Financial review
Margins
Nordecon International Group ended 2009 with a gross profit of 136.3 million
kroons (8.7 million euros), 62% down from the 357.9 million kroons (22.9 million
euros) earned in 2008. The decrease is mainly attributable to a significant
decline in the profitability of construction contracts across all segments and
the completion of more profitable contracts started in previous periods. In
ordinary circumstances, lower than average profitability in the first and fourth
quarter results from seasonal factors that impact mainly the road construction
business and are counteracted in the second and third quarters. In 2009,
however, they were accompanied by exceptionally weak demand in the buildings
construction sector throughout the year, which triggered fierce competition and,
accordingly, a steep decrease in margins. This caused also a decrease in gross
profit for 12 months compared with gross profit for the third quarter.
The Group ended the year with an operating loss of 126.7 million kroons (8.1
million euros). The comparative period, 2008, ended with an operating profit of
208.5 million kroons (13.3 million euros). The incurrence of an operating loss
can be explained by shrinkage in gross profit and the year-end re-measurement of
the Group's assets and liabilities.
In 2009, the Group responded to the anticipated decline in gross profit already
at the beginning of the year by applying decisive measures for cutting
administrative costs with a view to reducing the cost base compared with the
previous year by 30%. Consolidated administrative expenses for 2009 totalled
186.4 million kroons (11.9 million euros). However, a significant proportion of
administrative expenses is made up of items that are not impacted by
cost-cutting (such as impairment losses on goodwill). Excluding such items,
administrative expenses for 2009 totalled 125.2 million kroons (8 million
euros), reflecting a roughly 33% decrease in comparable administrative expenses
for 2008. In addition, the restructuring conducted in 2009 gave rise to certain
non-recurring expenditures in the form of operating expenses and termination
benefits. Excluding the non-recurring items, the ratio of administrative
expenses to revenue was 5.2%, which is slightly above the 5% target set by
management but perfectly acceptable in view of the plunge in volumes experienced
by the construction market.
The Group's operating result was also influenced by the impairment losses
recognised for other assets (trade receivables and investment properties) within
Other expenses. Impairment losses on receivables and investment properties
totalled 42.0 million kroons (2.7 million euros) and 12.5 million kroons (0.8
million euros) respectively. Altogether, the impact of the one-off write-down
expenses on operating profit was 115.7 million kroons (7.4 million euros).
The Group remains committed to the aim of reducing the cost base in 2009-2010 by
up to 30% compared with 2007-2008 and is prepared to adopt resolute measures
also in the future.
Fiscal 2009 ended with a consolidated net loss of 88.7 million kroons (5.7
million euros). The loss attributable to owners of the parent amounted to 45.3
million kroons (2.9 million euros) while the loss attributable to
non-controlling interests equalled 43.4 million kroons (2.8 million euros).
The profitability ratios monitored by the Group's management have changed
significantly due to dramatic deterioration 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. Demand that is insufficient for meeting the needs of all market players
has heightened pressure for lowering the prices. Under the circumstances, the
Group's gross margin for 2009 dropped to 5.7% (2008: 9.3%).
The Group believes that in the current market situation, the above level of
gross margin is still acceptable for profitable operation. In the light of new
trends emerging in the construction market, the Group intends to continue
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 next financial year will end in an operating profit.
Cash flows
The Group's operating activities generated a net cash inflow of 99.9 million
kroons (6.4 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, due to renegotiated and extended settlement terms,
cash is received over a considerably longer period than previously. In addition,
the period's receipts were 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 2009 resulted in a net outflow of 54.0 million kroons
(3.5 million euros) compared with an outflow of 156.6 million kroons (10.0
million euros) for 2008. Acquisitions of investments in subsidiaries, associates
and joint ventures (including disposals) generated a net outflow of 30.5 million
kroons (2.0 million euros). The corresponding figure for 2008 was a net outflow
of 139.1 million kroons (8.9 million euros).
Financing activities generated a net outflow of 116.9 million kroons (7.5
million euros). The corresponding figure for 2008 was an outflow of 88.2 million
kroons (5.6 million euros). Debt financing has decelerated because business
volumes are not growing and in net terms financial liabilities are decreasing.
The period's net outflow from interest-bearing loans and borrowings (excluding
interest expense) was 56.1 million kroons (3.6 million euros) against a net
inflow of 49.4 million kroons (3.2 million euros) in 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) in 2008.
Key financial figures and ratios
--------------------------------------------------------------------------------
| Figure / ratio | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Weighted average number of shares* | 30,756,72 | 30,756,72 | 30,756,72 |
| | 8 | 8 | 8 |
--------------------------------------------------------------------------------
| Earnings per share (in kroons) | -1.47 | 4.73 | 8.70 |
--------------------------------------------------------------------------------
| Earnings per share (in euros) | -0.09 | 0.30 | 0.56 |
--------------------------------------------------------------------------------
| Revenue growth | -37.7% | 3.1% | 49.9% |
--------------------------------------------------------------------------------
| Average number of employees | 1,128 | 1,232 | 1,103 |
--------------------------------------------------------------------------------
| Revenue per employee (in thousands of | 2,137 | 3,140 | 3,402 |
| kroons) | | | |
--------------------------------------------------------------------------------
| Revenue per employee (in thousands of | 137 | 201 | 217 |
| euros) | | | |
--------------------------------------------------------------------------------
| Personnel expenses to revenue, % | 15.1% | 12.7% | 12.3% |
--------------------------------------------------------------------------------
| Administrative expenses to revenue, % | 7.7% | 4.7% | 4.6% |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBITDA (in thousands of kroons) | -56,897 | 281,161 | 370,581 |
--------------------------------------------------------------------------------
| EBITDA (in thousands of euros) | -3,636 | 17,969 | 23,684 |
--------------------------------------------------------------------------------
| EBITDA margin, % | -2.4% | 7.3% | 9.9% |
--------------------------------------------------------------------------------
| Gross margin, % | 5.7% | 9.3% | 13.3% |
--------------------------------------------------------------------------------
| Operating margin, % | -5.3% | 5.4% | 8.2% |
--------------------------------------------------------------------------------
| Operating margin excluding gains on | -5.4% | 5.3% | 7.8% |
| asset sales, % | | | |
--------------------------------------------------------------------------------
| Net margin, % | -3.7% | 4.4% | 7.7% |
--------------------------------------------------------------------------------
| Return on invested capital, % | -4.1% | 19.1% | 37.2% |
--------------------------------------------------------------------------------
| Return on assets, % | -6.0% | 9.1% | 17.1% |
--------------------------------------------------------------------------------
| Return on equity, % | -11.3% | 20.5% | 44.1% |
--------------------------------------------------------------------------------
| Equity ratio, % | 37.1% | 36.5% | 36.9% |
--------------------------------------------------------------------------------
| Gearing, % | 26.5% | 18.2% | 13.5% |
--------------------------------------------------------------------------------
| Current ratio | 1.47 | 1.33 | 1.30 |
--------------------------------------------------------------------------------
* For comparability, the weighted average number of shares is the number of
shares after the bonus issues.
--------------------------------------------------------------------------------
| As at 31 December | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Order book (in thousands of kroons) | 1,530,661 | 2,220,748 | 2,526,652 |
--------------------------------------------------------------------------------
| Order book (in thousands of euros) | 97,827 | 141,932 | 161,482 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 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 in 2009 accounted for approximately 15% of
consolidated revenue against approximately 20% a year ago. The decline is
primarily attributable to developments in the Ukrainian market.
In 2009, the Group expanded its operations in Latvia - at the end of the year
Latvian revenues accounted for around 11% of the total while in 2008 the
proportion was 6%. However, since the Latvian operations were generating a loss,
the Group sold its interest in the Latvian entities at the beginning of 2010. As
a result, the Group expects that its Latvian revenues will decline significantly
in 2010. In the next few years, the Group plans to continue project-based
business in Latvia through its Estonian entities, involving partners where
necessary. Continuation of project-based operations assumes the availability of
profitable projects.
At the same time, the contribution of Ukrainian revenues has dropped to
approximately 3%. The downturn is mainly attributable to the completion of major
projects started in the previous period and the complexity of entering into new
contracts during a steep recession. In Lithuania, the Group has suspended active
operations for the time being (see Changes in the Group's management structure
and operations in 2009).
Further information on developments in the Group's markets can be found in the
section Outlooks of the Group's geographical markets.
--------------------------------------------------------------------------------
| | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Estonia | 85.7% | 80.3% | 87.9% |
--------------------------------------------------------------------------------
| Ukraine | 2.7% | 11.4% | 11.6% |
--------------------------------------------------------------------------------
| Lithuania | 0.4% | 2.4% | 0.5% |
--------------------------------------------------------------------------------
| Latvia | 11.2% | 5.9% | 0% |
--------------------------------------------------------------------------------
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 2009 amounted to 2,410.8 million kroons (154.1 million
euros), a 37.7% decrease from the 3,867.9 million kroons (247.2 million euros)
generated in 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 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 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, in 2009 the revenue generated by the
Infrastructure segment exceeded that of Buildings. This results mainly from the
situation in the construction market (particularly in Estonia) that has caused
the order book of the Infrastructure segment to develop more favourably already
since the second half of 2008.
In 2009, the Buildings and Infrastructure segments generated revenue of 1,047.4
million kroons (66.9 million euros) and 1,339.2 million kroons (85.6 million
euros) respectively. The corresponding figures for 2008 were 2,136.9 million
kroons (136.6 million euros) and 1,698.5 million kroons (108.6 million euros)
respectively. The 51%-decrease in the revenue generated by the Buildings segment
corresponded to management's assessment of the market situation and was
therefore anticipated.
Revenue distribution between segments *
--------------------------------------------------------------------------------
| Business segments | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Buildings | 45% | 63% | 53% |
--------------------------------------------------------------------------------
| Infrastructure | 55% | 37% | 47% |
--------------------------------------------------------------------------------
* 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 2010 will continue increasing
compared with 2009. The assessment is supported by the Group's order book as at
31 December 2009 where the contracts of the Infrastructure segment exceed 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. The
growth in the contribution of the Commercial buildings sub-segment to two thirds
of segment revenue is attributable to two large projects: the building of the
Nordea Bank in Tallinn and an extension to the Lõunakeskus shopping mall in
Tartu. 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 slight 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 Buildings | 2009 | 2008 | 2007 |
| segment | | | |
--------------------------------------------------------------------------------
| Commercial buildings | 66% | 59% | 58% |
--------------------------------------------------------------------------------
| Industrial and warehouse facilities | 10% | 16% | 9% |
--------------------------------------------------------------------------------
| Public buildings | 18% | 14% | 19% |
--------------------------------------------------------------------------------
| Apartment buildings | 6% | 11% | 14% |
--------------------------------------------------------------------------------
Growth in the operations of the Nordecon Infra SIA subgroup in 2008-2009 caused
structural shifts in revenue distribution within the Infrastructure segment. The
contribution of other engineering projects increased largely on account of
growth in pipeline and outdoor network construction. Due to the divestment of
Nordecon Infra SIA in 2010, the contribution of other engineering projects is
expected to decline (see Outlooks of the Group's geographical markets).
Environmental engineering revenues have expanded thanks to a decline in
construction prices that has increased investments by state and local
government.
--------------------------------------------------------------------------------
| Revenue distribution in the | 2009 | 2008 | 2007 |
| Infrastructure segment | | | |
--------------------------------------------------------------------------------
| Road construction and maintenance | 49% | 45% | 41% |
--------------------------------------------------------------------------------
| Port construction | 12% | 24% | 33% |
--------------------------------------------------------------------------------
| Other engineering | 31% | 25% | 13% |
--------------------------------------------------------------------------------
| Environmental engineering | 8% | 6% | 13% |
--------------------------------------------------------------------------------
Order book
At 31 December 2009, the Group's order book stood at 1,531 million kroons (98
million euros), approximately a third down from the 2,221 million kroons (142
million euros) posted a year ago.
--------------------------------------------------------------------------------
| As at 31 December | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Order book, in thousands of kroons | 1,530,661 | 2,220,748 | 2,526,652 |
--------------------------------------------------------------------------------
| Order book, in thousands of euros | 97,827 | 141,932 | 161,482 |
--------------------------------------------------------------------------------
The order book of the Infrastructure segment has been growing year-over-year. At
31 December 2009 it accounted for 74% of the Group's total order book (31
December 2008: 59%), reflecting the situation in the construction market where
shrinkage in the Buildings segment has significantly outpaced growth in the
Infrastructure segment. In absolute terms, the order book figures have been
severely weakened by tumbling construction prices.
Between the reporting date (31 December 2009) and the date of release of this
report, Group companies have been awarded additional construction contracts of
approximately 61 million kroons (3.9 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 2009, the Group (including the parent and the subsidiaries) employed, on
average, 1,128 people including around 470 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):
--------------------------------------------------------------------------------
| Year | ETP | Workers | Total average |
--------------------------------------------------------------------------------
| 2009 | 467 | 661 | 1,128 |
--------------------------------------------------------------------------------
| 2008 | 511 | 721 | 1,232 |
--------------------------------------------------------------------------------
| 2007 | 425 | 678 | 1,103 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Group's personnel expenses for 2009, including associated taxes, totalled
363.5 million kroons (23.2 million euros), a 27% decrease compared with the
498.6 million kroons (31.9 million euros) incurred 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 2009 Group entities terminated employment relations with
approximately 620 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. The decrease in the number of staff may continue in 2010 but
considerably more slowly except for the effect of the divestment of Nordecon
Infra SIA that has reduced the number of the Group's employees by around 150.
In 2009, the remuneration of the members of the council of Nordecon
International AS including social security charges amounted to 1,436 thousand
kroons (92 thousand euros). The corresponding figure for 2008 was 1,443 thousand
kroons (92 thousand euros). The remuneration and benefits of the members of the
board of Nordecon International AS including social security charges totalled
3,254 thousand kroons (208 thousand euros) compared with 14,514 thousand kroons
(928 thousand euros) in 2008. The differences in the remuneration of the board
stem from the fact that from 5 January 2009 the board had three members and
since October 2009 there have been two members while in 2008 the number was five
(see Changes in the Group's management structure and operations in 2009). In
addition, the figure has been impacted by a 15% reduction in board member
remuneration across the Group.
Share and shareholders
Share information
ISIN code EE3100039496
Short name of the security NCN1T (until 3 April 2009 EEH1T)
Nominal value 10.00 kroons / 0.64 euros
Total number of securities issued 30,756,728
Number of listed securities 30,756,728
Listing date 18 May 2006
The share capital of Nordecon International AS consists of 30,756,728 ordinary
shares with a par value of 10 Estonian kroons each. Owners of ordinary shares
are entitled to dividends as distributed from time to time. Each share carries
one vote at the general meetings of Nordecon International AS.
Summarised trading results
Share trading history (EEK)
--------------------------------------------------------------------------------
| Price | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Open | 16.43 | 76.51 | 166.64 |
--------------------------------------------------------------------------------
| High | 29.26 | 76.51 | 224.53 |
--------------------------------------------------------------------------------
| Low | 8.61 | 14.86 | 69.00 |
--------------------------------------------------------------------------------
| Last closing price | 24.72 | 15.96 | 76.67 |
--------------------------------------------------------------------------------
| Traded volume | 9,627,956 | 6,447,283 | 7,284,775 |
--------------------------------------------------------------------------------
| Turnover, millions | 188.24 | 313.68 | 845.09 |
--------------------------------------------------------------------------------
| Listed volume (31 December), | 30,757 | 30,757 | 15,378 |
| thousands | | | |
--------------------------------------------------------------------------------
| Market capitalisation (31 | 760.36 | 490.86 | 2,358.07 |
| December), millions | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Share trading history (EUR)
--------------------------------------------------------------------------------
| Price | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Open | 1.05 | 4.89 | 10.65 |
--------------------------------------------------------------------------------
| High | 1.87 | 4.89 | 14.35 |
--------------------------------------------------------------------------------
| Low | 0.55 | 0.95 | 4.41 |
--------------------------------------------------------------------------------
| Last closing price | 1.58 | 1.02 | 4.90 |
--------------------------------------------------------------------------------
| Traded volume | 9,627,956 | 6,447,283 | 7,284,775 |
--------------------------------------------------------------------------------
| Turnover, millions | 12.03 | 20.05 | 54.01 |
--------------------------------------------------------------------------------
| Listed volume (31 December), | 30,757 | 30,757 | 15,378 |
| thousands | | | |
--------------------------------------------------------------------------------
| Market capitalisation (31 | 48.60 | 31.37 | 150.71 |
| December), millions | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholder structure
The largest shareholders of Nordecon International AS at 31 December 2009
--------------------------------------------------------------------------------
| Shareholder | Number of | Ownership |
| | shrares | interest |
--------------------------------------------------------------------------------
| AS Nordic Contractors | 16,507,464 | 53.67 |
--------------------------------------------------------------------------------
| Skandinaviska Enskilda Banken Ab Clients | 2,608,822 | 8.48 |
--------------------------------------------------------------------------------
| State Street Bank and Trust Omnibus | 1,147,911 | 3.73 |
| Account A Fund | | |
--------------------------------------------------------------------------------
| ING Luxembourg S.A. | 1,111,853 | 3.61 |
--------------------------------------------------------------------------------
| Ain Tromp | 678,960 | 2.21 |
--------------------------------------------------------------------------------
| ASM Investments OÜ | 519,600 | 1.69 |
--------------------------------------------------------------------------------
| SEB Pank AS | 405,757 | 1.32 |
--------------------------------------------------------------------------------
| Aivo Kont | 339,480 | 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. By the transaction, the ultimate controlling party'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 31 December 2009
--------------------------------------------------------------------------------
| | Number of | Ownership |
| | shareholders | interest |
--------------------------------------------------------------------------------
| Shareholders with interest exceeding | 1 | 53.67% |
| 5% | | |
--------------------------------------------------------------------------------
| Shareholders with interest between | 8 | 23.18% |
| 1% and 5% | | |
--------------------------------------------------------------------------------
| Shareholders with interest below 1% | 1,882 | 23.15% |
--------------------------------------------------------------------------------
| Total | 1,891 | 100.00% |
--------------------------------------------------------------------------------
Shares controlled by members of the council of Nordecon International AS at 31
December 2009
--------------------------------------------------------------------------------
| Council | | Number of | Ownership |
| | | shares | interest |
--------------------------------------------------------------------------------
| Toomas Luman (AS Nordic | Chairman of | 16,559,144 | 53.84 |
| Contractors, | the 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 31
December 2009
--------------------------------------------------------------------------------
| Board | | Number of | Ownership |
| | | shares | interest |
--------------------------------------------------------------------------------
| Jaano Vink | Chairman of | 34,000 | 0.11% |
| | the 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 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 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 conducted with the financial support of the European Union
(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 assumes 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 that in
2008 began seeking opportunities for penetrating 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.
- Construction prices will probably cease declining in 2010 and may even start
rising compared with 2008-2009. In such a situation, completion of contracts
concluded at unreasonably low margins or below cost may have an adverse impact
and may cause serious difficulties for companies not noticing the trend.
- After the global financial crisis that peaked in 2009, the financing terms
offered by banks have started improving but many private sector companies are
still finding it difficult to raise debt in order 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.
- In 2009, building materials manufacturers that had significantly increased
their
output during the growth phase of the market were faced by continuing shrinkage
in demand and, consequently, greater strain in meeting the obligations taken for
increasing their capacities. To date, the decline in building materials prices
has notably decelerated and the prices are expected to start rising in 2010.
- Companies involved in general contracting and project management will
probably
have to face growth in doubtful and irrecoverable receivables.
- Because of the increasing importance of infrastructure projects, critical
success factors 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 have caused continuing unemployment for
construction workers. The ensuing increase in the availability of labour has
lowered construction companies' personnel expenses.
- The change in construction projects' financing schemes (including significant
extension of customers' settlement terms) and additional requirements to the
financing provided by general contractors during the construction period put
pressure on contractors' liquidity.
Nordecon International Group operates in accordance with its long-term
objectives that are adjusted for changes in the external environment. Relevant
strategic management is the responsibility of the Group's board (see The Group's
strategy and objectives for 2009-2013).
The Group has prepared for changes in the economic environment by:
- Ensuring profitability by cutting costs an seeking effective technical
solutions
that should halt year-over-year decrease in profit margins in 2010
- 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
- Rapidly reducing the operations in foreign markets and focusing on the home
market.
Latvia and Lithuania
In its third quarter financial statements, the Group reported that its Latvian
subsidiary Nordecon Infra SIA was experiencing liquidity difficulties because
owing to a lack of resources and administrative weaknesses the customers of
major projects did not settle their accounts on a timely basis. Moreover, the
entity was operating in an environment where profitable performance was not
possible without taking disproportionate risks. Because the Group incurred
losses in the Latvian market in 2009 and the market situation was not expected
to improve in the foreseeable future, the Group sold its stake in Nordecon Infra
SIA in February 2010.
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.
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
currently mainly undermined by the lack of financing. To date, the weakening of
the local currency that began in 2008 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 31
December 2009, the provisions (including current and non-current ones) totalled
15.7 million kroons (1.0 million euros). The corresponding figure at 31 December
2008 was 14.6 million kroons (0.93 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.
In 2009, net loss on doubtful receivables amounted to 42.0 million kroons (2.7
million euros). The figure includes the impairment loss recognised for the
receivables connected with the construction of the St Petersburg Business
Quarter referred to in the third quarter financial statements. In 2008,
recoveries of receivables written down in preceding periods exceeded the
period's impairment losses on receivables by 9.0 million kroons (0.6 million
euros).
Liquidity risks
Free funds are placed in overnight or fixed-interest term deposits with the
largest banks of the markets where the Group operates. To ensure timely
settlement of liabilities, approximately two weeks' working capital is kept in
current accounts or overnight deposits. Where necessary, overdraft facilities
are used. At the reporting date, the Group's current assets exceeded its current
liabilities 1.47-fold (31 December 2008: 1.33-fold) and available cash funds
totalled 225.2 million kroons (14.4 million euros) (31 December 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 Group's interest-bearing liabilities to banks have mainly fixed interest
rates. Finance lease liabilities have floating interest rates and are linked to
EURIBOR. At 31 December 2009, the Group's interest-bearing loans and borrowings
totalled 558.8 million kroons (35.7 million euros), a 4.3 million kroon (0.3
million euro) increase year-over-year. Interest expense for 2009 amounted to
26.6 million kroons (1.7 million euros). Compared with 2008, interest expense
has contracted by 11.3 million kroons (0.7 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,
consequently, against 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 2009 was 0.7 million kroons (0.04
million euros). In 2008, the Group's exchange differences resulted in a gain of
6.6 million kroons (0.4 million euros).
Condensed consolidated interim financial statements
Condensed consolidated interim statement of financial position
--------------------------------------------------------------------------------
| EEK ‘000 | 2009 | 2008 |
| As at 31 December | | |
--------------------------------------------------------------------------------
| Current assets | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | |
--------------------------------------------------------------------------------
| Trade receivables | 225,191 | 296,184 |
--------------------------------------------------------------------------------
| Other receivables and prepayments | 338,767 | 473,935 |
--------------------------------------------------------------------------------
| Deferred tax assets | 322,283 | 408,541 |
--------------------------------------------------------------------------------
| Income tax assets | 776 | 776 |
--------------------------------------------------------------------------------
| Inventories | 0 | 3,207 |
--------------------------------------------------------------------------------
| Non-current assets held for sale | 403,307 | 386,733 |
--------------------------------------------------------------------------------
| Total current assets | 4,616 | 0 |
--------------------------------------------------------------------------------
| Current assets | 1,294,941 | 1,569,376 |
--------------------------------------------------------------------------------
| Non-current assets | | |
--------------------------------------------------------------------------------
| Long-term investments | 35,933 | 112,605 |
--------------------------------------------------------------------------------
| Investment property | 87,975 | 116,783 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 204,115 | 263,295 |
--------------------------------------------------------------------------------
| Intangible assets | 268,233 | 305,188 |
--------------------------------------------------------------------------------
| Total non-current assets | 596,256 | 797,871 |
--------------------------------------------------------------------------------
| TOTAL ASSETS | 1,891,197 | 2,367,247 |
--------------------------------------------------------------------------------
| LIABILITIES | | |
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and borrowings | 262,959 | 235,948 |
--------------------------------------------------------------------------------
| Trade payables | 244,764 | 439,615 |
--------------------------------------------------------------------------------
| Taxes payable | 45,169 | 65,760 |
--------------------------------------------------------------------------------
| Other payables | 318,742 | 423,270 |
--------------------------------------------------------------------------------
| Provisions | 10,364 | 11,600 |
--------------------------------------------------------------------------------
| Total current liabilities | 881,998 | 1,176,193 |
--------------------------------------------------------------------------------
| Non-current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and borrowings | 295,828 | 318,578 |
--------------------------------------------------------------------------------
| Other liabilities | 4,846 | 2,534 |
--------------------------------------------------------------------------------
| Provisions | 7,041 | 6,630 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 307,715 | 327,742 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | 1,189,712 | 1,503,935 |
--------------------------------------------------------------------------------
| EQUITY | | |
--------------------------------------------------------------------------------
| Share capital | 307,567 | 307,567 |
--------------------------------------------------------------------------------
| Statutory capital reserve | 40,012 | 34,800 |
--------------------------------------------------------------------------------
| Translation reserve | -3,201 | -4,106 |
--------------------------------------------------------------------------------
| Retained earnings | 345,777 | 426,995 |
--------------------------------------------------------------------------------
| Equity attributable to owners of the | 690,155 | 765,256 |
| parent | | |
--------------------------------------------------------------------------------
| Non-controlling interests | 11,330 | 98,056 |
--------------------------------------------------------------------------------
| TOTAL EQUITY | 701,485 | 863,312 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY | 1,891,197 | 2,367,247 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR `000 | 2009 | 2008 |
| As at 31 December | | |
--------------------------------------------------------------------------------
| Current assets | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | |
--------------------------------------------------------------------------------
| Trade receivables | 14,392 | 18,930 |
--------------------------------------------------------------------------------
| Other receivables and prepayments | 21,651 | 30,290 |
--------------------------------------------------------------------------------
| Deferred tax assets | 20,598 | 26,110 |
--------------------------------------------------------------------------------
| Income tax assets | 50 | 50 |
--------------------------------------------------------------------------------
| Inventories | 0 | 205 |
--------------------------------------------------------------------------------
| Non-current assets held for sale | 25,776 | 24,717 |
--------------------------------------------------------------------------------
| Total current assets | 295 | 0 |
--------------------------------------------------------------------------------
| Current assets | 82,762 | 100,301 |
--------------------------------------------------------------------------------
| Non-current assets | | |
--------------------------------------------------------------------------------
| Long-term investments | 2,297 | 7,197 |
--------------------------------------------------------------------------------
| Investment property | 5,623 | 7,464 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 13,045 | 16,828 |
--------------------------------------------------------------------------------
| Intangible assets | 17,143 | 19,505 |
--------------------------------------------------------------------------------
| Total non-current assets | 38,108 | 50,993 |
--------------------------------------------------------------------------------
| TOTAL ASSETS | 120,870 | 151,295 |
--------------------------------------------------------------------------------
| LIABILITIES | | |
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and borrowings | 16,806 | 15,080 |
--------------------------------------------------------------------------------
| Trade payables | 15,644 | 28,096 |
--------------------------------------------------------------------------------
| Taxes payable | 2,887 | 4,203 |
--------------------------------------------------------------------------------
| Other payables | 20,371 | 27,052 |
--------------------------------------------------------------------------------
| Provisions | 662 | 741 |
--------------------------------------------------------------------------------
| Total current liabilities | 56,370 | 75,172 |
--------------------------------------------------------------------------------
| Non-current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and borrowings | 18,908 | 20,361 |
--------------------------------------------------------------------------------
| Other liabilities | 310 | 162 |
--------------------------------------------------------------------------------
| Provisions | 450 | 424 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 19,668 | 20,947 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | 76,038 | 96,119 |
--------------------------------------------------------------------------------
| EQUITY | | |
--------------------------------------------------------------------------------
| Share capital | 19,657 | 19,657 |
--------------------------------------------------------------------------------
| Statutory capital reserve | 2,557 | 2,224 |
--------------------------------------------------------------------------------
| Translation reserve | -205 | -262 |
--------------------------------------------------------------------------------
| Retained earnings | 22,099 | 27,290 |
--------------------------------------------------------------------------------
| Equity attributable to owners of the parent | 44,108 | 48,909 |
--------------------------------------------------------------------------------
| Non-controlling interests | 724 | 6,267 |
--------------------------------------------------------------------------------
| TOTAL EQUITY | 44,832 | 55,176 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY | 120,870 | 151,295 |
--------------------------------------------------------------------------------
Condensed consolidated interim statement of comprehensive income
--------------------------------------------------------------------------------
| EEK ‘000 | Q4 2009 | Q4 2008 | 12M 2009 | 12M 2008 |
--------------------------------------------------------------------------------
| Revenue | 443,158 | 945,036 | 2,410,798 | 3,867,917 |
--------------------------------------------------------------------------------
| Cost of sales | 472,075 | 899,262 | 2,274,493 | 3,510,006 |
--------------------------------------------------------------------------------
| Gross profit / loss | -28,917 | 45,774 | 136,305 | 357,911 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution expenses | 2,626 | 1,795 | 9,416 | 8,007 |
--------------------------------------------------------------------------------
| Administrative expenses | 90,494 | 45,376 | 186,376 | 182,526 |
--------------------------------------------------------------------------------
| Including impairment losses on | 61,206 | 0 | 61,206 | 0 |
| goodwill | | | | |
--------------------------------------------------------------------------------
| Other operating income | 3,282 | 45,435 | 25,458 | 63,947 |
--------------------------------------------------------------------------------
| Other operating expenses | 52,592 | 14,268 | 92,710 | 22,845 |
--------------------------------------------------------------------------------
| Operating profit / loss | -171,34 | 29,770 | -126,738 | 208,480 |
| | 7 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income | 48,848 | 19,690 | 84,657 | 96,877 |
--------------------------------------------------------------------------------
| Finance expenses | 8,205 | 37,765 | 33,910 | 68,019 |
--------------------------------------------------------------------------------
| Net finance income / expense | 40,643 | -18,075 | 50,747 | 28,858 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share of profit of equity | 340 | -2,181 | 1,855 | 17 |
| accounted investees | | | | |
--------------------------------------------------------------------------------
| Share of loss of equity | 4,653 | 22,672 | 7,691 | 24,770 |
| accounted investees | | | | |
--------------------------------------------------------------------------------
| Net share of profit and loss of | -4,313 | -24,853 | -5,836 | -24,753 |
| equity accounted investees | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss before income tax | -135,01 | -13,158 | -81,827 | 212,585 |
| | 7 | | | |
--------------------------------------------------------------------------------
| Income tax expense | 1,525 | -1,176 | 6,842 | 41,269 |
--------------------------------------------------------------------------------
| Profit / loss for the period | -136,54 | -11,982 | -88,669 | 171,316 |
| | 2 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive income / | | | | |
| expense: | | | | |
--------------------------------------------------------------------------------
| Exchange differences on | 569 | -3,263 | 905 | -6,371 |
| translating foreign operations | | | | |
--------------------------------------------------------------------------------
| Total other comprehensive | 569 | -3,263 | 905 | -6,371 |
| income / expense for the period | | | | |
--------------------------------------------------------------------------------
| TOTAL COMPREHENSIVE INCOME / | -135,97 | -15,245 | -87,764 | 164,945 |
| EXPENSE FOR THE PERIOD | 3 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss attributable to: | | | | |
--------------------------------------------------------------------------------
| - Owners of the parent | -111,81 | -9,722 | -45,242 | 145,580 |
| | 8 | | | |
--------------------------------------------------------------------------------
| - Non-controlling interests | -24,724 | -2,260 | -43,427 | 25,736 |
--------------------------------------------------------------------------------
| | -136,54 | -11,982 | -88,669 | 171,316 |
| | 2 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total comprehensive income / | | | | |
| expense attributable to: | | | | |
--------------------------------------------------------------------------------
| - Owners of the parent | -111,24 | -12,045 | -44,337 | 139,120 |
| | 9 | | | |
--------------------------------------------------------------------------------
| - Non-controlling interests | -24,724 | -3,200 | -43,427 | 25,825 |
--------------------------------------------------------------------------------
| | -135,97 | -15,245 | -87,764 | 164,945 |
| | 3 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share attributable | | | | |
| to owners of the parent: | | | | |
--------------------------------------------------------------------------------
| Basic earnings per share | -3.64 | -0.32 | -1.47 | 4.73 |
| (EEK/share) | | | | |
--------------------------------------------------------------------------------
| Diluted earnings per share | -3.64 | -0.32 | -1.47 | 4.73 |
| (EEK/share) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR ‘000 | Q4 2009 | Q4 2008 | 12M 2009 | 12M 2008 |
--------------------------------------------------------------------------------
| Revenue | 28,323 | 60,399 | 154,078 | 247,205 |
--------------------------------------------------------------------------------
| Cost of sales | 30,171 | 57,473 | 145,367 | 224,330 |
--------------------------------------------------------------------------------
| Gross profit / loss | -1,848 | 2,925 | 8,711 | 22,875 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution expenses | 168 | 115 | 602 | 512 |
--------------------------------------------------------------------------------
| Administrative expenses | 5,784 | 2,900 | 11,912 | 11,666 |
--------------------------------------------------------------------------------
| Including impairment losses on | 3,912 | 0 | 3,912 | 0 |
| goodwill | | | | |
--------------------------------------------------------------------------------
| Other operating income | 210 | 2,904 | 1,627 | 4,087 |
--------------------------------------------------------------------------------
| Other operating expenses | 3,361 | 912 | 5,925 | 1,460 |
--------------------------------------------------------------------------------
| Operating profit / loss | -10,951 | 1,903 | -8,100 | 13,324 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income | 3,122 | 1,258 | 5411 | 6,192 |
--------------------------------------------------------------------------------
| Finance expenses | 524 | 2,414 | 2,167 | 4,347 |
--------------------------------------------------------------------------------
| Net finance income / expense | 2,598 | -1,155 | 3,244 | 1,844 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share of profit of equity | 21 | -139 | 118 | 1 |
| accounted investees | | | | |
--------------------------------------------------------------------------------
| Share of loss of equity | 297 | 1,449 | 492 | 1,583 |
| accounted investees | | | | |
--------------------------------------------------------------------------------
| Net share of profit and loss of | -276 | -1,588 | -374 | -1,582 |
| equity accounted investees | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss before income tax | -8,629 | -841 | -5,230 | 13,587 |
--------------------------------------------------------------------------------
| Income tax expense | 97 | -75 | 437 | 2,638 |
--------------------------------------------------------------------------------
| Profit / loss for the period | -8,727 | -766 | -5,667 | 10,949 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive income / | | | | |
| expense: | | | | |
--------------------------------------------------------------------------------
| Exchange differences on | 36 | -208 | 58 | -407 |
| translating foreign operations | | | | |
--------------------------------------------------------------------------------
| Total other comprehensive | 36 | -208 | 58 | -407 |
| income / expense for the period | | | | |
--------------------------------------------------------------------------------
| TOTAL COMPREHENSIVE INCOME / | -8,690 | -974 | -5,609 | 10,542 |
| EXPENSE FOR THE PERIOD | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss attributable to: | -7,147 | -621 | -2,892 | 9,304 |
--------------------------------------------------------------------------------
| - Owners of the parent | -1,580 | -144 | -2,775 | 1,645 |
--------------------------------------------------------------------------------
| - Non-controlling interests | -8,727 | -766 | -5,667 | 10,949 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total comprehensive income / | -7,110 | -770 | -2,834 | 8,891 |
| expense attributable to: | | | | |
--------------------------------------------------------------------------------
| - Owners of the parent | -1,580 | -204 | -2,775 | 1,651 |
--------------------------------------------------------------------------------
| | -8,690 | -974 | -5,609 | 10,542 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share attributable | | | | |
| to owners of the parent: | | | | |
--------------------------------------------------------------------------------
| Basic earnings per share | -0.23 | -0.02 | -0.09 | 0.30 |
| (EUR/share) | | | | |
--------------------------------------------------------------------------------
| Diluted earnings per share | -0.23 | -0.02 | -0.09 | 0.30 |
| (EUR/share) | | | | |
--------------------------------------------------------------------------------
Condensed consolidated interim statement of cash flows
--------------------------------------------------------------------------------
| | EEK ‘000 | EUR ‘000 |
--------------------------------------------------------------------------------
| For twelve months | 2009 | 2008 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Cash flows from operating | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Cash receipts from customers | 3,337,46 | 4,693,41 | 213,303 | 282,802 |
| | 7 | 8 | | |
--------------------------------------------------------------------------------
| Cash paid to suppliers | -2,799,6 | -3,809,4 | -178,928 | -243,468 |
| | 16 | 42 | | |
--------------------------------------------------------------------------------
| Cash paid to and for employees | -427,098 | -540,926 | -27,296 | -34,571 |
--------------------------------------------------------------------------------
| Income taxes paid | -10,858 | -38,041 | -694 | -2,431 |
--------------------------------------------------------------------------------
| Net cash from operating | 99,895 | 305,009 | 6,385 | 19,494 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from investing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Acquisition of property, plant | -2,156 | -11,856 | -138 | -758 |
| and equipment | | | | |
--------------------------------------------------------------------------------
| Acquisition of intangible | -7,609 | -929 | -486 | -59 |
| assets | | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of | 17,406 | 11,989 | 1,112 | 766 |
| property, plant and equipment | | | | |
| and intangible assets | | | | |
--------------------------------------------------------------------------------
| Acquisition of investment | -200 | 0 | -13 | |
| properties | | | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries, | -11,688 | -211,331 | -747 | -13,507 |
| net of cash acquired | | | | |
--------------------------------------------------------------------------------
| Proceeds from disposal of | 0 | 2,063 | 0 | 132 |
| subsidiaries | | | | |
--------------------------------------------------------------------------------
| Acquisition of associates | -6,000 | -7,615 | -383 | -487 |
--------------------------------------------------------------------------------
| Proceeds from disposal of | 7,230 | 77,812 | 462 | 4973 |
| associates | | | | |
--------------------------------------------------------------------------------
| Acquisition of interests in | -20,000 | 0 | -1,278 | 0 |
| joint ventures | | | | |
--------------------------------------------------------------------------------
| Loans granted | -80,828 | -120,756 | -5,166 | -7,718 |
--------------------------------------------------------------------------------
| Repayment of loans granted | 34,897 | 86,721 | 2,230 | 5542 |
--------------------------------------------------------------------------------
| Dividends received | 61 | 183 | 4 | 12 |
--------------------------------------------------------------------------------
| Interest received | 14,907 | 17,079 | 953 | 1092 |
--------------------------------------------------------------------------------
| Net cash used in investing | -53,980 | -159,640 | -3,450 | -10,011 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from financing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Proceeds from loans received | 343,242 | 415,558 | 21,937 | 26,559 |
--------------------------------------------------------------------------------
| Repayment of loans received | -348,364 | -309,607 | -22,265 | -19,787 |
--------------------------------------------------------------------------------
| Dividends paid | -31,933 | -104,130 | -2,041 | -6,655 |
--------------------------------------------------------------------------------
| Payment of finance lease | -51,029 | -56,517 | -3,261 | -3,612 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Interest paid | -28,284 | -33,283 | -1,808 | -2,127 |
--------------------------------------------------------------------------------
| Other payments made | -487 | -258 | -31 | -16 |
--------------------------------------------------------------------------------
| Net cash used in financing | -116,855 | -88,237 | -7,469 | -5,639 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow | -70,940 | 60,132 | -4,534 | 3,843 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 296,184 | 236,112 | 18,930 | 15,090 |
| beginning of period | | | | |
--------------------------------------------------------------------------------
| Effect of exchange rate | -53 | -60 | -3 | -4 |
| fluctuations | | | | |
--------------------------------------------------------------------------------
| Decrease / increase in cash | -70,940 | 60,132 | -4,534 | 3,843 |
| and cash equivalents | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 225,191 | 296,184 | 14,393 | 18,930 |
| 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 15 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). At the end
of 2009 Nordecon International Group employed nearly 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
www.nordecon.com
