Press releases

  • Consolidated net revenue 553 million euro: down slightly versus 562.5 million euro in 1H16 (-1.7%);
  • Consolidated EBITDA 27.3 million euro, up by 21.2% versus 1H16, due also to the positive contribution of certain gains; improving for the fourth consecutive year;
  • Net result of +4.4 million euro improves by over 8 million euro versus the loss in 1H16;
  • Group net financial position at -284.4 million euro, improving by approximately 90 million euro versus -374.8 million euro  in 1H17

Current year projections

  • Targets confirmed, versus 2016 pro-forma[1] figures, with steady revenue, “high single-digit” growth of adjusted EBITDA[2], with resulting improvement in profit margins and sharp increase in net profit (+30%);
  • Net financial position projections improve and expected to further reduce versus 31 December 2016 with a net debt/adjusted EBITDA ratio below 2.0x

***

  • Definition with RCS MediaGroup S.p.A. of the relations regarding the purchase agreement of RCS Libri S.p.A. and the price adjustment

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

[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 Annex 5 “Glossary of terms and alternative performance measures used”.

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Half-Year Financial Report at 30 June 2017[1], presented by CEO Ernesto Mauri.

HIGHLIGHTS IN 1H17

In 1H17, on a like-for-like consolidation basis with Rizzoli Libri versus 2016[2], the Group continued on its path of operational improvement, delivering a 9% increase in adjusted EBITDA and paving the way to accomplishing the targets set for the whole 2017.

The LTM cash flow from ordinary operations – the first time it includes Rizzoli Libri for the previous 12 months – amounted to approximately 63 million euro, continuing the positive performance of cash generated by the Group’s businesses which, along with the extraordinary transactions involving the strategic rationalization of the portfolio of activities, improve forecasts on net financial position at year end.

Adjusted EBITDA has little bearing on the performance of the entire year since the negative contribution of Rizzoli Libri (outside the scope in 1Q16) is attributable to the seasonal nature of the Education business, which includes in the first quarter expenses to promote the campaign on school textbooks adoption, while revenue is typically recorded in the second half of the year.

Net profit in the reporting period, amounting to +4.4 million euro, improved by over 8 million euro versus 30 June 2016, due also to the contribution of a number of positive extraordinary items.

GROUP PERFORMANCE AT 30 JUNE 2017

Consolidated revenue in 1H17 amounted to 553 million euro, down slightly (-1.7%) versus 562.5 million euro in the prior year, due mainly to the performance of the Magazines areas, to the temporary effect (recovered in July) of the shift forward of revenue from supplies to a number of clients in the Educational Area, and to the targeted reduction in revenue from consumer electronics products in the Retail Area.

On a like-for-like consolidation basis with Rizzoli Libri (in the second quarter only), adjusted EBITDA grew by 9% (from 26.7 million euro to 29.1 million euro) with a percentage on revenue increasing from 4.7% to 5.3% – especially in the Books (from 9.5 million euro to 13.2 million euro net of Rizzoli Libri’s first quarter) and Magazines Italy areas (+13%).

Including the result of Rizzoli Libri as from 1 January, adjusted EBITDA amounted to 21.6 million euro, as a result of the negative contribution of -7.5 million euro in 1Q17, attributable to the seasonal nature of the education business.

Consolidated EBITDA improved by 21.2% (from 22.5 million euro to 27.3 million euro), driven by the gains from the disposal of certain assets in the second quarter of the year (4.2 million euro from the disposal of a property in Corporate & Shared Services, and 4.3 million euro from the disposal of NaturaBuy in Magazines France).

Consolidated EBIT in 1H17 amounted to 11.2 million euro, up by approximately 33% versus 30 June 2016, and includes amortization, depreciation and impairment of 16 million euro, up versus 14 million euro in 1H16 from the impact of the amortization of Banzai Media intangible assets (1.2 million euro) and the capitalized expenses of the Rizzoli Libri school business (2 million euro, 1.1 million euro of which in the first quarter).

Consolidated profit before taxes came to 4.1 million euro and includes financial costs of 7.1 million euro, down versus the prior year (7.9 million euro) on a like-for-like basis of average net debt, due to the reduction in the average interest rate of approximately 40 bps.

The overall tax burden in the period amounted to +1.6 million euro (-3.1 million euro in 2016), benefiting from the adjustment of 3.8 million euro of deferred taxes of Mondadori France.

At 30 June 2017, Group employees with a fixed-term or permanent labour contract amounted to 3,112 units, down by 8.6% versus 3,404 units at June 2016, as a result of the outsourcing of logistics activities in May, as well as the ongoing restructuring and efficiency improvement measures involving each of the Group’s business areas.

The Group’s net financial position at 30 June 2017 stood at -284.4 million euro, improving by approximately 90 million euro versus -374.8 million euro at 30 June 2016, as a result of the positive cash generation from ordinary operations of 63.2 million euro, the first time it includes the contribution of Rizzoli Libri for 12 months, and extraordinary operations in the last twelve months, which generated 27.3 million euro.

CONSOLIDATED FINANCIAL HIGHLIGHTS IN 2Q17

In 2Q17, consolidated revenue amounted to 291.9 million euro, down by 5.2% versus 2Q16.

Despite discontinuity from the shift forward of revenue from the Educational Area, Books – on a like-for-like basis for the first time – were basically stable versus 2Q16 (+0.8%).

Adjusted EBITDA grew by 9.5% in the quarter, especially in Books (from 5.4 million euro to 8.6 million euro) and Magazines Italy (+27.8%), confirming the Group’s continued efficiency recovery.

Consolidated EBITDA, including extraordinary items, improved significantly by over 10 million euro (from 14.0 million euro to 25.5 million euro), driven by the positive contribution of the abovementioned gains.

Consolidated net profit, after minority shareholders’ result, came to 13.5 million euro versus a loss of 2 million euro at 30 June 2016.

OUTLOOK FOR THE YEAR

In light of the Group’s performance in the first half of the year, it is reasonable to confirm the previously disclosed estimates for 2017 versus the 2016 pro-forma figures[3] that indicate steady revenue and a “high single-digitgrowth of adjusted EBITDA, with a resulting improvement in profit margins and a sharp increase of approximately 30% in net profit.

Also as a result of the extraordinary transaction involving the disposal of an asset in the first six months, net debt at end 2017 is estimated to further reduce versus 31 December 2016, with a net debt/adjusted EBITDA ratio below 2.0x (from the previous forecast between 2.2/2x).

PERFORMANCE OF GROUP BUSINESS AREAS AT 30 JUNE 2017

  • BOOKS

In 1H17, the Trade Books market grew by +1.3% versus 1H16[4]. Against this backdrop, Mondadori Libri retained its market leadership position with an overall 28.1% share.

In 1H17, the Group held a total of 5 positions in the ranking of the ten best-selling titles in terms of value, with Storie della buonanotte per bambine ribelli. 100 vite di donne straordinarie by F. Cavallo and E. Favilli, in first place, L’arte di essere fragili. Come Leopardi può salvarti la vita by A. D’Avenia (3°), Dentro l’acqua and La ragazza del treno by P. Hawkins (5° and 6°), and Tredici by J. Asher (7°).

Additionally, in July the publisher Einaudi won the 71st edition of the Strega Prize with Le otto montagne by Paolo Cognetti, a remarkable success translated in over 30 countries.

Revenue from the Books Area amounted to 187.9 million euro, up by 10.4% versus 1H16 (170.1 million euro), also as a result of the consolidation of Rizzoli Libri (present only in the second quarter of 2016), despite the publishing plan to schedule the release of best-selling titles mostly in the second half of the year:

  • trade revenue grew by 4.3% versus 1H16; the increase is explained by the consolidation of Rizzoli Libri, which contributed 18.2 million euro to revenue in the first half of the year;
  • educational revenue improved by 16.3% versus 1H16, driven also by Electa’s performance in museum and publishing activities;
  • revenue from distribution activities was up by 27.2% versus 1H16, due to the different consolidation period of Rizzoli Libri.

Adjusted EBITDA of the Books Area came to 5.7 million euro; net of the loss reported in the first quarter by Rizzoli Libri, explained by the typical seasonal nature of the school textbooks business, adjusted EBITDA would amount to 13.2 million euro, up by approximately 39% versus 1H16 (9.5 million euro), as a result of the progress in the integration process and resulting synergies, as well as the positive performance of Electa.

EBITDA amounted to 5.6 million euro (9.1 million euro at 30 June 2016).

  • RETAIL

In 1H17, the Retail Area achieved revenue of 84.7 million euro, down by 4% versus 88.2 million euro in 1H16, due also to the targeted reduction in revenue from consumer electronics products.

Books were the predominant product category, making for 80% of total revenue of the Area[5]: in 1H17, the product grew by 3.4%, outperforming the relevant market trend.

The result benefited from the directly-managed network and confirms the effectiveness of the actions undertaken in terms of product penetration and assortment.

In the period under review, Mondadori Retail’s market share in books rose to 14.7% from 14.3%.

Non-book revenue was basically steady in the impulse (stationery and toys) and media categories, while, as mentioned, Consumer Electronics continued to fall as targeted (approximately -22% versus 2016).

Adjusted EBITDA came to -3.7 million euro, deteriorating versus -3.1 million euro reported in 1H16, as a result of the structural decline in sales volumes in the book club channel, despite the positive performance of other channels.

EBITDA came to -5 million euro (-3.1 million euro in 1H16), as a result of higher restructuring costs (1.5 million euro).

  • MAGAZINES ITALY

In Italy, in a continually adverse market in terms of magazine circulation, the Mondadori Group retained its leadership, increasing its share to reach 31.6%.[6]

In 2Q17, in line with the selective strategy on the development of the product portfolio to sustain revenue and optimize editorial costs, Mondadori launched two new publications, both receiving a warm welcome from the public: the monthly Giallo Zafferano, with an average circulation of approximately 200,000 copies, and the weekly SPY, with average sales of approximately 300,000 copies for the first four issues.

Revenue from the Area amounted to 148.1 million euro, down by 7.9% versus 160.9 million euro in 1H16, due also to the sharp drop in add-on sales. Specifically:

  • circulation revenue (newsstands + subscriptions) fell by 8.2%, less than the relevant market trend in both the newsstand and subscription channels;
  • advertising revenue (print + web) increased by approximately 7%, driven by the contribution of the consolidation of Banzai Media activities, bringing the percentage of digital revenue on the total to approximately 28%. Gross advertising sales grew by 14.5% in the reporting period; considering print alone, on a like-for-like basis of titles and barter deals, sales fell by -3.9%, outperforming, however, the relevant market trend (-6.1% at May);
  • revenue from add-on products, as mentioned, dropped sharply versus 1H16, in line with the market trend (-29.7%[7]);
  • distribution and revenue towards third publishers managed by Press-Di dropped at a more moderate pace (-2.2%) than the relevant market[8], thanks to the ongoing commitment to developing third-publisher portfolios.

In the digital area, the Mondadori Group reached a unique audience of 16.6 million users/month[9] in the first six months of the year versus 8 million/month of May 2016 (+3.5% versus December 2016), retaining its position as Italy’s top traditional publisher also in the digital business, boasting a supremacy in key vertical segments such as women, food, health & wellness.

A position corroborated by comScore surveys, which reported a Group audience of 23.6 million unique users/month at May 2017, steady versus December.

Adjusted EBITDA in the Magazines Italy Area improved by approximately 12.8%, rising from 10.6 million euro to 11.9 million euro, driven mainly by the benefits of the digital business achieved with the combination of Banzai Media and Mondadori’s teams and digital products; print activities reported a steady margin, offsetting the drop triggered by the trend of the markets, as a result of the ongoing optimization actions and containment of editorial and overhead costs.

Digital activities in the period achieved an overall positive adjusted EBITDA (negative in 1H16).

The Area’s reported EBITDA confirmed the growth trend, closing at 11.7 million euro (10 million euro).

  • MAGAZINES FRANCE

In 1H17, revenue from Mondadori France amounted to 148.1 million euro, down by 7.6% versus 160.4 million euro in 1H16. Specifically:

  • circulation revenue (approximately 74% of the total) lost 4.5% versus 1H16: -7% subscriptions (representing the strongest and steadiest contribution to revenue of the Area with 54%); -5.1% the newsstand channel, outperforming the relevant market trend (-8.1%)[10].

Revenue from the sale of digital copies grew sharply in the first half versus 2016, driven by the new partnerships with a number of French telco players to offer Mondadori France brands to their subscriber base.

  • advertising revenue (print + web) fell by an overall 17.4% versus 1H16; print (-13.3%), basically in line with the relevant market, accounted for approximately 86% of total advertising revenue, while digital advertising accounted for the remaining approximately 14%.

In the reporting period, Mondadori France held a 10.6% market share[11], basically steady versus the prior year, retaining its position as second top player on the magazine advertising market.

The digital readers (web, mobile & tablet) of Mondadori France magazines reached 11.4 million unique users[12], up by approximately +16% versus the average figure in 1H16.

Adjusted EBITDA came to 12.5 million euro versus 15.5 million euro in 1H16. The drop is mainly attributable to the downturn in advertising revenue generated by the Digital Area, to the increase in rental costs for the offices and deconsolidation since 1 May of NaturaBuy: net of the latter two effects, the decline in business would amount to approximately 1.9 million euro in the first half of the year, mitigating the drop in revenue brought by the lingering weakness of the relevant markets, as a result of the constant attention placed on editorial and overhead cost containment.

Reported EBITDA amounted to 15.7 million euro, up by approximately 10% versus 1H16, driven by the positive contribution of the gain of 4.3 million euro from the disposal of NaturaBuy in May.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

On 26 June, Arnoldo Mondadori Editore launched a share buyback plan, under art. 5 of Regulation (EU) No. 596/2014, in execution of the resolution adopted by the Shareholders’ Meeting held on 27 April 2017, authorizing the purchase and disposal of treasury shares for a maximum amount of up to 0.96% of the share capital, which is intended to provide the Company with the 2.49 million shares needed in the three-year period to meet the obligations under the 2017-2019 Performance Share Plan approved by the Meeting.

On 3 July, the Company announced the purchase, in the period from 26 to 30 June, of 198,098 ordinary shares (equal to 0.076% of the share capital) at an average unit price of Euro 1.6283, for a total amount of Euro 332,566.59.

On 10 July, the Company announced the purchase, in the period from 3 to 7 July, of a further 38,902 ordinary shares (equal to 0.015% of the share capital) at an average unit price of Euro 1.5906, for a total amount of Euro 61,876.25.

On 17 July, the Company announced the purchase, in the period from 10 to 14 July, of a further 25,000 ordinary shares (equal to 0.010% of the share capital) at an average unit price of Euro 1.6694, for a total amount of Euro 41,734.50.

On 24 July, the Company announced the purchase, in the period from 17 to 21 July, of a further 29,500 ordinary shares (equal to 0.0113% of the share capital) at an average unit price of Euro 1.7062, for a total amount of Euro 50,331.45.

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds 371,500 treasury shares, equal to 0.1421% of the share capital (including the approximately 80,000 shares purchased in the period from 30 November to 2 December 2016, as disclosed to the market on 6 December 2016).

* * *

Definition with RCS MediaGroup S.p.A. of the relations regarding the purchase agreement of RCS Libri S.p.A. and the price adjustment

Regarding the agreement on the acquisition of RCS Libri S.p.A., completed on 14 April 2016, Arnoldo Mondadori Editore S.p.A. announces that it has reached an agreement with RCS MediaGroup S.p.A. on a price adjustment, contained in the purchase agreement, based on the achievement of RCS Libri S.p.A.’s financial targets for 2015, amounting to approximately 2 million euro in favour of Arnoldo Mondadori Editore S.p.A.. As a result, given the above price adjustment, the overall purchase price for RCS Libri S.p.A. amounts to 125.1 million euro. The agreement still provides for an earn-out of up to 2.5 million euro in favour of RCS MediaGroup S.p.A., based on the achievement in 2017 of specific results in the Books Area of the Mondadori Group, as previously disclosed. As part of these understandings, the parties have also defined all the mutual relations under the above purchase agreement.

* * *

The documentation relating to the presentation of the results at 30 June 2017, will be 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 Executive Manager responsible for the drafting of the corporate accounting documentation – Oddone Pozzi – hereby declares, pursuant to Art. 154 bis, par. 2, of the Finance Consolidation Act, that the accounting documentation contained in this press release corresponds to the Company’s accounting entries, books and results.

Annexes (see attached pdf):

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

[1] The results at 30 June 2017 include the contribution of Rizzoli Libri, which was outside the scope of consolidation in 1Q16, and Banzai Media activities, consolidated as from 1 June 2016 and merged by incorporation into the parent company, with accounting effects as from 1 January 2017.

[2]  Net of Rizzoli Libri in 1Q17

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

[4] Source: GFK, June 2017 (figures in terms of market value).

[5] Store revenue.

[6] Internal source: Press-Di, cumulative figures at May 2017 (newsstands + subscriptions in terms of value).

[7] Internal source, figure at May 2017.

[8] Drop in copies sold in the Newsstand/Large Retailer channel, 8% for dailies and 7% for magazines (source: ADS, figures in terms of copies, May).

[9] Source: Audiweb, at May 2017.

[10] Internal source Mondadori France, figure at April 2017.

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

[12] Source: Nielsen, average figure January-April 2017

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

2017 targets confirmed

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

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

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

GROUP PERFORMANCE IN 1Q17

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS OUTLOOK

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

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

BUSINESS AREAS

  • BOOKS

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

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

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

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

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

  • RETAIL

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

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

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

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

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

  • MAGAZINES ITALY

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

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

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

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

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

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

  • MAGAZINES FRANCE

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

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

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

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

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

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

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

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

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

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

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

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

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

Annexes (see attached pdf):

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

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

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

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

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

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

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

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

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

[9] Source: Audiweb, at February 2017

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

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

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

  • Consolidated net revenue of 1,262.9 million euro: +12.4% versus 1,123.2 million euro in 2015; -2.9% on a like-for-like basis
  • Adjusted EBITDA[1] improves sharply to 108.5 million euro: +48.5% versus 73 million euro in 2015; +20.7% on a like-for-like basis
  • Net profit of 22.5 million euro: tripling versus 6.4 million euro in 2015
  • Net financial position: -263.6 million euro versus -199.4 million euro in 2015 net debt reduced by approximately 100 million euro over last three years,  despite capital expenditure for the acquisitions in 2016

Guidance for 2017-2019 three-year period

  • 2017-2019: completion of path to strengthen competitive position and improve the business and financial performance of core businesses
  • 2017 estimates: pro-forma revenue basically steady versus 2016[2]; high single-digit growth in adjusted EBITDA; 30% increase in net profit; net debt to reduce and reach debt/adjusted EBITDA ratio between 2.2/2x
  • 2019 estimates: consolidated revenue above 1.3 billion euro; adjusted EBITDA of approximately 115 million euro; net profit of 35 million euro; cash generation from ordinary operations around 60 million euro; net financial position of approximately -155 million euro

[1] Adjusted EBITDA: gross operating profit net of income and expenses of a non-ordinary nature (Glossary: annexe 8)

[2] Pro-forma figures: consolidation of the companies acquired in 2016 (Rizzoli Libri and Banzai Media) assumed as from 1 January 2016.

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 2016[1] presented by CEO Ernesto Mauri.

2016 was a truly important year in the history of the Mondadori Group, a year in which it successfully completed its strategic repositioning and laid the structural foundations to address the challenges of its new phase of growth.

To start with, the Group confirmed the positive outcome of the path of change that it embarked on in 2014 which, thanks to the steadfast commitment to focus on its core businesses – achieved also through a number of extraordinary transactions – and contain operating costs and overheads, brought a sharp improvement in results and in Mondadori’s ability to generate financial resources.

Over the last three years, the Group has, in fact, doubled adjusted EBITDA, up from 49.1 million euro to 108.5 million euro (approximately 100 million euro pro-forma), and reduced net debt at end 2016 (-263.6 million euro) by approximately 100 million euro versus end 2013 (-363.2 million euro), despite capital expenditure for the acquisitions made in 2016 (approximately 133 million euro, net of disposals).

In 2016, a crucial step was taken with the acquisition of Rizzoli Libri, which has allowed the Group to increase the contribution of the Books business, to consolidate its presence in the Italian Trade market, and to gain a leadership position in the school textbooks market and in the international illustrated books business (USA in particular).

The acquisition of Banzai Media operations was a cornerstone in the growth strategy of Mondadori’s magazine brands: thanks to this deal, the Group has become Italy’s top publisher also in the digital area with a leadership in key areas – women, food, health&wellness – that are complementary and synergistic with the brands held in its portfolio.

2016 also marked a turning point in the relations with the financial market, following admission to the STAR segment of Borsa Italiana, the start of a path that will shine greater light on the Mondadori Group to enhance the value of the Company and of its activities.

Group performance at 31 December 2016
In 2016, consolidated net revenue totaled 1,262.9 million euro, up by 12.4% versus 1,123.2 million euro in 2015.

Pro-forma revenue (based on the consolidation of the acquired companies as from 1 January) would amount to approximately 1,280 million euro.

On a like-for-like basis, the Group dropped by 2.9%.

Consolidated adjusted EBITDA improved sharply in 2016 (+48.5%), amounting to 108.5 million euro versus 73 million euro in the prior year (pro-forma adjusted EBITDA, including the results of Rizzoli Libri and Banzai Media as from 1 January, would amount to approximately 100 million euro).

The Books Area contributed 75.3 million euro, up by 76% (net of the negative contribution in the first quarter of Rizzoli Libri) versus 42.7 million euro in 2015, while Magazines Italy tripled its contribution to reach 10.5 million euro (Banzai Media consolidated for seven months only).

Even on a like-for-like basis, the Group achieved a remarkable performance, with adjusted EBITDA at 88.2 million euro, up by over 20% versus 2015.

The quarter-by-quarter results confirm the Group’s ability to constantly improve its operational effectiveness, despite the challenging scenario of its relevant markets, deriving from the industrial revision actions and re-organization launched and implemented over the last three years, while still maintaining continuous improvement in the publishing quality of its brands as a key objective.

On a like-for-like basis, operational effectiveness improved from 6.5% to 8.1% of consolidated revenue.

Total EBITDA grew by 15.3%, from 81.6 million euro in 2015 to 94 million euro in the reporting period. 2015 benefited from net positive non-recurring items of 21.2 million euro (from the disposal of certain assets) versus net negative non-recurring items of 3.7 million euro in 2016 related to expenses deriving from acquisitions made.

Consolidated EBIT in the year amounted to 60 million euro, improving by approximately 10% versus 54.5 million euro in 2015, as a result of the abovementioned improvement in EBITDA, despite increased amortization of 7.6 million euro from the changed consolidation scope.

Consolidated profit before taxes came to a positive 42.3 million euro, up by 10.4% versus 38.3 million euro in 2015. Financial costs in 2016 amounted to 17.7 million euro versus 16 million euro in 2015, which had benefited from the positive contribution of 1.6 million euro from the derecognition of a number of put options (Kiver, MUK and NaturaBuy), despite the significant investments made in the acquisition of Rizzoli Libri and Banzai Media, which increased average net debt for the year by approximately 20 million euro, offset by a decrease in the average debt rate (inclusive of amortized costs) of approximately 0.5 bps.

Consolidated profit from continuing operations, after minority interests, came to a positive 21.6 million euro, up by 43% versus 15.1 million euro at 31 December 2015.

Group profit at 31 December 2016 came to a positive 22.5 million euro, improving by 16.1 million euro and tripling the 6.4 million euro reported in 2015 (which included the loss of 8.7 million euro from the disposal of Monradio operations). Net profit in 2016 includes a capital gain of 1 million euro, net of relating expenses, from disposals.

The Group’s net financial position at 31 December 2016 came to -263.6 million euro versus -199.4 million euro at 31 December 2015, as a result of cash outlays for extraordinary transactions of 132 million euro, despite the Group’s positive cash generation from ordinary operations of 68 million euro (48 million euro on a like-for-like basis).

At 31 December 2016, cash flow from operations came to a positive 99.4 million euro (74.4 million euro on a like-for-like basis); ordinary cash flow (after the cash-out for financial charges and taxes for the year) amounted to 67.9 million euro, which is net of the cash outlays in the January-March quarter (not consolidated in 2016) of Rizzoli Libri, attributable to the investments made and to the seasonal nature of the Education business; on a like-for-like basis, Group cash generation from ordinary operations came to 48.4 million euro, improving versus 45.4 million euro in 2015.

Cash flow from extraordinary operations came to -132.1 million euro, as a result of capital expenditure net of disposals of 132.6 million euro, restructuring costs of approximately 15 million euro, and cash-ins from prior-years’ taxes amounting to 15.5 million euro.

In 2016, Group employees amounted to 3,261 units (3,076 units in 2015); on a like-for-like basis, the headcount dropped by 6.9% versus 31 December 2015, as a result of the ongoing reorganization process implemented both in Italy and in France.

Business outlook
In 2016, the Mondadori Group accomplished the goals of strategic repositioning and business-financial stability it had set three years ago, securing itself a leadership position and positive profitability in all its business areas, while continuing to push strongly on efficiency measures consistent with the relevant market trends.

Additionally, overall profitability improved significantly in the period, with adjusted EBITDA (pro-forma)[2] at approximately 100 million euro, as well as cash flow from operations, reducing total net debt to adjusted EBITDA (pro-forma) within 2.6x.

Over the 2017-2019 three-year period, the Group will continue efforts to strengthen its competitive position and improve the business and financial performance of its core businesses, through ongoing focus on publishing quality and optimization of operational processes and cost structure, while paying particular attention to the achievement of synergies arising from the integration of Rizzoli Libri, to the development of the Digital Area of Magazines Italy, and to the plan to expand the Franchising channel in the Retail Area.

In line with the above strategy, the plan sets operational targets which, based on the current scope, allow the Group to estimate for 2019 consolidated revenue above 1.3 billion euro, adjusted EBITDA of approximately 115 million euro, a net profit of 35 million euro, cash generation from ordinary operations close to 60 million euro, and a negative net financial position of around 155 million euro, net of the impact of any dividend distribution.

In light of today’s relevant context, it is reasonable to predict for 2017 basically steady pro-forma3 revenue versus 2016 and a “high single-digitgrowth of adjusted EBITDA, with a resulting improvement in profit margins. The net profit for the year is expected to rise sharply by approximately 30%. Lastly, net debt at end 2017 is estimated to drop versus 31 December 2016, with a debt/adjusted EBITDA ratio at 2.2/2x.

Business areas
Books
In 2016, the Mondadori Group confirmed its leadership position in the Trade market with a 29.3% share (23.1% on a like-for-like basis, net of Rizzoli Libri brands), and secured itself the top position also in the school textbooks market, following the integration of Rizzoli Education activities, with a 24% share of textbook adoptions[3].

In the reporting period, the Area’s revenue totaled 475.1 million euro, up by 48.1% versus 320.8 million euro in the prior year, due basically to the effects of the consolidation of Rizzoli Libri from the second quarter.

On a like-for-like basis:

  • Trade revenue grew by 1.7%, despite the selective publishing policy focused on improving efficiency and profitability;
  • the Educational segment was basically steady (-0.4%);
  • distribution activities fell sharply due to the termination of a number of distribution contracts.

Adjusted EBITDA increased by approximately 76% to reach 75.3 million euro versus 42.7 million euro in 2015. A result ascribable to the consolidation of Rizzoli Libri as from 1 April 2016 and to the 30.8% increase on a like-for-like basis. The reporting period reaped the benefits of the new management policy launched in 2015, focused on a targeted publishing policy and on the ongoing optimization of the operating processes in the Trade segment, which significantly increased the contribution margin; concurrently, action continued on containing fixed costs which, together with the increased performance of Mondadori’s Educational Area, contributed to further improving profitability, which stood, on a like-for-like basis, at 18.2% versus 13.3% in the prior year.

 

In the April-December consolidation period, Rizzoli Libri contributed 19.4 million euro to reported EBITDA, mainly as a result of the positive performance of the schools segment, which excludes the negative contribution in the first quarter from the seasonal nature of the Education business.

The Area’s EBITDA amounted to 72.5 million euro, up by 57.7% versus 45.9 million euro in 2015, which included the capital gain of 7.6 million euro from the transfer of the interest held in the Harlequin Mondadori joint venture, despite a higher percentage of restructuring costs versus the prior year (4.3 million euro in 2016 versus 0.5 million euro in 2015). 2016, instead, included charges of 2.3 million euro for the acquisition of Rizzoli Libri.

Retail
In 2016, revenue generated by the Retail Area amounted to 199.6 million euro, in line with the prior year on a like-for-like basis. As of 1 April 2016, following the consolidation of the acquisition of Rizzoli Libri, activities relating to Librerie Rizzoli have been absorbed by the Retail Area; as a result, the Area increased revenue by an overall 1.6%.

The analysis by channel of the Area shows the following:

  • a growth in Megastores (+2.4%), driven by the openings of Milano San Pietro all’Orto in June 2015 and Arese in April 2016 (-5.5% on a like-for-like basis);
  • the good performance of franchised Bookstores (+0.2%), driven by the development of the network (-1.9% on a like-for-like basis);
  • the 4.8% drop of directly-managed bookstores (+2.7% on a store like-for-like basis);
  • the growth of the online channel (+8.6%), specifically in the Book product (+12%);
  • a more moderate drop by the Bookclub (-3.4%) than in prior years.

In 2016, the Retail Area’s adjusted EBITDA amounted to 2.3 million euro on a like-for-like basis, up by 3.6% versus the prior year (1.8 million euro including the result of Librerie Rizzoli).

A result achieved through ongoing cost-curbing measures, which led to a lower percentage of overheads and personnel costs, despite the reduction in the product margin arising from the different product/channel mix, related also to the structural decline of the book clubs channel.

EBITDA in 2016 amounted to 1.9 million euro (1.4 million euro including the result of Librerie Rizzoli) versus 1.8 million euro in the prior year.

Magazines Italy
In 2016, the Group retained its leadership of the magazine market, with a circulation share, in terms of value, of 31.7%, steady versus December 2015[4].

In the reporting period, the Area’s revenue amounted to 310.8 million euro, basically steady (+0.4%) versus 309.6 million euro in the prior year (-3.8% on a like-for-like basis, net of the effects of the acquisition of Banzai Media, consolidated as from 1 June 2016).

Specifically:

  • circulation revenue: down by approximately 3%;
  • revenue from add-on products: basically in line with 2015 (-0.6%);
  • total advertising revenue: up by approximately 13%, pushed by the acquisition of Banzai Media; on a like-for-like basis, gross advertising sales on Group brands in Italy (print+web) fell by 3.8%.

Banzai Media, consolidated as of June 2016, contributed approximately 12.8 million euro to Magazines Italy revenue, bringing overall revenue of the properties at approximately 18 million euro, basically tripling the figures of 2015, and accounting for 21% of total advertising revenue.

In 2016, the Group reached a unique audience of 16 million/month,[5] becoming Italy’s top digital publisher, a position corroborated by comScore surveys, which reported in December 2016 an audience of 23.7 million unique users/month.

Adjusted EBITDA in the Magazines Italy Area improved sharply, rising from 3.5 million euro to 10.5 million euro, despite the drop in revenue triggered by the market context, driven by the effective review of the publishing structure and by the containment of promotional activities, while retaining the traditional focus on the publishing quality of the titles. The reporting period additionally saw a sharp drop in industrial costs, achieved also as a result of the renegotiation of printing contracts.

The Area’s EBITDA confirmed the growth trend, increasing from 0.4 million euro in 2015 to 3.8 million euro in 2016, as a result of the above actions and despite higher restructuring costs.

Magazines France
Mondadori France’s revenue came to 321.6 million euro in 2016, down by -3.9% versus 334.6 million euro in 2015.

Against a shrinking market backdrop, Mondadori France retained its position as second player in the magazine advertising market, with its share (in terms of volume) steady at 10.9%.

Advertising revenue (print-digital) fell by 6.5% versus 2015: digital advertising (almost 18% of total advertising revenue) grew by over +16%, partly offsetting the decrease from print advertising sales (-10.3% in terms of value).

Circulation revenue (newsstands+subscriptions), which accounts for approximately 75% of the total, showed an overall -2.9% decline, slightly improving versus the prior year, thanks to the steady performance of subscriptions, which make for over half the total (53%).

Digital activities grew by an overall 11.6%, driven by the digital activities of the properties (+9.5%) and by NaturaBuy activities (+23.5%).

Adjusted EBITDA came to 33.2 million euro, down by 8% versus the prior year, due in particular to M&A costs in the year with margins on revenue again above 10% (10.3% in 2016 versus 10.8% in 2015).

In 2016, Mondadori France continued to focus its strategy on editorial and overhead cost containment to counter the lingering weakness of the relevant markets, with a view to further adjusting the organization to market changes, while retaining the ability to make investments in quality and in the gradual digitization of publishing activities. Digital activities continued to enjoy positively growing margins in the reporting period versus 2015.

The Area’s EBITDA, amounting to 30.8 million euro, was down by 5% versus 2015 (32.4 million euro), to a lesser extent as a result also of lower restructuring costs.

Performance of Arnoldo Mondadori Editore S.p.A.
The financial statements of the Parent Company Arnoldo Mondadori Editore S.p.A. show a loss of 15.2 million euro for the year ended 31 December 2016, improving versus 32 million euro reported in the prior year.

Main significant events after year-end
On 29 September 2016, the Board of Directors approved the plan on the merger by incorporation of the subsidiary Banzai Media S.r.l. in Arnoldo Mondadori Editore S.p.A., prepared pursuant to art. 2501-ter and art. 2505, par. 1, of the Italian Civil Code, concurrently approved by the Board of Directors of Banzai Media S.r.l.

The transaction aims to achieve the full integration of Banzai Media activities with the digital properties of Magazines Italy. The value of Banzai Media’s brands will, instead, remain separate and distinct. The merger will give birth to a unified product range with the potential to present itself as a leader to both advertisers and users, improving time to market and sharing the wealth of mutual assets and know-how, leveraging on greater streamlined business processes.

On 8 November, the Board of Directors approved the merger by incorporation, with no share exchange, of the wholly-owned company Banzai Media S.r.l., in accordance with the previously approved merger plan.

The merger, signed on 10 January, took effect for statutory purposes as from 15 January 2017, and for accounting and tax purposes as from 1 January 2017.

The Board of Directors of Arnoldo Mondadori Editore S.p.A. called the Shareholders’ Meeting on Thursday 27 April 2017 in first call.

Renewal of the authorization to purchase and sell treasury shares
Following the expiry of the preceding authorization resolved upon by the Shareholders’ Meeting on 21 April 2016, with the approval of the financial statements at 31 December 2016, 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 picking up 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 compensation for the acquisition of interests within the framework of the Company’s investments;
  • to use the treasury shares purchased against the exercise of option rights, including conversion rights, deriving from financial instruments issued by the Company, its subsidiaries or third parties and to use the treasury shares for lending, exchange or transfer transactions or to support extraordinary transactions on the Company’s capital or financing transactions that imply the transfer or sale of treasury shares;
  • to undertake any investments, directly or through intermediaries, including for the purpose of containing abnormal movements in share prices, stabilizing share trading and prices, supporting the liquidity of the share on the market, in order to foster the regular conduct of trading beyond normal fluctuations related to market performance, without prejudice in any case to compliance with applicable statutory provisions;
  • to possibly 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
Until the Shareholders’ Meeting called to approve the financial statements for the year ending 31 December 2017.

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 on regulated markets 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 unit price not lower than the official Stock Exchange price of the day preceding the purchase transaction, reduced by 20%, and 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.

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, and support to incentive plans approved by the Shareholders’ Meeting.

To date, Arnoldo Mondadori Editore S.p.A. holds a total of no. 80,000 treasury shares, equal to 0.031% 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 current laws and regulations.

Proposed adoption of a Performance Share Plan
The Board resolved, on a proposal from the Remuneration and Appointments Committee, to submit to the approval of the Ordinary Shareholders’ Meeting, the adoption of a Performance Share Plan for 2017/2019, in accordance with art. 114-bis of Legislative Decree no. 58 of 24 February 1998, intended for the CFO-Executive Director and/or other executive managers with strategic responsibilities and/or second-line managers/executives of the Group.

With the adoption of the Plan, the Company aims to incentivize 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 2017 to 2019.

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 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 current laws and regulations.

Proposed amendments to the company by-laws
The Board resolved to submit a proposal to the Extraordinary Shareholders’ Meeting on amendments to art. 7 (adoption of increased voting rights pursuant to art. 127-quinquies of Legislative Decree no. 58/98) and art. 17 (amendments to appointment procedures for the Board of Directors by means of a so-called blocked lists system) of the Company by-laws. For further information on the amendments, reference should be made to the explanatory reports, which will be published within the time limits and in the manner prescribed by current laws and regulations.

Sustainability Report
The Board of Directors of Arnoldo Mondadori Editore S.p.A. also aligned financial and non-financial disclosures by approving its 2016 Sustainability Report, drafted according to the GRI Guidelines, standard G4, based on the “in accordance – core rating”.
A summary of the Sustainability Report in line with the provisions will be supplemented in the Annual Report; the complete document will be made available at the Shareholders’ Meeting.

The 2016 results, approved on today’s date by the Board of Directors, will be presented by the Mondadori Group Management to the financial community today, 5:00 PM, at the Mondadori Megastore in piazza Duomo, Milan.

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

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

Annexes (see attached pdf):

  1. Consolidated balance sheet;
  2. Consolidated income statement;
  3. Consolidated income statement – fourth quarter;
  4. Group cash flow;
  5. Arnoldo Mondadori Editore S.p.A. balance sheet;
  6. Arnoldo Mondadori Editore S.p.A. income statement;
  7. Arnoldo Mondadori Editore S.p.A. cash flow statement;
  8. Glossary of terms and alternative performance measures used.

[1] On 30 September 2015, the transfer of 80% of the share capital of Monradio S.r.l. to R.T.I. S.p.A. was completed for a consideration of 36.8 million euro. Pursuant to IFRS 5 (“Non-current assets held for sale”), the Group’s radio business was classified as “discontinued operations” and as such entered in these consolidated financial statements. As a result, in the income statement for 2015, the results achieved in the period, along with the depreciation of operations made in order to bring their value in line with the consideration from the transfer, were classified under “Profit/(loss) from discontinued operations”.

 

[2] Pro-forma figures: consolidation of the companies acquired in 2016 (Rizzoli Libri and Banzai Media) assumed as from 1 January 2016.

[3] AIE, 2016 ministerial data based on textbook adoption (number of sections).

[4] Internal source: Press-di, December 2016.

[5] Source: Audiweb at December 2016

  • Net profit improves by over 20 million euro: 17.9 million euro at 30 september 2016 versus -2.8 million euro at 30 september 2015; 11 million euro on a like-for-like basis
  • Consolidated net revenue 935.3 million euro versus 818.3 million euro in the prior year: +14% including the consolidation of Rizzoli Libri and Banzai Media; basically steady on a like-for-like basis.
  • Adjusted EBITDA 76.1 million euro versus 48 million euro in the prior year: +59% with the positive contribution of the acquired companies; +24% on a like-for-like basis.
  • EBITDA improves for 11th consecutive quarter to 70.3 million euro versus 48.8 million euro in the prior year: +44% including Rizzoli Libri and Banzai Media; +10% on a like-for-like basis as a result of the ongoing efficiency gains.
  • Net financial position -329 million euro versus -243.6 million euro, as a result of the constant increase in cash generation, which allowed investments in acquisitions of approximately 170 million euro.

Guidance for current years improves

  • Revenue confirmed to increase by approximately 14% including Rizzoli Libri and Banzai Media; basically steady on a like-for-like basis.
  • Adjusted EBITDA expected to improve by 35% (versus previous estimate of 30%) including the acquired companies; double-digit growth on a like-for-like basis (versus previous high single-digit estimate).
  • NFP/EBITDA ratio improves to about 3.3x versus previous estimate of 3.5x (lower than bank covenant of 4.5x).

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Report on Operations at 30 September 2016 presented by CEO Ernesto Mauri.

GROUP PERFORMANCE AT 30 SEPTEMBER 2016

In 9M16, Mondadori Group reported a rather encouraging performance. After almost four years, revenue kept steady – on a like-for-like basis – versus the prior year; these results, together with the improvement of EBITDA for the eleventh consecutive quarter, laid the groundwork to improve the outlook for the full year.

Additionally, 2016 marked the transition to the new phase of the Group’s development, as a result of the consolidation of the recently acquired Rizzoli Libri and Banzai Media, a major step made to strengthen the leadership position in the Group’s strategic businesses.

In 9M16, consolidated net revenue grew by 14.3% to 935.3 million euro; net of the effects of the consolidation of the companies acquired in the year, the Group’s performance remained basically steady versus 818.3 million euro posted in the prior year.

Consolidated adjusted EBITDA[1] grew by 58.7% (76.1 million euro versus 48 million euro in 9M15), thanks also to the positive contribution from the companies acquired in 2016, from Rizzoli Libri (16.5 million euro) in particular. The Books Area increased by 65%, while Magazines Italy tripled its performance. The Retail Area, despite the negative impact (from the seasonality of the Rizzoli bookstore in Milan), improved by over 13%.

On a like-for-like basis, the Group’s adjusted EBITDA grew by 23.7%, with a percentage on revenue increasing from 5.9% to 7.3%. This performance is the result of a constant and focused management policy, launched and successfully implemented in all of the business areas; Books (+18.2%) and Magazines Italy (from 1.7 million euro to 6.5 million euro) performed strongly.

Consolidated EBITDA was up by 44% to 70.3 million euro, including the result of Rizzoli Libri and Banzai Media. On a like-for-like basis, the increase amounts to 9.9% (from 48.8 million euro to 53.7 million euro), confirming the Group’s strong and constant efficiency gains from its ability to stabilize revenue and thanks to the industrial and organizational review actions launched and implemented over the past three years, despite the benefits felt in 3Q15 from the capital gain of 7.6 million euro arising from the disposal of the Harlequin Mondadori joint venture (Books Area).

In 9M16, consolidated EBIT was up by 60.1% to 48 million euro, including amortization and depreciation of 5.2 million euro relating to Rizzoli Libri; on a like-for-like basis, EBIT amounted to 37 million euro, improving by 23.4% versus 30 million euro in 9M15, also as a result of the decrease in amortization, depreciation and impairment losses by 16.7 million euro versus 18.8 million euro at 30 September 2015, which included the impairment of 4 million euro of the interest held in the Greek Attica Publications subsidiary (Magazines Italy Area).

The consolidated result before taxes amounted to 35.3 million euro, up versus 16.1 million euro, or to 24.5 million euro on a like-for-like basis, rising sharply (+52.1%) versus 9M15, thanks also to the contribution of financial costs (12.5 million euro), which decreased sharply (-9.2%) as a result of the reduction in the average debt rate from the renegotiation of the loan agreement made at end 2015 (from 3.72% to 3.05%), and of a lower average debt in the period, despite the acquisitions made in 2016.

The Group consolidated net result amounted to 17.9 million euro, improving by over 20 million euro versus -2.8 million euro at 30 September 2015, which included the capital loss from the disposal of the Group’s radio business; on a like-for-like basis, the net result came to a positive 11 million euro.

At 30 September 2016, Group employees amounted to 3,330 units. The 7.8% increase in headcount versus September 2015 is due solely to the acquisitions made over the last 12 months; on a like-for-like basis, Group employees would be down by 5.8%.

The Group net financial position at 30 September 2016 came to -329 million euro versus -243.6 million euro at 30 September 2015, as a result of the Group’s significant cash generation over the past 12 months, which allowed net investments in acquisitions of 135.7 million euro.     

At 30 September 2016, cash flow from operations – on a like-for-like basis – in the last twelve months came to a positive 83.9 million euro; ordinary cash flow (after outlays for financial costs and taxes for the period) continued the upward trend of the seven previous quarters and came to 56.3 million euro. Including the contribution from recent acquisitions, cash flow from ordinary operations in the last twelve months amounted to 53.3 million euro.

This performance is the result of constant and effective monitoring, and the ability to act on and manage all of the economic and financial variables typical of all of the Group’s business areas.

OUTLOOK FOR THE YEAR

In light of the Group’s performance and of the results of the acquired companies, the forecasts previously announced on revenue for the current year can be reasonably confirmed: including Rizzoli Libri (for 9 months) and Banzai Media (for 7 months), revenue is expected to increase by approximately 14%, while, on a like-for-like basis, it is basically steady versus 2015.

Adjusted EBITDA estimate improves: including Rizzoli Libri and Banzai Media, adjusted EBITDA is forecast to grow by approximately 35% (from the previous estimate of +30%), while, on a like-for-like basis, forecasts point to a double-digit growth (from the previous high single-digit estimate) versus 2015, with a resulting increase in profitability.

The net financial position is expected to improve versus the previous forecast (3.5x), with a NFP/EBITDA ratio of about 3.3x, lower than the bank covenant for the year of 4.5x.

PERFORMANCE OF GROUP BUSINESS AREAS AT 30 SEPTEMBER 2016

  • BOOKS

In 9M16, the Trade Books market in Italy grew by +2.3% versus 9M15 (GFK, September 2016, figures in terms of market value), confirming the positive signs reported in the first half of the current year.

Against this backdrop, Mondadori Libri retained its market leadership position with a 22.8% trade share.

At 30 September 2016, following the acquisition of the Rizzoli Libri brands (Rizzoli, BUR and Fabbri Editori), the Group increased its overall market share to 27.8%.

In the school textbooks segment, following the integration of Rizzoli Education, the Group increased its market share to 24.1%, becoming the leading player in the segment in Italy.

In the period under review, revenue from the Books Area of Mondadori Group amounted to 355.5 million euro, up by 52.5% as a result of the consolidation of Rizzoli Libri from April 2016 (+1.8% on a like-for-like basis versus 233.2 million euro in 9M15). Rizzoli Libri contributed an overall 118.4 million euro to the period.

On a like-for-like basis, the Trade Books Area revenue increased by 15.7% versus 9M15, as a result of the positive performance of sales from the titles launched between the end of 2015 and the first half of the current year. Regarding the Educational Area, revenue in 9M16 grew by 2.5% on a like-for-like basis versus 9M15.

Adjusted EBITDA in the Area came to 58.6 million euro, rising sharply (+65.1%) versus 9M15 (35.5 million euro); in the reporting period, Rizzoli Libri contributed 16.6 million euro, mainly as a result of the positive performance of the schools segment.

The Books Area performed strongly also on a like-for-like basis, surging by +18.2% (42 million euro at 30 September 2016), propelled by the increase in revenue from the targeted publishing policy and by the ongoing optimization of the operating processes implemented in the Trade segment, which helped slash the percentage of costs of goods sold on revenue. Concurrently, the cost containment policy aimed at cutting fixed costs and discretionary expenses continued and resulted in improved profitability.

Reported EBITDA in the Area amounted to 57.9 million euro versus 39.6 million euro at 30 September 2015, which included the capital gain of 7.6 million euro from the disposal of the interest held in the Harlequin Mondadori joint venture, partly offset in the reporting period by lower restructuring costs versus the prior year.

  • MAGAZINES ITALY

Revenue from the Magazines Italy Area amounted to 234.9 million euro, up by 0.8% versus 233 million euro in 9M15 (-2.3% on a like-for-like basis, net of Banzai Media, consolidated as from 1 June 2016)[2].

Against this backdrop, Mondadori Group retained its market leadership position with a 31.8% share (Internal source: Press-di, August).

In 9M16, Banzai Media contributed approximately 7.2 million euro to the Area’s revenue. Following the acquisition, Mondadori has reached a total digital audience of 16.6 million unique monthly users (Audiweb, average figures at August 2016), becoming the leading Italian digital publisher.

Circulation revenue of the Magazines Italy Area dropped by 2.4%; on a like-for-like basis of titles, the drop was basically in line with the relevant market performance (-8.3%, internal source Press-Di, cumulative figures at August 2016: newsstands+subscriptions at cover price) in both the newsstand and subscription channels.

Revenue from advertising sales fell by 2.6%; print advertising sales in Italy dropped by 4% (in line with the market’s -3.6%, Nielsen, cumulative figures at August 2016); sales on websites increased by 0.6% and outperformed the relevant market trend (-1.6%, Nielsen, cumulative figures at August 2016), with the contribution of the consolidation of Mondadori Scienza properties (Nostrofiglio.it and Focus.it).

Revenue from add-on products was steady versus 9M15, thanks to the positive contribution of the home-video business (50% of total), which offset the drop in gadgets and music CDs.

Looking at distribution and revenue towards third publishers, the Area was in line with the prior year, thanks to the ongoing commitment to developing third-publisher portfolios.

International operations achieved revenue of 4.3 million euro, down versus 5.3 million euro reported in 9M15, as a result of the drop in licensing activities caused by the deteriorated market environment.

Revenue from Digital Marketing Service activities (8.7 million euro) grew by approximately 2% versus 9M15, as a result of the gradual expansion of the portfolio of solutions that had started in 2015.

Adjusted EBITDA in the Magazines Italy Area improved significantly to 6.9 million euro (including the contribution of Banzai Media), or to 6.5 million euro on a like-for-like basis versus 1.7 million euro in 9M15, driven by the effective review of the publishing structure, implemented while retaining the traditional focus on the publishing quality of the titles. The reporting period also saw a sharp drop in industrial costs, achieved also as a result of the renegotiation of printing contracts.

The Area EBITDA more than confirmed the growth trend, increasing by over 4 million euro (from 0.8 million euro to 5.4 million euro), despite the higher amount of negative non-recurring items; on a like-for-like basis, reported EBITDA came to 5.1 million euro.

  • MAGAZINES FRANCE

In 9M16, revenue from Mondadori France amounted to 239.3 million euro, down by 3% versus 246.8 million euro in 9M15.

Specifically:

  • Circulation revenue, accounting for approximately 75% of the total, fell by 2.4% versus the prior year.

Specifically, sales revenue in the subscription channel was basically stable, partly offsetting the decline in the newsstand channel (-6.1%, basically in line with the market trend) and confirming the strategic opportunity for further investments in this channel, which accounted for 53% of circulation revenue in 9M16, representing the major and most growing contribution to revenue of the area.

These positive performances were achieved with the constant attention paid to publishing quality and innovation. In the period under review, Mondadori France, in fact, launched various brand extensions, including Grazia Hommes.

  • Advertising revenue fell by an overall 4.6% versus 9M15, but performance differed between offline and online component: digital advertising (accounting for about 20% of total advertising revenue) was up by approximately 22%, partly offsetting the drop in traditional print advertising (-8.9%). Against this backdrop, Mondadori France retained its 6% market share (Kantar Media: cumulative figures in terms of volume at June 2016) and was, once again, the second top player in the magazine advertising market.

Digital activities (approximately 5% of total revenue) grew by an overall 14.8%, propelled by the development of the properties, in addition to the positive performance of NaturaBuy (+29%). The web audience of Mondadori France magazines totaled 8.9 million unique users (Médiamétrie Netratings-Nielsen, January-August 2016 average figure), up by approximately 9% versus 9M15.

Adjusted EBITDA came to 21.3 million euro, down by 3.8% versus 9M15, due mainly to costs for M&A managed in the period (0.7 million euro). Focus continued on editorial and overhead cost containment to counter the lingering weakness of the relevant markets, with a view to further adjusting the organization to market changes, while retaining the ability to make investments in quality and in the gradual digitization of publishing activities. Digital activities continued to enjoy positively growing margins in 9M16 versus the loss in 9M15.

Reported EBITDA, amounting to 19.4 million euro, was down by 3.1% versus 20.0 million euro in 9M15, as a result of the abovementioned M&A costs and of restructuring costs of approximately 1.9 million euro (2.1 million euro in 9M15).

  • RETAIL

In 9M16, the Retail Area revenue – on a like-for-like basis – rose to 135 million euro, increasing by 1.1% versus 131.9 million euro in 9M15, due mainly to the growth of the Franchised channel (+3.3%) and of Megastores (+3.8%), which more than offset the structural decline of the Book Clubs; the online channel posted a positive performance (+2.2%), driven mainly by the good results of school textbooks. As of 1 April 2016, following the consolidation of the acquisition of Rizzoli Libri, activities relating to the Rizzoli bookstore have been absorbed by the Retail Area; as a result, in 9M16, the Area increased revenue by an overall 2.4%.

In 9M16, Mondadori Retail adjusted EBITDA, on a like-for-like basis, came to -2.5 million euro, improving versus -3.1 million euro in 9M15 (-2.7 million euro, including the result of Librerie Rizzoli in the April-September six-month consolidation period). A result achieved through cost-curbing measures involving stores and central functions, which more than offset the effects arising from the structural decline of the book clubs channel. On a like-for-like basis, reported EBITDA came to -2.1 million euro versus -2.8 million euro in 9M15, as a result of a number of positive extraordinary items (0.4 million euro).

Designation of the Lead Independent Director

The Board of Directors, in accordance with the Corporate Governance Code, designated Independent Director Cristina Rossello as Lead Independent Director.

The Lead Independent Director remains in office for the same period as the members of the Board of Directors, thus until the Shareholders’ Meeting called to approve the financial statements for the year ending 31 December 2017.

The Board of Directors also approved the merger by incorporation, with no share exchange, of the wholly-owned company Banzai Media S.r.l., in accordance with the merger plan made available, as announced on 29 September, at the Company’s registered office, through the authorized storage mechanism 1info (www.1info.it) and on the Company website www.gruppomondadori.it (Governance section). The conclusion of the merger deed and the required entry in the Company Registry are scheduled by 15 January 2017, following expiry of the objection period for creditors pursuant to art. 2503 of the Italian Civil Code.

 The documentation relating to the presentation to analysts of the results for the first nine months of 2016 is made available to the public on the authorized storage mechanism 1info (www.1info.it) and on www.gruppomondadori.it (Investor section).

 Publication of the Interim Report on Operations at 30 September 2016

This Interim Report at 30 September 2016 was approved by the Board of Directors and is made available starting from today’s date at the Company’s registered office, on the authorized storage mechanism 1info (www.1Info.it) and on www.gruppomondadori.it (Investor section).

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

Annexes (see pdf attached):

  1. Consolidated financial situation
  2. Consolidated income statement
  3. Consolidated income statement – third quarter
  4. Group cash flow
  5. Glossary of terms and alternative performance measures used

[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 Annex 5 “Glossary of terms and alternative performance measures used” .

[2] On 1 January 2016, following reorganization, Digital Marketing Service activities and the central unit focused on the digital business of the Mondadori brands were transferred to Magazines Italy (previously included in Other Business, Corporate and Digital Innovation); the Area’s income statement was reclassified, for information sake, also in 9M15.

  • Consolidated net revenue: +1.1% on a like-for-like basis versus 1H15;including the effects of the consolidation of Rizzoli Libri and Banzai Media, consolidated net revenue 562.6 million euro: +8.6% versus 1H15
  • Consolidated EBITDA: +24% on a like-for-like basis versus 1H15; including Rizzoli Libri and Banzai Media, consolidated EBITDA 22.5 million euro: +18.7% versus 1H15
  • Group consolidated positive net result of 0.2 million euro on a like-for-like basis versus -12.2 million euro in 1H15; -3.8 million euro including Rizzoli Libri and Banzai Media
  • Group net financial position -374.8 million euro versus -326.5 million euro at 30 June 2015 as a result of the significant cash generation despite net investments of over 150 million euro for the acquisition of Rizzoli Libri and Banzai Media

CURRENT YEAR PROJECTIONS
(including Rizzoli Libri for 9 months and Banzai Media for 7 months):

  • Revenue to increase by approximately 14% versus 2015;
  • Adjusted EBITDA* to improve by approximately 30%;
  • Net financial position expected with a NFP/EBITDA ratio of about 3.5x, lower than the bank covenant of 4.5x

 

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Half-Year Financial Report at 30 June 2016, presented by CEO Ernesto Mauri.

GROUP PERFORMANCE AT 30 JUNE 2016

In 2016, the Mondadori Group enjoyed a rather positive start to the year, even more rewarding if one considers the persisting volatile macroeconomic environment.

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

2Q16 saw the consolidation of Rizzoli Libri and Banzai Media, a major step in strengthening the leadership position in the Group’s strategic businesses, accelerating the growth process of the Company.

These acquisitions helped strengthen the already positive performance of revenue in 1H16, which increased by 8.6%.

In 1H16, consolidated net revenue amounted to 562.6 million euro, as mentioned, up by 8.6%. Net of the effects of the consolidation of the companies acquired in 2016, the Group reported a 1.1% increase.

Adjusted EBITDA amounted to 26.7 million euro, improving by 11.9% versus 23.8 million euro in 1H15. On a like-for-like basis, the growth is 15.9%, with a percentage on revenue increasing from 4.6% to 5.3%. This performance was the result of a constant and focused management policy successfully implemented in all of the Group’s business areas.

Consolidated EBITDA came to 22.5 million euro versus 19 million euro in 1H15, up by 18.7%, including the result of Rizzoli Libri (-1.5 million euro) and Banzai Media (+0.6 million euro). On a like-for-like basis, the increase amounts to 24%: a result that confirms the Group’s strong efficiency gains from its ability to stabilize revenue and the industrial and organizational review actions launched and implemented over the past two years.

Consolidated EBIT in 1H16 amounted to 8.5 million euro, including amortization and depreciation of 3 million euro relating to Rizzoli Libri; on a like-for-like basis, EBIT amounted to 12.4 million euro, improving by 34.7% versus 9.2 million euro in 1H15, despite the increase in amortization, depreciation and impairment losses (11.1 million euro versus 9.7 million euro at 30 June 2015), resulting from higher amortization following the upturn in investments.

The consolidated result before taxes amounted to 0.6 million euro, or to 4.6 million euro on a like-for-like basis, a sharp increase versus 0.6 million euro in 1H15, thanks also to the contribution of financial costs, which amounted to 7.8 million euro, decreasing sharply (-8.4%) as a result of the reduced average net debt in the period and average total cost of debt.

The Group consolidated net result amounted to -3.8 million euro, improving strongly versus -12.2 million euro at 30 June 2015, while on a like-for-like basis, the net result came to a positive 0.2 million euro.

Fixed-term or permanent staff employed by the Group at 30 June 2016 amounted to 3,404 units; the figure includes 438 resources coming from the acquisition of Rizzoli Libri and Banzai Media; on a like-for-like basis, Group staff would be down by 2.5%.

The Group net financial position at 30 June 2016 came to -374.8 million euro versus -326.5 million euro at 30 June 2015, as a result of the Group’s significant cash generation, including of an extraordinary nature, over the past 12 months, which allowed net investments in acquisitions of 157.3 million euro.

At 30 June 2016, cash flow from operations in the last twelve months, on a like-for-like basis, came to a positive 79.4 million euro, while cash flow from ordinary operations (after outlays for financial costs and taxes for the period) came to 51.5 million euro, continuing the rising trend seen in the seven previous quarters.

Including the effects of Rizzoli Libri and Banzai Media, the overall cash flow from ordinary operations amounted to 42.8 million euro, lower than the figure on a like-for-like basis, owing to the seasonal performance of the Rizzoli Libri business in 2Q16.

This performance was the result of constant and effective monitoring, and the ability to act and manage all of the economic and financial variables typical of all of the Group’s business areas.

OUTLOOK FOR THE YEAR

In light of the positive performance of the Group in the first half of the year and considering the integrations in progress, the forecasts previously announced on a like-for-like basis for the current year can be reasonably confirmed (basically steady revenue versus 2015 and a “high-single digit” growth in adjusted EBITDA, with a resulting increase in profit margins).

Including the effects of the consolidation of Rizzoli Libri (for 9 months) and of Banzai Media (for 7 months), revenue is expected to grow by approximately 14% versus 2015, while adjusted EBITDA is expected to increase by approximately 30%. The net financial position is expected to increase versus the figure at 31 December 2015, with a NFP/EBITDA ratio of about 3.5x, lower than the bank covenant of 4.5x.

CO-OPTATION OF A DIRECTOR

At today’s meeting, the Board of Directors took note of the resignation, for professional reasons, of non-executive director Bruno Ermolli, also member of the Remuneration and Appointment Committee.

Accordingly, the Board of Directors, pursuant to art. 2386 of the Italian Civil Code, and to art. 17.6 of the company by-laws, approved the appointment by cooptation of Paolo Ainio, who will remain in office until the next Shareholders’ Meeting.

At the same meeting, the Board of Directors, in accordance with the provisions of the Corporate Governance Code issued by Borsa Italiana S.p.A., approved the reintegration of the Remuneration and Appointment Committee, by appointing non-executive director Alfredo Messina, who replaces director Bruno Ermolli.

Mention should be made that director Bruno Ermolli, at the date of his resignation, holds no equity interest in the Company.

The curriculum vitae of director Paolo Ainio, who qualifies as a non-executive director, in accordance with the provisions of the Corporate Governance Code issued by Borsa Italiana S.p.A., is available on the Company’s website www.gruppomondadori.it, Governance section.

PERFORMANCE OF GROUP BUSINESS AREAS AT 30 JUNE 2016

  • BOOKS

In 1H16, the Italian Trade Books market grew by +2.6% versus 1H15 (GFK, June 2016; figures in terms of market value). Against this backdrop, the Trade Books Area of Mondadori Libri was once again market leader, boasting a 22.9% share; following the acquisition of the Trade Books brands of Rizzoli Libri (Rizzoli, BUR and Fabbri Editori), the Group increased its overall Trade Books market share, reaching 28.8% (at 30 June 2016).

In the period under review, revenue from the Books Area of the Group amounted to 170.1 million euro, up by 37.9% versus 123.4 million euro in 1H15, as a result of the consolidation of Rizzoli Libri (with total revenue in the April/May 2016 period amounting to 36.6 million euro from the activities relating to trade, educational and Rizzoli International Publications, which operates in the high-end illustrated books market and through the activities of the Rizzoli Bookstore located in New York).

On a like-for-like basis, revenue from the Books Area of the Group increased by +8.2% versus 1H15.

Regarding the Trade Books Area on a like-for-like basis in 1H16 (net of the contribution of Rizzoli Libri), revenue amounted to 85.6 million euro, increasing by 14.3% versus 1H15, as a result of the positive performance of sales from the titles launched between the end of 2015 and the first half of the current year.

The Educational Area revenue grew by 17% on a like-for-like basis versus 1H15, as a result of supplies provided in advance in the school textbooks segment and of the positive performance of museum management activities.

Mondadori Libri’s adjusted EBITDA surged by over 29% on a like-for-like basis versus 1H15 to settle at 11 million euro, driven by the increase in revenue from the targeted publishing policy, by the remarkable success of the new titles published, and by the ongoing optimization of the operating processes implemented since 2015 in the Trade segment.

EBITDA on a like-for-like basis came to 10.7 million euro, doubling the result of 1H15 (5.2 million euro), thanks also to lower restructuring costs versus 1H15.

In the consolidation quarter (April-June 2016), Rizzoli Libri contributed negatively – 1.5 million euro – to the reported EBITDA of the Books Area, due mainly to the Educational Area’s seasonal performance, which generates most of its revenue in the second half of the year.

Reported EBITDA of the Books Area of the Group, including the effects of the consolidation of Rizzoli Libri, amounted to 9.1 million euro (+74.2% versus 1H15).

  • MAGAZINES ITALY

In 1H16, Mondadori Group retained its leadership position in the magazines market, with a 32.1% share (Internal source: Press-di, figures in terms of value at May, newsstands + subscriptions).

In the period under review, revenue from the Magazines Italy Area amounted to 161.1 million euro[1], up by 1.1% versus 159.4 million euro in 1H15 (-0.8% on a like-for-like basis, net of the effects of the acquisition of Banzai Media).

Specifically:

  • circulation revenue grew by 0.8%, due also to the contribution of the Mondadori Scienza titles;
  • revenue from advertising sales dropped by 2%; print advertising sales of Magazines Italy lost 4%, in line with the market’s -3.6% (Nielsen; cumulative figures at May); sales on websites increased by 4.7%, outperforming the relevant market (-1.9%: Audiweb; cumulative figures at May). Overall, in the period under review (print+web), advertising sales on Mondadori brands in Italy were down by 2.7%.

Traffic data of Mondadori websites showed an overall audience rate of 8.4 million unique users (Audiweb, cumulative figures at May) versus 7.2 million at May 2015 (+16% on January-May average);

  • revenue from add-on products sold in attachment to Mondadori magazines rose by 1.7% versus 1H15;
  • distribution and revenue towards third publishers was in line with 1H15, thanks to the ongoing commitment to developing third-publisher portfolios;
  • international operations achieved revenue of 3 million euro, down from the 3.5 million euro reported in 1H15, following the drop in licensing activities due to the deteriorated international macroeconomic environment and the negative effect of British and Chinese exchange rates;
  • revenue from Digital Marketing Service activities (6.2 million euro) grew by 2%, as a result of the gradual expansion of the portfolio of solutions that had started last year.

In 1H16, Banzai Media contributed approximately 2.9 million euro to the Magazines Italy Area’s revenue (in June): with the acquisition of an audience of 16.4 million unique users (Audiweb, average figures at May 2016), Mondadori becomes the leading Italian digital publisher.

Adjusted EBITDA in the Magazines Italy Area improved considerably on a like-for-like basis (approximately +13%), rising from 8.8 million euro to 9.9 million euro, driven by the effective review of the publishing structure and of promotional activities, implemented while retaining the traditional focus on the publishing quality of the titles.

The half-year period saw a significant reduction in industrial costs, achieved also as a result of the renegotiation of printing contracts. Including the contribution of Banzai Media, the increase in the period is 20.4%.

Reported EBITDA in the Area more than confirmed the growth trend in 1H16, increasing by 17% on a like-for-like basis, and by 25% (including the consolidation of Banzai Media), thanks to the above measures and to lower restructuring costs.

  • MAGAZINES FRANCE

In 1H16, revenue from Mondadori France amounted to 160.3 million euro, down by 3.8% versus 166.6 million euro in 1H15. Specifically:

  • circulation revenue (making for approximately 75 of the total) lost 2.8% versus 1H15: revenue from subscriptions (53% of circulation revenue) was basically steady, partly offsetting the drop by the newsstand channel (-6.3%) and confirming the opportunity to continue investments in this channel;
  • advertising revenue was down by 5.8% versus 1H15, but performance differed between offline (-10.9%) and online (18% of total advertising revenue) products, which reported a 27% increase.

The number of readers of Mondadori France magazines totaled 9.8 million unique users (Médiamétrie Netratings – Nielsen; average figure January/May 2016), up by approximately 19% versus 1H15, also as a result of the gradual digitization of the editorial teams.

Adjusted EBITDA came to 15.5 million euro, down by 3.8% versus 1H15, due mainly to M&A costs (0.6 million euro) incurred in the period. In keeping with the positive performance of 2015, digital activities enjoyed positive margins in 1H16 versus the loss in IH15.

Reported EBITDA, amounting to 14.2 million euro, dropped slightly versus 14.4 million in 1H15, as a result of the abovementioned M&A costs and of higher restructuring costs of approximately 0.3 million euro, arising from the voluntary redundancy plan launched in 2015, which has already produced benefits.

  • RETAIL

In 1H16, the Retail Area achieved revenue of 88.2 million euro, improving by 2.8% versus 85.9 million euro in 1H15.

As of 1 April 2016, following the consolidation of the acquisition of Rizzoli Libri, Librerie Rizzoli activities, relating to the long-standing bookstore in Galleria Vittorio Emanuele, Milan, and to the rizzolilibri.it ecommerce site, have been absorbed by the Retail Area. Accordingly, on a like-for-like basis, the Retail Area grew by 1.6%, thanks mainly to the growth of the Franchised channel (+5.2%) and the Megastores (+3.8%), which more than offset the structural decline of the Book Clubs (-8.8%).

In 1H16, Mondadori Retail adjusted EBITDA, on a like-for-like basis, came to -3 million euro, improving versus -3.2 million euro in 1H15 (-3.1 million euro, including the result of Librerie Rizzoli in 2Q16). A result achieved through cost-curbing measures for stores and central functions, which determined a lower percentage of personnel costs and overheads, and more than offset the reduction in the product margin arising from the different product mix/channel, related also to the effects of the structural decline of the book clubs channel.

Reported EBITDA came to -3 million euro (-3.1 million euro including the result of Librerie Rizzoli;   -2.8 million euro in 1H15 as a result of positive extraordinary items).

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

CLOSING OF THE DISPOSAL OF MARSILIO EDITORI S.P.A.

On 26 July 2016, Arnoldo Mondadori Editore S.p.A. completed the disposal, through its subsidiary Rizzoli Libri S.p.A., of its 94.71% interest in the share capital of Marsilio Editori S.p.A. to GEM S.r.l.. The amount cashed in from the transaction is 8.9 million euro, based on an enterprise value in line with the price of the acquisition of the interest, part of the Rizzoli Libri transaction completed last 14 April 2016; the amount includes an adjusted positive net financial position of 1.3 million euro.

The disposal of Marsilio Editori S.p.A. was completed in accordance with the remedies set out in the provision issued by the Antitrust Authority. GEM S.r.l., a company operating in the publishing industry, headed by the De Michelis family, had held an interest in Marsilio Editori S.p.A. from 1985 to April 2016.

Based on the 2016 budget, Marsilio Editori is expected to achieve revenue of approximately 9.4 million euro and EBITDA of 1 million euro.

* * *

The documentation relating to the presentation of the results at 30 June 2016, will be made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investor Relations section of the Company’s website www.gruppomondadori.it.

* * *

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

Annexes:

  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 indicators used

* This document, in addition to the statements and conventional financial indicators 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 Annex 5 “Glossary of terms and alternative performance measures used” .

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

 

BoD approves interim report at 31.03.2016

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

§

Outlook for the current year:

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS AREAS

  • BOOKS

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

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

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

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

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

  • MAGAZINES ITALY

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

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

Specifically:

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

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

  • MAGAZINES FRANCE

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

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

Specifically:

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

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

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

  • RETAIL

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

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

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

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

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

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

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

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

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

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

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

§

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

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

§

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

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

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

  • Consolidated net revenue 1,122.8 million euro: -4% versus 1,169.5 million euro in 2014
  • Strong improvement in consolidated EBITDA to 81.6 million euro: +14% versus 71.5million euro in 2014 (+7.5% before non-recurring items)
  • Positive consolidated net profit from continuing operations of euro 15.1million: threefold growth versus 5.3million euro in 2014
  • Sharp improvement in net financial position from cash generation of over 90million euro in 12 months: -199.4 million euro versus -291.8 million euro in 2014
  • §
  • 2016 forecast like-for-like: steady revenue, operating EBITDA “high single-digit” growth, further improvement in net financial position versus 31 December 2015
  • §
  • Shareholders’ Meeting called for 21 April 2016

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 2015[1] presented by CEO Ernesto Mauri.

2015 was a truly important year in the history of the Mondadori Group, a year in which we laid the structural foundations to address the challenges of our new phase of growth.
We confirmed the positive outcome of the path taken for some years now which, thanks to the steadfast commitment to the reduction in operating and overhead costs, brought a sharp improvement in our results, with a positive profitability touching all business areas, and in Mondadori’s ability to generate financial resources.
We continued to successfully focus on our core businesses, through the strategic rationalization of the portfolio of activities: the extraordinary transactions for the disposal of a number of non-strategic assets completed in 2015 (transfer of the majority interest in R101, a property in Rome, and 50% of the Harlequin Mondadori joint venture) have further increased available financial resources.
These positive results were used to reduce consolidated debt – which was almost halved in less than 24 months – and to provide adequate resources to the strategic lines of the Group’s development.
2015, in fact, was a year of transition to a new phase for Mondadori, in which the Company has returned to investing in order to strengthen its competitive edge in the Group’s strategic businesses and sustain the growth process.
In July, Mondadori increased its investment in Gruner+Jahr/Mondadori to 100%, adding even further value to its portfolio with a successful brand such as Focus, in line with its strategy to strengthen Group leadership in the magazine market by focusing on the key titles with the highest growth potential in the digital segment.
In October, the Group took a crucial step in its strategic development, signing the agreement to acquire RCS Libri, which will allow Mondadori, from 2016, to extend its foothold in the Italian trade books and school textbooks market, and in the international illustrated books business (United States in particular).

GROUP PERFORMANCE AT 31 DECEMBER 2015

In 2015 consolidated net revenue came to 1,122.8 million euro, down by 4% versus 1,169.5 million euro in 2014. The Magazines Italy area includes revenue generated by Gruner+Jahr/Mondadori, consolidated since 1 July 2015 (9 million euro) – now Mondadori Scienza; net of this change, at the Group level, the drop in revenue would amount to 4.7%.

In 2015 consolidated EBITDA improved strongly (+14%), reaching 81.6 million euro versus 71.5 million euro in 2014, due also to the benefits from non-recurring items such as the gain from the disposal of a property in Rome and of 50% of the Harlequin Mondadori joint venture.
Even net of non-recurring items, EBITDA grew by 7.5%, from 67.9 million euro in 2014 to 73 million euro in 2015, increasing its percentage on revenue from 5.8% to 6.5%. The consolidation of Gruner+Jahr/Mondadori contributed a positive 0.4 million euro, while the disposal of the Harlequin Mondadori joint venture contributed a negative 0.2 million euro.

The quarter-by-quarter results confirm the Group’s increasing efficiency, achieved despite the difficult market scenario in which it operates, deriving from the industrial revision actions and re-organization launched and implemented over the last two years, while maintaining continuous improvement in the quality of the publishing programme as a key objective.
Profitability (net of non-recurring items) recovered thanks to the lower percentage of the cost of items sold by over 2 percentage points (from 41.1% to 38.8% of revenue, improving across all business areas), and to the reduction in fixed costs (from 11% to 10.4% of revenue), higher than the reduction in revenue, partly alleviated by the rising percentage of variable costs on revenue (from 23.3% to 24.9%).

At 31 December 2015, the headcount dropped by 1.5% (3,076 units versus 3,123 in 2014), as a result of the ongoing review of the organizational process both in Italy and in France (like-for-like: -3%, or 94 units); net of non-recurring restructuring costs, the cost of personnel in 2015 fell by 3.4% versus 2014 (-5.3% like-for-like).

In 2015 consolidated EBIT amounted to 54.5 million euro, up by approximately 13% versus 48.2 million euro in 2014, as a result of the abovementioned growth in EBITDA, despite increased amortization, depreciation and impairment mainly from the impairment of the interest held in the Greek Attica Publications subsidiary (4 million euro), and from the impairment of goodwill of Kiver and Mondadori UK (3 million euro).
Depreciation of tangible assets (6.9 million euro versus 9.8 million euro in 2014) and amortization of intangible assets (13.1 million euro versus 13.5 million euro in 2014) continued to fall as a result of lower capital expenditure.

Consolidated profit before taxes came to a positive 38.3 million euro, up by 52% versus 25.2 million euro in 2014; financial costs in 2015 amounted to 16 million euro, falling sharply versus 23 million euro in 2014, as a result of reduced average net debt and average total cost of debt, and of the contribution of 1.6 million euro from the derecognition of a number of put options.
Tax costs in the reporting period came to 20.4 million euro (16.7 million euro in 2014), and include the impairment of deferred tax assets on prior-years’ losses, following the tax rate reduction introduced by the 2016 Stability Law (IRES rate from 27.5% to 24% from 1 January 2017).

The consolidated net profit from continuing operations, net of minority interests, almost tripled versus 31 December 2014, and came to 15.1 million euro versus 5.3 million euro in 2014.
The result from discontinued operations, which came to a negative 8.7 million euro in 2015, includes the period net result of the Radio Business area (improving from -4.7 million euro at 31 December 2014 to -3.1 million euro), as well as the loss of 5.6 million euro from the impairment of Monradio operations, disposed of in September 2015.

The Group’s net profit at 31 December 2015, net of the result from discontinued operations, came to a positive 6.4 million euro, up by 5.8 million euro versus 0.6 million euro in 2014, despite the inclusion of the depreciation of Monradio operations.

The Group’s net financial position at 31 December 2015 came to -199.4 million euro, improving sharply (92.4 million euro) versus -291.8 million euro at 31 December 2014, as a result of the Group’s twelve-month cash generation, deriving both from improved ordinary operations and extraordinary operations.

At 31 December 2015, cash flow from operations came to a positive 70 million euro; ordinary cash flow (after the cash-out for financial charges and taxes for the year) amounted to 45.4 million euro, continuing the improvement witnessed in the previous five quarters.

Cash flow from extraordinary operations came to a positive 47 million euro, mainly as a result of the gain generated by the disposals completed in the period, totalling 54.8 million euro, from the transfer of 80% of Monradio and 50% of the Harlequin Mondadori joint venture, previously recognized at 30 September 2015, as well as a property in Rome completed in December.

BUSINESS AREAS

  • BOOKS

In 2015, after years of constant decline, the Books market rose by 0.9% versus 2014 (GFK, December): against this backdrop, the Mondadori Group retained its leadership in the trade segment with a 24% market share (versus 25.3% in 2014).
In the school textbooks market, Mondadori Education held to its third place in the segment, with a 12.5% share, adoptions-wise (AIE).

In 2015, the Books Area revenue amounted to 320.8 million euro, down by 5.7% versus 340.1 million euro in 2014, with a good performance achieved by the Educational area, and a drop reported by the Trade segment.

  • Trade Books: the reduction in revenue witnessed in trade in 2015 versus the previous year (from 182.4 million euro to 160.4 million euro) is attributable to the selective publishing policy focused on improving efficiency, therefore, profitability; specifically, in 2015, the amount of new titles and average print run was cut to reduce future unsold stock. These targeted actions have and will be taken maintaining the priority objective of research and ongoing improvement of the quality of the publishing schedule, as shown by the ranking of the top ten bestselling titles in 2015, with 5 of the Group’s titles in the charts (Grey, La ragazza del treno, È tutta vita, After and Cinquanta sfumature di grigio);
  • Educational Books: in this segment, the Group grew by 2.8% versus 2014, driven by the good performance of Mondadori Electa (+17.5%), as part of the management of museum concessions and the organization of exhibitions, and by EXPO Milano 2015, which more than offset the decline in revenue in the school textbooks segment (-4.3%).

Revenue from the download of e-books, amounting to 10 million euro, rose by 15% versus 2014, with digital sales accounting for 6.2% of total trade (4.8% at 31 December 2014).

Reported EBITDA for the Area came to 45.9 million euro, up from 45.1 million euro in 2014, and includes the 7.6 million euro gain from the transfer of the interest held in the Harlequin Mondadori joint venture (completed on 30 September 2015), and a higher percentage of restructuring costs versus 2014 (4.3 million euro in 2015 versus 0.9 million euro in 2014).

EBITDA, net of non-recurring items, fell from 46 million euro to 42.7 million euro, parallel to the drop in revenue.
The figure was basically steady as a percentage on revenue (13.3% versus 13.5% in 2014), as a result of the good performance in the Educational area, and of greater efficiency in managing operating processes, achieved thanks to the deep organizational and product review implemented in the Trade segment.

  • MAGAZINES ITALY

In 2015, the Mondadori Group retained its leadership with a market share of 31.2% at 31 December 2015 (internal source Press-di; December 2015).

In 2015, Magazines Italy posted revenue totalling 296.3 million euro, down by 2.1% versus 302.7 million euro in 2014 (-4.9% like-for-like, net of the 50% acquisition of Gruner+Jahr/Mondadori), outperforming the relevant segment in terms of advertising, while being in line circulation-wise:

  • circulation revenue dropped by 1.7%; on a like-for-like basis, the drop was 7.5%, in line with the market, due also to the decline in the subscription channel caused by the rationalization of low-profit subscriptions;
  • revenue from add-on products dropped by 8.8% versus 2014, as a result of the rationalization process implemented, which targeted increased project profitability (-10.6% like-for-like);
  • total advertising revenue fell by 1.8%; on a like-for-like basis, gross advertising sales on Mondadori brands in Italy (print + web) were down by 3.7%.

International activities, through Mondadori International Business, increased revenue by 2.4% versus 2014, thanks mainly to the performance of the Grazia International Network and the launch of the international editions of Il mio Papa.

EBITDA for the Magazines Italy area, net of non-recurring items, posted a remarkable improvement, rising from -0.7 million euro to a positive 5.8 million euro, despite the decline in revenue caused by the market conditions and by the implementation of targeted project selection policies, as a result of the effective review of the publishing and operating organization, and the containment of promotional activities, while retaining the traditional focus on the publishing quality of the titles.

Reported EBITDA confirmed the growth trend, rising from -1 million euro to a positive 2.6 million euro, as a result of the abovementioned actions and of the lower reduction in advertising sales, despite higher restructuring costs and non-recurring items of approximately 1 million euro in 2014, deriving from the contribution of advertising operations to Mediamond.

Traffic data of Mondadori websites showed an overall audience rate of 9.5 million unique users (Audiweb, December 2015), up by 16% versus 2014, due also to the inclusion in the scope of the Nostrofiglio.it brand (Gruner+Jahr/Mondadori), which boasted over 1.3 million unique users in December 2015 (+19% versus 2014).

MAGAZINES FRANCE
In the reporting period, Mondadori France revenue came to 334.6 million euro, down by 1.9% versus 2014 (340.9 million euro), halving last year’s decline (-3.7% in 2014).
Revenue from print activities was down by 2.9%, while digital activities stepped up their growth (+27%), thanks to the development of the digital activities on the properties (+26%: advertising revenue and revenue from the sale of digital copies) and of NaturaBuy (+31%).

Against a sliding market backdrop and despite a rather poor start to the year following the January terrorist attacks, Mondadori France’s advertising revenue (print + digital) dropped by 3.3% versus 2014. Specifically:

  • print advertising sales were down by 5% in value versus 2014, outperforming the market (-6.3%; Kantar Media, December); Mondadori France retained its position as the second player in the magazine advertising market, with its share in terms of volumes at 10.9%.
  • digital advertising revenue rose by almost 30% (versus the market’s 5.5% increase; SRI-Udecam-PwC), making for almost 15% of total advertising revenue, as a result of the sharp increase in audience (+20%).

Circulation revenue (newsstands and subscriptions), which accounts for more than 70% of the total, showed an overall 1.8% decline, slightly improving versus 2014, thanks to the performance of subscriptions, which make for over half the total.
Specifically:

  • newsstand channel revenue dropped by 5.8%; the comparison with 2014 results is affected, on the one hand, by the poor start of the market in 2015, as a result of the challenging national environment and, on the other, by the outstanding performance in January 2014, driven by the publication of the “Hollande scoop” on Closer;
  • on the other hand, subscription channel revenue posted a 0.8% growth versus 2014, thanks to the good trend in volumes, propelled by the ongoing promotional initiatives and steady prices, confirming the strategic opportunity to further invest in this channel.

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

EBITDA, net of non-recurring items, was basically steady versus 2014, totalling 36 million euro, with margins on revenue again above 10% (10.8% in 2015 versus 10.5% in 2014). A positive result achieved by Mondadori France, which continued to rationalize structures and curb editorial costs, while retaining its ability to invest in publishing quality and in diversification, with a view to further adjusting the organization to market changes and to sustaining profitability.
Specifically, two projects were launched in 2015, critical to countering the market downturn and to transforming the company into a truly digital organization: a restructuring plan based on voluntary staff leaving, launched in May; and the reorganization of the editorial teams, to be fully completed from end 2016.
As forecast, digital activities achieved a positive EBITDA in 2015.

Reported EBITDA, amounting to 32.4 million euro, was down by 7.5% versus 2014 (35 million euro), due to higher restructuring costs of approximately 2.8 million euro resulting from the above plan in effect.

Digital and diversification activities (over 8% of total revenue) grew by 14% thanks mainly to the growth of digital activities (+26.9%), regarding both the titles (+26.2%) and the NaturaBuy website (+30.9%).
The total number of readers of Mondadori France magazines reached 8.8 million unique users (Mediamètre Net Ratings MNR, average figure January-December 2015), up by approximately 23.8% versus 2014, also as a result of the steady digitization of the editorial teams.

  • RETAIL

In the Retail area, the Group continued to implement strategic actions to align the organization and the sales channels to the developments of the market, which showed the first signs of recovery in 2015, focusing on operating costs reduction, on gradual network revision and format.

In 2015, the Retail area’s revenue fell by 7.2% to 196 million euro versus 211.2 million euro in 2014, mainly as a result of the disposal of the flagship store in corso Vittorio Emanuele in Milan (which had contributed 14.2 million euro in 2014). In the Books segment, which made for 77% of store revenue, Mondadori Retail has a 14.2% market share.

The analysis by channel showed the following:

  • the growth of directly-managed book stores: +2.0% on a like-for-like basis;
  • franchised bookstores: slight downturn of revenue in the books segment, but a slight increase overall with stores like-for-like (+0.8%);
  • net of the disposal of the flagship store in corso Vittorio Emanuele in Milan, books in Megastores posted a good performance (+6.8%), while consumer electronics returned to growth (+2.3%);
  • in the online segment, revenue was down by 5.7% overall (-1.8% in the books segment);
  • book clubs performed in line with the structural reduction expected in the medium term development plan (-14.3%).

In 2015, Mondadori Retail posted a positive EBITDA, net of non-recurring items, of 2.2 million euro, improving sharply versus 0.2 million euro in 2014. The recovery of one percentage point of profitability is due largely to the improved product margins, specifically in the Books segment and in consumer electronics, and to the extended implementation of cost reduction measures, which led to a lower percentage of fixed and personnel costs.

Reported EBITDA in 2015 amounted to 1.8 million euro versus 8.9 million euro in 2014, which included the contribution of 9.3 million euro from the gain generated by the disposal of the flagship store in corso Vittorio Emanuele in Milan.

PERFORMANCE OF ARNOLDO MONDADORI EDITORE S.P.A.
The financial statements of the Parent company, Arnoldo Mondadori Editore S.p.A., for the year ended 31 December 2015, show a loss of 32 million euro (12.9 million euro in 2014).
As a result of the transfer of the business unit relating to publishing and distribution activities in the Books area, effective 1 January 2015, the two years are not comparable. The net profit in 2014 included operating profit of 11.7 million euro from the transferred BU, in addition to over 20.1 million euro in dividends received from a number of subsidiaries in the Books area.
The net profit was also affected by:

  • EBITDA before non-recurring items amounting to -7.5 million euro, as a result of the structural costs of the Digital and Corporate area (-12.2 million euro), offset by the positive result in the Magazines Italy area (4.8 million euro);
  • the adjustment to equity of the measurement of subsidiary and associated companies, amounting to 24.7 million euro versus 28.2 million euro in 2014, in addition to the charges from the disposal of Monradio and resulting exit from the radio business, amounting to 1.9 million euro;
  • positive non-recurring items of 7.2 million euro, as a result of the gain from the disposal of the property in Rome, net of restructuring costs for incentives granted to employees and contractors.

SIGNIFICANT EVENTS AFTER YEAR END
On 22 January 2016, the Antitrust Authority announced the opening of an investigation into the acquisition of RCS Libri. The investigation will be completed within 45 days from 21 January 2016. An additional 30 days will be needed to receive an opinion from the Communications Authority.

2016 OUTLOOK
In 2015, the Group continued to vigorously implement its efficiency measures, consistent with the dynamics of its relevant markets, and the strategic rationalization of its portfolio of activities. The success of these strategies, coupled with the improvement of business performance, allowed it to achieve EBITDA of over 80 million euro and a positive net profit, on the rise versus 2014, as well as a strong reduction in the net financial position.

In 2016, the Group will continue to strengthen its core businesses – this also includes the mentioned agreement on the acquisition of RCS Libri – through constant focus on publishing quality and on the optimization of operating processes and cost structure, in order to further strengthen its competitive position and implement the development plan in the digital segment.

In light of the current relevant context and the Group’s positive performance in the opening months, it is reasonable to expect for the current year basically steady revenue (on a like-for-like basis) versus 2015 and a “high-single digit” growth of operating EBITDA (on a like-for-like basis), with a resulting increase in marginality.

In line with the above and notwithstanding a recovery in investments, the net financial position (on a like-for-like basis) is expected to further improve versus 31 December 2015.

To date, these projections do not include the consolidation of RCS Libri and the relating synergies from the integration, the impact on the outlook for the current year of which will be readily disclosed to the market once the transaction is completed.
§

The Board of Directors of Arnoldo Mondadori Editore S.p.A. also aligned financial and non-financial disclosures by approving its 2015 Sustainability Report, drafted according to the GRI Guidelines, standard G4, based on the “in accordance” – core rating.
A summary of the Sustainability Report in line with the provisions contained in the 2014/95/EU directive adopted by the EU Parliament and Council on 22 October 2014 will be supplemented in the Annual Report; the complete document will be made available at the Shareholders’ Meeting.

§

The Board of Directors of Arnoldo Mondadori Editore S.p.A. called the Shareholders’ Meeting on Thursday 21 April 2016 in first call.

PROPOSAL TO COVER THE LOSS OF THE PERIOD BY USING AVAILABLE RESERVES
The Board of Directors will propose to the Shareholders’ Meeting to entirely cover the loss of the year of 31,981,679.37 euro at 31 December 2015 by using the available reserves as follows:

  • 1,100,690.02 euro by fully resorting to the stock option reserves under item “Other reserves and profit (loss) carried forward”;
  • 30,880,989.35 euro by partially resorting to the available portion of the extraordinary reserve under item “Other reserves and profit (loss) carried forward”;

§

RENEWAL OF THE AUTHORIZATION TO PURCHASE AND SELL TREASURY SHARES
Following the expiry of the preceding authorization resolved upon by the Shareholders’ Meeting on 23 April 2015, with the approval of the financial statements at 31 December 2015, the Board of Directors will propose to the next Shareholders’ Meeting the renewal of the authorization to purchase Treasury Shares with the aim of retaining the applicability of law provisions in the matter of any additional re-purchase plans and, consequently, of picking up any investment and operational opportunities involving Treasury Shares.
The Shareholders’ Meeting of 23 April 2015 authorized the purchase of Treasury Shares up to a maximum of 10% of the share capital made up of No. 26,145,834 ordinary shares.

In relation to the authorization of 23 April 2015, Arnoldo Mondadori Editore S.p.A. did not proceed, either directly or indirectly through its subsidiaries, to purchase any Treasury Shares.

On the occasion of the next Shareholders’ Meeting the proposal for the renewal of the authorization to sell the treasury shares acquired by the Company will also be made pursuant to article 2357 ter of the Italian Civil Code.
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 compensation for the acquisition of interests within the framework of the Company’s investments;
  • to use the treasury shares purchased against the exercise of option rights, including conversion rights, deriving from financial instruments issued by the Company, its subsidiaries or third parties and to use the treasury shares for exchange or transfer transactions or to support extraordinary transactions on the Company’s capital or financing transactions that imply the transfer or sale of treasury shares;
  • to possibly rely on investment or divestment opportunities, if considered strategic by the Company, also in relation to available liquidity;
  • To sell treasury shares against the exercise of option rights for the relevant purchase granted to the beneficiaries of the Stock Option Plans established by the Shareholders’ Meeting.
  • Duration

Until the Shareholders’ Meeting called to approve the financial statements at 31 December 2016 and, in any case, for a period not exceeding 18 months from the effective date of the resolution made by the Shareholders’ Meeting.

  • Maximum number of purchasable Treasury Shares

The renewed authorization will enable the Company to reach the cap of 10% of its share capital, in line with the previous authorization.
Considering that, as indicated above, the Company does not hold any treasury shares, either directly or indirectly, the authorization would refer to the purchase of maximum No. 26,145,834 treasury shares (10% of the share capital).

  • Criteria for purchasing Treasury Shares and indication of the minimum and maximum purchasing cap

Purchases shall be made on the regulated markets pursuant to article 132 of Italian Legislative Decree n. 58 of 24 February 1998 and article 144 bis, paragraph 1, letter B of Consob Regulation n. 11971/99 according to the operating criteria established in the organization and management regulations of the same markets, which do not allow the direct combination of the purchase negotiation proposals with pre-determined sale negotiation proposals, and also in compliance with any additional applicable regulations
The minimum and maximum purchase price would be determined under the same conditions established by the preceding Shareholders’ Meeting authorizations, i.e. at a unit price not lower than the official Stock Exchange price of the day preceding the purchase transaction, reduced by 20%, and 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 EC Regulation n. 2273/2003.

§

The 2015 results, approved today by the Board of Directors, will be presented by the Mondadori Group Management to the financial community today, 3.30 PM, at the Mondadori Megastore in piazza Duomo, Milan.
The corresponding documentation will be made available on 1Info a twww.1info.it, www.borsaitaliana.it and www.gruppomondadori.it (Investor Relations).

§

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

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

The Board of Directors approved the interim report at 30 September 2015

  • Consolidate net revenues: euro 817.1 million, -4.1% against euro 851.9 million of 30.09.2014
  • Consolidated EBITDA: euro 48.8 million, up 21.3% against euro 40.2 million of 30.09.2014
  • Result from continuing operations: positive for euro 6.6 million; up by over euro 10 million against a loss of euro 3.8 million at 30.09.2014
  • Net financial position: euro -243.6 million; significantly up against euro -327.4 million of 30.09.2014, as a result of 12-month cash generation equal to euro 83.8 million
  • §
  • EBITDA incrase estimates confirmed for 2015; significant improvement expected in net financial position against end of 2014

The Board of Directors of Arnoldo Mondadori Editore S.p.A., held on today’s date and chaired by Marina Berlusconi, examined and approved the interim report at 30 September 2015[1] presented by the CEO Ernesto Mauri.

GROUP PERFORMANCE AT 30 SEPTEMBER 2015

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

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

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

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

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

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

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

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

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

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

BUSINESS AREAS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mondadori France continued the process for the rationalization of structures and the implementation of the policy targeting editorial cost containment. These actions are expected to be continued through 2015 with a view to further adjusting the organization to the changes and to sustaining profitability, while keeping its ability to make investments in quality and in the progressive digitalization of editorial activities.

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

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

RETAIL
In the first nine months of 2015, the Retail area posted revenues of euro 131.6 million, down by 9.2% against euro 144.9 million of the same period of the previous year, also as a result of the transfer (completed in 2014) of the flagship store located in corso Vittorio Emanuele in Milan (whose contribution in the first nine months of 2014 was equal to euro 10.4 million).

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

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

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

Two main causes drove this result:

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

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

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

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

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

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

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

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

§

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

§

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

§

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

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

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

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

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

The Board of Directors approved the half year report at 30.06.2015

  • Consolidated net revenues: Euro 517.1 million, -4.8% against Euro 543.3 million of 30.06.2014
  • EBITDA before non-recurring items: Euro 23.8 million, up 32% against Euro 18.1 million of 30.06.2014
  • Total consolidated EBITDA: Euro 19 million, up 7.9% against Euro 17.6 million of 30.06.2014
  • Consolidated net result from continuing operations (excluding discontinued operations in the radio business area): Euro -3.4 million, remarkably up against  Euro -8.6 million of 30.06.2014
  • Net financial position: Euro -326.5 million, up against Euro -368.9 million of 30.06.2014

§

  • Improved results from operations in all of the Group’s business areas and focus on the strategic rationalization of the operations portfolio

§

  • EBITDA increase estimates confirmed for 2015; expected improvement in net financial position against end of 2014

 

The Board of Directors of Arnoldo Mondadori Editore S.p.A., held on today’s date, examined and approved the half year financial report at 30 June 2015 presented by the CEO Ernesto Mauri.

GROUP PERFORMANCE AT 30 JUNE 2015

In the first half year period of 2015 net consolidated revenues amounted to euro 517.1 million, down 4.8% against euro 543.3 million of the same period in 2014. A progressive improvement (-3.3%) was recorded in the second quarter against the performance of the first quarter (-6.2%).

EBITDA before non-recurring items registered an increase of 32%, from euro 18.1 million in the first half of 2014 to euro 23.8 million this year, with a percentage on revenues rising from 3.3% to 4.6%; consolidated EBITDA improved by 7.9%, totalling euro 19 million vs. euro 17.6 million of 30 June 2014. The recovery of profitability is even more significant net of non-recurring items (which had a negative impact on the result for approximately euro 5 million, mainly due to restructuring costs).

This performance is the result of a rigorous management policy. In particular:
– the majority of the business areas posted reduced incidence of the cost of goods sold, specifically the Book Area and the Retail Area, due to a more effective management of operating processes and to a targeted pricing policy;
– the rising incidence of variable costs on revenues is mainly attributable to the Magazines France Area and is referred to increased mail tariffs for subscriptions;
– the reduction in fixed costs is higher than the drop in revenues and was also reached through the implementation of a cost containment policy for third party services and rents;
– employee headcount at the end of the half year period was down by 144 people (-4.5%) against the first half year of 2014, due to the ongoing review of the organizational structures; cost of personnel consequently dropped by 4.6% against the previous year, essentially in line on revenues (20.9%).

Quarter after quarter, this result confirms the greater efficiency achieved by the Group across all business areas, especially in the Books and Magazines Italy Areas, as a result of the industrial and organizational review implemented over the last two years.

In the first half year of 2015, consolidated EBIT amounted to euro 9.2 million, up 32% against euro 7 million posted in the same period of 2014, as a result of the above-mentioned increased EBITDA and reduced amortization and depreciation.

Consolidated profit before taxes is positive for euro 0.6 million against euro -5.3 million at 30 June 2014; in the first half year of 2015, financial costs amounted to comprehensively euro 8.5 million, considerably down against euro 12.3 million of the same period in 2014, as a result of reduced average net debt for the period and average total cost.

Taxes in the period totalled euro 2.8 million (euro 2.1 million in the first half year of 2014).

Consolidated net result from continuing operations, after minority interest, was negative for euro 3.4 million, remarkably up against the euro 8.6 million loss registered at 30 June 2014.

The result from discontinued operations in the first half year of 2015, negative for euro 8.8 million, includes the same-period result of the Radio business area (up from euro -2.5 million at 30 June 2014 to euro -1.8 million) as well as depreciation of Monradio operations in order to bring their value in line with the fair value resulting from the offer received on 30 June 2015 by R.T.I. S.p.A.

The Group’s net financial position at 30 June 2015 was equal to euro -326.5 million, up against euro -368.9 million of 30 June 2014 as a result of the significant Group’s cash generation – especially from operations – over the last twelve months; the comparison with the value at 31 December 2014 (euro -291.8 million) includes the effects of the seasonal fluctuations typical of the business.

At 30 June 2015, cash flow from operations in the last twelve months is positive for euro 59.6 million; ordinary cash flow (after cash-out relative to financial charges and taxes for the period) is equal to euro 31.5 million, continuing the rising trend registered in the four previous quarters.

Cash flow from extraordinary operations is positive for euro 10.9 million despite cash-out for restructuring actions, and results from the capital gain deriving from the disposal of an asset in the Retail Area and from the collection of tax receivables accrued in previous years.

BUSINESS AREAS

  • BOOKS

In the first six months of 2015, the Trade Books area continued the trend already shown in the first quarter, down 2.7% vs. 30 June 2014 (source: GFK, value in June).

In this context, Mondadori Group confirmed its position as market leader with a 24.4% market share.

During the period, the Group has 4 titles in the ranking of the 10 top bestsellers books and was awarded the Strega Prize 2015 with La ferocia written by Nicola Lagioia (Einaudi) and the Strega Giovani Prize 2015 with Chi manda le onde written by Fabio Genovesi (Mondadori).

In the first six months of 2015, Mondadori Group’s Books Area recorded revenues for euro 123 million, down by 4.3% against euro 128.5 million of the same period of 2014.

Revenues from the Trade Books registered a higher decline than the market, influenced by a selective publishing policy aimed at increasing profitability. Mondadori’s positive performance in the second quarter benefited from the distribution of Grey, the new novel by E.L. James, which continues the Fifty shades of grey trilogy: launched on July 3rd in 500,000 copies, Grey is already an outstanding bestseller, with over 200,000 copies sold in the first two weeks.

Revenues from the download of e-books rose by 18.6% against the first six-months of 2014, with a 6.1% share of digital sales on the total revenues of Trade Books (4.7% at 30 June 2014).

In the first six months of 2015, revenues from Educational Books grew by 12.4% against the same period of 2014. The Education segment is characterized by the seasonal effects of the school textbook business, whose revenues are typically generated in the second half of the year.

EBITDA in the Books Area, net of non-recurring items, despite dropping revenues (-4.3%), posted a significant increase (+65.8%) from euro 5.1 to 8.5 million as a result of a more effective management of operating processes deriving from the radical restructuring process implemented in the Trade Area. Concurrently, the actions aimed at reducing fixed costs and cost of personnel continued.

Reported EBITDA, including a higher incidence of restructuring costs compared to last year (euro 3.2 million in 2015 against 0.5 million in 2014), which were concentrated in the first part of 2015, is equal to euro 5.2 million, up by approximately 12% against the same period of 2014 (euro 4.7 million).

  • MAGAZINES ITALY

In Italy, despite the negative scenario recorded in the market in terms of both circulation – down by 6.5% (internal source, newsstand channel, in May) – and sales from advertising – down by 3.6% (source: Nielsen, in May) – Mondadori confirmed its position as market leader with a 32.3% market share in circulation.

Overall revenues of the Magazines Italy Area amounted to euro 153 million, down by 6.1% (-5.7% on a like-for-like basis, considering magazines sold in March 2014), against euro 162.9 million in the first six months last year.

More specifically, revenues from circulation decreased by 7.6% (-6.8% on a like-for-like basis), however showing a significant recovery in the second quarter compared to first-quarter data.

The drop results from the combined effect of the reference market performance and of the rigorous policy adopted in the selection of the most profitable promotional initiatives.

Revenues from advertising sales in the print segment dropped by 6.3% (-6% on a like-for-like basis), while web advertising (-0.7%) performed better than the reference market trend (-2.2% source: Nielsen, in May), posting a +2.5% growth in the second quarter of the year, also thanks to the positive results of Grazia.it (+7.3% against the first six months of 2014). On the whole and on a like-for-like basis, sales from advertising on Mondadori (print + web) brands dropped by 5.6% during the same period.

Revenues from add-on products decreased by 10.6% against the first six months of 2014 as a result of rationalization actions aimed at support profitability, even if they post a progressive recovery vs. the first quarter of 2015.

EBITDA of the Magazines Italy Area, net of non-recurring items, posted a remarkable improvement, up 28.6% (from euro 8.2 million to euro 10.5 million) as a result of the effective review of the publishing and operating organization as well as of promotional activities, despite the downward revenue trend determined by market conditions and by project selection policies.

Reported EBITDA confirmed the growth trend, rising from euro 9.1 to 9.8 million as a result of the above-mentioned actions and of the progressive recovery of advertising sales, even if the first half year of 2014 benefited from non-recurring items amounting to approximately euro 1 million, deriving from the contribution to Mediamond.

Traffic data show an overall audience rate equal to 6.7 million unique users with a 41% growth against the same period of the previous year (source: Audiweb, in May), also thanks to the performance of Grazia.it (+38%) and Panorama.it (+11%).

  • MAGAZINES FRANCE

In France, the magazines market showed a downward trend, both in advertising sales (-10.9% in May, source Kantar Media) and in circulation, which is down 5.2% in the newsstand channel (in May, internal source, excluding the extraordinary edition of Charlie Hebdo in February, which influenced the French magazines market in the first half year).

In the first six months of 2015, revenues from Mondadori France equalled euro 166.6 million, down 2% against euro 169.9 million in the same period in 2014, essentially confirming the trend of the first quarter.

Revenues from circulation (approximately 75% of total revenues) recorded a slight decline (-1.9%) against the previous year. In particular:
– the newsstand channel recorded a 7.3% reduction; the comparison with 2014 results is affected by the exceptional performance of January 2014, resulting from the publication of the “Hollande scoop” on Closer; net of such exceptionality, revenues from circulation dropped by –5,2%, in line with the reference market;
– on the other hand, the subscription channel posted a 0.6% growth, partly off-setting the newsstand channel decline.

Revenues from advertising sales (print + web) were down 5.2% against the same period of 2014, but performance differed between offline and online products: digital advertising (14% of total advertising revenues) grew over 23%, partially offsetting the drop in traditional print advertising (-8.5%), performing better than the reference market.

Mondadori is confirmed as second top player in the magazine advertising market, with a market share (in volume) of 10.3%.

EBITDA, net of non-recurring items, is stable against last year, totalling euro 16.1 million, even if the first half year of 2014 benefited significantly from the “Hollande scoop” published in January by the magazine Closer.

Mondadori France has continued the process of rationalizing structures and containing editorial costs, and it will be extended through 2015 in order to further adjust the organization to market changes and to sustain profitability, also limiting the impact of the increased postage fees associated with subscriptions and of some promotional investments. Reported EBITDA, equal to euro 14.4 million, is down 5.7% against the first half year of 2014 (euro 15.3 million), due to higher restructuring costs.

The fall in traditional activities stopped at 3.5%, while diversification activities (about 8% of total revenues) grew by 18.2% mainly as a result of the development of digital activities (+18.6%), with special emphasis on the growth of advertising sales of the properties (+23.5%).

The total number of readers of Mondadori France magazines reached 8.3 million unique users, up approximately 19% against 2014, also as a result of the progressive digitalization of the editorial teams.

  • RETAIL

In the first six months of 2015, the Retail Area posted revenues for euro 85.7 million, down 7.4% against euro 92.6 million of the same period last year (in line with the trend of the first quarter), mainly as a result of the disposal of the flagship store located in corso Vittorio Emanuele in Milano.

Books are the predominant product category (77% of the total) and outperform the reference market on a like-for-like basis by approximately 3 percentage points.

Revenue highlights from the single sales channels: direct bookstores are substantially stable (-0.6%); franchise bookstores are substantially stable in the books category, with a drop in the non-book sector; the book category in megastores (on a like-for-like basis) posted a positive performance and consumer electronics started to grow again; the online channel grew (+2.5%), especially for books, which outperformed the market by over 5 percentage points (+8.5% vs. +3.1% of the market); the trend in the book club segment is in line with the structural decline expected in the medium-term development plan (-13.5%).

EBITDA of Mondadori Retail, net of non-recurring items, totalled euro -3.2 million, clearly up (+37.1%), against euro -5.1 million in the same period of 2014. This result derives from two main elements:
– the improved product margin, especially in the book category and in consumer electronics, achieved thanks to actions aimed at network and format review (during this half year, the new megastore was opened in via San Pietro all’Orto, in Milano, in June), promotion containment and well-studied product assortment;
– the extended implementation of cost reduction measures determined a lower incidence of promotional expenses and a significant reduction in personnel costs and overhead.

This increase, compared to the first six months of 2014, is visible in the majority of the sales channels. Reported EBITDA remarkably improved in the first half year period, from euro -5.5 million in the first six months of 2014, which included restructuring costs for euro 0.4 million, to euro -2.8 million of the same period this year.

  • DIGITAL

In the first half year, total revenues from digital activities posted a 8% increase against 30 June 2014 (euro 25.6 million against euro 23.7 million at 30 June 2014). The incidence of digital activities on the Group’s total revenues is 5%, against 4.4% in the first six months of last year.

The purely digital activities that cut across all business areas posted increased revenues by 12.1% against the first six months of 2014.

The digital marketing service activities posted revenues for euro 6.2 million, down from euro 6.4 million in 2014, as a result of the shift of some projects relative to Cemit traditional activities, only partially offset by the launch of digital and multimedia products.

OUTLOOK FULL YEAR 2015
During this half-year period, the Group carried on the process aimed at strategically rationalizing portfolio activities and some non-core assets disposal in order to further strengthen its competitive position in the core businesses and eventually exploit any upcoming opportunities. This strategy includes the already mentioned transfer of the majority interest of the Group’s radio business.

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

Consistently with the description above and notwithstanding the higher investments and possible changes in the Digital Area aimed at ensuring future development of the Group, the net financial position is also expected to improve against 2014 year end.

The documentation relating to the presentation of the first half-year period results is made available to the public on the authorized storage device 1info (www.1info.it) and on www.gruppomondadori.it (Investor Relations section).

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

The Board of Directors approved the interim report at 31.03.2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS AREAS

  • BOOKS

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

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

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

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

  • MAGAZINES ITALY

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

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

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

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

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

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

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

  • MAGAZINES FRANCE

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

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

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

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

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

  • RETAIL

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

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

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

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

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

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

  • RADIO

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

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

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

  • DIGITAL

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

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

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

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

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

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

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