Against this backdrop, the books market recorded a slight increase, versus the sharp drop in the advertising and circulation market: both represent the main external risk factors identified in the latest Risk Assessment.
|Downturn of the advertising and circulation market.
|Portfolio innovation that points to alternative and innovative forms of communication such as website development, integrated communication platforms and event creation.
|Relevant market trends, with repercussions on Group performance.
|Trade area: ongoing focus on product quality and innovation of the publishing offer also through targeted integration strategies with the development of digital activities.
Education area: focus on product planning for the different programmes to encourage adoption. Ongoing product renewal aimed at increasing the ratio of adopted to sold.
Retail area: customer loyalty activities, fine-tuning of non-traditional sales channels (e-commerce) and reduction of structural costs.
|Drastic reduction in sell-out and average sales, especially for the titles whose sales are event-driven, and stalled due to the pandemic; increased risk across the board, due to margins focused on few successful titles/authors.
|Improvement in publishing efficiency through process rationalization.
Enhancement of the talent scouting unit.
Growth of the audio books channel.
Development of new forms for promoting titles, through the digital channel, as an alternative to the traditional channel.
Synergies with Retail and Digital marketing.
Growing importance is attached to continuously improving the efficiency and effectiveness of logistics processes, and of planning processes not only for raw materials, but also for finished products.
|Inadequate support to the assets on the balance sheet, in light of the current and future market trend (resulting in particular from the pandemic) and of the Group’s financial results.
|Ongoing monitoring of assets and write-off in order to ensure that the business-financial performance is in line with the company plans.
|Receivables: collection time and increased counterparty insolvency.
|Ongoing monitoring of customer credit exposure and use, if required, of hedging instruments.
Preventive analysis of customer solvency.
New and more stringent parameters for credit control vs. franchisees.
New consumer habits have changed as a result of the lockdown, and have increased e-commerce channels, to the detriment of traditional channels.
This contingent situation could irreversibly change customer behaviour, whose habit of making online purchases, overcoming the initial reluctance and fears, could become routine.
In the new scenario that is materializing, the online channel needs to be innovated in order to engage the customer more, improving the customer service process.
In this context, the risks generated by the increased level of competition in the main areas are a priority.
|Growing competition in the Group’s markets, due to increased competitiveness of existing players and to new players coming into the market.
|Further actions to overhaul the business model, including through the use of new platforms.
New search engine in the e-commerce site in order to continue performance development.
New formats and investments in new technologies to support digital events (cybersecurity).
The introduction of new regulations as well as changes to existing ones, including at the level of emergency compliance due to the pandemic, may have an impact in terms of affecting competitiveness and market conditions in specific business areas in addition to generating higher charges in the internal compliance processes.
In this respect, the Mondadori Group, in line with the requirements set out in the Corporate Governance Code for Listed Companies, defined an adequate internal control and risk management system which, through the identification and management of the main company risks, contributes to ensuring the protection of the company assets, the efficiency and effectiveness of company processes, the reliability of financial disclosures, and the compliance with laws and regulations, the company by-laws and internal procedures.
|Criticalities associated with regulatory developments on specific business issues regarding the Group’s areas of operation.
|Constant control and active participation in discussions for the issuance of new regulatory provisions also thanks to the involvement of the main category associations. Timely adjustment of business activities and products to regulatory changes also through the adoption of newly enforced regulations in the Group’s internal policies.
|Burden/criticalities from regulatory obligations following changes in the “traditional” and, in particular, “emergency” legal framework (Privacy, MAR, Whistleblowing, Legislative Decree 49/19, Business Crisis Legislative Decree 14/19).
|Attendance, through the trade associations, in discussions on the issuance of new measures.
Consequently, the Group’s policies and activities are geared to maintaining and improving the value of such intangible assets.
|The materialization of events that may damage the Group’s image and brands could result in the loss of customers, profit and reputation.
|Monitoring and prompt actions on different information sources through appointed functions (external relations, sustainability, and social media).
Main non-financial risks
In order to meet the requirements of Legislative Decree 254/2016, as part of the Group’s increasing commitment to sustainability, which also took its cue from a review of the relevant stakeholders, Risk Assessment included a complete and systematic analysis of the risks associated with the social and environmental effects of the company’s activities.
Health and safety risks do not apply to our business.
Alongside the risks associated with climatechanging emissions are the risks associated with energy efficiency, which if low could adversely affect economic benefits, and the risks associated with potential interruptions in paper supply. It should also be noted that social and environmental performance is becoming increasingly important in assessing the Company’s suppliers.
|Growing pressure from stakeholders and national and international institutions with regard to climate change.
|Constant oversight of the issue through continuous monitoring of overall greenhouse gas emissions produced by the various operations of the Group (such as product distribution and logistics and business travel) and the identification of effective actions for their reduction.
|Loss of opportunities for economic benefits due to reduced effectiveness of energy efficiency measures.
|Constant oversight of the issue through continuous monitoring of overall energy consumption, strong focus on the upgrading of IT equipment and identification of energy efficiency measures in workplaces.
|Interruptions in the production process due to the shortage of paper as a raw material.
|Gradual extension across the Group of the use of FSC and PEFC certified paper.
Against this backdrop, even for the Mondadori Group, the risks associated with the infringement of internal rules and relevant laws in force are of priority concern.
|Critical issues related to conduct infringing the laws in force by those who act in the name or on account of the Group.
|Constant oversight of the issue through organizational measures and controls to help ensure and spread proper conduct (personnel training, selection of non-publishing products bundled with the publications, monitoring of the legal framework, networking with other companies in the sector).
Adoption of the whistleblowing procedure, with the relating implementation of an IT system managed externally (to guarantee violator and whistleblower privacy) as a communications channel to handle reporting; amendment of Model 231 of the parent company and its subsidiaries; employee training plan.
Strong commitment by Top Management to the activities of the Procedures Committee.
Drafting of a specific anti-corruption procedure following a specific risk assessment.
This is why the Mondadori Group is committed to establishing true dialogue with its people, to encourage a greater understanding of the respective needs and to find solutions to any existing issues.
|Risk that technological development, changes in the competitive scenario and low turnover rates may lead to a gradual skills gap in personnel.
|Creation and implementation of engagement and training plans able to provide the skills needed to develop innovative solutions that can correctly interpret changes in the market and in society.
|Risk that a more dynamic jobs market may make it harder to retain people and attract new talent.
|Continuous improvement in human resources management practices, in terms of negotiation, career management support, training, retention and job rotation policies.