Annual Report 2017
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III. FORECAST, OPPORTUNITY AND RISK REPORT 

1. Forecast report 

dpa developed as expected in 2017 and with a result of 1.2 million euros slightly exceeded the previous year’s forecast. 

For the 2018 financial year, we expect a slight revenue growth of 1% to 1.5%, despite the continued circulation losses and the related decline in revenues in core services.  

Combined with moderate increases in costs as well as a constant level of earnings contributions from the subsidiaries and holdings, we are again expecting to achieve a result in the region of 1 million euros.  

In addition, as well as the positive development of new activities such as Custom Content and dpa-Agenda, product initiatives outside the core services and the well-developing non-media market segment, the particularly successful switch to an international image supply for dpa-Bildfunk will have an important impact on the result.  

Looking ahead, we also anticipate a slight increase in total sales for the year 2019 and, on balance, expect a net income for that year similar to 2018.

2. Opportunity and risk report 

As in the previous year, 2017 also stood for the dpa's readiness for change and its ability to change. This has challenged the organization in every area. The agency managed, however, once again to expand its business. In the newspaper sector, market shares have been maintained at a high level, and the number of domestic and international customers remains at a historic high. 

However, greater growth was again achieved outside of the traditional core market and with individualized offers; these successes have encouraged us to continue along our current path. At the same time, during the past financial year there was a further intensification of cooperation with other agencies. The cooperation and sales cooperation with the US news agency AP, which started in early 2013, was also outstanding in its fifth year of existence. AP services were able to secure a permanent place in the German media market as an independent additional journalistic offer of dpa. Furthermore, after the early extension of the AP agreement in 2016, the cooperation was even significantly expanded last year. After the end of the long-standing cooperation with the European Pressphoto Agency epa, which supplied international images, dpa is increasingly focusing on the AP image service and the picture desk augments this with additional, global cooperation agreements to ensure an image supply this both seamless and of the highest quality.  

In November, dpa made a minor acquisition, purchasing just under 4 percent of the British financial news agency Alliance News Ltd., which works closely with dpa-AFX and is an important international customer for its English feed. Britain’s Press Association also took a stake in the company at the same time and under the same conditions. Both parties hope to work together even more closely in the future within this market segment.  

Acquisitions and co-operations are important pillars of dpa’s overall strategy. However, this strategy also includes keeping up with the digitalization of the markets and, in this regard, driving forward the further development of the modes of production and the product portfolio.  

The editorial service, which was newly founded in Hamburg at the beginning of 2014 and produces so-called Custom Content particularly for the non-media market, also saw extremely successful development in 2017. This has specifically served a market segment outside the usual circle of customers.  

An essential part of our corporate culture is the constructive cooperation with employee representatives. This has been evident particularly in connection with the design and implementation of the necessary change processes and will continue to be a guiding principle for the company’s management and editorial board.  

There continue to be risks due to the media industry’s well-known problems and especially those of our customers in the daily newspaper sector. Print circulation continues to fall – with a few exceptions. Many media companies feel a sustained high cost pressure. It cannot be ruled out that in the medium term further newspaper titles will be discontinued or editorial teams merged.  

On the other hand, a factor reducing risk is the obvious continuing loyalty of customers to dpa. Numerous long-term contracts with major customers have been renewed. Recently, various media companies from the shareholder group have also been able to achieve initial success by putting up a partial paywall for their digital services. However, it is still unclear how these digital revenues will be able to compensate for declining revenues from print editions in the medium term.  

In order to counteract the default and liquidity risk of the financial assets and the associated receivables, we operate an active financial risk management. Liquidity surpluses are invested in the short and medium term in accordance with the existing guidelines. By filling managerial positions at the affiliated companies and holdings with our own employees and adhering to the dual control principle, we can minimize risks and react at short notice to current developments.  

Trade receivables (including those against shareholders) are tracked promptly and managed through a consistent receivables management.  

dpa depends on an IT infrastructure that is always at the ready. Risks exist due to technical system failures (power failures) or external intervention such as, for example, hacker attacks. The extensive backup structure includes emergency generators, continuous data backup and mirroring, and a comprehensive firewall and IT security architecture.  

At present, there are no identifiable risks that are likely to occur.