DOVRE GROUP TRADING STATEMENT JANUARY 1 – MARCH 31, 2016

Espoo, Finland, 2016-04-28 07:45 CEST (GLOBE NEWSWIRE) --
Dovre Group Plc                    Company announcement                          April 28, 2016 at 8.45 a.m.

DOVRE GROUP TRADING STATEMENT JANUARY 1 – MARCH 31, 2016

ADAPTING TO THE MARKET SITUATION, GROUP LOWERS GUIDANCE

Dovre Group Plc issues today a trading statement on the Group’s operating performance for the first quarter  of 2016. As of January 1, 2016, Dovre Group applies the possibility allowed by amendments to the Finnish Securities Markets Act entered into force on November 26, 2015 not to release an interim report for the first three months and the first nine months of the financial year. Instead, the company will release a quarterly trading statement for each period in question.

The figures presented in this trading statement are not audited. Last year’s corresponding period in parentheses. Comparatives for Q1/2015 not including Norwegian Petroleum Consulting Group AS (NPC). NPC’s financials reported as part of Dovre Group’s Project Personnel business area as of May 28, 2015.

Key highlights January – March 2016:

• Net sales EUR 25.0 (26.2) million – decline 4.6%
• Project Personnel: net sales EUR 23.2 (24.1) million – decline 3.6%
• Consulting: net sales EUR 1.7 (2.1) million – decline 16.3%
• Operating result EUR 0.0 (-0.1) million
• Net cash flow from operating activities EUR 0.2 (0.0) million
• Seven new frame agreements secured

New guidance for 2016: Net sales are expected to be EUR 80 - 100 million and operating result is expected to be positive.

PATRICK VON ESSEN, CEO:

“Our Project Personnel business is facing the most challenging year in a decade. Volumes and margins are depressed and declining. In addition, weak currencies in our main markets, Norway and Canada, impact our top line. The price of oil remains low and volatile. However, the oil price has trended upwards since a ten year low in February. In its latest forecast, U.S. Energy information Administration predicts that global consumption of liquid fuels catches up with production in 2017. Based on this and similar forecasts from other independent market analysts, we believe that the oil & gas service market will bottom out in 2016. We expect a gradual increase in demand starting in 2017.

In fierce international competition, we secured two new frame agreements with oil and gas clients during the first quarter. Our diversification into new client segments is gaining momentum, and we secured five new frame agreements during the first quarter. We target clients and major projects in power generation, power transmission, infrastructure, petrochemical industry, metals & mining, and pulp & paper. Our new clients value our experience with large projects, our network of project professionals, our global reach and our efficient service. The new client sales pipeline strengthened throughout the first quarter. Although volumes are still low, we are encouraged by these achievements. We are on track to reach 25% of sales in new client segments by the end of the year. This new business only partly mitigates the decrease in demand in upstream oil and gas.

In Project Personnel, we continue to focus on new client acquisition and cost efficiency. We have taken further steps to gear our organization towards sales, while at the same reducing our fixed cost. The target is to reduce fixed costs by more than EUR 0.5 million per annum, which will have full effect starting Q3 of this year. In addition, we continue to improve and digitalize our work processes.

Our Consulting business has had a good start to the year. The decline in Consulting’s net sales compared to Q1/2015 was primarily due to the impact of the weaker Norwegian crown and the sale of the Group’s consulting business in Sweden in Q4/2015. Norway continues with solid profitability, and Finland’s profitability has improved significantly. Both business units continue to have a strong order stock.”

GUIDANCE FOR 2016

The Group lowers its guidance for 2016. We are seeing further reductions in rates and volumes combined with low visibility. We will also discontinue a partnership in Norway, which has yielded significant volume at low margin. The impact is lower net sales but improved relative gross margin.

New guidance for 2016: Net sales are expected to be EUR 80 - 100 million and operating result is expected to be positive.

Previous guidance: Net sales are expected to exceed EUR 100 million and operating result is expected to be positive.

NET SALES

In Q1, Dovre Group’s net sales were EUR 25.0 (26.2) million. Project Personnel accounted for 93 (92) % and Consulting for 7 (8) % of the Group’s net sales. Project Personnel’s net sales were EUR 23.2 (24.1) million, while net sales for Consulting totalled EUR 1.7 (2.1) million. In Q1/2015, the Group’s net sales including NPC (pro forma) would have been EUR 39.9 million.

PROFITABILITY

In Q1, the Group’s operating result was EUR 0.0 (-0.1) million. Project Personnel’s operating result was EUR 0.3 (0.5) million. Consulting business area’s operating result was EUR 0.2 (0.2) million. The operating result of the Group’s Other functions was EUR -0.4 (-0.7) million. In Q1/2015, the Group reported EUR 0.3 million as non-recurring costs related to external advisory services under Other functions.

PERSONNEL

On March 31, 2016, Dovre Group employed 617 (473) people, 570 (420) of which were employed by Project Personnel, 41 (48) by Consulting and 6 (5) by Other functions.

CASH POSITION

On March 31, 2016, the Group’s cash and cash equivalents totaled EUR 10.2 (10.5) million. The Group’s interest-bearing liabilities were EUR 6.0 (1.5) million, a total of EUR 3.9 (1.5) million of which were current and a total of EUR 2.1 (0.0) million non-current. In Q1, net cash flow from operating activities was EUR 0.2 (0.0) million, which includes EUR 0.4 (0.3) million change in working capital. In Q1, the Group paid a total of EUR 1.0 (0.0) million in dividends.

OTHER EVENTS

Dovre Group Plc’s listing prospectus concerning the listing of a total of 36,453,018 new shares in the company, issued as direct issue as part of the acquisition of NPC in May 2015, was approved by the Finnish Financial Supervisory Authority on March 8, 2016. The shares were listed on the official list of Nasdaq Helsinki Ltd on March 10, 2016. The shares are subject to a three (3) year lock-up period from the date of issue, lasting until May 28, 2018.

Espoo, April 27, 2016

Dovre Group Plc
Board of Directors

For additional information, please contact:

Dovre Group Plc

Patrick von Essen, CEO
(patrick.essen@dovregroup.com)

Heidi Karlsson, CFO
(heidi.karlsson@dovregroup.com)

tel. +358-20-436 2000
www.dovregroup.com

Distribution

Nasdaq Helsinki Ltd
Major media
www.dovregroup.com