Interim / Quarterly Report • Jul 24, 2014
Interim / Quarterly Report
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(Unless otherwise stated, last year's corresponding period in parentheses.)
| 4-6 | 4-6 | Change | 1-6 | 1-6 | Change | 1-12 | |
|---|---|---|---|---|---|---|---|
| EUR million | 2014 | 2013 | % | 2014 | 2013 | % | 2013 |
| Net sales | 24.1 | 25.3 | -4.7 | 48.8 | 49.7 | -1.7 | 98.5 |
| Operating result | 0.0 | 0.8 | -96.2 | 0.3 | 1.1 | -71.0 | 2.4 |
| % of net sales | 0.0 | 3.3 | 0.7 | 2.3 | 2.4 | ||
| Result for the period | -0.3 | 0.4 | -161.4 | -0.2 | 0.5 | -135.4 | 1.2 |
| % of net sales | -1.1 | 1.7 | -0.3 | 1.0 | 1.2 | ||
| Result for the period incl. | |||||||
| discontinued operations | -0.3 | 4.6 | -105.7 | -0.2 | 4.8 | -103.5 | 5.6 |
| % of net sales | -1.1 | 18.3 | -0,3 | 9.7 | 5.5 | ||
| Net cash flow from operations | 0.1 | -0.6 | -109.0 | -1.2 | -0.2 | -318.2 | 3.7 |
| Net cash flow from operations | |||||||
| incl. discontinued operations | 0.1 | -0.8 | -106.7 | -1.2 | -0.7 | 88.8 | 3.2 |
| Change in cash and cash | |||||||
| equivalents, incl. discontinued | -4.4 | 2.5 | -264.1 | -6.1 | 2.6 | -310.5 | 4.4 |
| 4-6 | 4-6 | Change | 1-6 | 1-6 | Change | 1-12 | |
|---|---|---|---|---|---|---|---|
| EUR million | 2014 | 2013 | % | 2014 | 2013 | % | 2013 |
| operations | |||||||
| Debt-equity ratio (Gearing), % | -31.4 | -41.8 | -25.0 | -31.4 | -41.8 | -25.0 | -50.0 |
| Earnings per share, EUR (excl. | |||||||
| discontinued operations): | |||||||
| Basic | 0.00 | 0.01 | 0.00 | 0.01 | 0.02 | ||
| Diluted | 0.00 | 0.01 | 0.00 | 0.01 | 0.02 |
"Dovre Group's growth in local currencies continues, but lower profit margins in Norway, strong investment in growth, and a number of extraordinary items in the second quarter affected the Group's profitability.
In January – June 2014 the Group's net sales were EUR 48.8 million. Net sales decreased in euros by approx. 2%, but grew in local currencies by almost 8%. Operating result was EUR 0.3 million, which is 0.7% of net sales, compared to EUR 1.1 million, or 2.3% of net sales, in the first half of the year 2013.
In the second quarter, the Group's net sales were EUR 24.1 million. Net sales decreased in euros by approx. 5% from April-June 2013. Net sales grew in local currencies. Operating result was EUR 0.01 million. Operating result excluding non-recurring items was EUR 0.11 million.
In the second quarter, our operating resulting affected primarily by the market situation in our most important market area, Norway, where several clients have suspended, rescheduled, or cut back investments. According to our estimations, however, Dovre's market share in Norway has increased, although our profitability has suffered. We have also reason to believe that the drop in market demand is temporary. In Canada, which is our second most important market area, market demand has remained stable, but the ending of a long-term project in the beginning of the year affected our net sales and operating result.
We continue investing in future growth in accordance with the Group's strategy. Our main investments are targeted at strengthening both the Dovre Club service platform and our international sales functions. Investment in growth reduces profitability in the short-term, but I believe that developing Dovre Club further as well as strengthening our sales organization lead to net sales growth and improve profitability over the next 12 months.
In the Consulting business area, the first half of the year did not go as expected. However, order volumes in Norway, Finland, and Sweden have grown, and we expect both our net sales and profitability to improve towards the end of the year. In future, we will be focusing more clearly on project management, and decided, during the period under review, to withdraw from biorenewables consulting.
One of the most important events during the period under review was the signing of a five-year frame agreement with BP Norge AS. The frame agreement covers the delivery of project personnel for BP Norge's projects. It also includes an option for a four-year extension. Also on a positive note, our associate SaraRasa Bioindo, which operates in Indonesia, secured in June an agreement for a delivery of pellets to an Asian client. This agreement is the first major sales agreement entered into by SaraRasa and it was signed following rigorous quality tests by the client. After the end of the period, we signed another important framework agreement in the Project Personnel business area, this time with Aramco Overseas Company, a subsidiary of Saudi Aramco."
Dovre Group Plc is an international company providing professional services to the energy industry. Dovre Group has two business areas: Project Personnel and Consulting. The Group's strategic aim is to become the most advanced international player in its field. The company's long-term financial objective is an operating profit margin on the level of 5-10% with an average annual net sales growth of more than 15%.
General economic insecurity has not significantly affected investment levels among Project Personnel business area's customers, but clients have become more cautious and lead times in certain markets are longer than previously. Dovre Group expects demand for the business area's services to remain stable.
In the beginning of the year, the Group's consulting business was affected by suspension of projects due to clients' increased cautiousness, but volume of orders is growing in Norway, Finland, and Sweden. The Group expects increase in customer demand in the second half of 2014.
The Board of Directors has adjusted the Group's guidance for 2014. The new guidance was released on July 21, 2014: In 2014, Dovre Group Plc's net sales will be EUR 95-105 million and operating result EUR 1.0-2.0 million. Previous guidance, released on April 21, 2014: In 2014, net sales are expected to grow and operating result to improve in local currencies from 2013.
In 2013, Dovre Group's net sales were EUR 98.5 million and operating result EUR 2.4 million. In 2014, operating result in euros is expected to decrease from the previous year. This is mainly due to a rapid weakening of the Norwegian market in the beginning of this year, lower margins in Canada compared to the previous year, strategic investment in future growth – especially in the development of Dovre Club -service platform and sales team – as well as currency changes and non-recurring items.
The Group expects increased investments to improve net sales and operating profit during the next 12 months. In the second half of 2014, net sales and operating result are expected to grow from the first half.
In Q2, Dovre Group's net sales decreased by 4.7%, totaling EUR 24.1 (25.3) million. In local currencies, the Group's net sales increased by approx. 3%. Net sales for Project Personnel increased by 3% in euros, totaling EUR 22.2 (23.0) million. Net sales for Consulting decreased by 18% in euros, totaling EUR 1.9 (2.3) million.
In H1, Dovre Group's net sales were EUR 48.8 (49.7) million. While the Group's net sales decreased by 1.7% in euros, in local currencies the Group's net sales increased by approx. 8%. In H1, Project Personnel accounted for 93 (91) % and Consulting for 8 (8) % of the Group's net sales. Net sales for Project Personnel were EUR 45.2 (45.2) million. Project Personnel's net sales grew in local currencies. Net sales for Consulting decreased from H1 2013 and were EUR 3.7 (4.4) million.
One of the most important events during the period under review was the signing of a five-year frame agreement with BP Norge AS. The frame agreement covers the delivery of project personnel for BP Norge's projects. It also includes a four-year option. During the period under review, the Group decided to withdraw from biorenewables consulting. The withdrawal has no impact on the Group's net sales.
By market area, EMEA's share of the Group's net sales in H1 grew, accounting for 59 (53) % of the Group's net sales. The growth in its share of net sales was due to the positive development of the Group's Middle Eastern operations. AMERICAS share of the Group's net sales was 36 (41) % and APAC's 5 (6) %.
| Net sales by | Change in | Change in | |||||||
|---|---|---|---|---|---|---|---|---|---|
| reporting | local | local | |||||||
| segment | 4-6 | 4-6 | Change | currencies | 1-6 | 1-6 | Change | currencies | 1-12 |
| EUR million | 2014 | 2013 | % | % | 2014 | 2013 | % | % | 2013 |
| Project Personnel | 22.2 | 23.0 | -3 | 5 | 45.2 | 45.2 | 0 | 10 | 89.9 |
| Consulting | 1.9 | 2.3 | -18 | -13 | 3.7 | 4.4 | -17 | -12 | 8.5 |
| Other functions | 0.0 | 0.0 | 0.0 | 0.0 | 0 | 0 | 0.1 | ||
| Group total | 24.1 | 25.3 | -4.7 | 3 | 48.8 | 49.7 | -1.7 | 7.8 | 98.5 |
| Change in | Change in | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Net sales by | local | local | |||||||
| market area | 4-6 | 4-6 | Change | currencies | 1-6 | 1-6 | Change | currencies | 1-12 |
| EUR million | 2014 | 2013 | % | % | 2014 | 2013 | % | % | 2013 |
| EMEA | 14.3 | 13.6 | 5 | 12 | 29.0 | 26.3 | 11 | 21 | 54.2 |
| AMERICAS | 8.6 | 10.2 | -16 | -5 | 17.4 | 20.5 | -15 | -4 | 39.2 |
| APAC | 1.3 | 1.5 | -15 | -32 | 2.4 | 2.9 | -19 | -36 | 5.2 |
| Group total | 24.1 | 25.3 | -4.7 | 3 | 48.8 | 49.7 | -1.6 | 8 | 98.5 |
Dovre Group's markets by area are:
In Q2, the Group's operating result was EUR 0.0 (0.8) million, which is 0.0 (3.3) % of net sales. Project Personnel business area's operating result was EUR 0.4 (1.1) million. Consulting business area's operating result was EUR 0.1 (0.1) million. The operating result of Other functions was EUR -0.4 (-0.4) million.
In H1, the Group's operating result was EUR 0.3 (1.1) million, which is 0.7 (2.3) % of net sales. The Group's operating result decreased 71% in euros and 53% in local currencies. Project Personnel business area's operating result was EUR 1.2 (1.9) million. Consulting business area's operating result was EUR 0.2 (0.2) million. The operating result of Other functions was EUR -0.9 (-0.8) million. Internal charges charged to business units during the period under review were EUR 0.4 (0.5) million.
In Q2, our operating resulting was affected by increased competition and reduced rate of usage in Norway and Canada. In Canada, usage rates were affected by the ending of a long-term project during the period. The market situation in the Project Personnel business is expected to improve in both Norway and Canada towards the end of the year. The Group also expects demand for consulting services in Norway, Finland, and Sweden to increase in the second half of the year.
Dovre Group has continued investing in future growth in accordance with the Group's strategy. The main investments are targeted at strengthening both the Dovre Club service platform and the international sales
functions. Investment in growth reduces profitability in the short-term, but will lead to net sales growth and improve profitability over the next 12 months.
In Q2, operating result was affected by non-recurring items related to the Group's withdrawal from biorenewables consulting as well as the settlement of a dispute between the company and its former employee. Excluding non-recurring items, the Group's operating result in Q2 was EUR 0.1 million and in H1 EUR 0.4 million.
| Operating result | Change in | Change in | |||||||
|---|---|---|---|---|---|---|---|---|---|
| by reporting | local | local | |||||||
| segment | 4-6 | 4-6 | Change | currencies | 1-6 | 1-6 | Change | currencies | 1-12 |
| EUR million | 2014 | 2013 | % | % | 2014 | 2013 | % | % | 2013 |
| Project Personnel | 0.4 | 1.1 | -64 | -58 | 1.2 | 1.9 | -36 | -26 | 3.8 |
| Consulting | 0.1 | 0.1 | -28 | -22 | 0.2 | 0.2 | -29 | -18 | 0.7 |
| Other functions | -0.4 | -0.4 | -26 | -26 | -0.9 | -0.8 | -11 | -11 | -1.8 |
| Unallocated | 0.0 | -0.1 | 28 | 28 | -0.1 | -0.2 | 9 | 9 | -0.3 |
| Group total | 0.0 | 0.8 | -96.2 | -90 | 0.3 | 1.1 | -70,9 | -53 | 2.4 |
In Q2, the Group's result before taxes was EUR -0.2 (0.8) million including EUR -0.2 (-0.1) million, of the results of its associates SaraRasa Biomass Pte Ltd. and SaraRasa Bioindo Pte Ltd. In Q2, the Group's result after taxes including discontinued operations was EUR -0.3 (4.6) million. In Q2 2013 discontinued operations accounted for EUR 4.2 million of the Group's result. The Group's earnings per share incl. discontinued operations was EUR 0.00 (0.07). Discontinued operations includes the result of Safran Software Solutions AS, which the Group sold in May 2013.
In H1, the Group's result before taxes was EUR 0.1 (1.0) million including EUR -0.3 (-0.1) million, of the results of its associates SaraRasa Biomass Pte Ltd. and SaraRasa Bioindo Pte Ltd. In H1, the Group's result after taxes including discontinued operations was EUR -0.2 (4.8) million. Discontinued operations includes the result of Safran Software Solutions AS, EUR 4.3 million in H1 2013. The Group sold Safran Software Solutions in May 2013.
In H1, the Group's earnings per share incl. discontinued operations was EUR 0.00 (0.08). The Group's return on average capital employed before taxes (ROI) was 0.7 (10.8) %.
On June 30, 2014, the Group balance sheet total was EUR 36.1 (43.4) million. The Group's cash and cash equivalents totaled EUR 7.6 (11.9) million. In addition, the parent company and the subsidiaries have unused credit limits.
On June 30, 2014, the Group's equity ratio was 58.0 (65.5) % and the debt-equity ratio (gearing) -31.4 (-41.8) %. The Group's interest-bearing liabilities amounted to EUR 1.1 (1.2) million, accounting for 2.9 (2.8) % of the Group's shareholders' equity and liabilities. The Group's interest-bearing liabilities were all current.
Net cash flow from operating activities for the Group's continuing operations was EUR -1.2 (-0.2) million. Net cash flow from operating activities including discontinued operations was EUR -1.2 (-0.7) million, which includes EUR -0.8 (-2.0) million change in working capital.
Net cash flow from investing activities was EUR -0.5 (3.6) million. Gross investments totaled EUR 0.2 (0.3) million.
Net cash flow from financing activities was EUR -4.4 (-0.1) million. The Group did not draw any new current loans during the period under review (EUR 0.2 million in H1 2013). During the period under review, the Group paid a total of EUR 4.4 million in dividends. In 2013 EUR 1.3 million were paid in dividends during the third quarter.
The balance sheet goodwill totaled EUR 6.9 (7.4) million on June 30, 2014.
The Group's CEO Patrick von Essen started in his position on April 1, 2014. Von Essen was previously Vice President, Real Estate, at Fiskars Plc.
The Group's CFO Tarja Leikas resigned after the end of the period, in July, 2014. Heidi Karlsson (M.Sc. (Economy)) was appointed the Group's new CFO as of July 24, 2014. Ms Karlsson was the Group's CFO 2010-2013. Sten Berntsen was appointed as Head of Consulting and member of the Group's Executive Team as of July 24, 2014. Mr Berntsen has previously been Director of the Group's consulting operations in Norway.
As of July 24, 2014, the Group's Executive Team includes Patrick von Essen (CEO), Heidi Karlsson (CFO), Arve Jensen (EVP, Project Personnel), and Stein Berntsen (EVP, Consulting).
In H1, the average number of personnel employed by the Group was 475 (465), of which 424 (404) were employed by Project Personnel and 48 (56) by Consulting. On June 30, 2014, Dovre Group employed 478 (470) people. 41 (40) % of employees in the Project Personnel business area were independent contractors.
| Personnel | 4-6 | 4-6 | Change | 1-6 | 1-6 | Change | 1-12 |
|---|---|---|---|---|---|---|---|
| Average | 2014 | 2013 | % | 2014 | 2013 | % | 2013 |
| Project Personnel | 428 | 408 | 5.0 | 424 | 404 | 4.9 | 411 |
| Consulting | 48 | 56 | -14.3 | 48 | 56 | -14.8 | 53 |
| Other functions | 4 | 5 | -20.0 | 4 | 5 | -20.0 | 5 |
| Group total | 480 | 469 | 2.4 | 478 | 465 | 2.3 | 469 |
On June 30, 2014, Dovre Group's share capital was EUR 9,603,084.48 and the total number of shares 62,990,751. In Q1, the number of shares increased by 75,000 due to the registration of new shares subscribed for with the company's 2010C stock option plan. There were no changes in the Group's share capital or the number shares in Q2.
In January – June, 2014, approximately 14.2 (7.6) million Dovre Group shares were exchanged on the NASDAQ OMX Helsinki Ltd., corresponding to a trade of approximately EUR 8.0 (3.8) million. The lowest quotation was EUR 0.46 (0.39) and the highest EUR 0.68 (0.59). On June 30, 2014, the closing quotation was EUR 0.50 (0.42). The period-end market capitalization was approximately EUR 31.5 (26.4) million.
On June 30, 2014, the number of registered shareholders of Dovre Group Plc totaled 3,618 (3,047). 0.9 (0.8) % of the Group's shares are nominee-registered. The company has not received any flagging notifications during the period under review.
Dovre Group has two option plans. Each stock option entitles the holder to subscribe for one share in Dovre Group Plc. The Group's 2013 option plan is divided into three series, with each series including a maximum of 1,000,000 stock options. The share subscription period and price per series are as follows:
Under the Group's 2010 option plan, the Group has granted a total of 535,000 2010A stock options and a total of 395,000 2010B stock options. The share subscription period and price per series are as follows:
The success of the Group's Project Personnel business area is influenced by the energy sector market as well as investment levels in the oil and gas industry. The business area expands its business to new geographical market areas. Growth in new market areas requires investments and includes risks. In the Consulting business area general economic uncertainty has an impact on investment levels, thus affecting also the demand for the Group's consulting services.
The Group's reporting currency is euro. The Group's most important functional currencies are the Canadian dollar, the Norwegian crown, and the US dollar. Currency fluctuations can affect the company's net sales.
Strengthening of the euro has increased risks relating to the growth of the Group's net sales in euros. The Group holds that no other significant changes have taken place in the Group's short-term risks.
The Group made changes to its Executive Team after the period. These are explained above under "Management". The Group also signed a significant frame agreement covering project personnel services with Aramco Overseas Company, a subsidiary of one of the world's biggest oil companies Saudi Aramco.
A video recording of Dovre Group's interim report presentation will be available on the company's website www.dovregroup.com on the afternoon of July 24, 2014. The presentation is in Finnish.
Helsinki, July 23, 2014
DOVRE GROUP PLC BOARD OF DIRECTORS
For additional information, please contact:
Dovre Group Plc Patrick von Essen, CEO Tarja Leikas, CFO tel. +358-20-436 2000 email: [email protected] www.dovregroup.com
Dovre Group releases its 2014 interim reports as follows:
Distribution NASDAQ OMX Helsinki Ltd Major media www.dovregroup.com
| EUR thousand | 4-6 2014 |
4-6 2013 |
Change % |
1-6 2014 |
1-6 2013 |
Chang e % |
1-12 2013 |
|---|---|---|---|---|---|---|---|
| NET SALES | 24 128 | 25 316 | -4.7 | 48 822 | 49 651 | -1.7 | 98 544 |
| Other operating income | 35 | 24 | 46.6 | 77 | 28 | 175.0 | 132 |
| Material and services | -136 | -69 | 96.6 | -224 | -119 | 88.2 | -274 |
| Employee benefits expense | -21 533 | -21 886 | -1.6 | -43 292 | -43 150 | 0.3 | -85 857 |
| Depreciation and amortization | -104 | -94 | 10.5 | -222 | -203 | 9.1 | -402 |
| Other operating expenses | -2 380 | -2 465 | -3.5 | -4 830 | -5 065 | -4.6 | -9 736 |
| OPERATING RESULT | 11 | 825 | -98.7 | 331 | 1 141 | -71.0 | 2 407 |
| Financing income | 27 | 273 | -90.2 | 100 | 355 | -71.7 | 478 |
| Financing expenses | -50 | -269 | -81.6 | -108 | -308 | -65.1 | -552 |
| Share of results in associates | -195 | -74 | 163.5 | -271 | -142 | 90.8 | -294 |
| RESULT BEFORE TAX | -207 | 755 | -127.4 | 53 | 1 046 | -95.0 | 2 039 |
| Tax on income from operations RESULT FOR THE PERIOD, |
-56 | -327 | -83.0 | -223 | -566 | -60.6 | -825 |
| continuing operations Discontinued operations: |
-263 | 428 | -161.4 | -170 | 480 | -135.5 | 1 214 |
| Result for the period, discontinued | |||||||
| operations | 4 193 | -100.0 | 4 349 | -100.0 | 4 349 | ||
| RESULT FOR THE PERIOD Other comprehensive income: Other comprehensive income to be classified as profit or loss in subsequent periods: |
-263 | 4 621 | -105.7 | -170 | 4 829 | -103.5 | 5 563 |
| Translation differences Other comprehensive income for the |
206 | -878 | 123.5 | 54 | -958 | 105.6 | -2 014 |
| period, net of tax TOTAL COMPREHENSIVE |
206 | -878 | 123.5 | 54 | -958 | 105.6 | -2 014 |
| INCOME FOR THE PERIOD | -57 | 3 743 | -101.5 | -116 | 3 871 | -103.0 | 3 549 |
| Earnings/share, EUR Basic, continuing operations |
0.00 | 0.01 | 0.00 | 0.01 | 0.02 | ||
| Diluted, continuing operations | 0.00 | 0.01 | 0.00 | 0.01 | 0.02 | ||
| Basic, discontinued operations | 0.07 | 0.07 | 0.07 | ||||
| Diluted, discontinued operations | 0.07 | 0.07 | 0.07 | ||||
| Basic, result for the period | 0.00 | 0.07 | 0.00 | 0.08 | 0.09 | ||
| Average number of shares Basic Diluted |
4-6/2014 62 990 751 63 468 585 |
4-6/2013 62 915 751 63 185 009 |
1-6/2014 62 965 751 63 475 315 |
62 905 751 63 246 192 |
1-6/2013 | 1-12/2013 62 910 751 63 225 292 |
| EUR thousand | June 30, 2014 |
June 30, 2013 |
Change % |
Dec. 31, 2013 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 762 | 855 | -10.9 | 754 |
| Goodwill | 6 937 | 7 359 | -5.7 | 6 972 |
| Tangible assets | 149 | 166 | -10.2 | 145 |
| Investments in associates | 707 | 1 165 | -39.3 | 967 |
| Other receivables | 27 | 24 | 11.4 | 26 |
| Deferred tax assets | 308 | 121 | 153.8 | 306 |
| Non-current assets | 8 890 | 9 691 | -8.3 | 9 170 |
| Current assets | ||||
| Trade receivables and other receivables | 18 347 | 20 775 | -11.7 | 16 854 |
| Tax receivable, income tax | 324 | 31 | 946.5 | 24 |
| Cash and cash equivalents | 7 613 | 11 938 | -36.2 | 13 737 |
| Current assets | 26 284 | 32 744 | -19.7 | 30 615 |
| Assets held of sale | 933 | 933 | 0.0 | 933 |
| TOTAL ASSETS | 36 107 | 43 368 | -16.7 | 40 718 |
| EQUITY AND LIABILITIES | ||||
| Shareholders' equity | ||||
| Share capital | 9 603 | 9 603 | 0.0 | 9 603 |
| Reserve for invested non-restricted equity | 381 | 352 | 8.2 | 352 |
| Revaluation reserve | 0 | 47 | -100.0 | 21 |
| Translation differences | -853 | 145 | -686.5 | -907 |
| Retained earnings | 11 793 | 15 519 | -24.0 | 16 297 |
| Shareholders' equity | ||||
| 20 924 | 25 667 | -18.5 | 25 366 | |
| Non-current liabilities | ||||
| Deferred tax liability | 584 | 680 | -14.1 | 609 |
| Other non-current liabilities | 27 | 24 | 11.4 | 26 |
| Non-current liabilities | 611 | 704 | -13.2 | 635 |
| Current liabilities | ||||
| Short-term liabilities, interest-bearing | 1 053 | 1 202 | -12.4 | 1 048 |
| Trade payables and other liabilities | 13 453 | 15 049 | -10.6 | 13 077 |
| Tax liability, income tax | 35 | 746 | -95.3 | 564 |
| Current provisions | 31 | 0 | 28 | |
| Current liabilities | ||||
| 14 572 | 16 997 | -14.3 | 14 717 | |
| TOTAL EQUITY AND LIABILITIES | 36 107 | 43 368 | -16.7 | 40 718 |
| a) Share capital |
|---|
| --------------------- |
| EUR thousand | a) | b) | c) | d) | e) | f) |
|---|---|---|---|---|---|---|
| SHAREHOLDERS' EQUITY Jan. 1, | 9 603 | 346 | 79 | 1 101 | 11 884 | 23 013 |
| 2013 | ||||||
| Comprehensive income | ||||||
| Result for the period | 4 829 | 4 829 | ||||
| Other comprehensive income | ||||||
| Translation differences | -5 | -955 | 2 | -958 | ||
| Transfers between items | -27 | 27 | 0 | |||
| Total comprehensive income | 0 | 0 | -32 | -955 | 4 858 | 3 871 |
| Transactions with shareholders | ||||||
| Stock options exercised | 6 | 6 | ||||
| Share based compensation | 35 | 35 | ||||
| Dividend distribution | -1 258 | -1 258 | ||||
| Total transactions with shareholders | 0 | 6 | 0 | 0 | -1 233 | -1 227 |
| SHAREHOLDERS' EQUITY June 30, | 9 603 | 352 | 47 | 146 | 15 519 | 25 667 |
| 2013 | ||||||
| EUR thousand | a) | b) | c) | d) | e) | f) |
| SHAREHOLDERS' EQUITY Jan. 1, | 9 603 | 352 | 21 | -907 | 16 297 | 25 366 |
| 2014 | ||||||
| Comprehensive income | ||||||
| Result for the period | -170 | -170 | ||||
| Other comprehensive income | ||||||
| Translation differences | 54 | 54 | ||||
| Transfers between items | -21 | 21 | 0 | |||
| Total comprehensive income | 0 | 0 | -21 | 54 | -149 | -116 |
| Transactions with shareholders | ||||||
| Stock options exercised | 29 | 29 | ||||
| Share based compensation | 54 | 54 | ||||
| Dividend distribution | -4 409 | -4 409 | ||||
| Total transactions with shareholders | 0 | 29 | 0 | 0 | -4 367 | -4 338 |
| SHAREHOLDERS' EQUITY | 9 603 | 381 | 0 | -853 | 11 793 | 20 924 |
| June 30, 2014 |
| EUR thousand | 4-6 2014 |
4-6 2013 |
1-6 2014 |
1-6 2013 |
1-12 2013 |
|---|---|---|---|---|---|
| Cash flow from operating activities | |||||
| Operating result, continued operations | 11 | 825 | 331 | 1 141 | 2 407 |
| Operating result, discontinued operations | 0 | 4 226 | 0 | 4 432 | 4 432 |
| Adjustments: | |||||
| Depreciation / Amortization | 104 | 96 | 222 | 206 | 404 |
| Gain on disposal of investment | 0 | -4 080 | 0 | -4 080 | -4 080 |
| Personnel expenses | 37 | 10 | 81 | 35 | 292 |
| Non-cash transactions | 0 | 0 | 0 | 0 | 8 |
| Adjustments, total | 141 | -3 974 | 303 | -3 839 | -3 376 |
| Changes in working capital | |||||
| Trade and other receivables, increase (-) / | |||||
| decrease (+) | 1 474 | -2 838 | -1 185 | -4 307 | -1 486 |
| Trade and other payables, increase (+) / | |||||
| decrease (-) | -1 157 | 1 194 | 384 | 2 338 | 2 342 |
| Changes in working capital, total | 317 | -1 644 | -801 | -1 969 | 856 |
| Interest paid | -5 | -5 | -11 | -10 | -26 |
| Interest received | 18 | 18 | 33 | 41 | 74 |
| Other financial expenses paid and received | -20 | 86 | -18 | 71 | 38 |
| Income taxes paid | -407 | -353 | -1 079 | -525 | -1 167 |
| Net cash generated by operating activities | 55 | -821 | -1 242 | -658 | 3 238 |
| Cash flow from investing activities | |||||
| Investments in tangible and intangible assets | -167 | -100 | -238 | -284 | -384 |
| Disposal of shares in Group companies, net of | |||||
| disposed cash | 0 | 3 932 | 0 | 3 932 | 3 932 |
| Purchase of shares in associates | 0 | 0 | 0 | 0 | -11 |
| Loan receivables, increase (-) / decrease (+) | 0 | 0 | -295 | 0 | 0 |
| Net cash generated by investing activities | -167 | 3 832 | -533 | 3 648 | 3 537 |
| Cash flow from financing activities | |||||
| Stock options exercised | 0 | 0 | 29 | 6 | 6 |
| Proceeds from short-term loans | 3 | 0 | 3 | 180 | 216 |
| Repayments of short-term loans | 0 | -258 | -7 | -271 | -404 |
| Dividends paid | -4 409 | 0 | -4 409 | 0 | -1 258 |
| Net cash generated by financing activities | -4 406 | -258 | -4 384 | -85 | -1 440 |
| Change in cash and cash equivalents | -4 518 | 2 753 | -6 159 | 2 905 | 5 335 |
| Translation differences | 78 | -229 | 35 | -274 | -905 |
| Cash and cash equivalents at beginning of the period | 12 053 | 9 414 | 13 737 | 9 307 | 9 307 |
| Cash and cash equivalents at end of the period | 7 613 | 11 938 | 7 613 | 11 938 | 13 737 |
The interim report has been prepared in line with IAS 34 and, apart from the additions below, the same accounting principles have been applied as in the 2013 financial statements. Key indicator calculations remain unchanged and have been presented in the 2013 financial statements.
As of January 1, 2014, the Group has adopted the following new, revised, and amended standards: IFRS 10 Consolidated Financial Statements (new); IFRS 11 Joint Arrangements (new); IFRS 12 Disclosure of Interests in Other Entities (new); IAS 27 Consolidated and Separate Financial Statements (amended); IAS 28 Investments in Associates (amended); IAS 32 Financial Instruments: Presentation (revised); IAS 36 Impairment of Assets (revised); and IAS 39 Financial Instruments: Recognition and Measurement (revised).
The Group's segment information is based on the Group's internal financial reporting and has been produced in accordance with IFRS standards. The Group does not allocate the parent company's intra-Group charges to segments. Unallocated expenses include customer agreements and relations and their amortization, share-based compensation recognized as expense in the income statement, financial items, and income taxes. The assets and liabilities of a segment are business items that a segment uses in its business or that can be allocated to a segment. Unallocated assets include customer agreements and relations, capitalized research and development expenses, cash and cash equivalents, available-for-sale investments, and tax assets. Pricing between segments is based on fair market price.
| 1-6/2014 EUR thousand |
Project Personnel |
Consulting | Other functions |
Elimi nations |
Un allocated |
Group total |
|---|---|---|---|---|---|---|
| Net sales | 45 160 | 3 662 | 0 | 0 | 0 | 48 822 |
| Operating result | 1 186 | 167 | -881 | -141 | 331 | |
| Financing income and expenses Share of results in associates Income taxes |
-271 | -7 -223 |
-7 -271 -223 |
|||
| Result for the period | 1 186 | 167 | -1 152 | 0 | -371 | -170 |
| 1-6/2013 EUR thousand |
Project Personnel |
Consulting | Other functions |
Elimi nations |
Un allocated |
Group total |
| 1-6/2013 EUR thousand |
Project Personnel |
Consulting | Other functions |
Elimi nations |
Un allocated |
Group total |
|---|---|---|---|---|---|---|
| Net sales | 45 191 | 4 436 | 0 | 24 | 0 | 49 651 |
| Operating result | 1 857 | 236 | -796 | 0 | -156 | 1 141 |
| Financing income and expenses Share of results in |
47 | 47 | ||||
| associates | -142 | -142 | ||||
| Income taxes | -566 | -566 | ||||
| Discontinued operations | 4 349 | 4 349 | ||||
| Result for the period | 1 857 | 236 | 3 411 | 0 | -675 | 4 829 |
| EUR thousand | June 30, 2014 | June 30, 2013 | Dec. 31, 2013 |
|---|---|---|---|
| Carrying value, opening balance | 967 | 1 296 | 1 296 |
| Additions | 0 | 0 | 11 |
| Share of profit and loss in associates | -271 | -142 | -294 |
| Translation differences | 11 | 11 | -46 |
| At the end of the period | 707 | 1 165 | 967 |
Dovre Group Plc has one class of shares. The book value of the shares is EUR 0.15 per share. Each share entitles the shareholder to one vote. Dovre Group Plc's shares are traded on NASDAQ OMX Helsinki Ltd.
| EUR thousand | Number of shares |
Share capital |
Reserve for non-restricted equity |
|---|---|---|---|
| Dec. 31, 2012 | 62 895 751 | 9 603 | 346 |
| Stock options exercised | 20 000 | 6 | |
| Dec. 31, 2013 | 62 915 751 | 9 603 | 352 |
| Stock options exercised | 75 000 | 29 | |
| June 30, 2014 | 62 990 751 | 9 603 | 381 |
In Q1, a total of 75,000 shares were subscribed for under Dovre Group Plc's 2010C option plan. The subscription period of the plan is March 1, 2014 – February 28, 2017. The increase in the company's number of shares has been entered in the Finnish trade register on March 28, 2014.
After the registration, there are a total of 62,990,751 shares in the company. The increase has been recorded in the company's reserve for non-restricted equity.
Dovre Group Plc's Annual General Meeting held on March 28, 2014, decided that shareholders be paid a dividend of EUR 0.02 per share and an extraordinary dividend of EUR 0.05 per share, corresponding to approx. EUR 4.4 million. The dividend was paid on April 8, 2014.
In its meeting on March 27, 2014, the Board of Directors decided to lower the subscription price for stock options granted under the 2010 plan by an amount equal to the extraordinary dividend paid in 2013 (by EUR 0.05 per share). The new subscription prices per series are as follows:
| 2010A | 2010B | 2010C | |
|---|---|---|---|
| Subscription period | 1.3.2012 - 28.2.2015 | 1.3.2013 - 28.2.2016 | 1.3.2014 - 28.2.2017 |
| New subscription price | EUR 0.28 | EUR 0.42 | EUR 0.33 |
The Board of Directors granted Patrick von Essen, the company's new CEO, a total of 130,000 stock options under the company's 2010C option plan upon assuming his position as the Group's CEO on April 1, 2014. Should von Essen exercise his options prior to February 28, 2015, the company shall pay him an amount equal to the difference between the subscription prices of the 2010A and 2010C series. The company recalculated the fair value of the 2010C stock options (EUR 0.19) using the Black & Scholes model and charged the expense for March 2014. The difference between the 2010A and 2010C series was treated as cash compensation.
In accordance with terms of the 2013 stock option plan, the subscription price of the 2013A series was lowered by an amount equal to the dividend paid in 2013 (by EUR 0.07 per share). The new subscription price is EUR 0.47. The subscription period is March 1, 2015 – February 29, 2018.
In 2014 the Board of Directors has granted a total of 450,000 option rights under its 2013B option plan to key employees. In addition, Patrick von Essen was granted a total of 300,000 option rights under the 2013B option plan upon assuming his position as the Group's CEO on April 1, 2014. The share subscription price for the 2013B series is EUR 0.60, which is the trade volume weighted average rating in NASDAQ OMX Helsinki Ltd during February 1 – March 31, 2014, and the subscription period March 1, 2016 – February 28, 2019. The fair value of the stock options was calculated using the Black & Scholes model. The key variables used were as follows:
| Share price at grant date | EUR 0.48 |
|---|---|
| Expected volatility | 28% |
| Expected option life | 5 years |
| Risk-free rate | 0.88% |
Fair value of the option at grant day was EUR 0.09.
In Q1, the Group has charged a total of EUR 61 thousand (EUR 35 thousand in 2013) of share-based compensation as expense in the income statement.
a) Loans and receivables measured at the effective interest rate method
b) Financial assets/liabilities at fair value through profit or loss
c) Financial liabilities measured at amortized cost
d) Balance sheet items at book value
e) Balance sheet items at fair value
| June 30, 2014 | |||||
|---|---|---|---|---|---|
| EUR thousand | a) | b) | c) | d) | e) |
| Non-current financial assets | |||||
| Loan receivables from associates | 295 | 295 | 295 | ||
| Receivables | 27 | 27 | 27 | ||
| Current financial assets | |||||
| Derivatives – receivables | 10 | 10 | 10 | ||
| Trade receivables | 15 445 | 15 445 | 15 445 | ||
| 15 767 | 10 | 15 777 | 15 777 | ||
| Non-current financial liabilities | |||||
| Other liabilities | 26 | 26 | 26 | ||
| Current financial liabilities | |||||
| Interest-bearing liabilities | 1 053 | 1 053 | 1 053 | ||
| Trade payables | 6 472 | 6 472 | 6 472 | ||
| 7 551 | 7 551 | 7 551 | |||
| June 30, 2013 | |||||
| EUR thousand | a) | b) | c) | d) | e) |
| Non-current financial assets | |||||
| Receivables | 24 | 24 | 24 | ||
| Current financial assets | |||||
| Derivatives – receivables | 25 | 25 | 25 | ||
| Trade receivables | 18 051 | 18 051 | 18 051 | ||
| 18 075 | 25 | 18 100 | 18 100 | ||
| Non-current financial liabilities | |||||
| Other liabilities | 24 | 24 | 24 | ||
| Current financial liabilities | |||||
| Interest-bearing liabilities | 1 202 | 1 202 | 1 202 | ||
| Trade payables | 5 470 | 5 470 | 5 470 | ||
| 6 696 | 6 696 | 6 696 |
The Group's financial assets and liabilities at fair value through profit or loss consist of currency derivatives. The fair value of derivatives is determined using the appropriate quoted market price and commonly used option valuation methods. This corresponds to level 2 in the hierarchy required by IFRS 13 Fair Value Measurement.
Commitments and contingent liabilities
Collateral for own commitments
| EUR thousand | June 30, 2014 | June 30, 2013 |
|---|---|---|
| Floating charges | 2 975 | 3 171 |
| Pledged shares | 933 | 933 |
| Future minimum lease payments for non-cancellable operating leases EUR thousand |
June 30, 2014 | June 30, 2013 |
| Not later than one year | 584 | 656 |
| Later than one year and not later than five years | 1 103 | 231 |
| Total | 1 687 | 887 |
The Group's operating leases include business premises, warehouse space, and cars. The leases have varying lengths, index clauses, renewal rights, and other terms. In 2014, the Group has agreed four new leases for business premises.
Loans to associates EUR thousand Loan receivable Interest income Sararasa Bioindo Pte. Ltd. June 30, 2014 293 13
| 1-3 2014 |
1-3 2013 |
4-6 2014 |
4-6 2013 |
7-9 2013 |
10-12 2013 |
|
|---|---|---|---|---|---|---|
| EUR thousand | ||||||
| NET SALES | 24 694 | 24 335 | 24 128 | 25 316 | 24 089 | 24 804 |
| Other operating income | 42 | 4 | 35 | 24 | 54 | 50 |
| Material and services | -88 | -49 | -136 | -69 | -63 | -93 |
| Employee benefits expense | -21 759 | -21 264 | -21 533 | -21 886 | -20 947 | -21 760 |
| Depreciation and amortization | -118 | -109 | -104 | -94 | -92 | -106 |
| Other operating expense | -2 450 | -2 600 | -2 380 | -2 465 | -2 268 | -2 402 |
| OPERATING RESULT | 320 | 316 | 11 | 825 | 773 | 493 |
| % of net sales | 1.3 | 1.3 | 0.0 | 3.3 | 3.2 | 2.0 |
| Financing income | 74 | 82 | 27 | 273 | 36 | 87 |
| Financing expenses | -58 | -39 | -50 | -269 | -87 | -157 |
| Share of results in associates | -76 | -68 | -195 | -74 | -92 | -60 |
| RESULT BEFORE TAX | 260 | 291 | -207 | 755 | 629 | 364 |
| % of net sales | 1.1 | 1.2 | -0.9 | 3.0 | 2.6 | 1.5 |
| Income taxes RESULT EXCL. DISCONTINUED |
-167 | -239 | -56 | -327 | -296 | 37 |
| OPERATIONS | 92 | 53 | -263 | 428 | 333 | 401 |
| % of net sales | 0.4 | 0.2 | -1.1 | 1.7 | 1.4 | 1.6 |
| Result from discontinued operations | 0 | 156 | 0 | 4 193 | 0 | 0 |
| RESULT FOR THE PERIOD | 92 | 208 | -263 | 4 621 | 333 | 401 |
| % of net sales | 0.4 | 0.9 | -1.1 | 18.3 | 1.4 | 1.6 |
The Group's key financial performance indicators have been calculated for the Group's continuing operations excluding result for the period, return on equity, and earnings per share, which include both continuing and discontinued operations.
| 4-6 2014 |
4-6 2013 |
1-6 2014 |
1-6 2013 |
1-12 2013 |
|
|---|---|---|---|---|---|
| EUR million | |||||
| Net sales | 24.1 | 25.3 | 48.8 | 49.7 | 98.5 |
| Operating result | 0.0 | 0.8 | 0.3 | 1.1 | 2.4 |
| % of net sales | 0.0 % | 3.3 % | 0.7 % | 2.3 % | 2.4 % |
| Result before taxes | -0.2 | 0.8 | 0.1 | 1.0 | 2.0 |
| % of net sales | -0.9 % | 3.0 % | 0.1 % | 2.1 % | 2.1 % |
| Result | -0.3 | 0.4 | -0.2 | 0.5 | 1.2 |
| % of net sales | -1.1 % | 1.7 % | -0.3 % | 1.0 % | 1.2 % |
| Result for the period incl. | |||||
| discontinued operations | -0.3 | 4.6 | -0.2 | 4.8 | 5.6 |
| % of net sales | -1.1 % | 18.3 % | -0.3 % | 9.7 % | 5.5 % |
| Return on equity, % | -4.5 % | 75.9 % | -1.5 % | 39.7 % | 23.0 % |
| Return on investment, % *) | -2.9 % | 16.5 % | 0.7 % | 10.8 % | 10.2 % |
| Interest-bearing liabilities | 1.1 | 1.2 | 1.1 | 1.2 | 1.0 |
| Cash and cash equivalents | 7.6 | 11.9 | 7.6 | 11.9 | 13.7 |
| Debt-equity ratio (Gearing), % | -31.4 % | -41.8 % | -31.4 % | -41.8 % | -50.0 % |
| Equity-ratio, % | 58.0 % | 65.5 % | 58.0 % | 65.5 % | 62.3 % |
| Balance sheet total | 36.1 | 43.4 | 36.1 | 43.4 | 40.7 |
| Gross investments | 0.2 | 0.1 | 0.2 | 0.3 | 0.4 |
| % of net sales | 0.7 % | 0.4 % | 0.5 % | 0.6 % | 0.4 % |
| Research & Development costs | 0.0 | 0.0 | 0.1 | 0.1 | 0.2 |
| % of net sales | 0.1 % | 0.2 % | 0.1 % | 0.2 % | 0.2 % |
| Personnel average for the period | 480 | 469 | 476 | 465 | 469 |
| Personnel at the end of the period | 478 | 470 | 478 | 470 | 468 |
| Earnings per share, EUR | |||||
| Basic | 0.00 | 0.01 | 0.00 | 0.01 | 0.02 |
| Diluted | 0.00 | 0.01 | 0.00 | 0.01 | 0.02 |
| Earnings per share, EUR (incl. | |||||
| discontinued operations) | |||||
| Basic | 0.00 | 0.07 | 0.00 | 0.08 | 0.09 |
| Diluted | 0.00 | 0.07 | 0.00 | 0.08 | 0.09 |
| Equity per share, EUR | 0.33 | 0.41 | 0.33 | 0.41 | 0.40 |
*) Return on capital employed before taxes (ROI) has been calculated for continuing operations
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