On 23 January 2017 Nordecon AS submitted to the Supreme Court an appeal in cassation against the decision of Tallinn District Court of 23 December 2016 in civil case no. 2-14-60996. The said civil case concerns the claim of Nordecon AS against the Republic of Estonia regarding the decision of the Estonian Road Administration in 2012 to prohibit the measuring of filtration at the construction of the Aruvalla-Kose road section by using the method on the basis of which the Estonian Road Administration had procured and accepted construction works for nearly fifteen years, and which the Estonian Road Administration initially accepted in the performance of the contract signed for the construction of the Aruvalla-Kose road section.
The decisions of the court instances, which have formed an opinion in the said matter so far, indicate that until 2012 the Estonian Road Administration applied an illegal practice and ordered and accepted non-filtrating roads all over Estonia. The said opinion is not justified and may in the future bring about the obligation for the Estonian Road Administration to return the funds of the European Union Cohesion Fund used for road constructions. The final decision in the dispute shall, therefore, have a broader meaning and the opinions of the Supreme Court in the disputed matters may become significant.
Nordecon AS does not agree to the conclusion of the appealed court decision that the prior method for measuring filtration (the Sojuzdornii method) promoted by the Estonian Road Administration contradicts the law and that the Estonian Road Administration procured non-filtrating roads for nearly fifteen years. Using the Sojuzdornii method did not bring about the construction of "non-filtrating roads” and the builders could not have foreseen before 2012 that filtration should be measured by something other than the Sojuzdornii method. Therefore, the Estonian Road Administration did not have the right to prohibit the use of the Sojuzdornii method more than one year after signing the contract with Nordecon AS without compensating the costs arising from the said unjustified prohibition to Nordecon AS.
The dispute has no negative impact on Nordecon AS financial performance and results. Previously has Nordecon AS disclosed the circumstances regarding the said dispute in the Group's quarterly report for the third quarter of 2016 (http://www.nasdaqbaltic.com/upload/reports/ncn/2016_q3_en_eur_con_00.pdf).
Nordecon (www.nordecon.com) is a group of construction companies whose core business is construction project management and general contracting in the buildings and infrastructures segment. Geographically the Group operates in Estonia, Ukraine, Finland and Sweden. The parent of the Group is Nordecon AS, a company registered and located in Tallinn, Estonia. In addition to the parent company, there are more than 10 subsidiaries in the Group. The consolidated revenue of the Group in 2015 was 145.5 million euros. Currently Nordecon Group employs close to 700 people. Since 18 May 2006 the company's shares have been quoted in the main list of the NASDAQ Tallinn Stock Exchange.
Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
E-mail: andri.hobemagi@nordecon.com
www.nordecon.com