Press releases

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first half of the year to 30 June 2014, as presented by the chief executive, Ernesto Mauri.

THE MARKET SCENARIO

In the first six months of the year, the markets in which the Group operates continued to decline compared with the same period of the previous year.

In particular in Italy:

– the book sector saw a downturn of 9% in terms of copies and 6.6% in terms of value compared with the first half of 2013 (Source: Nielsen, figures to 14 June);
– the magazine market saw a fall in circulation of 9.6% (internal data to May), a slump of 14.3% in add-on sales (internal data to May) and a fall in advertising sales of 11.6% (Source: Nielsen, figures to May);

Meanwhile in France:

– magazine circulation was down in the newsstand channel by 8.1%;
– advertising sales were down 9.4% on the same period of 2013 (figures to May: internal data for circulation and Kantar Media for advertising).

GROUP PERFORMANCE IN THE PERIOD TO 30 JUNE 2014

In a context characterised by a marked decline, the Mondadori Group recorded a 10.3% fall in consolidated revenues for the period to €549.2 million, compared with €612.3 million in the first half of 2013; on a like-for-like basis, taking account of the contribution, effective from 1 January 2014, of the advertising sales activities to Mediamond S.p.A., a company consolidated on an equity basis, the reduction was 7%.

Consolidated gross operating profit came to €14.9 million, an increase of €20.2 million compared with the loss of €5.3 million in the first six months of 2013, thanks to the impact of actions on the product, cost reduction efforts and a fall in non-recurring charges. The Magazine area made a decisive contribution to this marked improvement given that, after years of continuous decline, it recorded a total gross operating profit (Italy and France) amounted to €26.3 million, an increase of 50.3%.

This particularly positive result, in excess of expectations, is the result of actions on the product and a reduction in operating costs, which were down by around €70 million (-13.1%).

Consolidated gross operating profit net of non-recurring items amounted to €15.4 million, an increase of 8.5% compared with the €14.2 million of the previous year.

Consolidated operating profit came to €3.6 million, a marked improvement on the -€17.7 million of the first half of 2013, with amortisations of tangible and intangible assets of €11.3 million, compared with €12.4 million in 2013.

Pre-tax profit and consolidated net profit, amounting respectively to -€8.7 million (-€28.2 million in the first half of 2013) and -€11 million (-€27.1 million in the first half of 2013), include higher financial charges due, in part, to higher interest rates resulting from the renegotiation of credit lines concluded in November last year, as well as a higher average level of debt.

The Group’s net financial position on 30 June 2014 showed a deficit of -€368.9 million, an improvement on the situation in the first quarter of the year (-€396.5 million) and in line with the same period of 2013 (-€367.3 million) and at 31.12.2013. In addition to the seasonality of some of the Group’s businesses, the net financial position was affected by expenditure for restructuring and a recovery in investments and benefitted from an influx of €31 million from the placement of a total of 29,953,500 ordinary shares completed in the month of June.

RESULTS OF THE BUSINESS AREAS

• BOOKS

In the second quarter of the year the trade books segment felt the impact of the negative economic situation that has slowed down the recovery in consumer spending and the buying of books. This resulted in a further fall in the market which (to June) recorded a fall of 9% in terms of copies and 6.6% in terms of value (Source: Nielsen, figures to 14 June); in the second quarter the fall, in value terms, was of -8% (-5.3% in Q1). The downturn was more marked in the large-scale retail channel and independent bookshops that were down, respectively, by 15% and 7.5% (Source: Nielsen, figures to 14 June).

Substantially confirming the company’s market leadership, the share of the Mondadori Group’s publishing houses was 25.5% (excluding large-scale retail sales), a slight fall compared with the same period of last year that was positively affected by the performance of the bestsellers E l’eco rispose by Khaled Hosseini and Inferno by Dan Brown.

First half revenues generated by the Book area amounted to €128.5 million, a 4.1% fall on the €134 million of the previous year.

The fall in revenues and margins was determined by the aforementioned market trend as well as a different publishing schedule which, compared with 2013, will feature an absolutely significant launch of titles for the Christmas period as well as the publication of new works by the well-know authors in the second half, including, Follett, Grisham, Cornwell, Corona, Littizzetto and Camilleri.

Regarding to e-books, revenues were up by almost 13% compared with the first half of 2013 thanks to a catalogue that is continuously expanding and that currently includes over 7,000 titles.

The fall in revenues had an impact on gross operating profit compared with the first half of 2013. However, targeted actions aimed at cutting costs in different areas, in particular production and logistics, made it possible to mitigate the impact (from €9.8 million in the first half of 2013 to €5.4 million on 30 June 2014).

• MAGAZINES ITALY

In a generally uncertain climate, the second quarter saw a continuation of the downturn, albeit at a less marked level than the previous year.

In this context the Magazines Italy area – faced with an overall fall in revenues of 9.9% (-8.3% on a like-for-like basis, considering titles that were closed or sold) that amounted to €160.3 million, compared with €177.9 million in the first half of 2013 – recorded a significant increase in gross operating profit, which rose from €3.6 million to €11 million in the first half of 2014 due to the focus on the segments in which the Group is leader (fashion, well-being, cooking), the launch of new titles (Il mio Papa), the redesign of Panorama and actions aimed at the structural reduction of industrial, editorial and photographic costs, as well as labour costs.

Revenues from Mondadori titles were particularly hit by the negative trends in the markets of reference, but the Mondadori Group nevertheless managed to increase its market share in terms of value to 33.2%, compared with 32.6% in the first half of last year.

In particular:

– circulation revenues fell by 5.9% on a like-for-like basis, in a market that was down by 9.6%;
– gross advertising revenues were down by 8.5% on a like-for-like basis, in a market that was down by 11.6%;
– advertising sales for the web sites of the magazine brands recorded growth of 12.8% on a like-for-like basis compared with the same period of 2013, bucking the trend of a market that was down by 2.1% (Source: Nielsen, to May). Particularly positive results for the web sites Donnamoderna.com (+8.4%) and Grazia.it (+55.9%);
– in a market that in the first five months saw a fall of 14.3% in terms of value (internal source: Press-Di), add-on sales were down by 19.8%, following the decision to select and rationalise initiatives but, by comparison, affected also by the excellent performance achieved in 2013.

International activities

In the first half of 2014 Mondadori International Business recorded a 10% growth in revenues compared with the previous year. The increase was mainly attributable to the Grazia network which now has 23 editions around the world, the launch, last November, of the first international edition under licence of Icon and advertising sales in Italy since last October on behalf of El Pais, Spain’s leading daily newspaper.

In May, as part of the development of the digital activities of the Grazia International Network, it is worth underlining the acquisition of the marketplace London-Boutiques.com, an operation that is part of a more extensive project to launch, in the second half of the year, a global e-commerce platform using the Grazia brand.

With regard to holdings, Attica Publications, leader in the Greek magazine and radio broadcasting markets, after a positive first quarter, saw a fall in advertising revenues; Mondadori Seec Advertising Co. Ltd, the exclusive advertising sales company for the edition of Grazia published in China, saw an increase in revenues of 14% compared with the first half of 2013 and from April, the frequency of publication increased from monthly to weekly; Mondadori Independent Media LLC, the publisher of Grazia in Russia, closed the first half of the year with a fall in advertising revenues of 4%.

• MAGAZINES FRANCE

In the first half of 2014 the markets of reference in France saw a further decline, both in terms of newsstand sales (-8.1%; internal data to May) and advertising (-9.4%; internal figures based on Kantar Media data, to May).

Mondadori France performed decidedly better than the market keeping the fall to 2% in a market that was down by 8.1% and reporting growth of 50.6% in internet activities.

First half consolidated revenues generated by Mondadori France amounted to €169.9 million, -4% on the €176.9 million in the first half of 2013; on a like-for-like basis, considering the sale of Le Film Français finalised at the end of 2013 and the different number of issues of some titles, the fall was of 3.7%.

There was a marked difference in the performance of advertising revenues on print and for online: while the former saw a fall of 13.5% (-11% on a like-for-like basis), the latter were up by 49.3%, (51.1% on a like-for-like basis), as a result of which, digital sales now account for 10% of the total.

The advertising sales company remained among the main players in the market with a 10.5% share in terms of volume (Source: Kantar Media), making it the second player in the market.

Circulation revenues, that account for over 70% of total revenues, were down by 1.5% (-1,1% on a like-for-like basis):

– newsstand sales were down by 2%; some of the main titles, including Closer, Pleine Vie and Top Santé, saw growth of more than 10%;
– subscriptions remained stable thanks to the strong performance of Télé-Star, Pleine Vie and Top Santé.

During the first half Mondadori France launched a number of new products, such as Le Journal de Lucky Luke, Slam, Histoire & Jeux and Fort Boyard, and completed the redesign of L’Auto-journal Évasion, Diapason, Modes & Travaux, Science & Vie, Top Santé, Grazia and Closer, placing more focus on editorial quality.

The many activities carried out in recent quarters, and still ongoing, have made it possible, as indicated above, to launch new titles and realise significant reductions in editorial, industrial and general costs and thereby widely compensating for the fall in revenues.

Gross operating profit was up by 10.1% to €15.3 million from €13.9 million in the first half of 2013.

With regard to digital activities, since January 2014 advertising sales have been exclusively managed internally, cross-tile editorial teams have been created and some of the main properties have been updated and further enhanced with new functions for tablets and smartphones.

These efforts have had a positive impact on the audience which, in April, the latest Nielsen figures available, had reached 6.5 million unique users (+26% on 2013), with a peak of 7.8 million in January; while on mobile, the increase in unique users was 67% compared with 2013 (Source: Nielsen, to April).

Activities are also continuing aimed at creating new efficiencies, in particular, a plan has been introduced for the reduction of the structure along with a project for the rationalisation of the locations.

• ADVERTISING

The figures for the area are not comparable given that, as already mentioned, from January 2014, the advertising sale activities of Mondadori Pubblicità S.p.A., a subsidiary of Arnoldo Mondadori Editore S.p.A., were contributed to Mediamond S.p.A., a 50-50 joint-venture set up in 2009 by Mondadori Pubblicità S.p.A. and Publitalia ’80 S.p.A..

Revenues generated by the current Mondadori Pubblicità came to €5.8 million, a fall on the revenues generated by comparable activities in the first half of 2013 for the reasons outlined above.

Gross operating profit, that also includes the pro-quota results of Mediamond, consolidated on an equity basis, saw an improvement compared with the first half of 2013 (up from -€3.5 million to -€1.9 million), highlighting the first positive effects of the operation.

The revenues of Mediamond S.p.A. saw an overall increase of 1.8%.

The Mondadori brands (magazines and web) recorded a like-for-like reduction of 6.7% compared with 2013. In particular:

– the fall in advertising revenues for magazine titles amounted 8.5%, in a market of reference that was down by -11.6% (Source: Nielsen, to May);
– advertising revenues for the web sites was up by 12.8% in a segment that was down by 2.1% (Source: Nielsen, to May).

• RETAIL

Also in the first half of the year the retail market continued to show signs of weakness in consumer spending. With regard to the products sold, the book segment saw a fall of 6.6%, in terms of value, during the period, a situation that worsened in the second quarter also as the result of a lack of bestsellers. The channel that was best able to contain the downturn in revenues was the bookshop chains channel, compared with independent bookshops and large-scale retail outlets.

In the non-book area, there was growth only in gift-boxes, mobile phones and e-readers, while consumer electronics showed a general slowdown.

The 2013 figures have been reclassified to take account of the configuration introduced in the Retail area from September 2013, when Cemit Interactive Media S.p.A. was included under Other businesses and Corporate.

In the first half of 2014 the Retail area recorded revenues of €92.6 million, an 8.9% fall compared with the €101.7 million of the same period of 2013.

A breakdown of revenues by category shows that books – the most important, accounting for 74% of the total – had the best performance (+3.5%) compared with the market of reference, while consumer electronics continued to record a fall greater than the general trend in the sector.

The negative trend in the club channel continued with a fall in revenues of 20% and, finally, also online sales through inMondadori.it were also down (by around -4%).

The impact on gross operating profit (-€5.5 million from the -€6.1 million to 30 June 2014) of the reduction in revenues from the clubs and the consumer electronics segment was more than compensated by the positive performance of books and the effects of cost reductions.

To contrast the generally recessive economic environment actions, already underway in the first quarter and aimed at recovering profitability, continued. In particular:

– a progressive review of the network with actions to rationalise the sales outlets (the opening of a directly-owned and run bookstore in a new shopping mall, the Nave de Vero, near Marghera, and the closure of a number of franchise outlets), and formats for the development of a new concept for the bookshop of the future;
– the rebranding of the entire network; a new offer, above all in consumer electronics; co-marketing activities with important partners in the banking and telecoms sectors;
– the maintenance of promotional, communication and advertising initiatives to support sales and gain market share for books;
– the continuation of reorganisation efforts with the application of a solidarity procedure (20% compared with 10% in 2013) at the offices in Milan and Rimini.

• RADIO

After a positive start in the first quarter, the second quarter the radio market saw a phase of turbulence that had an impact on the performance of di R101.

Revenues generated by R101 in the first half amounted to €5.9 million, -13.2% compared with the €6.8 million at 30 June 2013

Gross operating profit (which went from -€1.6 million to -€2.7 million) was affected not only by the negative trend in revenues, but also by higher promotional and communication investments made in the second quarter to support the re-launch of the station.

Such efforts in the first half included, the launch at the end of March of the new R101, confirming greater engagement with sports events and partnerships with music events alongside national and international artists and their summer tours; the redesign of the look and content of the web site www.r101.it and the launch in June of the TV channel, on the digital terrestrial channel 66.

The launch of the TV platform, integrated with the radio station and other digital supports, will make it possible to offer a wide-ranging entertainment system.

• DIGITAL

The first half of 2014 saw the completion of the first step in strengthening the central control of the Digital Innovation area with the arrival of new and specialised resources. This has made it possible to give a greater impulse to digital projects functional to the different business units.

Total revenues were slightly down due to the fall in sales of marketing services (Cemit), while purely digital activities increased by 9.2% compared with the first half of 2013, as a result of the increase in e-books (+13%), the web sites of magazines in Italy (advertising revenues +12.8%) and France (advertising revenues +51.1%).

***

Information regarding personnel

As of 30 June 2014, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,213, a reduction of 361 (-10.1%) compared with 12 months previously and 223 (-6.5%) compared with December 2013.

Gross of extraordinary items, personnel costs (mounting to €117.4 million in the first six months) showed a significant fall (-20.7%) compared with the figures for the first half of 2013.

The significant fall in the headcount is attributable to important restructuring actions taken between the end of 2012 and last year, and is also influenced some imbalances in the scope of the company. Net of these extraordinary operations, compared with the situation in June 2013, the number of personnel was in any case down by 324 (-9.2%). The cost of personnel on a like-for-like basis, and net of restructuring charges was down by 10.9%.

***

EXPECTATIONS FOR THE FULL YEAR

In a market that still shows no clear signs of improvement, the positive performance in the first half – better than expected and the result of actions taken on the product, reorganisation and the reduction of costs, as well as the excellent performance of Magazines, both in Italy and France – makes it possible to estimate for the full year a level of gross operating profit higher than that of 2012, confirming what was stated during the presentation of the 2013 Annual Report and the Report on QI 2014.

Also the second half of the year will see a continuation of the management initiatives aimed at improving the organic capacity of the Group to generate financial resources and actions aimed at the sale/realisation of non-strategic assets, with a view to reinforcing access to the resources necessary for investment.

The net financial position is expected to be significantly better than the level in 2013.

***

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

The documentation relating to the presentation of the results for the first half of the year to 30 June 2014, will be made available through the authorised storage mechanism 1Info (www.1info.it), in the Investor Relations section of the company’s website www.gruppomondadori.it, on www.borsaitaliana.it and at the company’s corporate offices.

Mondadori has announced that its 2013 Sustainability Report is now available. The document, which can be viewed also online – www.gruppomondadori.it – in the “Sustainability” section – completes the information contained in the 2013 Annual Report and outlines in detail the company’s performance in Italy with regard to sustainable development and the main indicators for the sector.

For Mondadori, the report, now in its third edition, provides not only an account of the company’s approach to issues related to social responsibility, but also and most importantly is a tool in support of a virtuous mechanism, that is in the character of the company, that aims to ensure the implementation of a range of management processes and improvements in the company’s economic, environmental and social performance.

“During the year we have taken resolute measures to deal with the challenges imposed by dramatic changes in the markets in which we operate,” declared Ernesto Mauri, chief executive of the Mondadori Group. “This has involved a system of organisational and management choices based on a new approach that takes account of the irreversible evolution of the media world while safeguarding the company opportunities for growth. We have consequently profoundly changed the company’s structure, through renewal and improving business and productive efficiency in order to guarantee a sustainable future for the company and its stakeholders, in line with the role that Mondadori wants to continue to play in civil society,” Mauri underlined.

“With the Sustainability Report we want to give an account of our results, large and small, within the management of a company in full respect of the rules governing its business activities, but also the needs of our customers and the expectations of our stakeholders,” Mauri concluded.

The document, approved by the board of directors and subjected to external review, has been prepared in compliance with the Global Reporting Initiative (GRI) guidelines for the reporting of sustainability version G 3.1 with a B+ level of application of the standard.

Arnoldo Mondadori Editore S.p.A. has announced that the interim report for the first quarter of the year to 31 March 2014 is now available at the company’s corporate offices, on www.borsaitaliana.it and www.gruppomondadori.it (Investor Relations section).

Also available to the public at the company’s corporate offices, on www.borsaitaliana.it and www.gruppomondadori.it (Governance section), are the minutes of the ordinary and extraordinary sessions of the Annual General Meeting of the Shareholders held on 30 April 2014, together with the modified text of the Articles of Association.

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

THE MARKET SCENARIO

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

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

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

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

MONDADORI IN THE FIRST QUARTER 2014

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

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

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

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

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

GROUP PERFORMANCE IN THE PERIOD TO 31 MARCH 2014

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

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

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

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

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

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

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

Information regarding personnel

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

International activities

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• RETAIL

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

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

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

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

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

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

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

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

• RADIO

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

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

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

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

• DIGITAL

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

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

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

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

EXPECTATIONS FOR THE FULL YEAR

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

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

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

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

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the Chairmanship of Marina Berlusconi, to examine and approve the consolidated balance sheet and management report for the year to 31st December 2013 as presented by the chief executive, Ernesto Mauri.

MARKET SCENARIO
The macroeconomic situation in Italy in 2013 was once again characterised by a marked downturn in the main economic indicators that were even worse than the already dramatic decline recorded in 2012.

Only in the final quarter of the year were there some signs of a modest recovery in economic activity, albeit in an unfavourable climate due also to the lack of dynamism in some emerging countries’ economies.

This recessionary situation, combined with significant technological and structural changes in the sectors in which the Group operates had a significant impact, in particular in Italy where:

– the book market saw a fall in terms of value of -6.2% (-13.8% in the last two-years);
– the magazine market was severely affected by the ongoing slump in advertising expenditure, down by 23.9% (-38% in the period 2012-2013) while also circulation was down in value terms by 11.2% (-23.3% in the last two-years); while the decline in add-on sales was even more marked: -23.4% (-35.2% in the last two-years).

Also in France the economic picture was affected by the general crisis in the Eurozone: specifically:

– the magazine market in which Mondadori France operates recorded a marked fall compared with the previous year, especially in advertising -9.2% (-13.7% in the last two-years); while also circulation was down in terms of value by 6,7% (-11.7% in the period 2012-2013).

2013 AT MONDADORI

2013 was a year of change for the Mondadori Group as, in response to the market scenario outlined above, the Group embarked on a series of fundamental operations, both in terms of organisation and operating processes, aimed at bring the cost structure into line with the revenues trends of the traditional businesses and to ensure adequate resources to the excellence of the products and for businesses in development.

Organisational changes have affected almost the whole of the Group, with the redefinition of the responsibilities of both central and business functions and the renewal of most of the first line management.

As part of efforts to reduce operating costs, the “change of pace” plan, which foresees overall savings of €100 million by the end of 2015, touched on all cost items: among the most significant among the many measures introduced have been reductions in industrial costs (paper and printing), editorial costs and logistics (office space, retail outlets and distribution).

During the year total headcount (3,436 at year end), both permanent and temporary contracts, was down by 267 (-7.2% of the total on 31 December 2012) both through the ongoing review of organisational structures and extraordinary restructuring initiatives in all of the companies of the Group: excluding non-recurring costs related to restructuring, total personnel costs in 2013 were 10.1% lower than the previous year.

GROUP PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2013
The consolidated financial statements for 2013 also feature:

– restructuring costs and other non-recurring charges of €61.9 million, mostly attributable to reorganisation activities;

– write-downs of €145.4 million, following the impairment process that has aligned assets and holdings to values that conform to the current market situation.

Below, are the consolidated results for the year 2013, compared with the figures for the previous year, that have been adjusted as a result of the application of the new IAS 19: the income statement to 31.12.2012 shows an improvement in gross operating profit of €1.6 million and in net profit of €1.2 million compared with the previous year.

Consolidated net revenues came to €1,275.8 million, a fall of 9.9% on the €1,416.1 million in 2012.

Consolidated gross operating profit, net of non-recurring items came to €49.1 million, a 32.2% reduction on the €72.4 million of the previous year: non-recurring items not included refer to restructuring costs of €50.4 million (€18.8 million in 2012) and other charges of €11.5 million (income of €14.5 million in 2012).

Consolidated gross operating profit showed a loss of €12.8 million, compared with a profit in the previous year of €68.1 million.

The consolidated operating loss for the year came to -€183.1 million (-€149.9 million in 2012) following impairments of €145.4 million (€194.3 million in 2012).

The impairments refer to Mondadori France for €99.3 million (€140 million in 2012), R101 for €31.1 million (€46.3 million in 2012) and related investments and other assets for €15 million (€8 million in 2012). Amortizations in the year amounted to €24.9 million (€25 million in 2012).

Consolidated pre-tax losses for the year amounted to -€207.3 million (-€172.1 million in 2012) with financial charges of €24.2 million (€22.2 million in 2012).

The consolidated net loss came to -€185.4 million, compared with -€166.1 million in 2012.

The Group’s net financial position showed a deficit of -€363.2 million, compared with a deficit of -€267.6 on 31 December 2012, a result of the impact of financial outlays related to the restructuring process carried out during the year.

It should be pointed out that in November 2013 all of the Group’s credit lines were renegotiated.

THE BUSINESS AREAS

• BOOKS

The 2013 revenues of the Book Area amounted to €334.3 million, a 9.8% fall on the €370.6 million of 2012.

Trade books confirmed their leadership with a market share of 27%, with an editorial programme that enabled the Group’s brands (imprints) to have an average of 10 titles among the top 20 bestselling books of the year and to be in the top position for 23 weeks out of 52.

In terms of profitability, comparison with 2012 was particularly tough due to the “Fifty shades” phenomenon, which significantly stimulated margins; there was a very positive trend in the development of e-books (+70%) with 2 million downloads and the number of titles available in a digital format has now risen to almost 6,000 with a market share of over 40%.

It was a successful year for the educational and art books sector: with the educational area increasing its market share, after years of decline, to 13%, thanks to an extensive and appealing offer at all school levels while in the art publishing segment, thanks to the management and organisation of exhibitions, there was an increase in revenues in the year of 12.7%.

The importance of the Group’s activities in these sectors is underlined by the increase in profitability, despite a difficult market environment.

• MAGAZINES ITALY

The Magazines Italy area saw the biggest concentration of reorganisation and cost reduction activities during the year. These were focused on industrial costs and all the items that come under editorial costs, as well as personnel reductions.

In terms of the products, with the closure of 4 titles the Group’s portfolio was strengthened while the reorganisation of the editorial departments for TV guides and the wellness segments made it possible to confirm the Group’s leadership market (38%) through the re-launch of the main titles.

2013 revenues for the area amounted to €326.1 million, a 15.1% reduction on the €383.9 million of 2012 (-13.7% on a like-for-like basis). In particular:

– circulation revenues (-7% on a like-for-like basis) were penalised by a fall in newsstand sales and subscriptions;
– revenues from add-on sales (-13.7%) – while down, for a strategic decision to focus on the rationalisation of the initiatives – maintained their market leadership, with a more than 40% share and a high level of profitability;
– advertising revenues for Mondadori titles (-24.5% on a like-for-like basis) were affected by a decline in both weeklies and monthlies.

The performance of the Group’s leading web sites was very positive with revenues rising by 7.3% in a market that was down by 1.8%. In particular, Donnamoderna.com confirmed its position as the second most popular web site for women in terms of unique users (an annual average of 4.5 million, an increase of 20%), Grazia.it also saw its audience grow by 28% while the percentage growth of other sites were even higher.

With regard to the Group’s international activities, which continue to grow significantly, Mondadori International Business recorded revenues of €10.2 million, an increase of around 10% on 2012.

The number of editions of Grazia rose to 23 following the launch of the magazine during the year in Spain, Korea and Mexico. The year also saw the launch of Icon in Spain, distributed with El Pais.

Despite the difficult market conditions, the aggregate revenues generated by the international network came to €154.8 million, a fall of 4.2% compared with 2012.

In this context, advertising revenues came to €10.6 million, a rise of 14%, thanks also to an expansion of the international client portfolio.

Regarding the investments, there was an excellent revenue performance by the joint venture in China (+18%) while the Russian JV was essentially stable. Meanwhile, despite a negative performance during the year (-11%), Attica Publications recorded a reversal in the trend in the final quarter.

• ADVERTISING

The most important organisational change for the Group, implemented in 2013 and effective from the beginning of 2014, was the contribution of the advertising sales for magazines and radio (R101 and other radio stations under licence) to Mediamond, the joint venture with Publitalia ’80, that already managed the sale of advertising for the Mondadori web sites, as well as those of R.T.I. and a number of third parties

As a result of this operation, Mediamond is now Italy’s most complete advertising sales company, able to offer an integrated commercial package for print, web and radio, with the creation of a radio network that is the leader in the market with an daily average of 9.7 million listeners.

Thanks to this operation the Group will have a greater capacity to face a market that is expected to continue to decline, also in 2013, and in which all segments have shown negative trends.

2013 revenues generated by Mondadori Pubblicità amounted to €141.6 million, a fall of 18.1% on the €172.9 million of 2012. In Particular:

– advertising sales for magazines of the Mondadori Group were down by 29.7% on 2012; the figure was -23.6% on a like-for-like basis, essentially in line with the market;
– advertising sales for radio in 2013 were up by 41.8% thanks mainly to the acquisition of the sales contract for Radio Italia, to which were added Radio Subasio and Radio Norba;
– with regard to the Internet, the joint venture Mediamond generated revenues of €45.4 million (+21.6% on 2012) with results that were substantially better than the market.

• MAGAZINES FRANCE

Despite a market that has been in decline for two years, the Magazines France area continued and intensified efforts in brand extensions and to reduce costs that resulted in the maintenance of a still good level of profitability, with total revenues in 2013 amounted to €353.9 million, a fall of 7.3% on the €381.6 million of 2012.

In an advertising scenario strongly conditioned by the economic crisis (-6.2% in terms of volume, Source: Kantar Media), the sales company of Mondadori France performed better than the market (-4.5% in terms of volume) and saw its market share rise to 11% (+0.2%), confirming its position as France’s second magazine advertising sales company. The women’s haut de gamme titles (Grazia and Biba) remained the most important advertising segment for the Group, with revenues that were 32.9% of the total.

Circulation sales from newsstands and subscriptions, which account for around 70% of total revenues, were down by 6.1%. In particular, newsstand revenues fell by 6.8%, in line with the market of reference.

In the digital sector, there was a significant increase in the average audience of the Group’s sites (+25%), with unique users in December totalling 6.3 million, while at the same time revenues grew by 23.8%.

For the future, the company is pursuing further reductions in costs and during 2013 a project was launched to the digitisation of the editorial teams which will enable the editorial staffs to work with a single production flow and to make use of content produced across all platforms, print and digital.

• RETAIL

The retail area in 2013 generated revenues of €225 million, a fall of 8.2% on the €245.2 million of 2012. The year was characterised by a number of important changes:

– in terms of management, with the arrival of significant professional figures with established experience in the sector, followed by an extensive review of the structure;
– the closure of outlets and the development of higher potential locations;
– the expansion of the “non-book” assortment (stationery, toys, own label) and IT products also related to reading (e-readers), along with an ever-more complete offer of books (160,000 titles);
– the loyalty project, with the development of the Mondadori Card, of which 1,150,000 had been issued by the end of the year.

Particular attention has also been given to cost reductions through a simplification of the corporate and organisational structures, the renegotiation of rental agreements and a review of the logistical chain (offices and warehouses).

• RADIO

Also at R101 2013 was a year of change with a market in continuous decline (-9.3%) during which the reduction in budgets in important sectors (auto, large-scale retail, telecoms) had a significant impact.

In this context R101 recorded revenues of €11.3 million, a fall of 18.7% on the €13.9 million of 2012.

Confirming the strategic role R101 has for the Mondadori Group, the alliance with radio Italia has been consolidated and reinforced. Following the launch of the advertising concessions, in 2014 the relationship was extended to cover also programming and marketing, which has been entrusted to professionals from the sector in order to further enhance the identity of R101 in the Italian radio market.

On 25 March the creation of the new R101 was announced, with the presentation to the market of a completely revised editorial line, new commercial policies and partnerships with television programmes and important sporting events.

• DIGITAL

Similarly important in structural terms, a business model was defined in 2013 that envisages Digital as the cross-company driver for all of the Group’s activities, and consequently led to the hiring of specific new competencies aimed at enhancing the Group’s technological know-how, editorial content and the development of new activities.

Digital-based revenues at the end of 2013 amounted to €60.2 million (-4.3% compared with the €63 million in 2012), and included activities in the various areas of the Group, including the e-books published by the Trade Books area (+70%), the Group’s main sites in Italy (+7.3%), and in France (+23.8%) and the e-commerce site inMondadori.it (which saw a slowdown in sales).

RESULTS OF THE PARENT COMPANY ARNOLDO MONDADORI EDITORE S.P.A.
The Annual Report of the parent company Arnoldo Mondadori Editore S.p.A. on 31 December 2013 shows a loss of €315 million, higher than that of the previous year, which came to €39.6 million, essentially due to:

– the results of the Group’s businesses, in the difficult market environment of reference;
– organisational changes, involving the top management, editorial structures – in particular for magazines – and central functions, that resulted in significant non-recurring costs;
– the non receipt of dividends from the companies of the Group due to the poor results of the previous year;
– as well as the process of evaluation of the recoverable value of subsidiary and associated assets which, for the second consecutive year, resulted in significant impairment losses for a total of around €275 million.

FORECAST FOR THE FULL YEAR
In a market that is still not showing clear signs of a reversal in the trend, the performance of the Group’s businesses in the first months of 2014 is ahead of expectations: in addition to the positive results of the businesses and editorial products, there is also evidence of the effects of the reorganisation efforts and cuts in operating costs made in 2013.

This, and the substantial reduction of non-recurring charges in the current year, make it possible to estimate for the end of the year substantial growth in gross operating margins and higher than in 2012.

Among the most important new initiatives in the first three months of 2014 were:

– the launch of Il mio Papa, the world’s first weekly entirely dedicated to the Holy Father which, after the great success of the first issue, sold over 300,000 copies of the second;
– the acquisition of the brand and assets of the social reading service of Anobii Ltd, a platform with over a million users around the world, of which more than 300,000 in Italy;
– the scoop by the French weekly Closer about President François Hollande that sold a record number of more than 600,000 copies. The magazine has confirmed its position as the main point of reference among people titles in the country;
– the launch of the new R101, with a completely new editorial line and the presentation of new commercial partnerships;
– the launch of a revamped Panorama the first issue of which had 110 advertising pages, 40 of which for the fashion sector.

GUIDELINES OF THE 2014-2016 PLAN: CONSOLIDATED GROSS OPERATING PROFIT AT THE END OF THE PERIOD OF MORE THAN €100 MILLION
The macroeconomic scenario for the current year doesn’t appear to offer much that is different from last year, if not an inversion of the trend in GDP. Meanwhile, an improvement, in a situation that remains volatile, is expected in 2015-2016.

With regard to the trends in the main markets in which the Mondadori group operates, it is possible to foresee a further downturn, albeit at a slower pace than in the last three years.

In this context Mondadori – thanks to the action taken in 2013 – aims to achieve a level of profitability at the end of 2016, in terms of consolidated gross operating profit (EBITDA), of more than €100 million, with all businesses showing an improving trend and in profit.

Further efficiency measures, the revision of processes and cost reductions affecting all areas of the Group’s business will be of fundamental importance.

For the core businesses, the focus will concern:

• Books:

– Trade: confirmation of undisputed leadership in printed books;
– Education: a continuation of the upward trend in market share.

There will also be a big development in digital thanks to the strength of the catalogue of the Group’s publishing houses: in terms of revenues, there will be a rise from the current 5% to 16% of the total of the area and with higher margins on e-books than those on the physical product.

• Magazines & Advertising:

– continued efforts to renew the product portfolio aimed at consolidating leadership in all segments;
– rationalisation of editorial structures and integration with digital;
– Properties: profitable in both Italy and France from 2016;
– full effect of the integration of advertising sales in Mediamond, with a consequent recovery of market share.

• International Network:

– increase in the number of editions of Grazia and other titles in emerging markets;
– possibility of developing e-commerce activities for all 23 editions around the world of Grazia;
– activities in China: in April 2014 Grazia goes weekly, with significant effects on circulation growth and, particularly, advertising sales;
– brand extension activities built around the Grazia brand.

• Retail:

– big development of the franchising network and a process of rationalisation of sales outlets;
– optimisation of logistics (office space and distribution);
– diversification of the offer with an expansion of the assortment to include stationery, toys and food.

• Radio:

– full effects of the change of management at R101 and the capitalising, in terms of a further increase in advertising revenues, of the radio network of Mediamond that today has a daily average of over 9.7 million listeners.

With regards to digital:

the Digital Innovation area will be a cross-company driver for all of the Group’s businesses with the aim of tripling the proportion of digital revenues to 13% at the end of 2016.

In addition to completing the organisation with the most suitable professional skills and the transformation of the Group through the inclusion and integration of new businesses and technologies, the focus will be on:

– growth and the reinforcement of digital activities in existing businesses: e-books, properties and e-commerce;
– diversification and development of new revenue streams in non-traditional activities (marketing services);

– searching for partnership with third parties and acquisitions that are strategic and synergic with the core business.

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THE RESIGNATION OF THE CFO CARLO MARIA VISMARA EFFECTIVE FROM 31 MAY 2014

The Board of Directors has accepted the resignation submitted by Carlo Maria Vismara from his position as chief financial officer, and director of procurement and information systems, as well as the manager in charge of preparing the corporate accounts, and his position as a member of the board.

The decision by Vismara is related needs of a personal and family nature no longer compatible with the continuation of the full professional commitment required by a management role of such primary importance.

In order to ensure proper coordination and completion of activities related to the approval of the 2013 Annual Report and the interim report for the first quarter of 2014, the resignation will be effective from the Board of Directors already scheduled for the coming 13 May to approve the management report for the period to 31 March 2014 and, in any case, by the 31 May of this year.

The Directors expressed deep regret for the decision of Carlo Maria Vismara and expressed their gratitude and appreciation for the highly professional contribution made by him in more than eight years with the Mondadori Group.

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PROPOSAL TO COVER OF THE LOSS OF THE YEAR FROM AVAILABLE RESERVESThe Board of Directors will propose to the Shareholders’ Meeting convened for 30 April 2014 on first calling (2 May, on second calling), to settle in full the loss for the year to 31 December 2013 of €314,970,500.44 through the use of reserves as follows:

• for €170,624,621.21 entirely through the use of the share premium reserve, following the allocation from the share premium reserve to the extraordinary reserve of the restriction on the availability of the amount corresponding to the book value of the treasury shares, defined in line with the provisions of art. 2357 I, final para. of the Civil Code;
• for €5,334,814.39 entirely through the use of the reserve for capital grants, included under “Other reserves and retained earnings”;
• for a total of €51,132,983.35 entirely through the use of the following retained earnings, included under “Other reserves and retained earnings”:

Legal Reserve 675 of 12/08/1977 equal to €351,348.61;
Legal Reserve 904 of 16/12/1977 equal to €750,738.83;
Legal Reserve 124/1993, art. 13 equal to €159,607.90;
Merger reserve equal to €43,998,556.21;
Reserve for waived dividends equal to €5,872,731.80;

• for a total of €10,802,729.52 through the partial use of the available resources of the IAS/IFRS Reserve, included under “Other reserves and retained earnings”;
• for €77,075,351.97 through the partial use of the available resources of the Extraordinary Reserve, included under “Other reserves and retained earnings”.

PROPOSAL FOR THE RENEWAL OF AUTHORISATION FOR THE BUY-BACK AND UTILISATION OF COMPANY SHARES
Following the expiry on 31 December 2013 of the term fixed by the authorisation issued at the Annual General Meeting of 23 April 2013, the board of directors resolved to ask the forthcoming Annual General Meeting of the shareholders to renew authorisation to effect share buy-backs, giving the board the possibility of seizing eventual investment opportunities or operations based on the company’s shares.

It should be noted that, taking account of the shares previously in the portfolio, at the AGM of 23 April 2013, the shareholders authorised the acquisition of up to 10% of the share capital, which amounts to 24,645,834 ordinary shares.

Given the total of 14,953,5000 shares already directly or indirectly held at the date of the AGM – of which 10,436,014 are held directly in the portfolio of Arnoldo Mondadori Editore SpA and 4,517,486 by the subsidiary Mondadori International SpA – the authorisation consequently provided an option to buy an additional maximum of 9,692,334 shares.

Subsequent to the authorisation issued on 23 April 2013, Arnoldo Mondadori Editore SpA made no acquisitions or use of said shares, either directly or indirectly.

Consequently the number of shares held remains unchanged at 14,953,5000, or 6.067% of the share capital. It should also be noted that, as a result of the merger, by incorporation of Mondadori International SpA, completed during 2013, the total number of shares held are now in the portfolio of Arnoldo Mondadori Editore SpA.

The Shareholders will also be asked to authorise, pursuant to Art. 2357 ter of the Civil Code, the use of shares acquired or already in the company’s portfolio.

What follows is an outline of the proposal to be put to the Shareholders:

• Underlying motivation

The motivation for the request for authorisation to buy and use company shares is to provide the board of directors with the possibility:

– to use company shares, either bought or in the portfolio, for the exercise of rights, including conversion rights, deriving from financial instruments issued by the company, its subsidiaries or third parties;
– to use company shares, either bought or in the portfolio, as part or whole payment in any eventual acquisitions or equity investments that fall within the company’s stated investment policy;
– to take advantage, where and when considered strategic for the company, of investment opportunities, also in relation to available liquidity;
– to use company shares for the exercise of options for the purchase of shares assigned to participants in the stock option plans put in place by the shareholders.

• Duration

Until the approval of the Annual Report for the year 2014.

• Cap on the number of shares that may be bought

The authorisation refers to a limit of 10% of the share capital, in line with the previous authorisation that is about to expire. Given, as indicated above, that the company currently holds, directly or indirectly, a total of 14,953,500 shares, the new authorisation consequently foresees the possible acquisition of an additional 9,692,334 ordinary shares, or 3.933% of the share capital.

• Method of acquisition and price range

Buy backs would be effected on regulated markets as per art. 132 of Legislative Decree n. 58 of 24 February 1998 and art. 144 bis, para. 1,B of Consob Regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.

The corresponding minimum and maximum price of sale will therefore be determined at the same conditions that applied to previous authorisations agreed by the Shareholders, i.e. at a unit price not less than the official market price on the day prior to any operation, less 20%, and not more than the official market price on the day prior to any operation, plus 10%.

In terms of price and daily volumes, acquisition operations will in any case be conducted in line with the norms foreseen by the EU regulation 2273/2003.

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PROPOSED RENEWAL AND ATTRIBUTION OF POWERS TO THE BOARD OF DIRECTORS PURSUANT TO 2443 AND 2420 TER OF THE CIVIL CODE

The board of directors will propose to the Shareholders’ Meeting called for 30 April 2014, in extraordinary session, the adoption of the resolutions referred to in Articles 2443 and 2420 of the Civil Code, relating to powers of the board to increase the share capital and to issue convertible bonds.

Specifically, the board will ask the Shareholders to:

– renew the powers already granted to the board of directors by the Extraordinary Shareholders’ Meeting of 29 April 2009, which is due to expire at the end of the five-year term, in accordance with Art . 2443 and 2420 of the Civil Code, of attribution for the board of directors to increase, without excluding option rights, the share capital by a maximum nominal amount of €78,000,000 and to issue convertible bonds for a maximum nominal amount of €260,000,000 . The renewal is proposed under the same conditions as the authorisation about to expire and not used by the board, for a further period of 5 years, which corresponds to the maximum term foreseen by law.
– attribute to the board of directors, for the same five-year period, additional power to increase the share capital within a limit of 10% of the existing share capital and excluding the right of option, as per Articles 2443 and 2441, paragraph 4, second sentence, of the Civil Code.

The proposals for the renewal and granting of such powers are motivated by the opportunity to maintain and attribute to the board of directors the authority to implement, with greater speed and flexibility with respect to the resolutions of an Extraordinary Shareholders’ Meeting, any capital transactions aimed at strengthening the financial structure of the company in support of the development objectives of the Group, represented, as previously disclosed to the market, both in terms of the consolidation of the business lines with higher added value and improved profitability in the magazine sector, as well as growth in particular in the digital area.

With specific reference to the powers exercisable for any eventual capital increase with exclusion of option right to a limit of 10% of the existing share capital, it should be noted that any offer made to a third party may be a valuable tool to increase the free float and enable the company to maintain an adequate level of liquidity of the shares, or be functional for the entry into the capital of accredited investors, while limiting the dilutive effects for existing shareholders.

_______

Today at 3pm, at the company’s headquarters in Segrate, the management of the Mondadori Group will present the results for 2013 approved today by the board of directors, to the financial community.

All relative documentation is available on the web site www.mondadorigroup.com (in the Investor Relations section) and from Borsa Italiana S.p.A. (www.borsaitaliana.it).

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

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first nine months of the year to 30 September 2013, as presented by the Chief Executive, Ernesto Mauri.

HIGHLIGHTS 30 SEPTEMBER 2013

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

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

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

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

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

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

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2013

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

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

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

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

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

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

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

Information regarding personnel

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

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

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

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

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

RESULTS OF THE BUSINESS AREAS

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• ADVERTISING

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

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

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

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

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

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

• MAGAZINES FRANCE

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

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

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

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

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

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

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

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

• RETAIL

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

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

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

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

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

• RADIO

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

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

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

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

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

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

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

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

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

EXPECTATIONS FOR THE FULL YEAR

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

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

§

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

§

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

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

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first half of the year to 30th June 2013, as presented by the Chief Executive, Ernesto Mauri.

THE MARKET SCENARIO

The first half of 2013 saw a continuation of the difficult recessionary period facing the country with GDP expected to be down by about 2% at year-end and unemployment, expected to reach about 12%, and the prospects are of a further deterioration in 2014.

Also France is in a difficult situation, characterised by rising unemployment, now close to 11%, and a fall in consumer confidence to the lowest level since 1987. GDP growth in the first half was close to zero and in July, the ratings agency Fitch downgraded the country’s debt rating.

HIGHLIGHTS TO 30 JUNE 2013
During the reporting period even greater emphasis was given to the relaunch of magazines, particularly in Italy where the three main women’s weeklies – Grazia, Donna Moderna, TuStyle – and Chi generated very positive results. The development of digital activities in Italy and France continued and, in Books, the company consolidated its market leadership, thanks to the publication of new bestsellers by Dan Brown (in May) and Khaled Hosseini (in June).

The cost reduction and reorganisation plan, already outlined during the presentation of results at 31 March 2013, continued with target savings of €100 million in 2015, of which approximately €76 million has already been identified.

GROUP PERFROMANCE IN THE PERIOD TO 30 JUNE 2013

The Mondadori Group’s results in the first half of 2013 broadly confirm the trend seen in the first quarter, in particular, compared with last year, revenues were down by 9.4%, resulting in a reduced operating margin, however, this was in line with budget forecasts.

The difference compared to last year is also due to the presence of positive non-recurring items of €8.2 million in 2012, while in 2013 non-recurring items have resulted in losses of €19.5 million: largely due to due restructuring costs in the Magazine area with the aim of reducing operating costs and recovering profitability.

Consolidated revenues amounted to €612.3 million, a fall of 9.4% on the €676.2 million in the first half of 2012.

Consolidated gross operating profit net of non-recurring items came to €14.2 million, a reduction of 48.9% compared with the €27.8 million in the same period of the previous year.

Consolidated gross operating profit came to -€5.3 million, compared with the €36 million in the same period of the previous year.

Consolidated operating profit amounted to –€17.7 million, compared with €23.8 million in the first half of last year, with amortizations and depreciations of tangible and intangible assets of €12.4 million (€12.2 million in 1H 2012).

Consolidated profit before taxation showed a loss of –€28.2 million, compared with a profit of €15.6 million in the same period of last year, financial charges during the period amounted to €10.5 million.

Consolidated net profit for the period showed a loss of -€27.1 million, compared with a profit of €7.5 million in the previous year.

Gross cash flow in the first six months of 2013 was negative for an amount of €14.7 million, compared with a positive level of €19.7 million in 1H 2012. The Group’s net financial position of -€367.3 million is in line with the situation at 30 June 2012 (-€370 million).

Information regarding personnel

At 30 June 2013, permanent and temporary staff in the companies of the Group, totalled 3,574, a fall of 129 (-3.5%) compared to year-end and 171 (-4.6%) compared with June 2012.

A similar trend can be seen in personnel costs (€148 million in the first six months of 2013) which, net of higher restructuring charges, was down by 5.5% compared with the first half of 2012.

The reduction in staff is comparable across the Group and is the result of the introduction, from the end of 2012, of more decisive actions to reduce fixed costs. In particular, compared with a year ago, the Parent Company has reduced its headcount by 7.1% and costs by 6.1% (net of non-recurring charges), other subsidiaries in Italy have reduced staffing levels and costs, by 5.7% and 7.5% respectively, while Mondadori France has seen a reduction of 2.9%, despite a stable structure.

In terms of cost reductions, the start of the restructuring plan in the clerical areas of Magazines and the centralised units of Arnoldo Mondadori Editore have been particularly incisive, and will continue until the spring of 2014, along with the continued the use of social welfare incentives in various areas of the Direct division. With regard to magazine journalists, where at the beginning of June an agreement was reached for 87 redundancies, it should be noted that solidarity contracts and reduced-hour layoffs have already been activated for the end of the year, as part of the decree concerning access to early retirement 2013-2015, which will generate further significant savings.

COST REDUCTION PLAN
In line with what was announced on 14 May during the presentation the results for the first quarter of 2013, actions are ongoing to reduce costs on various fronts.

In addition to what is described in the section on personnel, in terms of industrial costs we would point to the successful conclusion of negotiations with Elcograf which led to a reduction of layout and printing fees, with the expectation of significant savings from the second half of the year.

In 2014 we also expect further benefits from the direct purchase of paper.

In terms of logistics costs, we are currently reviewing expenses related to the rental agreements, also with the aim of rationalizing the Group’s offices. The is also an ongoing project aimed at improving logistical efficiency related to all of the Group’s major business activities.

Finally, in terms of operating costs, the redefinition of contracts for the provision of general services, a new strategy for Information Technology and other service activities is underway, along with a review of business processes and costs.

RESULTS OF THE BUSINESS AREAS

BOOKS

In the first half of 2013 there was a slowdown in the trade books market (source Nielsen: -2.7% in terms of copies; -4.1% in terms of value). In this market context, the Mondadori Group confirmed its leadership with a market share of 26% in in terms of value (source: Nielsen).

During the period, revenues generate by the Books area amounted to €134 million, a fall of 7.3% from the €144.6 million the previous year.

Among the Group’s publishing houses, Edizioni Mondadori saw revenues rise by 2.6% over the same period of 2012. Of particular note was the 14 May 2013 publication, simultaneously worldwide, of the highly anticipated new novel by Dan Brown, Inferno, ten years after the success of The Da Vinci Code (80 million readers around the world, including 3 million in Italy) .

With a print run of 700,000 copies, Inferno was supported by a major marketing and communication campaign, which involved all the channels, from traditional retail to digital outlets, making the book to be the most sold in the first six months of the year, with excellent results also in the e-book format.

Edizioni Piemme closed the first half of 2013 with an increase in revenues of 8.2% over the previous year. The most important event was the publication on 21 June of E l’eco rispose, the new novel by Khaled Hosseini, which went straight to the top of the best-sellers list, where it remains.

In the first half of 2013 Mondadori Electa saw sales rise by 19.6% over the same period of 2012. The main reasons for this was the great success of the exhibition area and in the excellent performance of museum bookshop sales.

On the e-book side, the market segment recorded steady growth, during the period January to June 2013, the Mondadori Group’s four trade publishing houses saw an increase of 129% of total downloads, compared with the same period of 2012.

MAGAZINES ITALY

The ongoing recession continues to have an adverse affect on the performance of consumer magazines.

The figures available in May 2013 showed a decline in newsstand revenues of 12.3% (internal source), a slump of 18.3% in add-on sales (internal source) and magazine advertising revenues down by 24.4% (source: Nielsen).

The Magazines Italy area recorded revenues in the period of €177.9 million, a fall of 15.2% from the €209.9 million in the first half of 2012. The most important part of this trend can be attributed to the magazines (-16.2%), only partly offset by strong growth in revenues from Internet sites (+9.3%) and the licensing of International Activities (+14%).

In more detail, magazines were affected by the negative trend in the reference markets and recorded, as already mentioned, an overall fall of 16.2% (-13.4%, on a like-for-like basis, i.e. net of the effects due to the transformation of Flair as a supplement of Panorama, and the closure of Panorama Economy).

This trend was characterised by important activities and significant differences:

• in May, there was the simultaneous relaunch of the three main women’s weeklies Donna Moderna, Grazia and TuStyle, a segment where Mondadori is the absolute leader;
• in June Casaviva, VilleGiardini, Panorama Travel and Men’s Health were closed, with the subsequent introduction of solidarity incentives and layoffs;
• the results of 2013 had to do without the contribution of Panorama Economy, which ceased publication in May 2012;
• Flair was transformed into a supplement of Panorama.

In particular:

• Circulation revenues fell by 13.1% compared with the previous year (-9.7% on a like-for-like basis). The relaunch operations have resulted in very positive results, both in terms of copies sold and in terms of advertising sales.
• There was a progressively positive performance in June of the three women’s magazines: compared with the last issue before the relaunch, Grazia saw an increase of 22.1% in copies; Donna Moderna a hike of 25.6%; while TuStyle was up by +39.5% (source internal; progressive April-June).
• The good performance of Chi also continues thanks to a review of the editorial content and the various exclusive news stories published during the period. The ADS figures for May showed an average circulation of 299,283 copies (up 9% compared with the same month of 2012 and 4% in the second quarter of 2013 compared with the same period last year).
• In July, to total average weekly circulation of more than 1,150,000 copies per week is expected for the three women’s titles and Chi.
• The second quarter also saw the redesign of GraziaCasa, with an enrichment of the content to talk to readers not only about furniture, but also art, style and fashion.
• TV Sorrisi e Canzoni confirmed its role as Italy’s biggest selling weekly with 647,300 copies (down 7% compared with 2012, source: ADS May 2013).

In terms of advertising revenues for Mondadori magazines, see the “Advertising” section;

The market for add-on sales in the first five months of 2013 saw significant reduction (-18.3% in terms of value, internal source); in this context Mondadori recorded a better performance with a slowdown of 10.7%. During the period the number of initiatives was rationalised, in order to minimise the economic risks and maximise margins: this strategy has resulted in a reduction in both initiatives and revenues, but a significant increase in profitability.

The websites of the main magazine titles of the Mondadori Group have confirmed in 2013, not only the ability to generate ever-increasing traffic, but also to achieve results in terms of advertising revenues, which were up 9.3% compared with the first half of 2012, significantly outperforming the market (-0.3%, source: Nielsen in May). Contributing to these results:

• Donnamoderna.com confirmed a very positive trend in the first half compared with 2012, both in advertising sales (+8%), and levels of network traffic that saw a further improvement on the already excellent results in the first quarter, with a monthly average of almost 12 million unique users;
• Grazia.it saw a sharp increase in advertising revenues (+42% over the previous year) and the audience (+34% unique visitors in June compared with the same month last year, and a +14% hike in page views), thanks to a mix of actions on the user-experience and the handling of editorial content;
• Panorama.it which showed an increase in the period of unique users of 67% and 51% in page views compared with the same month of 2012, thanks to the traffic of the male style/fashion segment in the Icon channel;
• Panorama-auto.it continued to see a high performance both in terms of unique users and page views, which now total an average of more than 11 million per month.

International Activities

The Group’s international activities, concentrated in the company Mondadori International Business S.r.l., saw a rise in first half 2013 revenues of 10% compared with the previous year.

Licensing: revenues from royalties were up by 14%, thanks to new editions launched by Grazia International Network over the last 12 months (South Africa, Poland, Spain and South Korea).

Advertising: advertising sales were in line with the previous year, with a decidedly better performance than the market of reference.

From January 2013, Mondadori International Business S.r.l. expanded its activities to include the sale of advertising for international clients also in the French and Swiss markets and began operating as exclusive agent for advertising sales in Italy for titles that are not part of the Mondadori Group.

Holdings:

• Mondadori Seec Advertising Co. Ltd, the exclusive advertising sales company for the edition of Grazia in China, launched in February 2009, in the first half of 2013 recorded a rise in revenues of 28% compared with the same period of 2012;
• Mondadori Independent Media, the joint-venture that publishes the Russian edition of Grazia, saw first-half 2013 revenues up by 9% compared with 2012.
• Attica Publications, in an economic context that continues to be very difficult, has taken a dominant position in the Greek magazine market; faced with a fall of almost 30% in the market, Attica saw a fall in advertising sales of around 8% and ended the first half with a positive net result that was beyond expectations.

At 30 June 2013 the volume of business generated by the international network for Grazia amounted to €51.6 million, an increase of 9% on the first half of 2012.

ADVERTISING
Advertising investments in the first five months of the year were down by 17.2% compared with 2012, confirming the difficulties seen in recent years. There was a slight improvement, compared with previous months, for newspapers and radio, the exceptions were magazines and internet.

Mondadori Pubblicità ended the first half of 2013 with total sales of €76.8 million, a fall of 20% compared with the €96 million of the same period of 2012.

Mondadori magazines saw a like-for-like fall of 21.9%, with a performance that was significantly better than the market (cumulative to June Fcp: -26.1%), also as a result of the simultaneous relaunch of the three main women’s weeklies, Grazia, Donna Moderna and TuStyle, and initiatives on cooking and interiors titles. If we exclude the titles no longer in the portfolio, the figure is -29,3%.

Regarding advertising sales for radio, the first half of 2013 ended with an increase of 17.6%, mainly thanks to the acquisition of the concession, from 15 April, for Radio Italia Solo Musica Italiana. This operation substantially modified the positioning of Mondadori Pubblicità in the radio market: with a daily average of 7.5 million listeners net of duplications (source: Eurisko Radiomonitor 2012) and placing the company among the top three operators in the sector, with a leadership position in the female target that permits significant synergies with the print portfolio and the web.

In the Internet segment Mediamond outperformed a market in a continuing slowdown with +19,9% compared with 2012. Of special note were the results for Grazia.it (+42%) and Videomediaset (+40%).

MAGAZINES FRANCE

Also during the second quarter of the year, the market of reference for Mondadori France saw a slowdown in both circulation and advertising sales.

Consolidated revenues in the period came to €176.9 million, a fall of 8.6% on the €193,6 million of the first half of 2012; on a like-for-like basis, a fall of 7.5% (Télé Star, Télé Poche and Autoplus benefited from an extra issue in 2012).

The downturn in the period is mainly the result of

• a lower number of weekly issues in the auto and TV segments;
• increased and significant investments for the development of digital products;
• a reduction in magazine circulation due to a strike by Presstalis, the main distributor;
• comparison with a first half in 2012 when the advertising trend was still positive, with a marked slowdown in the second half (-4.9% at year end 2012; source: Kantar Media).

Advertising sales: the market trend was in line with the first quarter, with a shortfall in terms of volume of 6.8% (source: Kantar Media, May). In this context, Mondadori France, which remains the second operator, saw a fall of 3.1% in terms of volume, outperforming the market, which resulted in a rise of its market share to 10.8%.

Revenues were down by 11.9% (-10.4% like-for-like) due to difficulties in the food, auto and clothing segments.

During the period circulation revenues, which account for 72% of the total (including add-on sales), were down by 8.2%; on a like-for-like basis the figure is 6.8%.

In particular:

• newsstand sales were down by 5.8%, in a market that lost 6.4% (January/May; internal source);
• subscription revenues were down by 5.7% compared with the same period of last year and by 2.3% excluding non-recurring items, such as the loss of the subscriber base of Pleine Vie, following contractual changes adopted by an important insurance operator.

The strategy of brand extensions continues with good results for the launch of two new products: Closer Teen (a magazine for teens) and Vital by Top Santè (a fitness and wellbeing title).

Mondadori has also developed its first “web to print” experience, publishing a print version of the cooking site 750g.com (which had 4 million unique visitors in 2012; source: Nielsen).

The focus on editorial quality remains a priority: in the first half the redesign of Modes & Travaux, Sport-Auto, Science&Vie Junior, Grand Gibier and Auto-Journal was completed while in the second half of the year it will be the turn of AutoPlus, Grazia, and Biba. Also planned in the second half of the year is the launch of two new games titles in collaboration with France Television (Slam Magazine and Fort Boyard) and a new cooking title (MasterChef, in collaboration with the famous television format, which will be broadcast in France from September).

In the first half Mondadori France continued to invest in the development of digital activities, the audience of the sites, reached 5 million unique users (source: Nielsen), an increase of 21.5% compared with 2012. Also revenues were up 19% over the previous year.

The main actions in the first six months involved the development of new sites Autoplus.fr, Closermag.fr, Science-et-vie.com, putting online 25 years of archive material, TopSante.com Diapason.com; as well as iPad and iPhone applications for Tele-Star, Auto-Journal for iPad, and a new iPad version of Grazia and Sports-Auto.

The digital newsstand platform has been completely revamped for online subscriptions (kiosquemag.com), offering bundled print and digital subscriptions, but also only digital subscriptions, with the significant target of doubling the platform’s volume business in the next two years.

NaturaBuy.fr, the classifieds site for hunting and leisure, continued to grow, increasing the number of transactions by 18% compared with the same period of 2012.

DIRECT

In the first half of 2013 Direct revenues amounted to €110.4 million, a fall of 2.4% on the €113.1 million in the first six months of last year.

The decline significantly affected the book club activity and mail order sales in general, as well as the online sales of the dedicated web site; meanwhile sales from the network of shops were stable.

During the period, the rationalisation of sales outlets continued with the closure of 28 outlets, alongside the development of private label products and services focused on the new inMondadori brand.

In order to counteract the negative trend in the first half greater emphasis was also given to the customer loyalty campaign through the use of the Mondadori Card In terms of product, development continued of the Box for You gift boxes line and the Emporio Mondadori brand.

The distribution of the e-reader Kobo in its different versions, a cutting-edge device for the use of cultural content in digital format, has been a source of great satisfaction.

In a competitive environment characterised by a progressive reduction in advertising spending and consolidation of forms of digital-based communication, Cemit Interactive Media generated first half 2013 revenues in line with 2012.

This is even more significant when compared with a market that, in the period January-May, fell by 23.5% (source: Nielsen).

RADIO
Advertising revenues for radio, like the advertising market as a whole, saw a marked downturn of 14.6%, after the first 5 months of the year.

In this difficult context, the revenues generated from advertising on R101, which was affected in particular by a decline in major market sectors, especially the auto segment, for the first half of 2013 came to €6.8 million, a fall of 10.5% on the €7.6 million of the first half of 2012.

From an editorial perspective, R101 continued actions aimed at enhancing the formats, with the introduction of new programmes, and promotional activities with the organisation and sponsorship of events around the country.

In the first half a number of digital activities were developed that enabled the R101.it site to double the number of visitors (source: Google Analytics), raising the number of page views to 3.5 million and average monthly unique users to over 200,000, with positive trends also on social networks.

§

APPROVAL FOR THE PLAN TO MERGE BY INCORPORATION THE WHOLLY-OWNED SUBSIDIARY MONDADORI INTERNATIONAL S.P.A.
The Board of Directors approved the merger by incorporation of the wholly-owned subsidiary Mondadori International S.p.A., in accordance with the merger plan presented, as announced on 27 June, to the Italian Stock Exchange and at www.gruppomondadori.it (Governance section).

Completion of the merger is expected by the end of this year after the deadline for the opposition of creditors as foreseen by Article 2503 of the Civil Code.

§

EXPECTATIONS FOR THE FULL YEAR

In the first half all the activities of the Group have suffered the effects of the ongoing recession, which is not expected to improve during the year.

The actions carried out by the Group in support of the quality of magazine brands, the publishing programme for books and a range of activities aimed at cost containment are expected to show more positive effects in the second half of the year, and therefore the company also expects to post a gross operating profit in line with, or even greater that, that of the second half of 2012.

For the full year 2013, gross operating profit will in any case be less than the previous year, also on account of positive non-recurring items, present in 2012, and higher restructuring charges in the current year.

§

The documentation relating to the analysts’ presentation of the results for the first half of the year to 30 June 2013, is available in the Investor Relations section of the company’s website

§

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

· MAGAZINES ITALY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

· ADVERTISING

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

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

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

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

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

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

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

· MAGAZINES FRANCE

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

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

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

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

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

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

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

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

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

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

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

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

· DIRECT

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

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

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

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

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

· RADIO

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

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

EXPECTATIONS FOR THE FULL YEAR

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

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

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

§

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

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

§

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

§

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

§

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

§

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

The Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, met on today’s date to examine and approve the consolidated financial statements and the parent company financial statements as at December 31, 2012. Following to Maurizio Costa’s resignations from the post of Vice-President and CEO – as already disclosed to the market on last February 28 – the Board of Directors coopted Ernesto Mauri, appointing him CEO.

“Mr. Mauri has a complex but clear mission: giving further thrust to reorganize and improve our activities, and introduce strong elements of innovation and change”, said the President Marina Berlusconi. “In the name of the entire Board, I extend to him my best wishes to continue the excellent job he has accomplished so far within Mondadori at the highest level of responsibility”, she concluded.

THE MARKET SCENARIO

As we know, global economy and, in particular, the economy in the euro zone, continued to worsen also in the second half of 2012.

In Italy GDP posted a further drop (-2.4%) on an annual basis, unprecedented in the last twenty years. Also the unemployment rate, which rose from 8.4% to 10.7% in just one year, hit a peak since 1993, while consumer spending decreased by 3.8%.

In France, where the economic situation seems less difficult though also showing a rising unemployment rate (from 9.4% in 2011 to 10.2%) and consumer spending and GDP equal to zero growth, the values of Mondadori activities in the markets of reference proved less negative.

GROUP PERFORMANCE FOR THE YEAR ENDED AT DECEMBER 31, 2012

The Mondadori Group closed 2012 with a 6% reduction in revenues and EBITDA 49% lower than in the previous year; impairment on assets equaled euro 194.3 million, thus showing a negative result in the income statement at euro -167.3 million, which net of impairment would have instead been positive for euro 12 million.

Net consolidated revenues amounted to euro 1,416.1 million, down 6% against euro 1,507.2 million of 2011. Net of the consolidation of the EMAS joint venture (Editions Mondadori Axel Springer S.n.c.) in Mondadori France, the revenue reduction would have been equal to 8.6%.
Consolidated EBITDA amounted to euro 66.5 million, down 49% against euro 130.4 million of the previous year.
Excluding non-recurring items and restructuring costs, the reduction in EBITDA would have been equal to 38.9%.

Consolidated EBIT was negative for euro 151.6 million (against euro +103.8 million in 2011) after impairments for euro 194.3 million, mainly attributable to the goodwill of Mondadori France (euro 140 million) and the R101 radio station (euro 46.3 million). Amortizations and depreciations for the year totaled euro 25.1 million (euro 23.3 million in 2011).

Consolidated pre-tax profit was equal to euro -173.8 million, (euro 82.7 million in 2011) with financial charges amounting to euro 22.2 million (euro 20.5 million in 2011).

Consolidated net profit was negative at euro -167.3 million against euro + 49.6 million in 2011; net of impairments, 2012 would have closed with a consolidated net profit equal to euro 12 million.

As for balance sheet items, consolidated net equity equaled euro 433.8 million against euro 608.9 million of the previous year; the Group’s net financial position posted euro -267.6 million, up euro 67.8 million against 2011 also as a result of the transfer, completed in November, of the 50% interest owned in Random House Mondandori to Bertelsmann for a price equal to euro 54.5 million.

Information on personnel

At December 31, 2012 the Group employees with a permanent or temporary employment contract amounted to 3,703 people and the cost of personnel amounted to euro 290.4 million.

On a like for like basis, that is, net of the integral consolidation of the French joint venture Editions Mondadori Axel Springer S.n.c., personnel values dropped by 1.3%.

In fact, the final cost of personnel takes into account the already mentioned transaction with Emas, the merger into Arnoldo Mondadori Editore S.p.A. of the former joint-venture Mondadori Rodale, and a higher fund allocation for the restructuring started in the year of reference and is lower than 1.4%.

In addition to the ongoing rationalization and efficiency actions constantly implemented since 2009 in all Group companies, the results obtained are mainly attributable to specific re-organization actions started in the Direct area and, specifically, to the approval of a new restructuring plan that is expected to be completed by April 2014 for 152 redundant graphic-publishing workers belonging to Arnoldo Mondadori Editore S.p.A., Mondadori Pubblicità S.p.A. and Press-Di Distribuzione Stampa e Multimedia S.r.l..

Since, for bureaucratic reasons, they were implemented only in the second half of the year, these actions had only a limited economic and quantitative impact on the financial year of reference.

These efficiency actions have been combined with company development and rationalization actions aimed at favoring the Group’s growth strategy, with a view to enhancing the Group’s presence in the digital segment and internationally. In this respect, the establishment of Mondadori International Business S.r.l. is particularly relevant.

In the Direct area, where a rationalization process was started long ago on all points of sale, a negotiation table was opened last December 2012 for the definition of job security agreements for the employees of the offices of Mondadori Direct S.p.A. in Milan, Brescia and Rimini, for a total of 239 people. A similar job security agreement was reached for Mondadori Iniziative Editoriali S.p.A..

For Cemit Interactive Media S.p.A., an agreement was reached to reduce the number of jobs through redundancy payments and mobility.

In addition, it should be noted that in December 2012, also in Arnoldo Mondadori Editore S.p.A. Magazines area, negotiations were opened with the trade unions representing the journalists, for the purpose of examining the consequences of the shutting down of five magazines and the re-organization of the publisher’s remaining editorial staff. Negotiations are still underway.

RESULTS BY BUSINESS AREA

· BOOKS

In 2012 the trade book market decreased both in terms of copies (-6.9%) and value (-7.8%) against 2011 (source Nielsen) with a lower improvement than expected in the last month of the year. This reduction hit all the channels cross-sectionally: bookstores, hypermarkets and e-commerce.

In this context, the Mondadori Group increased its market share in terms of value (27.6%), confirming its leadership in the trade book segment.

In 2012 revenues from the Mondadori Books segment amounted to euro 370.6 million, down 4.8% against euro 389.1 million in the previous year.

Among the Group’s trade book publishers, in 2012 Edizioni Mondadori increased its market share in terms of value (14.1% against 13.3% in 2011), thanks to the excellent performance of a few publications: four titles ranked among the ten best sellers in 2012 and 43 were in the top 100.

Particularly important to Mondadori was the increase in foreign fiction, with the erotic trilogy by E.L. James, Cinquanta sfumature di grigio, Cinquanta sfumature di nero and Cinquanta sfumature di rosso, which exceeded 3,300,000 copies sold in Italy and 130,000 e-book downloads, the first, third and fourth, respectively, in the best seller lists for the year.

Mondadori also won the most prestigious Italian literary prizes, including the Strega Prize in July 2012 with Inseparabili by Alessandro Piperno, and the Campiello Prize, in September 2012, with La collina del vento by Carmine Abate.

Ken Follett’s new book, L’inverno del mondo, posted an excellent performance, coming in sixth in the 2012 general ranking, with over 300,000 copies sold and over 40,000 e-book downloads, as did the long-awaited second book by Paolo Giordano, Il corpo umano, printed in 300,000 copies.

In the educational segment, in 2012 Mondadori maintained a significant position in the school text book segment with a 12.8% market share.

During the year of reference Mondadori Education made massive investments: from a publishing perspective to update text books, and from a technological standpoint to produce books in digital format.

E-Book
Mondadori is market leader in the e-book segment with a market share of approximately 40%. In 2012 1.2 million books of the Group’s trade publishers were downloaded, with a 2% incidence on the net revenues of the hard copy product.

Among the most successful e-books, included in a catalogue of 4,000 titles in total, in addition to the trilogy Cinquanta sfumature, the following are worth noting: L’inverno del mondo by Ken Follett, La Dieta Dukan by Pierre Dukan, Steve Jobs by Walter Isaacson, 1Q84 by Haruki Murakami, the Hunger Games trilogy and the first book of the Diabolik series.

In relation to store performance, we should not overlook the sales results achieved by the Kobo platform in just a few months from its launch in the Italian market at the beginning of the last quarter of 2012.

· MAGAZINES ITALY
In an extremely dire economic scenario (the market is showing a 13.6% drop in value on a like for like basis), Mondadori magazines in 2012 posted revenues equal to euro 383.9 million in Italy, down 16.3% against euro 458.8 million of the previous year.

This result does not only reflect the negative economic performance, but also the effects of the structural changes that the segment of periodic publications has gone through in recent years, mainly linked to the evolution of the digital media and the different use of information and content, especially by the younger target.

Investments in advertising, decreasing in all channels with the exception of Internet (+5.3%), posted heavier reductions in printed magazines and papers (-17.6% for newspapers, -18.4% magazines), despite the introduction of new magazines compared to the previous year (source Nielsen)..

The circulation market was characterized by the launch of low cost products, addressed to a mass target, with relevant effects on the estimated reduction of the overall value of sales of magazines at newsstands (-10.5%, -13.6% compared with an equal number of magazines, internal source).

The results obtained in the Magazines Italy Area show different performances:

• revenues from circulation (-13.5%) were penalized by a significant drop both in the newsstand segment and subscriptions, as well as a lower number of copies sold in on-pack activities;
• revenues from the sales of add-ons, including co-editions, (-18,3%) were penalized by a drop in the sales of home videos, publishing products and gadgets, though still maintaining a good margin and the market leadership (34%);
• revenues from advertising in Mondadori magazines registered a 21.2% decrease despite the ongoing growth of Internet (+37.4%) and international (+17.1%).

International activities

International activities, concentrated since October 31, 2012 in the newly established Mondadori International Business S.r.l., carrying out licensing, syndication and advertising activities.

Licensing: in 2012 the aggregate revenue result generated by Grazia International Network- with over 20 editions all over the world – rose 8% against 2011, with a further possible increase expected in 2013 following the launch of Grazia Korea (bi-monthly) and Grazia Spain (weekly) in February 2013. As to the other international editions of Mondadori magazines, the launch of the German edition of Flair is worth noting, published by the Klambt Group in August 2012.

Syndication and photorights: this activity includes the sale of images produced by Mondadori and/or third parties, for which Mondadori acts as an agent, to a hundred of different publishers in more than forty countries.

Advertising: revenues from advertising grew by 17.1% against 2011 thanks also to the expansion of the activities in the French and Swiss markets, extending the company’s reach also to other product categories.

The Mondadori Group also owns interests in Greece, China and Russia:

– Attica Publications posted dropping revenues by 3% against 2011: considering the extremely difficult economic scenario, the performance was satisfactory and allowed the company to post a positive pre-tax result. The crisis in Greece and competitors’ difficulties enabled Attica to considerably increase its market share, obtaining benefits deriving from its leadership position.

– Mondadori Seec Advertising Co Ltd, exclusive concessionaire for the collection of advertising for the Chinese edition of Grazia, launched in 2009, posted a 56% revenue growth in 2012 against the previous year. This result enabled it to close the financial year with profits one year ahead of schedule.

– Mondadori Independent Media LLC, publisher of Grazia in Russia, closed 2012 at break-even thanks to the good performance of investments in advertising, which registered a 21% growth against the previous year.

Revenues generated from the international network of the magazines under licensing agreement and investments amounted to more than euro 160 million, up 9% against 2011.

· ADVERTISING
The continuing deterioration of the general economic situation has had a predictable impact on investment in advertising, which closed out the worst year in the past two decades (-14.3%). The market, in fact, dropped well below a value of euro 8 billion for the first time since 2003 at current prices and in real terms, down to the levels of 1991.

As already mentioned, the sharpest decline was seen in the print media, with newspapers (-17.6%) and magazines (-18.4%, reaching -21.4% if comparing the same number of publications to 2011), the sectors in which Mondadori Pubblicità S.p.A. mainly operates.

Advertising on the radio channel was also down considerably: after a positive start in 2012, advertising volumes dropped 10.2% compared to the previous year.

Internet was the only channel posting positive numbers (+5.3%), though showing signs of a sharp slowdown in the last months of the year.

In this scenario, every single segment has suffered a sharp cut in advertising investments.

Though facing increasingly aggressive competition in terms of prices, Mondadori Pubblicità paid close attention to pricing, in an attempt to reinforce the value of the publications it represents in concession.

In 2012, the company posted revenues at euro 172.9 million, down 21.4% against euro 219.9 million of 2011: all sectors were hit by the crisis, including Cosmetics, Interior Design and Automotive.

In particular:
– revenues from advertising for the Mondadori magazines were down 22.6% as a result of the negative performance of both monthlies and weeklies;
– revenues from advertising on the Radio channel dropped by 14.9%. This was largely due to cost containment policies on the part of clients from the sectors that had historically been the most important, such as Automotive, Consumer Goods and Telecommunications.

Increases in both volume and revenues from clients in the Fashion and Design sectors were not enough to counterbalance the reduction in investments by the traditional radio advertisers.

In 2012, the Mediamond S.p.A. joint venture registered an overall increase in revenues equal to 63.4%; the main web sites of the Mondadori Group are in constant growth: www.donnamoderna.com (+22%), www.grazia.it (+43%) and www.panorama.it (+22%), while RTI, TgCom (+10.5%) and Sport Mediaset (+53%) are also growing. Advertising for the www.videomediaset.it web site, which was added to the portfolio in January 2012, also posted strong growth figures.

· MAGAZINES FRANCE

The magazines market in France posted a reduction of 5.4% in value for circulation at newsstands (internal source) and lower investments from advertising by 4.9% in value (source: Kantar Media).

In this difficult scenario, Mondadori France obtained good results in 2012: revenues totaled euro 381.6 million, up 9.6% against euro 348.1 million in the previous year. On a like for like basis, excluding the integral consolidation of the Editions Mondadori Axel Springer S.n.c. joint venture, revenues would have shown a 2.2% drop in the period.

The ongoing improvement of products, combined with constant attention to cost containment policies, enabled the company to post a 16.5% increase in EBITDA against 2011, topping euro 38.9 million with a 10.2% incidence on revenues.

However, impairments amounting to a total of euro 140 million, including impairment on magazines and goodwill, had a strong impact on EBIT.

Revenues from advertising: from this standpoint, revenues on a like for like basis registered a 2.4% reduction against the previous year; in terms of volume, the decrease amounted to 1.4% in a market that showed a 5.7% overall drop (source: Kantar Media).

In the second half of the year, the advertising market showed a downturn against the first half, which had closed with results essentially in line with 2011.

In this context, Mondadori advertising revenues increased for the fourth consecutive year in terms of volume, consolidating its second position.

This excellent result reflects the growing trend of women’s magazines, including Grazia (+7.2%), Biba (+10.8%) and Pratique Modes & Traveaux (+9.1%), and the steady performance of the other publications despite the definitely unfavourable market scenario.

Revenues from circulation: revenues from circulation (newsstands and subscriptions), making for approximately 70% of the total revenues of Mondadori France, registered a reduction (-2.2% on a like for like basis).

Based on circulation audits DSH, the circulation of magazines in 2012 decreased by 4.3% in terms of copies. Mondadori registered a 3.6% reduction. For the third consecutive year Mondadori France outperformed the market.

In terms of value, sales at newsstands dropped 5% in the period. This reduction is in line with the market trend (-5.4% in the period; internal source).

Subscriptions, which rose by 0.5% against 2011, have increased by 10% over the last five years, making for 33.6% of Mondadori France revenues with over three million subscribers.

The key factors underlying the good performance of magazine circulation are ongoing innovation and publishing quality including product restyling and the launch of brand extension initiatives on the magazines.

Digital: in 2012, Mondadori France accelerated its investments in this area, targeting a 28% increase in revenues and a 67% increase in the audience, reaching 4.5 million single hits in 2012, against 2.7 million hits of 2011 (source: Nielsen).

It should be noted that at the end of August 2012, Mondadori France acquired a 60% interest in Naturabuy.fr, a leading web site for classifieds and personals, auction sales and a boutique for products associated with free time and, specifically, hunting and fishing. Last year Mondadori France also acquired the majority stake in AutoReflex.com, a web site featuring car ads.

· DIRECT

In 2012 the main products offered by the Mondadori Direct S.p.A. network registered sharp drops in revenues: books (-8%), dvd-films (-18%) and music (-14%) were all down, with the exception of gift boxes and consumer electronics, which grew respectively by 6.5% and 6% (source: GFK).

Advertising investments by companies in the traditional direct marketing channels, like door to door, mailings, inserts and telemarketing, have been in decline for several years, a logical consequence of technological innovation and the progressive replacement of these channels with web-based communication, mainly e-mail marketing and social media.

In this context, the revenues of the Direct area dropped by 5.8% to euro 261.8 million against euro 278 million of 2011.

In 2012 the top management concentrated on the following areas:
– activities related to the rationalization of sale points, which diminished by 31 units to a total of 597 sale points, in line with company policies targeting the integration of the various formats;
– further development of customer loyalty initiatives using the Mondadori Card, whose numbers have more than doubled in a year (units 700,000);
– redefinition of the strategies for retail, both hard copy and digital, with the creation of the inMondadori trademark as an umbrella brand, comprising all product and service sale formats offered, including e-commerce;
– signing of a partnership agreement with Kobo Inc. for the exclusive Italian distribution rights to the new Kobo e-reader, in various versions and formats.

· RADIO

In 2012, advertising revenues from the Radio channel, certified by Nielsen, decreased by 10.2%, with a downward trend that worsened over the course of the year (in June -5.5%, in September -8.1%, in December -10.2%).

In this context, R101 closed 2012 with a drop in advertising revenues of -13.7% compared to 2011, ascribable to a significant cut in investments by the key clients in the Automotive, Consumer Goods and Telecommunications sectors, which together accounted for more than 50% of its total revenues. Including revenues from the web site and other initiatives launched during the course of the year, total revenues were down 14.7% from euro 16.3 million in 2011 to euro 13.9 million in 2012.

EBIT reflected the effects of the reduced value of the frequencies assigned for a total of euro 46.3 million as a result of the impairment process and based on the opinion drafted by an independent professional consultant.

In terms of listeners, R101 is one of the leading commercial radio stations in Italy, with about 2.1 million listeners on an average day (source: Eurisko Radio Monitor, January-December panel) and more than 11.3 million per week (source: Eurisko Radio Monitor, February-December panel); the data on the average fifteen-minute segment for the last quarter were also very positive, posting an 18% increase over the first half of 2012 (source: Eurisko Radio Monitor).

The digital growth of R101 in 2012 was also significant: the web site reached an average of 200,000 single users per month and averaged more than 1.4 million page views per month.

§

RESULTS OF PARENT COMPANY ARNOLDO MONDADORI EDITORE S.P.A.
The Annual Report of the parent company, Arnoldo Mondadori Editore SpA, for the year ended at December 31, 2012 shows a net loss of euro 39.6 million against net profits of euro 55.3 million in 2011.

The decrease was due to dropping revenues from publishing activities, particularly in the magazines area, where revenues plummeted, both in terms of number of copies sold and the sale of add-ons, as well as in the sale of advertising space.

EBITDA reflected the business trend, down from euro 48.5 million in 2011 to euro 3.9 million in 2012.

This reduction aggregates trademark depreciation for euro 1.4 million and the depreciation of Monradio (R101 frequency) for euro 46.3 million. The net balance of profits and losses from investments, including dividends received and impairments in 2011 was equal to a positive euro 35.4 million and a negative euro 30.8 million in 2012.

§

PROPOSAL TO COVER THE LOSSES FROM THE FISCAL YEAR BY UTILIZING A PORTION OF THE SHARE PREMIUM RESERVE

The Board of Directors will submit to the Shareholders’ Meeting, called on April 23, 2013 on first call (April 24 on second call) a proposal to entirely cover the losses of the 2012 fiscal year, equal to euro 39,574,943.13, through the utilization of the share premium reserve for the corresponding amount.

§

PREDICTABLE EVOLUTION

The trend in the first months of 2013 continues to be strongly negative, with an impact on the company’s main sectors of activity.
Cost reduction measures implemented in recent years have allowed Mondadori to post positive results in 2012, before impairments. However, given the difficult scenario in which the Group is currently operating in all sectors of activity, for the purpose of recovering profitability in the medium term, the Group intends to implement the following measures with even greater emphasis:

• rationalization of the structure and reduction of industrial costs, resulting in greater flexibility in responding to the changing levels of demand;
• actions necessary to consolidate high value added business lines and the recovery of profitability in the area of Italian Magazines, with the ultimate aim of further reinforcing the Group’s competitive position and make the most of any new opportunities, also in the digital area.

Realization of the above objectives will require massive financial and economic investments; for 2013 a lower EBITDA than in 2012 is expected.

RENEWAL OF THE AUTHORIZATION TO PURCHASE AND DISPOSE OF TREASURY SHARES

Following expiry of the previous authorization resolved by the Shareholders’ Meeting on April 19, 2012, upon the approval of the financial statements at December 31, 2012, the Board of Directors will submit to the next Shareholders’ Meeting the proposal for the renewal of the authorization to purchase Treasury Shares for the purpose of maintaining the legal requirement for possible buyback plans applicable and, consequently, the possibility of taking advantage of investment opportunities on its Treasury Shares.

It should be noted that the Shareholders’ Meeting of April 19, 2012 had authorized purchases, also taking the shares already in portfolio into account, up to a cap equal to 10% of the company’s share capital, represented by n. 24,645,834 ordinary shares.

Considering the total of n. 13,555,209 shares already directly or indirectly owned as at the date of the Shareholders’ Meeting, the authorization provided for the possibility of purchasing max. another n. 11,090,625 Treasury Shares.

In relation to the authorization of April 19, 2012 Arnoldo Mondadori Editore S.p.A. purchased a total of n. 1,398,291 Treasury Shares, corresponding to 0.56% of the company’s share capital on the Mercato Telematico Azionario (screen-based stock exchange).

Following completion of the aforementioned transactions, the total number of Treasury Shares comprehensively owned by the company, either directly or indirectly, is equal to n. 14,953,500 corresponding to 6.067% of the company’s share capital, of which n. 10,436,014 directly in Arnoldo Mondadori Editore S.p.A.’s portfolio and n. 4,517,486 owned by its subsidiary Mondadori International S.p.A.

Pursuant to article 2357 ter of the Italian Civil Code, the Shareholders’ Meeting will also be submitted an authorization to dispose of Treasury Shares purchased or already in the Company’s portfolio.

Here below are the main items underlying the proposal made by the Board of Directors:

• Reasons

The reasons underlying the request for the authorization to purchase and dispose of Treasury Shares make direct reference to the opportunity of giving the Board of Directors the power to:

– use the Treasury Shares purchased or already in the Company’s portfolio in relation to the exercise of rights, including conversion rights, deriving from financial instruments issued by the Company, its subsidiaries and third parties;
– use the Treasury Shares purchased or already in the Company’s portfolio to pay for the acquisition of interests within the framework of the Company’s investment policy;
– possibly dispose, if considered strategic for the Company, of investment opportunities also in relation to the Company’s available liquidity;
– dispose of Treasury Shares in relation to the exercise of options for the purchase of the same shares attributed to the beneficiaries of the Stock Option Plans established by the Shareholders’ Meeting;

• Duration

Until the approval of the 2013 financial statements.

• Maximum number of repurchasable shares

The renewed authorization refers to the purchase of max. another n. 9,692,334 shares (3.933% of the Company’s share capital) which, taking into account the Treasury Shares already owned either directly or indirectly by the Company as above indicated, would enable the Company to reach the cap of 10% of the Company’s share capital, in line with the previous authorization coming to expiry.

• 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 Law n. 58 of February 24, 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.

The minimum and maximum purchase amount would be determined under the same conditions established in the previous Shareholders’ Meetings and, therefore, at a unit price not lower than the official Stock Exchange price of the day preceding the purchase transactions, decreased by 20%, and not higher than the Stock Exchange price of the day preceding the purchase transactions, increased by 10%.

In terms of prices and daily volumes, the purchase transactions would in any case be completed in compliance with the conditions established in EC regulation n. 2273/2003.

Today at 3pm, at the Company’s headquarters in Segrate, the Mondadori Group top management will present the results for 2012, approved on today’s date by the Board of Directors, to the financial community.

The entire documentation is available on the web site www.gruppomondadori.it (Investor Relations Section) and from Borsa Italiana S.p.A..

The CV of Mr Ernesto Mauri is available in the Governance section of our website www.gruppomondadori.it.

The executive manager responsible for the preparation of the company’s accounts, Carlo Maria Vismara, declares that, pursuant to aricle. 2, 154 bis of the Finance Consolidation Act, the accounting information contained in this release corresponds to that contained in the company’s formal accounts.

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

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

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

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

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

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

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

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

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

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

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

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

RESULTS OF THE BUSINESS AREAS

• BOOKS

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

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

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

• ADVERTISING

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

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

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

• MAGAZINES FRANCE

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

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

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

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

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

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

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

• DIGITAL

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

• DIRECT

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

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

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

• RADIO

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

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

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

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

§

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

§

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