Arnoldo Mondadori Editore S.p.A. announces the finalization today of the sale of its subsidiary Mondadori France S.A.S. to Reworld Media S.A. in execution of the agreement signed and disclosed to the market last 19 April.

Following this transaction, the Mondadori Group completes a further phase on the path of strategic repositioning, with increased focus on the Books Area and the development of new areas of business.

The consideration from the transaction amounts to € 70 million (cash free/debt free), plus an earn-out of € 5 million, according to the terms disclosed last 24 July.

Concurrent to the completion of the sale of Mondadori France, Arnoldo Mondadori Editore S.p.A. today repaid in full the Credit Line B of € 100 million, stipulated on 22 December 2017 with a pool of three banks (Banca Popolare di Milano S.p.A., Intesa San Paolo S.p.A. and Unicredit S.p.A.) as part of the loan agreement expiring in December 2022.

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

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 22 to 26 July 2019, of no. 59,000 ordinary shares (equal to 0.023% of the share capital) at an average unit price of Euro 1.4917 for a total amount of Euro 88,012.10.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting on 17 April 2019 (previously disclosed pursuant also to art. 144 bis of Consob Regulation 11971/99, to art. 5 of Regulation (EU) 596/2014 and to art. 132 of Legislative Decree 58/98).

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

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

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no. 1,728,703 treasury shares, equal to 0.661% of the share capital and to 0.431% of the total amount of voting rights.

Purchases in detail in the complete pdf.

Arnoldo Mondadori Editore S.p.A. announces that today the sale of its subsidiary Mondadori France S.A.S. to Reworld Media S.A. has 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.

In this context, as an update to the announcement made last 18 February, the parties have agreed to supplement, as indicated in point (iii), the structure of the consideration from the transaction, which remains – as expected – of € 70 million (cash free/debt free), also adding an earn-out of € 5 million:

• 86% of the value of the investment – equal to € 60 million – will be paid in cash, € 50 million of which at the closing date, and € 10 million 24 months from the closing date; the deferred payment is not subject to any condition;
• the remaining 14% of the value of Mondadori France S.A.S., equal to a nominal value of € 10 million, will be paid through issue of no. 3,558,718 Reworld Media S.A. shares, to be subscribed by Arnoldo Mondadori Editore S.p.A. at a price equal to € 2.81 per share;
• Arnoldo Mondadori Editore S.p.A. additionally undertakes to subscribe – in the period from the closing date to 31/1/2020 – to a capital increase for a maximum amount of € 12.6 million in Reworld Media shares, at a price equal to the average of the closing trading price over the 20 days prior to the date of approval of the capital increase.

Following the subscriptions, Arnoldo Mondadori Editore S.p.A. is expected to hold an investment between 14% and 16% in Reworld Media S.A ; the estimated improvement in the Mondadori Group’s net financial position will be approximately €63 million, up versus the announcement made last 19 April.

As already disclosed to the market, completion of the sale is subject to the fulfilment of two conditions precedent:

• approval of the reserved capital increase by the shareholders of Reworld Media (referred to in point ii);
• provision of a bank loan, already authorized, to Reworld Media.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 15 to 19 July 2019, of no. 55,000 ordinary shares (equal to 0.021% of the share capital) at an average unit price of Euro 1.5403 for a total amount of Euro 84,715.40.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting on 17 April 2019 (previously disclosed pursuant also to art. 144 bis of Consob Regulation 11971/99, to art. 5 of Regulation (EU) 596/2014 and to art. 132 of Legislative Decree 58/98).

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

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

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no. 1,669,703 treasury shares, equal to 0.639% of the share capital and to 0.417% of the total amount of voting rights.

Purchases in detail in the complete pdf.

Smart working consists of carrying out work in a flexible manner in terms of time and place where it is carried out and presupposes a new organisational-managerial philosophy based on greater autonomy for workers, who can choose when and where to work, in the face of greater responsibility for results and priorities.

In Italy, there are about 460,000 smart workers, with a tendency to grow.
Of a sample of 183 Italian companies with more than 250 employees, 56% already have structured smart working programmes in place, 8% will introduce them within the next 12 months and 21% are interested in the subject.

With the company agreement signed last year, the Mondadori Group has committed itself to the development of a smart working project for all employees of the Grafici Editoriali contract, with the aim of promoting forms of work that combine private and professional life.

More than 30 colleagues from all areas of the company, after having received the necessary training to understand the implications and changes in mentality, but also operational and health and safety requirements, will experience agile work until December 2019: that is, they can work in a different location from the company from a minimum of 2 to a maximum of 4 days a month according to agreements made with their direct managers.

As demonstrated by the many similar experiences in Italian and foreign companies, the expected benefits are many and on both sides: higher productivity and better performance, increasing sense of responsibility and satisfaction, lower transport costs and CO2 emissions, better balance between private and working life, less stress.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 8 to 12 July 2019, of no. 55,000 ordinary shares (equal to 0.021% of the share capital) at an average unit price of Euro 1.5627 for a total amount of Euro 85,949.60.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting on 17 April 2019 (previously disclosed pursuant also to art. 144 bis of Consob Regulation 11971/99, to art. 5 of Regulation (EU) 596/2014 and to art. 132 of Legislative Decree 58/98).

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

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

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no. 1,614,703 treasury shares, equal to 0.618% of the share capital and to 0.403% of the total amount of voting rights.

Purchases in detail in the complete pdf.

Arnoldo Mondadori Editore S.p.A. informs that – with the ruling issued by the Court of Nanterre on 26 June 2019 – the Comité social et économique’s request to suspend the sale process of Mondadori France to Reworld Media has been deemed inadmissible.

Arnoldo Mondadori Editore S.p.A. also takes note of the decision of the Court of Nanterre dated last 11 July, following the appeal filed by the Comité social et économique of Mondadori France, and – through Mondadori France – will comply with the Court’s request to initiate, within the established time limit of 8 days, the annual information and consultation procedure of the Comité on the company’s strategic guidelines, pursuant to art. L. 2312-24 of the Labour Code.

This month Icon is launching a special edition dedicated to the world of cars and motorcycles: Icon Wheels, with interviews with protagonists, stories of success and the most iconic and desirable models. From supercars to SUVs: powerful, ecological or simply irresistible cars of fascination and distinction.

“With Wheels, the first special issue dedicated to the world of both four and two wheels, Icon begins what is set to be a series of brand extensions with the ambitious aim of vertically expanding and deepening its coverage of the male passions that remain the foundation of the magazine’s original promise,” explained Andrea Tenerani, editor of the Mondadori Group’s male lifestyle title. “The next stage on the journey begun by Icon in 2019».

Icon Wheels will be available on newsstands from 16 July with two different covers: the first featuring the Maserati Levante Trofeo V8, with its distinctive and captivating style, a symbol of Italian excellence, and the second featuring actor Ewan McGregor, a motorcycle enthusiast, and a veteran of two wheels, who talks about his passion for bikes.

Plus, exclusive interviews with some of the big names from the world of engines, such as Marquez, Dovizioso and Bautista, enriching the content of the magazine, along with a section dedicated to lifestyle, with the most exclusive bars and restaurants bar of the summer 2019, in both Italy and around the world.

The new Wheels will also be available on the web with a dedicated channel on iconmagazine.it, a complete digital guide to driving style.

Following the success of the June issue, which confirmed the Mondadori Group’s male lifestyle magazine as leader in the sector – with sales up by +19% compared with 2018 – Icon Wheels also recorded excellent results in terms of advertising, once again in marked contrast to the print media market and the up-market male segment.

Icon continues to grow also across social media, in particular on Instagram, with an increase in followers of more than 30% compared with the beginning of the year.

Arnoldo Mondadori Editore S.p.A. (LEI Code 815600049A1F9AFE6666) announces the purchase on the MTA (Electronic Stock Market), in the period from 1 to 5 July 2019, of no. 55,000 ordinary shares (equal to 0.021% of the share capital) at an average unit price of Euro 1.5573 for a total amount of Euro 85,653.56.

These transactions were made under the authorization to purchase treasury shares approved by the Shareholders’ Meeting on 17 April 2019 (previously disclosed pursuant also to art. 144 bis of Consob Regulation 11971/99, to art. 5 of Regulation (EU) 596/2014 and to art. 132 of Legislative Decree 58/98).

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

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

Following the purchases made so far, Arnoldo Mondadori Editore S.p.A. holds no. 1,559,703 treasury shares, equal to 0.597% of the share capital and to 0.389% of the total amount of voting rights.

Purchases in detail in the complete pdf.