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.
Financial performance
During 2018 and 2017, focus has been on the repackaging of Nordic Morning Group’s capabilities and services to better meet today’s client needs and the digital business environment of tomorrow. This work has been done in close collaboration with clients to deliver a superior customer experience, driving growth and customer loyalty. 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 2018, Nordic Morning Group’s operating profit was EUR 0.9 (5.9) million, which was EUR 5.1 million lower than in 2017. The non-recurring income included in the operating profit totaled EUR 0.0 (5.8) million. Non-recurring expenses amounted to EUR -0.5. (-2.9) million. The Nordic Morning Group’s operating profit excluding non-recurring items was EUR 1.3 (3.0) million.
The Nordic Morning Group’s consolidated net revenue was EUR 76.4 million (EUR 93.4 million). Net revenue declined particularly in Sweden due to restructuring measures carried out in the Edita Prima and Nordic Morning business areas in the previous year. In the Edita Publishing business area, net revenue decreased due to lower advertising sales revenue.
The Group’s equity ratio improved by 3.1 percent, which resulted in a ratio of 40.3 percent (37.2 percent) by end of year.
Nordic Morning Group’s financial performance is explained in full in the 2018 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 2018, Nordic Morning sold products and services to its customers totaling EUR 77.0 million (99.2) and spent EUR 35.9 million (45.7) on buying goods and services from partners. Nordic Morning Group produced added financial value for stakeholders totaling EUR 41.1 million (53.5).
The majority of the added economic value goes towards personnel salaries and other social costs: EUR 35.3 million (41.5). The information on salaries and other remunerations regarding the Board of Directors and the CEO can be found in the 2018 Financial Statements.
Nordic Morning Group’s gross capital expenditure in 2018 totalled EUR 1.8 million (EUR 11.0 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 considering risk analysis in conjunction with budgeting. Risks are reported and dealt with immediately. However, 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 2018, regarding internal control.
Tax policy
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
| Stakeholder | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|---|---|---|
| Customers | Sales | 76 981 | 99 186 | 105 710 | 108 060 | 114 628 | 123 576 | 115 491 | 107 611 | 110 882 |
| Suppliers | Cost of goods, materials and services purchased | 35 891 | 45 670 | 56 703 | 52 546 | 56 583 | 65 590 | 58 634 | 50 443 | 50 745 |
| Added value created (tEUR) | 41 090 | 53 516 | 49 007 | 55 514 | 58 045 | 57 986 | 56 857 | 57 168 | 60 137 | |
| Stakeholder | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 |
| Employees | Wages and salaries, pensions, social costs | 35 339 | 41 455 | 49 513 | 50 645 | 45 671 | 48 393 | 51 273 | 48 798 | 50 342 |
| Public sector | Direct taxes | 26 | 1 026 | -143 | -132 | -102 | 123 | -255 | -40 | 244 |
| Financers | Net financing costs | 636 | 421 | 254 | 131 | -49 | -19 | 600 | 707 | 923 |
| Charitable organizations | Donations | 6 | 10 | 134 | 139 | 127 | 124 | 125 | 119 | 128 |
| Owners | Dividends | 2 230 | 2 000 | 2 000 | 2 000 | 1 500 | 0 | 0 | 990 | 1 740 |
| Investors | Investments | 1 796 | 11 024 | 5 297 | 7 786 | 3 980 | 3 379 | 7 368 | 5 017 | 3 312 |
| Total added value distributed to stakeholders | 40 032 | 55 937 | 57 055 | 60 569 | 51 127 | 52 200 | 59 111 | 55 591 | 56 689 | |
| Value added remaining in the company | 1 058 | -2 421 | -8 048 | -5 055 | 6 918 | 5 786 | -2 254 | 1 577 | 3 448 | |
| Added value created / FTE (tEUR) | 87 | 98 | 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.
Tax report
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 2018, the Group’s profit before taxes was EUR 0.2 million (5.5 million). In Finland, the Group was in the corporate income tax bracket, but the taxable profit was negative in Sweden. The Group will pay income taxes of EUR -0.3 million (-1.4 million) for the financial year 2018. The amount of confirmed tax losses carried forward from the previous years amounted to EUR 8.5 million in Sweden and to EUR 0,8 million in Finland at the end of the 2018 financial year. In 2018, the Group’s effective income tax rate was 10.7 (18.4 %).
At the end of 2018, deferred tax assets stood at EUR 0.1 million (0.1 million) and deferred tax liabilities stood at EUR 0.2 million (0.4 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 4.1 million (5.2 million), the majority of which was paid to Sweden.
Of the taxes remitted for the financial year, value added tax payments totaled EUR 10.2 million (9.3 million) and withholding taxes totaled EUR 7.7 million (9.3 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.
Tax contribution
| M€ | Finland | Sweden | Ukraine | Group | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||
| Turnover | 43.8 | 45.6 | 32.6 | 47.8 | 0.0 | 0.1 | 76.4 | 93.4 | |
| Profit before tax | 1.8 | 7.2 | -1.5 | -1.7 | 0.0 | 0.0 | 0.2 | 5.5 | |
| Utilized tax losses | 0.7 | 1.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.7 | 1.1 | |
| Personnel | 257 | 258 | 215 | 285 | 0 | 5 | 472 | 548 | |
| Taxes borne 2017-2018 | |||||||||
| Corporate income tax | 0.3 | 1.4 | 0.0 | 0.1 | 0.0 | 0.0 | 0.3 | 1.4 | |
| Employment taxes | 0.1 | 0.1 | 4.0 | 5.1 | 0.0 | 0.0 | 4.1 | 5.2 | |
| Taxes on property | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Other taxes | 0.0 | 0.0 | 0.6 | 0.5 | 0.0 | 0.0 | 0.6 | 0.5 | |
| Taxes collected 2016-2017 | |||||||||
| Payroll taxes | 3.8 | 4.2 | 3.9 | 5.1 | 0.0 | 0.0 | 7.7 | 9.3 | |
| Tax at source | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | |
| Sales VAT | 11.1 | 10.5 | 10.3 | 14.9 | 0.0 | 0.0 | 21.3 | 25.4 | |
| VAT, purchases | -6.8 | -7.5 | -4.3 | -8.5 | 0.0 | 0.0 | -11.1 | -16.1 | |
| VAT, returns | 0.0 | 0.0 | 0.0 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | |