Dovre Group Trading Statement January 1 – September 30, 2019

Dovre Group Plc                        Stock exchange release                        October 24, 2019 at 8.45 a.m.

DOVRE GROUP TRADING STATEMENT JANUARY 1 – SEPTEMBER 30, 2019

DOVRE REPORTS Q3 OPERATING RESULT ACCORDING TO EXPECTATIONS

Dovre Group Plc issues today a trading statement for the nine months ended on September 30, 2019. The figures presented in this trading statement are not audited. Last year’s corresponding period in parentheses.

July – September 2019

      ·Net sales EUR 21.6 (15.5) million – increase 39%

      ·Project Personnel: net sales EUR 20.3 (14.3) million – increase 42%

      ·Consulting: net sales EUR 1.4 (1.3) million – increase 11%

      ·Operating result EUR 1.5 (0.2) million, Q3 operating result includes gain on sale of asset of EUR 0.8 million

      ·Net cash flow from operating activities EUR 2.2 (0.0) million

January – September 2019

      ·Net sales EUR 59.8 (48.3) million – increase 24%

      ·Project Personnel: net sales EUR 55.4 (44.1) million – increase 26%

      ·Consulting: net sales EUR 4.4 (4.2) million – increase 5%

      ·Operating result EUR  2.0 (0.3) million, result for the period under review includes EUR 0.7 million of non-recurring items

      ·Net cash flow from operating activities EUR 0.8 (-0.7) million

            

Outlook for 2019: (unchanged, published September 13, 2019): Dovre Group’s net sales in 2019 are expected to improve from 2018 and the operating profit is expected to exceed EUR 2.3 million.

ARVE JENSEN, CEO:

“We have delivered Dovre’s strongest quarter in more than five years confirming the positive trend from H1. Net sales grew in both business areas and our result improved significantly. This positive development is due to the combination of organic growth and the acquisition of Tech4hire.

Project Personnel increased its sales by 42 percent from last year, of which almost 20 percent is organic growth. The market is in general positive, and our organization is performing well supporting the growth. Sales also increased in the Consulting business area, particularly in Norway.

We have now seen increased sales and improved profits for six consecutive quarters. Going forward, to improve Dovre Group’s profitability even more, low operational costs and continuous growth are the key elements.

I’m glad that we finalized the sale of our Kuukoti office building in Olari, Espoo, on 13 September 2019. The sale clearly improved our profit while strengthening our financials. We have also found a new office premises to lease at Ahventie 4, Espoo where we are going to move starting on Jan 1, 2020. The new office lease is expected to reduce company's annual operating costs by about 50,000 euros.”

OUTLOOK FOR 2019 (unchanged, published September 13, 2019)

The market is still affected by several uncertainties, including general economic development, oil price, and political instability. Our main markets are, however, in politically and economically stable countries.

In the Project Personnel business area, demand has improved and the prices are improving slightly. Thanks to a strong portfolio of frame agreements, cost savings already implemented, as well as improving demand, we expect our operating result to improve from 2018.

In the Consulting business area, market outlook remains unchanged.

Dovre Group’s net sales in 2019 are expected to improve compared to 2018 (EUR 65.5 million in 2018) and the operating profit is expected to exceed EUR 2.3 million (EUR 0.5 million in 2018).

NET SALES

In Q3, Dovre Group’s net sales grew to EUR 21.6 (15.5) million. Project Personnel accounted for 94 (92) percent and Consulting for 6 (8) percent of the Group’s net sales. Project Personnel’s net sales increased to EUR 20.3 (14.3) million, the segment grew by 41.8% of which 19.5% percentage points was organic. Net sales for Consulting increased by 10.6%, totalling EUR 1.4 (1.3) million. Fluctuations in foreign currency exchange rates did not have a significant impact on the Group’s total net sales during the third quarter.

During the period under review Dovre Group’s net sales increased by 23.9% and were EUR 59.8 (48.3) million. Project Personnel accounted for 93 (91) % and Consulting for 7 (9) % of the Group’s net sales. Project Personnel’s net sales were EUR 55.4 (44.1) million, while net sales for Consulting totalled EUR 4.4 (4.2) million. Fluctuations in foreign currency exchange rates impacted the Group’s revenues somewhat. The increase in net sales from the comparable period would have been 5% in the period under review if translated with 2018 exchange rates.

OPERATING RESULT

In Q3, the Group’s operating result improved to EUR 1.5 (0.2) million. Project Personnel’s operating result was EUR 0.8 (0.4) million. Consulting’s operating result was EUR 0.2 (0.0) million. The operating result of the Group’s Other functions was EUR 0.6 (-0.2) million. The result includes the capital gain of EUR 0.8 million from sale of Kuukoti office premises in Olari, Espoo on September 13, 2019.

During the period under review, the Group’s operating result was EUR 2.0 (0.3) million. Project Personnel’s operating result was EUR 1.6 (1.1) million. Consulting’s operating result was EUR 0.4 (0.3) million. The operating result of the Group’s Other functions was EUR 0.2 (-0.9) million. The result includes non-recurring items in the amount of EUR -0.1 million related to the Tech4Hire acquisition reported in Q2 and EUR +0.8 million related to the divestment of the Kuukoti property reported in Q3.

*) Unallocated expenses include amortization of customer agreements and relations, expenses recorded as a result of adoptation of IFRS 16 in 2019 and share-based compensation recognized as expense in the income statement in 2018.

PERSONNEL

On September 30, 2019, Dovre Group employed 681 (481) people, 641 (439) of whom were employed by Project Personnel, 37 (38) by Consulting and 3 (4) by Other functions.

CASH POSITION

On September 30, 2019, the Group’s net debt was EUR 0.4 (-0.1) million. The Group’s cash and cash equivalents totalled EUR 5.0 (3.3) million. The Group’s interest-bearing liabilities were EUR 5.3 (3.2) million, a total of EUR 2.3 (2.6) million of which were current and EUR 3.0 (0.6) million non-current. The sale of the Kuukoti property generated cash in the amount of EUR 1.6 million in Q3, and the Group therefore paid back interest-bearing liabilities in the amount of EUR 0.9 million.

The acquisition of Tech4Hire AS, completed in the second quarter of 2019, increased Dovre Group’s interest-bearing liabilities. In addition, the adoptation of IFRS 16 standard affected the interest-bearing liabilities as Dovre Group used a simplified transition method and the comparable figures were not adjusted accordingly.

In Q3, net cash flow from operating activities was EUR 2.2 (0.0) million, which includes EUR 1.3 (-0.3) million change in working capital.

EVENTS AFTER SEPTEMBER 30, 2019

Dovre Group Plc has signed a contract for a new office space at Ahventie 4, Espoo, starting on Jan 1, 2020.

In Espoo, October 24, 2019

DOVRE GROUP PLC

BOARD OF DIRECTORS

For additional information, please contact:

Dovre Group Plc

Arve Jensen, CEO

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Mari Paski, CFO

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Dovre Group is a global provider of project management services. Dovre Group has two business areas: Project Personnel and Consulting. Dovre Group has offices in Canada, Finland, Norway, Singapore and the US, and employs more than 650 people worldwide. Dovre Group is listed on the Nasdaq Helsinki (symbol: DOV1V). Company website .

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