Price sensitive

Mondadori Group informs that the renegotiation of the existing committed credit lines amounting to a total of euro 515 million has been completed. Today a new amortizing loan agreement with a five year maturity date (December 2020) was signed with a pool of six leading banks (BNP Paribas, Banca Popolare di Milano, Intesa Sanpaolo, Mediobanca – Banca di Credito Finanziario, UniCredit, UBI Banca), replacing the current loan agreement which provided for shorter repayments (2016-2017-2018), and including the financing of RCS Libri acquisition.

At 30 September 2015, Mondadori Group NFP was equal to euro -243.6 million.

The new agreement envisages more favorable economic conditions for the Group in terms of lower interest rates and fees: the initial cost of the credit lines for 2016 will be equal to 325 bps – in addition to the reference Euribor rate – with a reduction of approximately 90 bps against the current cost. This rate can also further decrease, on an annual basis, according to the positive evolution of the net debt/EBITDA ratio.

In order to sustain the Group’s core business development, new covenants (net debt/EBITDA) were also negotiated for 2016 (4.50x) and 2017 (3.75x), against the current 3.50x, which will be applied upon completion of the acquisition of RCS Libri.

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

GROUP PERFORMANCE AT 30 SEPTEMBER 2015

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

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

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

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

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

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

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

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

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

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

BUSINESS AREAS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Two main causes drove this result:

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

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

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

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

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

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

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

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

§

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

§

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

§

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

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

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

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

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

Following the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired today by Marina Berlusconi, CEO Ernesto Mauri has signed the agreement to acquire RCS Libri S.p.A.

The agreement will allow Mondadori Group to strengthen its foothold in the trade books market and educational publishing field in Italy, and in the illustrated books segment on an international level.

The scope of the transaction includes the entire interest, amounting to 99.99% held by RCS MediaGroup S.p.A. in RCS Libri S.p.A., with the underlying subsidiaries – which, at closing date, will include 94.71% of Marsilio Editore S.p.A. – with the exception of 58% held in Adelphi Edizioni S.p.A.

In FY 2014, this scope reported the following pro-forma figures: revenues of euro 221.6 million; EBITDA before non-recurring items of euro 8.8 million, and capex of euro 11 million, euro 1.7 million of which made to renew the Rizzoli bookstores.

Consideration for the transaction amounts to euro 127.5 million, and reflects an average NFP (to counter the effects of business seasonality) and adjusted (also to include the buy-back of minorities of Marsilio), amounting to euro -2.5 million.

Since the consideration reflects expectations on this year’s result, price adjustment mechanisms of up to +/- euro 5 million have been included, based on the achievement of pre-set financial targets in 2015.

The agreement also provides for an earn-out of up to euro 2.5 million to RCS MediaGroup S.p.A., based on the achievement of specific results in the books segment in 2017.

The transaction provides the customary representations and warranties in favour of the acquiror.

The acquisition, the consideration of which will be settled in cash at closing date, will be financed by credit lines; the Group has recently signed an agreement with the lending banks in order to reschedule the existing lines in connection with the transaction, reviewing deadlines and conditions.

By the transaction, Mondadori will acquire exclusive ownership over all the trademarks in the books segment, including Rizzoli. Under the agreement, RCS MediaGroup media titles are allowed to carry on their book publishing business in line with their existing activities.

Completion of the transaction is subject to approval by the appropriate regulatory authorities; any conditional clearance provisions will not compromise the completion of the transaction.

The presentation of the transaction will be made available tomorrow at the authorized storage system 1Info (www.1info.it) and on www.gruppomondadori.it (Investor Relations section).

Arnoldo Mondadori Editore S.p.A. informs that on today’s date, in line with its non-core assets disposal plan, it has completed the sale of 80% of Monradio S.r.l.’s share capital to R.T.I. S.p.A. and the sale to Harlequin Italia S.r.l. of the entire interest held, through Mondadori Libri S.p.A., in the joint venture Harlequin Mondadori S.p.A. for a total amount, cashed today, of euro 45.1 million.

The two transactions, increasing the availability of the consolidated financial resources, contribute to support the future development of the Group and its competitive position in the core businesses, consistently with the strategic guidelines announced during the year.

In detail, the sale agreement of 80% of Monradio’s share capital was signed today with R.T.I. (Mediaset Group) for a total price of euro 36.8 million (cash/debt free), according to the terms included in the information document regarding transactions of greater relevance with related parties disclosed to the public on 24 September 2015.
In 2014 Monradio contributed to the Group’s consolidated financials revenues of euro 11.7 million and a negative EBITDA of euro 4.4 million[1].

The sale of the 50% interest held by Arnoldo Mondadori Editore, through Mondadori Libri, in Harlequin Mondadori to Harlequin Italia (HarperCollins Publishers) was also finalised today.
Established in 1980, Harlequin Mondadori is a 50/50 joint venture operating in the women’s fiction mainly through the sale of the series Harmony in the newsstand channel.
In 2014 the company, consolidated on an equity basis, generated revenues of euro 9.1 million with a net profit of euro 1.0 million.
The value of the transaction amounts to euro 8.3 million, including an adjusted NFP (for 50%) positive for euro 1.6 million.

[1] Pursuant to IFRS5, the Group’s radio business was qualified as “discontinued operations” already in the income statement for the first half of 2015. Therefore, Monradio’s result in the period was recognized under item “result from discontinued operations”, which includes the writedown of Monradio’s assets equal to euro 7.1 million in order to align the value to the fair value resulting from the transaction (euro 46 million for 100%).

Arnoldo Mondadori Editore S.p.A. informs that pursuant to article 5 of Consob Regulation No. 17221/2010 and subsequent amendments, an information document regarding transactions of greater relevance with related parties has been made available in relation to the transfer – approved by the Company’s Board of Directors on today’s date (following the positive opinion given by the Committee of the independent directors on the transactions with related parties pursuant to Consob Regulation and the procedures adopted by the Company) – of 80% of Monradio S.r.l.’s share capital (a company fully owned by Arnoldo Mondadori Editore S.p.A.) to R.T.I. S.p.A. (a company fully owned by Mediaset S.p.A. and subject also to the joint control with Arnoldo Mondadori Editore S.p.A.).

The transaction qualifies as a “transaction of greater relevance” as the relevance indexes pursuant to article 4, par. 1, letter a) of the aforementioned Consob Regulation are exceeded and endorsed on a 2.5% ratio in the Procedure adopted by the Board of Directors of Arnoldo Mondadori Editore S.p.A..

The information document regarding the transaction above is made available at the Company’s legal offices, on the Company’s web site www.gruppomondadori.it (Governance section) and on the authorized storage web site www.1info.it.

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

GROUP PERFORMANCE AT 30 JUNE 2015

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS AREAS

• BOOKS

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

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

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

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

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

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

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

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

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

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

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

• MAGAZINES FRANCE

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

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

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

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

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

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

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

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

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

• RETAIL

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

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

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

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

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

• DIGITAL

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

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

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

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

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

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

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

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

The Board of Directors of Arnoldo Mondadori Editore S.p.A., held today, granted to the CEO the power to proceed with the offer received by R.T.I. S.p.A., a company fully owned by Mediaset S.p.A., in relation to the acquisition of 80% of Monradio S.r.l., a company wholly owned by Arnoldo Mondadori Editore S.p.A. controlling R101 radio.

The offer includes a period of exclusivity until maximum 20 September 2015.

The signing of the preliminary agreement is subject to the outcome of the due diligence and to the approval by the competent boards of the Mediaset Group.

The transaction, defined as a related party transaction, is subject to the provisions set out in Consob Regulation 17221 of 12 March 2010, as subsequently amended (“Consob Regulation”) and to the relative procedures adopted by Arnoldo Mondadori Editore S.p.A. and Mediaset S.p.A.

Arnoldo Mondadori Editore S.p.A. informs that it has submitted a binding offer to RCS MediaGroup S.p.A. to acquire the entire stake of RCS Libri S.p.A., equal to 99.99% of the share capital, as well as all the additional assets and activities comprising the books division of RCS MediaGroup. The offer was submitted within the terms of the exclusivity period, already disclosed to the market, started last 6 March 2015.

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

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

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

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

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

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

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

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

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

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

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

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

BUSINESS AREAS

• BOOKS

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

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

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

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

• MAGAZINES ITALY

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

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

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

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

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

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

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

• MAGAZINES FRANCE

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

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

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

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

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

• RETAIL

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

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

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

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

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

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

• RADIO

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

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

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

• DIGITAL

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

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

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

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

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

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

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

The Shareholders’ Meeting of Arnoldo Mondadori Editore S.p.A., held on today’s date and chaired by Marina Berlusconi, examined the 2014 consolidated financial statements, showing a positive net result of euro 0.6 million and approved the financial statements of Arnoldo Mondadori Editore S.p.A. at 31 December 2014. The Shareholders’ Meeting also resolved to entirely cover the year’s loss of the parent company – equal to euro 12,888,013.64 – through the utilization of reserves for an equal amount in accordance with the proposal made by the Board of Directors.

In his report, the CEO Ernesto Mauri illustrated the Group’s key highlights in 2014, as already communicated last 12 March 2015.

Moreover, the Shareholders’ Meeting resolved on the following items on the agenda:

APPOINTMENT OF THE BOARD OF DIRECTORS

The Shareholders’ Meeting appointed a new Board of Directors composed of the following members: Marina Berlusconi (Chairman), Ernesto Mauri, Pier Silvio Berlusconi, Oddone Maria Pozzi, Pasquale Cannatelli, Bruno Ermolli, Roberto Poli, Danilo Pellegrino, Alfredo Messina, Martina Forneron Mondadori, Marco Spadacini, Angelo Renoldi, Mario Resca and Cristina Rossello.

The Board of Directors’ composition complies with the provisions set out in Article 147-ter, par. 1- ter of Italian Legislative Decree No. 58/1998 in the matter of gender balance.

The curricula of the Board of Directors’ members are made available in the Company’s web site at www.gruppomondadori.it (Governance section).

The entire Board of Directors was appointed based on the only slate presented for the scheduled Shareholders’ Meeting, filed by the majority shareholder Fininvest S.p.A., and will remain in office for three financial years, until the Shareholders’ Meeting called for the approval of the financial statements at 31 December 2017.

The directors Martina Forneron Mondadori, Marco Spadacini, Angelo Renoldi and Cristina Rossello meet the requirements for independent directors set out in Article 148, par. 3, of Italian Legislative Decree No. 58/1998. It should be noted that the Board of Directors met after the Shareholders’ Meeting and verified that the aforementioned directors comply with the requirements for independent directors in accordance with the Governance Code of listed companies promoted by Borsa Italiana S.p.A. (“Governance Code”).

The Board of Directors confirmed Ernesto Mauri as CEO, vesting him with the relevant powers of management.

The Board of Directors also appointed the members of the following committees in compliance with the principles established by the Governance Code adopted:

• Control and Risk Committee: Angelo Renoldi (Chairman), Marco Spadacini and Cristina Rossello;
• Remuneration and Appointments Committee: Marco Spadacini (Chairman), Bruno Ermolli and Cristina Rossello;
• Committee for Related Party Transactions: Angelo Renoldi (Chairman), Cristina Rossello and Marco Spadacini.

Moreover, Oddone Maria Pozzi was confirmed Executive Manager responsible for the drafting of the corporate accounting documentation.

APPOINTMENT OF THE BOARD OF AUDITORS AND OF THE CHIEF STATUTORY AUDITOR

The Shareholders’ Meeting appointed a new Board of Auditors, composed of the following members: Ferdinando Superti Furga (Chief Statutory Auditor), Francesco Antonio Giampaolo e Flavia Daunia Minutillo (Standing Statutory Auditors); Francesco Vittadini, Annalisa Firmani ed Ezio Maria Simonelli (Substitute Statutory Auditors).

The Board of Auditors’ composition complies with the provisions set out in Article 148, par. 1- bis of Italian Legislative Decree No. 58/1998 in the matter of gender balance.

The curricula of the Board of Auditors’ members are made available in the Company’s web site at www.gruppomondadori.it (Governance section).

The entire Board of Auditors was appointed based on the only slate presented for the scheduled Shareholders’ Meeting, filed by the majority shareholder Fininvest S.p.A., and will remain in office for three financial years, until the Shareholders’ Meeting called for the approval of the financial statements at 31 December 2017.

RENEWAL OF THE AUTHORIZATION TO PURCHASE AND SELL TREASURY SHARES

Given the approaching expiry of the previous authorization resolved on 30 April 2014, the Shareholders’ Meeting renewed the authorization to purchase treasury shares up to a cap of 10% of its share capital. The Shareholders’ Meeting also authorized to sell the Treasury Shares acquired by the Company in compliance with Article 2357-ter of the Italian Civil Code.

During the period covered by the aforementioned authorization approaching its expiry, the Company did not buy treasury shares either directly or indirectly through subsidiaries. The Company sold the treasury shares in its portfolio through a private placement that was completed on 18 June 2014. Therefore, at the date of the Shareholders’ Meeting, the Company does not own any treasury shares either directly or indirectly through its subsidiaries.

Here below is the information provided relating to the purchase plan authorized by the Shareholders’ Meeting also with reference to the provisions of Article 144-bis of Consob Regulation No. 11971/1999:

1. Motivations

• to use the treasury shares purchased as compensation for the acquisition of interests within the framework of the Company’s investments;
• to use the treasury shares purchased against the exercise of option rights, including conversion rights, deriving from financial instruments issued by the Company, its subsidiaries or third parties and to use the treasury shares for exchange or transfer transactions or to support extraordinary transactions on the Company’s capital or financing transactions that imply the transfer or sale of treasury shares;
• to possibly rely on investment or divestment opportunities, if considered strategic by the Company, also in relation to available liquidity;
• to sell treasury shares against the exercise of option rights for the relevant purchase granted to the beneficiaries of the Stock Option Plans established by the Shareholders’ Meeting.

2. Maximum number of purchasable Treasury Shares
The authorization refers to the purchase of a maximum number of ordinary shares with a nominal value of euro 0.26 each up to a cap of 10% of the Company’s share capital. Considering that, as above indicated, the Company does not own to date, either directly or indirectly, treasury shares, the new authorization attributes therefore to the Board of Directors the power to purchase up to maximum No. 26,145,834 shares equal to 10% of the share capital.

3. Criteria for purchasing Treasury Shares and indication of the minimum and maximum purchasing cap
Purchases shall be made on the regulated markets pursuant to Article 132 of Italian Legislative Decree n. 58/1998 and Article 144 bis, par. 1, letter B of Consob Regulation n. 11971/1999 according to the operating criteria established in the organization and management regulations of the same markets, which do not allow the direct combination of the purchase negotiation proposals with pre-determined sale negotiation proposals and also in compliance with any additional applicable regulations.

The minimum and maximum purchase price is determined under the same conditions established by the preceding Shareholders’ Meeting authorisations and, therefore, at a unit price not lower than the official Stock Exchange price of the day preceding the purchase transaction, reduced by 20%, and not higher than the official Stock Exchange price of the day preceding the purchase transaction, increased by 10%.

In terms of daily prices and volumes the purchase transactions will be completed in compliance with the conditions established in Article 5 of EC Regulation n. 2273/2003, and, specifically:

• the Company shall not purchase treasury shares at a price higher than the higher between the price of the latest single transaction and that of the highest single bid traded in the regulated market in which such purchase takes place;
• in terms of daily purchase volumes, the Arnoldo Company shall not purchase a quantity of shares higher than 25% of the daily average volume of Mondadori Editore S.p.A. shares traded in the regulated market in the 20 trading days preceding the dates of purchase.

Any completed transaction shall be subject to disclosure pursuant to the terms and criteria set out in Article 87-bis of Consob Regulation No. 11971/1999.

4. Duration
The authorization to purchase treasury shares shall last until the approval of the financial statements at 31 December 2015 and in any case for a period not exceeding 18 months from the effective date of the resolution made by the Shareholders’ Meeting.

REMUNERATION REPORT

The Shareholders’ Meeting also provided its favourable opinion on the first Section of the Remuneration Report regarding the policy adopted for the 2015 financial year in the matter of remuneration to directors and executive managers with strategic responsibilities.

The minutes of the Shareholders’ Meeting shall be made available according to the criteria and terms established by law.