Financial responsibility 2017
Creating value for stakeholders
The aim of Nordic Morning Group is to run the business in a profitable way, which means creating added financial value for key stakeholders, employees, customers and the owner. Important stakeholders for added value also include partners, service providers, investors and the countries and municipalities in which we operate.
Nordic Morning Group follows principles of good corporate governance. Financial management is based on the Group’s policies, effective risk management, and the principles of internal control.
Nordic Morning Group began implementing its new strategy by dividing its operations into three new business areas. Nordic Morning Group now consists of the following business areas: Nordic Morning, Edita Prima, and Edita Publishing. The Group has responded to significant changes in the market by transforming its structures into these more focused companies.
In 2017, Nordic Morning Group turned a considerable profit after two years of losses. The Group’s adjusted operating profit in 2017 was EUR 3.0 million (EUR -1.9 million). Due to the company re-structure, the Group’s adjusted operating costs decreased by EUR 8.6 million (-15 percent ) which boosted profits despite lower revenue. As a result, operating profit excluding non-recurring items improved significantly across all business areas, thanks to strategic measures taken to improve efficiency and achieve cost savings.
Nordic Morning Group’s consolidated net revenue in 2017 was EUR 93.4 million (EUR 103.4 million). Net revenue decreased within the Nordic Morning business area and consequently, the Gothenburg and Malmö offices were closed down. In the Edita Publishing business area, net revenue grew significantly due to a strong performance in advertising sales. In the Edita Prima business area, the net revenue decreased due to the divestment of business in Sweden.
The Group’s equity ratio improved by 10.5 percent, which resulted in a ratio of 46.8 percent (36.3 percent) by end of year.
Nordic Morning Group’s financial performance is explained in full in the 2017 Financial Statements, which can be found at http://reporting.nordicmorning.com/en/financials.
Added value for stakeholders
Nordic Morning Group’s operations bring added financial value to the company’s stakeholders, operating areas and market areas. In 2017, Nordic Morning Group sold products and services to its customers totaling EUR 99.2 million (105.7) and spent EUR 48.1 million (56.7) on buying goods and services from partners. Nordic Morning Group produced added financial value for stakeholders totaling EUR 51.0 million (49.0).
The majority of the added economic value goes towards personnel salaries and other social costs: EUR 41.5 million (49.5). The information on salaries and other remunerations regarding the Board of Directors and the CEO can be found in the 2017 Financial Statements.
Nordic Morning Group’s gross capital expenditure in 2017 totalled EUR 1.7 million (EUR 5.3 million). At the Annual General Meeting, the Board of Directors proposed that a dividend of EUR 0.33/share, totaling EUR 2.0 million (EUR 2.0 million) is distributed.
To safeguard its future, the Group will continue to develop its offering and processes, and will identify further cost saving innovations.
Internal control and risk management
Nordic Morning Group’s aim is to effectively secure the profitability of its business operations through good governance, active internal control and risk management.
Every year, the Group conducts a risk analysis in conjunction with budgeting. Risks are reported and dealt with immediately. However, considering the size of the company and the high level of the company’s internal control, the Board of Directors decided not to issue a separate assignment for 2017, regarding internal control.
Nordic Morning Group pays taxes on its business income to each operating country, in compliance with local laws and regulations. More information on the Group’s tax policy and operating principles is in the table below.
Added value for stakeholders
|Customers||Sales||99 186||105 710||108 060||114 628||123 576||115 491||107 611||110 882|
|Suppliers||Cost of goods, materials and services purchased||48 147||56 703||52 546||56 583||65 590||58 634||50 443||50 745|
|Added value created (tEUR)||51 039||49 007||55 514||58 045||57 986||56 857||57 168||60 137|
|Employees||Wages and salaries, pensions, social costs||41 455||49 513||50 645||45 671||48 393||51 273||48 798||50 342|
|Public sector||Direct taxes||1 026||-143||-132||-102||123||-255||-40||244|
|Financers||Net financing costs||336||254||131||-49||-19||600||707||923|
|Owners||Dividends||2 000||2 000||2 000||1 500||0||0||990||1 740|
|Investors||Investments||1 696||5 297||7 786||3 980||3 379||7 368||5 017||3 312|
|Total added value distributed to stakeholders||46 523||57 055||60 569||51 127||52 200||59 111||55 591||56 689|
|Value added remaining in the company||4 516||-8 048||-5 055||6 918||5 786||-2 254||1 577||3 448|
|Added value created / FTE (tEUR)||93||75||78||88||87||81||77||73|
Tax policy and operating principles
Nordic Morning Group pays taxes on its business income to the countries it operates in, in compliance with local laws and regulations.
Nordic Morning Group’s main markets are located in Finland and Sweden. Nordic Morning Group has no companies or business in other countries or countries considered a tax haven. The Group’s aim is to secure and increase shareholder value through profitable and efficiently-managed business operations.
The Group’s tax policy is also aimed at securing shareholder value by ensuring that the local tax legislation of each operating country is always complied with, and that taxes are paid to the country in question.
In tax matters that are open to interpretation or otherwise complicated, support is obtained from external tax advisors or the tax authorities, who are requested to provide rulings and advice in advance. The Group’s objective is to handle its taxes and other levies appropriately, in as timely a manner as possible, and in full compliance with the law.
The Group has prepared a transfer pricing policy that defines the pricing principles for the Group’s internal cross-border trading. The transfer pricing policy is in line with current official guidelines and legislation.
The Group pays direct taxes on earnings and property. The Group also influences the economies of operating countries through indirect taxes, such as VAT, as well as other similar charges, such as the employer’s charges and social security premiums that the Group collects on behalf of governments.
In 2017, the Group’s profit before taxes was EUR 5.6 million (-14.5 million). In Finland, the Group was in the corporate income tax bracket, but the majority of the taxable profit was accrued in Sweden. The Group will pay income taxes of EUR -1.4 million (0.1 million) for the financial year 2017. The amount of confirmed tax losses carried forward from the previous years amounted to EUR 7.9 million in Sweden at the end of the 2017 financial year. In 2017, the Group’s effective income tax rate was 18.4 (1%).
At the end of 2017, deferred tax assets stood at EUR 0.0 million (0.1 million) and deferred tax liabilities stood at EUR 0.4 million (0.8 million). In accordance with the company’s principals of cautiousness, the Group has not booked any deferred tax receivables from taxes carried forward from previous fiscal years.
Of the taxes paid for the financial year, the most significant item was statutory employer’s contributions at EUR 5.2 million (7.1 million), the majority of which was paid to Sweden.
Of the taxes remitted for the financial year, value added tax payments totaled EUR 9.3s million (13.8 million) and withholding taxes totaled EUR 9.3 million (10.6 million).
In addition, the Group also pays additional mandatory contributions, other tax-related contributions and indirect taxes associated with its purchases, such as road tolls, energy taxes and insurance taxes.
|Profit before tax||7.3||-0.3||-1.7||-14.2||0.0||0.0||5.6||-14.5|
|Utilized tax losses||1.1||1.3||0.0||0.0||0.0||0.0||1.1||1.3|
|Taxes borne 2016-2017|
|Corporate income tax||1.4||0.0||0.0||0.1||0.0||0.0||1.4||0.1|
|Taxes on property||0.0||0.0||0.0||0.0||0.0||0.0||0.0||0.0|
|Taxes collected 2016-2017|
|Tax at source||0.0||0.0||0.1||0.7||0.0||0.0||0.1||0.7|