Corporate

Telecom Italia and the Mondadori Group today signed an e-book distribution deal in Frankfurt, at a ceremony attended by Telecom Italia CEO Franco Bernabè and Mondadori Group Deputy Chairman and CEO Maurizio Costa.

As a result of this deal, Bibletstore Italy’s first digital bookshop opens for business today, offering over 1,200 e-books from the Mondadori publishing group.

Eight hundred titles from Mondadori, Einaudi, Sperling & Kupfer and Piemme’s back catalogue will be sold through Telecom Italia’s e-book store (www.biblet.it) along with over 400 new books published simultaneously in paper and electronic form.

Telecom Italia CEO Franco Bernabè declared: “We are particularly pleased about this deal with the Mondadori Group. It is a significant testament to our ability to innovate, which allows us to position the company as a driver of high-tech-led markets. Telecom Italia’s launch of Bibletstore spells the adoption of a new business model that differs from models adopted in other countries. Telecom Italia is developing this model in partnership with publishers, which retain the greatest possible freedom in terms of commercial positioning and setting price points.”

Maurizio Costa, Deputy Chairman and CEO of the Mondadori Group, stated: “The global transition currently underway in the book market, prompted by the uptake of new technologies, is set to have a significant impact also in Italy. Rapid mobile device growth will free reading. People will have more time to explore new content, which will lead to an increase in consumption in step with worldwide trends for increasing demand for information, learning and cultural entertainment. This partnership with Telecom Italia is a significant first step for the Mondadori Group’s leveraging of its publishing assets, which will also become available over the main platforms and devices available on the market.” Mr Costa concluded: “In the near future, our focus on the customer/reader will increasingly become our most precious resource. By sharing expertise with Telecom Italia, we will be able to offer our users an increasingly personalized service.”

Ken Follett’s latest novel, Fall of Giants, is one of the first new Mondadori books available on Telecom Italia’s e-book store shelves. Back catalogue titles from the Group’s publishing imprints include literary masterpieces by Jane Austen and Thomas Mann and recent bestsellers such as Jonathan Franzen’s The Corrections and Dan Brown’s The Da Vinci Code, along with books by leading lights on the contemporary book scene such as Philip Roth and Gabriel Garcia Marquez, and genre literary greats ranging from Agatha Christie to John Grisham. Also available are great thinkers of the past such as Descartes and Seneca, and more recent Italian and international non-fiction, as well as classic children’s books from Hans Christian Andersen’s Fables and the latest generation of children’s heroes such as Geronimo Stilton.

In a world first, the partnership between Telecom Italia and the Mondadori Group will see the launch this Christmas of three subscription-based themed e-book channels: high-brow lit, genre lit (thrillers and romance), and books for children. This new development will completely revolutionize the way readers are offered books. For a set monthly fee, readers will have access to a theme-based reading list. Subscribers can read as many books as they like from this list, one book at a time.

Telecom Italia’s dedicated new e-book platform will carry ePub and PDF format e-books protected by a Digital Rights Management (DRM) system to protect authors’ copyright.

Customers can, starting from today, buy e-books on Bibletstore from their PCs and pay by credit card. In the near future, TIM e-book readers will be launched that offer straightforward and direct access to the e-book store via 3G phone connection. Customers will pay nothing to browse the store, and will only be charged for the books they purchase. Using this method, payments will be accepted by credit card or by charging against credit on the SIM card. E-books may also be purchased and read using Olivetti’s OliPad, a new tablet that is being launched over the next few months, and on other devices that download dedicated applications free of charge.

From next week, Marco Casareto will be the new editor of the monthly magazine Geo.

Marco Casareto, 43, was born in Chelmsford, England. After studying physics at the University of Milan, he began freelancing for a number of magazines including, from 1993, Focus.

He joined the editorial staff of the Gruner+Jahr/Mondadori monthly three years later and in 2000 was appointed section chief with responsibility for coordinating the Focus Extra brand extension. Managing editor from 2002, in 2004 he became the coordinator of the new Gruner+Jahr/Mondadori title, Focus Storia, of which he became deputy editor in 2006 and editor in 2008. The same year he was appointed editor of Geo, a role he kept until November 2009, when he focused on the monthly Focus Storia and related editorial projects.

Following the launch of three new titles in 2010 (Wars, Biografie and Collection), Casareto today re-takes the helm at Geo.

Electa, a leader in art book publishing and museum services management, and Réunion des Musées Nationaux have drawn up an agreement for the creation of a 50-50 joint venture for the management of bookshop services at museums and archaeological sites owned by the Italian state.

Réunion des musées nationaux (RMN) – the biggest commercial operator in France and Europe in the culture sector, with revenues of over €100 million and over 1,000 employees, has a long-standing reputation for quality in the different areas in which it operates: publishing, sales, merchandising, exhibition organisation, picture agency and the valorisation of museum sites.

The French company is also the world’s biggest distributor of editorial products and gadgets, through the management of over 40 “librairies-boutiques”, including those at the Louvre and the other leading museums in Paris.

The newly-established company – Electa Rmn – aims to participate in all of the forthcoming bids for the management of bookshops in Italian state-owned museums and the creation of high-quality publishing and merchandising activities, which – thanks to the complementary experience and know-how of the two companies – makes it a qualified interlocutor for the valorisation of Italy’s historic artistic and museum assets.

“What is clear from the numbers is that there is a gap, in terms of best practice in museum services, between the offer in the Italian market and in other European countries,” explained Martin Angioni, managing director of Electa. “This is why, confident of the great potential for development offered by Italy’s outstanding historical and artistic heritage, Electa has decided to share with a partner, that we consider to be the best possible, the crucial transition for our sector,” continued Angioni.

“Access to a great store of knowledge and management skills and the opportunity of creating a system together with that of France, in general, and Paris in particular, gives a sense of the qualitative leap that our country can make in the so-called “additional services” sector, which is so strategic for our development. One figure is enough to illustrate the point. The Louvre, on its own, generates more bookshop revenues than all our museum bookshops put together,” concluded Angioni.

“Electa’s detailed knowledge of the Italian market, allied with Rmn’s experience as the world leader in museum bookshops, will enable Electa Rmn to make an attractive proposal for the valorisation of the extraordinary assets of Italy’s museums and archaeological sites,” claimed Thomas Grenon, managing director of Rmn.

Completion of the operation is subject to the necessary authorisation of the relevant authorities.

For more than 60 years Electa has played a dynamic role in the documentation and study of different areas of the visual arts. The company’s innovative editorial models, the quality of research, the unmistakable image and the great care taken in the preparation of reproductions are part of the history of illustrated publishing.

A success that has also led to an extensive network of co-editions with the world’s leading publishers in the sector and in the direct sales sector abroad, especially in the English-language markets.

Electa is currently the leader in the art and architecture sectors. But over the years the activities of the publishing house have expanded and it is now Italy’s leading player in the organisation of exhibitions and the management of museum services.

Réunion des Musées Nationaux is the world’s biggest commercial operator in the culture sector. In addition to the most important museums in Paris (Louvre, Musée d’Orsay, Grand Palais, Petit Palais, Musée Guimet, Musée du Quai Branly), it manages museum services and organises exhibitions across the whole of France (from Versailles to the Musée Cezanne in Aix-en-Provence).

Rmn is also part of the Louvre Abu Dhabi Project. In 2009 the company organised 28 exhibitions, including “Picasso et les Maîtres”, which, with 800,000 visitors and 94,000 catalogues’ sales, was one of the world’s biggest exhibitions of the year.

Paola Girardi has been appointed as the new editor of Casaviva from 2 November.

Girardi, born in Bari, she began her career at Mondadori, in 1982, in the graphic design area. She became a qualified journalist in 1985, and the following year she moved to Casaviva where she remained until 1989. From ’89 to ‘98 she was head of the design and layout department of Elle Decor (Edizioni Edif) before returning to Mondadori, to work on the weekly Grazia, where she worked also on the title’s supplements. In 2000 she was appointed editor of Sposabella (Condé Nast) and, after editing the travel magazine V&S (Edizioni Quadratum) from 2006 to 2009, she took the helm at Home (Hachette Rusconi), where she remained until now.

Casaviva is the leading title in the homes and furniture segment, in which Mondadori operates with a number of established titles that cover all of the circulation and advertising targets in the sector.

With a formula based on lifestyles, the evolution of tastes, the pleasures of the home and a constant update on production, Casaviva is an essential point of reference in the interiors market.

From 14 September Annalisa Monfreda will take over as editor of Cosmopolitan, the Italian edition of the world’s top-selling monthly, with 60 international editions, managed by the Hearst-Mondadori joint venture.

Annalisa Monfreda, 32, was born in Bari, and began working as a journalist in 1996. In 2002, after a Master in Journalism from the University of Urbino and an internship in the “home news” department of Corriere della Sera, she began a series of collaborations with different magazines. In 2004 she joined the staff of Gruner+Jahr/Mondadori working on the monthly title Geo. In 2008 she was appointed editor of Topgirl and in November 2009 became the editor of Geo.

Arnoldo Mondadori Editore S.p.A. has announced that the report for the period to 30 June 2010 is available, together with the independent auditor’s report, at the company’s corporate offices and Borsa Italiana S.p.A. The documents are also available on the Mondadori web site www.gruppomondadori.it (in the “Investor Relations” section).

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first six months of the year to 30 June 2010, as presented by the Group’s deputy chairman and chief executive, Maurizio Costa.

THE MARKET SCENARIO

In the current economic climate signals of a recovery in investments and industrial production have yet to be matched by a turnaround in consumer spending. Figures for the sectors in which Mondadori operates do, however, show that the slight recovery, which began in the first quarter, is continuing.

A BRIEF OVERVIEW OF THE PERFORMANCE OF THE MONDADORI GROUP

Mondadori’s results at the end of the first half of the year show consolidated revenues in line with the first six months of 2009. The figures also show that the company outperformed the market in almost all sectors of reference and generated a marked improvement in profitability.

These results have been achieved thanks to a series of factors that reflect the Group’s business approach:

• the sharp focus on the product and on readers’ needs that has always been a distinctive characteristic of Mondadori.
  Magazine circulation figures, once again better than the market, underline the importance of Mondadori’s constant commitment to a portfolio of titles that are points of reference in their respective sectors, both in Italy and in France;

• a capacity to maintain, at the highest international benchmark levels, the profitability of the Book Division.
  Despite a fall in revenues, due to a publishing schedule more focused on the second half of the year, the Division remains a pillar of the Group’s business portfolio;

• determination in the development of the Group’s leading brands, through its international network.
  Since first hitting the newsstands, almost one year ago, the success of Grazia in France is a demonstration of how the market can respond to products that stand out in terms of quality and content;

• a commitment to the pursuit of simplification in processes and structures aimed at ensuring a recovery of profitability from existing businesses and freeing up resources for new projects.
  In line with the declared objectives, the restructuring plan and various cost containment actions have generated significant results.

The technological changes currently affecting the media sector, with the explosion of different platforms for the distribution of and access to digital content, are changing consumer expectations, needs and models. Publishers consequently need to provide a concrete response to such changes, both in qualitative terms and with sustainable business models.

This is why, in the first half of the year, Mondadori has been engaged in intensive efforts:

• in books, to create the basis for agreements with different operators in order to make a vast selection of the books published by the Group, both new and backlist titles, available in digital formats;
• in magazines, to develop digital versions of the titles which make the most of the characteristics and potential of the new electronic devices and to provide a fresh impulse for the sale of advertising in the digital sector.

GROUP PERFORMANCE IN THE PERIOD TO 30 JUNE 2010

The highlights of the Group’s business results for the first half of the year are provided without reclassification, even if the figures for 2010 have been impacted by higher levels of development costs (mainly for Grazia France) and increased postal charges, imposed at the beginning of April.

Consolidated revenues to 30 June 2010 came to €726.8 million, essentially in line (-0.5%) with the €730.7 million recorded for the first half of 2009.

Consolidated gross operating profit to 30 June 2010 amounted to €54.6 million, an increase of 35.8% on €40.2 million in the previous year, despite taking account of, as indicated above, increased development costs and higher postal charges.

As a proportion of revenues this corresponds to 7.5%, compared with 5.5% for the same period of 2009.

Consolidated operating profit to 30 June 2010 totalled €42.8 million, an increase of 53.4% on €27.9 million in the first six months of 2009, with amortizations and depreciations of tangible and intangible assets for a total of €11.8 million (€12.3 million in 2009).

As a proportion of revenues, a rise from 3.8% in 2009 to 5.9%.

Consolidated pre-tax profit came to €30.8 million (+75% on €17.6 million in 2009), with increased financial charges of €1.7 million.

Consolidated net profit to 30 June 2010 amounted to €15.1 million, more than double the figure of €7.3 million for the same period of last year.

Gross cash flow in the first six months of 2010 totalled €26.9 million, compared with €19.6 million in 2009.

The net financial position went from -€372.9 million at the end of 2009 to -€393 million at 30 June 2010; compared with the same period of the previous year, this represents an improvement of €80.9 million.

Information regarding personnel

As of 30 June 2010 the number of people employed by companies of the Group (both on temporary and permanent contracts) totalled 3,757. On a like-for-like basis, the figure would be 3,525, excluding the staff of Mondolibri, consolidated since May (with a headcount of 232).

Compared with 31 December 2009 (3,750) there is clear evidence of the effects of the Restructuring Plan, above all in Magazines, with a reduction, on a comparable basis, of 225 people (55 of whom are journalists in Italy or France).

The implementation of the Plan will continue for the whole of 2010 and will be completed in the second half of 2011.

Finally, it should be noted that the CCNL labour contract for employees of printing and publishing companies has expired and has not yet been renewed.

RESULTS OF THE BUSINESS AREAS

• BOOKS

The Book Division recorded revenues for the first half of 2010 of €168 million, a fall of 8% on the €186.2 million of the same period of the previous year.

This was principally the result of changes to the publishing schedule for the most important titles, including the new novel by Ken Follett, La caduta dei giganti, which should be published in September.

Nielsen figures for the first six months of 2010 confirm the Group’s leadership in trade books, with a 26.3% share. The single publishing houses in the Division also confirmed their positions among the top ten in Italy: with Mondadori at the top of the list, with a market share of 13%; Einaudi with 5.4%, Piemme with 4.2% and Sperling&Kupfer with 2.2%.

During the first half of 2010 Edizioni Mondadori generated revenues of €55.5 million (-14.9%). Successful new titles published in the period included: Canale Mussolini by Antonio Pennacchi, which was published in March and went on to win the prestigious Strega prize; Il palazzo della mezzanotte by Carlos Ruiz Zafón (with sales of over 250,000 copies), consolidating his position among our key authors in the foreign fiction area; Il fattore Scarpetta by Patricia Cornwell, which sold more than 130,000 copies; La compagna di scuola (80,000 copies) by Madeleine Wickham, better known by her pseudonym Sophie Kinsella.

Of particular note were the results achieved by first-time author Alessandro D’Avenia with Bianca come il latte, rossa come il sangue which, in nine editions, has sold more than 100,000 copies, and La Malapianta by Nicola Gratteri and Antonio Nicaso, which has reached almost 100,000 copies. Also of note was the launch of the new Strade Blu Dark series, with the first two volumes of La Trilogia di Stoccolma by Jens Lapidus.

Mention should also be made, in general books, of the enormous success of the novel by Fabio Volo Il tempo che vorrei (which sold over 120,000 copies in 2010 alone, bringing total sales to 710,000 copies), and the Oscar editions of Gomorra by Roberto Saviano and La solitudine dei numeri primi by Paolo Giordano, both already among the bestselling paperbacks. In Children’s books there was a very positive response to the launch of the new Oscar Junior series, with sales of more than 300,000 copies for the first 35 titles.

Einaudi generated revenues of €23.8 million, a fall of 2.9% compared with the first half of 2009. This was the result of promotional initiatives carried out in 2009, but not repeated this year, that particularly benefited Stile Libero, in the bookshop channel, and the Meridiani and Valla series, in the instalments channel.

Stand out new titles in the first half of 2010 included La parola contro la camorra by Roberto Saviano (with sales of 105,000 copies) and Prima di morire addio by Fred Vargas (78,000).

Mondadori Electa generated revenues during the period of €16.3 million, down 11.9% on the same period of last year. There was a marked fall in book sales (-21%), which, net of the impact of add-on sales, translates as essentially in line with the first half of 2009. In general, given the ongoing difficulties facing illustrated books and art publishing, production levels continued to be strongly contained, with another sharp fall in the number of copies distributed.

There was also a fall in revenues in the Cultural Assets sector (-9%) due to lower sales from museum bookshops resulting from the termination of concessions at the Brera Museum and the Cenacolo in Milan and the Musei Civici in Venice.

However, during the period, two important acquisitions were made: the new Museum of the Twentieth Century in Milan (due to open in November 2010) and the Maxxi Museum in Rome, which opened to the public in May. Thanks also to an increase in the number of tourists visiting the country’s principal museums and monuments, in the organisation of exhibitions area in which the company is active, Mondadori Electa saw an increase in revenues compared with June 2009.

Sperling & Kupfer recorded revenues for the period of €13.9 million (-7.3%). This fall was mainly due to a reduction in the sale of rights for add-on sales initiatives. A total of 164 new titles were published during the period, compared with 187 in 2009, in line with the ongoing focus on the selection of titles for publication. Of particular note was the publication at the end of June of the new book by Sveva Casati Modignani, Mister Gregory, which immediately entered the Italian fiction bestsellers list and the first novels by two interesting new authors, Anne Fortier and Kate Morton.

Mondadori Education generated revenues during the period of €14.3 million (+0.7%). In the primary school area almost all of the adopted texts of last year have been confirmed, integrated with digital content for teachers, and there has been an increase in the range of extra-curricular materials, from which the company expects positive results. Catalogue sales continued to suffer in the first level secondary segment, while new titles achieved reassuring results, which augurs well for the future. Finally, the company confirmed its strong positioning in a series of subjects in the humanities in the second level secondary segment.

Edizioni Piemme ended the first half of 2010 with revenues of €24.2 million, an increase of 8.5% on 2009, thanks to the success of a series of commercial initiatives in the various sales channels and across all product lines.

In the fiction and non-fiction area new titles included Il sussurro della montagna proibita by Siba Shakib (47,000 copies sold). There was a slight fall in fiction sales compared with 2009, due to a reduction in supplies of titles by Khaled Hosseini, now available in paperback; while in Religion there was an excellent performance by A un passo dal baratro by Paolo Brosio (with sales of 60,000 copies since the beginning of 2010).

The Junior area saw an increase in sales compared with 2009 with varying trends: the brand Il Battello a Vapore saw revenues in line with last year, thanks to a range of well-established series, while the Stilton line saw a rise in revenues thanks to the publication of successful new titles.

• MAGAZINES ITALY

In the first half of the year the Italian magazine market was once again conditioned by the tail end of the crisis that affected both national and international publishers in the two-year period 2008 – 2009.

The impact was felt on the advertising front – with magazines struggling more than other media to turnaround a negative trend that has now lasted for almost two years – as well as circulation – where ongoing difficulties persisted in the first half of the year – and, finally, in add-on sales – where there was a further marked downturn.

All of which makes Mondadori’s performance in the first six months quite significant, both in terms of business performance (despite the negative impact of unexpected costs resulting from the cancellation of postal subsidies for subscriptions), and revenues.

The revenues generated by the Magazine Division in Italy in the first half of 2010 amounted to €250 million (-1% on €252.4 million in the same period of the previous year).

These results, after the sharp downturn recorded in 2009, were generated by Mondadori titles thanks to a series of factors:

• circulation revenues (-4%) that clearly outperformed the market, with a strengthening of the Division’s market share;
• an increase in revenues from add-on sales (+2.8%), in marked contrast to the market trend, where there was a fall of more than 30% (in terms of value to May). Underpinning this higher level of stability compared with the competition was the organisation of the business across different product types, the strength of certain brands and a careful selection of the initiatives;
• there was also a further moderate stabilisation in advertising revenues, decidedly more resistant (-1.7%) than the most qualified competitors, in a market that was down by 9.3%;
• revenues – particularly positive in the second quarter, almost in line with 2009 – benefited from a good performance by the weekly titles, while monthlies were decidedly weaker, with the exception of those titles currently being re-launched, including Grazia Casa, Interni, Casa Facile, Cucina Moderna and Panorama Travel.

The action taken by Mondadori in response to a still difficult market was organised along two main lines: the first aimed at reaping the benefits of the restructuring plan, and the second focused on sustaining the development of the product portfolio.

In terms of circulation, in a market which saw a downturn of 9.3% (in terms of volume to May), Mondadori confirmed and strengthened its leadership, with a market share of 35.8% at the newsstands; there was a slight upturn for Tu Style, with a stable circulation of around 200,000 copies, making it one of the best-selling women’s weeklies; both Chi and Donna Moderna performed well in their markets of reference; there was significant growth for Grazia; the new editorial formulas of Casa Facile and Interni; and satisfactory results for the monthlies Salute!, Oroscopo and Giochi, all of which are supplements to TV Sorrisi e Canzoni.

International activities

Thanks to the positive performance of the UK, Dutch and German editions of Grazia, licensing revenues increased in the first half of 2010 by 42%, while advertising sales in Italy for the network doubled, both thanks to the inclusion of new editions and an increase in revenues for existing titles, in particular in Russia, China and Great Britain.

The Attica subsidiary was affected by the financial crisis in Greece and the Balkans and saw a fall in advertising revenues of around 18% (-11% on a like-for-like basis). Energetic action is currently underway on the cost side, the results of which will be seen from the second half, with a positive effect on the company’s results.

• DIGITAL

There was a marked increase in online advertising and, in particular, display advertising was up by 11.6% compared with the same period of the previous year (source: Nielsen in terms of value, to May 2010).

Mondadori has created a new sales company, Mediamond, with a sales force dedicated to online advertising in order to improve the effectiveness of the offer. The decision to focus on the women’s market has already generated encouraging results and the new site of GraziaMagazine.it and the positive performance of DonnaModerna.com have given a new impulse to the sale of advertising on Mondadori sites.

• MAGAZINES FRANCE

The strategic decisions taken in France in 2009 – the launch of Grazia, the extension of the Editions Mondadori Axel Springer joint venture, and the review of the portfolio of titles – have had a favourable impact on the first half of 2010.

Mondadori France generated revenues of €168.4 million, a slight fall (-1.2%) on €170.5 million in the same period of 2009; excluding the titles sold and the contribution of Grazia France revenues were up by 6.6%.

Circulation revenues, which account for 70% of the total, were up by 2% on a like-for-like basis. The change is due to, on the one hand, a slight fall in newsstand sales, in a market that was down by 3% in May (internal figures, in terms of volume), and, on the other, to an increase in subscriptions, which make up an increasingly significant part of circulation revenues, which are less exposed to economic cycles. These results were obtained thanks to careful portfolio management, along with an ongoing focus on product quality.

The contribution of Grazia was of particular importance, raising the rate of growth, net of titles sold or transferred, to +5.3%

There was a marked improvement in advertising sales in the first half of the year compared with 2009. Mondadori France saw advertising sales increase by 21.2%, excluding the titles no longer consolidated, and by a total of 5.8%, thanks to the contribution of Grazia.

In a market that grew by 3.1% (Source: Kantar Media, in terms of volume, to May), thanks to the contribution of important new launches in the women’s weekly segment, Mondadori recorded growth of 22.7%, with a significant increase in the company’s market share, taking it close to the level of its direct competitor.

These results are even more positive if we remember that growth was generated in the high-margin upmarket segment, which now accounts for 22.4% of the advertising revenues of Mondadori France (6.5% in 2009).

The policy of cost reductions carried out over recent years continues also this year and, in addition to the restructuring, the project for the transfer of the company’s offices to new premises has taken on increasing importance. The move, to Montrouge, in the Paris metropolitan area, will take place in January 2011 and will have a positive impact in terms of costs, organisation and efficiency.

The extension of the Editions Mondadori Axel Springer joint venture, with the contribution of all of the company’s titles in the car sector, is already producing positive results, above all with the new formula of L’Auto-Journal, which, in the first five months saw 21.4% increase in circulation and interesting further developments are in the pipeline, particularly for the digital versions of the car titles.

The results of Grazia continue to be excellent – even after the launch of two competing titles (Envy and Be) – with an average of 29.5 advertising pages per issue and newsstand sales of 177,000 copies from the launch to the present.

• ADVERTISING

Advertising investments in Italy in the first five months of 2010 (Source: Nielsen – in terms of value) were up (+3.8%), but continued to show a varied capacity to react, both in terms of the speed and scale of recovery, by the different media as they emerge from different levels of crisis during 2009.

After the second quarter, the improved state of health of online and radio advertising was underlined, there was a progressive recovery in television, while in print media, magazines continued to suffer significantly (-9.3%) while newspapers remained essentially stable. There were however cautious signals of an improvement in investments in FMCGs and cosmetics, and, to a lesser extent in fashion and interiors.

Mondadori Pubblicità ended the first half with total revenues of €119.9 million, in line with 2009 on a like-for-like basis in terms of media (i.e. excluding online and newspapers, no longer in the portfolio in 2010). The marked changes in the breakdown of revenues, including the termination of the contract with Società Europea di Edizione S.p.A. in November, and the switch of online advertising sales from January to the new sales company, Mediamond, have had a negative impact in 2010 of around 5 percentage points.

During the first six months of 2010 sales for Mondadori magazines – characterised by an intense and focused policy of re-launches and an innovative range of technologically enriching activities – recorded a marked advantage compared with the main competitors, thanks to improved sales in the second quarter, with a slight fall compared with the first half of 2009 (-1.6%).

After a clear upturn (over 4.5%) in the second quarter, Mondadori weeklies recorded growth of 2.7%. There was a convincing and progressive consolidation in the women’s segment (particularly with Donna Moderna, Chi and Tu Style); a big success in terms of advertising for the re-launch of Panorama; and a performance that was below that of 2009 for monthly titles, in a market that remained somewhat “unconvinced” by this type of product.

In the radio segment, it should be underlined that R101 closed the first six months of 2010 with growth of 8.6%, compared with the same period of last year, thanks to a second quarter that was up by more than 12%. Meanwhile, sales for Radio Kiss Kiss, which began in March 2009, continued with constant success.

• DIRECT and RETAIL

Mondadori’s Direct & Retail Division generated total first half revenues in 2010 of €111.3 million, an increase of 18.9% on the €93.6 million on the first half of 2009.

It is worth remembering that the figures for last year did not include Mondolibri. Consequently, on a like-for-like basis, growth during the period was around 4%.

Investments in direct marketing in Italy were up by 5.8% in the first five months of the year (Source: Nielsen, in terms of value). In this context Cemit grew in line with the market, developing new opportunities in all of the sectors in which it has operated for years in the role of integrating processes for direct marketing and by expanding its market through a process of internationalisation.

In May 2010 Cemit was joined in the direct sales business by Mondolibri, which, with its six thematic book clubs, has around 800,000 members. Revenues from this business were down by around 6% compared with the first half of 2009, a period when the business was not consolidated.

Mondolibri is also one of the leading national operators in e-book sales, conducted through the web site Bol.it, where revenues were up by 43%, well above the trend in the market as a whole.

The revenues of the Retail Division, which since May include those generated by the outlets of Mondolibri S.p.A., were up by 6.4% (4.1% on a like-for-like basis) compared with the same period of the previous year. This increase was, however, substantially attributable to the development of the network, which now has a total of 564 outlets.

Mondadori Retail (33 own stores, bookstores and Multicenters) towards the end of the first half placed a special emphasis on redefining the offer of the Multicenter formula, making changes to the product mix and reviewing the lay out of the stores in order to make them more accessible.

Sales (+2.5% compared with the first half of 2009) grew sharply in stationery (+19.3%), performed very well for editorial products (+6.4%) and were stable for digital goods (-0.3%). Despite the opening of three new stores in Palermo, Rome and Turin, in the second half of 2009, there was an increase in staff of just 12, in line with the rationalisation policy implemented last year.

Mondadori Franchising generated revenues in the first half of €33.1 million, an increase of 6.8%, thanks to the expansion of the number of affiliates in the chain of book shops and the Edicolè formula (250 and 206 respectively).

Mondolibri, which operates 23 book shops directly and has 52 in franchising, generated May and June revenues (the period of consolidation) of €1.9 million.

• RADIO

In the first five months of the year the radio market grew by 14.6% compared with 2009, highlighting a trend of continuous growth and distinguishing itself as one of the best-performing media (Source: Nielsen, in terms of value).

Advertising sales for R101 during the first half of 2010 came to €7.6 million (+8.6%), with fewer special initiatives than in the same period of the previous year.

In terms of ratings, the new Audiradio survey rewarded R101, which in the first quarter of 2010 had a daily average of some 2.5 million listeners and 7 million over 21 days, an important breakthrough that confirms the Mondadori Group’s radio station as one of the leading national networks.

EXPECTATIONS FOR THE FULL YEAR

In the first six months of the year the volume of the Mondadori Group’s business was in line with that of the previous year, while, at the same time, there was a significant improvement in profitability, despite ongoing investments for the development of both the products in the international network and digital content, in the book and magazine sectors.

In addition to the positive revenue performance by the businesses, the company’s was also able to count on the increasingly effective containment of operating and structural costs. The only negative impact came from higher postal charges, after exceptional increases, from the beginning of April, resulting from the cancellation of state subsidies on the cost of postage for subscriptions.

It is therefore reasonable to suppose that, net of unforeseen circumstances and with ongoing stability in the trends in the company’s markets of reference, Mondadori will be able, for the full year, to further improve the already positive levels of operating profitability recorded in the first half.

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

Comlpete text (PDF) with enclosures

The Board of Directors of Arnoldo Mondadori Editore S.p.A. passed a resolution today at the proposal of the Remuneration Committee to assign for the year 2010 the options related to the Stock Option Plan set up by the Shareholders’ Meeting on 29 April 2009, with a duration covering the three years 2009/2010/2011.

In particular, the Board decided on allocation of a total of 1,800,000 options relating to 19 total beneficiaries, with a relevant reduction compared to the 47 beneficiaries identified for assignments 2009.

The Plan is set up on annually assigning to beneficiaries personal and non-transferrable options for purchase of ordinary Mondadori shares held by the company as treasury shares – in the ratio of one share (regular dividend rights) for every option exercised – at an Exercise price corresponding to the arithmetic average of the reference prices of the Mondadori share recorded during the period starting from the assignment date of the options back to the same day of the previous calendar month. Exercise of the options is allowed exclusively all together and at once, in the strike periods subsequent to the start date of the thirty-six month vesting periods.

With specific reference to the option assignments resolved today by the Board of Directors for the year 2010, below is the information required under Article 84 bis, paragraph 5 of the CONSOB Regulation no. 11971/1999 and subsequent amendments (the “Issuers Regulation”).

The information is also be available at the Italian Stock Exchange, the headquarters of the company and on the site: www.gruppomondadori.it, under the section Investor Relations.

The information is provided, where applicable, according to outline 7 of Attachment 3 A of the Issuers Regulation.

Complete text (PDF) with enclosures

From 1 September the Mondadori Group will create a Digital Department, managed by Vittorio Veltroni, who will report directly to the deputy chairman and chief executive Maurizio Costa.

The newly formed department will have the task of providing a new impetus in the development of Mondadori’s digital activities and efforts will be focused on two main areas. On the one hand, the valorisation – through technology, sites and digital platforms – of the company’s primary assets: its brands, content, authors, communities of readers and advertisers, in close association with its traditional business. And on the other, the general manager of the new department will be responsible for identifying new opportunities for growth in the digital area.

Vittorio Veltroni, 40, was born in Rome. He graduated in philosophy from Columbia University in New York in 1993. After taking a master’s degree, he completed a PhD in social and political science at the University of Cambridge, where he teaches political philosophy.

In 2000 Veltroni founded Goallars, of which he has been the chief executive, a company that supplies sports content for all digital media platforms (mobile, web and radio).

In 2006 Veltroni joined Vodafone where, until 2009, he was involved with content, multimedia services and mobile internet access. In April 2010 he was appointed director of all online services of Vodafone Italia.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the chairmanship of Marina Berlusconi, to examine and approve the interim report for the first three months of the year to 31st March 2010, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

The market scenario

After a protracted period of decline, in the first quarter there were still no clear signals of a turnaround. In many sectors, however, there was a slowdown in the fall in consumer spending and, in some cases, some encouraging indications of a recovery.

A brief overview of the performance of the Mondadori Group

In this context, in terms of profitability, Mondadori’s operating results continued the improvement that was recorded towards the end of 2009.

A significant part of the Group’s operating profit derived from cost reduction efforts – to which there is an ongoing commitment – making it possible to defend and, in some areas, improve the level of profitability of the businesses.

There was a slight downturn in revenues, but much less marked than in the previous year.

In terms of advertising spending, there was a sharp slowdown in the rate of decline and in some sectors there were important signs of recovery.

GROUP PERFORMANCE IN THE PERIOD TO 31 MARCH 2010

Consolidated revenues in the first quarter of 2010 amounted to €344.7 million, a fall of 2.8% on the €354.5 million of the first three months of 2009.

Consolidated gross operating profit came to €21.2 million, an increase of 49.3% on the €14.2 million of the previous year, despite increased investments for development.

Consolidated operating profit amounted to €15.7 million, up by 96.2% on the €8 million of the first quarter of 2009, with amortizations and depreciations of tangible and intangible assets for a total of €5.5 million (€6.2 million in 2009).

Consolidated profit before taxation amounted to €8.6 million, more than three times the €2.6 million of 2009 despite an increase of €1.7 million in financial charges deriving from the debt restructuring.

Consolidated net profit came to €2.4 million, compared with the loss of €1.8 million recorded in the first three months of last year.

Gross cash flow in the first three months amounted to €7.9 million, compared with €4.4 million in 2009.

In the art books segment Mondadori Electa recorded total revenues of €7.6 million, an 8.4% fall on the first three months of 2009; on a like-for-like basis, in other words net of revenues for the sale of rights for add-on sales operations, there would have been a slight increase (+0.4%) in total revenues.

There was a further improvement in the Group’s net financial position which went from -€372.9 million at the end of 2009 to -€357.2 million at the end of the first quarter of 2010. A positive balance, compared with the first quarter of last year, of €97 million.

Information regarding personnel

As of 31st March 2010, the personnel employed by companies of the Group (both on temporary and permanent contracts) amounted to 3,618 (3,750 in December 2009): a fall of 132 people, 70% of which resulting from the Restructuring and Early Retirement Plan, which is currently underway at the parent company and at Mondadori Pubblicità, and the remainder to the ongoing block on turnover and cost containment.

Compared with the first quarter of 2009 there was a reduction of 308 in the headcount.

RESULTS OF THE BUSINESS AREAS

• Books

The Book Division recorded revenues for the first quarter of 2010 of €80.1 million, a 10% fall on the €89 million of the same period of the previous year.

This shortfall was largely due to changes in the publishing schedule which, compared with 2009, foresees the publication of important titles after the end of the first quarter. These include the new book by Carlos Ruiz Zafón Il palazzo della mezzanotte, which was published in April and has already met with a good response.

During the first quarter of 2010, the Trade Books department announced a programme for the publication of more than 1,000 e-books for Christmas 2010.

Concerning the individual publishing houses, Edizioni Mondadori generated first quarter revenues of €28.7 million (-22.4%): a figure that was affected by a change in the publishing schedule which, compared with the previous year, is more concentrated in the second half.

Of note among the particularly successful titles was the new novel by Fabio Volo Il tempo che vorrei, published last year, which continued to sell extremely well in the first quarter, reaching total sales of 690,000 copies. New titles included: John Grisham’s Ritorno a Ford County (100,000 copies), Madeleine Wickham (alias Sophie Kinsella) with La compagna di scuola (75,000 copies) and the first novel by Alessandro D’Avenia, Bianca come il latte e rossa come il sangue (over 70,000 copies).

During the period the net revenues generated by Einaudi saw an increase of 7.4% compared with the previous year, reaching €13 million, despite a fall of almost 15% in the instalments channel.

Sperling & Kupfer generated revenues of €6.8 million, a fall of 17.1% compared with the first three months of 2009 which benefited from the good sales of Il gioco delle verità by Sveva Casati Modignani.

In the first three months of 2010 the revenues of Piemme amounted to €12.5 million, an increase of 4.2% compared with last year.

Mondadori Education generated in the first quarter 2010 revenues of €2.5 million, a slight improvement on the €2.3 million of the same period of the previous year, in a period of the year, which as usual has a minimal impact o annual revenues.

• Magazines Italy

In the first quarter of 2010, the Italian and international publishing world, while still conditioned by the crisis seen in 2009, began to show some pale signs of stabilising. This was mostly evident in the advertising area overall, while on the circulation front the first months of the year continued to be characterised by persistent weakness, heightened by a further marked downturn in add-on sales.

In terms of advertising sales, consumer magazines appears to be the segment that is finding it most difficult to regain growth: This was particularly true in January and February, while March and April have provided more encouraging signals.

In this context, the Magazine Division in Italy generated revenues of €123.4 million essentially in line (-0.7%) with the €124.3 million of the first three months of last year.

Performance during the period was determined by the following:

• a fall in circulation revenues (-4.3%) in a market that was down by 10.6% (in terms of copies);

• growth in revenues from add-on sales (+3.7%), in marked contrast to the market of reference (in terms of value, -32.5%);

• a limited fall (-4.1%) in advertising revenues, held up by sustained efforts by the sales staff that has added new clients to the portfolio and a range of innovative initiatives that have driven planning across integrated communication platforms including print, web and others (QR Code, Video In Print, Augmented Reality).

Of particular note during the period:

• the re-launch of Interni, Casa Facile, Panorama Travel and Grazia Casa, monthlies that have seen a positive reaction, above all on the circulation side;

• promotional support activities for a number of weeklies that contributed to stabilising circulation and advertising revenues;

• editorial revisions conceived for the re-launch of some core titles (Panorama, Tu Style and Chi), planned for the coming months.

It should be noted that at the end of March the government suspended the long-standing practice – common also in many other European countries – of allowing publishers to take advantage of reduced postal rates for subscriptions. If new measures, that all publishers are pressing for, are not introduced in the short term, this will lead to a 100% increase in postal tariffs , putting additional pressure on the subscription channel.

International activities

In the first three months of the year licensing revenues were up by 24%, thanks to the good performance of the UK and Dutch editions of Grazia and the launch of the magazine in Germany. During the period there was also a doubling of advertising revenues, thanks to new international editions and due to the very negative first quarter of 2009.

With regard to the joint ventures, the activities in Russia and China performed decidedly better than last year, particularly in terms of advertising sales.

The subsidiary Attica began to feel the effects of the financial crisis in Greece with a fall in advertising revenues of around 9% (-2.5% on a like-for-like basis); and the performance in the Balkans continued to be very negative, compared with the first quarter of 2009 in which the negative impact of the crisis had still not been felt.

Digital

In the first quarter of the year, the online advertising market expanded by 3% (in terms of value, source Nielsen). In this context, the organisation of a dedicated sales force with the new sales company Mediamond, and the launch of Graziamagazine.it have given a particular push to online ad sales (+30%); the Group’s web sites for women are also outperforming the market, in particular Donnamoderna.com and Cosmopolitan.it.

Efforts to concentrate resources specialised in digital ad sales have led to an increase in the share attributable to the sales company. This reduces net advertising revenues attributable to the publisher to +13%.

• Magazines France

Mondadori France generated first quarter 2010 revenues of €81.1 million, a 3% fall on the same period of the previous year. A correct evaluation needs to take account of changes in the business in France due to the closure and sale of some titles (some contributed to the EMAS joint venture) and the launch of Grazia, at the end of August 2009. On a like-for-like basis (excluding the titles sold or closed and the launch of Grazia France) revenues would be essentially in line with last year.

Circulation revenues, which account for around 75% of the total, were up by 1.2% (+4.5% on a like-for-like basis), thanks to good results by the magazines, including Biba, Modes&Travaux, Sciences&Vie. In addition to stable newsstand sales there was also a positive result from subscriptions, an increasingly important component of circulation revenues, which is also less exposed to economic volatility.

Revenue growth was the result of the strategic decision by the company to concentrate the portfolio on core titles, as well as a policy of continuous improvement of editorial quality. Of particular importance was the contribution of Grazia, which would up the increase, net of the titles no longer part of the portfolio, to +7.8%.

During the first quarter there was a marked upturn in advertising sales for Mondadori France titles compared with 2009: revenues were up by +4.2%, net of the titles no longer in the consolidation area and with the contribution of Grazia, also thanks to growth in the up-scale segment, which now accounts for 21% of total advertising sales (7% in 2009); total revenues were down by 9.3%.

Compared with the market of reference, which recorded growth of 3% in the first quarter, Mondadori France saw an increase in volumes of 6% (source: reclassified data from Kantar Media).

The cost reduction policy introduced by Mondadori France in recent years, continues also in the current year and, in addition to reorganisation, further savings will accrue from other actions. Among these is an important project for the transfer of all the company’s headquarters to Montrouge in the Paris metropolitan area at the beginning of 2011. This will not only lead to cost savings, but also to other organisational and operational efficiencies.

The expansion of the joint venture with Axel Springer, to which all of the titles in the auto sector have been contributed, has already brought positive results, above all for the new formula of L’Auto-Journal which, from the first issues, has seen a rise in circulation. Further interesting developments are planned in the short term, particularly for the online versions of car magazines

The results of Grazia, even after the launch of two competing titles (Envy and Be), continue to be excellent, with an average over the quarter of 27 advertising pages and newsstand sales of 175,000 copies.

• Advertising

During the first quarter of 2010, felt the weight of significant changes, including the loss, from November 2009, of the titles published by Società Europea di Edizioni (Il Giornale and its supplements) and the transfer, in January 2010, of online sales to the new joint venture Mediamond.

In this context, the revenues of the company in the first three months of 2010 amounted to €49.4 million, a fall of 4.4% on the €51.7 million of the same period of the previous year.

In the context of magazines, sales for Mondadori titles alone were down by 2.9% on the first quarter of 2009, with the weeklies proving stable thanks to the positive performance of the women’s titles.

In radio, ad sales for R101 were slightly up on those of the first quarter of 2009 and activities on behalf of Radio Kiss Kiss, begun in the first months of 2009, continued successfully.

• Direct Marketing

During the first quarter of 2010 Cemit generated revenues of €5.1 million, an increase of 6.3% on the €4.8 million of the same period of 2009, despite a market for direct mail investments that is continuing to decline. During the period the company continued its development and diversification activities for direct communication projects, also with an opening up of foreign activities, and improvements in the quality of processes.

• Retail

Total revenues from the Retail Division amounted to €44.4 million, a 6.2% increase on the €41.8 million of the first quarter of 2009, thanks to a stable performance by the network and partly due to new openings. During the period action continue to contain management costs in order to minimise the impact of a prolonged crisis in consumer spending that shows no sign of coming to an end.

The 32 stores directly managed by Mondadori Retail recorded sales in the first quarter of €27.1 million (+1.1% on the first three months of 2009).

Mondadori Franchising generated revenues of €17.3 million, a 15.3% increase on 31st March 2009, thanks to the development of the bookstore and Edicolè chain, which in the period rose to 456 outlets.

• Radio

R101 generated first quarter 2010 net revenues of €3.1 million, an increase of 3.3% on the €3 million of the same period of the previous year. In the first two months, advertising sales were up by 11.2%, in line with the market; the downturn in March was entirely due to the absence, of a significant special initiative that was a feature of 2009.

EXPECTATIONS FOR THE FULL YEAR

The situation in the markets of reference for the Mondadori Group in the first quarter of the year appear better compared with the end of 2009. In particular, advertising investments have seen improvement in the negative trend and, in some sectors, there has even been a turnaround.

Nevertheless, short-term visibility remains unclear, making it impossible to predict when a solid recovery will get underway. In any case the company is continuing with its organisational restructuring and qualitative investments on products, aimed at improving profitability and defending volumes, maintaining levels that are above the benchmarks.

As regards forecasts for the full year, in the light of the results of the first months, it is possible to restate that, provided there are no unforeseen circumstances, the company expects that the confidence already expressed during the presentation of the 2009 Annual Report, concerning the ability of Mondadori to improve its level of profitability compared with last year, to continue.

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

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The report for the first quarter of 2010 will be available, as per current legislation, at the company’s corporate headquarters, Borsa Italiana S.p.A. and on the web site www.gruppomondadori.it from today