DIRECTORS' REPORT
OUR MISSION
Our mission is to offer our customers complete premier value adding
construction
and engineering solutions.
We add value to the company by motivating our employees and
providing them with
clear development opportunities and a contemporary work
environment.
VISION
Our goal is to become the fastest growing
construction group on the Nordic and
Baltic stock exchanges by 2013 in terms
of revenue growth.
SHARED VALUES
Reliability
We keep our promises and
honour our agreements. We act openly and transparently.
We consistently
support and promote the best construction practices. We do not
take risks at
the expense of our customers.
Quality
We are
professional builders - we apply appropriate and effective construction
techniques and technologies and observe generally accepted quality standards.
We
provide our customers with integrated cost efficient solutions. We are
environmentally aware and operate sustainably. We value our employees by
providing them with a modern work environment that encourages
creativity and a
motivation system that fosters initiative.
Innovation
We are innovative and creative engineers. We take
maximum advantage of the
benefits offered by information technology. We
inspire our employees to grow
through continuous training and balanced
career opportunities.
FINANCIAL REVIEW
Margins
Nordecon International Group
ended the first quarter of 2009 with a gross profit
of 36.9 million kroons
(2.4 million euros), a 64 per cent decrease from the
101.4 million kroons
(6.5 million euros) earned in the first quarter of 2008.
In the first
quarter of 2009, the Group operated with practically zero profit,
incurring
a net loss of 0.6 million kroons (0.04 million euros). Compared with
the net
profit of 44.9 million kroons (2.9 million euros) earned in the first
quarter of 2008, the net result has shrunk considerably. The decrease results
largely from a decline in the profitability of construction contracts. In
ordinary circumstances, the lower than average profitability in the first
quarter has resulted from seasonal factors that impact mainly the road
construction business. In the current situation, however, this has
been
accompanied by exceptionally weak demand in the buildings
construction sector,
which has triggered fierce competition and,
accordingly, a steep decrease in
relevant associated margins. In addition,
consolidated net profit has been
influenced by distribution and
administrative expenses (particularly
non-recurring restructuring
expenditures) that have not decreased at the same
pace as the margins of
construction contracts.
The key
profitability ratios monitored by the Group's management are following
the
same trends that emerged in the last quarter of 2008 owing to 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
first quarter gross margin
to 6.2 per cent, a two-fold decrease from the 13.1
per cent posted for the
first quarter 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.
The operating loss of 3.5 million kroons (0.2 million euros) was
anticipated.
The restructuring of the Group and downsizing triggered
exceptional expenses
that will not recur in the next period. As a result,
the ratio of administrative
expenses to revenue rose to 6.3 per cent (Q1 2008:
5.6 per cent), surpassing the
5 per cent limit set by management. The Group
remains committed to the decision
that during the period 2009-2010 the cost
base should be reduced by up to 30 per
cent compared with 2007-2008 and will
act resolutely to achieve this.
Cash flows
The Group's net operating cash
flow was negative at 79.7 million kroons (5.1
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
delay settlement
past the agreed due dates. Receipts from customers exceed
disbursements
to suppliers but not enough to render the net operating cash flow
positive.
Investing activities of the first quarter of 2009 resulted in a net outflow
of
75.2 million kroons (4.8 million euros) compared with a net outflow of
164.6
million kroons (10.5 million euros) for the first quarter of 2008.
The largest
outflow resulted from lending activities (net outflow 47.7
million kroons or 3.0
million euros) that are becoming common especially in
the Estonian construction
market where potential customers view not only the
banks but also the builders
as potential co-financiers during the
construction period. Compared with a year
ago, investments in other companies
have decreased significantly. If in the
first quarter of 2008 investments
in other companies (mainly for the interest in
AS Eston Ehitus) totalled 195.4
million kroons (12.5 million euros), then in the
first quarter of 2009
investments in subsidiaries, associates and joint ventures
totalled 32.8
million kroons (2.1 million euros).
Financing
activities generated net inflow of 38.2 million kroons (2.4 million
euros).
The corresponding figure for the first quarter of 2008 was inflow of
265.1
million kroons (16.9 million euros). The net amount of loans received and
repaid through financing activities was positive at 59.3 million kroons (3.8
million kroons) against the also positive net result of 284.3 million
kroons
(18.2 million euros) for the first quarter of 2008.
In the first quarter of 2009, the Group's cash and cash
equivalents decreased by
116.6 million kroons (7.5 million euros) whereas in
the first quarter of 2008
cash and cash equivalents grew by 136.4 million
kroons (8.7 million euros).
At 31 March 2009, the Group's cash and cash
equivalents stood at 179.6 million
kroons (11.5 million euros) against 372.5
million kroons (23.8 million euros) at
31 March 2008. Considering that as a
rule the first and fourth quarters are
periods in which operating cash
flow is more influenced by disbursements than
receipts, management believes
that the Group's cash and cash equivalents are
sufficient to ensure the
Group's liquidity throughout the remainder of the year.
On the other hand, the
size of the Group's available cash funds depends directly
on whether the
banks' agree to extend the Group's short-term credit limits.
Key
financial figures and ratios
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|
Figure / ratio | Q1 2009 | Q1 2008 | Q1 2007 | 2008
|
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|
Weighted average number of | 30,756,7 | 30,756,7 | 30,756,72 | 30,756,72
|
| shares | 28 | 28 | 8 |
8
|
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|
Earnings per share (in kroons) | 0.23 | 1.50 | 0.96 | 4.73
|
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---
|
Earnings per share (in euros) | 0.01 | 0.10 | 0.06 | 0.30
|
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---
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|
Revenue growth | -23.6% | 38.2% | 63.8% | 3.1%
|
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---
|
Average number of employees | 1,223 | 1,102 | 1,009 | 1,232
|
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|
Revenue per employee (in | 483 | 702 | 555 | 3,140
|
| thousands of kroons) | | | |
|
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---
|
Revenue per employee (in | 31 | 45 | 35 | 201
|
| thousands of euros) | | | |
|
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---
|
Personnel expenses to revenue, | 16.7% | 13.6% | 13.3% | 12.7%
|
| % | | | |
|
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---
|
Administrative expenses to | 6.3% | 5.6% | 5.3% | 4.7%
|
| revenue, % | | | |
|
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---
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|
EBITDA (in thousands of | 14,813 | 77,166 | 51,619 | 281,161
|
| kroons) | | | |
|
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---
|
EBITDA (in thousands of euros) | 947 | 4,932 | 3,299 | 17,969
|
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---
|
EBITDA margin, % | 2.5% | 10.0% | 9.2% | 7.3%
|
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|
Gross margin, % | 6.2% | 13.1% | 11.8% | 9.3%
|
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---
|
Operating margin, % | -0.6% | 7.9% | 6.7% | 5.4%
|
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|
Operating margin excluding | -0.7% | 7.6% | 6.2% | 5.3%
|
| gains on asset sales, % | | | |
|
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|
Net margin, % | -0.1% | 5.8% | 5.6% | 4.4%
|
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|
Return on invested capital, % | 0.5% | 3.9% | 5.6% | 19.1%
|
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|
Return on assets, % | -0.2% | 2.8% | 2.6% | 9.1%
|
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|
Return on equity, % | -0.1% | 5.4% | 6.1% | 20.5%
|
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|
Equity ratio, % | 37.5% | 38.0% | 37.8% | 36.5%
|
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|
Gearing, % | 31.8% | 18.9% | 18.9% | 18.2%
|
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|
Current ratio | 1.28 | 1.65 | 1.41 | 1.33
|
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|
| 31 March | 31 March | 31 March | 31
|
| | 2009 | 2008 | 2007 |
December |
| | | |
| 2008
|
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|
Order backlog (in thousands of | 1,714,175| 3,368,680| 3,197,000 | 2,220,748
|
| kroons) | | | |
|
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---
|
Order backlog (in thousands of | 109,556 | 215,298 | 204,326 | 141,932
|
| euros) | | | |
|
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*
For comparability, the weighted average number of shares is the number of
shares after the bonus issues.
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|
Earnings per share (EPS) = net | Operating margin excluding gains on
|
| profit attributable to equity | asset sales = (operating profit -
gains |
| holders of the parent / weighted | on sale of property, plant and
|
| average number of shares | equipment - gains on sale of
real |
| outstanding | estate) / revenue
|
| Revenue per employee = revenue / | Net margin = net profit
for the period |
| average number of employees | / revenue
|
| Personnel expenses to revenue = | Return on invested
capital = (profit |
| personnel expenses / revenue | before tax +
interest expense) / the |
| Administrative expenses to revenue | period's
average (interest-bearing |
| = administrative expenses / |
liabilities + equity) |
| revenue
| Return on assets = operating profit / |
| EBITDA = earnings before
interest, | the period's average total assets |
| taxes, depreciation
and | Return on equity = net profit for the |
| amortisation
| period /the period's average total |
| EBITDA margin =
EBITDA / revenue | equity |
| Gross margin
= gross profit / | Equity ratio = total equity / total |
| revenue
| equity and liabilities |
|
Operating margin = operating | Gearing = (interest-bearing liabilities
|
| profit / revenue | - cash and cash equivalents) /
|
| | (interest bearing liabilities +
equity) |
| | Current ratio = total current
assets / |
| | total current liabilities
|
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PERFORMANCE
BY GEOGRAPHICAL MARKETS
In the
first quarter of 2009, revenue earned outside Estonia accounted for 17
per
cent of consolidated revenue against approximately 18 per cent a year ago.
The Group has expanded operations in Latvia. In the first quarter of 2009,
Latvian revenue accounted for more than 10 per cent of the total while in
2008
(full year) the proportion was 6 per cent.
At the same time, the contribution of Ukrainian revenues has
dropped to 3 per
cent. The downturn is attributable to the completion of
major projects started
in the preceding period and the complexity of
entering into new contracts in the
current steep recession. Lithuanian
revenues have remained stable at 2 per cent
of the total.
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|
Geographical market | Q1 2009 | Q1 2008 | Q1 2007 | 2008
|
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|
Estonia | 82.7% | 81.9% | 83.3% | 80.3%
|
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|
Ukraine | 3.2% | 16.2% | 16.7% | 11.4%
|
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---
|
Latvia | 12.2% | 0% | 0% | 5.9%
|
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---
|
Lithuania | 1.8% | 1.9% | 0% | 2.4%
|
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---
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 is 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
quarter of 2009 was 590.7 million kroons
(37.8 million euros), a 24 per
cent decrease from the 773.5 million kroons (49.4
million euros) generated in
the first quarter of 2008. Revenue has decreased
mainly on account of
shrinkage in demand in all the Group's markets. In
addition, the
absolute revenue figure has been impacted by stiff competition
that has
lowered the construction prices (see further explanations and
expectations for the future in Outlooks of the geographical markets where the
Group operates).
The Group tries 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 is will remain within the
strategically defined 20 per cent.
Segment revenue
It is quite common for the
construction business that in the first quarter the
revenue generated by the
Buildings segment is larger than that of
Infrastructure.
However, compared with the first quarter of 2008, revenue
distribution
between the primary segments has become more even. This results
from the
situation in the construction market (particularly in Estonia) that has
been
causing the order backlog of the Infrastructure segment to grow at a
faster
pace than that of the Buildings segment already since the second
quarter of
2008.
In the first quarter of 2009, the Buildings segment
generated 339.5 million
kroons (21.7 million euros) and the
Infrastructure segment 246.5 million kroons
(15.8 million euros) of the
Group's construction contract revenue. The
corresponding figures for
the first quarter of 2008 were 630.1 million kroons
and 140.6 million
kroons (40.3 million euros and 9.0 million euros)
respectively.
In response to market developments, the revenue of the Buildings
segment has
declined and that of the Infrastructure segment has grown. However,
the
approximately 100-million kroon (6.4-million euro) growth in the
Infrastructure segment is not wholly organic but includes also the Latvian
revenue which in the first quarter of 2008 was not yet consolidated.
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|
Revenue distribution between | | | |
|
| segments* | | | |
|
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|
Business segment | Q1 2009 | Q1 2008 | Q1 2007 | 2008
|
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|
Buildings | 58% | 80% | 55% | 63%
|
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|
Infrastructure | 42% | 20% | 45% | 37%
|
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*
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 increase in 2009. The
assessment is supported by the Group's order backlog as at 31 March 2009
where
the contracts of the Infrastructure segment surpass those of the
Buildings
segment (see Order backlog).
Revenue distribution within segments
Within the Buildings segment, revenue distribution has
remained similar to prior
periods, with commercial buildings accounting for
over 50 per cent of the
segment's revenue. As anticipated, revenue from
the construction of industrial
and warehouse facilities and apartment
buildings has decreased. Due to
favourable construction prices, the
proportion of revenue from the construction
of public buildings might
increase through potential local government investment
in schools, nursery
schools and other public buildings although such investment
plans may be
undermined by financing difficulties.
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|
Revenue distribution in the | Q1 2009 | Q1 2008 | Q1 2007 | 2008
|
| Buildings segment | | | |
|
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|
Commercial buildings | 75% | 63% | 50% | 59%
|
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|
Industrial and warehouse | 8% | 14% | 14% | 16%
|
| facilities | | | |
|
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|
Public buildings | 12% | 15% | 18% | 14%
|
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---
|
Apartment buildings | 4% | 8% | 18% | 11%
|
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---
In
absolute terms, the revenue of the Infrastructure segment has grown almost
two-fold year-over-year and this has changed revenue distribution within the
segment. The strong growth in port construction and environmental
engineering
revenues has increased the proportions of relevant
sub-segments.
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|
Revenue distribution in the | Q1 2009 | Q1 2008 | Q1 2007 | 2008
|
| Infrastructure segment | | | |
|
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|
Road construction and | 20% | 41% | 24% | 45%
|
| maintenance | | | |
|
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---
|
Port construction | 22% | 11% | 58% | 24%
|
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---
|
Environmental engineering | 17% | 5% | 18% | 6%
|
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---
|
Other engineering | 41% | 43% | - | 25%
|
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---
ORDER
BACKLOG
At
31 March 2009, the Group's order backlog was 1,714 million kroons (110
million euros), an almost 50 per cent decrease compared with the 3,369
million
kroons (215 million euros) posted a year ago.
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--
|
| 31 March | 31 March | 31 March | 31
|
| | 2009 | 2008 | 2007 |
December |
| | | |
| 2008
|
-----------------------------------------------------------------------------
---
|
Order backlog, in thousands of | 1,714,17 | 3,368,68 | 3,197,000 | 2,220,748
|
| kroons | 5 | 0 | |
|
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---
|
Order backlog, in thousands of | 109,556 | 215,298 | 204,326 | 141,932
|
| euros | | | |
|
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---
In
the Infrastructure segment, the order backlog has been growing
year-over-year. At 31 March 2009, the backlog of the Infrastructure segment
accounted for 65 per cent of the Group's total backlog portfolio (31 March
2008:
35 per cent), reflecting the situation in the construction market where
the
shrinkage in the Buildings segment has been considerably faster than
the growth
in the Infrastructure segment. In absolute terms, the backlog has
been severely
influenced by a major fall in construction prices.
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
both in terms of career opportunities
and the nature of the work.
People and personnel expenses
In the first quarter of 2009
the Group (including the parent and the
subsidiaries) employed, on
average, 1,223 people including around 500 engineers
and other technical
personnel. The proportion of engineers and technical
personnel (ETP)
has increased over the past couple of years due to business
growth.
Compared with a year ago, the number of staff has increased by
approximately 100 mainly on account of the acquisition of the Latvian company
SIA LCB at the beginning of 2009. However, since the end of 2008 the growth
curve has been declining in connection with downsizing instigated by a
significant decrease in business.
Average number of the Group's employees (including the parent and
its
subsidiaries):
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|
Period | ETP | Workers | Total average
|
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---
|
Q1 2009 | 499 | 724 | 1,223
|
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---
|
Q1 2008 | 456 | 646 | 1,102
|
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---
|
Q1 2007 | 396 | 613 | 1,009
|
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---
|
2008 | 511 | 721 | 1,232
|
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The
Group's personnel expenses for the first quarter of 2009, including
associated taxes, totalled 98.5 million kroons (6.3 million euros), a 7 per
cent
decrease on the 105.4 million kroons (6.7 million euros) incurred in the
first
quarter of 2008. At the same time, the number of staff has increased
by 11 per
cent.
The decrease in personnel expenses despite growth in the
number of staff results
from the reduction of basic salaries. Employee
salaries have been reduced at all
Group entities; the salaries of engineers
and other technical staff have been
cut by 15 per cent on average. The
performance pay of project staff that is
directly related to the
projects' profit margins has also declined.
Owing to the overall
economic situation and the slump in the construction
market, in the
first quarter of 2009 Group entities terminated employment
relations
with approximately 240 people.
In
the first quarter of 2009, the remuneration of the members of the council of
Nordecon International AS amounted to 270 thousand kroons (17 thousand
euros).
The corresponding figure for the first quarter of 2008 was also 270
thousand
kroons (17 thousand euros). The remuneration and benefits of the
members of the
board of Nordecon International AS totalled 611 thousand
kroons (39 thousand
euros) compared with 2,575 thousand kroons (165
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.
In addition, the figure has been
impacted by a 15 per cent reduction in board
member remuneration across the
Group.
OUTLOOKS OF THE
GEOGRAPHICAL MARKETS WHERE THE GROUP OPERATES
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 corporate and
individual customers. The Group's management
estimates that by 2010 the
total volumes of the construction market will have
decreased 50 per cent
compared with 2008
- The number of
development and buildings construction companies will decrease
(market
consolidation). Buildings construction companies 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 the
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.
- Construction
projects' financing schemes will change (customers' settlement
terms will
extend significantly) and additional requirements to the financing
provided
by general contractors during the construction period will impose
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.
The Group has prepared for changes in the economic environment
by:
- Setting the objective of reducing the cost base by 30 per
cent (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
Latvia and Lithuania
Despite the difficulties in 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 the
financing institutions, a significant decrease in private
sector demand,
still high inflation and heightening competition.
Recent
economic developments in Lithuania have been similar to the ones in the
other Baltic countries. Pressure on the state budget and national currency,
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)
market has 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 the current
plans swiftly and decisively.
In view of the
situation in the Lithuanian construction market and the prospects
of the
Lithuanian economy, the Group is also considering the alternative of
revising its current action plan in 2009 and does not rule out the
possibility
of downscaling the Lithuanian operations temporarily should this
prove
reasonable and justified.
The Group designs its activities in the Latvian and
Lithuanian construction
markets in accordance with its international
expansion strategy and believes
that in the longer term the two markets
will have a logical place in the Group's
internationalisation.
Ukraine
In Ukraine, the Group will
continue acting as a general contractor and project
manager in the
construction of commercial buildings and production facilities.
Activities
on development projects that require major investment 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 government and the judicial
system,
inflation, and the availability of quality construction
inputs. 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.
Nevertheless, the Group is
confident 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 regarding general
contracting and project management in the construction business, which will
improve the Group's position in the long term considerably.
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 31 March
2009
the provisions (including current and non-current ones) totalled 13.9
million kroons (0.9 million euros). The corresponding figure at 31 March 2008
was 11.2 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 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 quarter of 2009, the net loss on doubtful receivables
amounted to
0.9 million kroons (0.1 million euros). In the first quarter of
2008, income
from the recovery of previously expensed receivables
surpassed losses from the
write-down of receivables, yielding net gain of
0.2 million kroons (0.01 million
euros).
Liquidity risks
Free funds are placed in overnight or
fixed-interest term deposits with the
largest banks in Estonia. 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
1.28-fold (31
March 2008: 1.65) and available cash totalled 179.6 million kroons
(11.5
million euros) (31 March 2008: 372.5 million kroons or 23.8 million
euros). Together with unused overdraft facilities, the cash balances provide
a
sufficient liquidity buffer for conducting operations in an economic
environment
which 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 the end
of the reporting period,
the Group's interest-bearing loans and borrowings
have increased by 8.3 million
kroons (0.5 million euros) year-over-year to
665.8 million kroons (42.6 million
euros). Interest expense for the first
quarter of 2009 amounted to 8.4 million
kroons (0.5 million euros). Compared
with the first quarter of 2008, the size of
interest expense has remained
stable despite growth in loans and borrowings.
This has been possible
thanks to a decline in the EURIBOR base rate.
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 the
euro, 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 decrease 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 per cent year-over-year.
In 2009 the weakening of the Ukrainian hryvna against the euro has
stopped and
in the first quarter of 2009 the Group's exchange losses
(including the ones
recognised in finance expenses and other operating
expenses) totalled 0.2
million kroons (0.01 million euros). The net
result of exchange differences
(including exchange gains) on the Group's
result of operations was gain of 2.1
million kroons (0.1 million euros).
FINANCIAL STATEMENTS
Condensed
consolidated interim statement of financial position
----------------------------------------------------------------------------
----
|
EEK '000 | 31 March | 31 March 2008 | 31 December
|
| | 2009 | |
2008
|
-----------------------------------------------------------------------------
---
|
ASSETS | | |
|
-----------------------------------------------------------------------------
---
|
Current assets | | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 179,643 | 372,537 | 296,184
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 443,126 | 359,718 | 473,935
|
-----------------------------------------------------------------------------
---
|
Other receivables and | 414,134 | 245,195 | 408,541
|
| prepayments | | |
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 776 | 1,905 | 776
|
-----------------------------------------------------------------------------
---
|
Income tax assets | 0 | 0 | 3,207
|
-----------------------------------------------------------------------------
---
|
Inventories | 443,553 | 431,055 | 386,733
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for | 0 | 43,362 | 0
|
| sale | | |
|
-----------------------------------------------------------------------------
---
|
Total current assets | 1,481,232 | 1,453,772 | 1,569,376
|
-----------------------------------------------------------------------------
---
|
Non-current assets | | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 121,960 | 91,828 | 112,605
|
-----------------------------------------------------------------------------
---
|
Investment property | 116,783 | 133,753 | 116,783
|
-----------------------------------------------------------------------------
---
|
Property, plant and equipment | 253,140 | 276,167 | 263,295
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 332,869 | 290,356 | 305,188
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 824,752 | 792,104 | 797,871
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 2,305,984 | 2,245,876 | 2,367,247
|
-----------------------------------------------------------------------------
---
|
LIABILITIES | | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and | 332,295 | 151,184 | 235,948
|
| borrowings | | |
|
-----------------------------------------------------------------------------
---
|
Trade payables | 319,687 | 291,656 | 439,615
|
-----------------------------------------------------------------------------
---
|
Taxes payable | 52,658 | 48,411 | 65,760
|
-----------------------------------------------------------------------------
---
|
Other payables | 384,488 | 382,168 | 423,270
|
-----------------------------------------------------------------------------
---
|
Provisions | 9,903 | 8,078 | 11,600
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 1,099,031 | 881,497 | 1,176,193
|
-----------------------------------------------------------------------------
---
|
Non-current liabilities | | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and | 333,474 | 506,308 | 318,578
|
| borrowings | | |
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 4,258 | 761 | 2,534
|
-----------------------------------------------------------------------------
---
|
Provisions | 4,022 | 3,739 | 6,630
|
-----------------------------------------------------------------------------
---
|
Total non-current liabilities | 341,754 | 510,808 | 327,742
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 1,440,785 | 1,392,305 | 1,503,935
|
-----------------------------------------------------------------------------
---
|
EQUITY | | |
|
-----------------------------------------------------------------------------
---
|
Share capital | 307,567 | 307,567 | 307,567
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 34,800 | 21,426 | 34,800
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -2,714 | 4,574 | -4,106
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 434,033 | 432,937 | 426,995
|
-----------------------------------------------------------------------------
---
|
Equity attributable to owners | 773,686 | 766,504 | 765,256
|
| of the parent | | |
|
-----------------------------------------------------------------------------
---
|
Non-controlling interests | 91,513 | 87,067 | 98,056
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 865,199 | 853,571 | 863,312
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 2,305,984 | 2,245,876 | 2,367,247
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
Condensed
consolidated interim statement of financial position
----------------------------------------------------------------------------
----
|
EUR '000 | 31 March 2009 | 31 March 2008 | 31 December
|
| | | |
2008
|
-----------------------------------------------------------------------------
---
|
ASSETS | | |
|
-----------------------------------------------------------------------------
---
|
Current assets | | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 11,481 | 23,810 | 18,930
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 28,321 | 22,990 | 30,290
|
-----------------------------------------------------------------------------
---
|
Other receivables and | 26,468 | 15,670 | 26,110
|
| prepayments | | |
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 50 | 123 | 50
|
-----------------------------------------------------------------------------
---
|
Income tax assets | 0 | 0 | 205
|
-----------------------------------------------------------------------------
---
|
Inventories | 28,348 | 27,549 | 24,717
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for | 0 | 2,771 | 0
|
| sale | | |
|
-----------------------------------------------------------------------------
---
|
Total current assets | 94,668 | 92,913 | 100,301
|
-----------------------------------------------------------------------------
---
|
Non-current assets | | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 7,795 | 5,869 | 7,197
|
-----------------------------------------------------------------------------
---
|
Investment property | 7,464 | 8,548 | 7,464
|
-----------------------------------------------------------------------------
---
|
Property, plant and | 16,178 | 17,650 | 16,828
|
| equipment | | |
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 21,274 | 18,557 | 19,505
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 52,711 | 50,625 | 50,993
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 147,379 | 143,538 | 151,295
|
-----------------------------------------------------------------------------
---
|
LIABILITIES | | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and | 21,238 | 9,662 | 15,080
|
| borrowings | | |
|
-----------------------------------------------------------------------------
---
|
Trade payables | 20,432 | 18,640 | 28,096
|
-----------------------------------------------------------------------------
---
|
Taxes payable | 3,364 | 3,094 | 4,203
|
-----------------------------------------------------------------------------
---
|
Other payables | 24,574 | 24,425 | 27,052
|
-----------------------------------------------------------------------------
---
|
Provisions | 633 | 516 | 741
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 70,241 | 56,338 | 75,172
|
-----------------------------------------------------------------------------
---
|
Non-current liabilities | | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and | 21,313 | 32,359 | 20,361
|
| borrowings | | |
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 272 | 49 | 162
|
-----------------------------------------------------------------------------
---
|
Provisions | 257 | 239 | 424
|
-----------------------------------------------------------------------------
---
|
Total non-current | 21,842 | 32,647 | 20,947
|
| liabilities | | |
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 92,083 | 88,985 | 96,119
|
-----------------------------------------------------------------------------
---
|
EQUITY | | |
|
-----------------------------------------------------------------------------
---
|
Share capital | 19,657 | 19,657 | 19,657
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 2,224 | 1,369 | 2,224
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -173 | 292 | -262
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 27,740 | 27,670 | 27,290
|
-----------------------------------------------------------------------------
---
|
Equity attributable to | 49,448 | 48,989 | 48,909
|
| owners of the parent | | |
|
-----------------------------------------------------------------------------
---
|
Non-controlling interests | 5,849 | 5,565 | 6,267
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 55,296 | 54,553 | 55,176
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 147,379 | 143,538 | 151,295
|
-----------------------------------------------------------------------------
---
Condensed
consolidated interim statement of comprehensive income
----------------------------------------------------------------------------
----
|
| Q1 2009 | Q1 2008 | 2008
|
| EEK '000 | | |
|
-----------------------------------------------------------------------------
---
|
Revenue | 590,664 | 773,510 | 3,867,917
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 553,809 | 672,156 | 3,510,006
|
-----------------------------------------------------------------------------
---
|
Gross profit | 36,855 | 101,354 | 357,911
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Distribution expenses | 2,223 | 827 | 8,007
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 37,404 | 43,493 | 182,526
|
-----------------------------------------------------------------------------
---
|
Other operating income | 1,689 | 7,122 | 63,947
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 2,423 | 3,113 | 22,845
|
-----------------------------------------------------------------------------
---
|
Operating profit / loss | -3,506 | 61,043 | 208,480
|
-----------------------------------------------------------------------------
---
|
Finance income | 18,775 | 4,559 | 96,877
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 13,782 | 19,851 | 68,019
|
-----------------------------------------------------------------------------
---
|
Net finance income / expense | 4,993 | -15,292 | 28,858
|
-----------------------------------------------------------------------------
---
|
Share of profit of equity accounted | 0 | 16 | 17
|
| investees | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity accounted | 2,644 | 728 | 24,770
|
| investees | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and loss of | -2,644 | -712 | -24,753
|
| equity accounted investees | | |
|
-----------------------------------------------------------------------------
---
|
Profit / loss before income tax | -1,157 | 45,039 | 212,585
|
-----------------------------------------------------------------------------
---
|
Income tax expense | -618 | 145 | 41,269
|
-----------------------------------------------------------------------------
---
|
Profit / loss for the period | -539 | 44,894 | 171,316
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Other comprehensive income: | -1,480 | 2,331 | -6,371
|
| Exchange differences on translating | | |
|
| foreign operations | | |
|
-----------------------------------------------------------------------------
---
|
Other comprehensive income for the | -1,480 | 2,331 | -6,371
|
| period | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive income for the | -2,019 | 47,225 | 164,945
|
| period | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
-------------------------------------------------------------------------
-------
-----------------------------------------------------------------------
---------
|
Profit / loss attributable to: | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 7,046 | 46,138 | 145,580
|
-----------------------------------------------------------------------------
---
|
- Non-controlling interests | -7,585 | -1,244 | 25,736
|
-----------------------------------------------------------------------------
---
|
| -539 | 44,894 | 171,316
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive income | | |
|
| attributable to: | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 8,438 | 48,358 | 139,120
|
-----------------------------------------------------------------------------
---
|
- Non-controlling interests | -10,457 | -1,133 | 25,825
|
-----------------------------------------------------------------------------
---
|
| -2,019 | 47,225 | 164,945
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Earnings per share attributable to | | |
|
| owners of the parent: | | |
|
-----------------------------------------------------------------------------
---
|
Basic earning s per share | 0.23 | 1.50 | 4.73
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per share | 0.23 | 1.50 | 4.73
|
-----------------------------------------------------------------------------
---
Condensed
consolidated interim statement of comprehensive income
----------------------------------------------------------------------------
----
|
EUR '000 | Q1 2009 | Q1 2008 | 2008
|
-----------------------------------------------------------------------------
---
|
Revenue | 37,750 | 49,436 | 247,205
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 35,395 | 42,959 | 224,330
|
-----------------------------------------------------------------------------
---
|
Gross profit | 2,355 | 6,478 | 22,875
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Distribution expenses | 142 | 53 | 512
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 2,391 | 2,780 | 11,666
|
-----------------------------------------------------------------------------
---
|
Other operating income | 108 | 455 | 4,087
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 155 | 199 | 1,460
|
-----------------------------------------------------------------------------
---
|
Operating profit / loss | -224 | 3,901 | 13,324
|
-----------------------------------------------------------------------------
---
|
Finance income | 1,200 | 291 | 6,192
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 881 | 1,269 | 4,347
|
-----------------------------------------------------------------------------
---
|
Net finance income / expense | 319 | -977 | 1,844
|
-----------------------------------------------------------------------------
---
|
Share of profit of equity accounted | 0 | 1 | 1
|
| investees | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity accounted | 169 | 47 | 1,583
|
| investees | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and loss of | -169 | -46 | -1,582
|
| equity accounted investees | | |
|
-----------------------------------------------------------------------------
---
|
Profit / loss before income tax | -74 | 2,879 | 13,587
|
-----------------------------------------------------------------------------
---
|
Income tax expense | -39 | 9 | 2,638
|
-----------------------------------------------------------------------------
---
|
Profit / loss for the period | -34 | 2,869 | 10,949
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Other comprehensive income: | -95 | 149 | -407
|
| Exchange differences on translating | | |
|
| foreign operations | | |
|
-----------------------------------------------------------------------------
---
|
Other comprehensive income for the | -95 | 149 | -407
|
| period | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive income for the | -129 | 3,018 | 10,542
|
| period | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
-------------------------------------------------------------------------
-------
-----------------------------------------------------------------------
---------
|
Profit / loss attributable to: | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 451 | 2,949 | 9,304
|
-----------------------------------------------------------------------------
---
|
- Non-controlling interests | -485 | -80 | 1,645
|
-----------------------------------------------------------------------------
---
|
| -34 | 2,869 | 10,949
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Total comprehensive income | | |
|
| attributable to: | | |
|
-----------------------------------------------------------------------------
---
|
- Owners of the parent | 539 | 3,090 | 8,891
|
-----------------------------------------------------------------------------
---
|
- Non-controlling interests | -668 | -72 | 1,651
|
-----------------------------------------------------------------------------
---
|
| -129 | 3,018 | 10,542
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Earnings per share attributable to | | |
|
| owners of the parent: | | |
|
-----------------------------------------------------------------------------
---
|
Basic earning s per share | 0.01 | 0.10 | 0.30
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per share | 0.01 | 0.10 | 0.30
|
-----------------------------------------------------------------------------
---
Condensed consolidated interim statement of cash flows
------------------------------------------------------------------------------
--
|
| EEK '000 | EUR '000
|
-----------------------------------------------------------------------------
---
|
| Q1 2009 | Q1 2008 | Q1 2009 | Q1 2008
|
-----------------------------------------------------------------------------
---
|
Cash flows from operating | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Cash receipts from customers | 661,510 | 1,041,501 | 42,278 | 66,564
|
-----------------------------------------------------------------------------
---
|
Cash paid to suppliers | -608,644 | -869,455 | -38,899 | -55,568
|
-----------------------------------------------------------------------------
---
|
Cash paid to and for | -126,515 | -136,073 | -8,086 | -8,697
|
| employees | | | |
|
-----------------------------------------------------------------------------
---
|
Income taxes paid | -6,002 | -20 | -384 | -1
|
-----------------------------------------------------------------------------
---
|
Net cash used in / from | -79,651 | 35,953 | -5,091 | 2,298
|
| operating activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from investing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of property, | -530 | -2,473 | -34 | -158
|
| plant and equipment | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of intangible | -7,500 | -464 | -479 | -30
|
| assets | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from sale of | 1,130 | 3,342 | 72 | 214
|
| property, plant and | | | |
|
| equipment and intangible | | | |
|
| assets | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of subsidiaries, | -6,776 | -194,719 | 433 | 12,444
|
| net of cash acquired | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from disposal of | 0 | 1,482 | 0 | 95
|
| subsidiaries | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of associates | -6,000 | 0 | -383 | 0
|
-----------------------------------------------------------------------------
---
|
Proceeds from disposal of | 6,724 | 0 | 430 | 0
|
| associates | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of interests in | -20,000 | 0 | -1,279 | 0
|
| joint ventures | | | |
|
-----------------------------------------------------------------------------
---
|
Loans granted | -53,747 | -7,973 | -3,435 | -510
|
-----------------------------------------------------------------------------
---
|
Repayment of loans granted | 6,092 | 31,111 | 389 | 1,988
|
-----------------------------------------------------------------------------
---
|
Interest received | 5,457 | 5,099 | 349 | 326
|
-----------------------------------------------------------------------------
---
|
Net cash used in investing | -75,150 | -164,595 | -4,803 | -10,520
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from financing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from loans received | 122,911 | 333,701 | 7,855 | 21,327
|
-----------------------------------------------------------------------------
---
|
Repayment of loans received | -63,576 | -49,421 | -4,063 | -3,159
|
-----------------------------------------------------------------------------
---
|
Payment of finance lease | -12,462 | -13,499 | -796 | -863
|
| liabilities | | | |
|
-----------------------------------------------------------------------------
---
|
Interest paid | -8,374 | -5,693 | -535 | -364
|
-----------------------------------------------------------------------------
---
|
Other payments made | -315 | 0 | -20 | 0
|
-----------------------------------------------------------------------------
---
|
Net cash from financing | 38,184 | 265,088 | 2,440 | 16,942
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Net cash flow | -116,617 | 136,446 | -7,454 | 8,720
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash and cash equivalents at | 296,184 | 236,112 | 18,930 | 15,089
|
| beginning of period | | | |
|
-----------------------------------------------------------------------------
---
|
Effect of exchange rate | 76 | -20 | 5 | -1
|
| fluctuations | | | |
|
-----------------------------------------------------------------------------
---
|
Decrease / increase in cash | -116,617 | 136,446 | -7,454 | 8,720
|
| and cash equivalents | | | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents at | 179,643 | 372,538 | 11,481 | 23,810
|
| 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