III. FORECAST, OPPORTUNITY AND RISK REPORT
1. Forecast report
Despite the omnipresent corona pandemic, dpa’s performance in 2020 was in line with expectations and there were even gains in some business areas – especially the digitally-driven ones. With earnings of 1.6 million euros, the forecast figure from the previous year was at the upper end of the target corridor.
For the financial year 2021 we anticipate revenue growth despite continuing circulation losses and the associated revenue declines in our core business. A favourable impact derives from the strong development of newer activities such as Custom Content, dpa-Select or the audio service as well as from the first full-year reporting of the acquired TNN video business.
We expect once again to generate earnings of around 1.0 million euros. This projection takes into account a slight increase in expenses for revenue-driven cost items, higher technical costs for speeding-up key innovation projects, and upcoming tariff adjustments, coupled with slightly lower earnings contributions from subsidiaries. The extent to which the corona crisis will also leave its mark on the 2021 financial year is currently difficult to gauge and renewed countermeasures may be needed as in 2020.
For 2022 we have also assumed a slight increase in total sales. The degree to which we will be able to live up to this expectation depends on how long the crisis lasts and on its aftermath. Whatever happens, the situation will have to be reassessed in autumn 2021.
2. Opportunity and risk report
The German Press Agency can look back on a successful year although it was marked by the effects of the pandemic. The agency has coped well with absorbing the economic effects. The news agency has posted solid figures. Consistent cost management combined with steady sales in the core business and noticeable progress in growth markets have kept dpa in safe waters.
The positive response of many publishing customers to dpa’s new pricing model, which has been in use since the beginning of 2020, is gratifying. The model takes greater account of online and print reach. The German Press Agency began efforts at an early stage to offer new formats with a high utilizable value on the customer side. A growing number of publishers and associations are choosing to cooperate with the agency on this new contractual basis. This enables dpa to push forward with innovation, plan for the long term and ensures its financial success so that it can continue to provide the media in Germany and around the world with independent and verified news.
The volume of misinformation on the internet continues to increase, leading to a growing feeling of uncertainty in society. Social networks are the main focus. The German Press Agency feels it has a social responsibility to curb misinformation. The agency has further expanded its fact-checking and verification teams and intensified their activities. Under the umbrella of dpa-infocom, fact-checks are now produced by dpa editorial teams in six European countries (Germany, Austria, Switzerland, the Netherlands, Belgium and Luxembourg). Their contribution to the economic success of the dpa group is growing.
Last year was marked by an audio boom and this was reflected in a wide-ranging offer of podcasts on various streaming platforms. Under the Rufa umbrella, dpa now produces various white-label and commissioned podcasts. Beyond that, the agency is developing a central audio hub which provides audio producers with legally-safe original sounds and other material for direct use.
As the German media’s agency, dpa is involved in various projects under the motto of “Member Value” which contribute to the further development of journalism and to supporting the agency’s shareholders in their economic and journalistic goals. The DRIVE project, for example, is about creating an inter-publishing house database on the use of digital offerings. The project partners use artificial intelligence and self-learning algorithms to determine the best formats for attracting paying digital customers.
The #UseTheNews project is a joint initiative. Together with the Hamburg Senate and the BDZV, dpa is looking into the news usage and literacy of young people – especially in the target group of 14 to 24-year-olds. The project rests on three pillars. These are a scientific study led by the Hamburg Leibniz Institute, a News Literacy Lab in which journalists work on new news products and the development of a news curriculum to boost the teaching of news literacy in schools in cooperation with educational institutions and media partners (Open News Education – ONE). Around 25 partners from publishing houses, TV and radio stations, academia and civil society are involved in #UseTheNews. They hope to gain new insights and set the agenda for future business models.
The German Press Agency sees more opportunities than risks in the new working conditions prompted by the pandemic experience. From June 2020, the company began working intensively on the new worlds of work project with long-term consequences for dpa locations and teams. In spring 2021, a group company agreement was concluded that regulates working from home.
In order to counter the default and liquidity risk of financial assets and the associated receivables, we pursue an active financial risk management system. Liquidity surpluses are invested in the short and medium term in accordance with the existing guidelines in order to maintain their value. By filling board positions at affiliated companies and participations with our own employees and by observing the principle of dual control, we can minimize risks and react at short notice to current developments at any time. Trade receivables (including those due from shareholders) are monitored promptly and reduced through consistent receivables management.
Despite stable figures for the year 2020 and a cautiously optimistic outlook for 2021, dpa remains committed to the highest level of vigilance with regard to the impact of the corona pandemic. Only by doing so can it identify the risks in good time and take swift countermeasures if necessary.