Board of Directors' report 2021

DNV’s purpose to safeguard life, property, and the environment continues to be relevant in guiding the company’s activities and operations. Record-high financial results in 2021 despite the pandemic, paired with a customer-centric and robust strategy, lay a strong foundation for further growth in the current decade of transformations.

While most markets were affected by the pandemic in some way or another, DNV maintained its leading position in key markets and continued to deliver strong results. DNV’s business models proved resilient, and the company recorded operating revenues of NOK 21,464 million in 2021, a 2.6% growth compared with 2020. The emphasis on, and investment in, digitalization before the pandemic have been critical in ensuring DNV’s ability to secure daily operations and serve customers across the world. 

At the start of 2021, DNV launched a new strategy and made significant organizational changes to better support customers, generate growth, and deliver on its purpose of safeguarding life, property, and the environment. The new business area structure is described in the “Strategy” and “Market” sections below. 

The Board sincerely thanks management and employees for their hard work and commitment throughout 2021 under challenging circumstances. The roll-out and execution of DNV’s 2021-2025 strategy has gained traction, and the foundation underpinning the new strategy stands firm. The acquisitions of six new companies in the fields of digital health, energy market intelligence, medical technology certification, and cyber security are testimony to the company’s ambitious growth ambitions and capabilities towards 2025.

A year with COVID-19 still high on the world’s agenda

The business environment continued to be challenging during 2021, with operations affected by the pandemic across several regions and sectors. After a much sought-after reopening of some DNV offices in the third quarter of 2021, the Omicron variant of COVID-19 ignited new uncertainty on the verge of 2022. In face of the pandemic, DNV’s group crisis team continued to drive, facilitate, and support the work done by all local crisis teams around the world. 

The swift and early response to the pandemic in 2020, and the appropriate adjustments made in 2021, have ensured that the financial impact on DNV’s business has been minimized. Thanks to a robust IT infrastructure, digital tools, and an increasingly agile way of working, most employees can work from home and many services can be performed remotely at short notice – including data-driven analytics services as well as remote surveys, audits, and inspections. 

The Board is very satisfied with the way in which the pandemic has been handled since 2020. Indeed, the response has enabled the company to achieve strong results. At the same time, our thoughts go out to our colleagues who have suffered losses and pain caused by the pandemic. 

As we enter 2022, DNV is well positioned for continued growth and to pursue its vision “to be a trusted voice to tackle global transformations”.

Financial performance

The DNV Group recorded operating revenues of NOK 21,464 million in 2021, NOK 553 million more than in 2020, representing growth of 2.6%. Adjusted for exchange rate fluctuations, the growth was 7.8%. While the Maritime business area experienced a small contraction at actual rates, all business areas recorded growth at comparable rates. This was driven by a combination of a rebound effect following the COVID-19 outbreak in 2020 and strong market developments in most of our businesses.

  • Maritime recorded revenues of NOK 7,464 million in 2021, corresponding to growth of -1.2% compared to 2020.
  • Energy Systems reported revenues of NOK 7,897 million, representing growth of 3.2% (compared to the 2020 revenues of the merged business areas Oil & Gas and Energy).
  • The new Business Assurance achieved revenues of NOK 2,892 million in its first year, with a sole focus on management system certification and related training services.
  • The Supply Chain and Product Assurance (SCPA) business area was carved out from Business Assurance at the beginning of the year and ended the year with revenues of NOK 1,009 million.
  • In total, Business Assurance and Supply Chain and Product Assurance achieved growth of 8.5%.
  • The new Digital Solutions realized growth of 2.2% in 2021 and delivered revenues of NOK 1,121 million.
  • The newly established Accelerator came in at NOK 977 million. 

Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by NOK 192 million from NOK 3,481 million in 2020 to NOK 3,673 million in 2021. The operating profit (EBIT) for 2021 ended at NOK 2,646 million, an increase of NOK 240 million compared to the NOK 2,406 million recorded in 2020. The enhanced EBITDA primarily relates to higher revenues, improved margins across all businesses, and reduced costs related to travelling and restructuring. A special focus on low-performing units also contributed strongly to the improvements. Following a stronger EBIT before profit share (DNVs employee incentive scheme) compared to 2020, the profit share given to the employees increased significantly by NOK 454 million, reducing the reported EBIT accordingly. 

The net financial income was NOK 512 million in 2021, compared to net financial expenses of NOK 233 million in 2020. The change from 2020 was primarily caused by the gain of NOK 599 million from the sale of shares in StormGeo Holding AS and reduced net currency losses. 

The 2021 tax expense of NOK 737 million represents an average tax cost of 23%, down from 31% in 2020, mainly due to the tax-exempt gain of NOK 599 million from the sale of the shares in StormGeo Holding AS. The net profit for the year was NOK 2,420 million, compared to last year’s net profit of NOK 1,502 million. 

The DNV Group had a strong balance sheet, with an equity ratio of 53% and liquidity of NOK 6,936 million, at the year-end 2021. As of 31 December 2021, DNV Group had total assets of NOK 33 932 million and total equity of NOK 17 861 million. In December 2021, the parent company entered into a NOK 3,000 million revolving credit facility agreement, replacing two existing facilities totalling NOK 2,500 million (no amounts were drawn under the facility as of year-end 2021). The new facility has a tenure of five years with options to extend for 1+1 year. A net actuarial gain of NOK 902 million from defined benefit pension plans and negative exchange differences from net investments in foreign subsidiaries of NOK 464 million were recognized in equity at the year-end. '

The cash flow from operations came to NOK 2,761 million in 2021, compared with NOK 4,081 million in 2020. The NOK 351 million increase in working capital is mainly explained by revenue growth. The cash flow from investments was NOK -460 million in 2021. This includes the acquisitions of Imatis and Applied Risk (both described below), offset by proceeds from the divestment of StormGeo shares for NOK 786 million. The investments of NOK 198 million in intangible assets mainly relate to the development of commercial software by Digital Solutions and in-house Oracle enterprise resource planning (ERP) implementation and system integration in the business areas. 

Financing activities produced a negative cash flow of NOK 797 million, of which NOK 271 million relates to the down payment on an external loan. Following from IFRS 16, a change in lease liabilities caused a negative impact of NOK 437 million on the cash flow from financing activities, with a positive effect on the cash flow from operations. 

The total net positive cash flow for the year was NOK 1,504 million. 

The accounts of DNV Group AS, the parent company of the DNV Group, show a net profit for the year of NOK 1,662 million, mainly generated from dividend received from subsidiaries in 2021. As of 31 December 2021, DNV Group AS had total assets of NOK 19,896 million and total equity of NOK 10,893 million. The Board proposes to transfer the profit for the year to other equity. 

The Board confirms that the going concern assumption applies and that the financial statements have been prepared on this basis. The Board regards DNV Group’s financial performance and status as strong and liquidity as very good. The parameters contribute to a robust platform for achieving strategic targets and maintaining our independence as a financially strong and autonomous company. The Board also confirms that, to the best of its knowledge, the information presented in the financial statements gives a true and fair view of the assets, liabilities, financial position, and results of the DNV Group for the period. To the best of the Board’s knowledge there are no material events after the balance sheet date affecting the 2021 financial statements.

Strategy

The 2025 strategy was launched in January 2021 together with strategies for six business areas. The strategy is designed to drive the company’s purpose of safeguarding life, property, and the environment and is inspired by DNV’s vision “to be a trusted voice to tackle global transformations”. 

DNV’s customer-centric growth strategy has the overall ambition to shape the future of assurance. In delivering on this ambition, DNV aims to lead the digital transformation of assurance and the assurance of digital assets. 

DNV’s market goals are: to be the leading maritime classification society through major transformations; to enable customers to tackle the energy transition; to lead the assurance of management systems, supply chains, products, medical technology, and aquaculture; and to strengthen the company’s digital platforms, software solutions, and cyber security portfolio. 

The new strategy is centred on decarbonization and digitalization trends, along with an increased need – reinforced by the COVID-19 pandemic – for trust and transparency in products, services, and value chains. 

All the business areas have adapted their organization, started to realize the strategy, and executed growth initiatives. Key achievements in 2021 are described in greater depth below under the “Market” section and include:

  • In Maritime, strong financial performance and the best-ever share of the newbuild market were achieved, supported by an intensified focus on digitalization, remote ways of working, and decarbonization underpinning long-term work with our key customers, as well as expanded service deliveries beyond the classification activities. 
  • For Energy Systems, the merger of legacy Oil & Gas and Energy business areas has positioned DNV to fully utilize the width of competence across the energy space. In addition, it has led to higher employee engagement levels, strong growth in revenue, and a higher order intake. DNV’s Energy Systems business area also acquired new companies. These include Antuko; a leading energy price forecaster and the solar photovoltaic analytics platform from Alteso. In addition, the acquisition of ERS at the end of 2020 strengthened DNV’s energy insight, planning, design, and implemented services during 2021.
  • The establishment of Business Assurance as a reshaped business area concentrating on management system certification and related training has enabled a sharpened focus and agile ways of working during the pandemic, thereby ensuring good results for existing and new certification schemes. 
  • Supply Chain and Product Assurance is a new business area spun off from Business Assurance to grow the portfolio of services within supply chain assurance, ESG, and product assurance, including medical devices. The acquisition of MEDCERT completed in January 2022 will help DNV grow its assurance offering and delivery capabilities in the medical device sector.
  • In addition to acquiring industrial cyber security specialist Applied Risk, the Accelerator business area also achieved strong organic and profitable growth in its cyber security business unit. The first strategic acquisition was made within digital health through the purchase of Imatis, a company that provides digital solutions to hospitals and other care-giving institutions, allowing healthcare workers access to structured real time information anywhere.
  • Digital Solutions introduced the global business management of each product line for improved focus and performance and delivered sales above annual targets. The ongoing development of tools and methods for assuring digital assets achieved early wins, particularly within the assurance of digital twins.

Market

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Corporate Governance

DNV considers sound corporate governance to be fundamental for ensuring trust in the company, and a foundation for achieving sustainable value creation in the best interests of DNV’s customers, employees, owner – Stiftelsen Det Norske Veritas – and other stakeholders. 

DNV issues an annual Corporate Governance Report to verify corporate governance in accordance with the most recent Norwegian Code of Practice for Corporate Governance (Code of Practice) to the extent relevant for the DNV Group as a private limited company. DNV’s Corporate Governance Report deals with each of the 15 topics covered by the Code of Practice and describes DNV’s adherence to this code. The Corporate Governance Report also describes the legal basis and principles for DNV’s corporate governance structure. The management company of the DNV companies is DNV Group AS, registered in Norway and governed by the Norwegian Private Limited Companies Act. DNV Group AS is wholly owned by Det Norske Veritas Holding AS (DNV Holding) and ultimately fully owned by Stiftelsen Det Norske Veritas. Stiftelsen Det Norske Veritas issues a separate annual corporate governance report available on www.detnorskeveritas.com

The Board of Directors of DNV Group AS consists of ten members. Six of these are elected by the shareholders while four are elected by and from among DNV employees worldwide. The Board comprises six men and four women from four nationalities, with an average age of 57.2 years. The tenure of the Board members ranges from eight months to five-and-a-half years, with an average of three years. The Board’s combined expertise represents a range of stakeholders, markets, and competences. In 2021, two shareholder-elected Board members were up for re-election. The Nomination Committee proposed no changes for the 2021 election year. The composition of the shareholder-elected Board members hence remained unchanged and is as follows:

  • Jon Fredrik Baksaas, Chair of the Board
  • Lasse Kristoffersen, Vice-Chair of the Board 
  • Ingvild Sæther, Board Member 
  • Christian Venderby, Board Member 
  • Birgit Aagaard-Svendsen, re-elected as Board Member 
  • Silvija Seres, re-elected as Board Member 

During the election by and from among the employees, one new member was elected. The composition of the employee-elected Board members is as follows:

  • Nina Ivarsen, Board Member 
  • Jon Eivind Thrane, Board Member 
  • David McKay, re-elected as Board Member in the constituency “Worldwide (except Europe)” 
  • Thomas Reimer, elected as Board Member in the constituency “Europe (except Norway)” 

Detailed information about the individual Board members can be found in the Board of Directors’ Profiles section of the DNV Annual Report. 

The Board held six ordinary meetings and six extraordinary meetings in 2021. The average attendance at these Board meetings was close to 100%. The Board Audit Committee held five meetings in 2021 and the attendance at these was 100%. The Board Compensation Committee held three ordinary meetings and two extraordinary meetings in 2021 and the attendance at these was close to 100%. 

DNV purchases a comprehensive global directors’ and officers’ (D&O) liability insurance. This covers all directors and officers in the DNV Group, including DNV Group AS (with subsidiaries and affiliates). The Board of Directors considers the limits of the coverage to be sufficient to meet any relevant and foreseeable risks related to the governance of the DNV Group. 

Further information related to DNV’s corporate governance can be found in the company’s Corporate Governance Report for 2021 and on www.dnv.com.

Enterprise risk management

The Board underlines the importance of continuously having a comprehensive understanding of the risks facing DNV that could affect the Group’s financial performance, reputation, and key business objectives. DNV has processes in place to proactively identify such risks at an early stage and initiate adequate mitigating measures and actions. DNV’s risk management policy is part of the management system and shall ensure that the risk management processes are integrated into everything the company does. The policy is aligned with the ISO 31000 framework. 

The Board formally reviews the risk management status and outlook, both risks and opportunities, twice a year – as part of the strategy revision and annual planning processes. DNV calculates its riskadjusted equity on an annual basis, considering the most important risk factors. Based on value-at-risk methodology, the analysis includes potential losses from operations, foreign-exchange exposure, and pension plan assets and liabilities. The book equity less the maximum calculated loss illustrates DNV’s total risk exposure and the amount that can be lost in a worst-case scenario. This exercise gives the Board a measurable overview of the key quantified risks and DNV’s capacity to take on new risk. 

Severe quality, safety, and integrity risks in the company represent another focus area. Numerous barriers exist to minimize the likelihood of such risks materializing, and DNV’s management system is constantly scrutinized to ensure the company is managing these risks satisfactorily. To limit the potential financial consequences of such risks, DNV has put in place global insurance policies with a level of insurance cover suited to DNV’s operations and risk profile. 

DNV’s main financial risks are its market risk (interest rate and foreign currency risk), credit risk, liquidity risk, pension plan risk, and political risk related to trade sanctions. 

Interest rate risk: The company has limited borrowings, and the interest rate on existing loans is fixed for most of 2022. Consequently, the exposure to interest rate risk is primarily connected to any new loans beyond 2022. All existing loans are denominated in NOK and the risk is therefore linked to the Norwegian interest rate level. 

Foreign currency risk: DNV has revenues and expenses in approximately 60 currencies. Of these, six (NOK, EUR, USD, CNY, KRW, and GBP) make up 78% of the total revenue. In most currencies, the company has a natural hedge through a balance of revenues and expenses. However, a significant portion of DNV’s net income is based on the USD or currencies closely correlated to the USD. DNV is also materially exposed to the re-evaluation of balance sheet items, including net investments in foreign subsidiaries. 

Credit risk: Receivable balances are monitored on an ongoing basis, with the result that the company’s exposure to bad debts is limited. There are no significant credit risk concentrations within the company. With respect to the credit risk resulting from the other financial assets, which comprise cash, cash equivalents, and certain derivative instruments, DNV’s exposure arises from any default of the counterparty, with the maximum exposure equal to the market value of these instruments. 

Liquidity risk: DNV maintains a liquidity reserve where the targeted amount shall correspond to 15% of the Group’s annual revenue plus a certain amount in an acquisition and investment reserve. DNV monitors its liquidity risk on a continuous basis. The liquidity planning considers the maturity of the financial assets (e.g., accounts receivable, other financial assets) and projected cash flows from operations. 

Pension plan risk: The company has closed all existing defined benefit pension schemes to new entrants. However, DNV is exposed to volatility in the financial markets affecting the value of the pension plan assets. The Group is also exposed to interest rate volatility affecting the pension commitments. Lower interest rates over several years have led to an increase in the pension commitments while the situation at year-end 2021 shows a minor increase in interest rates. 

Political risk: The diverse locations of our operations around the world expose DNV to a wide range of political developments, instabilities, changes to the regulatory environment, and consequent changes to DNV’s economic and operating environment (including for example the war in Ukraine, the continued impact of the COVID-19 pandemic or any future epidemic/pandemic, and new and existing trade sanctions). These risks require close and continuous monitoring and are being closely followed up both locally and at Group level. 

Information and cyber security risk: As the delivery of services is increasingly digitally enabled, there is also an increased risk related to securing technical-, business-, and customer-critical information. Generally, this risk is considered moderate but growing, and a single breach could be critical. It is therefore a high priority to continuously monitor and mitigate information and cyber security risks within the Group and business areas. DNV’s information security management systems for GSS IT, Energy Solutions, Digital Solutions, and Maritime are certified to the ISO 27001 information security standard. The Board continues to review DNV’s cyber security risk twice per year. 

Climate risk: International concerns about climate change are high on the world’s agenda. Addressing these concerns is a major driver of the energy transition and will affect both DNV and its customers. DNV conducts significant research into this area. The research is then fed into the company’s strategy development. An impact analysis in line with the Task Force on Climate-related Financial Disclosures (TCFD) standard was initiated in 2021.

Sustainability and climate

DNV’s sustainability strategy is twofold. On the one hand, DNV works to become climate net positive in its own operations, and on the other hand DNV helps customers decarbonize, become more energy efficient, and contribute to the UN Sustainable Development Goals. 

To achieve its purpose and vision, DNV conducts extensive research into the challenges facing ocean, energy, food, healthcare, and transport systems, with a focus on how technology can help address these challenges. The Board expects DNV to use its technical expertise to accelerate the transformation required to limit global warming to 1.5°C, the goal established by the Paris Agreement, and make a positive impact on the Sustainable Development Goals (SDG). 

DNV defines sustainability broadly and dedicates considerable resources to maintaining health and safety, ethics and compliance, data security, diversity and inclusion, and a sustainable value chain. Given its area of expertise and research, DNV puts particular emphasis on sustainability initiatives promoting environmental sustainability and accelerating the energy transition. SDG3 (Good health), SDG7 (Affordable and clean energy), SDG13 (Climate action), and SDG14 (Life under water) have been identified as core goals where DNV can make a particularly positive impact through the work it conducts for its customers as well as through partnerships. 

DNV’s sustainability strategy includes plans for offices and laboratories worldwide to use renewable electricity by 2025, and 50% of DNV's total renewable electricity usage in 2021 was certified green electricity. DNV is also implementing strong measures to reduce its carbon footprint in line with science-based targets. Any residual carbon footprint has been offset to maintain our status as carbon neutral. The Board maintains governance of sustainability issues and is monitoring the strategy implementation to ensure that DNV meets its ambitious targets and reduces the environmental impact of its operations. 

DNV pursues continuous improvement in its sustainability performance, and its management systems are certified to the ISO 9001, ISO 14001, and OHSAS 18001 standards. DNV is a dedicated member, and supports the work, of the United Nations Global Compact. The Board maintains that the integration of the ten principles on human rights, labour standards, environmental performance, and anti-corruption is critical for achieving long-term value, and that the UN Sustainable Development Goals should be used to drive progress on the issues that matter. DNV is also an active member of the World Business Council for Sustainable Development and actively supports the work of the Red Cross. 

In 2021, DNV had zero cases of non-compliance with environmental regulations and zero fines related to environmental aspects. Internal and external audits are undertaken to assure performance. 

DNV reports in accordance with the core level Global Reporting Initiative (GRI) standards. KPMG has conducted limited assurance of the sustainability reporting on material topics. The Board Audit Committee has reviewed DNV’s sustainability reporting, including recommendations made by KPMG. The Board refers to the annual report for a complete account of corporate sustainability, including information on the priorities, management approach, targets, and performance.

Organization and people

The DNV Group has employees in close to 75 countries and corporate headquarters located at Høvik, just outside Oslo, Norway. The total number of employees at the year-end 2021 was 11,795, of whom 98.3% are permanent employees. In addition, 9,844 subcontractors and expert consultants were engaged at the year-end. 

Employee turnover was 9.9%, with voluntary turnover at 7.4%. DNV strives for diversity at all levels of the organization and is firmly committed to providing equal opportunity in all aspects of employment. A career in DNV should not be hindered by nationality, gender, or age if the employee has the competence, attitude and values needed for the role. The Board considers the company’s purpose, vision, and values to be instrumental in attracting and retaining the diverse workforce necessary in global markets. The Board also emphasizes the importance of sound management of human and labour rights. DNV’s statement pursuant to the UK Modern Slavery Act has been signed by the Board and is published on the company website. 

The employees represent 114 nationalities and DNV has operations involving 100 or more employees in 20 countries. DNV’s largest operations are in Norway, the US, Germany, the UK, and China. Of the permanent employees, 87.8% have a higher education. The proportion of female employees and female managers is 34% and 29% respectively. As of 31 December 2021, the Executive Committee consisted of four women and seven men.

Business ethics and anti-corruption

DNV’s business model and success are based upon trust. Building trust is enshrined in the company’s vision and values. The Board strongly emphasizes the necessity of reflecting DNV’s values and demonstrating ethical leadership in society. 

The DNV Group has a zero-tolerance policy for corruption and unethical behaviour which applies to all those working in DNV, including employees, subcontractors, agents, and suppliers. 

DNV is committed to maintaining and continuously improving a compliance management system in accordance with ISO 37301, focusing on anti-corruption, anti-trust, data protection, export control, and sanctions. Compliance risks are regularly assessed as part of the corporate risk management process and appropriate measures are taken accordingly. 

The Group Compliance Officer reports on performance to the Board and Executive Committee annually and to the Board Audit Committee quarterly. 

Information on how to report occurrences or suspected misconduct is published on the company website and the intranet. DNV also offers an ethical helpline and anonymous whistleblowing channel to ensure and encourage reporting. 

In 2021, a new Code of Conduct was approved by the Board, stating expectations for line managers and employees. The Code of Conduct is aligned with DNV’s strategy and focuses on areas of increased importance. DNV’s Code of Conduct was further emphasized in a new mandatory e-learning course made available in 2020 and completed by 95% of all employees. A new e-learning course was launched in 2021 and DNV will continue to follow this up to achieve its completion rate target. It should be noted that, as some employees are hired or leave the company during the year, a 100% completion rate is not possible. 

In 2021, 63 potential compliance cases were reported and handled (versus 64 in 2020). DNV was not a participant in any legal action regarding anti-competitive behaviour or violations of antitrust or monopoly legislation during the reporting period. DNV was not subjected to any significant fines or non-monetary sanctions and no non-compliances with laws and/or regulations in the environmental, social, or economic areas were identified. 

Further measures were also implemented in 2021 to sustain a high level of integrity, including training, communication, and updates to governing documents following statutory amendments. 

Moreover, over 4,000 employees received individual training on compliance-related topics.

Safety and resilience

DNV abides by its guiding principle that no work is so urgent or important that it cannot be done in a safe and healthy way. 

DNV is committed to managing safety in its work environment and helping employees develop resilience. The focus on safety and resilience is anchored in the strategy and in the way that Group Health, Safety and Environment (HSE) has been reorganized into Group People Safety and Resilience and Group Climate and Sustainability. 

The pandemic continued to take its toll on people and businesses in 2021. In parallel, the pandemic became more volatile, on both a global and local level. Nevertheless, surveys revealed that DNV’s employees have largely coped well during the pandemic, and many have established new routines for balancing their work and private life while working from home. 

Survey data also identified employees’ concerns about workload, loneliness, and communication issues related to virtual work. These concerns provided direction and inspired additional initiatives that were launched in 2021 to mitigate these factors. Resilience webinars for all employees, tailored knowledge-sharing sessions on how to deal with COVID-19 flare-ups and lockdowns, resilience webinars for team leaders, and the launch of the DNV Resilience Gateway all showcased DNV’s commitment to its values. 

The company’s main occupational health and safety risks are related to slips, trips and falls, field work, driving, and stress caused by an excessive workload or other circumstances. Some cases of ill health related to working from home were also recorded and are being monitored. The long-term trend in the number of injuries and occupational disease cases has been stable for the last couple of years, with a slight increase (from 17 to 21) in lost time incidents (LTI). The average number of recovery days has decreased from 33.5 in 2020 to 23.5 days in 2021. The increase in the number of registered LTIs is due to COVID-19 infections, as five of the 21 cases are employees who were infected with COVID-19. More details are provided in the Health and Safety section of the annual report. Employee safety and resilience performance is reviewed by the Board twice a year and included in the CEO’s report to every Board meeting, and the Board views this to be on par with industry benchmarks. 

Moving into 2022, DNV will continue to offer guidance and support to employees to protect their safety, health, and resilience. At the same time, and in line with its new flexible work policy, the company will help employees navigate a more standardized and widespread hybrid way of working. The focus in 2022 will therefore be twofold: managing the safety and resilience risks associated with the pandemic and dealing with the challenges associated with the transition to a hybrid working environment. This means DNV will continue to invest in a future-fit, healthy, and safe work environment that fosters employee resilience.

Outlook

Despite some signs of normalization of the global situation related to the ongoing pandemic, the world continued to live with the effects and consequences of COVID-19 in 2021. Although many countries have gradually reopened, and many sectors have experienced revitalization, some countries keep significant restrictions, and the pandemic has caused significant disturbance in several global supply chains. This has resulted in longer lead times and shortages in the availability of critical materials and components, ultimately impacting economic growth. These global bottlenecks are expected to continue to have an impact on many sectors and the economy throughout 2022. Moreover, the ongoing war in Ukraine means that the strains and complexities regarding supply chains are expected to be further negatively impacted in addition to exceptional volatility in energy prices. The war has a direct impact on several of DNV’s customers and business contracts. DNV has issued a statement saying that, as a result of the invasion of Ukraine, DNV will follow international sanctions and the intentions behind them, is reviewing all ongoing contracts and operations with Russian entities and is winding down all related business. This is expected to have minor financial impact on DNV, however indirect effects from the war may have broader consequences on the different sectors and regions where DNV operates.

The effects of the spread of COVID-19 have proven to be longer-lasting than expected. Although most Western countries have managed to keep up the pace of vaccination, the virus has mutated several times, causing flare-ups and increased infection rates and triggering the need for the frequent reinstatement of national and global measures to limit the spread of the virus. This will clearly further impact the growth outlook and represent an additional uncertainty related to DNV’s global market conditions. However, the proven relevance of DNV’s services, including during pandemic times, is expected to continue to create business opportunities. Combined with the company’s demonstrated ability to deliver services and generate new business, we expect DNV to have favourable market conditions in 2022 relative to the average growth expectations in global markets. Except for some specific sectorial challenges, and generally competitive markets, the outlook for 2022 is still considered to be good, although ongoing efforts to contain COVID-19 and increasing geopolitical tensions present continued and somewhat hard to predict risks to the outlook.

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