Börsiteade

Pealkiri

2025 first quarter consolidated interim report (unaudited)

Teade

Macroeconomic indicators give reason to believe that the decline in the Estonian
construction  market  has  halted  and  that  the  market  is  stabilizing.  The
Infrastructure segment is also supported this year by the volume of work related
to  Rail Baltica, while investments by  the Transport Administration continue to
decrease.  In the Buildings segment, some revival  can be seen in private sector
orders.  This stability is also  reflected in the group's  results for the first
quarter of 2025.
As  in previous years, over  90% of the group's revenue  in the first quarter of
the year comes from the Buildings segment. Revenue in this segment has decreased
by  approximately 15% compared to the  same period last year,  which is also the
main reason for the overall decline in the group's revenue. During the reporting
period,  the group has signed  a significant number of  new contracts, but their
impact on revenue will be seen over a longer period.
The  group's gross margin was 4.6%, remaining at  the same level as in the first
quarter  of last year. Profit was generated  in the Buildings segment, while the
Infrastructure  segment recorded a loss due  to its seasonal nature. The decline
in the operating profit margin is affected by the drop in revenue.
As  of  31 March  2024, the  order  book  increased  by  43%. The  volume of the
Infrastructure  segment  has  grown  significantly,  primarily  due to contracts
signed  for the construction  of Rail Baltica.  The volume of  order book in the
Buildings segment has remained at the same level.

Condensed consolidated interim statement of financial position

 EUR'000                                           31 March 2025 31 December 2024
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                               7,399            8,195

 Trade and other receivables                            30,733           29,449

 Prepayments                                             3,165            3,543

 Inventories                                            28,854           28,091

 Total current assets                                   70,151           69,278

 Non-current assets

 Other investments                                          77               77

 Trade and other receivables                            10,770           10,681

 Investment property                                     5,517            5,517

 Property, plant and equipment                          12,718           13,247

 Intangible assets                                      14,942           14,951

 Total non-current assets                               44,024           44,473

 TOTAL ASSETS                                          114,175          113,751



 LIABILITIES

 Current liabilities

 Borrowings                                             12,259           12,626

 Trade payables                                         39,773           36,819

 Other payables                                         10,882           10,260

 Deferred income                                        10,446           12,472

 Provisions                                              1,037            1,333

 Total current liabilities                              74,397           73,510

 Non-current liabilities

 Borrowings                                              5,950           5,720,

 Trade payables                                          4,815            5,091

 Provisions                                              2,908            2,826

 Total non-current liabilities                          13,673           13,637

 TOTAL LIABILITIES                                      88,070           87,147



 EQUITY

 Share capital                                          14,379           14,379

 Own (treasury) shares                                   (660)            (660)

 Share premium                                             635              635

 Statutory capital reserve                               2,554            2,554

 Translation reserve                                     3,938            4,034

 Retained earnings                                       4,130            4,746

 Total equity attributable to owners of the
 parent                                                 24,976           25,688

 Non-controlling interests                               1,129              916

 TOTAL EQUITY                                           26,105           26,604

 TOTAL LIABILITIES AND EQUITY                          114,175          113,751

Condensed consolidated interim statement of comprehensive income

 EUR'000                                               Q1 2025  Q1 2024      2024
-------------------------------------------------------------------------------
 Continuing operations
-------------------------------------------------------------------------------
 Revenue                                              39,355   46,245   223,925

 Cost of sales                                      (37,553) (44,107) (207,155)

 Gross profit                                          1,802    2,138    16,770



 Marketing and distribution expenses                    (83)     (68)     (422)

 Administrative expenses                             (1,546)  (1,564)   (7,878)

 Other operating income                                   52       26       286

 Other operating expenses                               (34)    (146)     (695)



 Operating profit                                        191      386     8,061

 Finance income                                          145      137       678

 Finance costs                                         (739)    (705)   (3,011)

 Net finance costs                                     (594)    (568)   (2,333)



 Profit (loss) before tax                              (403)    (182)     5,728

 Income tax expense                                        0        0     (563)

 Profit (loss) for the period                          (403)    (182)     5,165



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

 Exchange differences on translating foreign
 operations                                             (96)       51       248

 Total other comprehensive income (expense)             (96)       51       248

 TOTAL COMPREHENSIVE INCOME (EXPENSE)                  (499)    (131)     5,413



 Profit (loss) attributable to:

 - Owners of the parent                                (616)    (593)     3,827

 - Non-controlling interests                             213      411     1,338

 Profit (loss) for the period                          (403)    (182)     5,165



 Comprehensive income (expense) attributable to:

 - Owners of the parent                                (712)    (542)     4,075

 - Non-controlling interests                             213      411     1,338

 Comprehensive income (expense) for the period         (499)    (131)     5,413



 Earnings per share attributable to owners of the
 parent:

 Basic earnings per share (EUR)                         (0.02)   (0.02)      0.12

 Diluted earnings per share (EUR)                       (0.02)   (0.02)      0.12



Condensed consolidated interim statement of cash flows

  EUR'000                                                    Q1 2025    Q1 2024
------------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                              46,622     53,333

  Cash paid to suppliers                                  (41,349)   (39,940)

  VAT paid                                                 (1,249)    (3,112)

  Cash paid to and for employees                           (3,923)    (4,859)

  Income tax paid                                            (350)          0

  Net cash from (used in) operating activities               (249)      5,422



  Cash flows from investing activities

  Paid for acquisition of property, plant and equipment       (35)       (21)

  Proceeds from sale of property, plant and equipment          207         25

  Loans provided                                              (26)       (18)

  Repayments of loans provided                                   3          0

  Dividends received                                             0          6

  Interest received                                             12         39

  Net cash from investing activities                           161         31



  Cash flows from financing activities

  Proceeds from loans received                                 633        108

  Repayments of loans received                               (406)      (633)

  Payments of lease principal                                (633)      (555)

  Payments of lease interest                                  (68)       (92)

  Interest paid                                              (209)      (186)

  Other payments                                                 1         99

  Net cash used in financing activities                      (682)    (1,259)



  Net cash flow                                              (770)      4,194



  Cash and cash equivalents at beginning of period           8,195     11,892

  Effect of movements in foreign exchange rates               (26)        (3)

  Change in cash and cash equivalents                        (770)      4,194

  Cash and cash equivalents at end of period                 7,399     16,083

Financial review

Financial performance

Nordecon's  gross profit for  the first quarter  of 2025 was EUR1,802 thousand (Q1
2024: 2,138 thousand) and gross margin for the period was 4.6% (Q1 2024: 4.6%).
The  gross margin of the Buildings segment was 7.5%, at the same level as a year
earlier, when it was 7.8%. The gross margin of the Infrastructure segment, which
in  the first quarter is affected by a  large share of uncovered fixed costs and
made  a  loss,  was  negative  at  (24.6)%  (Q1  2024: (30.9)%). The loss of the
Infrastructure  segment decreased year on year, mainly due to weather conditions
that  were more  favourable for  the provision  of contractual  road maintenance
services,  and the start of  work on the Hagudi-Alu  section of the Rail Baltica
railway infrastructure in Rapla County.
The  group's administrative expenses  for the first  quarter of 2025 were EUR1,546
thousand,  at the same  level as in  the same period  last year (Q1 2024: EUR1,564
thousand).  The ratio of administrative expenses  to revenue (12 months rolling)
increased year on year, rising to 3.6% (Q1 2024: 3.3%).
The group's operating profit for the first quarter of 2025 was EUR191 thousand (Q1
2024: 386 thousand) and EBITDA was EUR858 thousand (Q1 2024: EUR1,094 thousand).
The  group's finance income and costs are affected by exchange rate fluctuations
in  the group's  foreign markets.  In the  first quarter  of 2025, the Ukrainian
hryvnia  weakened against  the euro  by around  1.8% and the  translation of the
loans  provided to  the group's  Ukrainian subsidiaries  in euros into the local
currency  gave rise to an  exchange loss of EUR117  thousand (Q1 2024: an exchange
loss  of 25 thousand). The Swedish krona strengthened against the euro by around
5.6% and  the translation of a loan provided  to the Swedish subsidiary in euros
into the local currency gave rise to an exchange gain of EUR41 thousand (Q1 2024:
an exchange loss of EUR5 thousand).
The group ended the period with a net loss of EUR403 thousand (Q1 2024: a net loss
of  EUR182 thousand). The net loss attributable  to owners of the parent, Nordecon
AS, was EUR616 thousand (Q1 2024: a net loss of EUR593 thousand).

Cash flows

Operating  activities produced a net cash outflow  of EUR249 thousand in the first
quarter  of  2025 (Q1  2024: an  inflow  of  EUR5,422 thousand). The item with the
strongest impact on operating cash flow was cash paid to suppliers. The decrease
in revenue also reduced cash receipts from customers.
Investing  activities resulted in a net cash inflow of EUR161 thousand (Q 1 2024:
an  inflow  of  EUR31  thousand).  Payments  made  to  acquire property, plant and
equipment  totalled EUR35 thousand  (Q1 2024: EUR21 thousand)  and proceeds from the
sale  of property, plant  and equipment amounted  to EUR207 thousand (Q1 2024: EUR25
thousand).  Loans  provided  amounted  to  EUR26 thousand (Q1 2024: EUR18 thousand),
repayments  of  loans  provided  totalled  EUR3  thousand (Q1 2024: nil euros) and
interest received amounted to EUR12 thousand (Q1 2024: EUR39 thousand).
Financing  activities generated a net cash outflow of EUR682 thousand (Q1 2024: an
outflow  of EUR1,259 thousand).  The items with  the strongest impact on financing
cash  flows were repayments of loans received and lease payments, which amounted
to  EUR406  thousand  and  EUR633  thousand,  respectively  (Q1  2024: EUR633 thousand
and EUR555  thousand, respectively). Proceeds from loans received amounted to EUR633
thousand  (Q1 2024: EUR108 thousand) and  interest payments totalled EUR277 thousand
(Q1 2024: EUR278 thousand).
The  group's  cash  and  cash  equivalents  at  31 March 2025 amounted to EUR7,399
thousand (31 March 2024: EUR16,083 thousand).

Key financial figures and ratios

 Figure/ratio                   Q1 2025       Q1 2024       Q1 2023        2024
-------------------------------------------------------------------------------
 Revenue (EUR'000)                 39,355        46,245        33,549     223,925

 Revenue change                 (14.9)%         37.8%       (24.7)%       20.1%

 Net     profit    (loss)
 (EUR'000)                          (403)         (182)       (1,674)       5,165

 Net     profit    (loss)
 attributable  to  owners
 of the parent (EUR'000)            (616)         (593)       (1,874)       3,827

 Weighted  average number
 of shares                   31,528,585    31,528,585    31,528,585  31,528,585

 Earnings per share (EUR)          (0.02)        (0.02)        (0.06)        0.12

 Administrative  expenses
 to revenue                        3.9%          3.4%          4.7%        3.5%

 Administrative  expenses
 to revenue (rolling)              3.6%          3.3%          2.9%        3.5%

 EBITDA (EUR'000)                     858         1,094           155      11,025

 EBITDA margin                     2.2%          2.4%          0.5%        4.9%

 Gross margin                      4.6%          4.6%          2.9%        7.5%

 Operating margin                  0.5%          0.8%        (1.9)%        3.6%

 Operating         margin
 excluding  gain  on non-
 current asset sales               0.4%          0.8%        (2.2)%        3.5%

 Net margin                      (1.0)%        (0.4)%        (5.0)%        2.3%

 Return    on    invested
 capital                         (0.5)%          0.1%        (2.4)%       15.6%

 Return on equity                (1.5)%        (0.8)%        (6.4)%       21.0%

 Equity ratio                     22.9%         19.1%         19.5%       23.4%

 Return on assets                (0.4)%        (0.2)%        (1.3)%        4.4%

 Gearing                          24.4%          4.4%         35.6%       22.6%

 Current ratio                     0.94          0.85          0.85        0.94

                          31 March 2025 31 March 2024 31 March 2023 31 Dec 2024

 Order book (EUR'000)             283,548       198,737       148,302     209,489

Performance by geographical market

Revenue generated outside Estonia, in Ukraine, accounted for approximately 2% of
the  group's total revenue in the first quarter of 2025. In Ukraine, we continue
to provide services under the contracts signed in 2023 for the reconstruction of
substations  and installation of  associated physical protection  systems in the
Poltava,  Zhytomyr,  Volyn  and  Ivano-Frankivsk  oblasts,  where work is taking
longer  than  originally  planned  and  depends  on the consumption needs of the
country's  energy  system.  We  are  also  reconstructing  a building in Ovruch,
Zhytomyr  oblast, into an apartment complex for internally displaced persons. No
revenue  was generated in  Sweden, as Nordecon  had no construction contracts in
progress in the Swedish market.

        Q1 2025   Q1 2024   Q1 2023   2024
--------------------------------------------
  Estonia   98%       99%       98%    98%

  Ukraine    2%        1%        0%     2%

  Finland     -         -        2%      -

Performance by business line

Segment revenues

We  strive to maintain a balance between  the revenues of our two main operating
segments  (Buildings and Infrastructure) as far as market developments allow, as
this  helps  diversify  risks  and  provides  better  opportunities  to continue
construction  activities in more challenging market conditions, where volumes in
one subsegment decline sharply while volumes in another subsegment start to grow
more rapidly.
The  group's  revenue  for  the  first  quarter  of  2025 was  EUR39,355 thousand,
approximately 15% lower than in the first quarter of 2024, when revenue amounted
to EUR46,245 thousand. The Buildings segment generated revenue of EUR36,584 thousand
and  the Infrastructure  segment revenue  of EUR2,766  thousand. The corresponding
figures for the first quarter of 2024 were EUR43,408 thousand and EUR2,808 thousand.
Revenue  generated  by  the  Buildings  segment  decreased  by  16% and  revenue
generated  by the Infrastructure segment  decreased by 1.5%. The revenue decline
in  the first  quarter was  expected. Although  the group  secured a significant
volume  of new contracts during the reporting  period, these will have an impact
on revenue over a longer period.

  Revenue by operating segment   Q1 2025   Q1 2024   Q1 2023   2024
--------------------------------------------------------------------
  Buildings                          93%       94%       92%    84%

  Infrastructure                      7%        6%        8%    16%

Subsegment revenues

In  the first quarter  of 2025, most of  the revenue generated  by the Buildings
segment  came from  the public  buildings and  commercial buildings subsegments,
with  the contribution from commercial buildings  at its highest level in recent
years.  While revenue from  commercial buildings increased  by 36% year on year,
revenue  from public  buildings decreased  at a  similar rate.  Revenue from the
apartment  buildings  subsegment  declined  -  there  were  no major projects in
progress  and revenue from  own property development  was not significant during
the period.
The  largest projects  in the  public buildings  subsegment were  the design and
construction  of a new  study and sports  building for the  Saku Upper Secondary
School  near Tallinn, the  design and construction  of a study  building for the
Centre  for Defence Investment on the Raadi campus in Tartu and the construction
of Loodusmaja (Nature Hub) in Tallinn.
The   largest   projects   in  the  commercial  buildings  subsegment  were  the
construction  of the LEED Gold compliant Golden Gate office building at Ahtri 6
in  Tallinn,  a  commercial  building  at  Väike-Turu  7 in Tartu, the LEED Gold
compliant  Uusküla spa hotel on  the northern shore of  Lake Peipus in Alutaguse
rural municipality and Lidl stores in Võru and Viljandi.
Revenue  from own  development activities,  which is  included in  the apartment
buildings  subsegment, amounted  to EUR6  thousand (Q1  2024: EUR3,952 thousand). We
continued  to  build  phase  1 of  the  Seileri  Kvartal housing estate in Pärnu
(https://seileri.ee)  and the  Tammepärja Kodu  housing estate  in the Tammelinn
district  in  Tartu  (https://tammelinn.ee).  Both  development projects will be
completed  in  the  first  half  of  2025. In  carrying  out our own development
activities,  we  carefully  monitor  potential  risks in the housing development
market.

  Buildings segment                     Q1 2025   Q1 2024   Q1 2023   2024
---------------------------------------------------------------------------
  Public buildings                          52%       67%       43%    70%

  Commercial buildings                      46%       19%       25%    21%

  Apartment buildings                        1%       14%       22%     6%

  Industrial and warehouse facilities        1%        0%       10%     3%

The  largest revenue contributor in the Infrastructure segment is still the road
construction  and maintenance subsegment, whose revenue decreased by around 17%
compared to the same period last year. A major share of the subsegment's revenue
came  from the construction of  the Hagudi-Alu section of  stage III of the Rail
Baltica  Rapla County main line railway infrastructure and the provision of road
maintenance  services in  Järva County.  Most of  the other  engineering revenue
resulted  from  the  construction  of  a  platform  area for Class E aircraft at
Tallinn Airport.

  Infrastructure segment              Q1 2025   Q1 2024   Q1 2023   2024
-------------------------------------------------------------------------
  Road construction and maintenance       77%       83%       61%    90%

  Other engineering                       23%       17%       33%    10%

  Environmental engineering                0%        0%        6%     0%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at  EUR283,548 thousand at 31 March  2025, reflecting an increase of approximately
43% year  on year.  In the  first quarter  of 2025, we  signed new contracts for
EUR111,276 thousand (Q1 2024: EUR17,617 thousand). After the reporting date, we have
signed new contracts for EUR17 474 thousand.

                    31 March 2025 31 March 2024 31 March 2023 31 Dec 2024
-------------------------------------------------------------------------
 Order book (EUR'000)       283,548       198,737       148,302     209,489

At 31 March 2025, the Buildings segment accounted for 66% and the Infrastructure
segment  for  34% of  the  group's  order  book  (31  March  2024: 93% and  7%,
respectively).  Compared  to  31 March  2024, the  order  book  of the Buildings
segment  has remained stable, while the order book of the Infrastructure segment
has  increased significantly,  driven by  the Rail  Baltica contracts.  The Rail
Baltica  projects  support  the  order  book  of the Infrastructure segment in a
situation  where investment by the Transport Administration is declining year by
year. The volume of public investment in the order book of the Buildings segment
has  also decreased. There  is some activity  at the local  government level and
private investment is picking up.
Major contracts secured in the reporting period include:

  * Construction of a spa hotel and a swimming complex in Viljandi with an
    approximate cost of EUR30,000 thousand.
  * Construction of Punamütsike Kindergarten in Võru with an approximate cost of
    EUR6,370 thousand.
  * Construction of the Selja-Tootsi section of stage I of the Rail Baltica
    Pärnu County main line railway infrastructure with an approximate cost of
    EUR62,300 thousand.
  * Design and construction of a barracks at the Tapa Army Base for the Estonian
    Centre for Defence Investment with an approximate cost of EUR5,300 thousand.
  * Design and construction of a building facility for the Estonian Centre for
    Defence Investment in Harju County with an approximate cost of EUR3,700
    thousand.

Based on the size of the order book and its distribution over the years, as well
as  the general outlook for the economy and the construction market, the group's
management  expects business volumes in 2025 to remain broadly at the same level
as  in  2024. In  a  highly  competitive  environment,  we  have  avoided taking
unjustified risks that could materialise during the contract execution phase and
adversely affect the group's results. The main focus is on managing fixed costs,
increasing  productivity and  effectively executing  pre-construction and design
activities to leverage our professional competitive advantages.

People

Employees and staff costs

The  group's average number of employees in  the first quarter of 2025 was 411,
including  263 engineers and technical professionals (ETP). Compared to the same
period last year, the number of employees decreased by around 3%.

Average  number  of  employees  at  group  companies (the parent company and the
subsidiaries):

                  Q1 2025   Q1 2024   Q1 2023   2024
-----------------------------------------------------
  ETP                 263       281       392    283

  Workers             148       142       192    152

  Total average       411       423       584    435

The group's staff costs for the first quarter of 2025, including all taxes, were
EUR4,795  thousand compared  with EUR3,939  thousand in  the first quarter of 2024.
Staff costs increased by 22% due to a salary increase.
In  the first quarter of 2025, the service fees of the members of the council of
Nordecon  AS  totalled  EUR50  thousand  and  the  related social security charges
amounted to EUR17 thousand (Q1 2024: EUR50 thousand and EUR17 thousand, respectively).
The  service  fees  of  the  members  of  the board of Nordecon AS totalled EUR139
thousand  and the related  social security charges  amounted to EUR46 thousand (Q1
2024: EUR130 thousand and EUR43 thousand, respectively).

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 the staff costs incurred:

                                                Q1 2025 Q1 2024 Q1 2023   2024
------------------------------------------------------------------------------
 Nominal labour productivity (rolling), (EUR'000)   501.8   535.4   472.3  514.3

 Change against the comparative period, %        (6.3)%   13.4%    4.5%   3.0%



 Nominal labour cost efficiency (rolling), (EUR)      8.7    11.1    11.0    9.3

 Change against the comparative period, %       (21.8)%    0.5%  (9.8)% (9.7)%

In the first quarter of 2025, the group's nominal labour productivity and labour
cost  efficiency decreased compared to the same period last year. Nominal labour
productivity  decreased due  to the  decline in  revenue and nominal labour cost
efficiency  decreased due  to the  decline in  revenue as  well as the growth in
staff costs.

Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
Email: [email protected] (mailto:[email protected])
www.nordecon.com (http://www.nordecon.com)