Press releases

Donna Moderna, Corri con noi: enrolments now open for the final run in Morocco

Donna Moderna, the Mondadori Group brand leader in the women’s segment, is opening enrolments for the Iriki Adventure, an exciting trip to Morocco, the last stage of the big Corri con noi (Run with us) project that offers the possibility for women who love to run and walk to train in 9 cities around Italy.

The final adventure will take place from 19 to 27 October in the Erg Chegaga desert where two options will be available: 80 km in 4 days for runners, and 40 km in 4 days for walkers.  Participants will come in contact with local customs and habits and the stories and traditions of Morocco and the enchanting city of Marrakesh.

“It will be a unique experience that will allow us to get to know the territory and its people slowly, as only walking can. And it will also be wonderful to share all of this with the community of women that have been activated by the Corri con noi project,” declared Annalisa Monfreda, editor of Donna Moderna.

Participants will also get to know the editor of the Mondadopri Group magazine who will be running with them, as well as the journalist of the staff, the ambassadors and the many women who have decided to enjoy an unforgettable week in one of the world’s most beautiful the deserts.

The race will take place in a breath-taking landscape, a corner of the Sahara close to the border with Algeria, with some of the country’s most impressive dunes, some of which are 300 metres high.

The runners will sleep in specially equipped tents and will also be able to take part in yoga and dance lessons and cookery courses. They will see sand dunes and high plains of rock and stones, Berber villages and the world’s largest palm grove.

For the women who are already enrolled in Corri con noi – and will take part in the training sessions in 9 Italian cities – the package will cost €2,000. For all other participants the cost will be €2,200. The price includes the entire experience, flights, the race and bib.

Full details of programme and how to enrol can be found on: donnamoderna.com/corriconnoi

Running with us as partners of the initiative are: Royal Air Maroc the Moroccan national airline; Equilibra an historic Italian company that for over 30 years has been the leader in the market for food supplements and natural cosmetics; Salvelox with Salvelox plasters and a line of products for foot health; Tescoma a world leader in kitchen utensils with the Purity of drinks bottles, ideal for sport.

The project is open to all companies interested in contact women involved in an aggregation and empowerment project together with Donna Moderna

Donna Moderna, Italy’s leading network for women network, is an ecosystem that through the magazine, web and social media channels,  embraces a digital audience of 14 million unique users per month (Source: Audiweb TDA media Dec-Feb 2018) and a total audience of 3.5 million readers every month (Source: Audipress 2018/III) to which should be added over 1,100,000 fans on Facebook, more than 500,000 followers on Twitter and 150,000 on Instagram.

At the cinema with Grazia – ‘Il campione’, the latest film starring Stefano Accorsi, an exclusive premiere for Grazia readers

Grazia, the magazine edited by Silvia Grilli, intensifies its relationship with the world of cinema.

 

Grazia and QMI Stardust, a leading entertainment mar­keting and communication agency organised a special screening on Tuesday 16 April for loyal readers and fans of the magazine at the Anteo Palazzo del Ci­nema in Milan of Il Cam­pione, the latest film starring Stefano Accorsi.

 

In addition to Silvia Grilli, the editor of Grazia, also present at the screening were the star of the film, its director Leonardo D’Agostini, the producer Matteo Rovere and the screenwriters Giulia Steigerwalt and Antonella Lattanzi.

 

Il Campione is the story of Christian Ferro (played by Andrea Carpenzano), a genial and unruly football superstar, an idol to fans across the world, but whose antics make him a  constant target of the media. How can he be put back on the straight and narrow? The chairman of his club has an idea: a weekly exam: If he doesn’t pass, he doesn’t play.  Right up until he passes his high school diploma.

The film, in cinemas from today, will be much discussed, given that it starts from a common prejudice that great football players are often both uneducated and undisciplined. But there is much more to this film: there is an encounter between two apparently opposing lifestyles. That of the football player Christian Ferro and his somewhat solitary and reserved teacher, Valerio Fioretti (played by Accorsi), who has to deal with a difficult past. At the beginning they are not able to communicate, then they develop a relationship based on mutual respect and affection, that enables both of them to grow.

 

At the beginning of the film the teacher is weary and demotivated, but the discovers that: “For the first time I’ve once again discovered that I like this job.” The goal-scorer, meanwhile, gradually learns to keep a check on his anger and understands that the biggest challenge he faces in life is not on the field, but with himself.

 

The film, a Groenlandia production with Rai Cinema in association with 3 Marys Enter­tainment, is produced by Matteo Rovere and Sydney Sibilia and distributed by 01Distribution.

 

Donna Moderna launches 50&me

As they approach 50 women feel and are in the middle of their personal and social lives, but also have to face challenges and contradictions that are among the most challenging in their existence. It is an age that is lived with pride and naturalness, but also often with the need to juggle a thousand demands between work and the family.

Donna Moderna, the women’s weekly edited by Annalisa Monfreda has developed the 50&me project to provide a response to the many issues raised, which range from beauty to work, health and caregiving and many more.

50, a turning point. How to face it in order to enjoy it and deal with the complexities? The Mondadori Group brand responds to the many questions raised with articles, videos and a Facebook live campaign dedicated to the most engaging issues for women in this period of their lives.

“Women reach the age of 50 full of energy and expectations. They feel that they still have much to give to society and are not ready to resign themselves to the role of mere spectators. Our project aims to give such women the tools they need to continue to be protagonists,” announced the editor, Annalisa Monfreda.

A large number of companies have already been brought on board by the advertising sales company Mediamond, with native and content marketing projects.

Starting with beauty: 50 is the new 30 for women. But sometimes the mirror doesn’t reflect the image of energy and vitality that one feels: a tired face and a body that begins to show small signs of wear. And it is here that the latest generation of cosmetics and new technology can be of help. With the contribution of experts from BioNike, 50&me wants to offer women concrete and practical beauty advice. This historic Italian dermocosmetic company has forever been involved in scientific and dermatological research and, with Donna Moderna, will address the theme of resilience, in other words “the capacity to absorb impact without breaking”. A concept used initially in physics, and subsequently in psychology, that seems like a made to measure definition for women.

The issue of work is also crucial for women in their fifties: in fact the number of women in this age group is increasing in companies. And work is still important for them, and yet only a very small proportion feel that their talents are used to the full: they often feel lost and in objective difficulty. This why the project – in collaboration with Gruppo Adecco – will also address the issue of repositioning in the workplace and reverse mentoring and the value that women bring within an organisation.

Women also live longer than men, but their health is often more precarious due to both biological and hormonal factors. In this area the50&me project is supported by Protein SA, that will enable us to examine issues related to prevention and integration with its key product Colpropur, which is new to the Italian market. The natural, hydrolysed collagen-based product is used for the preservation of joints, bones, muscles and skin.

The initiative, which will run until the end of the year, will also take a close look at the issue of caregiving (for those who also have to look after aging parents), with information about legal tools for the protection of caregivers, associations around the country that provide support and welfare services provided by companies. And, finally, extensive coverage will also be given to dietary and lifestyle advice for the over-50s, as well as economic and financial advice in order to manage the future in the best way possible, and much more.

50&me is also online with a special on www.donnamoderna.com/50eme that looks in detail at the issues covered in the magazine, with advice and suggestions for how to make the best of your age and looking closely at all of the opportunities and services available for women. All of these issues will also be addressed on a daily basis in the newsletter Un caffè con Donna Moderna.

A series of videos and interviews will be available live on social channels in which experts will discuss and respond to readers’ questions.

Donna Moderna, Italy’s leading network for women, is an ecosystem that through the magazine, web and social media channels, embraces a digital audience of 13 million unique users every month (Source: Audiweb TDA November 2018) and reaches 3.5 million readers each month (Source: Audipress 2018/II) to which should be added the more than 1,100,000 fans on Facebook, over 500,000 followers on Twitter and 150,000 on Instagram.

The magazine Chi presents: a chat with Alfonso Signorini

A chat with Alfonso Signorini is a new event, created by Chi, Italy’s most widely-read people magazine,  which will take place for the first time in Milan on 21 March at 6:30 pm at the Grand Hotel et de Milan in Via Manzoni, 29.

An unmissable opportunity for all fans of the Mondadori Group magazine to participate and get to know not only the editor, but also the many personalities from the world of television and entertainment that every week animate the pages of their favourite magazine, up close.

An authentic salon moderated by the editor Alfonso Signorini, and an occasion to look more closely at current affairs, the most unexpected gossip and the personal and intimate side of the most popular celebrities.

This will be the first in a series of encounters open to readers that will be held in symbolic locations in the city of Milan. Starting from the Grand Hotel et de Milan, known locally as the “Milan”, that has long been frequented by artists, diplomats, actors and many of the performers associated with Milan’s famous La Scala theatre.

For accreditation for A chat with Alfonso Signorini please go to the site http://chiacchieriamo-con-alfonsosignorini.eventbrite.it to register.

BoD approves results at 31 December 2018

The results of the 2018 financial report have been prepared in accordance with IFRS 5, showing Magazines France amounts under “Adjusted result from discontinued operations” [1]

Targets set for the year achieved:

  • further operating and financial consolidation
  • greater focus on the more profitable core businesses

Results in line with forecasts:

  • Consolidated net revenue from continuing operations € 891.1 million: -8.1% versus € 970.1 million in 2017;
  • Adjusted EBITDA[2] from continuing operations € 90.1 million: +6.6% versus € 84.5 million in 2017;
  • Adjusted net profit from continuing operations € 20.3 million as forecast (€ -6.9 million versus 2017 due to higher restructuring costs).
    As a result of the fair value adjustment of French operations, amounting to € -200.1 million, the figure at 31.12.2018 drops to € -177.1 million versus € 30.4 million at 31.12.2017
  • Group net financial position improves by approximately 22% to reach € -147.2 million versus € -189.2 million in 2017

Targets for continuing operations in 2019

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

Proposed revocation and granting of powers to the board of directors pursuant to articles 2443 and 2420 ter of the italian civil code

[1] In 2018, the “Adjusted result from discontinued operations” included the net result of Mondadori France in the current year, together with the recognition of the fair value adjustment of assets being sold, to reflect the negotiations in progress, previously measured at value in use. This item also includes the financial expense held by the Parent Company, but attributable to Mondadori France and charged to the latter under the intercompany loan agreement (approximately € 3 million). The “Adjusted result from continuing operations” and the “Adjusted result from discontinued operations” therefore differ by this amount from the amounts of the statements attached to this Report (equal to € -192.4 million in 2018 and € 12.6 million in 2017), prepared in accordance with IFRS international accounting standards.

To enable a like-for-like comparison, 2017 figures have been restated accordingly.

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

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the draft Parent Company and Group consolidated financial statements at 31 December 2018 presented by CEO Ernesto Mauri.

PERFORMANCE AT 31 DECEMBER 2018
In 2018, the Mondadori Group achieved the targets set: on the one hand, further operating and financial consolidation and, on the other, the launch of a new strategic repositioning phase, with the revision of the portfolio of activities in the Magazines Italy Area and the start of the disposal of Magazines France, enabling the Group to place greater focus on the more profitable core businesses.
The results achieved in the year, in line with the targets set, also confirm the Group’s leadership in its segments of operation.

Consolidated net revenue in 2018 amounted to € 891.1 million, down by 8.1% versus € 970.1 million in 2017.

Consolidated adjusted EBITDA increased by more than € 5 million to reach € 90.1 million versus € 84.5 million in 2017. Specifically:

  • the Books Area increased its contribution to reach 87% of Group EBITDA (from 83%), with margins of approximately 19% on revenue and an 11% increase versus 2017, due mainly to the Educational Area.
  • the Retail Area increased adjusted EBITDA to reach € 1.4 million versus € 0.7 million.
  • the Magazines Italy Area recorded adjusted EBITDA of € 11.9 million, down by approximately € 3 million versus the prior year.

The Group’s EBITDA margin in 2018 rose to 10.1% of consolidated revenue (from 8.7%), confirming the significant improvement in operating efficiency.
The percentage on revenue of goods sold, variable costs and overheads was reduced as a result of ongoing measures to improve efficiency and contain costs across all the areas.

Additionally, the reduction in cost of personnel continued (-6.7% versus the prior year; approximately -5.7% on a like-for-like basis[1]): at 31.12.2018, employees, considering continuing operations, were 2,132, down by 6.2% versus 2,275 at 31 December 2017, as a result of the disposal of Inthera and Panorama, and of the continued efficiency actions on each business area of the Group.

Reported EBITDA fell by € 9.2 million to € 77.5 million versus € 86.7 million in 2017.
Overall, non-recurring expense increased by approximately € 14 million versus the prior year, due to business restructuring of approximately € 10 million and lower extraordinary income versus 2017.

Consolidated EBIT in the year amounted to € 51.2 million, dropping by 15.2% versus € 60.4 million in 2017, as a result of the abovementioned decrease in EBITDA; amortization, depreciation and impairment amounted to € 26.2 million, in line with the prior year.

The consolidated result before tax came to a positive figure of approximately € 35.2 million and included:

  • the sharp drop in financial expense (from € 7 million to € 2.9 million), as a result of an average interest rate that has more than halved versus the prior year (from 2.72% to 0.93%), and of a lower average net debt;
  • a negative performance by associates (consolidated at equity), down from € -4 million to € -13.2 million, due in particular to Mach2 Libri, active in the distribution of books in the Large Retailers channel and put into liquidation in 2018.

Adjusted net profit from continuing operations[2] amounted to € 20.3 million versus € 27.2 million in 2017. Mondadori France recorded net revenue of € 305.6 million in the period, down by 7.5%, and an adjusted EBITDA of € 26.1 million, in line versus the prior year.
An adjustment was made in the year to the fair value of the assets being sold, to reflect the negotiations in progress, previously measured at value in use, amounting to € 200.1 million.
Accordingly, the adjusted net result from discontinued operations came to € -195.5 million, including a net profit of € 2.6 million from Mondadori France (€ 3.3 million in 2017).
The Group’s net result, following the fair value adjustment of French assets, came to € -177.1 million versus € +30.4 million in 2017.

The Group’s net financial position at 31 December 2018 stood at € -147.2 million, improving by approximately 22% versus € -189.2 million at 31 December 2017, thanks mainly to cash generated from ordinary operations of continuing operations of € 52.1 million.
In 2018 the debt/adjusted EBITDA ratio was 1.6x.

CONSOLIDATED FINANCIAL RESULTS FOR FOURTH QUARTER 2018
Consolidated revenue in fourth quarter 2018 amounted to € 233 million, down by 11.4% versus € 263.1 million in the same quarter of 2017.

Adjusted EBITDA grew by 15% in the last quarter of the year to reach € 27.3 million versus € 23.7 million in fourth quarter 2017, driven by the improved operating performance of school textbooks and by Magazines Italy.

Consolidated EBITDA came to € 24.5 million, up by 4% versus € 23.5 million in the same quarter of the prior year, thanks to the abovementioned performance of the Books Area and the non-recurring income from the disposal of an owned property, partly mitigated by non-recurring expense recorded mainly in the Magazines Italy Area.
Amortization, depreciation and impairment, amounting to € 10.7 million, were in line with fourth quarter 2017.
Financial expense, as in prior quarters, benefited from lower debt costs and lower average debt versus the prior year.

Adjusted net profit from continuing operations came to € 4.5 million, up sharply from € 1.7 million in fourth quarter 2017.

BUSINESS OUTLOOK[3]

The Group will continue its strategic repositioning and further focus on the more profitable core businesses, in particular by consolidating its leadership in the Books Area, completing the sale of Mondadori France and identifying new areas of development.
In line with the outlined strategy and in light of the current relevant context, the operating targets for 2019, based on the current scope, allow the Group to estimate, at a consolidated level, a slight decrease in revenue and a single-digit growth of adjusted EBITDA versus 2018.
The net result from continuing operations in 2019 is expected to be significantly higher than last year (in the € 30-35 million range).
Cash flow from ordinary operations in 2019 is forecast at around € 45 million, creating sustainable conditions for a possible return in the future to the dividend.

PERFORMANCE OF BUSINESS AREAS

BOOKS
In 2018, the national Trade books market recorded a slight decline (-1.1% in terms of value versus the prior year[4], after the sharp increase of +6.1% in 2017).

Against this backdrop, the Mondadori Group, considering all its publishers, boasts a market leadership position, with a 27.4% share and 4 titles in the top 10 bestsellers of the year.

The Mondadori Group retained its leadership of the school textbooks market with an overall 22.9% share, adoptions-wise[5],.
In 2018, the segment grew moderately overall, up by approximately 1% in the primary and lower secondary segment, and was steady in the upper secondary segment[6].

In 2018, revenue from the Area amounted to € 450.4 million, down by 6.7% versus € 483 million in the prior year. Specifically:

  • Trade fell by 13%, as a result of the comparison with 2017, marked by the strong concentration of bestsellers, and of the decline of the Large Retailers channel;
  • the Educational Area reported a positive performance across all the activities of the publishers (-0.5%);
  • distribution activities fell (-17.7%), due mainly to the reduction in current contracts.

Adjusted EBITDA of the Books Area amounted to € 84.7 million, up by 11% versus 2017.
2018 saw efforts continue on implementing the management policy focused on a targeted editorial planning in the Trade segment, and on the ongoing optimization of operating processes across all segments, which allowed the Group to achieve profitability of approximately 19%.
Reported EBITDA amounted to € 82.9 million, up by approximately 9% versus € 76.2 million in 2017.

RETAIL
In 2018, the Group continued to implement strategic actions to align the organization and the sales channels to the developments of the market, working to gradually revise the network of stores and its formats.
In the Books segment (making for 80% of store revenue), Mondadori Retail’s market share stood at 14.4%.

In 2018, the Retail Area achieved revenue of € 191.8 million, down by 3.4% versus € 198.5 million in the prior year, as a result of:

  • the decline of the relevant market for books;
  • a targeted reduction in revenue from consumer electronics;
  • the streamlining of the direct sales network launched in second half 2017.

The analysis by channel shows the following:

  • a 0.9% growth of directly-managed bookstores (-2.9% on a like-for-like basis in terms of stores);
  • a growth of franchised bookstores (+0.9%; -0.4% on a like-for-like basis in terms of stores);
  • a 10.9% drop in Megastores (-4.4% on a like-for-like basis in terms of stores);
  • a decline in the online sector (-9.3% due to the delayed implementation of the decree on the “18app” Culture Bonus);
  • a 9% drop by the Bookclub, in line with the decline seen in prior years.

In 2018, Mondadori Retail recorded an adjusted EBITDA of € 1.4 million, up versus € 0.7 million in 2017, thanks to the cost cutting measures through the sale of non-profitable stores.
EBITDA, which includes non-recurring expense of approximately € 1.4 million, came to breakeven.

MAGAZINES ITALY
In Italy, the magazines market in 2018 witnessed a continued drop in advertising in the print, circulation and add-on sales segments.

The Magazines Italy Area generated total revenue of € 287 million in 2018, down by 12% versus € 326.1 million in 2017. On a like-for-like basis (the disposal of Inthera and the weekly Panorama), the drop would be 9.1%. Specifically:

  • circulation revenue was down by 11.1%. In the newsstands and subscriptions channels, the Group retained its market leadership with a share in terms of value of 30.7%.
  • total advertising revenue (print + web) was down by approximately 5%: the print segment fell by approximately 10% (on a like-for-like basis, the trend was in line with the market’s -9%); the digital segment grew by approximately 8%, thanks to the positive performance of advertising sales in the food and wellness & beauty segments.
    Gross digital advertising revenue accounted for approximately 32% of total revenue (27% in the prior year).
  • revenue from add-on products was down sharply (approximately -21%) versus 2017.

The Mondadori Group was once again Italy’s top digital publisher, with a unique audience rated by Comscore of close to 30 million unique users per month (in December 28.9 million, up by 11% versus December last year), with an annual 2018 average up by 17% versus 2017[7].

Adjusted EBITDA of the Magazines Italy Area amounted to € 11.9 million (€ 14.8 million in 2017, due to the fall in print revenue, partly offset by the positive performance of digital operations of € 5.7 million versus € 2.2 million in the prior year).

The Area’s reported EBITDA amounted to € -0.2 million versus € +12.1 million in 2017, as a result mainly of higher restructuring costs recorded in the period from the necessary accelerated structural reorganization and cost reduction process, and of the loss generated by disposals.

MAGAZINES FRANCE (discontinued operations)
In 2018, Mondadori France’s relevant markets continued the downturn in newsstands sales (-7.1%)[8] and in print advertising sales (-10.8%)[9]: Mondadori France retained its position as one of the top players in the magazines market, with an 11% share[10].

In this shrinking market, Mondadori France recorded revenue of € 305.6 million, down by -7.5% versus € 330.4 million in 2017. Specifically:

  • Circulation revenue (77% of the total) was down by approximately 6% versus 2017;
  • Advertising revenue (print + web) dropped by approximately 7% versus 2017: the print segment (88% of total advertising revenue) was down by approximately 7% versus 2017; the digital segment fell by 11.2% versus the market’s -0.5%.

Adjusted EBITDA in 2018 amounted to € 26.1 million versus € 26 million in the prior year.
Reported EBITDA amounted to € 23.1 million, up versus € 18.4 million in 2017 (which included significant restructuring costs).

PERFORMANCE OF ARNOLDO MONDADORI EDITORE S.P.A.
The Parent Company’s income statement at 31 December 2018 shows the same net result as in the consolidated financial statements, with a loss of € 177.1 million, due to the fact that the Company has opted to use the equity method to measure its investments in the separate financial statements.

Revenue amounted to € 256.6 million, down versus € 282.3 million in the prior year, due mainly to the reduction in print operations in the Magazines Italy Area.
Revenue from the digital operations of the Magazines Italy Area, on the other hand, increased thanks to the positive results from advertising sales. The Parent Company also comprises revenue from services provided to other Group companies, equal to € 35.3 million.

Adjusted EBITDA declined slightly from € +0.3 million to € -0.4 million, as a result mainly of the decline in the margins from print operations in the Magazines Italy Area, offset by a sharp rise in digital operations.

2018 benefited from net positive extraordinary items of € 2.6 million, attributable mainly to the disposal of the Sporting property complex in Verona, but was affected by higher restructuring costs in the Magazines Italy Area (€ +7.2 million versus 2017).

The disposal of the subsidiary Mondadori France and the consequent adjustment of the book value to fair value led to the recognition of expense from discontinued operations; the net result of the Company, therefore, closes with a loss of € 177.1 million (same as in the consolidated financial statements); the Board of Directors has decided to propose the Shareholders’ Meeting to fully cover the loss for the year.

SIGNIFICANT EVENTS AFTER YEAR-END
On 11 February 2019, Andrea Santagata was appointed Chief Innovation Officer, reporting directly to CEO Ernesto Mauri. This new position was created with the aim of further investing in the development and formulation of digital and transformation strategies for all the Group’s activities.

Arnoldo Mondadori Editore S.p.A. signed a put option that guarantees the right to sell its subsidiary Mondadori France S.A.S. to Reworld Media S.A. in accordance with the terms disclosed to the market on 18 February 2019.

The Board of Directors of Arnoldo Mondadori Editore S.p.A. has convened the ordinary and extraordinary Shareholders’ Meeting in first call on Wednesday 17 April 2019 to approve the financial statements for the year ended 31 December 2018.

PROPOSED RENEWAL OF THE AUTHORIZATION TO PURCHASE AND SELL TREASURY SHARES
Following the expiry of the preceding authorization resolved upon by the Shareholders’ Meeting on 24 April 2018, with the approval of the financial statements at 31 December 2018, the Board of Directors will propose to the next Shareholders’ Meeting the renewal of the authorization to purchase and sell treasury shares with the aim of retaining the applicability of law provisions in the matter of any additional re-purchase plans and, consequently, of seizing any investment and operational opportunities involving treasury shares.
Here below are the main elements of the proposal made by the Board of Directors:

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

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

Duration
The authorization to purchase treasury shares is requested to last until the approval of the financial statements for the year ending 31 December 2019, while the authorization to sell is requested to last for an unlimited period.

Maximum number of purchasable treasury shares
The renewed authorization will enable the Company to reach the cap of 10% of its share capital, also considering the shares held directly and indirectly from time to time, in line with the previous authorization.

Criteria for purchasing treasury shares and indication of the minimum and maximum purchasing cap
Purchases shall be made pursuant to the combined provisions of art. 132 of Legislative Decree no. 58/1998, of art. 5 of Regulation (EU) 596/2014, (ii) of art. 144-bis of the Issuer Regulation, (iii) of the EU and national legislation on market abuse, and (iv) of Accepted Practices.
Specifically, purchases shall be made on regulated markets, according to operating criteria which do not allow the direct combination of the purchase negotiation proposals with pre-determined sale negotiation proposals.
The minimum and maximum purchase price would be determined under the same conditions established by the preceding Shareholders’ Meeting authorizations, i.e. at a minimum unit price not lower than the official Stock Exchange price of the day preceding the purchase transaction, reduced by 20%, and a maximum not higher than the official Stock Exchange price of the day preceding the purchase transaction, increased by 10%.
In terms of daily prices and volumes, the purchase transactions would be completed in compliance with the conditions established in art. 3 of the Delegated Regulation (EU) 2016/1052.
Purchases instrumental in (a) the support to market liquidity and (b) the purchase of treasury shares to build a so-called “treasury shares” portfolio, shall also be made in accordance with the conditions provided by market practices, under the combined provisions of art. 180, par. 1, lett. C) of the TUF and of art. 13 of (EU) Regulation 596/2014.

With regard to the sale of treasury shares, the Board of Directors resolved to propose to the Shareholders’ Meeting to sell the shares in any appropriate manner in the interest of the Company, for purposes which include the sale on regulated markets, the exercise of option rights, including conversion rights, deriving from financial instruments issued by the Company or third parties, support to incentive plans approved by the Shareholders’ Meeting, and as consideration for the acquisition of equity interests as part of the Company’s investment policy.

To date, Arnoldo Mondadori Editore S.p.A. holds a total of no. 1,346,703 treasury shares, equal to 0.515% of the share capital.
For further information on the proposed authorization for the purchase and sale of treasury shares, reference should be made to the Directors’ Explanatory Report, which will be published within the time limits and in the manner prescribed by applicable regulations.

PROPOSED ADOPTION OF A 2019-2021 PERFORMANCE SHARE PLAN
The Board resolved, on a proposal from the Remuneration and Appointments Committee, and in keeping with the introduction of the performance share approved last year for the medium/long-term remuneration of executive directors and executives with strategic responsibilities, to submit to the approval of the Ordinary Shareholders’ Meeting, the adoption of a 2019-2021 Performance Share Plan, in accordance with art. 114-bis of Legislative Decree no. 58 of 24 February 1998, intended for the Chief Executive Officer, the CFO – Executive Director and a number of Company managers who have an employment and/or directorship relationship with the Company or with its subsidiaries on the granting date of the shares.

With the adoption of the Plan, the Company aims to encourage Management to improve medium to long-term performance, in terms of both industrial performance and growth in the value of the Company.
The Plan envisages the right for beneficiaries to receive a bonus in the form of Company shares, subject to the achievement of specific targets set and measured at the end of the three-year performance period from 2019 to 2021.
These targets are structured to include both shareholder remuneration indicators and management indicators functional to raising the share value, ensuring maximum alignment of Management remuneration and the creation of value for the Company.
For details on the proposed adoption of the 2019-2021 Performance Share Plan, the beneficiaries and the main characteristics of the Regulations of the Plan, reference should be made to the Information Document drawn up by the governing body, pursuant to art. 84-bis and annex 3A of the Issuer Regulation, and to the Explanatory Report, which will be published within the time limits and in the manner prescribed by applicable regulations.

PROPOSED REVOCATION AND GRANTING OF POWERS TO THE BOARD OF DIRECTORS PURSUANT TO ARTICLES 2443 AND 2420 TER OF THE ITALIAN CIVIL CODE
The Board of Directors will propose the Shareholders’ Meeting, called on 17 April 2019, also in extraordinary session, to adopt the resolutions referred to in articles 2443 and 2420 ter of the Italian Civil Code, relating to the granting of powers to the Board of Directors to increase the share capital and issue convertible bonds.

Specifically, the Board will propose the Shareholders’ Meeting:

  • the revocation, solely regarding the unexercised portion, of all the powers to increase the share capital and issue convertible bonds granted to the Board of Directors by the Extraordinary Shareholders’ Meeting held on 30 April 2014;
  • the granting of powers to the Board of Directors, pursuant to art. 2443 of the Italian Civil Code, to make a divisible increase in the share capital against payment, on one or more occasions, reserved with pre-emptive rights to the assignees, within a period of five years from the resolution date for a maximum nominal amount of € 75,000,000;
  • the granting of powers to the Board of Directors, pursuant to article 2420-ter of the Italian Civil Code, to issue, on one or more occasions, bonds convertible into shares, for a maximum nominal amount of € 250,000,000, including, pursuant to article 2420-ter, par. 1, of the Italian Civil Code, the powers to correspondingly increase the share capital to service the conversion by issuing ordinary shares with the same characteristics as outstanding shares, for a maximum nominal amount of € 250,000,000, within a period of five years from the resolution date;
  • the granting of powers to the Board of Directors, in accordance with art. 2443 of the Italian Civil Code, to make a divisible increase in the share capital against payment, on one or more occasions, within a period of five years from the resolution date, excluding pre-emptive rights in accordance with art. 2441, par. 4, second sentence, of the Italian Civil Code, by issuing ordinary shares up to 10% of the total amount of shares forming the share capital of Arnoldo Mondadori Editore at the date of any exercise of the powers and, in any case, for a nominal amount of up to € 20,000,000.

The proposed renewal and granting of powers is motivated by the expediency to maintain and grant the Board of Directors the general powers to implement, through faster and more streamlined procedures than the resolutions adopted by the Extraordinary Shareholders’ Meeting, any capital transactions to strengthen the financial structure in support of the Group’s development targets.
With particular regard to the powers that may be exercised for capital increases with the exclusion of pre-emptive rights up to a ceiling of 10% of the existing capital, mention should be made that the offer made to third parties may represent an effective tool to increase the free float and maintain appropriate liquidity of the share at any moment, or be functional to the participation of qualified investors in the share capital, while curbing the diluting effects for existing shareholders.

For further information on the proposed revocation and granting of powers pursuant to articles 2443 and 2420 ter of the Italian Civil Code, reference should be made to the Directors’ Explanatory Report, which will be published within the time limits and in the manner prescribed by applicable regulations.

IFRS 16 (LEASES)
The Mondadori Group will apply IFRS 16 (Leases) as from 1 January 2019. The new standard introduces a different system for recognizing leases for the lessee in the financial statements.
The main impacts on the Group’s consolidated financial statements are estimated as follows:

  • Balance sheet at 1 January 2019: recording of fixed assets and financial liabilities for approximately € 112 million;
  • Consolidated income statement in 2019: as a result of the agreements in place at 1 January 2019, the consolidated income statement for 2019 is forecast to see an improvement in EBITDA of approximately € 16.4 million, an increase in amortization and depreciation of approximately € 15.1 million and an increase in financial expense of approximately € 2.5 million.
    The combination of the straight-line depreciation of “user rights on the asset” and the actual interest rate method applied to financial payables under IFRS 16 results in higher expense charged to the income statement in the opening years of the lease contract and lower expense in the final years.

CONSOLIDATED NON-FINANCIAL STATEMENT PURSUANT TO LEGISLATIVE DECREE 254/2016
Under Legislative Decree 254/2016, the Board of Directors’ 2018 Report on Operations of the Mondadori Group is also composed of the Consolidated Non-Financial Statement, a qualitative-quantitative description of the non-financial performance of the Company, associated with environmental, social, and staff-related issues, as well as those regarding respect for human rights, and the fight against active and passive corruption, which are relevant given the activities and characteristics of the Company.
With regard to 2018, the Mondadori Group has updated its materiality analysis, in accordance with the principles set out by the GRI Sustainability Reporting Standards (GRI Standards), including the “Media Sector Disclosures”, defined in 2016 and 2014 respectively by the Global Reporting Initiative (GRI).
A new process was introduced with three main new features: the involvement of independent experts in the media and publishing segments; a comparison with the main European peers; an extension of the level of engagement towards the outside, involving suppliers of the main utilities and franchisees of the Mondadori Store bookstores.

The 2018 results, approved on today’s date by the Board of Directors, will be presented by the Mondadori Group Management to the financial community today, at 4 PM, at the Mondadori Megastore in piazza Duomo, Milan.

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

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

Annexes (in the pdf file):

  • Consolidated balance sheet;
  • Consolidated income statement;
  • Consolidated income statement – fourth quarter;
  • Group cash flow;
  • Arnoldo Mondadori Editore S.p.A. balance sheet;
  • Arnoldo Mondadori Editore S.p.A. income statement;
  • Arnoldo Mondadori Editore S.p.A. cash flow statement;
  • Glossary of terms and alternative performance measures used.

[1] Net of the effects of the outsourcing of logistics activities.
[2] In 2018, the “Adjusted result from discontinued operations” included the net result of Mondadori France in the current year, together with the recognition of the fair value adjustment of assets being sold, to reflect the negotiations in progress, previously measured at value in use. This item also includes the financial expense held by the Parent Company, but attributable to Mondadori France and charged to the latter under the intercompany loan agreement (approximately € 3 million). The “Adjusted result from continuing operations” and the “Adjusted result from discontinued operations” therefore differ by this amount from the amounts of the statements attached to this Report (equal to € -192.4 million in 2018 and € 12.6 million in 2017), prepared in accordance with IFRS international accounting standards.
To enable a like-for-like comparison, 2017 figures have been restated accordingly.
[3] Before application of IFRS 16
[4] Source: GFK, December 2018 (in terms of value)
[5] Source: ESAIE, 2018 (adopted sections)
[6] Source: Databank, 2018
[7] Source: Comscore, December 2018
[8] Source: Mondadori France + Presstalis, December 2018 (in terms of value)
[9] Source: Net Index, December 2018 (in terms of value)
[10] Source: Kantar Media, December 2018 (in terms of volume)

“Donne come noi” comes to theatres, companies and universities

Following the success of last year, the show that celebrates the strength of women, produced by Teatro Franco Parenti, return on 7 march

The project was conceived by the brand Donna Moderna

Donne come noi (Women Like Us), the Donna Moderna project dedicated to female empowerment, continues to grow and launches a series of new initiatives aimed at taking the message in 2019 to an even larger number of people, not just in theatres but also in companies and universities.

“Donne come noi is no longer just a book, or a show, or a training course, but an authentic movement, which we are re-launching from 7 March. Our ambition is to reach Italian women of all ages, from middle and high schools to universities, and from companies to professionals, businesswomen and housewives, and to encourage them to think big, giving them both inspiration and the tools to reach their goals,” declared the editor of Donna Moderna, Annalisa Monfreda.

It all started from a book written by thee magazine’s editorial team – published by Sperling&Kupfer – that tells the stories of 100 contemporary Italian women who have managed to realise the small miracle of reaching the highest levels in their job, in the arts and sciences.

The book went on to inspire a theatre show – on stage on 7 March at the Teatro Franco Parenti, which produced the show – written by Giulia Minoli and Emanuela Giordano, with the exceptional protagonist: Tosca. On stage with her will be 5 actresses and singers who, with words and music, will tell stories of women who have been able to transform difficulties, obstacles and prejudices into opportunities. From Chiara Montanari, the first woman to lead an expedition to the Antarctic, to Fabiola Gianotti, director of the prestigious Cern Institute in Geneva, and from the athlete Irma Testa, Italy’s first female boxer at the Olympics to Alessandra Laricchia, the first female ranger on the African savannah.

The third step of this project was the creation of a training course organised in different stages across Italy, that provided concrete skills such as team working, time management, how to reconfigure your own career, thinking outside the box and learning how to tell your story.

This year the show will also take in companies, schools and universities, touring Italy as a “educational moment” made up of the Donne come noi theatre show, a short piece featuring three actresses and a cello. Along with the show will be a training course with an inspiring live testimony by one of the protagonists of the book and a two-hour workshop with an acting teacher who, using exercises, techniques and games typical of methods of theatrical improvisation, will help participants to work and reflect on how to prepare to avoid being judgemental, to accept and listen to and enhance oneself and others, how to establish relationships of trust and support, how to challenge oneself, participate and collaborate.

Some of the basic skills required by improvisational theatre include a capacity to be aware of the self and of others, to develop clear and positive communication, to valorise and integrate suggestions and different points of view, to adopt choices instinctively and spontaneously, and to work as a team towards a common objective. All gifts that are both useful and beneficial for individual affirmation and success in the workplace, in studies and also in the personal sphere.
For more information, please go to: www.donnamoderna.com/donne-come-noi.

BoD approves interim management statement at 30.09.2018

The Interim Management Statement at 30.09.2018 has been prepared in accordance with IFRS 5, presenting the figures for Mondadori France under “Profit (loss) from discontinued operations” [1]

  • Consolidated revenue from continuing operations € 658.1 million[2]: -6.9% versus € 707.1 million at 30.09.2017
  • Adjusted EBITDA[3] from continuing operations € 62.8 million: +3.2% versus € 60.8 million at 30.09.2017
  • Profit from continuing operations € 15.8 million versus € 25.5 million at 30.09.2017, which had included extraordinary gains and lower restructuring costs.The figure grows by 3% in the third quarter versus the same period of 2017. As a result of the fair value adjustment of French operations, amounting to € -198.1 million, the figure at 30.09.2018 drops into negative territory to € -181.5 million versus € 31.2 million at 30.09.2017
  • Group net financial position improves by 18% reaching € -209.3 million versus € -256 million at 30.09.2017

2018 TARGET ON CONTINUING OPERATIONS SCOPE

  • High single-digit drop in consolidated revenue;
  • Slight increase in adjusted EBITDA;
  • Profit from continuing operations down by approximately € 7 million due to higher negative non-ordinary items;
  • Cash flow from ordinary operations around € 50 million (€ 55/60 million including discontinued operations)

[1] In 2018, “Profit (loss) from discontinued operations” includes the net result of Mondadori France in the first nine months of the current year, together with the recognition of the fair value adjustment of the assets being sold, in line with the negotiations currently underway, previously measured at value in use. The item also includes intercompany financial expense relating to Mondadori France. The “adjusted result from continuing operations” therefore differs in this amount from the result from continuing operations shown in the financial statements attached to this Statement (€ -193.3 million in 9M 2018 and € 12.8 million in 9M 2017, in accordance with IFRS 5). For the sake of comparison, figures for the first nine months of 2017 have been restated accordingly.

[2] Beginning from 1 January 2018 (and to provide a consistent presentation, also for 2017), the Mondadori Group has adopted the new IFRS 15 – Revenue from Contracts with Customers – revenue recognition standard.

The new IFRS 15 presents revenue and costs differently, with no effect on EBITDA. Beginning from 2018, the result generated by associates (consolidated at equity), previously classified in adjusted EBITDA, is shown under EBIT; for consistency, 2017 has been reclassified accordingly.

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

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 30 September 2018 presented by CEO Ernesto Mauri.

INTRODUCTION
On 27 September 2018, as disclosed to the market, Arnoldo Mondadori Editore S.p.A. began exclusive negotiations with Reworld Media SA, in order to carry out the customary activities aimed at the possible disposal of the subsidiary Mondadori France SAS.

The transaction, which is in line with the Group’s strategy to refocus on the more solid business of Books, will help increase the availability of financial resources and support the strategic lines of development and the competitiveness of its core businesses, also through potential new investments.

At the reference date of this Interim Management Statement, as the activities leading up to the disposal are in progress, and the Directors have considered the requirements of the international accounting standards met, the transaction is classified as a discontinued operation, in accordance with IFRS 5, given that the successful outcome of the negotiations would imply an exit by the Mondadori Group from the French magazine publishing market.

GROUP PERFORMANCE AT 30 SEPTEMBER 2018
In the first nine months of 2018, the Mondadori Group, net of the French assets held for sale, recorded a 3.2% increase in adjusted EBITDA versus the prior year, in line with the scheduled operating plans, and improving significantly in the performance of the Books Area.

In the period under review, the Magazines Italy Area recorded restructuring and reorganization costs functional to the structural reduction in operating costs, as well as the disposal of non-strategic and non-profitable businesses (including the disposal of Inthera and the Panorama newsmagazine business units).

This trend, together with the enduring positive performance of cash generation from ordinary operations, makes the achievement of the targets set and disclosed for the whole 2018 financial year increasingly feasible.

Consolidated revenue from continuing operations in the first nine months of 2018 amounted to € 658,1 million, down by 6.9% versus the prior year, due mainly to the performance of Magazines Italy, attributable to the persisting negative trends of the relevant markets, in terms of both circulation and advertising.

Including the positive results of Mondadori France in the period under review, consolidated revenue would have amounted to € 884.5 million, dropping by 7.2% versus the prior year, while total adjusted EBITDA would have come to € 78.4 million, increasing by 1% versus the figure at 30 September 2017.

Adjusted EBITDA from continuing operations in the period under review came to € 62.8 million, up by 3.2% versus the prior year (€ 60.8 million) – with a percentage on revenue growing from 8.6% to 9.5% and with different trends reported by the various businesses:

  • the Books Area reported a sharp rise in the period, driven by further operating efficiencies in both the Trade and Educational segments;
  • the Retail Area saw a gradual improvement as a result of the rationalization of directly-managed stores, especially of Megastores;
  • the Magazines Italy Area fell in the first half, while in the third quarter the ongoing actions to cut operating and structural costs, and the disposal of non-profitable businesses, fully mitigated the effects of the decline in revenue triggered by the trend of the traditional markets.

The Group also continued with its effective measures to curb fixed overheads, which reduced their impact on revenue from 8.4% to 7.9%.

Consolidated EBITDA decreased from € 63.2 million in the prior year to € 53 million. The downturn reflects:

  • less positive non-ordinary items versus the first 9 months of 2017, which had benefited from gains of approximately € 4 million from the disposal of a property;
  • a loss (approximately € 2 million) by the Magazines Italy Area, due to the disposal of Inthera;
  • higher restructuring costs in the period for the Magazines Italy Area, functional to the reorganization and revision of the operating and overhead costs structure.

Consolidated EBIT at 30 September 2018 amounted to € 37.5 million versus € 47.8 million at 30 September 2017, due to the dynamics of the above non-ordinary items, and includes amortization, depreciation and write-downs of € 15.5 million, in line with the prior year.

The consolidated profit before taxes came to approximately € 25.6 million and includes:

  • the sharp drop in financial expense (from € 4.9 to € 2.1 million), as a result of an average interest rate that is half the prior year (from 4% to 2.01%), and of a lower average net debt;
  • a negative performance by associates (consolidated at equity), down from € -2.2 million to € -9.9 million, due in particular to Mach2 Libri, active in the distribution of books in the Large Retailers channel and put into liquidation in 2018.

The overall tax burden for the period came to a negative € 9.8 million versus € 15.3 million in 2017.

Adjusted profit from continuing operations therefore amounted to € 15.8 million versus € 25.5 million at 30 September 2017.

In the third quarter, an adjustment of € 198.1 million was made to the fair value of Mondadori France, the company being sold, in line with the current negotiations underway, previously valued at value in use.

Accordingly, the adjusted net result from discontinued operations came to € -195.7 million (a profit of € 7.7 million in the first nine months of 2017, which had benefited from the gains from the disposal of NaturaBuy, amounting to € 3.7 million, net of tax effects) including € 2.4 million from the result of Mondadori France.

The net result of the Group, following the fair value adjustement of French operations, came to € -181.5 million versus € 31.2 million at 30 September 2017.

The Group’s net financial position at 30 September 2018 improved by approximately 18% to end at € -209.3 million versus € -256 million at 30 September 2017, due to the positive cash generation of the Group of approximately € 47 million.

Cash flow from ordinary operations (after outlays for financial expense, management of investments and taxes for the period) – which includes the cash flow generated by discontinued operations – amounted to € 64.8 million (of which € 11.3 million from discontinued operations), confirming the strong path of cash generation and financial improvement of the Group.

Cash flow from non-ordinary operations came to a negative figure of approximately € 18 million, of which € 4.8 million from discontinued operations, and includes mainly restructuring costs and a negative balance of acquisitions/disposals.

At 30 September 2018, Group employees amounted to 2,930 units (of whom 733 from Mondadori France), down by approximately 4% from 3,053 units at 30 September 2017, as a result mainly of the disposal of the subsidiary Inthera, despite the acquisition of Direct Channel, and of the ongoing restructuring and efficiency improvement measures involving each of the Group’s business areas. Net of these discontinuities, the drop would have been around 2.6%.

CONSOLIDATED FINANCIAL HIGHLIGHTS THIRD QUARTER 2018
Consolidated revenue from continuing operations in third quarter 2018 amounted to approximately € 267.2 million, down by 10.6% versus € 298.8 million in the prior year, attributable to both the Magazines Italy Area and the Books Area, whose performance in the quarter under review was affected by unfavourable timing in the Educational segment and by the presence in the Trade segment in 2017 of the publication of the titles by Ken Follett and Dan Brown, bestsellers of the year.

Adjusted EBITDA from continuing operations in third quarter 2018 amounted to € 50.7 million, basically steady versus € 51.1 million in the same period of 2017, despite the different scheduling of revenue in the Books Area versus last year, and reflects the effects of the constant improvement of the Group’s operations.

In the Magazines Italy Area, the lower drop in overall revenue, triggered by the trend of the traditional markets, as a result of the benefits arising from portfolio review actions, and of the reduction in operating and structural costs, helped regain € 0.3 million on the third quarter of 2017 (from € -3 million to € -2.7 million).

At a consolidated level, in the quarter under review, the percentage margin on revenue increased from 17.1% in 2017 to 19% in 2018.

The trend of consolidated EBITDA from continuing operations (from € 51.3 million to € 49.5 million) reflects higher negative non-recurring items recorded in the quarter versus the same period of 2017.

The Group’s adjusted profit from continuing operations in the third quarter of the current year (€ 29.5 million) was approximately 3% higher than in the same period of 2017, due to a further reduction in the tax burden.

BUSINESS OUTLOOK
In light of the discontinuity produced by the French operations, the current relevant context and operations in the first nine months of the year, estimates for 2018, previously disclosed to the market, show for the scope of continuing operations:

  • a slight increase in adjusted EBITDA,
  • profit from continuing operations reduced by approximately € 7 million over the entire year versus 2017, due to higher negative non-ordinary items.
  • cash flow from ordinary operations in the year of around € 50 million (€ 55/60 million including discontinued operations).

Versus the previous estimate, the consolidated revenue is expected to fall by a high single-digit percentage versus the prior year, due mainly to the performance of Magazines Italy, triggered by the negative trends of the relevant markets.

BUSINESS AREAS

BOOKS
In the first nine months of the year, the Trade Books market was basically steady versus the same period of the prior year (-0.4%)[1].

The Mondadori Group retains its leadership with an overall 27.4% market share, with 5 titles appearing in the list of the top ten bestsellers in terms of value.

Revenue from the Books Area in the first nine months of 2018 amounted to € 339.6 million, down by 4.9% overall versus € 357.2 million in the same period of 2017, due to the expected decline in the Trade Area, attributable mainly to the drop in the Large Retailers channel and the presence in third quarter 2017 of the bestsellers by D. Brown and K. Follett.

The new titles include the publication from 27 September of Un Capitano, by Francesco Totti with Paolo Condò (Rizzoli), which sold 100,000 copies in October alone.

In the first nine months of 2018, the Educational Area achieved revenue of € 199.4 million, up by 1.2% versus the same period of 2017 (€ 197 million), driven by the positive performance of school textbooks.

Adjusted EBITDA for the Books Area amounted to € 68 million, improving by 9% versus the same period of 2017, due to the ongoing operating efficiencies, and to the different revenue mix of the Education Area.

EBITDA amounted to € 66.8 million, in line with the trend of adjusted EBITDA (€ 62 million at 30 September 2017).

RETAIL
At 30 September 2018, the market share of Mondadori Retail in the Books segment (approximately 80% of revenue[2]) stood at 14.6%.

Revenue amounted to € 129.3 million, down slightly (approximately -2.5%) versus € 132.6 million in the same period of the prior year.

The analysis by channel shows the following:

  • a 2.5% increase by directly-managed bookstores, driven by the positive performance of Books (-2.5% on a like-for-like basis in terms of stores);
  • a positive +1% performance by Franchised bookstores; the channel continued to strengthen in the period (-0.4% on a like-for-like basis in terms of stores);
  • a 10.9% drop by Megastores, due not only to the shrinking sales in Consumer Electronics, but also to the closure of two stores (+0.3% the Books category on a like-for-like basis in terms of stores);
  • a slight drop in the online segment (-3.5%).

In the first nine months of the year, Mondadori Retail’s adjusted EBITDA improved by € 0.6 million to reach € -3.4 million versus € -3.9 million at 30 September 2017, as a result of the project to rationalize directly-managed stores, specifically in the Megastores channel, and of greater management efficiency.

EBITDA came to € -3.7 million, rebounding versus the nine months of 2017 (€ -4.6 million), as a result of lower restructuring costs.

MAGAZINES ITALY
In Italy, against the sharp fall of the market in the first eight months of the year, the Mondadori Group retained its leadership with a 30.9% share[3].

Revenue amounted to € 216.1 million, down by 11.3% versus € 243.6 million in the same period of the prior year, due also to the sharp drop in add-on sales.[4] Net of the disposal of Inthera in May, the decline would have come to 9.7%.

Circulation revenue (newsstands + subscriptions) was down by 10.5%, affected by the rather poor trend of Panorama (sold effective from 1 November 2018) and of the kitchen segment, which had benefited in 2017 from the launch of Giallo Zafferano.

Advertising revenue (print + web) fell by 4.3%: the web grew by approximately 7% (versus the market’s 4%[5]) as a result of a series of co-marketing initiatives, while print advertising sales were basically in line with the segment[6]. The percentage of digital advertising sales on the total increased to 30.5%.

In the period under review, the Mondadori Group retained its position as Italy’s top publisher also in the digital segment, leader in the high-value vertical segments such as women, food, wellness, fashion and education, with a total audience of 27.9 million/month[7], up by 19% versus 2017.

In the first nine months of the year, adjusted EBITDA from the Magazines Italy Area reported a negative trend, dropping by € 3.9 million versus 2017.

The third quarter saw a partial recovery (€ +0.3 million) from the trend of the first six months.

The Area’s reported EBITDA (€ -6.2 million versus € 4.6 million in the first nine months of 2017) reflects higher restructuring costs recorded in the period from the necessary accelerated structural reorganization and cost reduction process and from the loss generated by the disposal of Inthera, in order to improve results in the coming years.

MAGAZINES FRANCE (assets held for sale)
In France, in a continually shrinking market versus the prior year in terms of circulation and advertising, Mondadori France held a 10.7%[8] advertising share in terms of volume, ranking as second top player in the field.

In the first nine months of 2018, revenue from Mondadori France amounted to € 226.4 million, down by -8.1% versus € 246.4 million in the same period of 2017.

Circulation revenue posted a 6.8% drop versus the prior year (-8.2% newsstands channel; -5.1% subscriptions channel).

Advertising revenue (print + web) was down by an overall -9% versus the same period of 2017, with print (88% of total) falling (-8.7%) lower than the relevant market (-10.7%[9]).

Adjusted EBITDA amounted to € 15.6 million, down by € 1.2 million versus € 16.8 million in the first nine months of the prior year (down by € -0.8 million net of the discontinuity deriving from NaturaBuy (sold in May 2017).

Reported EBITDA amounted to € 14.3 million, down versus € 18.2 million in the first nine months of 2017, which had benefited from the gains of € 4.3 million from the abovementioned disposal.

Significant events after the reporting period
Following the authorization to purchase treasury shares approved by the Shareholders’ Meeting held on 24 April 2018, on 25 June, Arnoldo Mondadori Editore S.p.A. launched a share buyback program.

On 8 October, the Group announced the purchase, in the period from 1 to 5 October, of a further 17,500 ordinary shares (equal to 0.007% of the share capital) at an average unit price of € 1.4831, for a total amount of € 25,954.35.

On 15 October, the Group announced the purchase, in the period from 8 to 12 October, of a further 19,500 ordinary shares (equal to 0.007% of the share capital) at an average unit price of € 1.4099, for a total amount of € 27,493.70.

On 22 October, the Group announced the purchase, in the period from 15 to 19 October, of a further 15,500 ordinary shares (equal to 0.006% of the share capital) at an average unit price of € 1.4439, for a total amount of € 22,380.10.

On 29 October, the Group announced the purchase, in the period from 22 to 26 October, of a further 12,500 ordinary shares (equal to 0.005% of the share capital) at an average unit price of € 1.4655, for a total amount of € 18,318.70.

On 1 November 2018, the business units of the newsmagazine Panorama were sold to La Verità S.r.l..

On 5 November, the Group announced the purchase, in the period from 29 October to 2 November, of a further 13,000 ordinary shares (equal to 0.005% of the share capital) at an average unit price of € 1.5272, for a total amount of € 19,853.35.

On 12 November, the Group announced the purchase, in the period from 5 to 9 November, of a further 13,000 ordinary shares (equal to 0.005% of the share capital) at an average unit price of € 1.5785, for a total amount of € 20,520.85.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds 1,274,700 treasury shares, equal to 0.488% of the share capital.


 

The documentation relating to the presentation of the results at 30 September 2018 is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company’s website www.gruppomondadori.it.

The Interim Management Statement at 30 September 2018, approved by the Board of Directors, will be made available by today’s date at the Company’s offices, on the authorized storage mechanism 1info (www.1info.it), and on www.gruppomondadori.it (Investors section).

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

Annexes (in the pdf file):

  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] Source: GFK, September 2018 (figures in terms of market value)
[2] Store revenue on a like-for-like basis
[3] Internal source: Press-Di, cumulative figures at September 2018 (newsstands + subscriptions) in terms of value
[4] -21.6% versus the first nine months of 2017
[5] Source: Nielsen, cumulative figures at September 2018
[6] Magazines -8.9% (Source: Nielsen, cumulative figures at September 2018)
[7] Source: comScore, average figure January-August 2018
[8] Source: Kantar Media, Juin 2018
[9] Source: Net Index, in term of value, cumulative figures at Juin 2018)

Disclosure on the purchase of treasury shares from 30 July to 3 August 2018

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 30 July to 3 August 2018, of no. 21,000 ordinary shares (equal to 0.008% of the share capital) at an average unit price of Euro 1.4466 for a total amount of Euro 30,377.80.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting on 24 April 2018 (previously disclosed pursuant also to art. 144 bis of Consob Regulation 11971/99 and to art. 132 of Legislative Decree 58/98).

The following table details the purchases made per day in the above period of Arnoldo Mondadori Editore S.p.A. ordinary shares, ISIN IT0001469383:

DateQuantityAverage price (€)Amount (€)
30/07/20183,0001.49084,472.40
31/07/20183,0001.48904,467.00
01/08/20188,0001.435811,486.40
02/08/20185,0001.41527,076.00
03/08/20182,0001.43802,876.00

The purchases were made through the authorized intermediary Equita Sim S.p.A. (LEI Code 815600E3E9BFBC8FAA85).

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no. 1,046,500 treasury shares, equal to 0.400% of the share capital.

Purchases in detail in the complete pdf.

  • Consolidated revenue € 543.8 million: -5.1% versus € 573.1 million at 30.06.2017
  • Adjusted EBITDA[1] € 24.2 million: +9% versus € 22.2 million at 30.06.2017
  • Net result € -12.5 million versus € +4.4 million in first half 2017, which had included gains and lower restructuring costs
  • Net financial position € -238.4 million: improving by 16% versus € -284.4 million at 30.06.2017

 2018 targets confirmed

  • Consolidated revenue slightly down;
  • Adjusted EBITDA basically steady;
  • Net profit up sharply in second half 2018; down by € 7 million for full year due to less positive non-ordinary items;
  • Cash flow from ordinary operations forecast at around € 55-60 million

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

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Half-Year Financial Report at 30 June 2018[1], presented by CEO Ernesto Mauri.

Group performance in first half 2018

In first half 2018, the Mondadori Group recorded a 9% increase in adjusted EBITDA, rebounding from the weaker performance of the first quarter of the year, in line with the forecast operating plans.

Actions continued on improving operations in the Books Area, reducing costs and focusing on the core business in the Magazines areas.

Against this backdrop, the half year comprised non-ordinary restructuring and reorganization costs functional to the structural reduction in operating costs, and to the disposal of non-strategic and non-profitable businesses in the Magazines Italy Area. 2017 had, instead, recorded most of the restructuring costs in the second half, while in the first six months of the year, it had benefited from certain gains from the disposal of assets.

This trend, together with the enduring positive performance of cash generation from ordinary operations, makes the achievement of the targets set and disclosed for the whole 2018 financial year increasingly feasible.

Consolidated revenue in first half 2018 amounted to approximately € 543.8 million, down by 5.1% versus € 573.1 million in the prior year, due mainly to the performance of the Magazines areas, attributable to the persisting negative trends of the relevant markets, in terms of both circulation and advertising. Revenue from the Books Area increased by 4%.

In the first half under review, the Group more than made up for the operating loss recorded in the first quarter, which was entirely attributable to Magazines Italy.

Adjusted EBITDA came to € 24.2 million, up by 9% versus the prior year (€ 22.2 million in first half 2017) – with a percentage on revenue growing to 4.4% (from 3.9%).

The various businesses recorded different trends:

  • a sharp rise in the Books Area, driven by further operating efficiencies and for a different timing in revenue from the supplies to a number of clients in the School Textbooks segment;
  • a gradual improvement in the Retail Area, as a result of the rationalization of directly-managed stores;
  • a steady performance by the Magazines France Area (net of the discontinuity associated with the disposal of NaturaBuy in 2017);
  • a drop in the Magazines Italy Area, previously recognized in the first quarter, while in the second quarter the ongoing actions to cut operating and structural costs offset the decline in revenue triggered by the trend of the traditional markets.

In the period under review, the Mondadori Group also continued with its effective measures to curb fixed overheads, which reduced their impact on revenue from 8.5% to 8% in the first half of the year.

Consolidated EBITDA came to € 14.3 million, down versus € 27.6 million in the first half of the prior year. This downturn reflects:

  • less positive non-ordinary items versus first half 2017, which had benefited from gains of approximately € 8.5 million (€ 4.3 million from the disposal of NaturaBuy in the Magazines France Area and € 4.2 million from the disposal of a property in the Corporate & Shared Services Area);
  • a loss (approximately € 2 million) by the Magazines Italy Area, due to the disposal of Inthera;
  • higher restructuring costs recorded in the first half, due mostly to the Magazines Italy Area and functional to the reorganization and revision of the operating and overhead costs structure.

Consolidated EBIT came to € -1.1 million versus € +11.5 million at 30 June 2017, and includes amortization, depreciation and impairment losses of € 15.4 million, down versus € 16 million in the prior year, due to the dynamics of the abovementioned extraordinary items.

The consolidated result before taxes amounted to € -12.4 million and includes: the sharp drop in financial expenses, due to an average interest rate of 2.13% versus 4.36% in the prior year; a lower average net debt; the negative result of associates (consolidated at equity), which deteriorated due in particular to Mach2 Libri, active in the distribution of books in the Large Retailers channel and put into liquidation in 2018.

The net result came to € -12.5 million versus € +4.4 million in first half 2017, which had included net gains of approximately € 7 million and lower restructuring costs, while first half 2018 included liquidation costs of approximately € 7 million for Mach2 Libri.

The Group’s net financial position at 30 June 2018 stood at € -238.4 million, improving by approximately 16% versus € -284.4 million at 30 June 2017, due to the positive cash generation of the Group of approximately € 46 million.

At 30 June 2018, cash flow from operations in the last twelve months came to a positive € 80.3 million; cash flow from ordinary operations (after outlays for financial expenses, management of investments and taxes for the period) came to € 62.1 million, confirming the strong path of cash generation and financial improvement of the Group, and the cash conversion of adjusted EBITDA (rolling basis) to over 50%.

Cash flow from non-ordinary operations came to € -16 million, as a result of a negative acquisition/disposal value of € 5 million and of restructuring costs of approximately € 11 million.

At 30 June 2018, Group employees amounted to 2,962 units, down by 4.8% from 3,112 units at 30 June 2017, as a result mainly of the disposal of the subsidiary Inthera, despite the acquisition of Direct Channel, and of the ongoing restructuring and efficiency improvement measures involving each of the Group’s business areas. Net of these discontinuities, the drop would have been around 3.4%.

Consolidated financial highlights in second quarter 2018
Consolidated revenue in second quarter 2018 amounted to € 290.4 million, down by 3.7% versus the prior year, attributable mainly to the Magazines areas: as mentioned earlier, the Magazines Italy Area, however, saw a steady improvement in the drop in the second quarter which, net of the disposal of Inthera, would have amounted to 6.7%.

Revenue from the Books Area grew by 6.2%, due partly to a different timing in the Educational segment.

At a consolidated level, all cost items in the quarter under review reduced their percentage on revenue, despite the contraction of the latter.

Adjusted EBITDA in second quarter 2018 amounted to € 23.7 million, up significantly versus € 18.2 million in the same period of 2017, thanks mainly to the Books Area, which improved by € 5.2 million.

In the Magazines areas – both in Italy and France – the measures to reduce operating costs and overheads helped reach basically steady results versus second quarter 2017, despite the drop in overall revenue triggered by the trend of the traditional markets.

Business outlook
In light of the current relevant context and the results achieved in the first six months of the year, the forecasts on 2018, on a like-for-like basis versus 2017, previously disclosed to the market, can be reasonably confirmed: a slight drop in consolidated revenue; adjusted EBITDA basically steady; net profit up sharply in second half 2018 versus the same period of the prior year and down by approximately € 7 million for the full year versus 2017, which had included positive non-ordinary items.

Cash flow from ordinary operations is forecast at around € 55/60 million.

Business areas

  • BOOKS

In the first six months of the year, the Trade Books market was basically steady versus the same period of the prior year (-0.1%)[2].

Against this backdrop, Mondadori Libri retained its leadership position with an overall 27.8% market share.

In the period under review, the Mondadori Group placed 6 titles in the ranking of the top ten bestselling books in terms of value[3]: Storie della buonanotte per bambine ribelli 2 by Cavallo Francesca, Favilli Elena (Mondadori); Quando tutto inizia by Volo Fabio (Mondadori); Storie della buonanotte per bambine ribelli. 100 vite di donne straordinarie by Cavallo Francesca, Favilli Elena (Mondadori); Origin by Dan Brown (Mondadori); Il morso della reclusa by Fred Vargas (Einaudi); Divertiti con Luì e Sofì. Il fantalibro by Me contro Te (Mondadori Electa).

In first half 2018, the Area revenue amounted to € 178.5 million, up by 4% versus € 171.6 million in the same period of 2017, driven by the positive performance of the Educational Area (+18.8%), due mainly to the timing of invoicing to large customers in the school textbooks business.

In the Trade segment, revenue fell by 5.4% versus the same period of the prior year, due mainly to the continued strategy of selective production of new titles, and the meticulous management of the related print runs, aimed at increasing operating efficiency and, therefore, overall profitability.

Adjusted EBITDA amounted to € 13.3 million, improving strongly versus € 6 million in the same period of the prior year, as a result of further operating efficiencies and of the continued management streamlining process undertaken in recent years, and of the different timing of revenue from supplies to a number of clients in the Education Area.

EBITDA amounted to € 12.5 million, confirming the abovementioned growth versus the prior year (€ 5.6 million at 30 June 2017).

  • RETAIL

The relevant market for the Retail Area is books (approximately 80% of revenue[4]), where Mondadori Retail’s market share stands at 14.1%.

In the first six months of the year, revenue amounted to € 83.1 million, down slightly (-1.9%) versus € 84.7 million in the same period of the prior year. The analysis by channel versus first half 2017 shows: a 2.3% increase in directly-managed Bookstores, driven by the positive performance of Books; an approximately 11% drop by Megastores, attributable to the decline in consumer electronics sales and closure of two stores; a 3.6% increase in franchised Bookstores, in line with the strategy to strengthen this channel.

Adjusted EBITDA amounted to € -3.2 million, improving versus € -3.7 million at 30 June 2017, due to the rationalization plan of directly-managed stores. EBITDA came to € -3.5 million, rebounding sharply versus the six months of 2017 (€ -5 million), as a result of lower restructuring costs.

  • MAGAZINES ITALY

In Italy, against the sharp fall of the relevant market in the first five months of 2018, the Mondadori Group retained its leadership in magazines with a 31.4% share.[5]

The Area’s revenue amounted to € 147.5 million, down by 11% versus € 165.7 million in the same period of the prior year, due also to the sharp drop in add-on sales (-23.6%).

Net of the disposal of Inthera in May, the decline would have come to 9.7%. This performance reflects a steady improvement recorded in the second quarter, which shows a 6.7% decrease (on a like-for-like basis).

In the first half, circulation revenue lost 7.1%, performing slightly better than the relevant market[6], due also to the contribution of the new titles Giallo Zafferano and Spy.

Advertising revenue (print + web) was down by 7.1%; web advertising sales were steady versus first half 2017, while print sales were basically in line with the market[7]. The percentage of digital advertising sales on the total increased to 30% (from 28% in 1° half 2017).

In the period under review, the Mondadori Group retained its position as Italy’s top traditional publisher also in the digital segment, with a total audience of 27.7 million unique users per month[8], up by 15% versus 2017. The reach on the market is close to 76% of the Italian digital population.

In the first six months of 2018, adjusted EBITDA fell by € 6.8 million versus € 11 million in first half 2017, due to the drop previously recorded in the first quarter of the current year. The digital area continued to improve in the period and increased its adjusted EBITDA by over € 1 million in the half year.

The Area’s EBITDA (€ -0.1 million versus € 10.8 million in first half 2017) reflects higher restructuring costs recorded in the period from the necessary accelerated structural reorganization and cost reduction process and from the loss generated by the disposal of Inthera.

  • MAGAZINES FRANCE

In France, in a continually shrinking market in terms of circulation and advertising, Mondadori France held a 10.1% share[9], basically steady versus the prior year, ranking as second top player on the magazine advertising market.

In the first six months of 2018, revenue amounted to € 152.9 million, down by 7.3% versus € 164.9 million in the same period of 2017. In terms of circulation (approximately 77% of total revenue), the decline was -6.7% versus the prior year. Advertising revenue (print + web) fell by an overall -7.3% versus the same period of 2017, with print advertising (87% of total) down by -5.6% versus the market’s -10.7%.

Adjusted EBITDA amounted to € 12.1 million, basically steady versus € 12.5 million of the six months of the prior year, net of the discontinuity from NaturaBuy (sold in May 2017), thanks to the effective actions to contain industrial costs, and to the reorganization of the teams, which started to offset the decline in revenue triggered by the trend of the markets. Adjusted EBITDA from digital operations ended positive versus the loss recorded in first half 2017.

EBITDA amounted to € 10.8 million, down versus € 15.7 million in the first six months of 2017, which had benefited from the gain of € 4.3 million from the abovementioned disposal.

Significant events after first half 2018
Following the authorization to purchase treasury shares approved by the Shareholders’ Meeting held on 24 April 2018, on 25 June, Arnoldo Mondadori Editore S.p.A. launched a share buyback program.

On 2 July, the Group announced the purchase, in the period from 25 to 29 June, of a further 27,500 ordinary shares (equal to 0.011% of the share capital) at an average unit price of € 1.3006, for a total amount of € 35,766.85.

On 9 July, the Group announced the purchase, in the period from 2 to 6 July, of a further 16,000 ordinary shares (equal to 0.006% of the share capital) at an average unit price of € 1.3530, for a total amount of € 21,648.10.

On 16 July, the Group announced the purchase, in the period from 9 to 13 July, of a further 17,500 ordinary shares (equal to 0.007% of the share capital) at an average unit price of € 1.4700, for a total amount of € 25,725.70.

On 23 July, the Group announced the purchase, in the period from 16 to 20 July, of a further 17,500 ordinary shares (equal to 0.007% of the share capital) at an average unit price of € 1.5102, for a total amount of € 26,428.50.

On 30 July, the Group announced the purchase, in the period from 23 to 27 July, of a further 27,000 ordinary shares (equal to 0.010% of the share capital) at an average unit price of € 1.4606, for a total amount of € 39,435.25.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds to date 1,025,500 treasury shares, equal to 0.392% of the share capital (including the approximately 80,000 shares purchased in the period from 30 November to 2 December 2016, as per disclosure to the market on 6 December 2016).

The documentation relating to the presentation of the results at 30 June 2018 is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company’s website www.gruppomondadori.it.

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

Annexes (in the pdf file):

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

[1] Beginning from 1 January 2018 (and to provide a consistent presentation, also for 2017), the Mondadori Group has adopted the new IFRS 15 – Revenue from Contracts with Customers – revenue recognition standard.
The new IFRS 15 presents revenue and costs differently, with no effect on EBITDA. Beginning from 2018, the result generated by associates (consolidated at equity), previously classified in adjusted EBITDA, is shown under EBIT; for consistency, 2017 has been reclassified accordingly.
[2] Source: GFK, June 2018 (figures in terms of market value)
[3] Source: GFK, June 2018 (ranking in terms of cover value)
[4] Store revenue on a like-for-like basis
[5] Internal source: Press-Di, cumulative figures at May 2018 (newsstands + subscriptions) in terms of value
[6] -9.1%: Internal source: Press-Di, cumulative figures at May 2018 (newsstands + subscriptions) in terms of value
[7] -8.6% (Nielsen, cumulative figures at May 2018)
[8] Source: comScore, average figure Jan.-May 2018
[9] Source: Kantar Media, cumulative figures in terms of volume at April 2018

BoD approves interim management statement at 31.03.2018

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

2018 targets

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

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

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 31 March 2018[1] presented by CEO Ernesto Mauri.

GROUP PERFORMANCE IN FIRST QUARTER 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS OUTLOOK

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

BUSINESS AREAS

  • BOOKS

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

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

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

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

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

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

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

  • RETAIL

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

The analysis by channel shows the following:

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

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

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

  • MAGAZINES ITALY

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

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

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

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

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

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

  • MAGAZINES FRANCE

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

Specifically:

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

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

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

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

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

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

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

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

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

PUBLICATION OF THE MINUTES OF THE SHAREHOLDERS’ MEETING

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

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

Annexes (in the pdf file):

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

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

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

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

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

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

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

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

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