DIRECTORS' REPORT
Financial review
Margins
Nordecon International Group ended the first half of 2009 with a
gross profit of
84.4 million kroons (5.4 million euros), 65% down from the
238.7 million kroons
(15.3 million euros) earned in the first half of 2008.
The decrease
results largely from a decline in the profitability
of construction contracts
across all segments. In ordinary
circumstances, lower than average
profitability in the first
quarter results from seasonal factors that impact
mainly the road
construction business and are counteracted in the second
quarter. This
year, however, they have been accompanied by exceptionally weak
demand in
the buildings construction sector, which has triggered fierce
competition and, accordingly, a steep decrease in relevant margins.
Management set the Group the objective of ending the first half-year with
an
operating profit following the first quarter, which had ended with an
operating
loss mainly because of non-recurring restructuring and down-sizing
expenses.
Consolidated operating profit for the first half-year was 5.2
million kroons
(0.3 million euros). The positive operating result is
attributable, among other
factors, to the reduction of administrative
expenses. At period-end, the ratio
of administrative expenses to revenue
stood at 5.3% (I half 2008: 5.0%);
considering one-off costs from the
name change, the figure tallies with
management's 5% target. The
Group remains committed to its stated aim of
reducing the cost base
during 2009-2010 by up to 30% compared with 2007-2008 and
is prepared to act
resolutely to achieve this.
In the first
half-year, the Group earned a net profit of 5.2 million kroons (0.3
million
euros), a substantial decrease compared with the 110.8 million
kroons
(7.1 million euros) generated in the first half of 2008.
Consolidated net profit was significantly influenced by income tax expense of
5.9 million kroons (0.4 million euros) recognised in the second quarter
(mostly
dividend tax).
The key profitability ratios monitored by the Group's management
are following
the same trends that emerged in the last quarter of 2008 as a
result of adverse
changes in the operating environment. The Group's margins
have dropped (in all
markets) year-over-year primarily on account of a steep
decline in demand. The
main sector-specific trend has been the increasing
excess of construction
capacities over the number of projects on offer.
Low demand that is insufficient
for meeting the business needs of all market
players has heightened pressure for
lowering the prices. To remain
competitive, the Group was forced to lower the
half-year's gross margin to
6.9%, a notable decrease from the 12.8% posted for
the first half of 2008.
In the light of the trends prevailing in the
construction market,
the Group will focus on redesigning its internal processes
(improving the
efficiency of purchase of services, cost cutting, etc) so as to
maintain its
gross margin at a level that would ensure that the year will end
in an
operating profit.
Cash flows
The Group's net operating cash flow was negative at 57.1 million kroons
(3.6
million euros), reflecting developments in the markets where the
Group
operates. Contractual settlement terms have lengthened (particularly as
regards
the public sector projects) and the overall economic situation is
causing difficulties that cause settlement delays. Receipts from customers
exceed disbursements to suppliers but not enough to render the net
operating
cash flow positive. The ability and speed of achieving a
positive net operating
cash flow depend on how quickly and effectively the
Group will adjust to
the new economic environment (settlement dates with
subcontractors) and the
extent to which operating costs can be cut.
Investing activities of the first half of
2009 resulted in a net outflow of 41.1
million kroons (2.6 million euros)
compared with an outflow of 130.2 million
kroons (8.3 million euros) for
the first half of 2008. Acquisitions of
investments in subsidiaries,
associates and joint ventures (including disposals)
generated a net outflow of
30.2 million kroons (1.9 million euros) and lending
activities (including
interest received) resulted in a net outflow 7.0 million
kroons (0.4 million
euros). Corresponding figures for the first half of 2008
were an outflow
of 168.9 million kroons (10.8 million euros) for acquisitions
and an inflow
of 38.4 million kroons (2.5 million euros) for lending.
Financing
activities generated a net outflow of 39.9 million kroons (2.5 million
euros).
The corresponding figure for the first half of 2008 was an inflow of
109.0
million kroons (7.0 million euros). The result of financing cash flows
has
changed because the Group has reduced borrowing but is continuing the
servicing
of existing debt. In the first half of 2009, net outflow from
interest-bearing
loans and borrowings was negative at 6.8 million kroons
(0.4 million euros)
against an inflow of 212.8 million kroons (13.6
million euros) in the first half
of 2008. The remainder of financing cash
flows is made up of a dividend
distribution of 31.9 million kroons
(2.0 million euros) compared with 103.8
million kroons (6.6 million
euros) a year ago.
Key financial figures
and ratios
------------------------------------------------------------------------------
--
|
Figure / ratio | 1st half | 1st half | 1st half | 2008
|
| | 2009 | 2008 | 2007 |
|
-----------------------------------------------------------------------------
---
|
Weighted average number of | 30,756,7 | 30,756,7 | 30,756,72 | 30,756,728
|
| shares * | 28 | 28 | 8 |
|
-----------------------------------------------------------------------------
---
|
Earnings per share (in | 0.69 | 3.39 | 4.03 | 4.73
|
| kroons) | | | |
|
-----------------------------------------------------------------------------
---
|
Earnings per share (in | 0.04 | 0.22 | 0.26 | 0.30
|
| euros) | | | |
|
-----------------------------------------------------------------------------
---
|
Revenue growth | -34.5% | 23.1% | 64.0% | 3.1%
|
-----------------------------------------------------------------------------
---
|
Average number of employees | 1,174 | 1209 | 1113 | 1,232
|
-----------------------------------------------------------------------------
---
|
Revenue per employee (in | 1,044 | 1,547 | 1,365 | 3,140
|
| thousands of kroons) | | | |
|
-----------------------------------------------------------------------------
---
|
Revenue per employee (in | 67 | 98 | 87 | 201
|
| thousands of euros) | | | |
|
-----------------------------------------------------------------------------
---
|
Personnel expenses to | 15.4% | 12.4% | 11.6% | 12.7%
|
| revenue, % | | | |
|
-----------------------------------------------------------------------------
---
|
Administrative expenses to | 5.3% | 5.0% | 4.6% | 4.7%
|
| revenue, % | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
EBITDA (in thousands of | 41,125 | 179,579 | 176,310 | 281,161
|
| kroons) | | | |
|
-----------------------------------------------------------------------------
---
|
EBITDA (in thousands of | 2,628 | 11,477 | 11,268 | 17,969
|
| euros) | | | |
|
-----------------------------------------------------------------------------
---
|
EBITDA margin, % | 3.4% | 9.6% | 11.6% | 7.3%
|
-----------------------------------------------------------------------------
---
|
Gross margin, % | 6.9% | 12.8% | 14.2% | 9.3%
|
-----------------------------------------------------------------------------
---
|
Operating margin, % | 0.4% | 7.8% | 9.6% | 5.4%
|
-----------------------------------------------------------------------------
---
|
Operating margin excluding | 0.3% | 7.6% | 9.2% | 5.3%
|
| gains on asset sales, % | | | |
|
-----------------------------------------------------------------------------
---
|
Net margin, % | 0.4% | 5.9% | 8.6% | 4.4%
|
-----------------------------------------------------------------------------
---
|
Return on invested capital, | 1.9% | 11.7% | 17.8% | 19.1%
|
| % | | | |
|
-----------------------------------------------------------------------------
---
|
Return on assets, % | 0.2% | 6.3% | 9.3% | 9.1%
|
-----------------------------------------------------------------------------
---
|
Return on equity, % | 0.6% | 13.7% | 23.9% | 20.5%
|
-----------------------------------------------------------------------------
---
|
Equity ratio, % | 35.8% | 33.0% | 33.7% | 36.5%
|
-----------------------------------------------------------------------------
---
|
Gearing, % | 31.7% | 27.4% | 32.5% | 18.2%
|
-----------------------------------------------------------------------------
---
|
Current ratio | 1.36 | 1.45 | 1.45 | 1.33
|
-----------------------------------------------------------------------------
---
|
| 30 June | 30 June | 30 June | 31 December
|
| | 2009 | 2008 | 2007 |
2008
|
-----------------------------------------------------------------------------
---
|
Order book (in thousands of | 1,568,00 | 3,196,93 | 2,730,813 | 2,220,748
|
| kroons) | 4 | 7 | |
|
-----------------------------------------------------------------------------
---
|
Order book (in thousands of | 100,214 | 204,322 | 174,531 | 141,932
|
| euros) | | | |
|
-----------------------------------------------------------------------------
---
*
For comparability, the weighted average number of shares is the number of
shares after the bonus issues.
------------------------------------------------------------------------------
--
|
Earnings per share (EPS) = net | Operating margin excluding gains on
|
| profit attributable to equity | asset sales = (operating profit -
|
| holders of the parent / weighted | gains on sale of property, plant
and |
| average number of shares outstanding | equipment - gains on sale of
real |
| Revenue per employee = revenue / | estate) / revenue
|
| average number of employees | Net margin = net profit
for the |
| Personnel expenses to revenue = | period / revenue
|
| personnel expenses / revenue | Return on invested
capital = (profit |
| Administrative expenses to revenue = | before tax +
interest expense) / the |
| administrative expenses / revenue | period's
average (interest-bearing |
| EBITDA = earnings before interest, |
liabilities + equity) |
| taxes, depreciation and
| Return on assets = operating profit / |
| amortisation
| the period's average total assets |
| EBITDA margin = EBITDA / revenue
| Return on equity = net profit for the |
| Gross margin = gross profit /
| period /the period's average total |
| revenue
| equity |
| Operating margin =
operating profit | Equity ratio = total equity / total |
| / revenue
| equity and liabilities |
|
| Gearing = (interest-bearing |
|
| liabilities - cash and cash |
|
| equivalents) / (interest bearing |
|
| liabilities + equity) |
|
| Current ratio = total current assets |
|
| / total current liabilities
|
-----------------------------------------------------------------------------
---
Performance
by geographical market
In the
first half of 2009, revenue earned outside Estonia accounted for
approximately 16% of consolidated revenue against approximately 20% a year
ago.
The Group has expanded operations in Latvia - in the first six months of
2009,
Latvian revenues accounted for around 13% of the total while in 2008
(full year)
the proportion was 6%.
At the same time, the contribution of Ukrainian revenues
dropped to 2%. The
downturn is attributable to the completion of major
projects started in the
previous period and the complexity of entering
into new contracts during the
steep recession. Lithuanian revenues
decreased in line with the decisions made
by the Group regarding the
Lithuanian market (see Changes in the Group's
management structure and
operations in 2009 in Directors' report).
Further information on
developments in the Group's chosen markets can be found
in Outlooks of the
Group's geographical markets.
------------------------------------------------------------------------------
--
|
| 1st half | 1st half | 1st half | 2008
|
| | 2009 | 2008 | 2007 |
|
-----------------------------------------------------------------------------
---
|
Estonia | 83.9% | 80.1% | 90.0% | 80.3%
|
-----------------------------------------------------------------------------
---
|
Ukraine | 2.3% | 14.9% | 10.0% | 11.4%
|
-----------------------------------------------------------------------------
---
|
Lithuania | 0.9% | 2.2% | 0% | 2.4%
|
-----------------------------------------------------------------------------
---
|
Latvia | 12.9% | 2.8% | 0% | 5.9%
|
-----------------------------------------------------------------------------
---
Revenue
distribution across different geographical areas is a consistently
deployed strategy aimed at mitigating the risks arising from undue reliance
on a
single market. In addition, increasing the proportion of revenue earned
outside
Estonia remains one of the Group's strategic objectives - in 2013 the
Group
expects to earn half of its revenue outside Estonia.
Performance by business line
The core business of Nordecon International Group is
general contracting and
project management in buildings and infrastructure
construction. In addition,
the Group is involved in road construction and
maintenance, environmental
engineering, concrete works and real estate
development.
Consolidated revenue for the first half
of 2009 was 1,225.1 million kroons (78.3
million euros), a 34.5% decrease from
the 1,870.6 million kroons (119.6 million
euros) generated in the first half
of 2008. Revenue has decreased mainly on
account of shrinkage in demand
in all of the Group's markets. In addition, the
absolute revenue figure has
been impacted by stiff competition that has lowered
the construction prices
(see further commentary in Outlooks of the Group's
geographical
markets).
The
Group aims to maintain the revenues generated by its main segments
(Buildings and Infrastructure) in balance as this helps disperse risks and
provides a more solid foundation under stressed circumstances when one
segment
experiences shrinkage in operating volumes. In view of estimates of
demand for
apartments, the proportion of housing construction revenue from
apartment
buildings will remain within the strategically defined 20%.
Segment revenue
In contrast to previous years, in the first half of
2009 the revenue generated
by the Infrastructure segment surpassed that of
Buildings. This results mainly
from the situation in the construction market
(particularly in Estonia) that has
caused the order book of the Infrastructure
segment to develop more favourably
already since the second half of 2008.
In the first half of 2009, the
Buildings and Infrastructure segments generated
revenue of 600.8 million
kroons (38.4 million euros) and 616.4 million kroons
(39.4 million euros)
respectively. The corresponding figures for the first half
of 2008 were
1,332.0 million kroons (85.1 million euros) and 534.2 million
kroons
(34.1 million euros) respectively. In response to market developments,
the
revenue of the Buildings segment has declined and that of Infrastructure
has
grown. However, the approximately 80-million kroon (5.1-million euro)
growth in
the Infrastructure segment is not wholly organic but includes also
Latvian
revenues which in the first half of 2008 were not yet
consolidated.
Revenue distribution between segments*
------------------------------------------------------------------------------
--
|
Business segments | 1st half | 1st half | 1st half | 2008
|
| | 2009 | 2008 | 2007 |
|
-----------------------------------------------------------------------------
---
|
Buildings | 49% | 72% | 54% | 63%
|
-----------------------------------------------------------------------------
---
|
Infrastructure | 51% | 28% | 46% | 37%
|
-----------------------------------------------------------------------------
---
*
In connection with the entry into force of IFRS 8 Operating Segments during
the reporting period, the Group has changed segment reporting in its
financial
statements. In the Directors' report the Ukrainian and EU
Buildings segments
which are disclosed separately in the financial
statements are presented as a
single segment. In addition, the segment
information presented in the Directors'
report does not include the
disclosures on “other segments” that are presented
in the financial
statements.
Management
believes that because of the market situation the proportion of
revenue
generated by the Infrastructure segment will continue increasing
compared with 2008. The assessment is supported by the Group's order book as
at
30 June 2009 where the contracts of the Infrastructure segment surpass
those of
the Buildings segment (see Order book in Director's report).
Revenue distribution within segments
The distribution of the Group's buildings construction revenue
has remained
stable, with commercial buildings accounting for over 50% of
the total. As
anticipated, revenues from the construction of industrial
and warehouse
facilities and apartment buildings have decreased. On
the other hand, the
downturn in construction prices has triggered
growth in the construction of
public buildings thanks to municipal
investments in schools, nurseries and other
public buildings. However, despite
attractive construction prices, further
growth in local government
projects may be undermined by financing
difficulties.
------------------------------------------------------------------------------
--
|
Revenue distribution in the | 1st half | 1st half | 1st half | 2008
|
| Buildings segment | 2009 | 2008 | 2007 |
|
-----------------------------------------------------------------------------
---
|
Commercial buildings | 71% | 59% | 53% | 59%
|
-----------------------------------------------------------------------------
---
|
Industrial and warehouse | 11% | 20% | 10% | 16%
|
| facilities | | | |
|
-----------------------------------------------------------------------------
---
|
Public buildings | 16% | 13% | 20% | 14%
|
-----------------------------------------------------------------------------
---
|
Apartment buildings | 1% | 8% | 17% | 11%
|
-----------------------------------------------------------------------------
---
Changes
in the structure of the Group's infrastructure revenues are attributable
to
the acquisition of subsidiaries (the subgroup of the Latvian subsidiary SIA
Nordecon Infra). The contribution of other engineering projects has
increased,
year-over-year, largely on account of growth in pipeline and
outdoor network
construction, while environmental engineering revenues
have expanded thanks to a
decline in construction prices that has increased
investment by state and local
government.
------------------------------------------------------------------------------
--
|
Revenue distribution in the | 1st half | 1st half | 1st half | 2008
|
| Infrastructure segment | 2009 | 2008 | 2007 |
|
-----------------------------------------------------------------------------
---
|
Road construction and | 32% | 51% | 30% | 45%
|
| maintenance | | | |
|
-----------------------------------------------------------------------------
---
|
Port construction | 17% | 26% | 28% | 24%
|
-----------------------------------------------------------------------------
---
|
Other engineering | 38% | 19% | 17% | 6%
|
-----------------------------------------------------------------------------
---
|
Environmental engineering | 14% | 4% | 25% | 25%
|
-----------------------------------------------------------------------------
---
Order
book
At
30 June 2009, the Group's order book was 1,560 million kroons (100 million
euros), 50% down from the 3,197 million kroons (204 million euros) posted a
year
ago.
------------------------------------------------------------------------------
--
|
| 30 June | 30 June | 30 June | 31 Dec
|
| | 2009 | 2008 | 2007 |
2008
|
-----------------------------------------------------------------------------
---
|
Order book, in thousands of | 1,568,00 | 3,196,937 | 2,730,813 | 2,220,748
|
| kroons | 4 | | |
|
-----------------------------------------------------------------------------
---
|
Order book, in thousands of | 100,214 | 204,322 | 174,531 | 141,932
|
| euros | | | |
|
-----------------------------------------------------------------------------
---
In
the Infrastructure segment, the order book has been growing year-over-year.
At 30 June 2009 it accounted for 68% of the Group's total order book
portfolio
(30 June 2008: 53%), reflecting the situation in the construction
market where
shrinkage in the Buildings segment is outpacing growth in the
Infrastructure
segment. In absolute terms, the order book figures have
been severely weakened
by tumbling construction prices.
Between the reporting date (30 June 2009) and the
date of release of this
report, Group companies have been awarded
additional construction contracts of
approximately 380 million kroons (24,3
million euros).
People and personnel
expenses
In the first half
of 2009 the Group (including the parent and the subsidiaries)
employed, on
average, 1,187 people including around 500 engineers and technical
personnel.
The proportion of engineers and technical personnel (ETP) has been
expanding over the years due to business growth. In 2009, the acquisition of
the
Latvian company SIA LCB increased the number of staff by more than 100.
However,
since the end of 2008 personnel growth has been replaced by a decline
because of
downsizing triggered by a significant decrease in the Group's
operations.
Average number of the Group's employees (including the
parent and its
subsidiaries):
------------------------------------------------------------------------------
--
|
Period | ETP | Workers | Total average
|
-----------------------------------------------------------------------------
---
|
1st half 2009 | 480 | 707 | 1,187
|
-----------------------------------------------------------------------------
---
|
1st half 2008 | 493 | 716 | 1,209
|
-----------------------------------------------------------------------------
---
|
1st half 2007 | 412 | 701 | 1,113
|
-----------------------------------------------------------------------------
---
|
2008 | 511 | 721 | 1,232
|
-----------------------------------------------------------------------------
---
The
Group's personnel expenses for the first half of 2009, including associated
taxes, totalled 188.4 million kroons (12.0 million euros), a 19% decrease
compared with the 232.9 million kroons (14.9 million euros) incurred in the
same
period in 2008.
The Group has been able to reduce personnel expenses in a situation
where the
number of staff has remained more or less stable by cutting the
basic pay.
Employee salaries have been lowered at all Group entities;
the average pay-cut
for engineers and technical personnel was 15%. The
performance pay of project
staff that is linked the projects' profit
margins has also declined.
Owing to the overall economic situation
and the slump in the construction
market, in the first half of 2009
Group entities were forced to terminate
employment relations with
approximately 450 people. This however does not
influence directly the
total average number of employees of the period, taken
also into account
the additions.
In the first
half of 2009, the remuneration of the members of the council of
Nordecon
International AS including associated taxes amounted to 718 thousand
kroons
(46 thousand euros). The corresponding figure for the first half of 2008
was
725 thousand kroons (46 thousand euros). The remuneration and benefits of
the members of the board of Nordecon International AS including associated
taxes
totalled 1,674 thousand kroons (107 thousand euros) compared with 8,257
thousand
kroons (528 thousand euros) a year ago. The differences in the
remuneration of
the board stem from the fact that since 5 January 2009 the
board has had three
members while in 2008 the number was five (see Changes
in the Group's management
structure and operations in 2009). In addition, the
figure has been impacted by
a 15% reduction in board member remuneration
across the Group.
Share and shareholders
Share information
ISIN code
EE3100039496
Short name of the security NCN1T (until 3 April
2009 EEH1T)
Nominal value 10.00 kroons / 0.64 euros
Total number of securities issued 30,756,728
Number of listed securities 30,756,728
Listing date 18 May 2006
The share
capital of Nordecon International AS consists of 30,756,728 ordinary
shares
with a par value of 10 Estonian kroons each. Owners of ordinary shares
are
entitled to dividends as distributed from time to time. Each share carries
one vote at general meetings of Nordecon International AS.
Summarised trading results
Share trading history (EEK)
------------------------------------------------------------------------------
--
|
Price | 1st half | 1st half 2008 | 1st half 2007
|
| | 2009 | |
|
-----------------------------------------------------------------------------
---
|
Open | 16.43 | 76.51 | 166.64
|
-----------------------------------------------------------------------------
---
|
High | 20.34 | 76.51 | 224.53
|
-----------------------------------------------------------------------------
---
|
Low | 8.61 | 50.85 | 96.54
|
-----------------------------------------------------------------------------
---
|
Last closing price | 13.61 | 53.98 | 93.88
|
-----------------------------------------------------------------------------
---
|
Traded volume | 1,875,140 | 4,112,826 | 2,480,799
|
-----------------------------------------------------------------------------
---
|
Turnover, millions | 22.2 | 229.8 | 425.8
|
-----------------------------------------------------------------------------
---
|
Listed volume (30 June), | 30,757 | 30,757 | 15,378
|
| thousands | | |
|
-----------------------------------------------------------------------------
---
|
Market capitalisation (30 | 418.60 | 1,650.44 | 1,443.69
|
| June), millions | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
Share
trading history (EUR)
------------------------------------------------------------------------------
--
|
Price | 1st half | 1st half 2008 | 1st half 2007
|
| | 2009 | |
|
-----------------------------------------------------------------------------
---
|
Open | 1.05 | 4.89 | 10.65
|
-----------------------------------------------------------------------------
---
|
High | 1.30 | 4.89 | 14.35
|
-----------------------------------------------------------------------------
---
|
Low | 0.55 | 3.25 | 6.17
|
-----------------------------------------------------------------------------
---
|
Last closing price | 0.87 | 3.45 | 6.00
|
-----------------------------------------------------------------------------
---
|
Traded volume | 881,595 | 759,958 | 1,745,628
|
-----------------------------------------------------------------------------
---
|
Turnover, millions | 1.42 | 14.69 | 27.21
|
-----------------------------------------------------------------------------
---
|
Listed volume (30 June), | 30 757 | 30 757 | 15 378
|
| thousands | | |
|
-----------------------------------------------------------------------------
---
|
Market capitalisation (30 | 26.75 | 105.48 | 92.27
|
| June), millions | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
Shareholder
structure
The
largest shareholders of Nordecon International AS at 30 June 2009
------------------------------------------------------------------------------
--
|
Shareholder | Number of shares | Ownership
|
| | |
interest
|
-----------------------------------------------------------------------------
---
|
AS Nordic Contractors | 18,807,464 | 61.15%
|
-----------------------------------------------------------------------------
---
|
ING Luxembourg S.A. | 1,111,853 | 3.61%
|
-----------------------------------------------------------------------------
---
|
Ain Tromp | 678,960 | 2.21%
|
-----------------------------------------------------------------------------
---
|
ASM Investments OÜ | 519,600 | 1.69%
|
-----------------------------------------------------------------------------
---
|
Skandinaviska Enskilda Banken Ab Clients | 456,758 | 1.49%
|
-----------------------------------------------------------------------------
---
|
State Street Bank & Trust Co. | 355,199 | 1.15%
|
-----------------------------------------------------------------------------
---
|
The Bank of New York Mellon | 353,323 | 1.15%
|
-----------------------------------------------------------------------------
---
|
Aivo Kont | 339,480 | 1.10%
|
-----------------------------------------------------------------------------
---
|
SEB Pank AS | 322,200 | 1.05%
|
-----------------------------------------------------------------------------
---
|
Raul Rebane | 316,104 | 1.03%
|
-----------------------------------------------------------------------------
---
Shareholder
structure at 30 June 2009
------------------------------------------------------------------------------
--
|
| Number of | Ownership
|
| | shareholders |
interest
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest exceeding 5% | 1 | 61.15%
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest between 1% | 9 | 14.48%
|
| and 5% | |
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest below 1% | 1,741 | 24.37%
|
-----------------------------------------------------------------------------
---
|
Total | 1,751 | 100.00%
|
-----------------------------------------------------------------------------
---
Shares
controlled by members of the council of Nordecon International AS at 30
June
2009
------------------------------------------------------------------------------
--
|
Council | | Number of | Ownership
|
| | | shares |
interest
|
-----------------------------------------------------------------------------
---
|
Toomas Luman (AS Nordic | Chairman of | 19,059,144 | 61.97%
|
| Contractors, OÜ Luman ja | the Council | |
|
| Pojad)* | | |
|
-----------------------------------------------------------------------------
---
|
Ain Tromp | Member of the | 678,960 | 2.21%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
|
Alar Kroodo (ASM Investments | Member of the | 519,600 | 1.69%
|
| OÜ)* | Council | |
|
-----------------------------------------------------------------------------
---
|
Andri Hõbemägi | Member of the | 40,000 | 0.13%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
|
Tiina Mõis | Member of the | 0 | 0.00%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
|
Meelis Milder | Member of the | 0 | 0.00%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
*
Companies controlled by the individual
Shares controlled by members of the board of Nordecon International AS at
30
June 2009
------------------------------------------------------------------------------
--
|
Board | | Number of | Ownership
|
| | | shares |
interest
|
-----------------------------------------------------------------------------
---
|
Jaano Vink | Chairman of | 34,000 | 0.11%
|
| | the Board | |
|
-----------------------------------------------------------------------------
---
|
Sulev Luiga | Member of the | 1,000 | 0.00%
|
| | Board | |
|
-----------------------------------------------------------------------------
---
|
Priit Tiru | Member of the | 0 | 0.00%
|
| | Board | |
|
-----------------------------------------------------------------------------
---
Members
of the board and council of Nordecon International AS and companies
controlled by them have not been granted any share options under which they
could acquire shares in Nordecon International AS in subsequent periods.
Information on significant transactions with related parties
On 26 March 2009 Nordecon Ehitus AS, a wholly-owned subsidiary of
Nordecon
International AS, acquired a 50% stake in OÜ Unigate from AS
Arealis, a
subsidiary of the Group's controlling shareholder Nordic
Contractors AS.
OÜ Unigate is a housing developer incorporated in
Estonia that has been
developing properties belonging to it in
Paekalda street in Tallinn. The
investment was made in line with the
Group's strategy according to which in
2009-2010 the Group is to prepare
for a potential rise of the Estonian real
estate market that may take
place after 2010. For this, the Group's subsidiaries
will acquire property
portfolios that will allow launching housing construction
projects as soon as
the market situation changes.
In accordance
with the terms of the transaction, AS Arealis was paid 20.0
million
kroons (1.3 million euros) including 1.5 million kroons (0.1 million
euros) for an interest in the entity's share capital and 18.5 million kroons
(1.2 million euros) for AS Arealis' loan receivables from OÜ Unigate.
Depending
on the success of the development operations, AS Arealis will also
be paid a
variable price component that will be calculated at 450 kroons
(28.8 euros) per
square metre sold. In February 2009 the market value of the
properties belonging
to OÜ Unigate (the proportion acquired by Nordecon Ehitus
AS) was approximately
47.5 million kroons (3.0 million euros).
Outlooks of the Group's geographical markets
Estonia
According to management's assessment, in
2009-2010 the Estonian construction
market will be characterised by the
following features:
- Total demand in the
construction market will depend heavily on public
procurement tenders and the
number and pricing of infrastructure, environmental
and other projects
launched with the support of the European Union funds (the
latter will be
critically influenced by the administrative capabilities of the
central and
local governments). However, the more moderate decline in the
infrastructure sector will not be able to compensate for the steep
contraction
of the buildings construction market that has currently been
abandoned by most
private sector corporates and individuals. The Group's
management estimates that
by 2010 the total volumes of the construction market
will have decreased 50%
compared with 2008.
- The number of development and buildings
construction companies will decrease
(market consolidation). Companies
focused on residential construction which in
2008 began seeking
opportunities to penetrate other market segments such as
infrastructure
will continue to do so, heightening competition in the segments
involved.
The continuing slump will lead to mergers, takeovers and bankruptcies.
-
Owing to the global financial crisis, the amount of money circulating in the
economy has decreased considerably. As a result, more and more private sector
companies will have difficulty in raising debt to finance new construction
projects. The steep decrease in demand may be somewhat alleviated by a
competition-induced decrease in prices, which will render investment in
construction projects more attractive than it was during the boom of
2006 and
2007.
- Building materials manufacturers that significantly
increased their output
during the growth phase of the market will be faced by
shrinking demand and,
consequently, greater strain in meeting the
obligations taken for increasing
capacities.
- Real estate development companies'
ability to service and repay existing
loans
will weaken and their
creditworthiness will decrease. For companies involved in
general contracting
and project management, this may mean an increase in
doubtful and
irrecoverable receivables.
- The
importance of infrastructure projects will increase and, accordingly,
critical success factors will include specialised engineering expertise and
experience as well as the availability of relevant resources.
- The deteriorating economic climate and fierce competition in the
construction
market along with falling demand will cause continuing
unemployment for
construction workers. The ensuing increase in the
availability of labour will
lower construction companies' personnel
expenses although in the short term the
decrease will be lessened by the
disbursement of redundancy benefits.
- The change in construction
projects' financing schemes (customers' settlement
terms will extend
significantly) in combination with additional requirements to
the financing
provided by general contractors during the construction period
will put
pressure on contractors' liquidity.
Nordecon International Group operates in accordance with its long-term
objectives that are adjusted for changes in the external environment.
Relevant
strategic management is the responsibility of the Group's board
(see The Group's
strategy and objectives for 2009-2013).
The Group has prepared for changes in the economic
environment by:
- Setting the objective of reducing the cost
base by 30% (by cutting personnel
expenses by downsizing and lowering
salaries, reducing the costs of goods and
services purchased, etc)
- Restructuring the Group for
better management of the business lines
(buildings
and infrastructure
construction) and maintaining the competitive advantages
- Performing a
more thorough preliminary analysis of the customers' solvency
and
creditworthiness and dealing proactively with the collection of overdue
receivables
- Dispersing risks through portfolio design
- Dispersing activities
across geographical areas and business segments
Latvia and Lithuania
Despite the difficulties
of the Latvian political and monetary systems, the
volumes of various
infrastructure projects financed by the state and local
government with
the support of EU funding will remain stable or, hopefully, will
even increase
(such as projects for the rehabilitation of the water supply and
central
heating systems). Construction activities will be mainly affected by
the
situation of financing institutions, a significant decrease in private
sector
demand, still high inflation and heightening competition. The
ability of the
Latvian central and local governments to provide
self-financing for projects
financed with the support of the EU and,
accordingly, their ability to pay to
contractors, has also become dependent
on whether Latvia will receive the loan
agreed with IMF.
Recent economic developments in
Lithuania have been similar to the ones in the
other Baltic countries.
Slowdown in investment both in the public and private
sectors and similar
factors directly influence the construction market. The
commercial and
residential construction (the Group as a general contractor not a
developer)
markets have contracted visibly and the situation remains strained.
Other
relevant risks include the stability of banks, increasing competition and
the
impact of inflation on the construction prices.
The Group's management has suspended major decisions and remains alert to
developments in Latvia and Lithuania because similarly to Estonia, their
whole
economy is in difficulty and this can also be felt in the construction
sector.
Management is analysing the Group's operation in the Latvian and
Lithuanian
markets in the light of developments in the external
environment and is prepared
to revise current plans swiftly and decisively.
The business operations of the
Lithuanian-based UAB Nordecon Statyba (formerly
UAB Eurocon LT) have been
practically suspended and the Group is monitoring the
market situation. The
short-term decision will not change the Group's strategic
objectives in the
Lithuanian construction market and does not imply the sale or
liquidation of
the company.
The Group
designs its activities in the Latvian and Lithuanian construction
markets
in accordance with its international expansion strategy (see The
Group's
strategy and objectives for 2009-2013) and believes that in the long
term the
two markets will have a logical place in the Group's
internationalisation.
Ukraine
In Ukraine, the Group will continue as a
general contractor and project manager
in the construction of commercial
buildings and production facilities.
Activities on development
projects that require major investment (currently two)
have been suspended to
minimise the risks until the situation in the Ukrainian
and global financial
markets has eased up.
The main risks
in the Ukrainian market are connected with the low administrative
efficiency
of the central and local governments and the judicial system,
inflation, and the availability of quality construction inputs. Demand is
mainly
undermined by the lack of financing. Since October 2008 the Ukrainian
monetary
and banking systems have been under severe pressure. The Ukrainian
national
currency hryvna (UAH) has weakened significantly against both
the US dollar and
the euro, which is causing substantial foreign exchange
losses for foreign
companies operating in Ukraine that have not hedged
their currency risk
exposures. To date, the weakening of the currency
has stopped and the Group's
exposure to market-based currency risk has
decreased considerably.
Nevertheless, the Group believes that
the construction market of a country with
a population of 46 million will
offer business opportunities also in the future.
The Group's main success
factor is negligible competition in the project
management sector (the
Group offers flexible construction management along with
European practices
and competencies). The Group's management is confident that
the current
crisis in the Ukrainian construction market and economy as a whole
will
transform the local understanding and expectations of general contracting
and project management in the construction business, which will improve the
Group's position in the long-term perspective.
Description of the main risks
Business risks
To mitigate the risks arising from the seasonal nature of the
construction
business (primarily the weather conditions during the
winter months), the Group
has acquired road maintenance contracts that
generate year-round business. In
addition, Group companies are constantly
seeking new technical solutions that
would allow working more efficiently
under changeable weather conditions.
To manage their daily construction
risks, Group companies purchase Contractors'
All Risks insurance. Depending
on the nature of the project, both general frame
agreements and specially
tailored project-specific contracts are used. In
addition, as a rule,
subcontractors are required to secure the performance of
their obligations
with a bank guarantee issued for the benefit of a Group
company. To
remedy builder-caused deficiencies which may be detected during the
warranty
period, all Group companies create warranties provisions. At 30 June
2009
the provisions (including current and non-current ones) totalled 15.1
million kroons (1.0 million euros). The corresponding figure at 30 June 2008
was
7.8 million kroons (0.5 million euros).
Credit risks
For credit risk management, a potential customer's settlement
behaviour and
creditworthiness are analysed already in the tendering
stage. Subsequent to the
signature of a contract, the customer's settlement
behaviour is monitored on an
ongoing basis from the making of an advance
payment to adherence to the
contractual settlement schedule, which
usually depends on the documentation of
the delivery of work performed. We
believe that the system in place allows us to
respond to customers' settlement
difficulties with sufficient speed. As at the
end of the reporting period,
our customers' settlement practice was good.
However, the customers'
settlement behaviour has changed. The proportion of
overdue receivables
has increased somewhat, increasing the probability of credit
losses in
subsequent periods. In accordance with the Group's accounting
policies, all receivables that are more than 180 days overdue are recognised
as
an expense.
In the first half of 2009, net loss on doubtful receivables amounted to
9.2
million kroons (0.6 million euros). In the first half of 2008, losses
from the
write-down of receivables totalled 7.1 million kroons (0.5 million
euros).
Liquidity risks
Free funds are placed in overnight or fixed-interest term
deposits with the
largest banks of the markets where the Group operates.
To ensure timely
settlement of liabilities, approximately two weeks'
working capital is kept in
current accounts or overnight deposits. Where
necessary, overdraft facilities
are used. At the reporting date, the
Group's current assets exceeded its current
liabilities 1.36-fold (30 June
2008: 1.45-fold) and available cash funds
totalled 158.1 million
kroons (10.1 million euros) (30 June 2008: 321.8 million
kroons / 20.6
million euros), providing a sufficient liquidity buffer for
operating
in an economic environment that is more uncertain than in the previous
year.
Interest rate risks
The loans taken by Group companies from banks operating in Estonia,
Latvia and
Ukraine have mainly fixed interest rates. Finance lease contracts
have floating
interest rates and are linked to EURIBOR. By 30 June 2009, the
Group's
interest-bearing loans and borrowings had decreased by 127.1
million kroons (8.1
million euros) year-over-year to 619.7 million kroons
(39.6 million euros).
Interest expense for the first half of 2009
amounted to 15.7 million kroons (1.0
million euros). Compared with the first
half of 2008, interest expense has
contracted by 2.7 million kroons (0.2
million euros) thanks to a decline in the
EURIBOR base rate and a decrease in
loans and borrowings.
Currency risks
As a rule, construction
contracts and subcontractors' service contracts are made
in the currency of
the host country: in Estonia contracts are made in Estonian
kroons (EEK), in
Latvia in Latvian lats (LVL), in Lithuania in Lithuanian litas
(LTL) and in
Ukraine in Ukrainian hryvnas (UAH). A significant proportion of
services
purchased from other countries are priced in euros, which does not
constitute a currency risk for the Group's Estonian, Latvian and Lithuanian
entities.
In the last quarter of 2008, the Ukrainian economy and its national
currency
(the Ukrainian hryvna / UAH) were seriously hit by the global
financial crisis.
The exchange rate of the local currency that was not
officially pegged to any
international currency was deeply impacted by a
slump in exports and foreign
investment and concerns about the general
reliability of the Ukrainian banking
system. Despite counter-measures, the
local central bank was unable to maintain
a stable exchange rate for the
Ukrainian hryvna and in 2008 the latter weakened
against the US dollar and
the euro by more than 30% year-over-year.
In 2009 the weakening
of the Ukrainian hryvna against the euro has stopped and
in the first half
of 2009 the Group's exchange losses (including the ones
recognised in
finance expenses and other operating expenses) totalled 0.3
million
kroons (0.02 million euros). The net effect of exchange differences
(including exchange gains) on the Group's net profit was gain of 1.1 million
kroons (0.07 million euros).
Condensed consolidated interim statement of financial position
------------------------------------------------------------------------------
--
|
EEK ‘000 | 30 June 2009 | 31 December 2008
|
-----------------------------------------------------------------------------
---
|
ASSETS | |
|
-----------------------------------------------------------------------------
---
|
Current assets | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 158,089 | 296,184
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 526,234 | 473,935
|
-----------------------------------------------------------------------------
---
|
Other receivables and prepayments | 357,663 | 408,541
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 776 | 776
|
-----------------------------------------------------------------------------
---
|
Income tax assets | 0 | 3,207
|
-----------------------------------------------------------------------------
---
|
Inventories | 475,653 | 386,733
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for sale | 4,924 | 0
|
-----------------------------------------------------------------------------
---
|
Total current assets | 1,523,339 | 1,569,376
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Non-current assets | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 134,013 | 112,605
|
-----------------------------------------------------------------------------
---
|
Investment property | 116,783 | 116,783
|
-----------------------------------------------------------------------------
---
|
Property, plant and equipment | 238,057 | 263,295
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 332,253 | 305,188
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 821,105 | 797,871
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 2,344,444 | 2,367,247
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
LIABILITIES | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 253,486 | 235,948
|
-----------------------------------------------------------------------------
---
|
Trade payables | 392,740 | 439,615
|
-----------------------------------------------------------------------------
---
|
Taxes payable | 43,806 | 65,760
|
-----------------------------------------------------------------------------
---
|
Other payables | 416,117 | 423,270
|
-----------------------------------------------------------------------------
---
|
Provisions | 15,541 | 11,600
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 1,121,690 | 1,176,193
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Non-current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 366,235 | 318,578
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 15,568 | 2,534
|
-----------------------------------------------------------------------------
---
|
Provisions | 2,307 | 6,630
|
-----------------------------------------------------------------------------
---
|
Total non-current liabilities | 384,110 | 327,742
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 1,505,800 | 1,503,935
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
EQUITY | |
|
-----------------------------------------------------------------------------
---
|
Share capital | 307,567 | 307,567
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 40,012 | 34,800
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -2,813 | -4,106
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 412,195 | 426,995
|
-----------------------------------------------------------------------------
---
|
Equity attributable to owners of the | 756,961 | 765,256
|
| parent | |
|
-----------------------------------------------------------------------------
---
|
Non-controlling interests | 81,683 | 98,056
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 838,644 | 863,312
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 2,344,444 | 2,367,247
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
---------------------------------------------------------------------
-----------
|
EUR ‘000 | 30 June 2009 | 31 December 2008
|
-----------------------------------------------------------------------------
---
|
ASSETS | |
|
-----------------------------------------------------------------------------
---
|
Current assets | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 10,104 | 18,930
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 33,632 | 30,290
|
-----------------------------------------------------------------------------
---
|
Other receivables and prepayments | 22,858 | 26,110
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 50 | 50
|
-----------------------------------------------------------------------------
---
|
Income tax assets | 0 | 205
|
-----------------------------------------------------------------------------
---
|
Inventories | 30,400 | 24,717
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for sale | 315 | 0
|
-----------------------------------------------------------------------------
---
|
Total current assets | 97,359 | 100,301
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Non-current assets | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 8,565 | 7,197
|
-----------------------------------------------------------------------------
---
|
Investment property | 7,464 | 7,464
|
-----------------------------------------------------------------------------
---
|
Property, plant and equipment | 15,215 | 16,828
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 21,234 | 19,505
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 52,478 | 50,993
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 149,837 | 151,295
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
LIABILITIES | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 16,201 | 15,080
|
-----------------------------------------------------------------------------
---
|
Trade payables | 25,100 | 28,096
|
-----------------------------------------------------------------------------
---
|
Taxes payable | 2,800 | 4,203
|
-----------------------------------------------------------------------------
---
|
Other payables | 26,595 | 27,052
|
-----------------------------------------------------------------------------
---
|
Provisions | 993 | 741
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 71,689 | 75,172
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Non-current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 23,407 | 20,361
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 995 | 162
|
-----------------------------------------------------------------------------
---
|
Provisions | 147 | 424
|
-----------------------------------------------------------------------------
---
|
Total non-current liabilities | 24,549 | 20,947
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 96,238 | 96,119
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
EQUITY | |
|
-----------------------------------------------------------------------------
---
|
Share capital | 19,657 | 19,657
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 2,558 | 2,224
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -180 | -262
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 26,344 | 27,290
|
-----------------------------------------------------------------------------
---
|
Equity attributable to owners of the | 48,379 | 48,909
|
| parent | |
|
-----------------------------------------------------------------------------
---
|
Non-controlling interests | 5,220 | 6,267
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 53,599 | 55,176
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 149,837 | 151,295
|
-----------------------------------------------------------------------------
---
Condensed
consolidated interim statement of comprehensive income
------------------------------------------------------------------------------
--
|
EEK ‘000 | Q2 2009 | Q2 2008 | 1st | 1st half | 2008
|
| | | | half | 2008 |
|
| | | | 2009 | |
|
-----------------------------------------------------------------------------
---
|
Revenue | 634,430 | 1,097,1 | 1,225,0 | 1,870,63 | 3,867,91
|
| | | 25 | 94 | 5 |
7
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 586,932 | 959,741 | 1,140,7 | 1,631,89 | 3,510,00
|
| | | | 41 | 7 |
6
|
-----------------------------------------------------------------------------
---
|
Gross profit | 47,498 | 137,384 | 84,353 | 238,738 | 357,911
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Distribution expenses | 2,140 | 2,575 | 4,363 | 3,402 | 8,007
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 27,946 | 49,595 | 65,350 | 93,088 | 182,526
|
-----------------------------------------------------------------------------
---
|
Other operating income | 18,209 | 11,298 | 19,898 | 18,420 | 63,947
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 26,950 | 12,577 | 29,373 | 15,690 | 22,845
|
-----------------------------------------------------------------------------
---
|
Operating profit | 8,671 | 83,935 | 5,165 | 144,978 | 208,480
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Finance income | 12,128 | 18,868 | 30,903 | 23,427 | 96,877
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 9,131 | 5,284 | 22,913 | 25,135 | 68,019
|
-----------------------------------------------------------------------------
---
|
Net finance income / | 2,997 | 13,584 | 7,990 | -1,708 | 28,858
|
| expense | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Share of profit of | 777 | -16 | 777 | 0 | 17
|
| equity accounted | | | | |
|
| investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity | 239 | -381 | 2,883 | 347 | 24,770
|
| accounted investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and | 538 | 365 | -2,106 | -347 | -24,753
|
| loss of equity accounted | | | | |
|
| investees | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Profit before income tax | 12,206 | 97,884 | 11,049 | 142,923 | 212,585
|
-----------------------------------------------------------------------------
---
|
Income tax expense | 6,513 | 32,005 | 5,895 | 32,150 | 41,269
|
-----------------------------------------------------------------------------
---
|
Profit for the period | 5,693 | 65,879 | 5,154 | 110,773 | 171,316
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Other comprehensive | | | | |
|
| income: | | | | |
|
-----------------------------------------------------------------------------
---
|
Exchange differences on | -231 | -3,818 | -1,711 | -1,489 | -6,371
|
| translating foreign | | | | |
|
| operations | | | | |
|
-----------------------------------------------------------------------------
---
|
Total other | -231 | -3,818 | -1,711 | -1,489 | -6,371
|
| comprehensive income for | | | | |
|
| the period | | | | |
|
-----------------------------------------------------------------------------
---
|
TOTAL COMPREHENSIVE | 5,462 | 62,061 | 3,443 | 109,284 | 164,945
|
| INCOME FOR THE PERIOD | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
-------------------------------------------------------------------------
-------
|
Profit attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 14,130 | 58,134 | 21,176 | 104,272 | 145,580
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -8,437 | 7,745 | -16,022 | 6,501 | 25,736
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 5,693 | 65,879 | 5,154 | 110,773 | 171,316
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive | | | | |
|
| income attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 14,031 | 52,669 | 22,469 | 101,025 | 139,120
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -8,569 | 9,392 | -19,026 | 8,259 | 25,825
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 5,462 | 62,061 | 3,443 | 109,284 | 164,945
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Earnings per share | | | | |
|
| attributable to owners | | | | |
|
| of the parent: | | | | |
|
-----------------------------------------------------------------------------
---
|
Basic earnings per share | 0.46 | 1.89 | 0.69 | 3.39 | 4.73
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per | 0.46 | 1.89 | 0.69 | 3.39 | 4.73
|
| share | | | | |
|
-----------------------------------------------------------------------------
---
-----------------------------------------------------------------------
---------
|
EUR ‘000 | Q2 2009 | Q2 2008 | 1st | 1st half | 2008
|
| | | | half | 2008 |
|
| | | | 2009 | |
|
-----------------------------------------------------------------------------
---
|
Revenue | 40,547 | 70,119 | 78,298 | 119,555 | 247,205
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 37,512 | 61,339 | 72,907 | 104,297 | 224,330
|
-----------------------------------------------------------------------------
---
|
Gross profit | 3,036 | 8,780 | 5,391 | 15,258 | 22,875
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Distribution expenses | 137 | 165 | 279 | 217 | 512
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 1,786 | 3,170 | 4,177 | 5,949 | 11,666
|
-----------------------------------------------------------------------------
---
|
Other operating income | 1,164 | 722 | 1,272 | 1,177 | 4,087
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 1,722 | 804 | 1,877 | 1,003 | 1,460
|
-----------------------------------------------------------------------------
---
|
Operating profit | 554 | 5,364 | 330 | 9,266 | 13,324
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Finance income | 775, | 1,206 | 1,975 | 1,497 | 6,192
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 584 | 338 | 1,464 | 1,606 | 4,347
|
-----------------------------------------------------------------------------
---
|
Net finance income / | 192 | 868 | 511 | -109 | 1,844
|
| expense | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Share of profit of | 50 | -1 | 50 | 0 | 1
|
| equity accounted | | | | |
|
| investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity | 15 | -24 | 184 | 22 | 1,583
|
| accounted investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and | 34 | 23 | -135 | -22 | -1,582
|
| loss of equity accounted | | | | |
|
| investees | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Profit before income tax | 780 | 6,256 | 706 | 9,134 | 13,587
|
-----------------------------------------------------------------------------
---
|
Income tax expense | 416 | 2,045 | 377 | 2,055 | 2,638
|
-----------------------------------------------------------------------------
---
|
Profit for the period | 364 | 4,210 | 329 | 7,080 | 10,949
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Other comprehensive | | | | |
|
| income: | | | | |
|
-----------------------------------------------------------------------------
---
|
Exchange differences on | -15 | -244 | -109 | -95 | -407
|
| translating foreign | | | | |
|
| operations | | | | |
|
-----------------------------------------------------------------------------
---
|
Total other | -15 | -244 | -109 | -95 | -407
|
| comprehensive income for | | | | |
|
| the period | | | | |
|
-----------------------------------------------------------------------------
---
|
TOTAL COMPREHENSIVE | 349 | 3,966 | 220 | 6,985 | 10,542
|
| INCOME FOR THE PERIOD | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Profit attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 903 | 3,715 | 1,353 | 6,664 | 9,304
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -539 | 495 | -1,024 | 415 | 1,645
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 364 | 4,210 | 329 | 7,080 | 10,949
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive | | | | |
|
| income attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 897 | 3,366 | 1,436 | 6,457 | 8,891
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -548 | 600 | -1,216 | 528 | 1,651
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 349 | 3,966 | 220 | 6,985 | 10,542
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Earnings per share | | | | |
|
| attributable to owners | | | | |
|
| of the parent: | | | | |
|
-----------------------------------------------------------------------------
---
|
Basic earnings per share | 0.03 | 0.12 | 0.04 | 0.22 | 0.30
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per | 0.03 | 0.12 | 0.04 | 0.22 | 0.30
|
| share | | | | |
|
-----------------------------------------------------------------------------
---
Condensed
consolidated interim statement of cash flows
------------------------------------------------------------------------------
--
|
| EEK ‘000 | EUR ‘000
|
-----------------------------------------------------------------------------
---
|
| 1st half | 1st half | 1st half | 1st half
|
| | 2009 | 2008 | 2009 |
2008
|
-----------------------------------------------------------------------------
---
|
Cash flows from operating | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Cash receipts from customers | 1,448,84 | 2,235,72 | 92,598 | 142,889
|
| | 3 | 4 | |
|
-----------------------------------------------------------------------------
---
|
Cash paid to suppliers | -1,271,9 | -1,828,4 | -81,294 | -116,860
|
| | 81 | 65 | |
|
-----------------------------------------------------------------------------
---
|
Cash paid to and for employees | -225,462 | -286,494 | -14,410 | -18,310
|
-----------------------------------------------------------------------------
---
|
Income taxes paid | -8,538 | -13,868 | -546 | -886
|
-----------------------------------------------------------------------------
---
|
Net cash used in / from | -57,138 | 106,897 | -3,652 | 6,832
|
| operating activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from investing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of property, plant | -839 | -6,109 | -54 | -390
|
| and equipment | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of intangible | -7,530 | 0 | -481 | 0
|
| assets | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from sale of | 4,762 | 6,329 | 304 | 404
|
| property, plant and equipment | | | |
|
| and intangible assets | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of investment | -200 | 0 | -13 |
|
| properties | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of subsidiaries, | -11,720 | -211,254 | -749 | -13,502
|
| net of cash acquired | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from disposal of | 0 | 9,800 | 0 | 626
|
| subsidiaries | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of associates | -6,000 | 0 | -383 | 0
|
-----------------------------------------------------------------------------
---
|
Proceeds from disposal of | 7,465 | 32,605 | 477 | 2,084
|
| associates | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of interests in | -20,000 | 0 | -1,278 | 0
|
| joint ventures | | | |
|
-----------------------------------------------------------------------------
---
|
Loans granted | -54,803 | -17,776 | -3,502 | -1,136
|
-----------------------------------------------------------------------------
---
|
Repayment of loans granted | 38,094 | 46,815 | 2,435 | 2,992
|
-----------------------------------------------------------------------------
---
|
Interest received | 9,707 | 9,357 | 620 | 598
|
-----------------------------------------------------------------------------
---
|
Net cash used in investing | -41,064 | -130,233 | -2,624 | -8,323
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from financing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from loans received | 141,095 | 332,686 | 9,018 | 21,263
|
-----------------------------------------------------------------------------
---
|
Repayment of loans received | -108,970 | -78,279 | -6,965 | -5,003
|
-----------------------------------------------------------------------------
---
|
Dividends paid | -31,933 | -103,790 | -2,041 | -6,633
|
-----------------------------------------------------------------------------
---
|
Payment of finance lease | -25,305 | -29,295 | -1,618 | -1,872
|
| liabilities | | | |
|
-----------------------------------------------------------------------------
---
|
Interest paid | -14,444 | -12,465 | -923 | -797
|
-----------------------------------------------------------------------------
---
|
Other payments made | -381 | 148 | -24 | 9
|
-----------------------------------------------------------------------------
---
|
Net cash used in / from | -39,938 | 109,005 | -2,553 | 6,967
|
| financing activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Net cash flow | -138,140 | 85,669 | -8,829 | 5,475
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash and cash equivalents at | 296,184 | 236,112 | 18,930 | 15,090
|
| beginning of period | | | |
|
-----------------------------------------------------------------------------
---
|
Effect of exchange rate | 45 | -13 | 3 | -1
|
| fluctuations | | | |
|
-----------------------------------------------------------------------------
---
|
Decrease / increase in cash | -138,140 | 85,669 | -8,829 | 5,475
|
| and cash equivalents | | | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents at | 158,089 | 321,768 | 10,104 | 20,565
|
| end of period | | | |
|
-----------------------------------------------------------------------------
---
Nordecon
International is a group of construction companies whose core business
is
general contracting and construction management in the construction
of
buildings and infrastructures in Estonia, Latvia, Lithuania and Ukraine.
In
addition, in Estonia our companies act as independent contractors in
road
construction and maintenance, environmental engineering, the assembly
of
reinforced concrete elements, and the performance of cast-on-site
concrete
works. The parent of the Group is Nordecon International AS, a
company
registered and located in Tallinn, Estonia. In addition to the parent
company,
there are more than 20 subsidiaries in the Group. The consolidated
revenue of
the Group in 2008 was 3.9 billion kroons (247 million euros) and
the
consolidated net profit was 171 million kroons (11 million euros).
Nordecon
International Group employs more than 1,100 people. Since 18 May
2006, the
company's shares have been quoted in the main list of the NASDAQ OMX
Tallinn
Stock Exchange.
1 euro = 15.6466 kroons
Raimo
Talviste
Nordecon International AS
Head of Investor Relations
Tel: +372 615
4445
Email: raimo.talviste@nordecon.com
www.nordecon.com
|