Villu Zirnask

Estonia has made great progress in the speed of publishing some economic data during the corona crisis. For example, when writing these lines on November 24, it was known that the total turnover of Estonian companies in September was at the same level as in 2019. The labour market situation could even be analysed on the basis of indicators of the week before last, based on data available from Statistics Estonia. Unfortunately, companies' financial statements are not available as quickly.

This year was even worse than usual, as companies were allowed to submit annual reports by the end of October instead of the end of June, an opportunity that many took advantage of. However, the top companies in the TOP 101 ranking of Estonia's most valuable companies can be commended for being much faster. For example, this year’s winner Eesti Energia gave a conference call introducing the audited results of the 2019 financial year to investors on 28 February, Tallink published its audited annual report on 20 April and Swedbank submitted its reports to the Central Commercial Register on 21 April.

If all companies were this fast, the publication of the TOP 101 could be a spring event, and in a normal year would more or less reflect the value of companies at the time of publication. Perhaps not in this, particularly abnormal year though, because even if the rankings were compiled in May, one’s thoughts would still immediately turn to how much the corona crisis would reduce the value of one company or another.

The total turnover of companies in September mentioned at the beginning of the story is one of the indicators promising some optimism about the future. This suggests that if COVID-19, which is now once again putting pressure on the economy, is suppressed, either through vaccine or the arrival of spring, the economy will recover immediately.

Sector-specific barometers and the economic confidence index summarising them, compiled by the current flagship of operational and prudent economic information, the Institute of Economic Research, confirm what the monthly turnover reports will show a little later. In September-October, the "mood" of Estonian companies was not much lower than it had been around the turn of the year in December-January, and was much better than in April-May-June.

By the way, when comparing the TOP 101 in 2019 and 2020, the so-called total value seems to be in line with the economic confidence index. In the new ranking, the value of companies is mostly a little lower than in the previous year's ranking. And the economic confidence index was also slightly lower throughout 2019 - the year on which the latest TOP 101 is based - than in 2018, on which the previous TOP 101 is based.

If the “Vision for the Real-time Economy 2020-2027” recently prepared by the Ministry of Economic Affairs and Communications was realised, it would theoretically be possible for the TOP 101 to become a fairly real-time document about the champions of the Estonian economy within 10 years. After all, this vision sets out that by 2025, Estonia will switch to data-based reporting, which means that more than 80% of companies would submit to the state reports automatically generated on the basis of standardised transaction information. Among other things, by 2023, an early indicator capability based on real-time data would be created for areas important to the country, and by 2027, real-time and consensual sharing of company data with third parties (the state, a counterparty, a bank) would be achieved.

Sounds good? Probably not in the opinion of all companies - why else would many TOP 101 companies submit their annual reports just before the deadline, although the technical readiness to submit them several months in advance probably exists in most of them.

Tieto EVRY's study, on which the country's vision for the real-time economy is largely based, emphasises that the abolition of existing reports and the automatic provision of corporate transactions and personnel information to the state at the transaction level requires a social agreement and corresponding legislative changes. For example, if data sharing was to occur on a transaction-by-transaction basis earlier in the process, then auditors should review the source documents and accounting records on an ongoing basis as well.

The coming years will show where this vision will go, but the discussion that took part in the first half of 2010s does not inspire much optimism. Thinking back, in 2013 Statistics Estonia proposed that the deadline for submitting the annual report be changed to four months instead of six if the reports need to be audited and three months if no audit is required. Instead, we got an exception this year that allowed a ten-month deadline ...

However, even the current reports provide more up-to-date information than last year's results. For example, some companies include an appendix at the end of the report, “Events after the Reporting Period,” which can shed some light on how COVID-19 might affect them.

However, due to the insidious nature of the current corona crisis, it is not easy to predict the potential extent of the negative effects. For example, Tallink, which will probably no longer hold 2nd place in the TOP 101 in 2021, states in the appendix: „As it is not known how long the current coronavirus crisis and the associated travel and movement restrictions will last, and how the post-crisis recovery will proceed, the financial impact of the COVID-19 crisis cannot be reliably assessed at this time."

Synlab Eesti OÜ, which places 84th in the ranking, which may become one of the biggest gainers in the ranking next year, as it conducts millions of euros worth of tests for corona and its antibodies, prefers to remain tight-lipped and modest despite excellent financial prospects: „The existence of the new coronavirus (COVID-19) was confirmed at the beginning of 2020 and this has now spread throughout the world, including Estonia, causing problems for companies and economic activities, which may necessitate changes in the accounting estimates used by the Management Board in future reporting periods."

It is not currently easy to assess the value of unlisted companies if they themselves prefer to remain silent about their wins and losses.