III. FORECAST, OPPORTUNITY AND RISK REPORT
1. Forecast Report
Despite the on-going Corona pandemic, dpa developed largely in line with expectations in 2021 and was even able to grow noticeably in some business areas – especially the digitally-driven ones. With a net profit of 2.0 million euros, the forecast from the previous year was slightly exceeded and the result is thus at the upper end of the target corridor.
It should be noted that the result was influenced by an allocation to the provident fund that was 3.5 million euros higher than in the previous year. Without this special effect, the result would have been correspondingly higher. The reason for the improved result was, in addition to the significantly increased revenue with slightly disproportionately lower cost increases on balance, the strongly increased income from profit and loss transfer agreements from news aktuell and dpa-infocom.
For the 2022 financial year, we expect only a slight increase in revenue in view of continuing circulation losses and the associated decline in revenue in the core market as well as the above-average growth in the previous year, which is mainly driven by the development of the newer activities such as Custom Content, dpa-Select or dpa-Audio. In addition, there was a one-time increase in turnover from the merger of the photo agency Zentralbild GmbH with the dpa parent company.
Owing to slightly rising expenses resulting from turnover-driven cost items and increased technical costs for the acceleration of essential innovation projects, coupled with slightly declining profit contributions from the subsidiaries, we expect to achieve a result of about 1.3 to 1.5 million euros, taking into account an allocation to the provident fund of 3.7 million euros. The extent to which the Corona crisis will leave its mark on the 2022 financial year remains to be seen and this may require renewed countermeasures as in the two previous years.
Looking ahead, we expect total revenues to increase slightly again in 2023 and anticipate a net profit for the year similar to that of 2022.
The extent to which we can maintain this will be determined by the duration of the crisis situation and its effects on the 2022 business year.
2. Opportunity and Risk Report
2021 pandemic has shaped the work of the agency and its employees. Despite this, dpa has managed to operate successfully in economic terms and to present stable figures. Consistent ongoing cost management together with constant turnover in the core business as well as renewed progress in the growth markets ensure that dpa remains in safe waters. Since remote working has become part of everyday life as a result of Corona, the management and chief editors have been working intensively on adapting the premises in Hamburg and in Berlin.
The past year was used to carry out comprehensive restoration and modernisation measures in the building on Hamburg’s Mittelweg. New working environments have found their way into the ground floor of the Wilhelminian villa as well as into the former open-plan room. Other areas at the location will follow. Based on the assumption that in the future more employees will continue to work from home or other remote locations, dpa has implemented a modern and future-proof concept that meets the requirements of a digitally-driven media house. Shared desks, soundproofed work boxes as well as relaxation and communication zones have been adapted to the work processes and promote a collaborative and creative environment.
The Berlin central editorial office is also reorienting itself and preparing for a move in the first half of 2023. New premises have been rented in the same building complex on Markgrafenstraße, which can be redesigned to meet the requirements of a multimedia news agency. Sound and video studios are being created in the new newsroom, as well as shared desks and activity-based work environments.
dpa knows that in order to attract and retain highly qualified staff, the company must offer a contemporary and flexible working environment. This is a key opportunity for the agency’s successful future.
Another important factor for long-term stable economic development is the continued implementation of the new pricing model for basic services in dpa’s core markets, which came into effect in 2020. Around two thirds of publishing customers now work on the basis of the new model. Its basis is the calculation of an integrated reach from print and online and the associated simplification and clarity for customers.
The European Newsroom (ENR) initiative promises further impulses for international business as well as for stronger networking of the agency in Brussels. Under the leadership of dpa, a new workspace and meeting place for the correspondents of European news agencies is being created. The European Union is funding this project with around 1.8 million euros, distributed among all 16 news agencies participating in the project. The newsroom should be ready by mid-2022.
A completely new business area with growth opportunities is the curation of content for the Facebook News service. The platform has set itself the goal of presenting journalistic quality content from a variety of media houses more visibly and prominently for users. Since March 2022, dpa has been responsible for the selection and provision of the contributions. The agency has set up a separate team for this purpose, which implements this task independently of the general editorial team. dpa does not provide its own content.
With the introduction of the management method Objectives & Key Results, the management is setting a new agenda. OKR is a procedure for focused, transparent and overarching planning in quarterly steps in which management and employees are jointly involved. In contrast to top-down annual planning with targets without continuous adjustments, important goals (objectives) are defined every three months and linked to measurable results (key results) to be achieved in the respective quarter. The method is aligned with the overall goals of the company and is transparent to all. The management is confident that with the help of OKR, projects and goals can be implemented better and faster in an ever-changing digital business world and that dpa’s agility will increase.
The number of cyber-attacks on German companies has increased sharply in recent years. Media houses have also become more of a focus for hackers. At dpa we are aware of this threatening situation and the resulting risks and we have initiated various protective measures as part of risk management.
An information security team with two full-time employees has been established, headed by an information security officer. A tool-based awareness campaign in the form of training and test emails was launched in the second half of the year to contain the growing threat posed by so-called phishing emails. To ensure that the dpa is also protected against DDoS attacks, all of the agency’s data traffic has been routed through a cyber security provider since the middle of the year, filtering out possible attacks.
In order to counter the default and liquidity risk of the financial assets and the associated receivables, the Deutsche Presse-Agentur operates an active financial risk management. Liquidity surpluses are invested in the short and medium term in accordance with the specified guidelines. By filling executive functions at affiliated companies and participations with our own employees and by adhering to the dual control principle, we can minimise risks and react to current developments at short notice at any time. Trade receivables (including those due from shareholders) are monitored promptly and reduced through consistent receivables management.
Currently, there are no discernible risks that could jeopardise the existence of the company.
Despite stable figures for 2021 and a cautiously optimistic outlook for 2022, dpa remains committed to the highest level of vigilance with regard to the effects of the Corona pandemic. It is vital to identify the risks this involves at an early stage and, where necessary, to take immediate and appropriate countermeasures.