Directors' report
Financial review
Margins
Nordecon International Group ended the first nine months of 2009 with
a gross
profit of 165.2 million kroons (10.6 million euros), 47% down from
the 312.0
million kroons (19.9 million euros) earned in the first nine
months 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 and
third quarters. 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 margins.
Consolidated
operating profit for the first nine months was 44.6 million kroons
(2.9
million euros). The generation of a positive operating result despite a
decrease in gross profit is mainly attributable to a decisive reduction of
administrative expenses. Compared with a year ago, administrative expenses
have
decreased by 41.5 million kroons (2.7 million euros), i.e. 30%. At
period-end,
the ratio of administrative expenses to revenue stood at 4.9%
(9M 2008: 4.7%),
which corresponds to the 5% limit set by management. The
Group remains committed
to its stated aim of reducing the cost base in
2009-2010 by up to 30% compared
with 2007-2008 and is prepared to act
resolutely to achieve this.
In the first nine months, the
Group earned a net profit of 46.7 million kroons
(3.0 million euros). Net
profit attributable to owners of the parent amounted to
65.4 million kroons
(4.2 million euros) while the loss attributable to
non-controlling
interests equalled 18.7 million kroons (1.2 million euros).
The
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
gross margin for the first nine months to 8.4%, a
notable decrease from the
10.7% posted for the first nine months 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. At the end of the financial year
(in the fourth quarter),
the Group's management will perform a valuation of the
Group's assets, which
will probably lower consolidated operating profit on a
non-recurring
basis. Management is not going to forecast the extent of any
potential
impairment losses before the valuation results are available.
Cash
flows
The Group's operating activities for the first nine months generated a net
cash
inflow of 71.0 million kroons (4.5 million euros), a strong improvement
on the
net outflow of 57.1 million kroons (3.6 million euros) posted for the
first
half-year. In the current market situation, cash receipts occur, as
a rule,
according to settlement terms that are significantly later than
the delivery
dates of the projects. In the reporting year, the Group has
completed a number
of major projects started in previous periods. In
addition, receipts are
influenced by the approaching end of the
construction season that is accompanied
by the signature of completion
documents. The Group's ability to maintain a
positive net operating cash
flow depends on how well it can adapt to the new
economic environment
(e.g. by extending settlement terms with subcontractors)
and the extent to
which operating costs can be cut.
Investing
activities for the first nine months of 2009 resulted in a net outflow
of 45.9
million kroons (2.9 million euros) compared with an outflow of 158.6
million kroons (10.1 million euros) for the first nine months of 2008.
Acquisitions of investments in subsidiaries, associates and joint ventures
(including disposals) generated a net outflow of 30.7 million kroons (2.0
million euros). The corresponding figure for the first nine months of
2008 was a
net outflow of 108.7 million kroons (6.9 million euros).
Financing activities generated a net outflow of 79.8 million
kroons (5.1 million
euros). The corresponding figure for the first nine months
of 2008 was an
outflow of 35.8 million kroons (2.3 million euros). The
structure of financing
cash flows has changed because the Group has reduced
borrowings but is
continuing the servicing of existing debt. The
period's net outflow from
interest-bearing loans and borrowings
(excluding interest expense) was negative
at 24.2 million kroons (1.5 million
euros) against a net inflow of 97.6 million
kroons (6.2 million euros) in the
first nine months of 2008. The remainder of
financing cash flows was made
up of a dividend distribution of 31.9 million
kroons (2.0 million euros)
compared with 104.1 million kroons (6.7 million
euros) for the first
nine months of 2008.
Key financial
figures and ratios
------------------------------------------------------------------------------
--
|
Figure / ratio | 9M 2009 | 9M 2008 | 9M 2007 | 2008
|
-----------------------------------------------------------------------------
---
|
Weighted average number of | 30,756,7 | 30,756,7 | 30,756,72 | 30,756,72
|
| shares * | 28 | 28 | 8 |
8
|
-----------------------------------------------------------------------------
---
|
Earnings per share (in kroons) | 2.13 | 5.06 | 6.38 | 4.73
|
-----------------------------------------------------------------------------
---
|
Earnings per share (in euros) | 0.14 | 0.32 | 0.41 | 0.30
|
-----------------------------------------------------------------------------
---
|
Revenue growth | -32.7% | 9.9% | 50.7% | 3.1%
|
-----------------------------------------------------------------------------
---
|
Average number of employees | 1,110 | 1,267 | 1,113 | 1,232
|
-----------------------------------------------------------------------------
---
|
Revenue per employee (in | 1,773 | 2,306 | 2,389 | 3,140
|
| thousands of kroons) | | | |
|
-----------------------------------------------------------------------------
---
|
Revenue per employee (in | 113 | 147 | 153 | 201
|
| thousands of euros) | | | |
|
-----------------------------------------------------------------------------
---
|
Personnel expenses to revenue, | 14.2% | 12.4% | 11.2% | 12.7%
|
| % | | | |
|
-----------------------------------------------------------------------------
---
|
Administrative expenses to | 4.9% | 4.7% | 4.4% | 4.7%
|
| revenue, % | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
EBITDA (in thousands of | 97,471 | 234,230 | 277,622 | 281,161
|
| kroons) | | | |
|
-----------------------------------------------------------------------------
---
|
EBITDA (in thousands of euros) | 6,230 | 14,970 | 17,743 | 17,969
|
-----------------------------------------------------------------------------
---
|
EBITDA margin, % | 5.0% | 8.0% | 10.4% | 7.3%
|
-----------------------------------------------------------------------------
---
|
Gross margin, % | 8.4% | 10.7% | 13.0% | 9.3%
|
-----------------------------------------------------------------------------
---
|
Operating margin, % | 2.3% | 6.1% | 8.7% | 5.4%
|
-----------------------------------------------------------------------------
---
|
Operating margin excluding | 2.1% | 6.0% | 8.4% | 5.3%
|
| gains on asset sales, % | | | |
|
-----------------------------------------------------------------------------
---
|
Net margin, % | 2.4% | 6.3% | 7.9% | 4.4%
|
-----------------------------------------------------------------------------
---
|
Return on invested capital, % | 5.3% | 18.9% | 26.3% | 19.1%
|
-----------------------------------------------------------------------------
---
|
Return on assets, % | 1.9% | 7.7% | 13.4% | 9.1%
|
-----------------------------------------------------------------------------
---
|
Return on equity, % | 5.5% | 21.7% | 35.8% | 20.5%
|
-----------------------------------------------------------------------------
---
|
Equity ratio, % | 36.9% | 35.5% | 32.6% | 36.5%
|
-----------------------------------------------------------------------------
---
|
Gearing, % | 25.7% | 28.7% | 23.2% | 18.2%
|
-----------------------------------------------------------------------------
---
|
Current ratio | 1.43 | 1.42 | 1.38 | 1.33
|
-----------------------------------------------------------------------------
---
|
| 30 Sept | 30 Sept | 30 Sept | 31 Dec
|
| | 2009 | 2008 | 2007 |
2008
|
-----------------------------------------------------------------------------
---
|
Order book (in thousands of | 1,612,16 | 3,042,65 | 3,161,956 | 2,220,748
|
| kroons) | 0 | 4 | |
|
-----------------------------------------------------------------------------
---
|
Order book (in thousands of | 103,036 | 194,461 | 202,086 | 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
Revenue
earned outside Estonia during the first nine months of 2009 accounted
for
approximately 15% of consolidated revenue against approximately 20% a year
ago.
The Group has expanded operations in Latvia - at the end of the first
nine
months of 2009 Latvian revenues accounted for around 12% of the
total while in
2008 (full year) the proportion was 6%. At the same time, the
contribution of
Ukrainian revenues has 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. In Lithuania, the
Group has suspended active operations
for the time being (see interim report
Changes in the Group's management
structure and operations in 2009).
Further information on
developments in the Group's chosen markets can be found
in interim report
Outlooks of the Group's geographical markets.
------------------------------------------------------------------------------
--
|
| 9M 2009 | 9M 2008 | 9M 2007 | 2008
|
-----------------------------------------------------------------------------
---
|
Estonia | 84.9% | 80.1% | 88.1% | 80.3%
|
-----------------------------------------------------------------------------
---
|
Ukraine | 2.2% | 13.4% | 11.9% | 11.4%
|
-----------------------------------------------------------------------------
---
|
Lithuania | 0.5% | 2.4% | 0% | 2.4%
|
-----------------------------------------------------------------------------
---
|
Latvia | 12.3% | 4.1% | 0% | 5.9%
|
-----------------------------------------------------------------------------
---
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 nine months of 2009 was 1,967.6
million
kroons (125.8 million euros), a 32.4% decrease from the 2,921.7
million kroons
(186.7 million euros) generated in the first nine months 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 and
forecasts for the future in interim report
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 estimated of demand
for
apartments in the real estate market and housing development risks, in
subsequent years the proportion of housing construction revenue from
apartment
buildings (the Group as a developer or a builder) will remain
significantly
below the strategic 20% limit.
Segment revenue
In contrast to previous years, at the end of the
first nine months 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.
During
the first nine months of 2009, the Buildings and Infrastructure segments
generated revenue of 872.0 million kroons (55.7 million euros) and 1,075.9
million kroons (68.8 million euros) respectively. The corresponding figures
for
the first nine months of 2008 were 1,642.2 million kroons (105.0 million
euros)
and 1,226.0 million kroons (78.4 million euros) respectively. The 47%
decrease
in the revenue generated by the Buildings segment corresponds to
management's
assessment of the current market situation and was therefore
expected.
Revenue distribution between segments *
------------------------------------------------------------------------------
--
|
Business segments | 9M 2009 | 9M 2008 | 9M 2007 | 2008
|
-----------------------------------------------------------------------------
---
|
Buildings | 44% | 64% | 52% | 63%
|
-----------------------------------------------------------------------------
---
|
Infrastructure | 56% | 36% | 48% | 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
estimates that because of the market situation the proportion of
revenue
generated by the Infrastructure segment in 2009 will continue
increasing
compared with 2008. The assessment is supported by the Group's
order book as at
30 September 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 | 9M 2009 | 9M 2008 | 9M 2007 | 2008
|
| Buildings segment | | | |
|
-----------------------------------------------------------------------------
---
|
Commercial buildings | 64% | 59% | 58% | 59%
|
-----------------------------------------------------------------------------
---
|
Industrial and warehouse | 9% | 16% | 9% | 16%
|
| facilities | | | |
|
-----------------------------------------------------------------------------
---
|
Public buildings | 23% | 14% | 19% | 14%
|
-----------------------------------------------------------------------------
---
|
Apartment buildings | 4% | 11% | 14% | 11%
|
-----------------------------------------------------------------------------
---
Changes
in the structure of the Group's infrastructure revenues are attributable
to
the addition of the Nordecon Infra SIA subgroup. 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 | 9M 2009 | 9M 2008 | 9M 2007 | 2008
|
| Infrastructure segment | | | |
|
-----------------------------------------------------------------------------
---
|
Road construction and | 43% | 52% | 37% | 45%
|
| maintenance | | | |
|
-----------------------------------------------------------------------------
---
|
Port construction | 16% | 19% | 39% | 24%
|
-----------------------------------------------------------------------------
---
|
Other engineering | 31% | 23% | 12% | 6%
|
-----------------------------------------------------------------------------
---
|
Environmental engineering | 10% | 6% | 12% | 25%
|
-----------------------------------------------------------------------------
---
Order
book
At
30 September 2009, the Group's order book stood at 1,612 million kroons (103
million euros), approximately 50% down from the 3,043 million kroons (194
million euros) posted a year ago.
------------------------------------------------------------------------------
--
|
| 30 Sept | 30 Sept | 30 Sept | 31 Dec
|
| | 2009 | 2008 | 2007 |
2008
|
-----------------------------------------------------------------------------
---
|
Order book, in thousands of | 1,612,16 | 3,042,654 | 3,161,956 | 2,220,748
|
| kroons | 0 | | |
|
-----------------------------------------------------------------------------
---
|
Order book, in thousands of | 103,036 | 194,461 | 202,086 | 141,932
|
| euros | | | |
|
-----------------------------------------------------------------------------
---
In
the Infrastructure segment, the order book has been growing year-over-year.
At 30 September 2009 it accounted for 66% of the Group's total order book (30
September 2008: 52%), reflecting the situation in the construction market
where
shrinkage in the Buildings segment has been 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 September 2009) and the date
of release of this
report, Group companies have been awarded additional
construction contracts of
approximately 180 million kroons (11.5 million
euros).
People
Nordecon believes that its most
important assets are its people and that the
value of the company depends
on the professionalism, motivation and loyalty of
its employees.
Accordingly, the Group's management is committed to creating a
contemporary
work environment that fosters professional growth and development
in terms
of working conditions, career opportunities and the nature of the
work.
People and personnel expenses
In the first nine months of 2009 the Group (including the parent and
the
subsidiaries) employed, on average, 1,110 people including around
450 engineers
and technical personnel (ETP). The acquisition of the Latvian
company SIA LCB in
2009 increased the number of staff by more than 100.
However, since the end of
2008 personnel growth has been replaced by a
decline owing to 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
|
-----------------------------------------------------------------------------
---
|
9M 2009 | 456 | 654 | 1,110
|
-----------------------------------------------------------------------------
---
|
9M 2008 | 525 | 742 | 1,267
|
-----------------------------------------------------------------------------
---
|
9M 2007 | 413 | 657 | 1,088
|
-----------------------------------------------------------------------------
---
|
2008 | 511 | 721 | 1,232
|
-----------------------------------------------------------------------------
---
The
Group's personnel expenses for the first nine months of 2009, including
associated taxes, totalled 279.9 million kroons (17.9 million euros), a 23%
decrease compared with the 363.7 million kroons (23.2 million euros)
incurred in
the same period in 2008.
Personnel expenses have declined on account of downsizing and
the cutting of
basic salaries. 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 to the
projects' profit margins has also
dropped.
Owing to the overall economic
situation and the slump in the construction
market, in the first nine
months of 2009 Group entities terminated employment
relations with
approximately 675 people. The figure includes forced and
voluntary
redundancies involving 450 people. However, this is not directly
reflected in the total average number of employees because the latter is
increased by the staff taken over on the acquisition of subsidiaries and
the
people hired under fixed term contracts.
In the first nine months of 2009, the remuneration of the members
of the council
of Nordecon International AS including social security charges
amounted to 1,077
thousand kroons (69 thousand euros). The corresponding
figure for the first nine
months of 2008 was 1,084 thousand kroons (69
thousand euros). The remuneration
and benefits of the members of the board
of Nordecon International AS including
social security charges totalled 2,701
thousand kroons (173 thousand euros)
compared with 13,550 thousand kroons
(866 thousand euros) for the first nine
months of 2008. The differences in
the remuneration of the board stem from the
fact that since 5 January 2009
the board had three members while in 2008 the
number was five (see interim
report 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 the general meetings of
Nordecon International AS.
Summarised trading results
Share trading history (EEK)
------------------------------------------------------------------------------
--
|
Price | 9M 2009 | 9M 2008 | 9M 2007
|
-----------------------------------------------------------------------------
---
|
Open | 16.43 | 76.51 | 166.64
|
-----------------------------------------------------------------------------
---
|
High | 25.97 | 76.51 | 224.53
|
-----------------------------------------------------------------------------
---
|
Low | 8.61 | 37.55 | 79.8
|
-----------------------------------------------------------------------------
---
|
Last closing price | 23.78 | 41.78 | 86.06
|
-----------------------------------------------------------------------------
---
|
Traded volume | 7,157,618 | 5,402,797 | 4,863,307
|
-----------------------------------------------------------------------------
---
|
Turnover, millions | 128.24 | 291.03 | 648.01
|
-----------------------------------------------------------------------------
---
|
Listed volume (30 Sept ), | 30,757 | 30,757 | 15,378
|
| thousands | | |
|
-----------------------------------------------------------------------------
---
|
Market capitalisation (30 | 731.40 | 1,285.03 | 1,323.43
|
| Sept ), millions | | |
|
-----------------------------------------------------------------------------
---
Share
trading history (EUR)
------------------------------------------------------------------------------
--
|
Price | 9M 2009 | 9M 2008 | 9M 2007
|
-----------------------------------------------------------------------------
---
|
Open | 1.05 | 4.89 | 10.65
|
-----------------------------------------------------------------------------
---
|
High | 1.66 | 4.89 | 14.35
|
-----------------------------------------------------------------------------
---
|
Low | 0.55 | 2.40 | 5.10
|
-----------------------------------------------------------------------------
---
|
Last closing price | 1.52 | 2.67 | 5.50
|
-----------------------------------------------------------------------------
---
|
Traded volume | 7,157,618 | 5,402,797 | 4,863,307
|
-----------------------------------------------------------------------------
---
|
Turnover, millions | 8.20 | 18.60 | 41.42
|
-----------------------------------------------------------------------------
---
|
Listed volume (30 Sept ), | 30,757 | 30,757 | 15,378
|
| thousands | | |
|
-----------------------------------------------------------------------------
---
|
Market capitalisation (30 | 46.75 | 82.13 | 84.58
|
| Sept ), millions | | |
|
-----------------------------------------------------------------------------
---
Shareholder
structure
The
largest shareholders of Nordecon International AS at 30 September 2009
------------------------------------------------------------------------------
--
|
Shareholder | Number of | Ownership
|
| | shares |
interest
|
-----------------------------------------------------------------------------
---
|
AS Nordic Contractors | 16,507,464 | 53.67
|
-----------------------------------------------------------------------------
---
|
Skandinaviska Enskilda Banken Ab Clients | 2,720,758 | 8.85
|
-----------------------------------------------------------------------------
---
|
ING Luxembourg S.A. | 1,111,853 | 3.61
|
-----------------------------------------------------------------------------
---
|
Ain Tromp | 678,960 | 2.21
|
-----------------------------------------------------------------------------
---
|
State Street Bank and Trust Omnibus Account A | 660,111 | 2.15
|
| Fund | |
|
-----------------------------------------------------------------------------
---
|
ASM Investments Oܜ | 519,600 | 1.69
|
-----------------------------------------------------------------------------
---
|
SEB Pank AS | 344,757 | 1.12
|
-----------------------------------------------------------------------------
---
|
Aivo Kont | 339,480 | 1.10
|
-----------------------------------------------------------------------------
---
|
Skandinaviska Enskilda Banken | 339,410 | 1.10
|
-----------------------------------------------------------------------------
---
|
The Bank of New York Mellon | 337,509 | 1.10
|
-----------------------------------------------------------------------------
---
|
Raul Rebane | 316,104 | 1.03
|
-----------------------------------------------------------------------------
---
On
4 September 2009 AS Nordic Contractors announced that it had sold 2,300,000
of its shares in Nordecon International AS (7.48% of all shares) to
institutional investors. As a result of the transaction, the majority
shareholder's interest in Nordecon International AS dropped to 53.67%. On
16
September 2009, East Capital Asset Management AB announced that East
Capital
Group's total stake in Nordecon International AS (through nominee
accounts) was
5.04%.
Shareholder structure at 30 September 2009
------------------------------------------------------------------------------
--
|
| Number of | Ownership
|
| | shareholders |
interest
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest exceeding 5% | 1 | 53.67%
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest between 1% | 10 | 23.96%
|
| and 5% | |
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest below 1% | 1,897 | 22.37%
|
-----------------------------------------------------------------------------
---
|
Total | 1,908 | 100.00%
|
-----------------------------------------------------------------------------
---
Shares
controlled by members of the council of Nordecon International AS at 30
September 2009
------------------------------------------------------------------------------
--
|
Council | | Number of | Ownership
|
| | | shares |
interest
|
-----------------------------------------------------------------------------
---
|
Toomas Luman (AS Nordic | Chairman of the | 16,759,144 | 54.49
|
| Contractors, | Council | |
|
| OÜ Luman ja Pojad)* | | |
|
-----------------------------------------------------------------------------
---
|
Ain Tromp | Member of the | 678,960 | 2.21
|
| | Council | |
|
-----------------------------------------------------------------------------
---
|
Alar Kroodo (ASM | Member of the | 519,600 | 1.69
|
| Investments 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
September 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 assessment of the Group's
management, 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 by over
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 interim
report 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 through 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, to date
the volumes of various
infrastructure projects financed by the state and local
government with the
support of EU funding (such as projects for the
rehabilitation of
the water supply and central heating systems) have remained
relatively
stable Construction activities are affected by the situation of the
financing institutions and declining demand that heightens competition.
Moreover, the ability of the Latvian central and local governments to
provide
self-financing for projects financed with the support of the EU is
weakening.
This is causing extensive settlement delays and increasing
dependence on the
loans granted to the state and local governments by IMF.
As a result, the liquidity of the Group's Latvian
subsidiary Nordecon Infra has
decreased to a level where its further
operations depend largely on its ability
to raise additional external
financing and to refinance existing borrowings. At
the date of release of
this report, Nordecon Infra SIA continues operating as a
going concern.
However, if external financing were withdrawn, the company might
run into
serious difficulties.
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 have directly influenced the
construction market.
The commercial and residential construction markets
(the Group as a general
contractor not a developer) have contracted
visibly and the launch of any new
private sector projects in the near
future is unlikely.
In response to this, the
business operations of the Group's Lithuanian
subsidiary Nordecon
Statyba UAB (formerly UAB Eurocon LT) have been essentially
suspended and the
Group is monitoring the market situation. The temporary
suspension of
operations does not result in any major costs for the Group. The
Group's
management does not exclude the possibility that the Lithuanian
operations will remain suspended also after 2010. The decision does 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's management 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
operations in the Latvian and
Lithuanian markets in the light of developments in
the external environment
and is prepared to revise the existing plans swiftly
and decisively.
The Group designs
its activities in the Latvian and Lithuanian construction
markets in
accordance with its international expansion strategy (see interim
report
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 mainly as a general contractor and
project
manager in the construction of commercial buildings and production
facilities.
In 2009 the number of projects started in the buildings
construction market has
decreased substantially. The situation in the sector
is not expected to improve
until after the first half of 2010.
Activities on development projects that
require major investment (currently two)
have been suspended and conserved 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. To date, the weakening of the local
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 in
combination 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
September 2009 the
provisions (including current and non-current ones) totalled
15.2 million
kroons (1.0 million euros). The corresponding figure at 30
September
2008 was 10.3 million kroons (0.7 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 behaviour was good,
considering the current
economic situation; however, there were also some large
problem customers.
The proportion of overdue receivables has increased,
increasing the
probability of credit losses also in subsequent periods. In
accordance
with the Group's accounting policies, all receivables that are more
than 180
days overdue or in respect of which no additional settlement agreements
have
been reached are recognised as an expense.
The reporting period's net loss on doubtful receivables amounted to 18.6
million
kroons (1.2 million euros). In the comparative period in 2008,
recoveries of
receivables written down in preceding periods surpassed the
period's write-down
losses by 0.2 million kroons (0 million euros).
The Group's subsidiary AS Eston Ehitus has filed
bankruptcy petitions against
Peterburi Ärikvartal OÜ that commissioned the
construction of the Peterburi
Business Quarter and Kobe Investments AS
that provided partial financing for the
project. The Group's receivables from
the project amount to approximately 25
million kroons (1.6 million euros).
The Group's management will decide whether
and to what extent the
receivables need to be written down in the fourth quarter
by reference to the
progress of the bankruptcy proceedings.
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 1.43-fold (30 September 2008: 1.42-fold) and
available cash funds
totalled 241.4 million kroons (15.4 million euros) (30
September 2008: 296.2
million kroons / 18.9 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 liabilities of Group companies to
banks operating in Estonia, Latvia and
Ukraine have mainly fixed interest
rates. Finance lease liabilities have
floating interest rates and are
linked to EURIBOR. At 30 September 2009, the
Group's interest-bearing
loans and borrowings totalled 610.5 million kroons
(39.0 million euros),
a 9.2 million kroon (0.6 million euro) decrease
year-over-year.
Interest expense for the first nine months of 2009 amounted to
22.0 million
kroons (1.4 million euros). Compared with the first nine months of
2008,
interest expense has contracted by 6.2 million kroons (0.4 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). Services purchased from other
countries are mostly priced in euros,
which does not constitute a currency risk
for the Group's Estonian, Latvian
and Lithuanian entities.
The Group's foreign exchange
gains and losses result mainly from its Ukrainian
operations because the
Ukrainian national currency floats against the euro and,
accordingly, the
Estonian kroon. To date, the weakening of the Ukrainian hryvna
against the
euro that began in the last quarter of 2008 has stopped. The
Group's
net exchange loss for the first nine months of 2009 was 0.9 million
kroons (0.06 million euros). In the comparative period in 2008, the Group's
exchange differences resulted in a gain of 0.7 million kroons (0.04 million
euros).
Condensed consolidated interim financial statements
Condensed consolidated interim statement of financial position
------------------------------------------------------------------------------
--
|
EEK ‘000 | 30 Sept 2009 | 31 Dec 2008
|
-----------------------------------------------------------------------------
---
|
ASSETS | |
|
-----------------------------------------------------------------------------
---
|
Current assets | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 241,426 | 296,184
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 455,890 | 473,935
|
-----------------------------------------------------------------------------
---
|
Other receivables and prepayments | 359,150 | 408,541
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 776 | 776
|
-----------------------------------------------------------------------------
---
|
Income tax assets | 0 | 3,207
|
-----------------------------------------------------------------------------
---
|
Inventories | 433,402 | 386,733
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for sale | 4,484 | 0
|
-----------------------------------------------------------------------------
---
|
Total current assets | 1,495,129 | 1,569,376
|
-----------------------------------------------------------------------------
---
|
Non-current assets | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 126,554 | 112,605
|
-----------------------------------------------------------------------------
---
|
Investment property | 116,783 | 116,783
|
-----------------------------------------------------------------------------
---
|
Property, plant and equipment | 221,847 | 263,295
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 279,335 | 305,188
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 744,519 | 797,871
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 2,239,648 | 2,367,247
|
-----------------------------------------------------------------------------
---
|
LIABILITIES | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 241,478 | 235,948
|
-----------------------------------------------------------------------------
---
|
Trade payables | 390,226 | 439,615
|
-----------------------------------------------------------------------------
---
|
Taxes payable | 38,971 | 65,760
|
-----------------------------------------------------------------------------
---
|
Other payables | 356,273 | 423,270
|
-----------------------------------------------------------------------------
---
|
Provisions | 13,826 | 11,600
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 1,040,776 | 1,176,193
|
-----------------------------------------------------------------------------
---
|
Non-current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 369,004 | 318,578
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 3,035 | 2,534
|
-----------------------------------------------------------------------------
---
|
Provisions | 1,367 | 6,630
|
-----------------------------------------------------------------------------
---
|
Total non-current liabilities | 373,406 | 327,742
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 1,414,182 | 1,503,935
|
-----------------------------------------------------------------------------
---
|
EQUITY | |
|
-----------------------------------------------------------------------------
---
|
Share capital | 307,567 | 307,567
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 40,012 | 34,800
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -4,298 | -4,106
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 456,453 | 426,995
|
-----------------------------------------------------------------------------
---
|
Equity attributable to owners of the | 799,734 | 765,256
|
| parent | |
|
-----------------------------------------------------------------------------
---
|
Non-controlling interests | 25,733 | 98,056
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 825,467 | 863,312
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 2,239,648 | 2,367,247
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
---------------------------------------------------------------------
-----------
|
EUR ‘000 | 30 Sept 2009 | 31 Dec 2008
|
-----------------------------------------------------------------------------
---
|
ASSETS | |
|
-----------------------------------------------------------------------------
---
|
Current assets | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 15,430 | 18,930
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 29,137 | 30,290
|
-----------------------------------------------------------------------------
---
|
Other receivables and prepayments | 22,954 | 26,110
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 50 | 50
|
-----------------------------------------------------------------------------
---
|
Income tax assets | 0 | 205
|
-----------------------------------------------------------------------------
---
|
Inventories | 27,699 | 24,717
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for sale | 287 | 0
|
-----------------------------------------------------------------------------
---
|
Total current assets | 95,556 | 100,301
|
-----------------------------------------------------------------------------
---
|
Non-current assets | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 8,088 | 7,197
|
-----------------------------------------------------------------------------
---
|
Investment property | 7,464 | 7,464
|
-----------------------------------------------------------------------------
---
|
Property, plant and equipment | 14,179 | 16,828
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 17,853 | 19,505
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 47,583 | 50,993
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 143,140 | 151,295
|
-----------------------------------------------------------------------------
---
|
LIABILITIES | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 15,433 | 15,080
|
-----------------------------------------------------------------------------
---
|
Trade payables | 24,940 | 28,096
|
-----------------------------------------------------------------------------
---
|
Taxes payable | 2,491 | 4,203
|
-----------------------------------------------------------------------------
---
|
Other payables | 22,770 | 27,052
|
-----------------------------------------------------------------------------
---
|
Provisions | 884 | 741
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 66,518 | 75,172
|
-----------------------------------------------------------------------------
---
|
Non-current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 23,584 | 20,361
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 194 | 162
|
-----------------------------------------------------------------------------
---
|
Provisions | 87 | 424
|
-----------------------------------------------------------------------------
---
|
Total non-current liabilities | 23,865 | 20,947
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 90,384 | 96,119
|
-----------------------------------------------------------------------------
---
|
EQUITY | |
|
-----------------------------------------------------------------------------
---
|
Share capital | 19,657 | 19,657
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 2,557 | 2,224
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -275 | -262
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 29,173 | 27,290
|
-----------------------------------------------------------------------------
---
|
Equity attributable to owners of the parent | 51,112 | 48,909
|
-----------------------------------------------------------------------------
---
|
Non-controlling interests | 1,645 | 6,267
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 52,756 | 55,176
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 143,140 | 151,295
|
-----------------------------------------------------------------------------
---
Condensed
consolidated interim statement of comprehensive income
------------------------------------------------------------------------------
--
|
EEK ‘000 | Q3 2009 | Q3 2008 | 9M 2009 | 9M 2008 | 2008
|
-----------------------------------------------------------------------------
---
|
Revenue | 742,546 | 1,051,0 | 1,967,6 | 2,921,6 | 3,867,91
|
| | | 62 | 40 | 97 |
7
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 661,677 | 977,791 | 1,802,4 | 2,609,6 | 3,510,00
|
| | | | 18 | 89 |
6
|
-----------------------------------------------------------------------------
---
|
Gross profit | 80,869 | 73,271 | 165,222 | 312,008 | 357,911
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Distribution expenses | 2,427 | 2,810 | 6,790 | 6,212 | 8,007
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 30,532 | 44,266 | 95,882 | 137,354 | 182,526
|
-----------------------------------------------------------------------------
---
|
Other operating income | 2,279 | 105 | 22,177 | 18,525 | 63,947
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 10,745 | -7,622 | 40,118 | 8,068 | 22,845
|
-----------------------------------------------------------------------------
---
|
Operating profit | 39,444 | 33,922 | 44,609 | 178,899 | 208,480
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Finance income | 4,907 | 53,760 | 35,809 | 77,187 | 96,877
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 3,933 | 4,751 | 26,845 | 29,886 | 68,019
|
-----------------------------------------------------------------------------
---
|
Net finance income | 974 | 49,009 | 8,964 | 47,301 | 28,858
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Share of profit of equity | 738 | 2,198 | 1,515 | 2,198 | 17
|
| accounted investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity | 155 | 746 | 3,038 | 1,093 | 24,770
|
| accounted investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and | 583 | 1,452 | -1,523 | 1,105 | -24,753
|
| loss of equity accounted | | | | |
|
| investees | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Profit before income tax | 41,001 | 84,383 | 52,050 | 227,306 | 212,585
|
-----------------------------------------------------------------------------
---
|
Income tax expense | -578 | 11,622 | 5,317 | 43,772 | 41,269
|
-----------------------------------------------------------------------------
---
|
Profit for the period | 41,579 | 72,761 | 46,733 | 183,534 | 171,316
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Other comprehensive | | | | |
|
| income: | | | | |
|
-----------------------------------------------------------------------------
---
|
Exchange differences on | -769 | -1,619 | -2,480 | -3,108 | -6,371
|
| translating foreign | | | | |
|
| operations | | | | |
|
-----------------------------------------------------------------------------
---
|
Total other comprehensive | -769 | -1,619 | -2,480 | -3,108 | -6,371
|
| income for the period | | | | |
|
-----------------------------------------------------------------------------
---
|
TOTAL COMPREHENSIVE | 40,810 | 71,142 | 44,253 | 180,426 | 164,945
|
| INCOME FOR THE PERIOD | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
-------------------------------------------------------------------------
-------
|
Profit attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 42,260 | 51,204 | 65,436 | 155,476 | 145,580
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -2,681 | 21,557 | -18,703 | 28,058 | 25,736
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 41,579 | 72,761 | 46,733 | 183,534 | 171,316
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive | | | | |
|
| income attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 42,776 | 50,140 | 65,245 | 151,165 | 139,120
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -1,966 | 21,002 | -20,992 | 29,261 | 25,825
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 40,810 | 71,142 | 44,253 | 180,426 | 164,945
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Earnings per share | | | | |
|
| attributable to owners of | | | | |
|
| the parent: | | | | |
|
-----------------------------------------------------------------------------
---
|
Basic earnings per share | 1.44 | 1.66 | 2.13 | 5.05 | 4.73
|
| (EEK/share) | | | | |
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per | 1.44 | 1.66 | 2.13 | 5.05 | 4.73
|
| share (EEK/share) | | | | |
|
-----------------------------------------------------------------------------
---
-----------------------------------------------------------------------
---------
|
EUR ‘000 | Q3 2009 | Q3 2008 | 9M 2009 | 9M 2008 | 2008
|
-----------------------------------------------------------------------------
---
|
Revenue | 47,457 | 67,175 | 125,755 | 186,730 | 247,205
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 42,289 | 62,492 | 115,196 | 166,790 | 224,330
|
-----------------------------------------------------------------------------
---
|
Gross profit | 5,168 | 4,683 | 10,560 | 19,941 | 22,875
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Distribution expenses | 155 | 180 | 434 | 397 | 512
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 1,951 | 2,829 | 6,128 | 8,779 | 11,666
|
-----------------------------------------------------------------------------
---
|
Other operating income | 146 | 7 | 1,417 | 1,184 | 4,087
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 687 | 487 | 2,564 | 516 | 1,460
|
-----------------------------------------------------------------------------
---
|
Operating profit | 2,521 | 2,168 | 2,851 | 11,434 | 13,324
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Finance income | 314 | 3,436 | 2,289 | 4,933 | 6,192
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 251 | 304 | 1,716 | 1,910 | 4,347
|
-----------------------------------------------------------------------------
---
|
Net finance income / | 63 | 3,132 | 573 | 3,023 | 1,844
|
| expense | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Share of profit of equity | 47 | 140 | 97 | 140 | 1
|
| accounted investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity | 10 | 48 | 194 | 70 | 1,583
|
| accounted investees | | | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and | 37 | 93 | -97 | 71 | -1,582
|
| loss of equity accounted | | | | |
|
| investees | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Profit before income tax | 2,620 | 5,393 | 3,326 | 14,528 | 13,587
|
-----------------------------------------------------------------------------
---
|
Income tax expense | -37 | 743 | 340 | 2,798 | 2,638
|
-----------------------------------------------------------------------------
---
|
Profit for the period | 2,657 | 4,650 | 2,986 | 11,730 | 10,949
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Other comprehensive | | | | |
|
| income: | | | | |
|
-----------------------------------------------------------------------------
---
|
Exchange differences on | -49 | -103 | -159 | -199 | -407
|
| translating foreign | | | | |
|
| operations | | | | |
|
-----------------------------------------------------------------------------
---
|
Total other comprehensive | -49 | -103 | -159 | -199 | -407
|
| income for the period | | | | |
|
-----------------------------------------------------------------------------
---
|
TOTAL COMPREHENSIVE | 2,608 | 4,547 | 2,828 | 11,531 | 10,542
|
| INCOME FOR THE PERIOD | | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Profit attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 2,828 | 3,273 | 4,182 | 9,937 | 9,304
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -171 | 1,378 | -1,195 | 1,793 | 1,645
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 2,657 | 4,650 | 2,986 | 11,730 | 10,949
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive | | | | |
|
| income attributable to: | | | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 2,734 | 3,205 | 4,170 | 9,661 | 8,891
|
-----------------------------------------------------------------------------
---
|
- Non-controlling | -126 | 1,342 | -1,342 | 1,870 | 1,651
|
| interests | | | | |
|
-----------------------------------------------------------------------------
---
|
| 2,608 | 4,547 | 2,828 | 11,531 | 10,542
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Earnings per share | | | | |
|
| attributable to owners of | | | | |
|
| the parent: | | | | |
|
-----------------------------------------------------------------------------
---
|
Basic earnings per share | 0.09 | 0.11 | 0.14 | 0.32 | 0.30
|
| (EUR/share) | | | | |
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per | 0.09 | 0.11 | 0.14 | 0.32 | 0.30
|
| share (EUR/share) | | | | |
|
-----------------------------------------------------------------------------
---
Condensed
consolidated interim statement of cash flows
------------------------------------------------------------------------------
--
|
| EEK ‘000 | EUR ‘000
|
-----------------------------------------------------------------------------
---
|
| 9M 2009 | 9M 2008 | 9M 2009 | 9M 2008
|
-----------------------------------------------------------------------------
---
|
Cash flows from operating | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Cash receipts from customers | 2,581,19 | 3,521,81 | 164,968 | 225,085
|
| | 2 | 5 | |
|
-----------------------------------------------------------------------------
---
|
Cash paid to suppliers | -2,168,7 | -2,912,2 | -138,606 | -186,128
|
| | 18 | 66 | |
|
-----------------------------------------------------------------------------
---
|
Cash paid to and for employees | -331,652 | -430,106 | -21,196 | -27,489
|
-----------------------------------------------------------------------------
---
|
Income taxes paid | -9,867 | -36,959 | -631 | -2,362
|
-----------------------------------------------------------------------------
---
|
Net cash from operating | 70,955 | 142,484 | 4,535 | 9,106
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from investing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of property, plant | -1,317 | -9,845 | -84 | -629
|
| and equipment | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of intangible | -7,588 | -929 | -485 | -59
|
| assets | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from sale of | 5,118 | 10,753 | 327 | 687
|
| property, plant and equipment | | | |
|
| and intangible assets | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of investment | -200 | 0 | -13 |
|
| properties | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of subsidiaries, | -11,688 | -202,800 | -747 | -12,962
|
| net of cash acquired | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from disposal of | 0 | 2,063 | 0 | 132
|
| subsidiaries | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of associates | -6,000 | -10,842 | -383 | -693
|
-----------------------------------------------------------------------------
---
|
Proceeds from disposal of | 7,024 | 102,927 | 449 | 6,578
|
| associates | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of interests in | -20,000 | 0 | -1,278 | 0
|
| joint ventures | | | |
|
-----------------------------------------------------------------------------
---
|
Loans granted | -84,843 | -118,454 | -5,422 | -7,571
|
-----------------------------------------------------------------------------
---
|
Repayment of loans granted | 61,040 | 56,562 | 3,901 | 3,615
|
-----------------------------------------------------------------------------
---
|
Dividends received | 61 | 122 | 4 | 8
|
-----------------------------------------------------------------------------
---
|
Interest received | 12,524 | 11,794 | 800 | 754
|
-----------------------------------------------------------------------------
---
|
Net cash used in investing | -45,869 | -158,649 | -2,931 | -10,140
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from financing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from loans received | 193,432 | 405,466 | 12,427 | 25,914
|
-----------------------------------------------------------------------------
---
|
Repayment of loans received | -179,952 | -265,443 | -11,501 | -16,965
|
-----------------------------------------------------------------------------
---
|
Dividends paid | -31,933 | -104,130 | -2,041 | -6,655
|
-----------------------------------------------------------------------------
---
|
Payment of finance lease | -37,648 | -42,387 | -2,406 | -2,709
|
| liabilities | | | |
|
-----------------------------------------------------------------------------
---
|
Interest paid | -23,344 | -29,053 | -1,492 | -1,857
|
-----------------------------------------------------------------------------
---
|
Other payments made | -307 | -301 | -20 | -19
|
-----------------------------------------------------------------------------
---
|
Net cash used in financing | -79,752 | -35,848 | -5,033 | -2,291
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Net cash flow | -54,666 | -52,013 | -3,494 | -3,324
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash and cash equivalents at | 296,184 | 236,112 | 18,930 | 15,090
|
| beginning of period | | | |
|
-----------------------------------------------------------------------------
---
|
Effect of exchange rate | -92 | -15 | -6 | -1
|
| fluctuations | | | |
|
-----------------------------------------------------------------------------
---
|
Decrease in cash and cash | -54,666 | -52,013 | -3,494 | -3,324
|
| equivalents | | | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents at | 241,426 | 184,084 | 15,430 | 11,765
|
| 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 1,000 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 Finance and Investor
Relations
Tel: +372 615 4445
Email: raimo.talviste@nordecon.com
http://www.nordecon.com