The current market context, which has been set out in detail in the foregoing paragraph, is mirrored in additional elements of risk tied to trade receivables,
arising from lengthened average collection times, potential contract non-fulfilment and cases of insolvency of counterparties, to poor warehousing in terms of misguided planning processes in purchasing and print runs, and to inadequate support given to the assets of the Company’s balance sheet.

The Board of Directors of Mondadori recently updated its “General Policy on the management of financial risks”, which governs how financial risks deriving from Group activities are dealt with, by defining guidelines that set objectives, hedging mechanisms, counterparties and operational limits. This update, however, kept to the core principles of the Policy: to perform transactions in derivatives only with a hedging purpose, and to give priority to bless complex technical forms, and simpler contract structures and risk yield profiles.

Main risksMitigating actions
Inadequate support with regard to the book value of assets in the light of current and future changes to the market situation and the economic and financial results of the Group.Constant monitoring of assets and write-offs to ensure that economic and financial performance is in line with the plans drawn up.
Risk linked to inefficient inventory management, in terms of errors in the supply and circulation planning processes which could translate into possible stock shortages and a high amount of stock to be written down.Improvement of publishing efficiency and measures to streamline processes.
Receivables: extension of collection timescales and increase in counterparty bankruptcies.Regular monitoring of the credit exposure of customers and possible use of hedging instruments. Preliminary analysis of customer reliability. Inclusion of financial balance in management incentivisation criteria.