equal to 6.7 million unique users; more specifically, the latest survey (August 2015) showed significant growth in the performance of Donnamoderna.com (+8%), Grazia.it (+13%) and Salepepe.it (+48%).

MAGAZINES FRANCE
In France, the magazines market showed a bearish trend both in terms of sales from advertising, down 8% (source: Kantar Media, data at July) and circulation, which fell by 3.9% at newsstands (internal source, data at August excluding the extraordinary edition of Charlie Hebdo in February).

In the first nine months of 2015, revenues from Mondadori France equalled euro 246.8 million, down 2.9% against euro 254.2 million of the same period in the previous year, mainly confirming the trend recorded in the first half of 2015.

Revenues from circulation (accounting for approximately 72% of the total) posted a 2.4% downturn against the previous year. In particular:

• the newsstand channel recorded a 6.2% reduction against the first nine months of 2014 (period including the publication of the “Hollande scoop” on Closer);
• the subscription channel instead posted a 0.2% increase.

These positive performances were made possible thanks to the constant attention paid to publishing quality and innovation.

Revenues from advertising sales were down 6.1% against the same period of the previous year, but performance differed between offline and online products: digital advertising was up (+24%) and now represents more than 14% of total advertising revenues, partially offsetting the drop in traditional print advertising (-9.8%). In this context Mondadori France confirmed its position as second top player in the magazine advertising market, with a market share of 11%.

EBITDA, net of non-recurring items, was equal to euro 22.1 million, down by 4.7% against the previous year, mainly as a result of increased mail tariffs and the extraordinary contribution, included in the same period of 2014, of the “Hollande scoop” published in January 2014 by the magazine Closer.

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 continued through 2015 with a view to further adjusting the organization to the changes and to sustaining profitability, while keeping its ability to make investments in quality and in the progressive digitalization of editorial activities.

Reported EBITDA, equal to euro 20 million, was down 10% against the first nine months of 2014 (euro 22.3 million), due to higher restructuring costs for approximately euro 1.1 million.

The total number of readers of Mondadori France magazines reached 8.1 million unique users, up approximately 28% against 2014, also as a result of the progressive digitalization of the editorial teams.

RETAIL
In the first nine months of 2015, the Retail area posted revenues of euro 131.6 million, down by 9.2% against euro 144.9 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 (whose contribution in the first nine months of 2014 was equal to euro 10.4 million).

Books represent the predominant product category (accounting for 77.5% of the total) and outperform the market of reference on a like-for-like basis by approximately 1 percentage point. As for the distribution channels, the following is worth mentioning:

• direct bookstores: -4.3% (+1.8% on a like-for-like basis);
• franchised bookstores: slight downturn in the revenues of the book category and a more substantial drop in the non-book segment;
• megastores: dropping revenues as a result of the transfer of the flagship store of corso Vittorio Emanuele in Milan; on a like-for-like basis the performance of the book segment was positive (+7.8%) and consumer electronics products were back on a growing trend;
• in the online segment revenues were down comprehensively by 4.2% (-0.6% in the book segment).

EBITDA, net of non-recurring items, was equal to euro -3.1 million, sharply up against euro -5.4 million of the corresponding period in 2014.

Two main causes drove this result:

• the improved product margin, especially in the book category (thanks to actions aimed at network and format review and promotion containment activities) and in consumer electronics thanks to a more targeted and well-studied product assortment focused on accessories and services;
• the extended implementation of cost reduction measures, which resulted in a lower incidence of operating costs and overhead.

Reported EBITDA increased substantially in the period, by euro 3.2 million against the same period of the previous year (euro -6 million including restructuring costs for euro 0.6 million), totalling euro -2.8 million.

DIGITAL
In the first nine months of 2015 total revenues from digital activities posted an 8.4% increase against 30 September 2014 (euro 38.3 million against euro 35.3 million).

The purely digital activities that cut across all business areas posted increased revenues by 11.1% against the first nine months of 2014; revenues from digital marketing service activities were stable.

The incidence of digital activities on the Group’s total revenues was equal to 4.7% against 4.1% recorded at 30 September 2014.

2015 FULL YEAR OUTLOOK
In the third quarter of 2015 the Group continued the non core assets disposal plan, which, increasing the availability of the consolidated financial resources, also contributed to supporting the future development of the Group and its competitive position consistently with the strategic guidelines announced. In line with the Group’s focus on core business, the Group recently signed an agreement to acquire RCS Libri. This transaction will enable the Group to consolidate its presence in Italy in the Trade and Educational segments and in illustrated books at the international level.

Based on the Group’s positive performance in these first nine months and on the ongoing optimization of operating processes and cost structure, as well as on the measures aimed at rationalizing the portfolio of activities and mitigating the downturn in revenues due to the performance of the market, it is reasonable to confirm the 2015 projections of a growing EBITDA at the Group level.

In the light of the aforementioned positive outlook, the recently completed disposals and the recovery of investments in the market, the Group’s net financial position is also expected to significantly improve against 2014 year end.

§

The documentation relating to the presentation of the results for the first nine months of 2015 to analysts is made available to the public on the authorized storage device 1info (www.1info.it) and on www.gruppomondadori.it (Investor Relations section).

§

The Executive Manager responsible for drafting 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.

§

INTERIM REPORT ON OPERATIONS AT 30 SEPTEMBER 2015
This interim report at 30 September 2015 was approved by the Board of Directors and is made available starting from today’s date at the Company’s legal offices, on the authorized storage device 1info (www.1Info.it) and on www.gruppomondadori.it (Investor Relations).

[1] On 30 September 2015 the transfer of 80% of the share capital of Monradio S.r.l. to R.T.I. S.p.A. was completed for a price equal to euro 36.8 million. Pursuant to IFRS 5 (“Non-current assets held for sale”) the Group’s radio business was qualified as “discontinued operations” and as such it was entered in the tables at 30.09.2015.. As a result, in the income statement of the first nine months of 2015 and of 2014 included for comparison purposes, the results achieved in the radio business area in the period, along with the depreciation of operations made in order to bring their value in line with the fair value resulting from the offer, were classified under “Result from discontinued operations”.

[2] The Magazines Italy area includes revenues generated from Gruner+Jahr/Mondadori consolidated since 1 July 2015 (euro 5.3 million) following the acquisition by Mondadori of 50% of the joint venture; net of this variation, at the Group level, the reduction in revenues would be equal to 4.7% in line with the performance recorded in the first half of 2015 (-4.8%).

[3] The consolidation of Gruner+Jahr/Mondadori as of 1 Juy 2015 contributed positively with euro 0.7 million.

[4] of which euro 0.7 mlllion generated from the consolidation of Gruner+Jahr/Mondadori

• Consolidate net revenues: euro 817.1 million, -4.1% against euro 851.9 million of 30.09.2014
• Consolidated EBITDA: euro 48.8 million, up 21.3% against euro 40.2 million of 30.09.2014
• Result from continuing operations: positive for euro 6.6 million; up by over euro 10 million against a loss of euro 3.8 million at 30.09.2014
• Net financial position: euro -243.6 million; significantly up against euro -327.4 million of 30.09.2014, as a result of 12-month cash generation equal to euro 83.8 million
• §
• EBITDA incrase estimates confirmed for 2015; significant improvement expected in net financial position against end of 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 nine months of the year to 30 September 2013, as presented by the Chief Executive, Ernesto Mauri.

HIGHLIGHTS 30 SEPTEMBER 2013

In a market that is showing no signs of improvement also in sectors of relevance for Mondadori, the Group continued to pursue activities aimed at changing the strategy, reviewing the organisation and effecting significant reductions in costs.

A business model was also defined that sees digital as a driver of development cutting across all areas in the coming years, with the inclusion of new and specific skills in order to strengthen technological know-how, digital marketing and e-commerce.

As part of the of cost reduction plan, in the third quarter further savings for a total of €80 million have been identified, confirming the target of saving €100 million by 2015. In September the effects of cost reductions in both staff (-8.6% net of restructuring costs restructuring) and other operating costs (-5.8%) were evident.

Figures to 30 September 2013 confirm the trend already evident in the first half.

The decline in economic performance, compared with the same period of the previous year, is attributable to the presence in 2012 of positive non-recurring items worth €8.9 million and in 2013 of non-recurring negative items worth €27.3 million; the latter are primarily attributable to restructuring charges: in particular, in the Magazines Area, a reduction in operating costs, together with the relaunch of leading titles, is expected to enable a recovery in profitability.

A comparison of the first three quarters of 2013 with those of 2012, shows a trend toward stabilisation in the decline in revenues and a gradual recovery of the fall in gross operating margins (before non-recurring and restructuring charges ): -17.3% in the third quarter compared with -48.9% in the first half of the year.

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2013

Consolidated revenues amounted to €931.2 million, a fall of 9.5% on the €1,028.4 million in 2012.

Consolidated gross operating profit net of non-recurring items came to €36.2 million, a reduction of 33.5% compared with the €54.4 million in the same period of the previous year.

Consolidated gross operating profit came to €8.9 million, a fall of 85.9% on the €63.3 million in the same period of the previous year.

The Group made a consolidated operating loss of €9.6 million, compared with a profit of €44.8 million in 2012, with amortizations and depreciations of tangible and intangible assets of €18.5 million (€18.5 million in 2012).

The Group made a consolidated loss before taxation of €26.2 million, compared with a profit of €32.2 million last year; financial charges during the period amounted to €16.6 million (€12.6 million in 2012).

The consolidated net loss for the period amounted to €32.3 million, compared with a profit of €16.3 million in the same period of 2012.

Gross cash flow in the first nine months of 2013 showed a deficit of €13.8 million, compared with a surplus of €34.8 million in the same period of 2012. The Group’s net financial position showed a deficit of €376.9 million at 30 September 2013 (-€346 million at 30 September 2012 and -€267.6 at the end of 2012).

Information regarding personnel

At 30 September 2013, permanent and temporary staff in the companies of the Group, totalled 3,539, a fall of 164 (-4.4%) compared to the end of 2012 and 204 (-5.5%) compared with September 2012, confirming the ongoing efforts at optimising the structures of the Group.

In terms of business areas, the biggest drop was in the parent company Arnoldo Mondadori Editore where, as a result of the joint effect of the early retirement of graphics staff, especially belonging to the Central Staff, and the restructuring plan of journalists of Magazines Italy, the total headcount was reduced by 8% compared with last year.

Also at the subsidiaries, the effect of the reductions in fixed costs has led to a reduction of 6% ​​compared with September 2012, a third of which in the Retail Area.

Total personnel costs benefited, net of non-recurring charges, as well as from a fall in the number of employees, also from the effects of various social safety nets, resulting in a reduction compared with the same period of 2012 of €17.3 million, or 8.6%. More specifically, the Parent Company recorded a reduction of close to 10%, the Italian subsidiaries more than 12% and Mondadori France more than 4%.

It should be noted that the restructuring plans of the Central Staff and Magazines in Italy of the parent company, as well as in the subsidiaries Mondadori Pubblicità and Press-Di, will continue, until April 2014 and May 2015 respectively, enabling further savings in the coming years.

RESULTS OF THE BUSINESS AREAS

· BOOKS
In the first nine months of 2013 the trade books market remained below the level of the same period of 2012 with a fall in terms of value of 6.3%. In this market context, the Mondadori Group confirmed its leadership in its market of reference with a market share of 26.8% in in terms of value (source: Nielsen).

During the period, revenues generated by the Books area amounted to €234.2 million, a fall of 10.5% from the €261.6 million the previous year; excluding the effect of the significant fall in revenues from the distribution of third-party publishers, the figure is 8.4%.

It should be noted that the revenues of the Group’s publishing houses were affected in the third quarter by a particularly penalising comparison with the same period of 2012 which benefitted from the great success of the EL James Fifty Shades trilogy. There was also a significant fall in revenues from third-party publishers. These effects were partially compensated by the success of Dan Brown and Khaled Hosseini and the ongoing double-digit growth in ebooks.

• MAGAZINES ITALY

The negative trend in the consumer magazine market continued in the third quarter; in particular, figures for August showed a fall in circulation of 12.4% (internal estimate), of add-on sales of 20.4% (internal estimate) and advertising sales of 24.3% (source: Nielsen, September).

In this context, in the first nine months of 2013 Mondadori recorded revenues of €253.1 million, a fall of 14.2% on the €295.1 million of the same period of 2012. This is attributable to reductions in revenues from:

• circulation (-9.9%), penalised by a fall in subscriptions and single copy sales;
• add-on sales (-12.2%), despite an increase in market share to more than 41%;
• advertising (-26.3%), in a seriously compromised advertising market and with a number of discontinuities;

and an increase in licensing revenues (+13.8%).

It should be noted that in the third quarter Casaviva, VilleGiardini, Panorama Travel and Men’s Health ceased publication, in addition to the changes of the first half (the closure of Panorama Economy and the transformation of Flair in a supplement of Panorama ).

During the period revenues generated by Mondadori titles were down 16%; on a like-for-like basis, i.e. net of the effects of the events mentioned above, the fall was 13.4%: in particular, advertising revenues were down 28.4% (22.8% on a like-for-like basis) and circulation revenues were down 9.9% (-8.2% on a like-for-like basis ).

Regarding the performance of the magazines, the excellent results of the main women’s titles were confirmed, Donna Moderna, Grazia and TuStyle all of which were relaunched in May, and performed very well during the summer, reaching, with the addition of the weekly magazine Chi, an average combined circulation of 1,200,000 copies, an increase of 37% compared with April.

During 2013, the websites of the main magazine titles of the Mondadori Group, confirmed an ability to attract a growing number of users and the interest of advertisers, with higher growth rates than the market, which fell by 2.6% (source: Nielsen).

In a still highly critical context, the Mondadori sites recorded growth of 6.2% compared with 2012, thanks to the performance of Donnamoderna.com (+5%), Grazia.it (+26%) and Panoramauto.it (+25%).

International Activities
In the first nine months of 2013, the volume of business generated by Mondadori’s international network grew by 6.3% compared with 30 September 2012. The improvement is mainly attributable to the Grazia International Network, which in February launched Grazia in Spain and Korea, and is currently working on new projects for further development. A few days ago the first international edition of Icon was launched in Spain.

Despite difficult market conditions, in the first nine months of 2013, advertising sales on behalf of international partners showed a slight improvement compared with 2012, in contrast to the local market also as a result of the expansion of the range of Mondadori’s International Business.

Mondadori is present in China with a 50% stake in Mondadori Seec Advertising Co. Ltd, the exclusive advertising sales company for the local edition of Grazia, which, in the first nine months of 2013, achieved revenue growth of 23% compared with the same period of 2012.

There was also a positive performance by the joint-venture Mondadori Independent Media, publisher of the Russian edition of Grazia, which, in the first nine months of 2013, recorded an increase in revenues of 9%.

In Greece, in an economic environment which remains extremely difficult, and an advertising market down 30%, Attica Publications in the first nine months of the year saw a fall in revenues of approximately 10.7%. Despite this, it achieved a positive result thanks to strong and consistent efforts to reduce costs and diversify revenues.

• ADVERTISING

In the first nine months of the year advertising investments in the market were down by 14.6% (source: Nielsen) compared with 2012, confirming the trend of recent years. Even the Internet which during these years of crisis, maintained a positive performance, was down (-2.6%).

Mondadori Pubblicità closed the first nine months with total sales of €105.1 million, a fall of -18.6% on the €129.1 million in the previous year.

Revenues from Magazine advertising was affected by the downturn of Mondadori titles (-28.4%), significantly affected by the closure of a number of titles, net of these changes, the fall was 22.8%.

The trend outlined, that is significantly better than the market (-24.3 %, source: Nielsen), is the result of two main phenomena: on the one hand the excellent results of the combined sale of advertising for Grazia, Donna Moderna and TuStyle, and the monthly cooking and furniture titles, and, on the other, the continuing difficulties in finding advertisers in other sectors, including in particular in the fashion industry.

With regard to sales for radio, the first nine months of 2013 closed up 32% thanks to the acquisition of the contract, starting in April, for Radio Italia Solo Musica Italiana and, from September, of Radio Subasio, which was joined in October by Radionorba, enabling Mondadori Pubblicità to strengthen its presence in the sector with an offer of a total daily average of 9.3 million listeners.

The advertising relating to the Internet, managed by the joint venture Mediamond, performed much better performance than the market, with an 18.3% increase on the same period of 2012, thanks to the excellent performance of Grazia.it (+26%) and Videomediaset.it (+42%).

• MAGAZINES FRANCE

During the third quarter of 2013 the French consumer magazine market continued to face a difficult period with a downturn in both advertising and circulation revenues.

In this context, the revenues of Mondadori France at the end of September came to €262.9 million, a fall of 7.6% from the €284.5 million in the first nine months of 2012.

Mondadori France saw a fall in advertising revenues, in terms of value, of 11.1%, while, in terms of volume, despite a decline of 3.3%, it still performed significantly better than the market which was down by 6.9% (source: Kantar Media, for August). Mondadori France confirmed its position as the second largest operator with a market share of 11.2% (source: Kantar Media), an increase of 0.4%.

Circulation revenues, including newsstand sales and subscriptions, and accounting for around 72% of total revenues, were down by 6.5% compared with the same period last year.

Newsstand sales were down 5.7%, compared to a market that saw a fall of 7% in January- September 2013 (internal source/in terms of value).

During the period brand extension efforts continued with the launch of successful new products, including Closer Teen and Vital by TopSanté.

The focus on editorial quality remains a priority pursued with the new formulas for Modes&Travaux, Sport-Auto, Science&Vie Junior, Grand Gibier, Auto-Journal and Auto Plus. In addition new titles were launched in the games and a cooking sectors.

Mondadori has continued to invest in the digital sector bringing the audience for its sites to over 5 million unique users (source: Nielsen), an increase of 20% compared with the same period of last year. Revenues were up by 19.8% in the period.

• RETAIL

Starting from the third quarter 2013, following the redefinition of the scope of the business area, the results and assets of the direct marketing activity managed by Cemit Interactive Media are shown in the Corporate and other business section. The comparable figures to 30 September 2012 have therefore been adjusted and made comparable to the figures from the current year.

Revenues generated by the Retail area in the first nine months of the year amounted to €153.4 million, a fall of 3% on the €158.1 million of the same period of the previous year.

The Retail Area manages its business across the country through a network that, on 30 September 2013, comprised 565 sales outlets, ranging from directly-owned and franchised bookshops, Multicenter stores, Edicolè and book clubs.

In view of the ongoing recession, which has resulted in a further decline in revenues, the process of rationalisation has continued and has led to the closing of 32 outlets since the beginning of the year.

Also sales generated through the web site www.inMondadori.it recorded a fall compared with the first nine months of 2012, both as a result of increased competition from the different players in the market and for the general downturn in consumer spending for non-essential goods.

• RADIO

Advertising spending in Italy has been severely affected by the general crisis with all media more or less sharply affected compared with 2012. Radio, in particular, while remaining in a negative trough (-14.4% to June), in September picked up slightly at -12.1% (source: Nielsen) and showing, in recent months, pale signs of containing the decline.

In this context, advertising sales for R101 in September were essentially in line with the trend in the market showing, in addition to the downturn in the main product sectors – in particular the automotive sector – also the typically marked seasonality of the period: total revenues came to €8.9 million, a fall of 13.6% on the €10.3 million of the first nine months of 2012.

On the content side, in addition to the appointment of a new head of content, efforts continued for the implementation of the renewal and enhancement of formats with a series of targeted actions, some of which already defined, others in progress, aimed at enabling R101 to take advantage of the opportunities that will derive from the hoped for recovery in advertising spending.

RENEGOTIATION OF CREDIT LINES FOR A TOTAL OF €570 MILLION WITH WAIVERS ON EXISTING COVENANTS

Mondadori has renegotiated the credit facilities for a total amount of €570 million.

In particular, it has signed a new loan agreement with a syndicate of five banks for an amount of €270 million with maturities, for the same sum, in 2016-2017-2018 to replace existing credit lines with short maturities for a total of around €380 million.

Existing credit lines, amounting to €300 million, comprising a loan of €200 million granted by Intesa Sanpaolo expiring at the end of 2016, and by a €100 million loan granted by Mediobanca and expiring at the end of 2017 have also been renegotiated.

The “all-in” face value cost of all credit lines is 485 bps (+Euribor).

Waivers on the existing covenants net debt/EBITDA for 2013 and 2014 have also been defined to facilitate the processes of organisational restructuring and relaunching of the Group.

EXPECTATIONS FOR THE FULL YEAR

The actions put in place by the Group regarding the change in strategy and organisation and significant cost reductions, have affected all the businesses and will have more positive effects in the latter part of the year, for which we expect a level of gross operating profit (before restructuring charges and extraordinary items) in line with that of the same period last year.

As for the full year 2013, the ongoing lack of any signs of improvement in the market means that the gross operating result will be substantially lower than last year, also as a result of marked effect of non-recurring items and restructuring charges.

§

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

§

The interim report for the period to 30 September 2013 will be available from today at the the company’s headquarters, Borsa Italiana S.p.A. (www.borsaitaliana.it) and on the web site www.gruppomondadori.it (in the “Investor Relations” section).

Also today, the documentation relating to the analysts’ presentation of the results for the year to 30 September 2013 will be available on www.gruppomondadori.it (in the “Investor Relations” section) and www.borsaitaliana.it.

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

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

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

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

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

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

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

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

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

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

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

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

RESULTS OF THE BUSINESS AREAS

• BOOKS

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

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

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

• ADVERTISING

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

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

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

• MAGAZINES FRANCE

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

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

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

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

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

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

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

• DIGITAL

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

• DIRECT

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

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

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

• RADIO

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

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

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

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

§

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

§

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

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first nine months of the year to 30th September 2011, as presented by the Group’s deputy chairman and chief executive, Maurizio Costa.

THE MARKET SCENARIO
As is well known, the third quarter of the year saw a significant deterioration in markets, particularly in the eurozone. Concerns of an economic nature were heightened also by fears of a financial crisis even worse than that of the recent past.
The lack, at a European level, of an immediate and common response to market problems has resulted in an even more negative perception of the situation and a high level of pessimism about prospects for growth, employment and stability.
The magazine market in Italy saw a continuation of the decline in circulation and a was sharp downturn in advertising. The book sector remained essentially stable, despite the absence of bestsellers and falling cover prices. There was a particularly marked fall in retail sales, both in directly managed stores and the large-scale retail channel.
In France, there were no particular changes in the annual trend in the magazine sector while advertising, which remained buoyant until September, saw a downturn from the beginning of October.

GROUP PERFORMANCE FOR THE PERIOD TO 30 SEPTEMBER 2011
In the context of the situation described above, in the first nine months of the year the Mondadori Group recorded:
– revenues that were slightly down against the same period of 2010, with a growing contribution for digital activities;
– another improvement in operating profitability, thanks to essential stability in the traditional businesses while positive non-recurring elements have made it possible to compensate most of the development costs of the digital business;
– a marked increase in net profit, also due to the absence of extraordinary tax charges paid in 2010 relating to previous years.

Consolidated revenues came to €1,114.7 million, a slight fall (-1.4%) on the €1,130.2 million for the same period of 2010.

Consolidated gross operating profit amounted to €104.6 million (+1.5% on the €103.1 million for the first nine months of last year): on a like-for-like basis, excluding non-recurring items and investments for digital development, gross operating profit increased by del 3.2% compared with the same period of 2010.

Consolidated operating profit came to €87.8 million, an increase of 2.6% on the €85.6 million for the same period of 2010, with amortizations and depreciations on tangible assets of €16.8 million (€17.5 million in 2010).

Consolidated pre-tax profit amounted to €71.3 million, an increase of 5,6% on the €67.5 million of the same period of last year, with interest of €16.5 million, compared with €18.1 in 2010.

Consolidated net profit came to €44.1 million, an increase of 43.6% compared with the €30.7 million of the same period of the previous year, which was impacted by non-recurring tax charges related to previous years (net of which the increase would still have been of 11.9%).

Gross cash flow for the first nine months of 2011 amounted to €60.9 million, compared with €48.2 million for the same period of 2010.

The Group’s net financial position went from -€342.4 million at the end of 2010 to -€380.6 million on 30 September 2011 (-€369 million on 30 September 2010); and in May the company paid dividends of €40.3 million.

Information concerning personnel
On 30 September 2011 permanent and temporary contract staff employed by the companies of the Group amounted to 3,720, essentially in line with the figure for the same period of last year (3,717).

The headcount figure includes also the development activities of the new Digital Area, the start-up of a new web company (Glaming), the hiring on fixed-term contracts of a number of staff at museum bookshops and the consolidation of AME Editoriale Wellness.
Given these changes, the current headcount is in fact 52 units lower than the same period of 2010 (-1.4%).
Account should also be taken of the fact that the figure for September traditionally rises for the hiring of temporary seasonal staff related to the school textbook sector until the end of the year.

THE BUSINESS AREAS
BOOKS
Nielsen figures for the first nine months of 2011 show that the summer was characterised by a general uncertainty and weakness in consumer spending that resulted in a slowdown in sales. In this context, the Mondadori Group nevertheless confirmed its leadership in trade books with a market share of 26.1%.

Revenues generated by the Books area amounted to €280.5 million, a 4.8% fall compared with the €294.5 million of the same period of the previous year.

The editorial programme for the closing months of the year is expected to allow for a positive result in terms of market positioning, thanks to strong titles that include new novels by Fabio Volo (Le prime luci del mattino), Giorgio Faletti (Tre atti, due tempi), John Grisham (I contendenti) and Alessandro D’Avenia (Cose che nessuno sa), as well as the considerable interest generated by the only official biography of Jobs.
The quarter also saw the consolidation of growth for the new NumeriPrimi° series, which with sales of 1.6 million copies is at the top of the paperback bestsellers lists.

On the e-book front, on 30 September 2011 the Mondadori catalogue contained 2,700 trade titles, including apps. Thanks to the opening in Italy of Apple’s iBookstore, which has contributed to an increase of more than 100% in the sale of digital titles, growth forecasts for the year can be confirmed.

MAGAZINES ITALY
In a market context of generalised decline in Italian and international magazine publishing, the revenues of Magazines, Italy, which include, in addition to circulation and advertising revenues from Mondadori titles, also revenues from the distribution of titles published by third parties, amounted to €351.1 million, in fall of 3% compared with the €362 million for the first nine months of 2010.

This was the result of:
– a 4.8% fall in circulation revenues (above all due to a reduction in investments in the subscription channel) and a 5.2% slide in add-on sales, which nevertheless retained a high level of profitability in line with the previous year;
– as light reduction in advertising for Mondadori titles compared with 2010 (-0.7%), but with a better than the market trend (-1.8%; Source: Nielsen to August); a marked increase in sales for the internet and the titles of the international network, taking the overall figure to +0.8%.

Work continued in the third quarter on the re-launch and repositioning of titles, of particular note was Donna Moderna Wellness, a new title dedicated to the ecology of body and mind, and the redesign of Sale&Pepe and di Panorama Travel. Initial indications show excellent levels of appreciation prime by both readers and advertisers.
Regarding the Mondadori web sites, in the period from January to September advertising sales grew by 37%, after a particularly brilliant third quarter (+50%), and well ahead of the market (Source: Nielsen to August +13.5%), thanks to the performance of www.donnamoderna.com (+31%), www.grazia.it (+54%) and www.panorama.it (+84%).

MAGAZINES FRANCE
Mondadori France ended the first nine months of the year with revenues of € 259.6 million, a 2.8% increase on the €252.6 million of the same period of 2010.

Circulation revenues, which account for 69% of the total, rose by 2.4%; a particularly significant result given the difficult situation facing the magazine market in recent years which, also in France, has been marked by a constant decline (-4.2%; internal data, in terms of newsstand sales in September).

The total advertising market in the first nine months of the year recorded an increase, in terms of value, of 0.5% (Source: Kantar Media) before a downturn that began from October.
In the same period, Mondadori France out-performed the market with an increase of 5.7% in revenues compared with the same period of the previous year, reaching €62.7 million. This result was mainly due to the excellent performance in revenues from the women’s weekly Grazia (+52%) and the monthly Biba (+11%).
In the last 12 months (October 2010-September 2011) Grazia sold 2,436 advertising pages, an increase of 63%, putting it in second place for total pages among French magazines. The company’s upscale women’s titles now account for 33.5% of total advertising revenues (25.9% in the same period of 2010).

International activities
The positive revenues trend for the company’s international activities continued (+30% compared with the first nine months of 2010), driven by a marked increase in revenues from advertising (+60%). There was also a positive contribution from licensing revenues (+26%), in particular for Grazia Germany, Holland and China.
The number of editions of Mondadori titles published under licence also continued to grow, with three new editions in the period.
There was a decided improvement in the results of the 50-50 joint ventures in Russia and China, in particular thanks to a rise in advertising sales.
The Greek subsidiary Attica saw a fall in revenues due to the worsening financial crisis that has had a negative impact especially on advertising. Nevertheless – thanks to a good performance by the radio stations and a number of add-on initiatives, the reorganisation of the company and the renegotiation of procurement, the final result showed an improvement compared with the same period of last year.

ADVERTISING
Advertising trends in Italy in the first nine months of 2011 have largely confirmed the negative trend that characterised the first six months of the year (Source: Nielsen to August: -4%).
In particular, for the first time since the beginning of the crisis in 2008, there was a slowdown in newspapers (-8.3%), in particular the free press (-49.7%), radio (-5.5%) and television (-4.7%).
Magazines showed a limited downturn (1.8%) on the back of a good performance in the fashion, cosmetics and pharma sectors, and ongoing difficulties in other sectors. Bucking the trend was the internet (+13.5%), making it the healthiest medium at the present time.

With regard to the Group’s activities, Mondadori Magazines saw a slight fall (-0.7%), with continuing positive trends for trend Grazia, Donna Moderna and Tu Style. Monthlies were in line with 2010, with a resilient performance by titles in the interiors sector.

Efforts continued, along with the publisher, for the organisation of fashion events, including Pitti and Milano Fashion & Design, which this year involved Grazia, Interni and R101, as testimonials for an event that was notably successful with both sponsors and the public.

For radio, the new organisation of Mondadori Pubblicità, launched in May and focused on exploiting the sales potential of the company’s entire network, has made it possible to achieve greater results than in 2010, compared with a market that was down by 5.5%.

Advertising sales generated by Mediamond were very positive (+65.9%), thanks to the brilliant results of sites www.donnamoderna.com and www.grazia.it and news sites www.tg.com and www.sportmediaset.it.

The company closed the first nine months of the year with total sales of €165 million, a slight fall (-3.1%) compared with the €170.2 million of the same period of 2010. The difference was largely determined by a downturn in business for third party publishers.

DIRECT and RETAIL
In the first nine months of 2011 total revenues generated by the Direct and Retail area amounted to €182 million, a 3.8% increase on the €175.4 million of the same period of 2010 (for last year’s figures, Mondolibri S.p.A. was consolidated from 1 May 2010).

Direct
Business levels were affected by the negative economic climate and particularly by the fall in direct marketing activities by a number of operators in the large-scale retail sector, traditionally a substantial part of Cemit’s business: faced with a fall in revenues of over 20%, the company was nevertheless able to mitigate the impact on its results.

Retail
Total revenues from stores were in line with the same period of last year, thanks to new affiliations in the franchising network, which compensated for a fall in turnover at the company’s directly owned stores, the result of the closure of a number of significant locations in the centre of Rome and Turin.
The number of outlets in the network rose to 608 (compared with 570 at the end of September 2010).

Revenues generated by the franchise bookshop chain in the first nine months of 2011 rose by 12.8% compared with the same period of the previous year, thanks to new affiliations that increased the number of outlets to 499, compared with 463 in September 2010. On a like-for-like basis, revenues were in line with those of last year.

The directly owned shops saw a fall in turnover of 11.5% compared with the previous year, mainly due to the aforementioned closures. On a like-for-like basis, there was a 3.3% fall in sales.

RADIO
The Italian radio market to 30 September 2011 recorded an overall downturn of 5.5% on the previous year, with a more marked slide in the first half of the year (-8.4%), compensated by a clear recovery in the summer months (+11%), but followed by a decline in September (-6% – Source: FCP Assoradio).

Advertising sales for R101, which markedly outperformed the market, generated revenues in the first nine months of €11.7 million, a 14.7% increase on the €10.2 million of the same period of last year, with a more limited increase in the first half (+7.9%) and a more marked upswing in the last three months (+27%).

DIGITAL
Revenues in the first nine months of 2011 from direct activities amounted to €13.1 million, compared with €5.8 million in the same period of 2010, while the development of indirect digital activities, in the context of other business sectors (e-books, online book clubs, web sites, subscriptions and advertising), achieved a turnover of €19.9 million, up from the €16.4 million of the first nine months of last year. Overall, the Digital area Digital recorded total revenues of €33 million, compared with €22.2 million in the first nine months of 2010.

Among the direct activities, of note were:
– e-commerce, represented by the sale of books, editorial products and sundry goods by Bol.it, which saw a steady improvement (+50% year on year) in the number of monthly visitors (over 1 million users) and a growth in orders of 30% compared with the same period of 2010;
– the development of the applications and services for mobile phones area continued with the creation of apps that have reached the top of the iTunes best sellers list in their category. The last quarter also saw the launch of the first game for the iPad and iPhone produced by Mondadori;
– the Mondadori project for the development of a CRM (Customer Relationship Management) system, aimed at bringing together all of the Group’s various client databases is continuing in line with the forecasted plan;
– on 28 September, the company was awarded a public gaming licence by the AAMS which will enable Glaming, a company owned jointly by Arnoldo Mondadori Editore S.p.A. (70%) and Fun Gaming S.r.l. (30%), to progressively launch a series of online games by the end of November.

FORECAST FOR THE FULL YEAR
The third quarter of the year saw a sharp increase in concerns about the health of the economy, above all in the eurozone, and the resilience of the public finances of member states.
This, combined with consequent pressures on the credit system, has worsened an already difficult situation in manufacturing, consumer spending and investments; while also unemployment, especially among the young, has reached very high levels.

The markets of reference for Mondadori have not been exempt from the general economic crisis, even if the company has so far been able to deal with the situation by placing even more attention on product quality and process efficiency, also with a view to containing costs.

With regard to the prospects for the full year, we can only repeat, with even greater conviction, what we said after the first half report, about the difficulty of making any forecasts, even in the short term.
It should also be noted that the figures for October show a generalised worsening of market indicators; consequently, the evolution of markets in the closing months of the year will be fundamental in determining a level of operating profitability in line with last year.

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The interim report for the period to 30 September 2011, as approved by the board of directors, will be available from today at the company’s headquarters, Borsa italiana S.p.A. and on the corporate web site www.gruppomondadori.it (in the Investor Relations section).
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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.

The Board of Directors of Arnoldo Mondadori S.p.A. met today to examine and approve the interim report for the first nine months of the year to 30th September 2010, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO IN THE THIRD QUARTER

There were no significant changes in the economic trends in the sectors of reference for Mondadori in the third quarter of the year. In particular, both circulation figures and advertising investments remained at lower levels than the previous year. Despite this unfavourable context, the company has been able to achieve in the third quarter a level of gross operating profit 73.2% higher than the same period of last year, bringing the increase for the first nine months of 2010 to 51.2%

A SUMMARY OF BUSINESS PERFORMANCE

The elements that have determined such a conspicuous improvement in profitability, with just a slight increase in revenues (+1.4%), are further confirmation of what was already stated in the report for the first six months, ie:

– a good level of stability in terms of magazine circulation, with a performance clearly ahead of the market average both in Italy and in France;

– a further increase in profitability in the book business, where revenues in the third quarter were also up on 2009;

– a constant improvement of the results from the international network and the ongoing success of Grazia France, both in terms of circulation and advertising sales;

– the increasing contribution of the plan for the reduction of operating costs – which has already realised 85% of the target savings of €170 million over the three-year period 2009-2011 – and which will continue for the whole of next year.

Activities related to digital content have continued with even greater impulse with the stipulation of agreements with operators in production, telecoms and retail; since the beginning of September the digital area has also taken on a locomotive role, both for its own activities and in support for other business sectors, above all magazines and books.

Thanks to the introduction of a new business model and the redefinition of the organisational structure – which will become fully operational from the beginning of next year – will encourage and stimulate the involvement and cooperation of all of the business areas in response to new market opportunities.

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2010

Il Consolidated revenues came to €1,130.2 million, an improvement of 1.4% on the €1,114.3 million of the first nine months of 2009.

Consolidated gross operating profit amounted to €103.1 million, an increase of 51.2% compared with the €68.2 million of last year, despite higher costs due to increased postal charges of €5.5 million.

This is equal to a figure of 9.1% as a proportion of revenues, compared with 6.1% for the same period of 2009.

Consolidated operating profit reached €85.6 million, a 71.2% increase on the €50 million of 30 September 2009, with amortizations and depreciations of tangible and intangible assets for a total of €17.5 million (€18.2 million in 2009). As a proportion of revenues, an increase from 4.5% in 2009 to 7.6%.

Consolidated profit before taxation amounted to €67.5 million, an increase of 35% on the €50 million of the first nine months of 2009, with net financial charges of €18.1 million. For an appropriate comparison with the previous year, account should be taken of a capital gain of €14.5 million in the third quarter resulting from the closure of a private placement and relative derivatives.

Consolidated net profit came to €30.7 million, a 13.3% increase on the €27.1 million of 30 September 2009: this result was affected by the payment of €8.7 million to clear a pending fiscal suit.

Consolidated adjusted net profit, which takes account of the net impact of the extraordinary elements outlined above (financial capital gains in 2009 and tax charges for previous years paid in 2010), was more than double that of the same period of 2009.

Gross cash flow in the first nine months of 2010 amounted to €48.2 million, compared with €45.3 million in 2009.

The Group’s net financial position went from -€372.9 million on 31 December 2009 to -€369 million. The improvement compared with 30 September 2009 was of €47.9 million and €275.5 million compared with 30 September 2008.

Personnel

On 30 September 2010 staff employed by the companies of the group, on both permanent and temporary contracts, totalled, a tempo 3,717.

On a comparable basis, in other words excluding the impact of the recent consolidation of Mondolibri S.p.A., there was a reduction of 260 (-7%) compared with 31 December 2009. This is mainly attributable to the ongoing restructuring process at the parent company, as well as constant efforts to improve efficiencies at all of the companies in the group.

There was a reduction in staff numbers of 688, which corresponds to 89% of the plan 2008/2011.

The action taken to date has been conducted in full compliance with the approved restructuring plan and has made it possible, in nine months and on a comparable basis, to reduce staff by 8% in Italy and almost 5% in France.

As a consequence, the cost of contract staff, which amounted to €198.2 million (€217,9 million on 30 September 2009) was down by 9%.

Finally, it should be noted that the national contract for printing and publishing employees, which expired in March 2010, has, to date, still not been renewed.

RESULTS OF THE BUSINESS AREAS

• BOOKS

Market data for the first nine months of 2010 (source: Nielsen) confirm the leadership of the Mondadori Group in trade books, with an overall market share of 26.7%, with Edizioni Mondadori and Einaudi in the top two places on the list of publishers.

Revenues in the Books area at 30 September 2010 totalled €294.5 million, a fall of 3.8% on the €306 million of the same period of the previous year.

Sales in the third quarter, especially in September, showed signs of a recovery in market share. Of note during the period were the awards of the Premio Strega 2010 to Antonio Pennacchi for Canale Mussolini (Mondadori), the Premio Campiello for the novel Accabadora by Michela Murgia (Einaudi), and the Nobel Prize for Literature to Mario Vargas Llosa, a historic author of Einaudi, as well as the success of the new novel by Ken Follett, and a series of other important new title that augur well for the Christmas season for all of the group’s publishing houses.

To 30 September 2010 Edizioni Mondadori generated revenues of €85.9 million, a 2.8% fall compared with the previous year.

The autumn season was characterised by the simultaneous world publication of the new novel by Ken Follett, La caduta dei giganti, which immediately entered the bestsellers list with an initial print run of 500,000 copies. Among the successful titles in foreign fiction were Sophie Kinsella’s, I love mini shopping, with sales of more than 160,000 copies and first-time author Maria Dueñas with La notte ha cambiato rumore che, that began with sales of 40,000 copies, confirming a great interest among readers for Spanish fiction.

In Italian fiction, Canale Mussolini by Antonio Pennacchi continued to perform well, selling 200,000 copies (making a total of 265,000) and the new novel by Andrea Camilleri, L’intermittenza (already in its fourth printing) has sold more than 150,000 copies.

In non-fiction there was a confirmation of the success of I segreti del Vaticano by Corrado Augias (160,000 copies), while in the unclassified segment the Fabio Volo phenomenon continued (with sales of over 160,000 copies of Il tempo che vorrei two years after it was first published, making a total of 750,000 copies). There were excellent results form the Oscar Mondadori campaign with an increase in sales of around 8% compared with the previous year. The protagonist during the summer months was the Oscar Grandi Bestsellers paperback edition of Paolo Giordano’s La solitudine dei numeri primi, which sold 280,000 copies in just three months, returning to the top of the bestsellers list with the release of the film based on the novel.

In the third quarter of 2010 Einaudi imporved its performance compared with the situation at 30 June 2010, with total net revenues of €33.8 million (-2% compared with the first nine months of 2009).

Among the best performing titles were: Accabadora by Michela Murgia (120,000 copies in 2010); Tre secondi by Roslund-Hellstrom (51,000); Per l’alto mare aperto by Eugenio Scalfari (51,000); Il giovane Holden by J.D. Salinger (77,000) and the recent Mia suocera beve by Diego De Silva with sales of more than 40s000 copies, La vendetta by Anne Holt (35,000). There was confirmed success for La parola contro la camorra by Roberto Saviano and Prima di morire addio by Fred Vargas. It should also be noted that the editorial plan of Einaudi foresees the publication of numerous titles in the last quarter of the year.

In the first nine months of 2010, Sperling & Kupfer recorded revenues of €18.4 million, a fall of 3.7% compared with the first nine months of 2009, mainly due to a fall in revenues from the sale of rights for add-on initiatives. Of particular note was the great success of Sveva Casati Modignani’s Mister Gregory, published at the end of the first half, which has sold almost 190,000 copies.

Cumulative revenues at Piemme to 30 September 2010 amounted to €34.9 million, an increase of 3.6% compared with the same period of last year.

Fiction and non-fiction lines saw an overall fall of 5.1% compared with 2009, mainly due to a different editorial programme for new titles.

The Junior sector continued its positive trend, in the Stilton line the most significant new titles were Sesto viaggio nel Regno della Fantasia (126,000 copies) and Viaggio nel tempo 3 (79,000 copies). Also of significance during the period was the publication of a celebrative volume to mark the tenth anniversary of Stilton, Caccia al libro d’oro (45,000 copies).

Total revenues by Mondadori Electa were down by 17.6% on the same period of 2009, this was due to the effects of a slowdown in all of the segments in which the company operates. The fall of revenues in the bookshop channel (-29.7%) and the substantial disappearance of add-on sales were not, unlike other years, compensated by revenues on the Cultural Heritage area (-12% compared with 2009) mainly due to the loss of certain museum bookstore concessions (Brera and Cenacolo in Milan, and the Musei Civici in Venice) and Sponsorship sales (-16%). There was, however, a recovery in co-editions (sales of foreign rights), penalised by the strength of the euro against the dollar and the pound.

During the first nine months 2010 Mondadori Education generated revenues of €66.8 million, a fall of 1.8% on the same period of the previous year, essentially confirming its share of the textbook adoptions market. The primary school segment confirmed the results of the previous year, thanks to the five-year rule on adoptions. The first level secondary segment saw an overall fall, despite good results for new titles and new editions.

The second level secondary segment saw a slight fall but confirmed excellent results in the subjects in which Mondadori Education is the market leader. There were good results in the scientific subjects affected by the reforms in high schools. Note should also be made of trend for price reductions in both secondary levels.

• MAGAZINES ITALY

Magazine sales during the summer months, traditionally positive for the magazine market, were positive and resulted in a recovery in terms of circulation.

In this context Mondadori performed better than the market, both in terms of advertising sales and single copy sales through the different channels.

The revenues of Magazines Italy in the first nine months of the year came to €362 million, a slight fall (-1.2%) on the €366.5 million of the same period of the previous year.

Even more significant with respect to the market of reference was the increase in profitability, despite the impact of the cancellation of postal subsidies.

This encouraging performance was based on the following factors:

– a 2.9% fall in circulation revenues, markedly better than the performance of the competitors in a market that lost around 5% (around 9% in terms of copies);

– essential stability in revenues from add-on sales (+1.4%), in absolute contrast to a market that slumped by 22%;

– a moderate re-balancing in advertising revenues (-2.4%), even more contained on a like-for-like basis.

Among the most significant factors during the period were:

– the re-launch at the end of July of Tu Style, supported throughout August by a big advertising campaign and promotional initiatives: to date the weekly has achieved notable results (with sales of over 200.000 copies);

– strong support for weeklies, that made it possible in the summer season to grow newsstand revenues close to the levels of 2009;

– the launch of an intensive campaign of launches of add-on sales, some of which are achieving much better than expected results;

– the ongoing programme of reorganisation in editorial and management structures;

– the reinforcement of the activities of Press-Di, the wholly-owned Mondadori subsidiary operating in distribution and subscription management for the group’s titles and third-party publishers. In addition to the numerous contracts for the distribution of newspapers and magazines acquired in recent years, since 1 October the company will also distribute the products of Sergio Bonelli Editore, leader in comic books;

– the conclusion, at the end of July, of the negotiation between Fieg and the Italian postal for an agreement on postal charges, following the cancellation from 1 April of subsidies which for many years compensated publishers for the inefficiencies of the service. The agreement will make it possible to reduce by around 50%, from 1 September, the charges resulting from the application of the new conditions for the delivery of subscription products.

Circulation

As already mentioned, the market saw an overall drop in newsstand circulation of 9% in terms of copies and around 5% in terms of value, compared with the above indicated -2.9% by Mondadori.

Among the group’s weekly titles, there was a marked improvement in the performance of Tu Style; TV guides held up well, as did Chi, Grazia and Donna Moderna. For monthlies, there was an increase in circulation revenues for the titles in the interiors and cooking segments.

Add-on sales

The add-on sales market, which saw a big slump (-22%), was characterised during the period by some particular phenomena, including an increase in the number of initiatives, the maintenance of relatively high prices and a strong downturn in average sales.

In this context Mondadori confirmed also in the third quarter a performance in marked contrast to the market that is expected to continue for the rest of the year.

The various initiatives in the home video segment and collectables were markedly up on 2009; those in music and editorial products, while less brilliant, were nevertheless satisfactory. In a portfolio of articulated activities, the operations linked to the major titles, including TV Sorrisi e Canzoni and Panorama, remain fundamental

International activities

The international activities of Mondadori Magazines generated excellent result to 30 September 2010, with licensing revenues up by 46%, following the good performance of Grazia UK, Grazia Olanda and the contribution of Grazia Germania and Grazia Francia launched during the period.

Revenues for the sale of advertising in Italy for the international network more than doubled, both on account of new editions and for growth in revenues for existing titles (Grazia UK +10%, Grazia Russia +67%).

The performance of 50-50 joint ventures in Russia and China was decidedly better than last year and markedly better than the budget, particularly in terms of advertising sales.

The Attica subsidiary has felt the effects of the financial crisis in Greece and the Balkans with a fall in advertising revenues of around 22% (-20% on a like-for-like basis). A strong cost reduction programme is already being implemented in order to at least partially compensate for the fall in revenues by the end of the year.

Digital

The online advertising market grew significantly, with, in particular, an increase in display advertising of 17.7% compared with the same period of the previous year (source: Nielsen in terms of value, August 2010).

Advertising sales for Mondadori sites, managed by Mediamond, in the first nine months of 2010 saw an increase of 36%, thanks to a significant push by DonnaModerna.com, the positive results of which confirm the validity of the group’s decision to focus on the women’s market.

• MAGAZINES FRANCE

Mondadori France ended the first nine months of the year with total revenues of €252.6 million (-0.9% on the €254.8 million of the same period of last year). Excluding the operations that have affected the consolidation area (the sale of titles to the joint venture Editions Mondadori Axel Springer S.n.c., the launch of Grazia and the restructuring of the magazine portfolio), revenues would be up by 6.7% compared with 2009.

Circulation

Circulation revenues totalled €175.8 million, a 2.1% fall (+4,5% on a like-for-like basis, compared with the same period of last year, thanks mainly to the launch of Grazia and a significant increase in subscriptions). Being less exposed to economic cycles, the subscription channel, which makes up around 33% of circulation revenues, is an important asset for the group.

This positive performance demonstrates the appropriateness of the strategy of repositioning the portfolio of titles towards the “grand public” market that the group has been pursuing since 2007 and has been accompanies by a constant improvement in the editorial quality of the titles. These results are even more remarkable given the current situation in the magazine sector and have been recognised by the market which has, over the last two years, awarded ten prizes for editorial excellence to our products.

In terms of copies Mondadori France recorded an increase of 3% in circulation, while the market as a whole saw a fall of 1.8%. In addition to the effect of Grazia, the excellent performance of other titles in the portfolio should be underlined, in particular Modes et Travaux (+6.2%), Science et Vie Découverte (+5.7%), Biba (+5.1%), Science et Vie Junior (+4.8%), L’Ami des Jardins et de la Maison (+2.5%), Science et Vie (+2.4%) and Closer (+1.7%).

Advertising

Advertising sales were up 5.5% on the previous year, an improvement that was even more significant on a like-for-like basis (+19.1%).

This excellent performance is above all explained by the growth in advertising sales for the up market (haut de gamme) women’s titles (the weekly Grazia and the monthly Biba) that now account for 26% of total advertising revenues.

The magazine advertising market to the end of September recorded an increase of 8.8% in page numbers (source: Kantar Media). In the same period Mondadori France recorded a very positive performance with an increase of 25.8% in pages and a 1.2 percentage point increase in market share.

Activities during the period

The strategic decisions taken in 2009, the launch of Grazia, the concentration in the joint venture with Axel Springer of the auto sector titles and the closure of marginal titles, have had a positive impact of the accounts in 2010.

Despite strong competition from two new titles (Be and Envy, which, however, interrupted publication at the end of September) the positive performance of Grazia continued with an average of 30 advertising pages in 2010 and newsstand circulation of 177,000 copies.

The activities of the joint venture Editions Mondadori Axel Sprinter, following the concentration of the auto sector titles, continued to show positive results, increasing newsstand sales; the editorial structure is evaluating new formulas for Sport Auto and Auto Plus and working on the development of digital activities.

The policy of cost reduction, began in recent years, continued, with particular attention on industrial costs and general expenses.

• ADVERTISING

Advertising investments in the first nine months of 2010 continued the generally positive trend noted in the first half of the year (+4.8% to August, source: Nielsen) showing, on the one hand, a progressive recovery in “healthy” media, including internet, radio and television, while on the other, ongoing difficulties for print media, within which newspapers (with the exception of the free press) and national commercial advertising remained essentially stable.

Magazine advertising, meanwhile, saw a fall of 8.4%, with the positive changes recorded in certain sectors, FMCGs, fashion, cosmetics and lately even furniture, only partially compensating the downturn in other segments. Despite positive August sales, a general uncertainty continues to hang over the medium in the latter part of the year characterised by different client behaviour on different titles, some of which have bucked the general trend in the market.

Mondadori Pubblicità ended the first nine months of the year with total revenues of €170.2 million, essentially in line, on a comparable basis, with 30 September 2009 (€181.6 million).

Marked changes in the revenue breakdown, such as the termination in November 2008 of the contract with Società Europea di Edizioni S.p.A. and the shift of online advertising sales, from January, to Mediamond, have had a negative impact on 2010 of around 7 percentage points.

After a third quarter in slight decline, the Mondadori titles have remained essentially in line with the first nine months of 2009 (-1.2%): on a like-for-like basis -2.4%.

Weeklies have held up well (+1.2%), thanks mostly to the performance of women’s titles, particularly Donna Moderna, Chi and Tu Style, that was supported by a targeted sales campaign that resulted in a total increase in sales of 35%, coinciding with the re-launch in July (+50% in the third quarter alone). The monthlies remained below the levels of 2009.

In concert with the publisher, activities have continued in the development of digital projects, including the launch of iPad versions of Panorama and Grazia, and the realisation of new events with innovative promotional formats. These include “Fashion & Design 2.0”, organised by Grazia and Interni during the Milan Fashion Week and “Milano Design Weekend”, an event dedicated to the interiors sector that took place in October.

In radio, the positive trend of R101 continued, up 6.2% in the first nine months of the year, and progressively recovering compared with the trend in the market in recent months. The figure is even more significant when account is taken of the comparison with an excellent first quarter in 2009, 7 percentage points ahead of the market. Sales were also good for Radio KissKiss, which began in March of last year.

• DIRECT and RETAIL

The Direct and Retail area generated revenues in the first nine months of 2010 of €181.2 million, a 29.2% increase on the €140.2 million of the same period of 2009.

It should be pointed out that the figures for last year did not include Mondolibri S.p.A., which has only been consolidated since April 2010; on a comparable basis, the increase was of around 7%.

Direct

Cemit saw a 25% increase in revenues, in a market that grew by just 2%.

Since May 2010, Cemit has been joined by Mondolibri, which with its seven thematic book clubs operates in mail-order sales with around 800,000 members.

The revenues of the book clubs were down by 6% compared with 2009; though this was compensated by growth in the e-commerce channel through the Bol.it web site (+34%).

Retail

Retail sales which, from May also include sales from the Mondolibri book shops, grew by 12.1% (5% on a like-for-like basis) compared with the same period of last year.

This increase in turnover was largely due to the expansion of the network, which now totals 570 book shops and multicenters, including both directly owned and franchised stores and Edicolè outlets

• RADIO

Advertising for R101 generated total net revenues in the period of €10.2 million (+5.2% on the €9.7 million in the first nine months of 2009). These are essentially the company’s share of the gross advertising revenues of around €14.7 million, up by 6.2% on the same period of last year.

In particular, in September, R101 recorded growth in advertising sales of 5.3% compared with 2009, in a market of reference that was down (-0.5%; +11.2% cumulative to the end of September: source FCP Assoradio).

The figure, overall lower than the market average, is however positive when account is taken of the fact that in the period display advertising on R101 (which makes up 91% of the radio station’s advertising) grew by 10% on 2009. The fall is therefore entirely attributable to a lower number of special initiatives compared with the first nine months of last year.

R101 is currently examining new projects to be introduced in the early part of next year aimed at further improving the station’s positioning in its targets, revamping the schedule and continuing to build the audience.

EXPECTATIONS FOR THE FULL YEAR

The third quarter saw a confirmation of the indications outlined in the half yearly report: all of the businesses achieved better revenue performance than the market benchmarks and, at the same time, continued to pursue the development of new activities.

Reorganisation objectives were also achieved, both in terms of simplifying processes and reducing operating costs.

These have resulted in a substantial recovery of profitability, which, failing any particular changes in market trends, we expect to continue during the last months of the year, allowing the company to significantly increase its operating profit for 2010, despite higher costs resulting from increased postal charges.

Also the estimate for net profit for the year, the improved operating performance should compensate for the impact of extraordinary items (positive in 2009 and negative in 2010) making it possible to post a significantly better final result than last year.

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SHAREHOLDERS MEETING: APPROVAL OF THE APPOINTMENT OF THREE NEW DIRECTORS

A Shareholders’ Meeting, held prior to the board of directors meeting, approved the enlargement of the board from 11 to 14 members, appointing as directors Roberto Briglia, as an executive director given his role as Group Editorial Director, and Angelo Renoldi, professor of economics and business administration at the University of Bergamo and Carlo Sangalli, chairman of Confcommercio (the Italian association of retailers) as independent non-executive directors.

The board of directors verified the requisites of independence, foreseen by the Code of Conduct for listed companies, of both Renoldi and Sangalli. The other independent non-executive directors already in office are Martina Mondadori, Marco Spadacini, Mario Resca and Umberto Veronesi.

The appointments, approved by the Shareholders, therefore will result in the enlargement of the independent component of the board, in line with the progressive reinforcement of the role of the same, as defined, in particular, by soon to be introduced Consob regulations regarding operations with related parties. These appointments will also further consolidate and support respect for the functions and activities of the board of directors’ internal committees.

The board of directors itself has consequently redefined the composition of the Internal Control Committee and the Remuneration Committee. In particular, the Internal Control Committee is entirely made up of independent non-executive directors, Marco Spadacini, Angelo Renoldi and Mario Resca; and the Remuneration Committee by the independent directors Marco Spadacini and Carlo Sangalli and the non-executive director Bruno Ermolli.

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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 period to 30 September 2010 is made available, as per current legislation, at the company’s corporate headquarters, Borsa Italiana S.p.A. and on the web site www.gruppomondadori.it

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

THE MARKET SCENARIO

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

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

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

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

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

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2009

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

RESULTS OF THE BUSINESS AREAS[1]

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

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

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

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

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

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

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

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

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

· Magazines Italy

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

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

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

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

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

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

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

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

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

International activities

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

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

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

· Magazines France

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

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

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

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

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

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

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

· Advertising

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

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

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

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

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

• Direct Marketing

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

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

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

• Retail

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

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

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

• Radio

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

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

EXPECTATIONS FOR THE FULL YEAR

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

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

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

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

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

§

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

§

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

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

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

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first nine months of the year to 30th September 2008, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO

From the beginning of the second half of 2008, as feared, the effects on the real economy of the financial and macroeconomic problems that hade emerged in the preceding period began to be felt and had an immediate and somewhat violent impact on consumer spending. A period of recession is now almost certain, and it is difficult to forecast either the quantitative impact or duration.

In Italy that characterising element of the general situation in the market of reference for the Mondadori Group has been a further marked decline in advertising investments, while there has been a continuation, without particular variations, in the slowdown in circulation and add-on sales. The growth recorded by books in the first months of the year has also come to a halt.

In France, magazine circulation has fallen, but also here it is advertising that has been most affected by the situation of uncertainty about prospects in the short term.

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2008

Despite such a difficult context, the Mondadori Group confirmed its capacity on the revenue front, recording a gross operating profit – net of add-on sales – that was higher than that of the corresponding nine-month period of the previous year, notwithstanding ongoing investments in business development.

This has been made possible by paying close attention to operating costs and efficiencies in all areas of the company that has enabled the Group, also in the third quarter, despite a fall in revenues due to the economic situation, to increase its margins compared with the same period of the previous year.

Consolidated revenues for the first nine months of 2008 came to €1,368.1 million, a fall of 5.1% compared with the €1,441.7 million in the first nine months of 2007 (-1.5% net of add-on sales).

Consolidated gross operating profit at 30 September 2008 came to €168.8 million, a fall on 9.8% on the €187.1 million of the same period of the previous year (+1.8% net of add-on sales). As a proportion of revenues, a fall to 12.3% from the 13% of the same period of 2007.

Net of the impact of add-on sales (-€20.8 million) and non-recurring factors (increased capital gains: +€3 million; personnel: -€1.5 million due to the application of new regulations on leaving entitlements in 2007 and extraordinary charges), operating margin would have grown by €1 million due to improved business results (+€7.2 million) and increased investments in development activities (-€6.2 million).

Consolidated operating profit at 30 September 2008 came to €137.5 million, a fall of 11% on the €154.5 million of the same period of 2007, with amortizations and depreciations of tangible and intangible assets for a total of €31.3 million (€32.6 million in 2007); as a proportion of revenues, a fall from the 10.7% of 2007 to 10.1% this time.

Consolidated profit before taxation amounted to €104.5 million, a fall of 19.8% on the €130.3 million of the first nine months of 2007, with an increase of €8.8 million in net financial charges, essentially due to the increased cost of borrowing (around €4.7 million) and lower returns from financial investments (around €3.1 million) and the IAS regulations regarding leaving entitlements (€1 million).

Consolidated net profit at 30 September 2008 came to €58.8 million, a fall of 16.1% on the €70.1 million for the same period of the previous year.

Gross cash flow in the first nine months of 2008 amounted to €90.1 million, compared with €102.7 million in the first nine months of 2007.

The Group’s net financial position at 30 September 2008 showed a deficit of €644.5 million, compared to a deficit of €535.3 million at the end of 2007. During the period income taxes of €65.5 million and dividends of €83.8 million were paid out.

RESULTS OF THE BUSINESS AREAS

• Libri

In the first nine months of 2008 the Book Division generated revenues of €316.5 million, a fall of 3% on the €326.4 million of the same period of 2007 (-1.8% net of the contribution of the sale of rights for add-on sales initiatives).

During the period the Group confirmed its leadership in the trade segment with a marked advantage over its main competitors, despite a period of recession and a general decline in consumer spending. Particularly positive results were recorded by Edizioni Mondadori, that saw its market share increase by a full percentage point, and Einaudi, which confirmed its position as Italy’s second-largest publisher. In the first nine months of the year, the Turin-based publisher generated net revenues of €37 million, an increase of 5.4% on the same period of 2007.

Among the important events during the period was the exceptional success of La solitudine dei numeri primi, the first novel by a new writer, Paolo Giordano, which also won the 2008 Premio Strega, and has sold more than 800,000 copies; among the long sellers, of special note was Gomorra by Roberto Saviano, which reached one and a half million copies.

• Magazines

The Magazine Division generated revenues of €725.5 million in the period, a fall of 8.4% on the €791.8 million at 30 September 2007, largely due to the fall in add-on sales (net of add-on sales, the fall in the Division’s total revenues would be of just 3%).

Italy

Revenues generated in Italy in the first nine months of 2008 amounted to €440.9 million, a fall of 12.5% compared with the €504 million of the same period of 2007.

The shortfall in revenues is attributable to the following factors:

– weakness in circulation revenues (-5.2%) in line with the reference market, marked by a decline in all segments of the business;

– as already indicated, a marked fall (-29.9%) in revenues from add-on sales, in line with the main competitors. The on-going decline in this type of activity has necessitated a stricter selection of the initiatives in order to maintain significant margins while reducing the risks of failure.

– a downturn in magazine advertising (-2.1%) which, after an encouraging start in the first quarter, saw an abrupt slowdown, above all from the summer period.

On the circulation side, Mondadori consolidated its market share, maintaining its position of absolute leadership. The best performances were recorded in the news segment with Panorama, in women’s weeklies with Donna Moderna and in the up-market segment by Grazia and Flair, which also performed well on the advertising front.

France

In the first nine months of the year Mondadori France generated revenues of €284.6 million, essentially in line (-1.1%) with the €287.8 million of the same period of 2007.

Over the same period, the company continued its efforts to reduce costs, generating important savings on both the production and distribution fronts.

The circulation revenues of Mondadori France remained at the levels of the previous year (+0.1%). In particular Closer and Biba recorded excellent performances; Modes & Travaux and Top Santé held up well, as did Le Chasseur Français and Télé Star Jeux, following their re-launches, while difficulties continued in the TV guides segment. Overall, also subscription revenues remained at the levels of the previous year, thanks to marked increases for Closer and Auto Plus.

On the advertising side, France saw a continuation in the third quarter of the marked slowdown in advertising sales.

Mondadori France, while safeguarding its market share, was particularly penalised by a downturn in sales in the Femme Grand Public, TV and auto segments; while results were positive in the people and up-market segments, driven by strong growth in the circulation of Closer and Biba.

In this context, Mondadori France in the first nine months of the year recorded advertising revenues of €75 million, an 8.4% fall on the €81.9 million of the same period of the previous year.

International activities

During the period there was a continuation in the rise in revenues from the international editions of Mondadori titles. The network, which as of 30 September had reached 15 units, either licensing agreements or joint-ventures, expanded further in October with the launch of Sale&Pepe in Romania, Grazia Casa in Croatia and Casaviva in Bulgaria, followed in November by the launch of a Serbian edition.

• Advertising

Mondadori Pubblicità recorded revenues for the period of €244.7 million, a fall of 1.6% on the €248.8 million of the first nine months of the previous year.

After a positive first half, the third quarter saw a reflection, albeit to a lesser degree, of the worrying downturn in the market as a whole in the period.

As regards individual titles, there was expansion for the Grazia “system” (+9%) and a positive trend for Flair as well as TV Sorrisi e Canzoni and Panorama, despite a critical moment for the segments typically characterised as “male”. In other media, there was further consolidation in radio with a substantial (+33.3%) increase for R101, while in the Internet area, in line with the market, there was an excellent performance by the web site www.donnamoderna.com.

• Printing

The situation at 30 September 2008 saw a significant fall in revenues compared with the same period of the previous year, due to a general decline in the market.

During the third quarter there was a further marked reduction in pages due to the sudden arrest in advertising compared with the first half, and there was a confirmation of the slowdown in the market for newspaper and magazine supplements.

In the first nine months of the year the Printing Division recorded total revenues of €281.2 million, in fall of 15.6% on the €333.3 million of the same period of the previous year, mainly due to the absence of activities for Mondadori Education, that were present in 2007.

As for other areas, the market for catalogues and commercial products was stable and in line with expectations; illustrated books showed signs of recovery in the volume of printing in Europe, compared to the Far East, and interesting printing contracts for the American market.

There was a slight increase in the cost of paper in the period, in particular for the paper used in the printing of magazines. Utilisation of plant capacity was lower than the budget, despite a significant reduction in outsourcing.

• Direct marketing

In the first nine months of the year Cemit operated in an increasingly difficult market, characterised by reductions in communication investments. During the period the company recorded revenues of €15.9 million, a fall of around 7% on the €17.1 million of the same period of the previous year, while maintaining a good level of profitability thanks to an improvement in the mix, which was more focused of higher value added activities and the ongoing control of costs.

• Retail

Total revenues from the Retail Division in the first nine months of 2008 came to €128.6 million, an increase of 7.3% compared with the €119.9 million of the same period of the previous year.

Mondadori Franchising recorded revenues of €44.2 million, an increase of 13.3% on the €39 million of the same period of 2007, thanks above all to new affiliations. The company’s expansion programme continued during the period raising the number of its outlets to a total of 369, making it Italy’s largest network of outlets for the sale of editorial products, of which 212 are bookshops (205 on 30 September 2007) and 157 Edicolè newsstands (117 at the same point of 2007).

Mondadori Retail revenues in the first nine months of the year came to €84.4 million, an increase of 4.3% on the €80.9 million of the same period of 2007. During the period the number of directly controlled outlets rose to 30.

• Radio

The net revenues of R101 in the first nine months of the year amounted to €11.1 million, a 50% increase on the €7.4 million of the same period of 2007, and corresponding to gross advertising revenues of €16 million (€12 million at 30 September 2007).

The good audience ratings for the station were confirmed in the period, reaching an average daily audience of 2.1 million (+4.85% in the 5th Audiradio cycle compared to the same period of the previous year), in a slightly falling market.

SIGNIFICANT EVENTS AFTER THE CLOSE OF THE PERIOD

Sale of 80% of Mondadori Printing S.p.A.

As previously communicated on 14 October, Arnoldo Mondadori Editore signed a preliminary contract for the sale of 80% of the subsidiary Mondadori Printing S.p.A. to the Gruppo Pozzoni. The value of the transaction was defined on the basis of an enterprise value for 100% of Mondadori Printing of €145 million. The impact of the operation on the consolidated net financial position of the Mondadori Group will be of €123 million.

The operation should be seen in the context of a general trend toward consolidation and concentration among the qualified players that characterises the printing sector at an international level in response to new competitive pressures, overcapacity and a fall in demand.

The agreement gives to the Gruppo Pozzoni an option to buy the remaining 20% of Mondadori Printing, that may be exercised from December 2011, at a cost determined by the fair market value of the company on the date of the operation. Mondadori will retain an option to sell the same 20%, from January 2017, at a price to be determined by the abovementioned criteria.

The agreement also includes an 8-year printing contract – renewable on terms in line with the best market benchmarks – guaranteeing Mondadori an improvement in terms of costs and the maintenance of high standards of quality.

The terms of the operation and the signing of the preliminary contract are subject to the approval of the Italian Competition Authority.

EXPECTATIONS FOR THE FULL YEAR

The current economic and financial situation is marked by exceptional factors and consequent uncertainties that cannot be compared to the past. Both the scale and, above all, the timing with which critical factors become evident, make it difficult to make forecasts about both the medium and the short term.

What is clear is that, even in these recent difficult months, the Mondadori Group has been able to face the inevitable downturn in business with results that are in line with the best expectations, and even better than the previous year, if the add-sales are excluded. At the same time, the company has created the conditions for further improvements in efficiency through an industrial partnership in printing.

As a result, it is possible to confirm, in line with the projections made at the time of the report on the first half of the year to 30 June, that, the management results for the core business, excluding add-on sales activities, at the end of 2008 are in line with those of the previous 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.