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Valuuta
Pealkiri 2018 IV quarter and 12 months consolidated interim report (unaudited)
Tekst
This  announcement includes Nordecon AS's  consolidated financial statements for
the  fourth quarter and  twelve months of  2018 (unaudited), overview of the key
events  influencing the  period's financial  result, outlook  for the market and
description of the main risks.
Interim  report is attached to the announcement  and is also published on NASDAQ
Tallinn and Nordecon's web page (http://www.nordecon.com/for-investor/financial-
reports/interim-reports).
Period's  investor presentation  are attached  to the  announcement and are also
published on Nordecon's web page (http://www.nordecon.com/for-investor/investor-
presentations).


Condensed consolidated interim statement of financial position

 EUR '000                                     31 December 2018 31 December 2017
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                               7,678            8,915

 Trade and other receivables                            31,627           35,193

 Prepayments                                             1,383            1,642

 Inventories                                            20,444           23,230

 Total current assets                                   61,132           68,980


 Non-current assets

 Investments in equity-accounted investees               2,266            1,888

 Other investments                                          26               26

 Trade and other receivables                             8,225            8,950

 Investment property                                     5,526            4,929

 Property plant and equipment                           12,288           12,566

 Intangible assets                                      14,674           14,639

 Total non-current assets                               43,005           42,998

 TOTAL ASSETS                                          104,137          111,978



 LIABILITIES

 Current liabilities

 Borrowings                                              9,374           16,197

 Trade payables                                         32,847           36,057

 Other payables                                          7,294            5,654

 Deferred income                                         3,932            3,651

 Provisions                                              1,000              533

 Total current liabilities                              54,447           62,092


 Non-current liabilities

 Borrowings                                             14,830           13,955

 Trade payables                                             98               98

 Other payables                                             71               71

 Provisions                                                982            1,273

 Total non-current liabilities                          15,981           15,397

 TOTAL LIABILITIES                                      70,428           77,489



 EQUITY

 Share capital                                          16,321           18,263

 Own (treasury) shares                                    -693           -1,349

 Share premium                                             618              589

 Statutory capital reserve                               2,554            2,554

 Translation reserve                                     1,992            1,995

 Retained earnings                                      10,896           11,086

 Total equity attributable to owners of the
 parent                                                 31,688           33,138

 Non-controlling interests                               2,021            1,351

 TOTAL EQUITY                                           33,709           34,489

 TOTAL LIABILITIES AND EQUITY                          104,137          111,978

Condensed consolidated interim statement of comprehensive income

 EUR '000                                    Q4 2018     2018  Q4 2017     2017
-------------------------------------------------------------------------------

 Revenue                                      55,908  223,496   56,478  231,387

 Cost of sales                               -52,563 -213,463  -54,551 -222,692

 Gross profit                                  3,345   10,033    1,927    8,695



 Marketing and distribution expenses            -156     -626     -175     -623

 Administrative expenses                      -1,748   -6,725   -1,561   -6,936

 Other operating income                          247    1,471        9      107

 Other operating expenses                        -49     -122      -11     -141

 Operating profit                              1,639    4,031      189    1,102



 Finance income                                  190      431       99    2,901

 Finance costs                                  -168     -909     -844   -1,570

 Net finance income/costs                         22     -478     -745    1,331



 Share of profit/loss of equity-accounted
 investees                                        -9      835      -33      485



 Profit/loss before income tax                 1,652    4,388     -589    2,918

 Income tax income/expense                        15     -567     -402   -1,193

 Profit/loss for the period                    1,667    3,821     -991    1,725



 Other comprehensive income
 Items that may be reclassified
 subsequently to profit or loss

 Exchange differences on translating
 foreign operations                             -105       -4      187      446

 Total other comprehensive expense/income       -105       -4      187      446

 TOTAL COMPREHENSIVE INCOME/EXPENSE            1,562    3,817     -804    2,171



 Profit attributable to:

 - Owners of the parent                        1,409    3,381   -1,590    1,388

 - Non-controlling interests                     258      440      599      337

 Profit/loss for the period                    1,667    3,821     -991    1,725



 Total comprehensive income
 attributable to:

 - Owners of the parent                        1,304    3,377   -1,403    1,834

 - Non-controlling interests                     258      440      599      337

 Total comprehensive income/expense
 for the period                                1,562    3,817     -804    2,171



 Earnings per share attributable to owners
 of the parent:

 Basic earnings per share (EUR)                 0.04     0.11    -0.05 0.04

 Diluted earnings per share (EUR)               0.04     0.11    -0.05 0.04

Condensed consolidated interim statement of cash flows

  EUR '000                                                   2018       2017
-----------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                            269,321    268,013

  Cash paid to suppliers                                 -232,642   -239,592

  VAT paid                                                 -8,269     -6,971

  Cash paid to and for employees                          -23,066    -22,593

  Income tax paid                                            -596       -605

  Net cash from/used in operating activities                4,748     -1,748



  Cash flows from investing activities

  Paid on acquisition of property, plant and equipment       -442       -343

  Paid on acquisition of intangible assets                      0         -5

  Proceeds from sale of property, plant and
  equipment                                                 1,847         49

  Paid on acquisition of investment property                  -88          0

  Proceeds from sale of investment property                 1,300          0

  Disposal of a subsidiary and a joint venture                  0      2,744

  Loans provided                                              -12        -45

  Repayment of loans provided                                  14      1,739

  Dividends received                                          249        153

  Interest received                                            10        368

  Net cash from investing activities                        2,878      4,660



  Cash flows from financing activities

  Proceeds from loans received                              2,898      9,207

  Repayment of loans received                              -4,671     -4,245

  Finance lease principal paid                             -1,879     -2,252

  Interest paid                                              -737       -752

  Dividends paid                                           -2,627     -4,497

  Reduction of share capital                               -1,847     -1,384

  Sale of own shares                                            0        153

  Net cash used in financing activities                    -8,863     -3,770



  Net cash flow                                            -1,237       -858



  Cash and cash equivalents at beginning of period          8,915      9,786

  Effect of movements in foreign exchange rates                 0        -13

  Decrease in cash and cash equivalents                    -1,237       -858

  Cash and cash equivalents at end of period                7,678      8,915


Financial review

Financial performance

Despite continuously stiff competition, Nordecon increased gross profit compared
to  2017. The  Group  ended  2018 with  a  gross profit of 10,033 thousand euros
(2017:  8,695 thousand euros)  and a  gross margin  of 4.5% (2017: 3.8%). In the
fourth  quarter,  the  gross  margin  improved  considerably,  rising  to 6% (Q4
2017: 3.4%). In   annual   terms,   both   operating  segments  increased  their
profitability.  The gross margin of the  Buildings segment was 4.7% for 2018 and
8.3% for  the fourth quarter (2017: 4.0% for the year and 3.3% for Q4) while the
gross  margin of the  Infrastructure segment was  5.6% for 2018 and 1.9% for the
fourth quarter (2017: 4.1% for the year and 4.5% for Q4). Due to very changeable
weather  conditions, the end of  the year was more  complicated than expected in
the provision of winter maintenance on national roads. This weakened the fourth-
quarter results of the Infrastructure segment. The gross margin of the Buildings
segment  was affected, particularly  in the first  half of the  year, by a lower
than  expected gross margin in the  apartment buildings sub-segment. The margins
of  long-term contracts secured in 2016 and 2017 were undermined by a continuous
rise  in subcontracting charges, particularly growth  in labour costs during the
performance  phase. Margins also continue to be affected by the conclusion of an
insufficient  volume of new  contracts in Sweden,  which gives rise to uncovered
fixed  costs. We  monitor the  proportions of  different segments in the Group's
portfolio  closely in order to better manage the risks resulting from changes in
input prices.
The  Group's administrative expenses for  2018 amounted to 6,725 thousand euros.
Compared to 2017, administrative expenses decreased by around 3.0% (2017: 6,936
thousand  euros) and the ratio of  administrative expenses to revenue (12 months
rolling)  was  3.0% (2017:  3.0%).  Both  in  the  reporting and the comparative
period,  administrative expenses were influenced by changes on the Group's board
(see also the chapter Employees and personnel expenses).
The  Group's operating profit  for 2018 amounted to  4,031 thousand euros (2017:
1,102 thousand  euros). EBITDA  amounted to  6,021 thousand euros  (2017: 3,123
thousand euros).
Finance  income and costs for the period  continued to be influenced by exchange
rate fluctuations in the Group's foreign markets. Although the Ukrainian hryvnia
strengthened  against  the  euro  by  around  5.6% and  the  Group recognised an
exchange  gain of  147 thousand euros  (2017: an  exchange loss  of 416 thousand
euros)  on the  translation of  a loan  provided to  the Ukrainian subsidiary in
euros,  the Swedish krona weakened  against the euro by  around 4% and the Group
recognised  an exchange loss of 121 thousand  euros (2017: 35 thousand euros) on
the translation of a loan provided to the Swedish subsidiary in euros.
The  Group's net profit  amounted to 3,821 thousand  euros (2017: 1,725 thousand
euros),  of which the net profit attributable  to owners of the parent, Nordecon
AS, was 3,381 thousand euros (2017: 1,388 thousand euros).

Cash flows

In 2018, operating activities produced a net cash inflow of 4,748 thousand euros
(2017:  an outflow of 1,748 thousand euros). Positive net operating cash flow is
attributable  to  growth  in  the  Group's  own  development  operations and the
collection  of the contractual retentions (5-10% of the contract price) of major
construction  projects which have been  completed. Operating cash flow continues
to be strongly influenced by the fact that the contracts signed with both public
and  private sector customers do not require them to make advance payments while
the  Group has to make prepayments  to subcontractors, materials suppliers, etc.
Cash  inflow is also  lowered by contractual  retentions, which extend from 5 to
10% of the contract price and are released at the end of the construction period
only.
Investing  activities  resulted  in  a  net  cash inflow of 2,878 thousand euros
(2017:  an inflow of 4,660 thousand euros, which was influenced by the sale of a
subsidiary  and a joint venture). Cash  flow was strongly influenced by proceeds
from  the sale of  property, plant and  equipment of 1,847 thousand euros (2017:
49 thousand  euros) and  investment property  of 1,300 thousand  euros (2017: 0
euros)  and acquisition of  property, plant and  equipment of 442 thousand euros
(2017:  348 thousand euros).  Dividends received  amounted to 249 thousand euros
(2017: 153 thousand euros).
Financing activities generated a net cash outflow of 8,863 thousand euros (2017:
an  outflow of  3,770 thousand euros).  The largest  items were loan and finance
lease  payments. Proceeds from loans  received amounted to 2,898 thousand euros,
consisting  of development  loans and  overdrafts (2017:  9,207 thousand euros).
Loan  repayments  totalled  4,671 thousand  euros  (2017: 4,245 thousand euros),
consisting  of  scheduled  repayments  of  long-term  investment and development
loans.  Finance lease  payments amounted  to 1,879 thousand  euros (2017: 2,252
thousand  euros). Dividends  paid in  2018 totalled 2,627 thousand  euros (2017:
4,497 thousand  euros). Payments made on the reduction of share capital totalled
1,847 thousand euros (2017: 1,384 thousand euros).
At  31 December  2018, the  Group's  cash  and  cash equivalents totalled 7,678
thousand euros (31 December 2017: 8,915 thousand euros). Management's commentary
on liquidity risks is presented in the chapter Description of the main risks.

Key financial figures and ratios

 Figure/ratio for the period                   2018         2017         2016
-------------------------------------------------------------------------------
 Revenue (EUR '000)                         223,496      231,387      183,329

 Revenue change                                -3.4 %       26.2 %       26.0 %

 Net profit (EUR '000)                        3,821        1,725        3,933

 Net profit attributable to owners of
 the parent (EUR '000)                        3,381        1,388        3,044

 Average number of shares                31,528,585   30,913,031   30,756,728

 Earnings per share (EUR)                      0.11         0.04         0.10

 Administrative expenses to revenue             3.0 %        3.0 %        3.3 %

 EBITDA (EUR '000)                            6,021        3,123        6,017

 EBITDA margin                                  2.7 %        1.3 %        3.3 %

 Gross margin                                   4.5 %        3.8 %        6.0 %

 Operating margin                               1.8 %        0.5 %        2.3 %

 Operating margin excluding gain on
 asset sales                                    1.3 %        0.5 %        2.2 %

 Net margin                                     1.7 %        0.7 %        2.2 %

 Return on invested capital                     8.4 %        5.9 %        8.5 %

 Return on equity                              11.2 %        4.8 %       10.6 %

 Equity ratio                                  32.4 %       30.8 %       28.6 %

 Return on assets                               3.5 %        1.6 %        4.2 %

 Gearing                                       28.5 %       32.7 %       16.7 %

 Current ratio                                 1.12         1.11         1.20

 As at 31 December                             2018         2017         2016
-------------------------------------------------------------------------------
 Order book (EUR
 '000)                                      100,352      144,122      131,335
-------------------------------------------------------------------------------

Performance by geographical market

The  contribution of the Group's foreign markets has remained stable in the past
three  years. In  2018, revenue earned  outside Estonia  accounted for 7% of our
total revenue.

            2018       2017       2016
-------------------------------------------
  Estonia     93   %     94   %     93   %

  Ukraine      4   %      2   %      2   %

  Sweden       2   %      3   %      4   %

  Finland      1   %      1   %      1   %

The  share  of  the  Group's  Ukrainian  revenues grew substantially compared to
2017. In   Ukraine,   we   provided  general  contractor's  services  under  one
infrastructure and two building construction contracts and the share of concrete
works   performed   in   the   building   construction  segment  also  increased
significantly.  The share of Swedish revenues decreased year on year. During the
period,  we  provided  services  under  two  construction contracts secured as a
general  contractor. Our  Finnish revenues  resulted from  concrete works in the
building construction segment.
Geographical  diversification  of  the  revenue  base  is a consciously deployed
strategy by which we mitigate the risks resulting from excessive reliance on one
market.  However,  conditions  in  some  of  our chosen foreign markets are also
volatile  and affect our current results. Increasing the contribution of foreign
markets  is  one  of  Nordecon's  strategic  targets.  Our vision of the Group's
foreign  operations  is  described  in  the  chapter  Outlooks  of  the  Group's
geographical markets.

Performance by business line

Segment revenues

We  strive to  maintain the  revenues of  our operating  segments (Buildings and
Infrastructure)  as balanced as  possible because this  helps to diversify risks
and provides better opportunities for continuing construction operations in more
challenging  market conditions where the volumes  of one or several sub-segments
decline substantially.
Nordecon's  revenues for  2018 totalled 223,496 thousand  euros, a roughly 3.4%
decrease   from  the  231,387 thousand  euros  generated  in  2017. The  revenue
generated  by  the  Infrastructure  segment  grew  by  around  7% but due to the
difference  in the  segments' revenue  volumes, this  did not counterbalance the
decline  (7%) in  the revenue  generated by  the Buildings segment. In 2018, our
Buildings  and  Infrastructure  segments  generated  revenue of 162,909 thousand
euros  and  60,086 thousand  euros  respectively.  The corresponding figures for
2017 were  174,447 thousand euros  and 56,335 thousand  euros (see  note 8). The
current  revenue structure  is also  reflected in  our order book where building
construction contracts continue to prevail.

  Operating segments   2018       2017       2016
------------------------------------------------------
  Buildings              72   %     74   %     73   %

  Infrastructure         28   %     26   %     27   %

Sub-segment revenues

In the Buildings segment, the largest revenue source is the commercial buildings
sub-segment.  In 2018, its revenue grew significantly: by around 27% compared to
2017. During  the period, we completed the construction of an office building at
Lõõtsa 12 and a multi-storey car park at Sepise 8 in Ülemiste City in Tallinn, a
14-floor commercial and residential building in the WoHo quarter at Mustamäe tee
3 in  Tallinn and the  Møller Auto car  sales and service  centre and the Omniva
logistics   centre  in  Rae  parish  near  Tallinn.  We  continue  work  on  the
reconstruction  and extension  of the  building of  Terminal D  in the  Old City
Harbour in Tallinn.
In 2018, the revenue of the public buildings sub-segment grew by 28% compared to
2017. The  results  of  the  sub-segment  continue  to be strongly influenced by
investments  made in national defence. During  the period, we continued to build
the  Estonian Academy of Security Sciences building in Tallinn. The construction
of  infrastructure  for  armoured  vehicles  has  reached  its  final  stage. We
delivered  to customers  the Abja  Health Centre  and barracks  completed at the
defence forces' base at Tapa.
The  share of revenue generated by the apartment buildings sub-segment decreased
by  around a  quarter compared  to 2017. In  Estonia, a  substantial part of the
Group's  apartment building projects is located in Tallinn. In 2018, the largest
of  them were apartment buildings at Sõjakooli  12 (phases III and IV) and Lesta
10. We  completed and delivered to  customers the Meerhof 2.0 apartment building
complex  at Pirita  tee 20a and  phase II  of the  Sõjakooli 12 project. Foreign
markets  continue to contribute  a major share  of the sub-segment's revenue. In
Ukraine,  we completed  the construction  of a  residential area  in the city of
Brovary  in the Kiev region. In Sweden, we completed the design and construction
of an eight-floor apartment building in Stockholm.
We  continue work on our own housing developments in Tartu and Tallinn (reported
in  the apartment  buildings sub-segment).  During the  period, we completed the
development of a new residential area in the Tammelinn district in Tartu. In the
course  of  development  which  began  in  March  2014, we  built nine apartment
buildings  with a total of 193 apartments (www.tammelinn.ee). We also began work
in  two new development projects: at Nõmme  tee 97 in Tallinn where we are going
to  build a  four-floor apartment  building with 21 apartments (www.nommetee.ee)
and  at  Aruküla  tee  in  Tartu  where  we  are  going to build three apartment
buildings  with  10 apartments  each  (www.kaldakodu.ee).  We  continue  to sell
apartments  in both of the above development  projects as well as in the project
completed  in 2017 at Magasini 29 (www.magasini.ee)  in Tallinn. Our development
revenues for 2018 totalled 9,369 thousand euros (2017: 6,533 thousand euros). In
carrying  out development activities, we monitor  closely potential risks in the
housing development market.
The  revenue of  the industrial  and warehouse  facilities sub-segment decreased
substantially  compared with 2017. The  largest project was  the construction of
the  Metsä Wood plywood factory in  Pärnu, which was successfully completed. The
volumes  of the  sub-segment continue  to be  supported by  orders placed by the
agricultural  sector.  During  the  period,  the  largest  of these included the
construction  of  the  Mätliku  robotic  dairy  shed,  a  cattle shed for Kraavi
Põllumajandus  OÜ and  the Lähtru  grain terminal  as well as the reconstruction
(phase  IV) of the fattening unit of the pig farm of Rakvere Farmid AS (EKSEKO).
We  continue to perform  a design and  build contract for  the construction of a
warehouse and office building at Kaldase tee 4 in Maardu.
Based on the order book at the end of the reporting period and contracts secured
in  2019, the Buildings segment will continue  to be dominated by the commercial
and public buildings sub-segments.

  Revenue breakdown in the Buildings segment   2018       2017       2016
------------------------------------------------------------------------------
  Commercial buildings                           35   %     25   %     16   %

  Public buildings                               25   %     19   %     30   %

  Apartment buildings                            25   %     30   %     34   %

  Industrial and warehouse facilities            15   %     26   %     20   %

For  a long  time, the  Infrastructure segment  has been  dominated by  the road
construction  and  maintenance  sub-segment  whose  relative importance has been
increasing year by year. During the period, a significant portion of its revenue
resulted  from  major  projects  performed  under contracts secured in 2017: the
reconstruction of the Haabersti intersection in Tallinn, the reconstruction of a
section  of the Tallinn  ring road (km  0.6-2.8) and the construction of passing
lanes    for   a   2+1 road   on   the   Valmaotsa-Kärevere   section   of   the
Tallinn-Tartu-Võru-Luhamaa  road.  In  2018, we  also  secured contracts for the
reconstruction  of  two  sections  of  the  Riga-Pskov  road (km 195.6-205.8 and
207.8-209.2) and  the construction of the  Veskitammi intersection in Laagri, on
the border of Tallinn. The construction of the latter will continue in 2019.
A  substantial  share  of  the  period's  revenue also resulted from forest road
improvement  services  provided  to  the  State  Forest  Management  Centre.  We
continued to render road maintenance services in Järva and Hiiu counties and the
Kose maintenance area in Harju county.
Contracts  secured  by  the  environmental  engineering  and  other  engineering
(utility  network construction)  sub-segments are  generally small.  Thanks to a
contract  signed in 2018 for performing earthworks on the Kiili-Paldiski section
of  the mainland part of Balticconnector (a  gas pipeline), it is likely that in
2019 other engineering revenue will remain at the level of the reporting period.
We do not expect any significant change in revenue breakdown in 2019 and believe
that road construction will remain the main revenue source in the Infrastructure
segment.

 Revenue breakdown in the Infrastructure segment 2018   2017   2016
---------------------------------------------------------------------
 Road construction and maintenance                 89 %   86 %   86 %

 Other engineering                                  7 %    8 %    9 %

 Environmental engineering                          4 %    6 %    5 %

Order book

At 31 December 2018, the Group's order book (backlog of contracts signed but not
yet  performed)  stood  at  100,352 thousand  euros,  a decrease of roughly 30%
compared  to the end of 2017. One of the reasons for the decrease in the Group's
order  book is that the decision-making processes of public procurements carried
out  in the  second half  of 2018 (periods  from the  submission of a bid to the
conclusion of a contract) took longer than usual.
Between  the reporting date (31  December 2018) and the date  of release of this
report,  Group companies have  secured additional construction  contracts in the
region of 42,888 thousand euros of which 36% is attributable to the above public
procurement contracts.

  As at 31 December          2018      2017      2016
------------------------------------------------------
  Order book (EUR '000)   100,352   144,122   131,335

At  the  reporting  date,  contracts  secured  by  the Buildings segment and the
Infrastructure segment accounted for 72% and 28% of the Group's total order book
respectively  (31  December  2017: 75% and  25% respectively).  Compared  to 31
December  2017, the order books of the  Buildings segment and the Infrastructure
segment have decreased by 34% and 20% respectively.
The order books of the commercial buildings and apartment buildings sub-segments
account for an equal share, approximately a third each, of the order book of the
Buildings segment. In the commercial buildings sub-segment, the largest projects
in  progress are in Tallinn: the reconstruction and extension of the building of
Terminal  D in the Old City Harbour  at Lootsi 13/4, the design and construction
of  an eight-floor  accommodation building  on the  property at Liimi 1B and the
construction  of a multi-storey  car park at  Sepapaja 1. The order  book of the
apartment  buildings sub-segment includes mainly  contracts for the construction
of  apartment buildings in Tallinn. However, there is also a housing development
project  in the Stockholm area in Sweden. A major share of the order book of the
public  buildings sub-segment it is made up of contracts for the construction of
a  state  secondary  school  at  Kohtla-Järve  and the Peetri sports and leisure
centre  in Rae parish. The order book of the industrial and warehouse facilities
sub-segment has decreased significantly.
The  order book  of the  Infrastructure segment  continues to  be underpinned by
contracts of the road construction and maintenance sub-segment which account for
around  72% of the Infrastructure segment's order  book. The largest projects in
the  road  construction  order  book  are  the  construction  of  the Veskitammi
intersection  in Laagri, on the border of  Tallinn, passing lanes for a 2+1 road
on     the     Pikknurme-Puurmani     section     (km     142.2-146.9) of    the
Tallinn-Tartu-Võru-Luhamaa  road, and roads and  bridges for the defence forces'
central  training area  in Kuusalu  parish. The  Group continues to provide road
maintenance  services in three road maintenance  areas: Järva, Hiiu and Kose. In
July  2018, the Group signed a contract for the performance of earthworks on the
53 kilometre-long Kiili-Paldiski section of the mainland part of Balticconnector
(a  gas pipeline), which accounts  for a significant share  of the order book of
the Infrastructure segment.
Based on the size of the Group's order book and known developments in our chosen
markets,  we expect that in 2019 the Group's revenue will remain at the level of
2018. In  an  environment  of  exceptionally  stiff competition, we avoid taking
unjustified risks whose realisation in the contract performance phase would have
an  adverse impact on the Group's results. Our preferred policy is to keep fixed
costs under control and monitor market developments closely.

People

Employees and personnel expenses

In  2018, the Group (the parent and the subsidiaries) employed, on average, 687
people  including 419 engineers and technical personnel (ETP). Headcount dropped
by  around  7% compared  to  2017. The  number  of workers decreased noticeably,
mostly  because the  contract for  providing road  maintenance services in Keila
area expired.
Average number of the Group's employees (at the parent and the subsidiaries)

                  2018   2017   2016
-------------------------------------
  ETP              419    426    381

  Workers          268    309    303

  Total average    687    735    684

Despite the decline in headcount, personnel expenses grew by around 0.4% through
a rise in wages and salaries. The Group's personnel expenses for 2018, including
all  taxes, totalled 22,964 thousand euros. In 2017, personnel expenses amounted
to 22,872 thousand euros.
The  service fees of the members of the council of Nordecon AS for 2018 amounted
to  187 thousand  euros  and  associated  social  security  charges totalled 62
thousand euros (2017: 167 thousand euros and 55 thousand euros respectively).
The  service fees of  the members of  the board of  Nordecon AS amounted to 656
thousand  euros  and  associated  social  security charges totalled 217 thousand
euros  (2017:  1,001 thousand  euros  and  330 thousand euros respectively). The
figures  include termination benefits of 180 thousand  euros paid to a member of
the board and associated social security charges of 60 thousand euros. In 2017,
board  members' service fees included termination benefits of 550 thousand euros
paid  to two members of the board and associated social security charges of 182
thousand euros.

Labour productivity and labour cost efficiency

We  measure  the  efficiency  of  our  operating  activities using the following
productivity  and  efficiency  indicators,  which  are  based  on  the number of
employees and personnel expenses incurred:

                                                    2018    2017    2016
--------------------------------------------------------------------------
 Nominal labour productivity (rolling), (EUR '000) 325.4   314.9   267.8

 Change against the comparative period, %            3.3 %  17.6 %  27.0 %



 Nominal labour cost efficiency (rolling), (EUR)     9.7    10.1     9.0

 Change against the comparative period, %           -3.8 %  12.6 %  12.8 %

The Group's nominal labour productivity increased compared to 2017 through a
decrease in headcount. Labour cost efficiency declined, mainly due to lower
revenue.


Nordecon (www.nordecon.com (http://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. The
consolidated  unaudited  revenue  of  the  Group  in 2018 was 223 million euros.
Currently  Nordecon  Group  employs  close  to 690 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
Email: andri.hobemagi@nordecon.com (mailto:andri.hobemagi@nordecon.com)
www.nordecon.com (http://www.nordecon.com)

Attachments

  * Investor presentation 12m 2018 (https://ml-
    eu.globenewswire.com/Resource/Download/616d40d1-b3f6-44a5-a264-d878c8c104d3)
  * Nordecon_Interim report_Q4_2018 (https://ml-
    eu.globenewswire.com/Resource/Download/ed53b070-9efd-4968-a311-a0a02199373b)