Financial Results

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 31 March 2020 presented by CEO Ernesto Mauri.

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

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

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

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

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

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

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

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

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

More specifically, for the different business activities:

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

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

• consolidated revenue amounted to € 135.3 million, down by 18.9% versus € 166.8 million in the same period of 2019 (-17.1% on a like-for-like basis, net of the change in the scope of consolidation from the disposal of the five titles in December 2019). The downturn is attributable mainly to the effects of COVID-19;

• adjusted EBITDA in the period under review amounted to € -3.1 million, down by € -4.8 million versus € 1.7 million in 1° quarter 2019. The decline is due mainly to the effects of COVID-19, obviously also considering the first positive effects of the actions taken;

• EBITDA amounted to € -4.2 million, down versus € 1.1 million in the first quarter of the prior year;

• EBIT amounted to € -14 million, down versus € -7.2 million at 31 March 2019, due to the dynamics of the above components and to higher amortization, depreciation and write-downs, which rose to € 9.8 million from € 8.4 million in 1° quarter 2019.

• the consolidated result before tax amounted to € -23.8 million versus € -9.2 million in first quarter 2019;

• the result from continuing operations amounted to € -19.1 million versus € -7.9 million in first quarter 2019, due to the net impact of € 5.2 million from the adjustment to market value of the Reworld Media shares held;

• the Group’s net result amounted to € -19.1 million versus € -3.5 million in 1° quarter 2019 (which had also included the temporarily positive result of € 4.9 million from discontinued operations, in addition to the above net impact of € 5.2 million relating to Reworld Media shares);
• the net financial position before IFRS 16 stood at € -96.9 million, improving sharply by approximately 46% versus € -179.3 million at 31 March 2019, as a result of the disposal of Mondadori France (€ 62.8 million) and of the cash generation from ordinary operations in the context of continuing operations in the last 12 months, equal to € 45.8 million versus € 48.5 million at 31 December 2019;

• the IFRS 16 net financial position stood at € -193.9 million and includes the IFRS 16 impact of € -97 million.

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

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

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

For such reason, the Mondadori Group has:

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

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

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

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

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

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

PERFORMANCE OF BUSINESS AREAS

• BOOKS

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

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

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

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

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

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

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

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

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

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

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

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

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

• RETAIL

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

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

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

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

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

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

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

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

• MEDIA^[5]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Annexes (in the complete pdf):

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

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

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

^[3] Product revenue excluding Club revenue

^[4]GFK (in terms of value)

^[5] As from 1 January 2020, all the activities referring to Mondadori Group magazines and websites, as well as the investments in the Magazines Italy Area, were transferred to Mondadori Media S.p.A. (100% owned by Arnoldo Mondadori Editore S.p.A.).

^[6]Nielsen, cumulative figures at February 2020

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

^[8] Management Reporting

^[9] Comscore (March 2020)

^[10] Storyclash (March 2020)

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 30 September 2019 presented by CEO Ernesto Mauri.

HIGHLIGHTS OF FIRST NINE MONTHS OF 2019
In the first nine months of 2019, the Mondadori Group recorded basically steady revenue and an approximately 13% increase in adjusted EBITDA from continuing operations before IFRS 16 to
€ 71.3 million, overshooting the planned targets.

Actions continued, in fact, to be taken to improve operations in the Books Area and to reduce costs, as well as to strengthen the Digital component of Magazines Italy; additionally, the reporting period saw the disposal of Mondadori France.

The first nine months of the year recorded significantly lower restructuring and reorganization costs than in the same period of 2018, due to the planned reduction and different timing of the divestment of non-strategic businesses and the reorganization of Group activities.

This performance (marked also by temporary benefits), together with the extended positive cash generation from ordinary operations, paves the way to the achievement of the targets set and disclosed for the entire financial year 2019.

GROUP PERFORMANCE AT 30.09.2019
Consolidated revenue came to € 658.9 million versus € 658.5 million in the prior year, despite the change in the consolidation scope of the Magazines Italy Area following the disposal of Inthera S.p.A. and Panorama (+1.5% on a like-for-like basis).

As mentioned above, adjusted EBITDA before IFRS 16 amounted to € 71.3 million, up by € 8.6 million (+13% approximately) versus the prior year (€ 62.8 million), with a percentage on revenue increasing from 9.5% to 10.8%.

IFRS 16 adjusted EBITDA amounted to € 83.4 million (IFRS 16 impact of € +12 million).

Consolidated EBITDA before IFRS 16, amounting to € 66.3 million versus € 53 million at 30.09.2018, was up sharply (+25%) versus the prior year. The result includes the increase in adjusted EBITDA and strong reductions in restructuring costs recorded in the period.

IFRS 16 EBITDA amounted to € 78.4 million (IFRS 16 impact of € +12 million).

EBIT before IFRS 16 improved significantly to € 49.2 million versus € 37.5 million at 30.09.2018, as a result of the dynamics of the above components (includes amortization, depreciation and write-downs of € 17.1 million). IFRS 16 amortization and depreciation amounted to € 11.1 million.

IFRS 16 EBIT amounted to € 50.2 million (includes the IFRS 16 impact of € +1 million).

Consolidated profit before tax was € 41.5 million, increasing sharply versus € 25.6 million in the first nine months of 2018. It includes:

• the significant reduction in financial expense, as a result of lower average net debt;
• improved performance by associates (consolidated at equity), from € -9.9 million to € -5.3 million in the same period of 2018.

The adjusted net result from continuing operations amounted to € 25.4 million, up more than 60% versus € 15.8 million at 30 September 2018.

Considering the net result of discontinued operations, the Group’s net result came to € 23.1 million versus € -181.5 million in 2018, which had included the impact from the fair value adjustment of Mondadori France of approximately € -200 million.

The Group’s net financial position before IFRS 16 stood at € -110.4 million, improving by approximately € 99 million versus € 209.3 million at 30 September 2018, as a result of the ongoing generation of cash flow from ordinary operations of continuing operations of € 52.5 million. The IFRS 16 Group net financial position stood at € -209.5 million.

At 30 September 2019, with regard to continuing operations, Group employees amounted to 2,092 units, down by -5% versus 2,203 units at 30 September 2018, as a result of the disposal of Panorama, of efficiency gains in the individual corporate areas, and excluding the employees of Mondadori France.

CONSOLIDATED FINANCIAL HIGHLIGHTS IN THIRD QUARTER 2019
Consolidated revenue came to € 279 million, up by 4.2% versus € 267.7 million at 30.09.2018, despite the effect of the change in the consolidation scope of Magazines Italy resulting from the disposal of Panorama.

Specifically, in the period revenue from Books increased by approximately +13% (partly temporary), while the Retail Area dropped by approximately -2%; the Magazines Italy Area fell by 7.3%, on a like-for-like basis, as a result of the dynamics of the relevant markets.

Adjusted EBITDA before IFRS 16 amounted to € 57.6 million, improving by 14% versus the prior year (€ 50.7 million), with different trends reported by the various businesses:

• in line with the revenue trend, the Books Area grew as a result of the positive performance of both the Trade and Education areas;
• the Retail Area fell versus 3° quarter 2018;
• the Magazines Italy Area grew despite the declining market trend, as a result of the disposals that took place, of the ongoing improvement of the digital area and of the actions aimed at reducing operating and structural costs.

IFRS 16 adjusted EBITDA amounted to € 61.6 million (IFRS 16 impact of approximately € 4 million). Consolidated EBITDA before IFRS 16 was up sharply, amounting to € 53.7 million versus € 49.5 million of the prior year.

BUSINESS OUTLOOK
In the first nine months of 2019, the Mondadori Group continued on the path of strategic repositioning and focus on its core businesses of Books and Retail and on Magazines with greater potential for multimedia development, completing the disposal of Mondadori France and moving ahead with the finalization of the disposal of five magazines.

In line with the outlined strategy and in light of the relevant context, including the performance in the first nine months, the operating targets for 2019, based on the current scope, allow the Group to confirm, at a consolidated level, a slight decrease in revenue (steady on a like-for-like basis following years of decline) and a single-digit growth of adjusted EBITDA no IFRS 16 versus 2018.

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

Cash flow from ordinary operations in 2019 is forecast at around € 45 million, paving the way for the distribution of a dividend in 2020.

PERFORMANCE OF BUSINESS AREAS

• BOOKS

In the first nine months of the year, the Trade Books market grew by 4.6% versus the first nine months of the prior year[1]. The Mondadori Group retains its leadership position with a total 25.7% market share and places seven titles in the ranking of the twenty best-selling books in terms of value.

In the period under review, revenue from the Books Area amounted to € 366 million, up by 7.5% versus € 340.3 million in the first nine months of 2018, as a result of the good performance of both Trade (+9.3%) and Educational (+7.7%).

Adjusted EBITDA before IFRS 16 amounted to € 77.6 million, up versus € 68 million in the same period of the prior year, as a result of the increase in revenue and the ongoing improvement of operations. IFRS 16 adjusted EBITDA amounted to € 78.6 million (the impact of IFRS 16 was € 1 million).

Reported EBITDA before IFRS 16 amounted to € 77.1 million, improving versus € 66.8 million reported at 30 September 2018. IFRS 16 reported EBITDA amounted to € 78.1 million and includes an impact of € +1 million.

• RETAIL

In the first nine months of 2019, Mondadori Retail generated revenue of € 126.6 million, down by 2.1% versus € 129.3 million of the same period of the prior year.

In the Books segment, the relevant market for the Area (approximately 82% of revenue^[2]) with a 13.2% market share, Mondadori Retail recorded a performance of -0.7% (on a like-for-like basis -1.1%).

The analysis by channel shows the following:

• a basic stability of direct bookstores (on a like-for-like basis -1.6%);
• in the Megastores, an approximately 12.7% drop (on a like-for-like basis -10.7%), due mainly to the decline in sales of consumer electronics;
• in franchised bookstores, a performance in line with the prior year (on a like-for-like basis -1.2%);
• in e-commerce a +2% growth;
• in the bookclub, a decrease of approximately 4% versus the prior year.

Adjusted EBITDA before IFRS 16 amounted to € -5.2 million versus € -3.4 million at 30 September 2018: the deterioration is due mainly to the decrease in revenue on a like-for-like basis and to the higher inventory write-down of consumer electronics products.

IFRS 16 adjusted EBITDA came to € +0.8 million and includes the IFRS 16 impact of € +6 million.

Reported EBITDA before IFRS 16 amounted to € -5.5 million, down versus
€ -3.7 million at 30 September 2018. IFRS 16 reported EBITDA amounted to € +0.5 million and includes an impact of € +6 million.

• MAGAZINES ITALY

In the first nine months of 2019, the Italian advertising market reported a growth in the digital channel (+2.1%) and a fall in magazines (-15.2%)[3]. Circulation also declined (-12.3%), with a slowdown in both the newsstands and subscriptions channels.

In this context, the Mondadori Group‘s market share stood at 28.6%, steady on a like-for-like basis (excluding the disposal of Panorama)[4]. The Group also retained its position as Italy’s leading digital publisher, with a 73% reach and 28.2 million unique users in the month[5].

In the first nine months of 2019, revenue in the Magazines Italy Area came to € 191.2 million versus
€ 216.1 million at 30.09.2018 (-5% net of the disposals of Inthera and Panorama). Specifically:

• revenue from circulation and related to add-on products was down by
  -14.1% versus the same period of the prior year, affected also by the disposal of Panorama
  (-8.5% on a like-for-like basis);
• advertising revenue (print + digital) recorded an overall drop of -7.7% versus the first nine months of 2018 (-2% net of the disposal of Panorama): the digital component grew by approximately +18%, thanks also to the contribution of AdKaora, an agency specializing in proximity marketing solutions; print advertising sales fell by -19.5% (approximately -13% excluding Panorama in the nine months of 2018, in line with the market trend). The percentage of digital revenue on the total rose to approximately 41% (from 32% in the first nine months of 2018);
• distribution activities and other revenue in the nine months fell by -8.7% versus the prior year, due to the disposal of Inthera S.p.A. (+2.6% excluding Inthera in the nine months 2018).

Adjusted EBITDA before IFRS 16 amounted to € 5.4 million, up versus the same period of the prior year (€ 4.1 million), as a result of the actions aimed at reducing operating and structural costs, of the ongoing improvement in the digital area, and the positive effects of the sale of Inthera S.p.A. and Panorama. IFRS 16 adjusted EBITDA amounted to € 5.5 million.

Reported EBITDA before IFRS 16 amounted to € 2.5 million, improving sharply versus € -3 million at 30 September 2018, as a result of lower restructuring costs. IFRS 16 reported EBITDA amounted to € 2.6 million.

TRANSFER TO A SINGLE COMPANY OF ALL THE ACTIVITIES INVOLVING THE MAGAZINES ITALY AREA
Today’s meeting of the Board of Directors also approved the transfer – effective from 1 January 2020 – of the Magazines business unit to a wholly-owned single company, where all the activities regarding magazine titles and the websites of Arnoldo Mondadori Editore S.p.A., as well as the investments in the Magazines Area, will be transferred.

The transaction brings no change to the overall profile of the Group’s activities or basic operating features, but completes an organization that is focused more on the peculiarities of the individual businesses, as was the case for the Retail and Books areas.

The setup is also more functional to the achievement of strategic opportunities and partnerships.

The transfer will be made on the basis of book values, with no impact on the consolidated financial statements.

The transaction is excluded from the application of the “Regulations containing provisions on transactions with related parties”, adopted by CONSOB with resolution no. 17221 of 12 March 2010, as well as the procedures adopted by Arnoldo Mondadori Editore S.p.A. on the matter, as it is a transaction with a subsidiary in respect of which the interests of other related parties of the Company cannot be considered significant (according to the criteria set out in the abovementioned procedures).

Significant events after the reporting period
On 23 October, the Group announced that it had received a binding offer for the acquisition of magazines Confidenze, Cucina Moderna, Sale&Pepe, Starbene and Tustyle by La Verità S.r.l.. The Board of Directors has resolved to authorize CEO Ernesto Mauri to implement all the actions aimed at reviewing and finalizing the transaction, in line with the announced strategy of focusing on the core businesses of Books, Retail and Magazines with greater potential for multimedia development. The offer is valid until 31 December 2019 and envisages the creation of a NewCo, whose interest will be 75% held by La Verità S.r.l. and 25% by Arnoldo Mondadori Editore S.p.A.; the offer also includes an earn-out in favour of the shareholder Arnoldo Mondadori Editore S.p.A. and put/call mechanisms in favour of shareholders. The activities relating to the 5 titles in question recorded revenue of € 22.4 million in 2018.

In accordance with the provisions of law, the procedure with the trade unions has been put into effect.

Following the authorization given by the Shareholders’ Meeting of 17 April 2019, on 10 June Arnoldo Mondadori Editore S.p.A. launched a share buyback programme. Following the transactions carried out so far and disclosed to the market in accordance with current legislation, the Company holds, to date, no. 2,641,203 treasury shares, equal to 1.010% of the share capital and 0.659% of the total voting rights.

The documentation relating to the presentation of the results at 30 September 2019, is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company website www.gruppomondadori.it.

The Interim Management Statement at 30 September 2019 approved by the Board will be available at the Company’s registered office, on the authorized storage mechanism 1Info (www.1info.it) and on www.gruppomondadori.it (Investors section) by today’s date.

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

Annexes (in the pdf file):

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

[1] Source: GFK, September 2019 (figures in terms of market value). As of May 2019, GFK has expanded its coverage panel by increasing the survey of e-commerce players; as a result, the overall market value and the YoY deviations have been restated pro-forma and the details by channel have been reviewed by merging book chains and e-commerce.
[2] Product revenue excluding the bookclub
[3] Source: Nielsen, cumulative figures at September 2019
[4] Internal source: Press-Di, cumulative figures at August 2019 (newsstands + subscriptions) in terms of value
[5] Source: comScore survey, August

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Half-Year Financial Report at 30 June 2019, presented by CEO Ernesto Mauri.

HIGHLIGHTS OF FIRST HALF 2019
In first half 2019, in line with the targets set, the Group recorded adjusted EBITDA from continuing operations of € 13.8 million, up by 14% net of the effect of the application of IFRS 16.

Actions continued to be taken to improve operations in the Books Area and to reduce costs, as well as to strengthen the Digital component in Magazines Italy.

The six months saw significantly lower restructuring and reorganization costs than in the same period of 2018, due to the planned reduction and different timing of the divestment of non-strategic businesses and the reorganization of Group activities.

This trend, together with the extended positive performance of cash generation from ordinary operations, paves the way to the achievement of the targets set and disclosed for the entire financial year 2019.

PERFORMANCE AT 30 JUNE 2019
Consolidated revenue in first half 2019 came to € 380 million versus € 390.8 million in the prior year, due partly to the change in the consolidation scope of Magazines Italy following the sale of Inthera S.p.A. and Panorama.

Adjusted EBITDA (before IFRS 16) for the period under review came to € 13.8 million, up by € 1.7 million versus the prior year (€ 12.1 million), with a percentage on revenue increasing from 3.1% to 3.6%.

IFRS 16 adjusted EBITDA came to € 21.8 million and includes the IFRS 16 impact of € +8 million.

EBITDA (before IFRS 16) grew strongly versus the prior year, from € 3.5 million to € 12.6 million, including the increase in adjusted EBITDA and the significant reduction in restructuring costs recorded in the first half of the year.

IFRS 16 EBITDA amounted to € 20.6 million and includes the IFRS 16 impact of € +8 million.

EBIT (before IFRS 16) at 30 June 2019 amounted to € 1.5 million, increasing sharply versus € -6.6 million at 30 June 2018, as a result of the dynamics of the above components, and includes amortization, depreciation and write-downs of € 11.1 million, slightly higher than the prior year.

IFRS 16 amortization and depreciation amounted to € 7.4 million.

IFRS 16 EBIT amounted to € 2.1 million and includes the IFRS 16 impact of € +0.6 million.

The consolidated result before tax came to € -1.6 million, improving strongly versus € -16.1 million in first half 2018. It includes:

• the decrease in financial expense (from € -1.4 million to € +0.3 million) as a result of lower average net debt;
• the result of the associates (consolidated at equity) from € -8.2 million to € -3 million.

The adjusted net result from continuing operations improved by approximately € +9 million and amounted to € -5.7 million versus € -14.7 million at 30 June 2018.

The net result from discontinued operations came to a positive € 3.9 million and includes the positive effect of the fair value adjustment of Mondadori France at 30 June 2019.

The Group’s net result was € -1.9 million, improving strongly versus € -12.5 million at 30 June 2018.

At 30 June 2019, the net financial position (before IFRS 16) stood at € -204.2 million, improving by € 34.2 million (approximately -14%) versus € -238.4 million at 30 June 2018, as a result of the ongoing cash generation from ordinary operations of continuing operations, amounting to
€ 46.5 million.

Including the effect of the application of IFRS 16 (€ -102 million), the Group’s net financial position at 30 June 2019 stood at € -306.2 million.

At 30 June 2019, with regard to continuing operations, Group employees amounted to 2,117 units, down by approximately -5% versus 2,224 units at June 2018, as a result of the sale of Panorama and of efficiency gains in the individual business areas, and excluding the 691 employees of Mondadori France.

Cost of personnel^[1] of continuing operations in the first six months of the year amounted to € 79.3 million, down by approximately 7% versus the same period of 2018, as a result of the ongoing reduction in the workforce and of the sale of Inthera and Panorama.

CONSOLIDATED FINANCIAL HIGHLIGHTS IN SECOND QUARTER 2019
Consolidated revenue in second quarter 2019 amounted to € 213.1 million, steady versus the prior year, despite the effect of the change in the consolidation scope of Magazines Italy following the sale of Inthera S.p.A. and Panorama.

In the Books Area, revenue in the second quarter increased by approximately 8%, while the Retail Area grew by approximately 1%; the Magazines Italy Area fell by 5% on a like-for-like basis as a result of the dynamics of the relevant markets.

Adjusted EBITDA (before IFRS 16) came to € 16 million, up by € 1.1 million versus the prior year
(€ 14.9 million).

IFRS 16 adjusted EBITDA came to € 20.1 million and includes the IFRS 16 impact of approximately
€ +4 million.

BUSINESS OUTLOOK[2]
The Group will continue its strategic repositioning and further focus on its core businesses, in particular by consolidating its leadership in the Books Area, completing the sale of Mondadori France and identifying new areas of development.

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

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

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

PERFORMANCE OF BUSINESS AREAS

• BOOKS

In the first six months of the year, the trade books market grew by +4%^[3] versus the first six months of the prior year. During the period, the Mondadori Group retained its leadership, with an overall 25.3% market share.

Revenue in the Books Area in first half 2019 amounted to € 183.8 million, up by 2.7% versus € 179 million in first half 2018. Specifically: the Trade Area recorded a +1.6% increase, the Educational Area +5.4%.

Adjusted EBITDA (before IFRS 16) came to € 15.6 million, up versus the same period of 2018
(€ 13.3 million), as a result of the ongoing improvement in operations.

IFRS 16 adjusted EBITDA came to € 16.2 million and includes the IFRS 16 impact of approximately
€ +0.6 million.

EBITDA (before IFRS 16) amounted to € 15.2 million, up versus € 12.5 million at 30 June 2018.

IFRS 16 EBITDA amounted to € 15.8 million and includes an impact of approximately € +0.6 million.

• RETAIL

The relevant market for the Retail Area is books (approximately 83% of store revenue), where Mondadori Retail has a 12.8% market share.

In the first six months of the year, the Retail Area recorded revenue of € 81.4 million, down slightly
(-2%) versus € 83.1 million in first half 2018.

The analysis by channel shows the following:

• a +1.2% increase by direct bookstores, as a result of the performance of the new stores in Roma Valle Aurelia and Taranto, opened respectively in April and September 2018 (-1.8% on a like-for-like basis in terms of stores);
• an approximately 12% drop by Megastores, due mainly to the shrinking sales of consumer electronics (-11.3% on a like-for-like basis in terms of stores);
• the Franchised Bookstores are in line with the prior year (also on a like-for-like basis in terms of stores);
• a slight decrease by the online segment (-3.4%);
• a slight fall by the Clubs channel versus the prior year (approximately -3%).

In first half 2019, Mondadori Retail’s adjusted EBITDA (before IFRS 16) came to € -4.6 million versus € -3.2 million at 30 June 2018.

IFRS 16 adjusted EBITDA came to € -0.6 million and includes the IFRS 16 impact of € +3.9 million.

EBITDA (before IFRS 16) amounted to € -4.8 million, down versus € -3.5 million at 30 June 2018.

IFRS 16 EBITDA amounted to € -0.9 million and includes the IFRS 16 impact of € +3.9 million.

• MAGAZINES ITALY

In the first five months of 2019, the Italian advertising market reported a growth in digital channels (+2%) and a -15.4% drop in magazines^[4].

Circulation also declined in Italy in the period (-12.3%), with a slowdown in both the newsstands and subscriptions channels.

The Mondadori Group’s market share in this segment stood at 28.8%^[5].

The Magazines Italy Area generated revenue of € 130.9 million versus € 147.5 million in first half 2018 (-3.9% net of the disposals of Inthera and Panorama).

Specifically:

• circulation revenue and revenue from add-on sales recorded an overall reduction of 12.5% versus first half 2018 (-5.9% net of the sale of Panorama);
• advertising revenue was down overall by -10.2%: the digital channel recorded a growth of approximately +15% versus first half 2018. The percentage of digital revenue on the total rose to approximately 39% versus 30% at 30.06.2018.
• distribution activities and other revenue fell by 9% versus the prior year, due to the sale of Inthera (+5.9% excluding Inthera).

The Mondadori Group retained its position as Italy’s leading digital publisher in the latest comScore survey in May, with a reach of 77% and 29.3 million unique users in the month.

Adjusted EBITDA (before IFRS 16) from the Magazines Italy Area came to € 6.8 million, in line with the same period of 2018 (€ 6.8 million), as a result of the actions aimed at reducing operating and structural costs, the ongoing improvement in the digital area and the positive effects of the sale of Inthera and Panorama.

IFRS 16 adjusted EBITDA amounted to € 6.9 million.

EBITDA (before IFRS 16) amounted to € 6.3 million, up sharply versus € -0.1 million at 30 June 2018, as a result of lower restructuring costs.

IFRS 16 EBITDA amounted to € 6.4 million.

• MAGAZINES FRANCE (discontinued operations)

In first half 2019, Mondadori France generated revenue of € 139.8 million (€ 152.9 million in first half 2018). Specifically:

• circulation revenue (approximately 80% of the total) was down by 5.1%;
• advertising revenue fell by 17% overall.

Adjusted EBITDA came to € 11.4 million versus € 12.1 million in the first six months of the prior year.

EBITDA amounted to € 11 million versus € 10.8 million in the first six months of 2018.

SIGNIFICANT EVENTS AFTER FIRST HALF 2019
On 24 July, the sale of the subsidiary Mondadori France S.A.S. to Reworld Media S.A. received clearance from the Autorité de la Concurrence.

In accordance with the remedy set out in the clearance, Reworld Media undertakes to sell a title of its choice that could be either L’Auto-Journal, published by the joint venture EMAS (Editions Mondadori Axel Springer) or Auto Moto, published by Reworld Media.

The parties have agreed to update – according to the terms disclosed on 24 July 2019 – the structure of the consideration from the transaction, which remains, as expected, equal to € 70 million (cash free/debt free), also adding an earn-out of € 5 million.

Additionally, on 29 July 2019, the Shareholders’ Meeting of Reworld Media resolved to grant the Board of Directors the power to implement the reserved capital increase.

The transaction remains subject to the provision of the bank loan, already authorized, to Reworld Media.

Following the authorization given by the Shareholders’ Meeting of 17 April 2019, on 10 June Arnoldo Mondadori Editore launched a share buyback programme.  

Following the transactions carried out so far and disclosed to the market in accordance with current legislation, Arnoldo Mondadori Editore S.p.A. currently holds no. 1,728,703 treasury shares, equal to 0.661% of the share capital and to 0.431% of the total voting rights.

The documentation relating to the presentation of the results at 30 June 2019, is made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company website www.gruppomondadori.it.

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

Annexes:

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

[1] Cost of enlarged personnel includes costs for collaborations and temporary employment.
[2] Before application of IFRS 16.
[3] Source: GFK, June 2019 (figures in terms of market value). As of May 2019, GfK has expanded its coverage panel by increasing the survey of e-commerce operators; as a result, the overall market value and the YoY deviations have been restated pro-forma and the details by channel have been reviewed by merging book chains and e-commerce.
[4] Source: Nielsen, cumulative figures at May 2019
[5] Internal source: Press-Di, cumulative figures at May 2019 (newsstands + subscriptions) in terms of value

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 31 March 2019^[1] presented by CEO Ernesto Mauri.

PERFORMANCE AT 31 MARCH 2019

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

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

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

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

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

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

IFRS 16 amortization and depreciation amounted to € 3.6 million.

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

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

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

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

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

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

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

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

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

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

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

BUSINESS OUTLOOK^[4]

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

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

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

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

PERFORMANCE OF BUSINESS AREAS

• BOOKS

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

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

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

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

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

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

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

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

• RETAIL

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

The analysis of revenue by channel shows in particular:

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

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

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

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

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

• MAGAZINES ITALY

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

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

Specifically:

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

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

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

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

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

IFRS 16 adjusted EBITDA amounted to € 2.6 million.

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

IFRS 16 reported EBITDA amounted to € 2.3 million.

• MAGAZINES FRANCE (discontinued operations)

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

Specifically:

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

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

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

SIGNIFICANT EVENTS AFTER FIRST QUARTER 2019

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

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

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

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

PUBLICATION OF THE MINUTES OF THE SHAREHOLDERS’ MEETING AND BYLAWS

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

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

Annexes (in the pdf file):

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS OUTLOOK[3]

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

PERFORMANCE OF BUSINESS AREAS

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

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

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

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

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

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

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

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

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

The analysis by channel shows the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Specifically, the Board will propose the Shareholders’ Meeting:

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

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

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

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

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

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

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

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

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

Annexes (in the pdf file):

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS AREAS

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

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

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

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

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

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

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

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

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

The analysis by channel shows the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Annexes (in the pdf file):

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

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

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

Group performance in first half 2018

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

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

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

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

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

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

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

The various businesses recorded different trends:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Business areas

• BOOKS

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

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

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

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

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

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

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

• RETAIL

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

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

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

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

• MAGAZINES FRANCE

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

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

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

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

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

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

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

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

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

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

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

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

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

Annexes (in the pdf file):

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

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

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

GROUP PERFORMANCE IN FIRST QUARTER 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS OUTLOOK

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

BUSINESS AREAS

• BOOKS

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

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

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

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

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

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

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

• RETAIL

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

The analysis by channel shows the following:

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

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

• MAGAZINES FRANCE

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

Specifically:

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

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

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

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

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

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

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

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

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

PUBLICATION OF THE MINUTES OF THE SHAREHOLDERS’ MEETING

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

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

Annexes (in the pdf file):

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

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

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

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

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

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

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

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

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

Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Report on Operations at 30 September 2017[1] presented by CEO Ernesto Mauri.

9M17 highlights

In 9M17, on a like-for-like consolidation basis with Rizzoli Libri versus 2016, the Group confirmed its operational improvement for the fourth consecutive year, posting an approximately 9% increase in adjusted EBITDA; concurrently, the Group continued on its path to achieve the targets set for the whole year, despite the lower-than-expected magazine market trend, mitigated however by greater operational efficiency and by the implementation of cost cutting measures.

The LTM cash flow from ordinary operations amounted to approximately 52 million euro, continuing the positive performance of cash generated by the Group’s businesses which, along with the extraordinary transactions involving the strategic rationalization of the portfolio of activities, improved the net financial position by over 70 million euro, reaching -256 million euro versus -329 million euro in 9M16.

Net profit in 9M17 (+31.2 million euro) improved by over 13 million euro versus 30 September 2016, due also to the contribution of a number of positive extraordinary items.

Group performance at 30 September 2017

Consolidated revenue in 9M17 amounted to 924.7 million euro, down slightly (-1.1%) versus the prior year, due mainly to the performance of the Magazines areas, affected by the acceleration of the negative trends of the markets, and to the targeted reduction in revenue from consumer electronics products in the Retail Area.

In the Books Area, revenue in 9M17 increased by 8.4%, driven by the positive performance of both the Trade and Educational areas, amplified by the different consolidation period of Rizzoli Libri (present only from the second quarter of 2016).

On a like-for-like consolidation basis with Rizzoli Libri (excluding 1Q17), adjusted EBITDA grew by 8.6% (82.7 million euro versus 76.1 million euro in 9M16) with a percentage on revenue increasing from 8.1% to 9.1% – especially in the Books (from 58.7 million euro to 68.1 million euro net of Rizzoli Libri’s first quarter) and Magazines Italy areas (+24%).

Including the result of Rizzoli Libri as from 1 January, adjusted EBITDA amounted to 75.2 million euro, as a result of the negative contribution of -7.5 million euro in 1Q17, attributable to the seasonal nature of the Education business, which includes in the first quarter expenses to promote the campaign on school textbooks adoption.

Consolidated EBITDA improved by 12.9% (from 70.3 million euro to 79.3 million euro), driven by the gains from the disposal of certain assets in the second quarter of the year.

Consolidated EBIT at 30 September amounted to 55.1 million euro, up by approximately 14.9% versus 30 September 2016, and includes amortization, depreciation and impairment of 24 million euro, up by approximately 2 million euro versus 9M16 from the impact of the amortization of Banzai Media intangible assets (1.8 million euro) and the amortization of capitalized expenses of the Rizzoli Libri school business (3 million euro).

Consolidated profit before tax came to 44.9 million euro and includes financial costs of 10.2 million euro, down versus the prior year (12.7 million euro), as a result of a lower average net debt and an average interest rate reduced by approximately 50 bps.

The overall tax burden in the period amounted to 11.8 million euro (16.2 million euro in 2016), benefiting from the adjustment of deferred tax of Mondadori France of 3.8 million euro, following the reduction in the rate introduced by the 2017 Budget Law (no. 2016-1917) from 34.4% to 28.9% starting from 2019.

At 30 September 2017, Group employees amounted to 3,053 units, down by 8.3% versus 3,330 units at September 2016, as a result of the disposal of the logistics activities in May, and of the ongoing restructuring and efficiency improvement measures involving each of the Group’s business areas.

Consolidated financial highlights in 3Q17[2]

In 3Q17, consolidated revenue amounted to 371.8 million euro, basically in line with 3Q16. A performance achieved thanks mainly to the publication from September in the Books Area of the bestsellers by Ken Follett (La colonna di fuoco) and Dan Brown (Origin).

The Retail Area also increased revenue versus the prior year, driven by the promotional activities launched in the quarter.

Revenue from magazines both in Italy and France continued the downward trend witnessed in prior quarters.

Adjusted EBITDA grew by 8.3% in the quarter, driven by the revenue trend of the Books Area (+6.5%) and by the implementation of ongoing cost-cutting measures in other business areas, confirming the Group’s continued efficiency recovery.

Consolidated EBITDA, including extraordinary items, confirmed the growth trend.

Consolidated net profit, after the minority shareholders’ result, came to approximately 27 million euro, up by 24.1% versus 30 September 2016.

Outlook 2017

In light of the trend of the markets and the Group’s performance in the first nine months, it is reasonable to estimate for 2017 – versus the 2016 pro-forma figures – a slight drop in revenue and a “high single-digit” growth of adjusted EBITDA, with a resulting improvement in profit margins and a sharp increase of approximately 30% in net profit.

Net debt at end 2017 is confirmed at a debt/adjusted EBITDA ratio below 2.0x.

Performance of group business areas at 30 september 2017

• Books

In 9M17, the Mondadori Group retained its leadership position in the trade books market (28.4%), placing 6 titles in the top 10 best-selling books in terms of value, besides winning the 2017 Strega Prize with Le otto montagne by Paolo Cognetti (Einaudi), and the 2017 Campiello Prize with L’arminuta by D. Pietrantonio (Einaudi). Einaudi is also the publisher in Italy of Kazuo Ishiguro, winner of the 2017 Nobel Prize in Literature.

The Group also confirmed its leadership in the school textbooks segment, with a market share steady at 24%.

The Area’s revenue amounted to 385.3 million euro, up by 8.4% versus 355.5 million euro in 9M16, driven by the positive performance of both the Trade and Educational areas, amplified by the different consolidation period of Rizzoli Libri (present only from 2Q16).

• trade revenue increased by +4.2% versus 9M16 as a result, as mentioned earlier, of both the publication and distribution from September of the bestsellers La colonna di Fuoco by Ken Follett (Mondadori) and Origin by Dan Brown (Mondadori), and of the different consolidation period of Rizzoli Libri versus 2016;
• Educational revenue increased by 8.1% versus 9M16, thanks to the positive performance of the school textbooks segment (+1.6%) and the sharp rise by Electa in museum and publishing activities (+16.6%);
• revenue from distribution and services on behalf of third publishers was up by +37.6% versus 9M16 as a result of the above mentioned different consolidation period of Rizzoli Libri;
• revenue from Rizzoli International Publications, including the sales of the Rizzoli Bookstore in New York, amounted to 19.9 million euro versus 13 million euro in 9M16, as a result of the different consolidation period, of the positive trend of the publishing schedule, and of the consolidation of the former joint venture Skira Rizzoli Publications.

Adjusted EBITDA of the Books Area came to 60.6 million euro; net of the loss reported in the first quarter by Rizzoli Libri, attributable to the typical seasonal nature of the school textbooks business, adjusted EBITDA would amount to approximately 68 million euro, up by approximately 16% versus 9M16 (58.7 million euro), as a result of the positive trend of revenue achieved by the Trade segment and by Electa, and of the progress in the integration process of Rizzoli Libri and the resulting synergies.

EBITDA amounted to 60.4 million euro, up by 4.4% versus the prior year (57.9 million euro at 30 September 2016).

• Retail

At 30 September 2017, the market share of Mondadori Retail in the Books segment (80% of revenue) rose to 15.3%[3].

In 9M17, the Area achieved revenue of 132.6 million euro, down by 1.8% versus 135 million euro in 9M16, due also to the targeted reduction in revenue from consumer electronics products. In the third quarter, revenue grew by 2.5% versus the prior year, driven by the promotional activities launched in the quarter.

The analysis by channel shows the following:

• a 6.5% drop by Megastores, due to the shrinking sales in consumer electronics and to closure of a store in Palermo (July 2017). The Books category grew by 3.2%, confirming the effectiveness of the actions undertaken in terms of assortment and promotion campaigns;
• a 1% drop by directly-managed bookstores, also following closure of a store in the province of Milan in May 2016 (+8.9% on a like-for-like basis in terms of stores);
• a slightly negative performance of Franchised Bookstores (-1.5%, also on a like-for-like basis in terms of stores);
• an approximately 35.5% increase in the online segment, driven by the positive performance of sales related to the government’s “Culture Bonus” for 18 year olds (“18app”);
• for book clubs, a trend in line with the structural decline forecast for the segment in the medium-term development plan.

Adjusted EBITDA of Mondadori Retail came to -3.9 million euro, deteriorating versus -2.7 million euro reported in 9M16, as a result of the structural decline in sales volumes in the book clubs channel, and the temporary decline of the franchised channel, affected by a number of promotional campaigns whose benefits are expected to be felt in the coming months, and by the costs associated with the targeted reduction in the sales of consumer electronics products.

EBITDA came to -4.6 million euro (-2.3 million euro in 9M16), also as a result of higher restructuring costs (1.5 million euro).

• Magazines Italy

In Italy, the Mondadori Group retained its leadership in magazines, increasing its share to reach 31.8%, in a market hit by shrinking circulation. In 9M17, in line with the selective strategy on the development of the product portfolio to sustain revenue and optimize editorial costs, Mondadori launched two new publications – Giallo Zafferano and SPY – which continue to receive a warm response from the public.

With an audience of 15.8 million unique users/month[4], Mondadori was once again Italy‘s top traditional publisher also in the digital business. In the same reporting period, ComScore counted 21.9 million unique users/month of the Group brands.

The Area’s revenue amounted to 216.2 million euro, down by 7.9% versus 234.8 million euro in 9M16, due also to the sharp drop in add-on sales.

Specifically:

• circulation revenue (newsstands + subscriptions) fell (-5.1%) less than the relevant market trend (-11.9%[5]).
• advertising revenue (print + web) increased by 4%; gross advertising sales in Italy, driven by the contribution of the consolidation of Banzai Media activities, were up by 13%, bringing the percentage of digital revenue on the total to 28%.

Print advertising sales in Italy – on a like-for-like basis of titles and barter deals for goods – outperformed (-4.1%) the relevant market trend (-7% at August[6]); digital advertising sales grew by 2% (on a pro-forma basis).

• Revenue from add-on products, as mentioned, dropped sharply (-29.4%) versus 9M16, in line with the market trend.
• distribution and revenue towards third publishers dropped at a more moderate pace (-2.1%) than the relevant markets, thanks to the ongoing commitment to developing third-publisher portfolios and to the increased amount of services provided.

Adjusted EBITDA in the Magazines Italy Area improved by approximately 23.9%, rising from 6.9 million euro to 8.5 million euro, driven mainly by the benefits of the digital business achieved with the combination of ex Banzai Media’s teams and products; print activities reported a slight decrease in margin, almost offsetting the drop triggered by the trend of the markets, with ongoing optimization actions and containment of editorial and overhead costs.

The Area’s EBITDA improved further, closing at 8.2 million euro, up versus 5.3 million euro in 2016.

• Magazines France

In 9M17, revenue from Mondadori France amounted to 220.1 million euro, down by 8% versus 239.4 million euro in 9M16.

Specifically:

• Circulation revenue (approximately 75% of the total) posted a more moderate downturn (-5%) than the relevant market (-7%), as a result of the improved performance of the subscriptions channel.

In September, Mondadori France launched Dr. Good!, the new bi-monthly women’s health magazine, which scored positive results in terms of advertising and circulation (over 100 thousand copies).

Revenue from the sale of digital copies grew sharply in 9M17 versus 2016, driven by the new partnerships with a number of French telco players to offer Mondadori France brands to their subscriber base.

• Advertising revenue fell by an overall -18.5% versus 9M16; print advertising, accounting for over 85% of total advertising revenue, was basically in line (-12.9%) with the relevant market (-11.4%[7]), while the performance on the digital channel was affected by the internalization of advertising sales of the mobile/video segment, which led to a temporary drop in revenue (-23%), in a market that lost 8% at August[8].

In the reporting period, Mondadori France retained its position as second top player in the magazine advertising market, with a 10.7% share[9].

The digital readers (web, mobile & tablet) of Mondadori France magazines reached 11.2 million unique users[10], down by approximately -4% versus the average figure in 9M16.

Adjusted EBITDA came to 16.8 million euro versus 21.3 million euro in 9M16. The drop is mainly attributable to the downturn in circulation and in advertising revenue, and to the increase in circulation expenses, not fully offset by cost reductions. Adjusted EBITDA was also affected by the increase in rental costs for the offices (1.1 million euro) and by the deconsolidation from 1 May of NaturaBuy: net of the latter two effects, the decline in business would amount to approximately 3 million euro in 9M17.

Reported EBITDA amounted to 18.2 million euro, down by approximately 6% versus 9M16, driven by the positive contribution of the gain of 4.3 million euro from the disposal of NaturaBuy in May.

Significant events after the reporting period

Arnoldo Mondadori Editore S.p.A. continued to purchase treasury shares, as previously disclosed to the market on 26 June 2017, in execution of the resolution adopted by the Shareholders’ Meeting held on 27 April 2017, authorizing the purchase and disposal of treasury shares for a maximum amount of up to 0.96% of the share capital, which is intended to provide the Company with the 2.49 million shares needed in the three-year period to meet the obligations under the 2017-2019 Performance Share Plan approved by the Meeting. Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds to date 760,000 treasury shares, equal to 0.291% of the share capital (including the 80,000 shares purchased in the period from 30 November to 2 December 2016, as per disclosure to the market on 6 December 2016).

On 19 October, the Mondadori share moved from the FTSE Italia Small Cap index to the FTSE Italia Mid Cap index.

The documentation relating to the presentation of the results at 30 September 2017, will be made available through the authorized storage mechanism 1Info (www.1info.it) and in the Investors section of the Company’s website www.gruppomondadori.it.

 This Interim Report at 30 September 2017 approved by the Board of Directors will be available on 10 November 2017 at the Company’s registered office, on the authorized storage mechanism 1info (www.1Info.it) and on www.gruppomondadori.it (Investor section).

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

 Annexes (see attached pdf):

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

[1] 9M17 at Group level includes, as from 1 January, the contribution of Rizzoli Libri, which was outside the scope of consolidation in 1Q16, and Banzai Media activities, consolidated as from 1 June 2016 and merged by incorporation into the Parent Company Arnoldo Mondadori Editore S.p.A., with accounting effects as from 1 January 2017.
 [2] 3Q17 and 3Q16 are comparable considering the consolidation scope of Rizzoli Libri and Banzai Media activities.
[3] Source: GFK, September 2017 (figures in terms of market value)
[4] Source: Audiweb, January-August 2017 average figure
[5] Internal source: Press-di, cumulative figures at August 2017 (newsstands + subscriptions in terms of value)
[6] Source: Nielsen, cumulative figures at August 2017
[7] Source: Kantar Media, cumulative figures in terms of volume at August 2017
[8] Source: SRI, August 2017
[9]> Source: Kantar Media, cumulative figures in terms of volume at July 2017
[10] Source: Nielsen, January-July 2017 average figure

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

GROUP PERFORMANCE IN 1Q17

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS OUTLOOK

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

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

BUSINESS AREAS

• BOOKS

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

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

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

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

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

• RETAIL

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

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

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

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

• MAGAZINES FRANCE

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

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

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

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

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

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

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

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

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

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

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

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

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

Annexes (see attached pdf):

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

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

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

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

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

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

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

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

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

[9] Source: Audiweb, at February 2017

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

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

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