Price sensitive

The Annual General Meeting of the Shareholders of Arnoldo Mondadori Editore S.p.A., which met today under the Chairmanship of Marina Berlusconi, approved the company’s balance sheet for the year ended 31 December 2008 and deliberated, in line with a proposal resolved by the board of directors on 25th March, to allocate the entire net profit for the year, amounting to €66,197,031.51 to the company’s extraordinary reserve.

The decision not to distribute a dividend for 2008 was taken with a view to allowing Mondadori to maintain its financial solidity, maintain investment levels in its core business, finance the process of reorganisation and leave the company in a position to be able to seize eventual opportunities emerging from a recovery in the economic cycle.

In his report to the shareholders, the deputy chairman and chief executive Maurizio Costa outlines the highlights of the group’s performance, already announced on 25 March.

The Shareholders also passed resolution on the following:

NOMINATION OF THE BOARD OF DIRECTORS

The shareholders confirmed the re-nomination of the entire board of directors, which comprises Marina Berlusconi (chairman), Maurizio Costa, Piersilvio Berlusconi, Pasquale Cannatelli, Bruno Ermolli, Martina Mondadori, Roberto Poli, Mario Resca, Marco Spadacini, Umberto Veronesi and Carlo Maria Vismara.

The entire board of directors was elected on the basis of the only list submitted to the AGM and presented by the major shareholder Fininvest S.p.A.

The board will remain in office for three years until the approval of the annual report for the year ending 31 December 2011.

In the context of the directors nominated by the Shareholders, as per art. 148, para. 3 of legislative decree 58/1998, the following qualify as independent directors: Martina Mondadori, Mario Resca, Marco Spadacini and Umberto Veronesi.

Subsequent to the AGM, the board met also to verify that the aforementioned directors Martina Mondadori, Mario Resca, Marco Spadacini and Umberto Veronesi are also in possession of the requisites of independence laid down by the Corporate Governance regulations for listed companies.

The board of directors confirmed Maurizio Costa in his role as deputy chairman and chief executive, attributing to him all the relative executive powers.

The board also confirmed Mario Resca, Bruno Ermolli and Marco Spadacini as members of the Internal Control Committee, and Bruno Ermolli, Roberto Poli and Marco Spadacini as members of the Remuneration Committee. Carlo Maria Vismara was also confirmed in his role as the executive responsible for overseeing the preparation of the company’s accounts and financial statements.

NOMINATION OF THE BOARD OF STATUTORY AUDITORS AND ITS CHAIRMAN

The board of statutory auditors nominated by the AGM for the three-year period 2009-2011 is made up of Ferdinando Superti Furga (chairman), Francesco Antonio Giampaolo e Franco Carlo Papa (acting statutory auditors), and Ezio Maria Simonelli and Francesco Vittadini (substitute statutory auditors).

The entire board of statutory auditors was elected on the basis of the only list submitted to the AGM and presented by the major shareholder Fininvest S.p.A.

RENEWAL OF AUTHORISATION FOR THE ACQUISITION AND UTILISATION OF COMPANY SHARES

Following the expiry of the term fixed for the authorisation issued at the Annual General Meeting of 22 April 2008, the shareholders renewed authorisation to effect share buy-backs, up to the limit of 10% of the share capital. The shareholders also authorised, as per Art. 2357 of the Civil Code, the use of shares involved in such buy back operations or already in the company’s portfolio.

On the basis of the authorisation that has now expired, Mondadori made no acquisitions of company shares, no did it conduct any transactions involving treasury stock, given that the conditions foreseen by the previous buy-back programme were not satisfied.

By taking account of the shares previously in the portfolio, the total number of shares comprising treasury stock is 20,097,587 (7,747% of the share capital), of which 15,580,101 are held directly in the Arnoldo Mondadori Editore S.p.A. portfolio and 4,517,486 are held by the subsidiary Mondadori International S.A.

In line with the provisions of art. 144 bis of Consob regulation 11971/1999, what follows is an outline of the buy-back programme authorised by the Shareholders:

1. aims and underlying motivation

– use company shares for the exercise of options for the purchase of shares assigned to participants in the stock option plans put in place by the shareholders;

– use company shares, either bought or in the portfolio, for the exercise of rights, including conversion rights, deriving from financial instruments issued by the company, its subsidiaries or third parties;

– use company shares, either bought or in the portfolio, as part or whole payment in any eventual acquisitions or equity investments that fall within the company’s stated investment policy;

– take advantage, where and when considered strategic for the company, of investment opportunities, also in relation to available liquidity.

2. Cap on the number of shares that may be bought

The authorisation requested applies to the limit of 10% of the company’s share capital, corresponding to 25,942,983 shares.

Given that the company currently holds a total of 15,580,101 shares and that a further 4,517,486 shares are held by the subsidiary Mondadori International S.A. – making a total of 20,097,587 shares, or 7.747% of the share capital – the new authorisation gives to the board the faculty to buy a back a further 5,845,396 ordinary shares, corresponding to 2.253% of teh share capital.

3. Method of acquisition and the price range

Buy backs would be effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99, according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.

The corresponding minimum and maximum price of sale will therefore be determined at the same conditions that applied to previous authorisations agreed by the Shareholders, i.e. at a unit price not less than the official market price on the day prior to any operation, less 20%, and not more than the official market price on the day prior to any operation, plus 10%.

In terms of price and daily volumes, acquisition operations will in any case be conducted in line with the norms foreseen by the EU regulation 2273/2005, in particular:

– the company will not buy shares at a price greater that the highest price of the last independent operation and the price of the highest current independent offer on the regulated market where the acquisition is made.

– in terms of daily volumes, the company will not purchase a quantity greater than 25% of the average daily volume of Mondadori shares traded on the regulated market and calculated on the basis of the average daily volume of trading of Mondadori shares in the 20 trading days prior to the dates of purchase.

Any operations that are effected will be communicated to the market as per the terms of art. 87bis, of Consob regulation 11971/1999.

4. Duration

This authorisation will remain valid until the approval of the Annual Report for the year to 31 December 2009, and in any case for a period of not more than 18 months from the date of the shareholders’ approval.

STOCK OPTION PLAN FOR THE THREE-YEAR PERIOD 2009-2011

Following the expiry of the Stock Option plan for the previous three-year period 2006-2008, the shareholders approved a Stock Option Plan for the three-year period 2009-2011, in conformity with the conditions communicated to the market on 9 April, as per art 84 bis, para. 1 of Consob regulation 11971/1999.

RENEWAL OF POWERS ATTRIBUTED TO THE BOARD OF DIRECTORS

In extraordinary session, the shareholders approved, following the expiry of the powers to the board of directors attributed for a period of five years by the shareholders at the AGM of 2004, to renew such powers to the board, with the faculty to resolve capital increases and the issue of convertible bonds, as per artt. 2443 and 2420 of the Civil Code.

Such powers, in line with those previously attributed and now expiring, will be for a period (of the legal limit of five years) and for total maximum amounts (respectively of a nominal €78 million for capital increases and a nominal €260 million for convertible bonds).

§

The company’s balance sheet for the year ending 31 December 2008 approved by the Annual General Meeting of the Shareholders, the consolidated balance sheet for the year ending 31 December 2008, along with other documentation supplied in conformity with art. 77 of Consob regulation 11971/1999, will be made available from today at the company’s headquarters, at Borsa Italiana S.p.A. and on the web site www.gruppomondadori.it. The minutes of the Annual General Meeting will be available by 13 May.

Arnoldo Mondadori Editore S.p.A. has announced, as per Art. 144 octies, para. 2 of Consob Regulation 11971/1999, that at the expiry of the term for the presentation of lists for the nomination of the Board of Statutory Auditors (14 April 2009) the only list presented was that by the majority shareholder Fininvest S.p.A.

As a result, in line with the provisions of Art. 144 sexies, para. 5 of Consob Regulation 11971/1999, the term within which other lists for the nomination of the Board of Statutory Auditors may be presented at the corporate offices of Arnoldo Mondadori Editore S.p.A. (via Bianca di Savoia 12, Milan) has been extended to 19 April 2009; the percentage for the presentation of lists has been reduced from 2.5% to 1.25% of the share capital.

Introduction

After the expiry of the stock option plan for the previous three-year period, 2006/2007/2008, on 25 March 2009 the Board of Directors of Arnoldo Mondadori Editore S.p.A. resolved, at the suggestion of the Remuneration Committee, to submit the creation of a Stock Option Plan for the three-year period 2009-2011 (the “Plan”) to the Ordinary Shareholders’ Meeting for approval.

The new three-year Plan submitted to the Meeting for approval takes the form of the assignment to the recipients, during each year in its life, of personal and non-transferable option rights that can be exercised in the ratio of one share for each option exercised in order to buy the Company’s own ordinary shares.

This Information Document is drawn up in accordance with Article 84 bis, paragraph 1, of Consob Regulations 11971/1999 as subsequently amended (the “Issuer Regulations”).

This information is provided, where applicable, in accordance with model 7 of Annex 3A to the Issuer Regulations. As fully specified in the Information Document, some aspects related to the implementation of the Plan will be defined by the Board of Directors in the performance of the delegated powers that the Company’s Shareholders’ Meeting is called upon to vest in it.

After the decisions that the Board of Directors takes in order to put the Plan in hand, provided that the resolution creating it is approved by the Shareholders’ Meeting and in conformity to the general criteria laid down in the said resolution, the consequent information will be provided in the manner and within the times prescribed in Article 84 bis, paragraph 5, of the Issuer Regulations. Specifically, Table 1 to the said model 7 of Annex 3A of the Issuer Regulations will be published when the resolutions regarding the actual assignment of the Options to the beneficiaries of the Plan are adopted.

The Ordinary Shareholders’ Meeting to approve the creation of the Stock Option Plan is convened on 29 April 2009 in first call and on 30 April 2009 in second call.

DEFINITIONS

The following terms used in this Information Document will have the meanings set out below:

“Assignments”: the allocations of Options for the Beneficiaries to be resolved by the Board of Directors in the performance of the delegated powers vested in it by the Ordinary Shareholders’ Meeting;

“Treasury Shares”: ordinary Arnoldo Mondadori Editore S.p.A. shares with a value of 0.26 euro each, traded in the blue chip segment of the On-Line Stock Market, held as Treasury Shares by the Company as per Article 2357 of the Italian Civil Code;

“Beneficiaries”: persons to be selected as assignees of the Options by the Board of Directors from the categories specified in the Shareholders’ Meeting that creates the Plan;

“Options”: personal, non-transferable rights that the Board of Directors is to assign to the Beneficiaries, which may be exercised to buy Treasury Shares in the ratio of one share with normal dividend rights for each Option exercised;

“Periods of Exercise”: the periods starting from the expiry of the vesting period after the Assignments of the Options during which the exercise of the Options is allowed;

“Plan”: The Stock Option Plan lasting over the three-year period 2009/2010/2011, submitted for the approval of the Company’s Shareholders’ Meeting called on 29/30 April 2009 in accordance with Article 114 of Legislative Decree 58 of 24 February 1998;

“Exercise Price”: the price at which the Beneficiaries pay for Treasury Shares exercising each Option that has been allocated to them. The Exercise Price is set by the Board of Directors having regard to the arithmetic mean of the reference prices of Mondadori shares recorded during the period starting from the date on which the Options are assigned back to the same day of the previous calendar month.

“Company”: Arnoldo Mondadori Editore S.p.A., with registered office at Via Bianca di Savoia 12, Milan.

1. 1. Beneficiaries

1.1 Names of the beneficiaries who are members of the board of directors or of the managing committee of the issuer of the financial instruments, the issuer’s controlling companies and the companies directly or indirectly controlled by the issue

1.2 Categories of employees or collaborators of the issuer of the financial instruments and of the companies controlling or controlled by the issuer

The Plan is intended for persons to be selected from the following categories by the Company’s Board of Directors at the proposal of the Remuneration Committee:

– executives of the Company and its subsidiaries that have key roles in the attainment of the Mondadori Group’s strategic objectives;

– Directors of the Company and its subsidiaries;

– journalists employed by the Company and its subsidiaries who are editors and co-editors of newspapers and periodicals;

– executives of the parent company in managerial positions carrying out functions on behalf of the Company.

The Plan is such as to be considered “on a particularly large scale” in accordance with Article 114 bis, paragraph 3, of Legislative Decree 58/1998 and Article 84 bis, paragraph 2, of the Issuer Regulations, inasmuch as “relevant persons” may consequently also be selected that fall under the categories specified in Article 152 sexies, paragraph 1, sections (c) (1) and (c) 2 of the Issuer Regulations, namely:

a) members of the Company’s Board of Directors;

b) Company executives with regular access to inside information with the power to take management decisions that can influence the Company’s progress and future prospects.

1.3 Names of beneficiaries of the plans belonging to the following groups:

1.3 a) Beneficiaries with management functions specified in Article 152 sexies, paragraph 1, section (c) (2), in the issuing company

To be established after the Board of Directors’ resolution regarding the implementation of the Plan.

1.3 b) Persons with management functions in a company that is a direct or indirect subsidiary of the issuer if the carrying value of the investment in the said subsidiary represents more than 50% of the issuer’s assets as shown in the last approved financial statements, as per Article 152 sexies, paragraph 1, section (c) (3)

1.3 c) Natural persons that control the issuer who are employees or work as collaborators for the issuer

This is not applicable, as no such persons are considered in the framework of the Plan.

1.4 a) Description and numbers of the all executives with regular access to inside information with the power to take management decisions that can influence the issuer’s progress and future prospects, as per 152 sexies, paragraph 1, section (c) (2)

To be established after the Board of Directors’ resolution regarding the implementation of the Plan.

These executives will be selected by the Board of Directors from the managers of the Company’s Business and Head Office Departments, who are bound under Article 114, paragraph 7, of Legislative Decree 58/1998, to disclose transactions involving shares issued by the Company or other financial instruments linked to them.

1.4 b) Description and numbers of the all executives with regular access to inside information with the power to take management decisions that can influence the progress and future prospects of a direct or indirect subsidiary of the issuer if the carrying value of the investment in the said subsidiary represents more than 50% of the issuer’s assets as shown in the last approved financial statements, as per Article 152 sexies, paragraph 1, section (c) (3)

Not applicable.

1.4 c) Description and numbers of any other categories of employees or collaborators for whom different characteristics of the plans are envisaged

Not applicable.

1.4 d) Should exercise prices that differ according to the persons belonging to the two categories be envisaged for the stock option plans, such persons falling under sections (a) and/or (b) should be specified by name separately

No different characteristics of the Plan are envisaged for the categories of its Beneficiaries, and, specifically, the Exercise Prices of the Options, to be set in accordance with the criteria laid down in paragraph 4.19 below, will be the same for all the Beneficiaries.

2. Reasons for the adoption of the Plan

2.1 Objectives that it is intended to attain by implementing the plans

The reasons for the proposal to adopt the Plan, as those specified with reference to the Stock Option Plans for the previous three-year periods, are substantially related to the following objectives:

– to provide the Company and its subsidiaries with a tool to build up its management’s loyalty that will encourage managers to commit themselves to attaining strategic goals and will give them a share in the Company’s results;

– to enable the management, and thus the Company, to improve its approach to value creation.

The number of Options to assign each Beneficiary will be decided by the Board of Directors at the proposal of the Remuneration Committee.

The Plan has a three-year time span (2009/2010/2011) with Periods of Exercise following each Plan reference year. These Periods of Exercise will start after the end of a 36-month vesting period from the dates on which the Options are allocated. This length of time is considered appropriate in order to attain the objectives of encouraging and building up the loyalty of the management that are those contemplated in the Plan.

2.2 Key variables, also in the form of performance indicators, considered for the purposes of implementing plans based on financial instruments

The implementation of the Plan, in terms of the Beneficiaries’ actual possibility of exercising the Options allocated to them – as specified in paragraph 4.5 below – will be subject to the attainment of annual economic and/or financial performance targets to be set by the Board of Directors at the proposal of the Remuneration Committee.

The terms and conditions for the exercise of the Options will be applicable to all the Beneficiaries of the Plan and there are thus no different or special conditions for the various categories of Beneficiary.

2.3 Elements forming the basis of the calculation of the amount of the share-based payments, or the criteria for their calculation

The Board of Directors will decide the number of Options to be assigned to individual Beneficiaries at the proposal of the Remuneration Committee and within the limits laid down in paragraph 4 below, assessing the effective capacity of each Beneficiary to have a practical effect on the attainment of the results, progress and future prospects of the Company and the Group on the basis of their experience and ability and the function that they perform within the Company.

2.4 Reasons for any decision to allocate payment plans based on financial instruments not issued by the issuer itself, such as financial instruments issued by subsidiaries or controlling companies of the group in question, or third party companies; if the said instruments are not traded on regulated markets, information regarding the criteria adopted to measure their value

Not applicable.

2.5 Considerations regarding material tax and accounting implications that had an effect on the decision regarding the plans

No material tax or accounting implications had any effect on the proposal to adopt the Plan.

2.6 Support of the plans, if any, from the special fund for encouraging worker participation in enterprises in accordance with Article 4, paragraph 112, of Law 350 of 24 December 2003

2.7 The Plan receives no support from the special fund for encouraging worker participation in enterprises in accordance with Article 4, paragraph 112, of Law 350 of 24 December 2003.

3. Formalities for approval and timing of the Assignment of the financial instruments

3.1 / 3.2 Scope of the powers and functions that the shareholders’ meeting delegates to the board of directors for the implementation of the plans / names of the persons instructed to administer the plans, with their functions and responsibilities

In accordance with the provisions of Article 114 bis of Legislative Decree 58 of 24 February 1998, the creation of the Plan will be submitted for the approval of the Ordinary Shareholders’ Meeting of Arnoldo Mondadori S.p.A. that has been convened on 29 April 2009 in first call and on 30 April 2009 in second call.

The proposal to the Shareholders’ Meeting will be that the Board of Directors be delegated the functions necessary for the implementation of the Plan – in compliance with the basic features of the Plan as described in this Information Document – in terms of the selection of the Beneficiaries, setting their performance targets, assigning the Option rights and drawing up regulations to carry out the Plan in all its aspects.

Subject to the adoption of this Shareholders’ Meeting resolution, the Board of Directors, in consultation with the Remuneration Committee, will then adopt the resolutions related to the implementation of the Plan, which will cover the following points in particular:

a) approval of the regulations for the implementation of the Plan and any amendments thereto;

b) selection of the Beneficiaries from the categories specified by the Shareholders’ Meeting, referred to above;

c) assignment of the Options to the Beneficiaries that have been selected;

d) calculation of the Option Exercise Price in conformity to the principles laid down in paragraph 4 below;

e) selecting and setting the performance targets to which the assignment of the Options is subject in every year of the duration of the Plan and verifying that these targets have been attained.

3.3 Any procedures in place to review the plans, also in relation to possible variations in the basic targets

The procedures for the review of the Plan, also in relation to possible variations in the basic targets, will be determined by the Board of Directors when it approves the Plan regulations.

3.4 Description of the methods for the determination of the availability and assignment of the financial instruments on which the plans are based

The Options to allocate in the framework of the Plan embody the rights to acquire – in a ratio of one share with normal dividend rights for each Option exercised – ordinary Mondadori Treasury Shares already held by the Company either directly or through subsidiaries, or to be bought in accordance with permission resolved by the Shareholders’ Meeting in accordance with Article 2357 of the Italian Civil Code and Article 144 bis of the Issuer Regulations.

3.5 Role played by each director in deciding the characteristics of the said plans: any situations of conflict of interests arising among the Directors involved

The Plan’s characteristics and guidelines were prepared by the Remuneration Committee and submitted for collective appraisal by the Board of Directors so that it could draw up the necessary proposals for the creation of the Plan for submission to the Shareholders’ Meeting. The subsequent resolutions of the Board of Directors were adopted in conformity to the proposals made by the Remuneration Committee, composed of three non-executive Directors who are not Beneficiaries of the Plan.

3.6 Date of the decision taken by the competent body to propose the plans to the shareholders’ meeting and of the proposal, if applicable, of the remuneration committee

The creation of the 2009/2010/2011 Plan is submitted to the Shareholders’ Meeting for approval on 29/30 April 2009, after a decision taken by the Board of Directors on 25 March 2009, at the proposal of the Remuneration Committee on 19 March 2009.

3.7 Date of the decision taken by the competent body with regard to the assignment of the financial instruments and any proposal submitted by the remuneration committee, if applicable, to the said body

This will be the date of the Board of Directors’ resolution to implement the Plan and the relative Remuneration Committee proposal.

3.8 Market prices of the financial instruments on which the plans are based as recorded on the dates specified above, if traded on regulated markets

The market prices (reference prices) of Mondadori shares recorded on the dates mentioned in paragraph 3.6 above were:

Date Reference price 19 March 2009 2.315 25 March 2009 2.5425

For plans based on financial instruments traded on regulated markets, the terms in which and the methods according to which the issuer takes into account the possible concomitance between the following events in determining the timing for the assignment of the instruments in the implementation of the plans:

(i) the assignment and any decisions taken with regard to the matter by the remuneration committee; and

(ii) any relevant information as per Article 114, paragraph 1, of Legislative Decree 58 of 24 February 1998; for example, if such information is:

1. a. not already in the public domain and likely to have a favourable effect on market prices; or
2. b. already in the public domain and likely to have an unfavourable effect on market prices.

The Options will be allocated on the date of the Option Exercise Price of the Options and allocate the Options to the persons selected as Beneficiaries.

As regards the need to avoid any significant interference between the effect on the price of the Shares of relevant information disseminated in accordance with Article 114, paragraph 1, of Legislative Decree 58 of 24 February 1998 and the setting of the Option Exercise Price, when the Options are allocated their Exercise Price is in any event set on the basis of the mean market price recorded over a relevant period of time, as fully specified in paragraph 4.19 below, thus diluting the effect of any sudden rises or falls in the price of the Shares.

4. Characteristics of the financial instruments allocated

4.1 Description of the forms in which the share-based payment plans are structured

For each year of its duration, the Plan is structured on the allocation of personal, non-transferable Option rights to the Beneficiaries, which they may subsequently purchase, settling their price at the time of their physical delivery, for ordinary Mondadori Treasury Shares in the ratio of one Share for each Option exercised. They are therefore stock options.

4.2 / 4.3 / 4.4 period of actual implementation of the plan, specifying any different cycles involved / termination of the plan / maximum number of financial instruments, also in the form of options, assigned in each tax year with respect to the persons specified by name or the categories specified

The Plan lasts for the three-year period 2009/2010/2011.

The Options allocated to the Beneficiaries may be exercised, in every year of the duration of the Plan, at the end of the 36-month vesting period from the date of assignment during pre-determined Periods of Exercise falling between the first day of the thirty-seventh month and the last day of the seventy-second month after the said Option assignment dates.

The maximum total number of Options to be assigned throughout the duration of the Plan will be decided in such a way that the Shares underlying the Options – in a ratio of 1 Share for each Option exercised – do not exceed 3% of the Company’s share capital, which corresponds to 7,782,895 shares.

The Exercise Period of the Plan and the number of Options assigned in each year of its duration to the persons falling under the categories of Beneficiaries as specified in paragraph 1.2 above will be determined after the Board of Directors’ resolutions regarding the implementation of the Plan.

4.5 Methods and implementation clauses of the plan, stating whether the actual allocation of the financial instruments is subject to meeting conditions or attaining certain results, including performance results; description of such conditions and results

The methods and the implementation clauses of the Plan are set out in paragraphs 4.1, 4.2, 4.3 and 4.4 above.

The Board of Directors, at the proposal of the Remuneration Committee, will establish and decide the conditions on which the Options allocated to the Beneficiaries may be actually exercised, on the basis of the attainment of economic and/or financial performance targets on an annual basis.

The satisfaction of the conditions for the exercise of the Options will be verified by the Board of Directors in each year of the duration of the Plan within the first six months of the financial period after that in which the Options have been allocated.

The conditions for the exercise of the Options will apply to all the Beneficiaries and there are therefore no different conditions for different categories of Beneficiary.

4.6 Any restrictions on the availability of the financial instruments allocated, or on the instruments given when the options are exercised, particularly as regards the periods of time during which it is allowed or forbidden to transfer the instruments to the Company itself or to third parties

The Options to allocate in the framework of the Plan are personal and non-transferable, and they are not available inter vivos; they cannot be pledged or guaranteed in favour of the Company or third parties.

There are no restrictions on the availability of the Shares to be distributed when the Options are exercised.

4.7 Description of any conditions subsequent related to the allocation of the plans if the beneficiaries carry out any hedging transactions that allow them to neutralise any prohibitions on the sale of the financial instruments assigned, also in the form of options, or of the financial instruments received after the exercise of such options

Any conditions subsequent related to the allocation of the Plan should the Beneficiaries carry out hedging transactions that enable them to neutralise any prohibitions on the sale of the Options allocated will be determined in the Plan regulations to be drawn up by the Board of Directors.

4.8 Description of the effects of termination of employment /4.9 other possible causes of the cancellation of the plans

The effects of the various ways in which a Beneficiary may leave his position as a Director and/or terminate his employment, and the indication of other possible causes of cancellation of the Plan, will be determined in the Plan regulations to be approved by the Board of Directors.

4.10 Justification for any provision for the company’s redemption of the financial instruments in the plans envisaged under Article 2357 ff of the Italian Civil Code; the beneficiaries of the redemption should specify whether the provision is only intended for special categories of employee; the effects of termination of employment on this redemption

Not applicable.

4.11 Any loans or other facilitations intended to grant for the purchase of the stock as per Article 2358, paragraph 3, of the Italian Civil Code

Not applicable.

4.12 Assessments of the expected cost to the company on the date the stock is assigned, as measurable on the basis of terms and conditions that have already been decided, by total amount and with regard to each instrument in the plan

The expected cost to the Company is not measurable at present because it depends on the amount of Options that are allocated on their respective assignment dates and on the Exercise Price. The total economic charge of the Plan will be measured in accordance with IFRS 2 accounting principles, according to which stock options are measured at fair value at the time of assignment. Fair value is determined using a binomial method, having regard to the Plan regulations.

These benefits are recognised as staff costs through profit and loss during the period of service, consistently with the vesting period, starting from the assignment date, with a contra-entry in equity under “Stock option reserve”.

The benefits awarded to employees/Directors of subsidiaries by parent company Arnoldo Mondadori Editore S.p.A. are recognised as increases in the cost of the investment, with a contra-entry in equity under “Stock option reserve”.

After the assignment date, a change in the number of Options will entail an adjustment to the total cost of the Plan, which will be recognised according to the method described above. At the end of each financial period, the fair value amount of each Option previously measured is neither reviewed nor adjusted, but remains finally in the balance sheet; on this date, on the other hand, the estimate of the number of Options that will accrue up to expiry (and thus of the number of employees that will be entitled to exercise the Options) is adjusted. The variation in the estimate is taken away from the “Stock option reserve” item with a contra-entry in profit and loss among staff costs, or reducing “Equity investments” if they are benefits awarded to employees/Directors of subsidiaries.

When Options are exercised, the portion of “Stock option reserve” related to the options exercised is reclassified under “Equity premium reserve”; the portion of “Stock option reserve” related to Options cancelled or that have not been exercised when they expire is reclassified under “Other reserves”.

4.13 Any dilution effects on capital caused by payment plans

Not applicable, since the Plan does not entail any increase in the Company’s share capital.

4.14 Any limits envisaged on the exercise of voting rights and the allocation of ownership rights

No limits are envisaged on the exercise of voting rights or the allocation of ownership rights on the Shares purchased after the Options have been exercised

4.15 In the event of the shares not being traded on a regulated market, all necessary information regarding a reliable assessment of their value

Not applicable.

4.16 Number of financial instruments underlying each option

Each Option allocated entitles the Beneficiary to purchase one Share.

4.17 Expiry of the options

The Options expire on the first day after the end of the relative Exercise Period. Options not exercised before they expire are forfeited and consequently do not give the Beneficiaries any rights.

4.18 Methods and timing of exercise, special conditions

As already stated in paragraph 4.2 above, the Options may be exercised, in each year of the duration of the Plan, only during the Periods of Exercise that start from the end of the specific 36-month vesting period from the date on which they are allocated.

4.19 Exercise price of the options, or the methods and criteria for its calculation, particularly as regards:

a) the formula for the calculation of the exercise price in relation to a determinate market price (fair market value); and

b) the methods for the calculation of the market price adopted to determine the exercise price

The Option Exercise Price will be set by the Board of Directors – when it resolves the Assignment of the Options – having regard to the arithmetical mean of the reference prices of the Shares recorded by Borsa Italiana S.p.A. during the period starting from the date on which the Options are assigned back to the same day of the previous calendar month.

4.20 If the exercise price is not the same as the market price calculated as specified in paragraph 4.19 (b) (fair market value), the justification for the difference

Not applicable.

4.21 Criteria for providing for different exercise prices for different beneficiary or different categories of beneficiary

Not applicable.

4.22 If the financial instruments underlying the options are not traded on a regulated market, the value attributable to the underlying instruments or the criteria for calculating this value

Not applicable.

4.23 Criteria for the adjustments made necessary as a result of extraordinary capital transactions and other transactions entailing a change in the number of underlying instruments (capital increases, extraordinary dividends, grouping and splitting of underlying shares, mergers and demergers, conversions into other classes of share, etc.)

The criteria for the adjustments made necessary as a result of extraordinary capital transactions and other transactions entailing a change in the number of underlying instruments will be determined in the Plan regulations that are to be approved by the Board of Directors.

Segrate, 9th April 2009

Arnoldo Mondadori Editore S.p.A. today announced that its annual Corporate Governance Report is available for public inspection at the company’s headquarters and at the Borsa Italiana S.p.A. The document is also in the “Corporate Governance” section of the web site www.gruppomondadori.it.

The Board of Directors of Arnoldo Mondadori S.p.A. met today, under the Chairmanship of Marina Berlusconi, to examine and approve the consolidated balance sheet and management report for the year to 31st December 2008 as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

The market scenario

As is well known, there was a further worsening of the macro-economic scenario in the last three months of 2008. Indeed, the downturn was worse than the already pessimistic forecasts and the crisis that affected the financial sector at an international level had a serious impact on the productive sectors, on employment and on consumer spending in industrialised countries, as well as slowing growth in developing countries. Confirmation of the depth of the current recession comes also from the extremely negative perceptions regarding the evolution of the situation in the short to mid-term, with an inevitable impact on investments and spending. Also in Italy, where the banking system has been less exposed to assets risks than other European countries and the United States, the crisis has, nevertheless, had a serious effect on the real economy, with a fall in GDP of 1%, something not seen since 1975.

For Mondadori and its markets of reference, the following observations can be made:

– in Italy, while there was not an acceleration in the downturn in both circulation and add-on sales, the Group’s market share remained essentially unchanged. On the advertising front, investments, in the last part of the year, saw a marked fall. Meanwhile, the volume of business in the book sector, in which the Mondadori Group consolidated its position of absolute leadership, remained essentially unchanged;

– in France the downward trend in advertising continued, while magazine circulation, both newsstand sales and subscriptions, were in line with the previous year.

MANAGEMENT RESULTS AT 31 DECEMBER 2008

As communicated to the market in October 2008, Mondadori sold 80% of the share capital of Mondadori Printing S.p.A. to Gruppo Pozzoni; a comparison between the Mondadori Group’s consolidated revenues and gross operating profit in December 2008 and the figures for the previous year are consequently also represented on a like-for-like basis, excluding. Consequently, the results, both for 2007 and 2008, of printing activities sold with effect on the company’s accounts from the month of November 2008 and, therefore, consolidated for only ten months of 2008.

Consolidated revenues for 2008 came to €1,819.2 million (-7.1% on the €1,958.6 million of 2007).On a like-for-like basis, the fall was of 6%. While, net of the add-on sales, turnover recorded a fall of 2.5%.

Consolidated gross operating profit for the year amounted to €249.2 million (-7.3% compared with the €268.9 million in the previous year). As a proportion of revenues, the figure is 13.7%, in line with 2007.

Excluding the activities of Mondadori Printing, the difference in operating profit was -€2.7 million (-1.2%), essentially due to: the positive business performance (+€6.5 million); a fall in add-on sales (-€13.3 million); increased investments in business development (-€7.9 million); higher organisational restructuring costs (-€4.7 million) and increased capital gains (+€16.7 million).

Consolidated operating profit came to €203.5 million, (-9.6% on the €225.2 million of 2007), with amortizations and depreciations of fixed assets of €31.1 million (€36.5 million in 2007) and of intangible assets of €14.6 million (€7.2 million in 2007).

As a proportion of revenues, as shift from 11.5% in 2007 to 11.2%.

Consolidated profit before taxation amounted to €151.4 million (-20.1% compared with the €189.5 million of 2007). Net financial charges increased by €16.4 million due to the higher cost of debt (around €6 million), lower returns on financial assets (around €8.3 million, partly due to writedowns) and financial charges for actualization of the deferred part of the payment for Mondadori Printing (€2.1 million).

Consolidated net profit on 31 December 2008 amounted to €97.1 million (-13.8% compared with €112.6 million in the previous year).

Gross cash flow for came to €142.8 million, compared with €156.3 million in 2007.

The net financial position went from -€535.3 million at the end of 2007 to -€490.3 million on 31 December 2008; during the period payments for tax of €80.4 million and dividends of €83.8 million were made, while the positive financial effect of the sale of 80% of Mondadori Printing S.p.A. amounted to €121.4 million.

 

THE BUSINESS AREAS

· Books

Against a general background of falling consumer spending, the performance of the trade segment of the Italian book market in 2008 was essentially in line with that of 2007 (-0.6% in terms of value, for medium to large sized bookstores: source Nielsen Bookscan).

In this context the Mondadori Book Division confirmed, by a wide margin, its leadership, with a market share of 28.8%; total revenues amounted to €434.3 million (-2.4% on the €445 million of the previous year).

The slight downturn in revenues, largely the result of a marked fall in the sale of rights for add-on sales initiatives, would, therefore, net of add-on sales, be -1.1%.

During the period Mondadori maintained the excellent levels of profitability of the previous year, with a gross operating profit, as a proportion of revenues of 19.1%.

In 2008 the Group published 2,695 new titles (compared with 2,742 in 2007) and 5,225 reprints (5,242 in 2007), a total of 53.4 million copies, compared with 54.6 million in 2007.

Among the Group’s publishing houses, Edizioni Mondadori recorded 2008 revenues of €144 million (+4.7% compared with €137.6 million the previous year). Of note during the year was the success of two first-time authors whose books sold more than one million copies: Paolo Giordano, winner of the Strega Prize with his novel La solitudine dei numeri primi and Roberto Saviano with the long seller Gomorra, first published in 2006. Also of note was the new novel by Margaret Mazzantini, Venuto al mondo, which sold more than 300,000 copies. There were also good results for Idi di marzo by Valerio Massimo Manfredi (250,000 copies) and Storia di neve by Mauro Corona (100,000 copies).

Einaudi generated revenues for the year of €51.7 million, an increase of 3.6% on the €49.9 million of 2007. This increase was the result of excellent sales through the bookshop and large-scale retail channels, thanks to the very positive sales of numerous books with average and high print runs.

With a market share of 13.4%, Mondadori Education in 2008 maintained a significant position in the educational market and leadership in the primary school textbook segment: net sales revenues generated by the company in the period amounted to €86.1 million (-1.1% on the €87.1 million of the previous year).

· Magazines

The Magazine Division generated consolidated revenues in 2008 of €949.8 million (-9.3% on the €1,047.7 million of 2007).

Italy

Mondadori maintained in 2008 its position of absolute pre-eminence, with revenues in Italy of €575.7 million (-12.5% compared with €657.8 million in 2007); net of add-on sales, the fall was of 4.4%.

Performace during the year was characterised by the following phenomena

– A fall in circulation revenues of 5.1%, in line with the market of reference;

– A marked decline in add-on sales (-28.6%) in line with the sector, but with good levels of profitability;

– A fall in advertising revenues of 5.3%, in a market that fell by 7.1%: it is a downturn that was especially marked in the second half of the year.

Among women’s titles, Donna Moderna consolidated its leadership; in newsmagazines, Economy saw a significant increase in its newsstand sales.

In the TV listings segment, which has been hit by a generalised fall in circulation, TV Sorrisi e Canzoni bucked the trend by maintaining weekly sales of more than one million copies. In the entertainment segment, Chi remained the most vivacious magazine with sales in line with 2007. In the up market women’s segment, while Grazia and Flair recorded more limited circulation, sales were still in line with the previous year and they had a marked penetration in the advertising market. Good results were recorded by both the cooking and design titles.

France

In 2008 Mondadori France generated total revenues of €374.1 million (-4.1% compared with the €389.9 million of 2007).

Circulation revenues by Mondadori France, which account for 70% of the total, remained at the level of the previous year (+0.6% on a like-for-like basis, net of the sale of niche title in the Sport e Loisirs area), thanks also to the positive performance of the leading titles, as Closer that confirmed its leadership in its segment; there was a positive performance in the up market segment Haut de gamme, in which Mondadori has Biba, and as a consequence of re-designs on a number of titles in the Femme Grand Public segment. There was a drop, in line with the market, for TV titles.

On the add-on sales front, the initiatives launched by the company during the year generated an increase in revenues of 7.2% compared with the previous year, but with the negative contribution being the result of a market that is structurally still not ready for development.

The revenues of Mondadori France from the sale of advertising saw a downturn of 14.5% in 2008, in line with a market in considerable difficulty; on a comparable basis the fall was of 12.3%.

The company, which is also penalised by its poor presence in the up-market segment, the only sector that grew compared with the previous year, did, in any case, safeguard its market share.

In terms of profitability Mondadori France in 2008 generated a gross operating profit, as a proportion of revenues, of 10.5% (12.5% net of add-on sales), thanks also to the ongoing control and reduction of costs that have generated savings in industrial distribution and labour costs.

International activities

2008 was characterised by intense number of new launches of the Mondadori Group titles in international markets, including Flair in Austria, Casaviva in Greece, Bulgaria and Serbia, Sale e Pepe in Romania, Grazia Casa in Croatia. The Grazia network expanded during the period to include new editions in India and Australia, both of which generated positive results from the first months of publication.

During the year the stage was set for the launch of Grazia in China and Casaviva in India, which went ahead in the first quarter of 2009.

Overall, at the end of the year, the Mondadori titles in world markets numbered nineteen, with revenues from licensing and commissions from the sale of advertising up by 30% on 2007.

There were also positive results from the Greek subsidiary Attica, leader in circulation and advertising in Greece and with a significant presence also in Romania and Bulgaria.

· Advertising

Mondadori Pubblicità ended the year with revenues of €331 million (-5.3% on the €349.5 million of 2007). Thanks to a good performance in the first half of the year, the company was able to at least partially offset the marked downturn in the market in the second half.

In particular, in a magazine market that lost 7.3%, the company recorded sales on its portfolio of titles of €242.6 million (-4.8%).

In the radio market, meanwhile, which showed an overall increase of 2.3%, R101 saw its advertising revenues grow by 23.9%. There was also a significant increase in advertising sales for the Group’s web sites (+27%), in a market that grew by 13.9%.

• Grafica

As mentioned above, the consolidated revenues from the Group’s printing activities refer only to the first ten months of the year. During this period there was a marked downturn in turnover, which came to €316.3 million (-28.1% on the €439.9 million of 2007).

This fall was the result of, in addition to two fewer months of business, the loss of the contribution of Mondadori Education that had been present in 2007, a marked reduction in magazine paginations and a sharp fall in the market for add-on sales.

• Direct marketing

In 2008 Cemit Interactive Media recorded revenues of €22.3 million, a fall of 6.7% on the €23.9 million of the previous year, while maintaining an excellent level of profitability (+18.4%).

• Retail

Total revenues by the Retail Division in 2008 amounted to €194.5 million (+6.2% on the €183.2 million of 2007). During the period the Group’s network of stores reached 434 units, making it Italy’s most extensive network of sale outlets for editorial products.

Mondadori Retail S.p.A. generated 2008 revenues of €128 million (+2.7% on the €124.6 million of 2007). During the year, having completed the integration of the ex-Messaggerie Musicali, there was an increase in the number of outlets (up to 30 from the 29 in 2007) and a simultaneous rationalisation of the chain.

Mondadori Franchising S.p.A. generated revenues of €66.5 million (+13.7% on the €58.5 million of 2007). During the period there was an increase in the number of bookstores, from 212 in 2007 to 227 in December 2008, while the number of Edicolè outlets rose from 136 in 2007 to 177 in 2008. Of note was also the testing of and formats were, including a children’s bookshop and a new form of franchising that combines the traditional bookshop and the book club.

• Radio

In 2008 R101 recorded net revenues of €14.8 million (+31% on the €11.3 million of 2007), which corresponds to gross advertising sales of €21.8 million (+23.9% on the €16 million of 2007), in a market that grew by just 2.3%.

In terms of ratings, the Mondadori Group’s radio reached an average daily audience of 2.1 million listeners, an increase of 7%, confirming its position among the top six Italian commercial radio stations, with around 8.4 million listeners over the 7-days.

RESULTS OF THE PARENT COMPANY ARNOLDO MONDADORI EDITORE S.P.A.

The Annual Report of the parent company, Arnoldo Mondadori Editore SpA, for the year to 31 December 2008, shows a net profit of €66.2 million (€90 million on 31 December 2007).

FORECAST FOR THE FULL YEAR

As is known, figures for consumer spending in the first months of the current year, in all the principal economic sectors, show a further decline compared to the end of 2008 and a climate of great uncertainty means that also investments are down or, at least, postponed.

In the previous year, the Mondadori Group was able to safeguard its levels of profitability thanks to the diversification of the business and, above all, to cost cuts, in anticipation of the growing crisis.

For a 2009 that is already heavily influenced by the consequences of the general situation in the publishing sector and the impact of technological changes, the company will continue to pursue cost savings, organisational simplification and the re-engineering of processes, also through the specific allocation of dedicated investments.

The trend in revenues in the first months of the year and the objective difficulty in foreseeing developments and the evolution in consumer spending and investments, especially in advertising, over the coming months, suggest a prudent approach in forecasting the company’s performance in 2009, which, in any case, is not expected to be at the same level as the previous year.

§

PROPOSAL FOR THE ALLOCATION OF THE NET PROFIT FOR THE YEAR 2008

The Board of Directors will propose to the Annual General Meeting of the Shareholders, to be held on 29 April 2009 (on first calling, or 30 April on second calling), the allocation of the entire net profit for the year to 31 December 2008 of Arnoldo Mondadori Editore S.p.A., amounting to €66,197,031.51 to an extraordinary reserve.

Given the lack of clear signs of an improvement in the market, the Board’s proposal to not distribute a dividend for 2008 is aimed at allowing Mondadori to maintain its financial solidity, maintain the necessary levels of investment in products, finance the reorganisation process, and to ensure that the company is ready to take advantage of possible opportunities deriving from a recovery in the economic cycle.

§

PROPOSAL TO THE SHAREHOLDERS FOR A STOCK OPTION PLAN FOR THE THREE-YEAR PERIOD 2009-2011

Following the termination of the Stock Option plan for the previous three-year period 2006-2008, the Board of Directors have resolved, following the recommendations of the Remuneration Committee, to propose to the Annual General Meeting of the Shareholders, to be held on 29 April 2009 (on first calling, or 30 April on second calling) a Stock Option Plan for the three-year period 2009-2011, as per Art 114 bis of Legislative Decree, 58/1998.

The purpose of the Plan is essentially to give the company and its subsidiaries access to a tool with which to promote loyalty and render the management more directly involved in the results.

In conformity with art. 114 bis of legislative decree N°58 of 24 February 1998, the fundamental characteristics of the Plan to be approved by the shareholders are as follows:

Participants in the Plan

Participants in the Plan will be identified by the Board of Directors from: managers of the company or its subsidiaries with functions critical for the attainment of the group’s strategic objectives; directors of the company and its subsidiaries; journalists of the company and its subsidiaries with the position of editor or co-editor; managers of the holding company who carry out their function in the interest of the company.

Participants may therefore also include “relevant subjects” belonging to the categories, as at Art. 152 sexies, para. 1, C.1), C2) of CONSOB Regulation 11971/1999.

Implementation of the Plan

The Plan is organised in annual allocations to the participants of options, which are personal and non-transferable, for the acquisition of shares of the company, held in the portfolio or through subsidiary companies. Implementation of the plan is subordinate to the attainment of the company’s performance objectives as determined by the Board of directors following the recommendations of the Remuneration Committee. Exercise of the allocated options will be further subordinate to a lock-up period and will be possible only within a defined period.

Criteria for the determination of the purchase price of shares

The price of such shares will be calculated on the basis of the arithmetical average of the reference price of Mondadori ordinary shares, in the period measured by the Borsa Italiana that goes from the date of allocation to the same day of the previous month.

Subject to the approval by the AGM, Board of directors will define, in the light of the above, Regulations for the implementation of the Stock Option Plan.

§

RE-ATTRIBUTION OF POWERS AS PER ARTT. 2443 AND 2420 TER OF THE CIVIL CODE

Following the expiry of the five-year attribution of powers made by the Shareholders’ Meeting of 2004, the forthcoming AGM (the extraordinary part), to be held on 29 April 2009 (on first calling, or 30 April on second calling), will be asked to approve the re-attribution of powers to the Board of Directors to resolve capital increases and the issue of convertible bonds, as per artt. 2443 and 2420 ter of the Civil Code.

The new powers are in line with the previous expiring powers, both in terms of duration (five years, in accordance with current legislation) and for the maximum sums (a nominal €78 million and €260 million respectively).

§

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.

§

The results of 2008 will be outlined by the deputy chairman and chief executive, Maurizio Costa, and the CFO, Carlo Maria Vismara, at a meeting with the financial community to be held today at 2.30 pm at the company’s headquarters in Segrate.

The Board of Directors of Arnoldo Mondadori Editore S.p.A. will ask the forthcoming Annual General Meeting of the Shareholders to renew – until the approval of the Annual Report for 2009 – authorisation to effect share buy-backs up to the legal limit of 10% of the share capital, authorisation already granted by the AGM of 22 April 2008 and due to expire with the approval of the Annual Report for the year to 31 December 2008.

The Annual General Meeting of the Shareholders, scheduled for 29 April 2009 (or 30 April on second calling) will also be asked to authorise the use of shares involved in such buy back operations or already in the company’s portfolio, as per Art. 2357 of the Civil Code.

The highlights of the board of directors’ proposal are as follows.

• Underlying motivation

The underlying reason for the request for authorisation to effect buy backs and make use of Company shares is that it will allow the Board of Directors to:

– use company shares for the exercise of options for the purchase of shares assigned to participants in the stock option plans put in place by the Shareholders;

– use company shares, either bought or in the portfolio, for the exercise of rights, also conversion rights, deriving from financial instruments issued by the company, its subsidiaries or third parties;

– use company shares, either bought or in the portfolio, as part or whole payment in any eventual acquisitions or equity investments that fall within the company’s stated investment policy;

– take advantage, where and when considered strategic for the company, of investment opportunities, also in relation to available liquidity.

• Cap on the number of shares that may be bought

The authorisation request relates to the legal limit of 10% of the company’s share capital, or 25,942,983 shares.

Given that the company currently holds 15,580,101 of its own shares and that a further 4,517,486 Mondadori shares are held by the subsidiary Mondadori International SA – making an overall total of 20.097.587 shares, corresponding to 7.747% of the share capital – the new authorisation would give the Board the faculty to buy back a further 5,845,396 ordinary shares, corresponding to 2.253% of the share capital.

• Method of acquisition and the price range

Buy backs would be effected on regulated markets as per art. 132 of the legislative decree of 24 February 1998 n. 58 and art. 144 bis, para. 1, B of Consob regulation 11971/99 according to operating procedures established by the regulations for the organisation and management of the markets themselves, which, does not permit the direct combination of offers to buy with predetermined offers to sell.

Consequently, the corresponding minimum and maximum price of sale will be determined at the same conditions that applied to previous authorisations agreed by the Shareholders, i.e. at a unit price not less than the official market price on the day prior to any operation, less 20%, and not more than the official market price on the day prior to any operation, plus 10%.

In terms of price and daily volumes, acquisition operations will in any case be conducted in line with the norms foreseen by the EU regulation 2273/2003.

With regard to press reports concerning the supposed sale of the business activities of the educational sector, Arnoldo Mondadori Editore S.p.A. would like to make it clear that no such plan exists, nor are any negotiations underway.

Arnoldo Mondadori Editore today announced that – following the formalisation of mandatory communication to the Italian Competition Authority – the definitive contract has been signed for the sale of 80% of the share capital of the subsidiary Mondadori Printing S.p.A. to Gruppo Pozzoni, as per the preliinary agreement reached on 14 October and previously communicated to the market.

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 nine months of the year to 30th September 2008, as presented by the Group’s Deputy Chairman and Chief Executive, Maurizio Costa.

THE MARKET SCENARIO

From the beginning of the second half of 2008, as feared, the effects on the real economy of the financial and macroeconomic problems that hade emerged in the preceding period began to be felt and had an immediate and somewhat violent impact on consumer spending. A period of recession is now almost certain, and it is difficult to forecast either the quantitative impact or duration.

In Italy that characterising element of the general situation in the market of reference for the Mondadori Group has been a further marked decline in advertising investments, while there has been a continuation, without particular variations, in the slowdown in circulation and add-on sales. The growth recorded by books in the first months of the year has also come to a halt.

In France, magazine circulation has fallen, but also here it is advertising that has been most affected by the situation of uncertainty about prospects in the short term.

GROUP PERFORMANCE IN THE PERIOD TO 30 SEPTEMBER 2008

Despite such a difficult context, the Mondadori Group confirmed its capacity on the revenue front, recording a gross operating profit – net of add-on sales – that was higher than that of the corresponding nine-month period of the previous year, notwithstanding ongoing investments in business development.

This has been made possible by paying close attention to operating costs and efficiencies in all areas of the company that has enabled the Group, also in the third quarter, despite a fall in revenues due to the economic situation, to increase its margins compared with the same period of the previous year.

Consolidated revenues for the first nine months of 2008 came to €1,368.1 million, a fall of 5.1% compared with the €1,441.7 million in the first nine months of 2007 (-1.5% net of add-on sales).

Consolidated gross operating profit at 30 September 2008 came to €168.8 million, a fall on 9.8% on the €187.1 million of the same period of the previous year (+1.8% net of add-on sales). As a proportion of revenues, a fall to 12.3% from the 13% of the same period of 2007.

Net of the impact of add-on sales (-€20.8 million) and non-recurring factors (increased capital gains: +€3 million; personnel: -€1.5 million due to the application of new regulations on leaving entitlements in 2007 and extraordinary charges), operating margin would have grown by €1 million due to improved business results (+€7.2 million) and increased investments in development activities (-€6.2 million).

Consolidated operating profit at 30 September 2008 came to €137.5 million, a fall of 11% on the €154.5 million of the same period of 2007, with amortizations and depreciations of tangible and intangible assets for a total of €31.3 million (€32.6 million in 2007); as a proportion of revenues, a fall from the 10.7% of 2007 to 10.1% this time.

Consolidated profit before taxation amounted to €104.5 million, a fall of 19.8% on the €130.3 million of the first nine months of 2007, with an increase of €8.8 million in net financial charges, essentially due to the increased cost of borrowing (around €4.7 million) and lower returns from financial investments (around €3.1 million) and the IAS regulations regarding leaving entitlements (€1 million).

Consolidated net profit at 30 September 2008 came to €58.8 million, a fall of 16.1% on the €70.1 million for the same period of the previous year.

Gross cash flow in the first nine months of 2008 amounted to €90.1 million, compared with €102.7 million in the first nine months of 2007.

The Group’s net financial position at 30 September 2008 showed a deficit of €644.5 million, compared to a deficit of €535.3 million at the end of 2007. During the period income taxes of €65.5 million and dividends of €83.8 million were paid out.

RESULTS OF THE BUSINESS AREAS

• Libri

In the first nine months of 2008 the Book Division generated revenues of €316.5 million, a fall of 3% on the €326.4 million of the same period of 2007 (-1.8% net of the contribution of the sale of rights for add-on sales initiatives).

During the period the Group confirmed its leadership in the trade segment with a marked advantage over its main competitors, despite a period of recession and a general decline in consumer spending. Particularly positive results were recorded by Edizioni Mondadori, that saw its market share increase by a full percentage point, and Einaudi, which confirmed its position as Italy’s second-largest publisher. In the first nine months of the year, the Turin-based publisher generated net revenues of €37 million, an increase of 5.4% on the same period of 2007.

Among the important events during the period was the exceptional success of La solitudine dei numeri primi, the first novel by a new writer, Paolo Giordano, which also won the 2008 Premio Strega, and has sold more than 800,000 copies; among the long sellers, of special note was Gomorra by Roberto Saviano, which reached one and a half million copies.

• Magazines

The Magazine Division generated revenues of €725.5 million in the period, a fall of 8.4% on the €791.8 million at 30 September 2007, largely due to the fall in add-on sales (net of add-on sales, the fall in the Division’s total revenues would be of just 3%).

Italy

Revenues generated in Italy in the first nine months of 2008 amounted to €440.9 million, a fall of 12.5% compared with the €504 million of the same period of 2007.

The shortfall in revenues is attributable to the following factors:

– weakness in circulation revenues (-5.2%) in line with the reference market, marked by a decline in all segments of the business;

– as already indicated, a marked fall (-29.9%) in revenues from add-on sales, in line with the main competitors. The on-going decline in this type of activity has necessitated a stricter selection of the initiatives in order to maintain significant margins while reducing the risks of failure.

– a downturn in magazine advertising (-2.1%) which, after an encouraging start in the first quarter, saw an abrupt slowdown, above all from the summer period.

On the circulation side, Mondadori consolidated its market share, maintaining its position of absolute leadership. The best performances were recorded in the news segment with Panorama, in women’s weeklies with Donna Moderna and in the up-market segment by Grazia and Flair, which also performed well on the advertising front.

France

In the first nine months of the year Mondadori France generated revenues of €284.6 million, essentially in line (-1.1%) with the €287.8 million of the same period of 2007.

Over the same period, the company continued its efforts to reduce costs, generating important savings on both the production and distribution fronts.

The circulation revenues of Mondadori France remained at the levels of the previous year (+0.1%). In particular Closer and Biba recorded excellent performances; Modes & Travaux and Top Santé held up well, as did Le Chasseur Français and Télé Star Jeux, following their re-launches, while difficulties continued in the TV guides segment. Overall, also subscription revenues remained at the levels of the previous year, thanks to marked increases for Closer and Auto Plus.

On the advertising side, France saw a continuation in the third quarter of the marked slowdown in advertising sales.

Mondadori France, while safeguarding its market share, was particularly penalised by a downturn in sales in the Femme Grand Public, TV and auto segments; while results were positive in the people and up-market segments, driven by strong growth in the circulation of Closer and Biba.

In this context, Mondadori France in the first nine months of the year recorded advertising revenues of €75 million, an 8.4% fall on the €81.9 million of the same period of the previous year.

International activities

During the period there was a continuation in the rise in revenues from the international editions of Mondadori titles. The network, which as of 30 September had reached 15 units, either licensing agreements or joint-ventures, expanded further in October with the launch of Sale&Pepe in Romania, Grazia Casa in Croatia and Casaviva in Bulgaria, followed in November by the launch of a Serbian edition.

• Advertising

Mondadori Pubblicità recorded revenues for the period of €244.7 million, a fall of 1.6% on the €248.8 million of the first nine months of the previous year.

After a positive first half, the third quarter saw a reflection, albeit to a lesser degree, of the worrying downturn in the market as a whole in the period.

As regards individual titles, there was expansion for the Grazia “system” (+9%) and a positive trend for Flair as well as TV Sorrisi e Canzoni and Panorama, despite a critical moment for the segments typically characterised as “male”. In other media, there was further consolidation in radio with a substantial (+33.3%) increase for R101, while in the Internet area, in line with the market, there was an excellent performance by the web site www.donnamoderna.com.

• Printing

The situation at 30 September 2008 saw a significant fall in revenues compared with the same period of the previous year, due to a general decline in the market.

During the third quarter there was a further marked reduction in pages due to the sudden arrest in advertising compared with the first half, and there was a confirmation of the slowdown in the market for newspaper and magazine supplements.

In the first nine months of the year the Printing Division recorded total revenues of €281.2 million, in fall of 15.6% on the €333.3 million of the same period of the previous year, mainly due to the absence of activities for Mondadori Education, that were present in 2007.

As for other areas, the market for catalogues and commercial products was stable and in line with expectations; illustrated books showed signs of recovery in the volume of printing in Europe, compared to the Far East, and interesting printing contracts for the American market.

There was a slight increase in the cost of paper in the period, in particular for the paper used in the printing of magazines. Utilisation of plant capacity was lower than the budget, despite a significant reduction in outsourcing.

• Direct marketing

In the first nine months of the year Cemit operated in an increasingly difficult market, characterised by reductions in communication investments. During the period the company recorded revenues of €15.9 million, a fall of around 7% on the €17.1 million of the same period of the previous year, while maintaining a good level of profitability thanks to an improvement in the mix, which was more focused of higher value added activities and the ongoing control of costs.

• Retail

Total revenues from the Retail Division in the first nine months of 2008 came to €128.6 million, an increase of 7.3% compared with the €119.9 million of the same period of the previous year.

Mondadori Franchising recorded revenues of €44.2 million, an increase of 13.3% on the €39 million of the same period of 2007, thanks above all to new affiliations. The company’s expansion programme continued during the period raising the number of its outlets to a total of 369, making it Italy’s largest network of outlets for the sale of editorial products, of which 212 are bookshops (205 on 30 September 2007) and 157 Edicolè newsstands (117 at the same point of 2007).

Mondadori Retail revenues in the first nine months of the year came to €84.4 million, an increase of 4.3% on the €80.9 million of the same period of 2007. During the period the number of directly controlled outlets rose to 30.

• Radio

The net revenues of R101 in the first nine months of the year amounted to €11.1 million, a 50% increase on the €7.4 million of the same period of 2007, and corresponding to gross advertising revenues of €16 million (€12 million at 30 September 2007).

The good audience ratings for the station were confirmed in the period, reaching an average daily audience of 2.1 million (+4.85% in the 5th Audiradio cycle compared to the same period of the previous year), in a slightly falling market.

SIGNIFICANT EVENTS AFTER THE CLOSE OF THE PERIOD

Sale of 80% of Mondadori Printing S.p.A.

As previously communicated on 14 October, Arnoldo Mondadori Editore signed a preliminary contract for the sale of 80% of the subsidiary Mondadori Printing S.p.A. to the Gruppo Pozzoni. The value of the transaction was defined on the basis of an enterprise value for 100% of Mondadori Printing of €145 million. The impact of the operation on the consolidated net financial position of the Mondadori Group will be of €123 million.

The operation should be seen in the context of a general trend toward consolidation and concentration among the qualified players that characterises the printing sector at an international level in response to new competitive pressures, overcapacity and a fall in demand.

The agreement gives to the Gruppo Pozzoni an option to buy the remaining 20% of Mondadori Printing, that may be exercised from December 2011, at a cost determined by the fair market value of the company on the date of the operation. Mondadori will retain an option to sell the same 20%, from January 2017, at a price to be determined by the abovementioned criteria.

The agreement also includes an 8-year printing contract – renewable on terms in line with the best market benchmarks – guaranteeing Mondadori an improvement in terms of costs and the maintenance of high standards of quality.

The terms of the operation and the signing of the preliminary contract are subject to the approval of the Italian Competition Authority.

EXPECTATIONS FOR THE FULL YEAR

The current economic and financial situation is marked by exceptional factors and consequent uncertainties that cannot be compared to the past. Both the scale and, above all, the timing with which critical factors become evident, make it difficult to make forecasts about both the medium and the short term.

What is clear is that, even in these recent difficult months, the Mondadori Group has been able to face the inevitable downturn in business with results that are in line with the best expectations, and even better than the previous year, if the add-sales are excluded. At the same time, the company has created the conditions for further improvements in efficiency through an industrial partnership in printing.

As a result, it is possible to confirm, in line with the projections made at the time of the report on the first half of the year to 30 June, that, the management results for the core business, excluding add-on sales activities, at the end of 2008 are in line with those of the previous year.

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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.

Arnoldo Mondadori Editore today announced that it has signed a preliminary contract for the sale of 80% of the share capital of its subsidiary Mondadori Printing S.p.A. to Pozzoni Group.

The transaction price was defined on the basis of an enterprise value for 100% Mondadori Printing of €145 million. The impact of the operation on the Mondadori Group’s consolidated net financial position will be in the region of €123 million.

The operation should be seen in the context of the general trend that increasingly characterises the printing sector at an international level: in which there is a growing tendency towards consolidation and aggregation among the most qualified operators in a market that is undergoing deep structural changes as a result of new competitive pressures, over-capacity in terms of production and a downturn in demand.

The agreement gives Pozzoni Group an option to acquire a further 20% stake in Mondadori Printing, to be exercised from December 2011 at a cost determined by the fair market value of the company at the time of the exercise of the option. Mondadori will retain an option to sell the same 20% stake from January 2017 at a price to be determined by the above mentioned criteria.

The agreement also includes a eight-year printing contract – renewable on terms in line with the best market benchmarks – guaranteeing Mondadori an improvement in terms of costs and the maintenance of high standards of quality. Additional continuity will be guaranteed by the confirmation of the current managing director of Mondadori Printing.

Mondadori Printing S.p.A. is the Mondadori Group company in which the activities of the Printing Division are concentrated, with four plants in Italy – located in Verona, Cles (TN), Pomezia (RM) and Melzo (MI) – and one in Spain at Toledo.

For the year ended 31 December 2007 the Mondadori Printing Division recorded revenues of €439,9 million and in the first half of 2008 the Division generated total revenues of €196,1 million.

Pozzoni Group is one of the most important players in the printing business and comprises 10 operating companies, nine plants (located in the provinces of Milan, Bergamo, Vicenza, Padua and Naples). In 2007, the company recorded consolidated revenues of €166 million, 20% of which from foreign sales.

With this operation Pozzoni Group completes its development strategy based on acquisitions and places the company among the leading European printers in terms of both revenues and staff.

The terms of the operation and the signing of the preliminary contract are subject to the legal notifications to the Italian Competition Authority.