Professional Documents
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REPORT
HALF YEAR
JUNE 2017
DNV GL
GROUP
HEADQUARTERS:
HVIK
NORWAY
GROUP
CENTRE
BUSINESS
MARITIME OIL & GAS ENERGY ASSURANCE SOFTWARE
We help enhance the safety, From the drawing board to We support our customers
efficiency and sustainability decommissioning, we provide across the electric power
of our customers in the technical advice and assurance value chain in ensuring
global shipping industry, services to enable oil and gas reliable, efficient and
covering all vessel types companies to enhance safety, sustainable energy supply.
and mobile offshore units. increase reliability and manage
costs in projects and operations.
BUSINESS
ASSURANCE SOFTWARE
9 982 276
2016: 10,985 2016: 590
2.8% 28
2016: 5.4% 2016: 329
65% 13173
2016 59% 2016: 14,273
1.6 2.6%
2016: 1.2 2016: 2.5%
As expected, 2017 is proving The ship and mobile offshore unit new- this has certainly resulted in smarter and
building markets, with the exception more cost-efficient solutions. The question
to be another challenging of cruise and some niche segments, now is whether the industry can deliver
year for our customers and remained depressed in the first half of on these proposed solutions in practice.
for DNV GL. In the first two the year, continuing the considerable
drop in activity level experienced in 2016. The onshore market continues to show
quarters of 2017, we saw con-
better activity than anticipated and we
tinued challenges, but also The continued decline in ship and off- secured several substantial contracts
improvement in some areas. shore newbuilding activity significantly in the first half of the year.
impacted our revenues and EBITA from
The positive news is that
classification services in the first two The revenue and EBITA performance for
all the business areas were quarters of the year. Our global market our oil and gas business is on target year-to-
profitable after the first six share for newbuildings also dropped date and better than last year. Our quality
months of the year, which to 20% and action has been taken to performance is showing a positive trend.
improve this in the second half of 2017.
was not the case in 2016. Our quality performance continues to For our Energy business area, the market
show a positive trend. situation has become more uncertain in the
e are maintaining invest- past six months. The US is implementing
W
ment levels in research Oil and gas companies are making less stringent environmental policies and
& innovation, moving strategic shifts in their portfolio towards this will most likely negatively influence our
forward with our digital lower-cost projects, shorter investment renewable advisory business in the US.
transformation and cycles and higher levels of flexibility.
gradually reaping the With the oil price fluctuating around The revenue and EBITA performance
benefits of internal efficiency projects, all 50 USD/barrel, the market continues to for our energy business is behind target,
of which will strengthen our position in the be challenging. However, current market but the year-to-date sales performance
longer term. Our purpose of safeguarding sentiments are slightly more positive than has improved from last year. Our invest-
life, property and the environment is more they were six months ago. The industry ment in the high-power lab at Arnhem is
relevant than ever before and serves as has had a pause for thought about the way progressing as planned, with completion
our guiding star and source of inspiration. offshore fields are being developed and due this autumn.
Our Software house is delivering revenue We are therefore conducting a review DNV GL has always been entrusted with
and EBITA below targets, but maintains to update the current strategy so it can data in the analogue world. I believe
good cost control. The shortfall in exter- better enable us to meet our customers we can bring this trust position into the
nal revenue YTD has partly been offset evolving needs, continue to differentiate digital world.
by lower-than-planned operating costs. ourselves in tough markets, improve our
About 30 per cent of our new software efficiency and position ourselves for OUTLOOK
licence sales are to new customers, which future growth in a more digital world. I expect the challenging market situation
indicates that our software solutions are for shipping to continue for at least the
gaining market shares. next 18 months, even allowing for a more
optimistic short term outlook in selected
ORGANIZATION AND PEOPLE shipping markets such as cruise, gas
As the downturn in several of DNV GLs THE RIGHT-SIZING and bulk. For offshore supply and mobile
key markets continues, our Maritime busi- OF THE ORGANI- offshore units we must see beyond year
ness area is most impacted by ongoing 2020 for recovery, with only select
ZATION HAS BEEN
right-sizing and redundancy processes. opportunities in floating production
In response to developments in our core ACHIEVED BY NATURAL and re-gasification.
markets, the total number of employees fell AND VOLUNTARY TURN-
to 13,173 at the end of June 2017, down from OVER, AS WELL AS The number of large-scale offshore oil
13,550 at the end of 2016. The right-sizing THROUGH WORKFORCE & gas conventional projects is on the rise.
of the organization has been achieved by REDUCTION PROCESSES The number of final investment decisions
natural and voluntary turnover, as well as for large developments will be bigger in
THAT WILL CONTINUE
through workforce reduction processes 2017 than in 2016. However, the market
that will continue in some locations in
IN SOME LOCATIONS is more selective than before, so only
the second half of the year. IN THE SECOND HALF premium projects are moving forward.
OF THE YEAR.
Our employees represent 113 national- I believe the renewable energy sector has
ities, 31.5% are female and 87% have a the potential to grow significantly due to
higher education. the drop in the cost of both renewable
energy and energy storage, making this
BUSINESS ETHICS, HEALTH, SAFETY combination increasingly competitive.
AND THE ENVIRONMENT In September, we will launch our inaugural
I regret to report that one of our col- Energy Transition Outlook in London. The assurance market is robust and pro-
leagues recently passed away while at The next three decades will see enormous vides many opportunities for our business
work for DNV GL. Although we cannot changes in the global energy mix as the assurance unit to grow, particularly
find any proven link between the cause of world decarbonizes and pursues energy within the food and health sectors.
death and the work our surveyor was efficiencies on an unprecedented scale.
conducting, an internal investigation is With our deep expertise in oil & gas, The promise of data-driven decision
ongoing to identify possible improve- power & renewables, and energy use, making, machine learning and automation
ments of our systems and procedures as I believe our outlook reports will stimu- is attractive, but getting there is not easy.
well as any learning opportunities. late rich debate and discussion, and Our software house, in combination with
be in stark contrast to some existing our state-of-the-art IT organization is a
The number of work-related injuries per outlook publications typically repre- key enabler in developing opportunities
million worked hours increased to 1.6 as senting certain interest groups. offered by the fourth industrial revolution.
of end of June from 1.2 end of June 2016.
The number of lost-time accidents are up Common to all the sectors we work in I am confident that our customer centricity,
33%, but on average the accidents have is an accelerated call for digital trans- digital leadership and cost discipline will
been less serious compared to last year. formation. Part of our response to this further strengthen our competitiveness.
is that we want to facilitate frictionless
The sickness absence rate remained stable connections between different industry
at 2.6% YTD. There were no confirmed players, domain experts and data scien- Remi Eriksen
incidents of corruption or non-compliance tists on our own industry data manage- Group President & CEO
with environmental laws and regulations. ment platform Veracity. DNV GL Group
The external revenue for the first The DNV GL Groups performance in Investment activities in the first half
half of the year amounted to NOK the first half-year was affected by the of 2017 related primarily to the devel-
9,982 million, producing an EBITA continued downturn in the Maritime opment and implementation of new
of NOK 276 million and an operating and Oil & Gas business areas due to ERP, HR and business systems, and
profit of NOK 28 million. The nominal challenging market conditions for our the development of the industry data
growth rate was 9%, while the organic customers. The contraction in business management platform named Veracity.
and currency-adjusted growth rate volume is expected to continue in the Investments in tangible fixed assets
was 7%. The relative strengthening second half-year and into 2018. were mainly linked to the extension of
of the NOK versus all major currencies our high-power laboratory in Arnhem.
resulted in a negative currency DNV GL Group has a strong balance sheet
effect of 2%. with total equity of NOK 18,099 million. M&A activities during the first half of
The equity ratio is 65%, slightly higher the year were limited to the divestment
than end of 2016 mainly due to positive of shares in STRI AS.
currency effects from net investments
in foreign subsidiaries. The management regards DNV GLs
financial status as satisfactory. The
The cash flow from operations was half year results include significant
NOK 175 million negative, impacted by cost related to capacity adjustment of
increased accounts receivable and work the organization. Hence, the company
in progress since year-end. Cash deposits has a robust platform to manage the
amounted to NOK 3,172 million, and challenging market and to maintain its
unused credit lines were at NOK 1,500 independence as a financially strong
million. The outlook for the second half and trusted company.
of the year reflects a positive cash flow
development from operations, coming
from improvement in the working capital
and improved business performance.
OPERATING EXPENSES
Actuarial gains /(losses) on defined benefit pension plans 26.4 (569.0) (85.8)
foreign operations
Share of other comprehensive income from associated companies (5.9) 27.4 60.8
Other comprehensive income for the period, net of tax 619.6 (1408.7) (1081.6)
AMOUNTS IN NOK MILLION NOTE 30 JUNE 2017 30 JUNE 2016 31 DEC. 2016
ASSETS
CURRENT ASSETS
Trade debtors, work in progress and other receivables 8568.2 9735.5 7904.6
LIABILITIES
Gain from change of defined benefit pension plans 0.0 0.0 (64.1)
Multi currency revolving credit facility drawn/ (paid) 0.0 250.0 (100.0)
Net increase/ (decrease) in cash and bank deposits (456.1) (93.1) (627.6)
Actuarial gains / (losses) on defined benefit pension plans 26.4 (569.0) (85.8)
The condensed consolidated interim financial statements Simplified IFRS requires that the IFRS recognition and
for DNV GL Group AS for the first six months of 2017, have measurement criteria (as adopted by the European Union)
been prepared in accordance with IAS 34 Interim Financial are complied with, but disclosure and presentation require-
Reporting. The interim condensed consolidated financial ments (the notes) follow the Norwegian Accounting Act
statements do not include all the information and disclosures and Norwegian Generally Accepted Accounting Standards.
required in the annual financial statements and should be
read in conjunction with the Groups Annual Report 2016. The financial statements are presented in Norwegian
The accounting policies adopted in the preparation of the Kroner (NOK) and all values are rounded to the nearest
interim consolidated financial statements are consistent with million (NOK million).
those followed in the preparation of the Groups Annual
Financial Statements for the year ended 31 December 2016. The interim condensed consolidated financial statements
for the first six months of 2017 include the parent company
The annual consolidated financial statements for DNV GL DNV GL Group AS and all companies in which the parent
Group AS have been prepared in accordance with the company directly or indirectly has controlling interest.
Norwegian Accounting Act 3-9 and Regulations on
Simplified IFRS as enacted by the Ministry of Finance The interim accounts have not been audited.
3 November 2014. In all material aspects, Norwegian
BUSINESS AREA:
03 PAYROLL EXPENSES
Payroll expenses 1 Jan.30 June 2017 include NOK 300 temination benefit expenses were included in payroll
million termination benefit expenses. NOK 272 million expenses 1 Jan.30 June 2016.
As a consequence of interest rate increase since year- Increased discount rate in Germany from 1.8% to 2.0%
end 2016, the assumptions for calculation of the defined (high-value corporate bonds) lead to reduced pension
benefit pension liabilities in Germany have been changed. liabilities of NOK 39 million, which has been reflected
in the 2017 half year financial statements.
HEADQUARTERS:
DNV GL AS
Veritasveien 1
NO-1322 Hvik, Norway
Tel: +47 67 57 99 00
www.dnvgl.com
DNV GL 08/2017
Design: Fasett