Corporate

Tomorrow sees the opening, in centre of Milan, of the new Mondadori Megastore in via San Pietro all’Orto 11. A place for encounters between people and with books where the buying experience becomes a voyage of exploration and discovery: as well as books, the core of the store’s assortment, visitors will also find a range of entertainment offers, services and a Café area.

 

The Megastore in via San Pietro all’Orto is the first example of bookstore with an innovative concept in the layout and a different formula in the assortment. The opening of this new outlet, alongside the Duomo and via Marghera stores in the city, is a continuation of the consolidation plan for the Retail activities of the Mondadori Group, which has the most extensive network of bookstores in Italy, with over 600 outlets around the country.

“The launch of the new format Megastore in San Pietro all’Orto is an important step in the development process of our activities in the Retail sector, one of our core businesses,” declared Ernesto Mauri, chief executive of the Mondadori Group. “We are leader in the book market and, for a publisher like us, being able to depend on a such an extensive chain of bookshops across the country is certainly an enormous strategic asset and a privileged way of being in direct contact with consumers, given that, every year, over 20 million people come into our stores and speak to us.” Mauri concluded.

 

 

“The development of the offer, the buying experience, the enhancement of the product, services and a comfortable environment: these are the key elements that have inspired us in the work of innovating the traditional bookshop and making it a model that enables us to get closer, and with greater frequency and satisfaction, to the worlds of culture and entertainment,” explained Mario Maiocchi, managing director of Mondadori Retail.

The design and layout of the Mondadori Megastore in San Pietro all’Orto was overseen with Mondadori Retail by the Milan-based design studio Migliore + Servetto Architects. On three levels and with a total floor space of 750 square metres, the store is characterised by a display system that with a light-touch design and rich chromatic feel and materials, highlights the real protagonists, books, which visitors are invited to touch, open and look through. A broad central staircase creates a vertical link between the three levels and leads the visitor through a ambience marked by the contemporary and the traditional where the red of Mondadori – the distinguishing element of the staircase and all of the signage – mixes with the green and the white of the metal fittings.

The design combines welcome areas with displays to create an innovative relationship with visitors who are free to move around according to their needs and interests. The Mondadori Megastore is a place to spend time and to return to, for those who love reading with comfortable chairs and a wide assortment that ranges from literature to comics and foreign-language books, organised as follows:

 

 

• the ground floor is home to the MARKETPLACE, with the most recent publications, stationery and gift box selections, as well as technology products, alongside a new customer assistance and after-sales service Help;

• the first floor is devoted to BOOKS&CAFÉ, where the store’s extensive book offer is located, with the Comics area and stationery store, as well as the Mondadori Café, developed along with Cibiamogroup, a leading company in quality fast food services: an area of encounter, inside the store, where adults and children, from 9 am until 11 pm everyday, will find selected products and simple recipes, all reflective of the best Italian tradition. The Café will also host meetings with authors and book presentations;

• the lower-ground floor also has a KIDS zone for children and teenagers: an area that brings together the physical and digital dimension thanks to touchwalls, designed to amuse and stimulate the imaginations of young readers through drawing and group games.

 

And the focus on the customer doesn’t end with the physical space of the Megastore, but also comes alive through an integrated system of digital services and tools linked to the web site Mondadoristore.it and, from today, with the new Mondadori Card app, available for both Apple and Android smartphones, which allows Mondadori Card holders to manage, even more conveniently than before, their profile and with the new store locator function, to receive information about events and initiatives in their nearest Mondadori store. Customers of the store will also soon be able to access the new book on demand service which offers readers a catalogue of over 7 million titles from across the world.

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.

Mondadori’s 2014 Report, drafted in accordance with the most up-to-date version (GRI-G4) of the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, including the Media Sector Disclosures, is approved by the Board of Directors.
On the basis of the current coverage of the General Standard Disclosures and the Specific Standard Disclosures, associated with material aspects, the “in accordance” option to the GRI-G4 standard as declared by Mondadori is “in accordance – core”.

Arnoldo Mondadori Editore S.p.A. informs that as of today’s date at the Company’s legal offices, at the authorized storage device 1info (www.1info.it) and on the Company’s website at www.gruppomondadori.it (Governance section) the following documents are made available:

– The 2014 annual report, including the Parent Company’s financial statements, the Group’s consolidated financial statements at 31 December 2014, the Directors’ Report on Operations and the Statements pursuant to article 154 bis, par. 5, of Italian Legislative Decree No. 58/1998;

– The reports from the Independent Auditors;

– The Board of Auditors’ report;

– The 2014 report on corporate governance and ownership structure;

– The remuneration report pursuant to article 123-ter of Italian Legislative Decree No 58/1998.

Arnoldo Mondadori Editore S.p.A. informs that the slates for the appointments to the Company’s Board of Directors and Board of Auditors, filed by Fininvest S.p.A. holding 50.399% of the Company’s share capital, along with the relevant documents required pursuant to Consob Resolution No. 11971/1999 and the Company’s By-Laws, are made available at the Company’s legal offices, on the authorized storage device 1Info (www.1info.it) and on the Company’s website www.gruppomondadori.it (Governance section).

Here below are the candidates indicated in the slates:

Candidates to the office of Director:

1. Marina Berlusconi
2. Ernesto Riccardo Mauri
3. Pier Silvio Berlusconi
4. Oddone Pozzi
5. Pasquale Cannatelli
6. Bruno Ermolli
7. Roberto Poli
8. Danilo Pellegrino
9. Alfredo Messina
10. Martina Forneron Mondadori (*)
11. Marco Spadacini (*)
12. Angelo Renoldi (*)
13. Mario Resca
14. Cristina Rossello (*)

(*) These candidates have declared that they fulfil the requirements for independent director.

Candidates to Statutory Auditors:

Standing Statutory Auditors:

1. Ferdinando Superti Furga
2. Francesco Antonio Giampaolo
3. Flavia Daunia Minutillo

Substitute Statutory Auditors:

1. Francesco Vittadini
2. Annalisa Firmani
3. Ezio Maria Simonelli

We remind herewith that the ordinary Shareholders’ Meeting for the appointment of the Board of Directors and Board of Auditors is called on 23 April 2015 (24 April on second call).

FAILED PUBLICATION OF THE MINORITY SLATES FOR THE BOARD OF AUDITORS

With reference to the slates for the appointment of the Board of Auditors, it should be noted that, pursuant to article 144-octies, par. 2 of Consob Resolution No.11971/1999, upon expiry of the final deadline (30 March 2015) only a slate from the majority shareholder Fininvest S.p.A. was filed.

Therefore, in compliance with the provisions set out in article 144 sexies, par. 5 of Consob Resolution No. 11971/1999, the deadline by which other slates for the appointment of the Board of Auditors may be filed has been extended to 2 April 2015 and the percentage for the filing of the slates has been reduced from 2.5% to 1.25% of the Company’s capital.

Arnoldo Mondadori Editore S.p.A. has announced that the notice calling the AGM to be held on 23 April 2015 (24 April on second call) and Directors’ reports on the following items on the agenda of the Ordinary Shareholders’ Meeting, are available at the Company’s registered office, as well at the authorised storage facility 1info (www.1info.it) and on www.gruppomondadori.it (in the Governance section):

– authorization for the purchase and sale of own shares, pursuant to the combined provisions of Articles 2357 and 2357-ter of the Civil Code;

– appointment of the Board of Directors;

– appointment of the Board of statutory Auditors for the financial years 2015/2016/2017.

The notice calling the AGM has been also published today in the newspaper specified in the notice.

Further documentation concerning the AGM will be made available in the manner described above, within the period foreseen by current legislation.

The meeting of 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 draft Parent Company and Group consolidated financial statements at 31 December 2014 presented by the CEO Ernesto Mauri.

2014 proved a turning point for Mondadori, with the confirmation of the positive outcome of the actions implemented in 2013 relating to the strategic rationalization of the portfolio of activities and the renewed definition of the Group’s industrial and organizational structure. Combined with the ongoing commitment on the reduction of operating and overhead costs these actions resulted in a significantly improved economic performance, giving Mondadori again the possibility to generate a positive cash flow with the objective, on one hand, to reduce the Group’s indebtedness and, on the other, to support the Group’s growth with appropriate resources.

GROUP PERFORMANCE AT 31 DECEMBER 2014

In 2014 consolidated net revenues totalled euro 1,177.5 million, down 7.7% against euro 1,275.8 million in 2013. On a like-for-like basis and considering the transfer of the advertising sales business unit to Mediamond S.p.A. completed in January 2014, consolidated revenues dropped by 4.6%.

Consolidated EBITDA was sharply up at euro 67.1 million against a negative value of euro 12.8 million recorded in the previous year. Also net of non-recurring items (which in 2013 impacted for approximately euro 62 million, mainly relative to restructuring costs), EBITDA was sharply up, by approximately 30%, climbing from euro 49.1 million in 2013 to euro 63.5 million in 2014. Group performance confirms recovered profitability and better efficiencies.

Consolidated net profit amounted to euro 42.4 million (euro -183.1 million in 2013).

The negative result recorded in 2013 referred to impairment losses for a total of euro 145.4 million following the alignment of assets and investments with currently applicable market values.

Consolidated profit before taxes was positive for euro 19.4 million against a negative result of euro -207.3 million in the previous year; in 2014 financial costs equalled euro 23 million (euro 24.2 million in 2013).

Consolidated net profit, after minority shareholders’ result, is positive for euro 0.6 million against a loss of euro 185.4 million in the past year.

The Group net financial position at 31 December 2014 was considerably up at euro -291.8 million against euro -363.2 million of 31 December 2013.

In 2014 the cash flow from operations was positive for euro 47.2 million (euro -28.7 million at 31 December 2013); the cash flow from core business operations (net of the payment of financial costs and taxes for the period) totalled euro 18.8 million (against a negative value of euro 64.1 million in 2013) as a result of improved profitability and optimized management of working capital.

Cash flow from extraordinary operations was positive for euro 52.6 million despite restructuring cost outlays (euro 20.3 million) and is attributed mainly to the increase in the Company’s capital and capital gain deriving from the transfer of a retail asset.

BUSINESS AREAS

• BOOKS

In the Book area the Group confirmed its leadership in Italy with a 26.5% market share in the trade market. The publishing schedule enabled the Group publishers to position four titles in the top ten bestseller rankings, including the first place of Storia di una ladra di libri by Markus Zusak (Frassinelli).

In the school textbook market Mondadori Education confirmed its third place with a market share equal to 13%, in line with the previous year.

Revenues in 2014 totalled euro 336.6 million, up 0.7% against euro 334.3 million recorded in 2013 as a result of the positive performance of the Educational area (+1.6%) and logistics activities on behalf of third publishers despite the reduction in the sales of trade products.

In 2014 EBITDA for the Book area amounted to euro 45.1 million, down 2.4% against the previous year, with a 13% margins on revenues.

In the Educational area profitability increased both in absolute terms and in percentage points, while the Trade area registered a reduction as a result of dropping revenues deriving from a different publishing schedule (the shifting of a more significant portion of the publishing schedule to the second half of the year did not compensate for the losses recorded in the first six months) and a different revenue mix resulting from a significant increase in logistics activities on behalf of third publishers, characterized by lower margins.

• MAGAZINES ITALY

Magazines Italy continued on the same positive trend of the first half of 2014, posting an even better performance in the segment of reference in terms of circulation and advertising sales. Mondadori is market leader with a market share currently equal to 31.3%.

In 2014 revenues totalled euro 297 million, down 8.9% against euro 326.1 million in 2013 (-7.6% on a like-for-like basis).

In particular:
– revenues from circulation (newsstands + subscriptions) decreased by 7.2% (-5% on a like-for-like basis); as to the newsstand channel only, the performance was better than the market of reference, which was down 8.2% ;
– revenues from advertising sales (print) decreased by 5.4%, but net of terminated and transferred magazines the reduction would be equal to 3.4% (against -6.5% of the market of reference; source: Nielsen); considering the positive performance of the digital area, advertising sales on Mondadori brands (print + web) dropped by 2.8% on a like-for-like basis;
– revenues from add-on sales (DVDs, CDs, books and gadgets distributed in attachment to magazines) dropped by 24.3% but showed increased margins mainly as a result of the implemented rationalization strategy and accurate selection of more profitable initiatives;
– revenues from advertising sales on Mondadori websites were up 4.1% on a year on year basis as a result of the positive performance recorded in particular by Grazia.it (+43.7%) despite a market of reference that increased by +2.1% against the previous year (source Nielsen, December).

EBITDA of Magazines Italy was slightly up in 2014 despite dropping revenues, increasing from a negative value of euro 20.6 million to euro +3.1 million, mainly as a result of the actions undertaken with reference to publishing products (including the focus on leading segments: Interior Design, Current News, Wellness, Cuisine, women’s magazines and TV; the launch of a new magazine and the restyling of other magazines), cost reduction policies targeting industrial, publishing and organizational costs and lower restructuring costs compared to 2013. If the positive effects of the re-organization of advertising activities are included, EBITDA improved by euro 39.5 million.

International activities (Mondadori International Business) generated increased revenues by approximately 4.1% against 2013, mainly as a result of the performance of Grazia International Network and Icon in Spain.

• MAGAZINES FRANCE

In terms of circulation, Magazines France again outperformed the market of reference, in particular thanks to the success of the sales of the magazines Top Santé, Pleine Vie and Closer.

Digital activities posted significant growth (+32% on a like-for-like basis) against the previous year; both revenues from on-line advertising sales (over 10% of total revenues from advertising sales) and web and mobile traffic data have increased significantly against the previous year.

In 2014 revenues of Mondadori France totalled euro 340.9 million, down 3.7% against euro 353.9 million in 2013; on a like-for-like basis, considering the transfer of Le Film Français completed at the end of 2013, the reduction would be equal to 2.8%.

In particular:
– revenues from circulation (newsstands and subscriptions) made for 70% of the total and posted a 1.7% reduction (-1% on a like-for-like basis); revenues from the newsstand channel were down by 5.1%, outperforming the -6.6% reduction registered by the market of reference (internal source), mainly as a result of the positive performance of the weekly magazine Closer (+3.8% in volume) and the monthly magazines Top Santé (+10% in volume) and Pleine Vie (+6.6%); revenues from subscriptions remained essentially in line with 2013 (-0.8%), confirming the need for strategic decisions for additional investments to be made in this channel;
– in line with the continuing downturn in the market, Mondadori France posted aggregate revenues from advertising sales (print + web) down by 9.1% against 2013 (-7.7% on a like-for-like basis). In this context, revenues from the digital area (over 10% of revenues from advertising sales) grew by 38% as a result of increased audience and a new commercial cross-media organization.

EBITDA was equal to euro 35 million, up by over 30% against euro 26.7 million of the previous year (impacted by restructuring costs for approximately euro 8 million), increasing margins on revenues from 7.5% to 10.3% in 2014.

Also in the period of reference actions targeting the reduction of organizational, industrial and logistic costs were continued and the resulting savings enabled the unit to entirely absorb the reduction in revenues and sustain company investments in publishing, digital and diversification activities.

• RETAIL

In the Retail Area, the Group continued to implement strategic actions to counter the negative market trend, targeting cost reduction and format and network revision in order to develop a new concept of bookstore for the future. The book category (making for 76% of in-store revenues) outperformed the market by over 7% with a market share equal to 15% (14% in 2013) and positive operating margins in 2014.

In 2014 the Retail area posted revenues totalling euro 211.2 million, down 6.1% against euro 225 million of the previous year.

The analysis by channel highlighted the following:
– the positive performance of directly managed bookstores (+4.5%) and the substantial stability of franchised bookstores (-1.2%) with increasing sales in the book category;
– some difficulties were registered by the megastores (-7%) mainly in relation to the reduction in consumer electronics;
– growth in the online channel (+4.1%) with particular reference to books, which posted a positive delta of over 10% against the market: +12.1% against -0.3% registered by the market (source: Nielsen).

In 2014 EBITDA for Mondadori Retail totalled euro 8.9 million against euro -8.5 million of the previous year. The yearly increase equal to euro 17.4 million is attributable to three main factors:
– the capital gain generated by the transfer of a store in Milan (equal to euro 9.3 million);
– increased operations which resulted in an EBITDA before non-recurring charges of euro 0.2 million, registering a positive value that, in addition to an improvement in net working capital, is evidence of the Group’s renewed ability to finance itself;
– lastly, reduced restructuring costs contributed an additional euro 7.7 million.

• RADIO

Despite the impact of the negative performance of advertising sales, the Radio area generated total revenues amounting to euro 11.7 million, up 3.3% against euro 11.3 million of the previous year, following the launch of the R101 TV channel last June, with a view to integrating TV activities with the radio and providing broad-spectrum entertainment programming.

In addition to the unfavourable performance of advertising sales, EBITDA (euro -4.4 million against euro -4.3 million in 2013) reflected higher promotion and communication costs borne for the restyling of the radio station started in the first months of 2014 and the costs sustained for the launch of the television channel, which were only partially mitigated by the implemented cost reduction actions targeted to the technical and artistic areas.

• DIGITAL

As to Digital Activities, actions continued to increase the team dedicated to business development. In this context reference should be made to the acquisition of Kiver, a digital marketing company, to enhance the Group’s presence in the segment of marketing services. Particularly significant in the view of the development of the digital activities was the acquisition of the LondonBoutiques.com marketplace, targeted to the launch, completed in November, of Graziashop.com, the global integrated e-commerce fashion platform of the Grazia brand.

Total revenues from purely digital activities aimed at increasing the value of the Group’s publishing products were up by 13% against 2013 with a 4.3% incidence on the Group’s total revenues. (3.9% in 2013).

PERSONNEL
Employees with a fixed-term or permanent labour contract employed by the Group companies at 31 December 2014 totalled 3,123 people, were down by 9.1% against December 2013 (-8.3% on a like-for-like basis.

Excluding non-recurring charges regarding the restructuring process and on a like-for-like basis, cost of personnel decreased by 6.2% against the previous year.

***

PERFORMANCE OF ARNOLDO MONDADORI EDITORE S.P.A.

The Annual Report of the parent company, Arnoldo Mondadori Editore SpA, for the year ended at 31 December 2014 shows a loss of euro 12.9 million, lower than the loss of the previous year (euro 315 million in 2013).

EBITDA, positive for euro 5.4 million (euro -59.2 million at 31 December 2013), benefited from a better business performance and lower restructuring costs compared to those sustained in 2013, following the organizational changes that led to the recognition of significant non-recurring charges.

***

FORSEEABLE EVOLUTION
Since 2013 the Company has implemented important optimization measures aimed at reducing operating costs and strategically rationalizing the portfolio of activities. The resulting positive outcomes – along with the improved performance of the business – enabled to achieve an EBITDA of €67.1 million and a positive net profit in 2014.

Based on the current market scenario and the actions mentioned above, which are expected to be continued in 2015, it is reasonable to expect a significant growth in the Group operating EBITDA in 2015; in parallel, the activities focused on non-core asset disposals will be carried on, which are estimated to generate an extraordinary contribution, basically in line with the value registered in 2014.

Consistently with the actions described above and notwithstanding the higher investments and eventual changes in the Digital Area, the Net Financial Position is also projected to improve against 2014 year end.

Based on the market trend and the latest performance of the business areas, it is reasonable to expect that revenues will grow by 0.5% to 1.5% in the 2015-2017 three-year span, an increase that is proportional to profitability (average annual growth of between 10% and 15%).

***

The Board of Directors of Arnoldo Mondadori Editore S.p.A. also aligned financial and non-financial disclosures by approving its 2014 Sustainability Report, drafted according to the GRI Guidelines, standard G4, based on the “in accordance” – core rating.

A summary of the Sustainability Report in line with the provisions contained in the 2014/95/EU directive adopted by the EU Parliament and Council on 22 October 2014 will be supplemented in the Annual Report; the complete document will be made available at the Shareholders’ Meeting.

***

RELEVANT EVENTS AFTER CLOSUREAppointments to the Board of Directors of Mondadori Libri S.p.A.
On 21 January 2015 the Board of Directors of Mondadori Libri S.p.A., composed of Ernesto Mauri, in his capacity as Chairman, Enrico Selva Coddè, Gian Arturo Ferrari, Antonio Porro and Oddone Pozzi, made the following appointments: Enrico Selva Coddè was appointed Managing Director of the Trade area; Antonio Porro was confirmed Managing Director of the Educational area and Gian Arturo Ferrari was appointed Vice President.

It should be noted that the following companies operating in the trade book, art and school text segments merged into Mondadori Libri S.p.A., which started operations on 1 January 2015: Edizione Piemme (100%), Giulio Einaudi editore S.p.A. (100%), Mondadori Education S.p.A. (100%), Mondadori Electa S.p.A. (100%), Sperling & Kupfer Editori S.p.A. (100%), Harlequin Mondadori S.p.A. (50%) – and the logistics company Mach 2 Libri S.p.A. (34.91%)

Non-binding expression of interest for RCS Libri S.p.A.
On 18 February 2015 the Company informed that RCS MediaGroup S.p.A. had been subjected to a non-binding expression of interest relative to a possible acquisition transaction of the entire interest owned by RCS MediaGroup S.p.A. in RCS Libri S.p.A. equal to 99.99% of the company capital as well as the additional assets and activities making up the RCS MediaGroup book repertoire.

On 6 March 2015 RCS MediaGroup S.p.A. granted the Company a period of exclusivity until 29 May 2015 in order to conduct an in depth analysis of the transaction terms and conditions.

***

The Board of Directors of Arnoldo Mondadori Editore S.p.A. called the Shareholders’ Meeting on Thursday 23 April 2015.

PROPOSAL TO COVER THE LOSS OF THE PERIOD BY USING AVAILABLE RESERVES
The Board of Directors will propose to the Shareholders’ Meeting called on 23 April 2015 in first call (on 24 April in second call) to entirely cover the loss of the period at 31 December 2014 equal to euro 12,888,013.64 by using the available reserves as follows:
– for euro 12,000,000.00 through the entire utilization of the share premium reserve built up as a result of the capital increase underwritten in the past year;
– for euro 888,013.64 by partially resorting to the available portion of the extraordinary reserve under item “Other reserves and result carried forward”;

***

RENEWAL OF THE AUTHORIZATION TO PURCHASE AND SELL TREASURY SHARES
Following the expiry of the preceding authorisation resolved upon by the Shareholders’ Meeting on 30 April 2014, with the approval of the financial statements at 31 December 2014, the Board of Directors will propose to the next Shareholders’ Meeting the renewal of the authorization to purchase Treasury Shares with the aim of retaining the applicability of law provisions in the matter of any additional re-purchase plans and, consequently, of picking up any investment and operational opportunities involving Treasury Shares.

The Shareholders’ Meeting of 30 April 2014, considering the shares already in portfolio, authorized the purchase of Treasury Shares up to a maximum of 10% of the share capital made up of No. 24,645,834 ordinary shares.

Considering the total of No. 14,953,500 shares already owned at the date of the Shareholders’ Meeting of 30 April 2014, the authorization enables the Company to purchase up to maximum another No. 9,692,334 Treasury Shares.

In relation to the authorization of 30 April 2014, Arnoldo Mondadori Editore S.p.A. did not proceed, either directly or indirectly through its subsidiaries, to purchase any Treasury Shares.

On 17 June 2014 the Board of Directors approved – by partially exercising the power attributed to it by the Shareholders’ Meeting of 30 April 2014 regarding the paid increase of the share capital – the allocation transaction on a total of maximum No. 29,953,500 ordinary shares with a nominal value of euro 0.26 each, which was completed through a private placement exclusively reserved to “Qualified Investors” in Italy and institutional investors abroad pursuant to currently applicable regulations.

The transaction described above – which was completed on 18 June 2014 – resulted also in the placement of No. 14,953,500 shares, equal to 6.07% of the share capital, owned by the company as treasury shares pursuant to article 2357 of the Italian Civil Code and, therefore, upon its completion the Company no longer owned treasury shares either directly or indirectly through its subsidiaries.

On the occasion of the next Shareholders’ Meeting the proposal for the renewal of the authorization to sell the treasury shares acquired by the Company will also be made pursuant to article 2357 ter of the Italian Civil Code.

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

• Motivations

The motivations underlying the request for the authorization to purchase and sell treasury shares refer to the opportunity to attribute to the Board of Directors the power to:
– use the Treasury Shares purchased as compensation for the acquisition of interests within the framework of the Company’s investments;
– 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;
– possibly rely on investment opportunities, if considered strategic by the Company, also in relation to available liquidity;
– sell Treasury Shares against the exercise of option rights for the relevant purchase granted to the beneficiaries of the Stock Option Plans established by the Shareholders’ Meeting.

• Duration

Until the approval of the 2015 financial statements.

• Maximum number of purchasable Treasury Shares

The renewed authorization will enable the Company to reach the cap of 10% of its share capital, in line with the previous authorization.

Considering that, as indicated above, the Company does not hold any treasury shares, either directly or indirectly, the authorization would refer to the purchase of maximum No. 26,145,834 treasury shares (10% of the share capital).

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

Purchases shall be made on the regulated markets pursuant to article 132 of Italian Legislative Decree n. 58 of 24 February 1998 and article 144 bis, paragraph 1, letter B of Consob Regulation n. 11971/99 according to the operating criteria established in the organization and management regulations of the same markets, which do not allow the direct combination of the purchase negotiation proposals with pre-determined sale negotiation proposals.

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

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

***

Today the management of the Mondadori Group will illustrate to the financial community the 2014 results, which have been approved by the Board of Directors on today’s date at 3:30 p.m. at the Four Seasons Hotel in Milan.

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

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

Upon CONSOB request, Arnoldo Mondadori Editore S.p.A. informs that it has submitted a non-binding offer to RCS MediaGroup S.p.A. to eventually acquire the entire stake held by RCS MediaGroup S.p.A. of RCS Libri S.p.A. share capital, equal to 99.99%, as well as all the additional assets and activities comprising the books division of RCS MediaGroup.

Arnoldo Mondadori Editore S.p.A. today announced, as per Art. 2.6.2 of the regulations governing markets organised and managed by Borsa Italiana S.p.A., the corporate events scheduled for 2015:

– Thursday 12 March 2015: meeting of the Board of Directors for the approval of the Annual Report for the year ended 31 December 2014;

– Tuesday 12 May 2015: meeting of the Board of Directors for the approval of the 1st Quarter Report to 31 March 2015;

– Tuesday 28 July 2015: meeting of the Board of Directors for the approval of the Interim Report to 30 June 2015;

– Thursday 5 November 2015: meeting of the Board of Directors for the approval of the 3rd Quarter Report to 30 September 2015.

The Annual General Meeting of the Shareholders for the approval of the Annual Report for the year ended 31 December 2014 will be held on Thursday 23 April 2015.

Analysts’ presentations of the results for the full year to 31 December 2014, the interim report to 30 June 2015 and the reports on the first and third quarters of 2015 will be held on the dates, as indicated above, of the respective meetings of the Board of Directors.

Any eventual changes will be promptly communicated to the market.