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NCN: Interim report for the third quarter and nine months ended 30 September 2010 (unaudited)

Teade

Nordecon International                Quarterly report                09.11.2010

Interim report for the third quarter and nine months ended 30 September 2010
(unaudited)

Directors' report
                                                               
The Group's strategy and objectives
                                             
Reasons for adjusting the Group's strategy                                      
The Group's development strategy for 2009-2013 was underpinned by the assumption
that in the forthcoming years the construction market would see shrinkage in    
volumes, downward pressure on the end-price of the service, increasing          
competition and subsequent market consolidation. The factors were interpreted   
not only as threats but also as opportunities to be exploited for reinforcing   
the Group's position and facilitating its international expansion. However, in  
2009 the global financial crisis and the ensuing economic downturn had a more   
severe impact on the Group's markets and financial performance than anticipated.
To date, the Group has suspended the operations of its Lithuanian subsidiary    
Nordecon Statyba UAB and at the beginning of 2010 we divested our Latvian       
subsidiary Nordecon Infra SIA owing to its poor operating results. In the past  
year and a half, operations in the Ukrainian buildings construction market have 
practically come to a standstill. As a result, we have had to make deep expense 
and job cuts at our Ukrainian subsidiary Eurocon Ukraine TOV. At the reporting  
date, approximately 95% of our business is conducted in Estonia.                
In July 2010, the board of Nordecon International AS proposed that the council  
revise the Group's development strategy because achieving one of the main       
strategic goals (continuing internationalization) and the ultimate strategic    
goal by 2013 had become unrealistic.                                            

The board considered revision necessary in light of the following:              
- In 2010 the construction markets of the Baltic countries and Ukraine will     
remain in a slump.                                                              
- In the next few years, economic growth in the Baltic countries will be modest 
and the construction market cannot be expected to recover before 2012.          
- The construction market is dominated by public procurement tenders that induce
underbidding and do not allow construction companies to operate at their average
historical profit margins.                                                      
- The decline in input prices has been replaced by a rise and the forthcoming   
years will reveal the extent of the risks taken/losses incurred with the intent 
of lowering prices.                                                             

The Group's revised strategy for 2010-2013                                      
The board is of the opinion that in the next couple of years, the Group should  
focus on its core business in its main market Estonia where Nordecon is         
represented in almost all construction segments and can rely on extensive local 
experience. In order to adapt to adverse changes in the external environment,   
the Group will have to continue restructuring its operations, improving         
profitability by effective cost management, and creating opportunities for      
successfully entering the growth phase of the construction market (also in the  
target foreign markets).
                                                        
According to the board's proposal, in 2010-2013 the Group will focus on         
achieving the above. The strategy for the next three years will have to support 
the Group's recovery from the slump and prepare ground for seizing the          
opportunities provided by the growth of the construction market that is         
anticipated to emerge in 2012.
                                                  
The ultimate goal of the Group's strategy for 2009-2013 was to become the       
fastest growing construction group on the Nordic and Baltic stock exchanges by  
2013 in terms of revenue growth. In the next few years, revenue growth will not 
be a priority because this would assume taking unjustified risks at margins that
are unnaturally low for the construction market.                                
The board submitted its proposals for revising the Group's strategy for review  
and approval by the council in July 2010. The council approved the suggested    
changes at a meeting held on 10 September 2010.                                 

The main objectives of the strategy for 2010-2013                               
- To complete adjustments to the Group's structure and governance that were     
launched in 2009 in order to secure profitable and rapid growth in the rise     
phase of the market                                                             
- To operate in Latvia, Lithuania and Belarus on a project basis, assuming that 
this is profitable                                                              
- To continue buildings construction operations in Ukraine in 2010 in line with 
the former strategy and to decide the need for revising the strategy in light of
the economic situation in the country in the first quarter of 2011 at the latest
- To maintain preparedness for re-launching more active operations in foreign   
markets (as a general contractor)  as soon as the situation in the construction 
market has become sufficiently supportive                                       
- To penetrate the Finnish concrete works market (as a contractor) through a    
subsidiary in order to support development of relevant operations               
- To become the leading construction group in Estonia that earns half of its    
revenue from infrastructure and the other half from buildings construction by   
the end of 2013                                                                 

The leitmotif of the strategy for 2010-2013 is “To respond to market changes    
swiftly and flexibly and to enter the next economic growth cycle successfully”  


Significant changes in the Group's structure in 2011                            
In a meeting held on 10 September 2010, the council of Nordecon International AS
resolved to approve the board's proposal for combining Nordecon International   
AS, Nordecon Infra AS and Nordecon Ehitus AS and signing a corresponding merger 
agreement.
                                                                      
The board of Nordecon International AS made the merger proposal based on its    
vision of the changes required in the Group's strategy in 2010-2013. The board  
believes that in a situation of declining business volumes the Group should also
redesign and streamline its management model. The merger of the three companies 
will provide a shorter and more flexible chain of command and should yield cost 
savings in the region of 15.6 million kroons (1 million euros) per year.        
According to the board's proposal, the parent Nordecon International AS will    
merge with its wholly-held subsidiaries Nordecon Infra AS and Nordecon Ehitus   
AS. The combined entity will become the holder of investments in the current    
stand-alone subsidiaries of Nordecon Infra AS and Nordecon Ehitus AS. The       
Nordecon International construction group will continue operating in all its    
current operating segments.
                                                     
The companies signed the merger agreement on 4 October 2010. The merger needs to
be approved, among other parties, by the shareholders of Nordecon International 
AS. An extraordinary general meeting has been called for 19 November 2010. The  
merger report, the merger agreement and the merging entities' financial         
statements for the past three years as well as their unaudited statements of    
financial position as at 30 September 2010 have been made available on the      
corporate website of Nordecon International AS (www.nordecon.com).              
According to plan, all merger procedures will be completed in 2010.             


Changes in the Group's operations in the first nine months of 2010              

Changes in the Group's Estonian operations                                      
In the first nine months of 2010, the Group's Estonian operations did not change
significantly. By the end of 2009 all major planned restructuring activities    
were completed and since the beginning of 2010 the Group has been conducting its
core business through two subgroups - Nordecon Ehitus AS and Nordecon Infra AS -
specialising in buildings and infrastructure construction respectively. Nordecon
International AS has acted mostly as a holding company, providing the Group with
strategic management and intra-Group support services. The Group will follow the
same model until the end of 2010. From 2011, Nordecon Ehitus AS and Nordecon    
Infra AS will merge with the parent Nordecon International AS (for further      
information, refer to the chapter Significant changes in the Group's structure  
in 2011) and the combined entity will continue operating under a new business   
name - Nordecon AS provided the proposal is approved by the shareholders at the 
extraordinary general meeting called for 19 November 2010.                      
Changes in the Group's foreign operations                                       

Latvia                                                                          
The Group entered the Latvian market at the beginning of 2007 when the          
acquisition of OÜ Kaurits provided it with a stake in a Latvian company - SIA   
Abagars (later renamed Nordecon Infra SIA). In order to avoid subsequent        
conflicts of interest, the Group acquired the majority shareholding in the      
Latvian entity in May 2008. The core business of the Latvian company was        
construction of water and wastewater networks. Business volumes in Latvia grew  
swiftly and the company was awarded and delivered several large public          
procurement projects. However, over-rapid growth resulted in an accumulation of 
operational risks which in combination with drastic changes in the economic     
environment caused the company to incur losses in the second half of 2009. The  
overall downturn in the Latvian economy caused difficulties in collecting       
payments from customers including counter-parties related to state and local    
governments.                                                                    

As a result, in February 2010 the board of Nordecon International AS resolved to
divest the Group's entire 56% interest in Nordecon Infra SIA because it was     
evident that in the next few years the entity would be operating with a loss.   
The stake was sold to an individual (a non-controlling shareholder). After the  
transaction, the Group does not have any ownership interests in companies       
domiciled in Latvia. The financial aspects of the transaction are described in  
greater detail in note 4 to the interim financial statements.                   
In the forthcoming years, the Group will continue operating in Latvia on a      
project basis through its Estonian subsidiaries, involving partners where       
necessary. However, the continuation of project-based operations assumes the    
availability of profitable projects.                                            

Belarus                                                                         
The Group has signed a contract with a Finnish food industry company for the    
construction of a factory in Belarus. The project is being performed through the
Group's wholly-held Belarusian subsidiary Eurocon Stroi IOOO whose establishment
was completed in January 2010. At the moment, this is the Group's only project  
in Belarus. The Group used a similar strategy, i.e. contracts tendered by       
well-known Nordic or Baltic companies, for penetrating the Ukrainian market more
than twelve years ago. The Group is not holding any negotiations regarding other
projects and according to the Group's development strategy penetrating the      
Belarusian market more extensively in 2010 is not a priority. The current year  
and the above project will serve as a basis for getting to know the market and  
conducting further analyses.                                                    

Ukraine                                                                         
There have not been any significant changes in the Group's Ukrainian operations 
compared with the end of 2009.                                                  

Finland                                                                         
The Group's subsidiary Nordecon Betoon OÜ has been seeking opportunities for    
winning concrete works contracts in Finland since the end of 2009. For this, in 
the first half of 2010 a Finnish subsidiary Estcon OY was acquired from the     
parent. The Group undertook the transaction to support the development of its   
concrete works operations.                                                      


The Group's structure and major structural changes                              

Major changes in the Group's structure in the first nine months of 2010         

Nordecon International AS                                                       
In January, the establishment proceedings of Eurocon Stroi IOOO, a Belarusian   
company founded by Nordecon International AS and Nordecon Ehitus AS, were       
completed. The shareholders' interests are 70% and 30% respectively. The company
was established for performing project-based construction work. Since Belarus is
one of the Group's potential target markets, then in line with the corporate    
strategy the majority shareholding in the entity belongs to the Group's parent  
company.                                                                        
In February, Nordecon International AS sold its 56% stake in the Latvian        
subsidiary Nordecon Infra SIA along with interests in its subsidiaries. The     
subsidiary was sold to an external party (a non-controlling shareholder). After 
the transaction, the Group has no ownership interests in companies registered in
Latvia.                                                                         
In April, Nordecon International AS sold 100% of its shares in the Finnish      
subsidiary Estcon OY to Group company Nordecon Betoon OÜ that is going to use   
the subsidiary for performing concrete works in Finland. Finland is not one of  
the Group's target markets. Therefore, transfer of the investment was not in    
contradiction with the Group's general investment holding strategy.             

Nordecon Infra AS                                                               
In April, Nordecon Infra AS participated in the establishment of Pigipada OÜ,   
paying for a 24% stake with a monetary contribution of 9.6 thousand kroons (0.6 
thousand euros). Pigipada OÜ will engage in the production of bitumen emulsion. 
In July, Nordecon Infra AS increased its interest in the company to 49%, paying 
10 thousand kroons (0.64 thousand euros) for the additional stake.              

Eston Ehitus AS                                                                 
In March, Eston Ehitus AS established a subsidiary Kaasa Vara OÜ. The share     
capital of the subsidiary is 40 thousand kroons (3 thousand euros). The entity  
is not yet active. The company was established for executing the corporate      
rehabilitation plans of major debtors of Eston Ehitus AS.                       
In May, Eston Ehitus AS participated in the establishment of Magasini 29 OÜ,    
acquiring a 34% stake for a monetary contribution of 13.6 thousand kroons (0.9  
thousand euros). The entity was transferred some of the assets and liabilities  
of Crislivinca OÜ (an existing company in which the stake of Eston Ehitus AS was
also 34%) that were related to an undeveloped property in Magasini street,      
Tallinn.                                                                        
In August, Eston Ehitus AS and AS EKE Invest completed a transaction by which   
they exchanged interests in Crislivinca OÜ and Magasini 29 OÜ. Before the       
transaction, the respective stakes of Eston Ehitus AS and AS EKE Invest were 34%
and 66% in both companies. After the transaction, Eston Ehitus AS holds 100% of 
the shares in Magasini 29 OÜ and has no stake in Crislivinca OÜ while AS EKE    
Invest holds all the shares in Crislivinca OÜ and has no stake in Magasini 29   
OÜ.                                                                             

Eurocon Ukraine TOV                                                             
In March, Eurocon Ukraine TOV sold its 99% stake in the dormant subsidiary      
Bukovina Development TOV. After the transaction, the Group has no ownership     
interest in Bukovina Development TOV.                                           


Financial review                                                                

Margins                                                                         
Nordecon International Group ended the first nine months of 2010 with a gross   
loss of 8.5 million kroons (0.5 million euros). In the comparative period (first
nine months of 2009), the Group earned a gross profit of 165.2 million kroons   
(10.6 million euros). The first two quarters of 2010 ended in a loss triggered  
by the combined effect of seasonal fluctuations in the construction business,   
unfavourable weather conditions and the recognition of potential losses from    
projects secured before the input prices started rising. The third quarter, on  
the other hand, ended in a profit. Consolidated third quarter gross profit      
amounted to 36.7 million kroons (2.3 million euros). In absolute terms, the     
third quarter profit figure was affected most by the completion of the Mäo      
bypass, a major project involving both design and construction operations.      
Overview of seasonal fluctuations in gross profit development:                  
--------------------------------------------------------------------------------
| Percentage of annual  |      Q1 |        Q2 |       Q3 |       Q4 |    Total |
| gross profit          |         |           |          |          |          |
--------------------------------------------------------------------------------
| 2006                  |     10% |       20% |      33% |      37% |     100% |
--------------------------------------------------------------------------------
| 2007                  |     13% |       30% |      26% |      31% |     100% |
--------------------------------------------------------------------------------
| 2008                  |     28% |       38% |      20% |      13% |     100% |
--------------------------------------------------------------------------------
| 2009                  |     27% |       35% |      59% |     -21% |     100% |
--------------------------------------------------------------------------------
According to management's assessment, the situation in the construction market  
continues to be exacerbated by fierce competition that renders the gross margins
of secured and new contracts lower than would be expected in a stable market. A 
slow but steady rise in input prices means that long-term contracts will remain 
exposed to the risk of loss. The Group recognised all estimated construction    
contract losses in the first half-year, which had a positive impact on the third
quarter gross profit. It should have a positive effect also on the last quarter.
Still, we remain cautious in our estimates and do not rule out the possibility  
that ongoing changes in the construction market may cause setbacks on certain   
projects.                                                                       

The Group's administrative expenses for the first nine months totalled 52.7     
million kroons (3.4 million euros). Compared with the first nine months of 2009,
the Group has cut its administrative expenses by 45%. As at the reporting date, 
the ratio of administrative expenses to revenue was 4.5% (9M 2009: 4.9%). Cost  
saving measures have yielded good results - we have been able to lower the ratio
of administrative expenses to revenue below the targeted 5% and are close to    
achieving the objective set at the beginning of the year according to which we  
should reduce operating expenses by a third compared with the previous year.    
In light of the above, the Group's operating loss for the first nine months of  
2010 amounted to 70.6 million kroons (4.5 million euros) (9M 2009: operating    
profit of 44.6 million kroons/2.9 million euros).                               

The Group's net loss for the period amounted to 98.7 million kroons (6.3 million
euros). Its formation was significantly influenced by non-recurring financial   
items. One-off finance income on the sale of the Latvian operations (see note 4 
to the interim financial statements) amounted to 32.6 million kroons (2.1       
million euros).                                                                 

During the reporting period the Group recognised an impairment loss of 40.2     
million kroons (2.6 million euros) for loans granted to legal persons. The      
write-down concerned loans provided by group entity Eston Ehitus AS to the      
owners of companies that commissioned the construction of Pärnu Keskus - the    
Pärnu Centre. To date, it has become clear that it is not reasonable to expect  
that the persons involved will regain their solvency. The construction contract 
receivables of Eston Ehitus AS that are due from the customers of the Pärnu     
Centre contract total 42.4 million kroons (2.7 million euros). The Group will   
decide the extent to which these items should be written down in the fourth     
quarter, when it has become clear how the problems surrounding the construction 
of the Pärnu Centre and the adjoining parking house will be resolved. Further   
information on the project and the problems is provided in note 39 to the       
Group's financial statements for the year ended 31 December 2009.               

The nine-month loss attributable to owners of the parent Nordecon International 
AS amounted to 89.5 million kroons (5.7 million euros).                         

Cash flows                                                                      
The Group's operating activities for the first nine months of 2010 resulted in a
net cash outflow of 39.7 million kroons (2.5 million euros). The comparative    
period ended in a net cash inflow of 71.0 million kroons (4.5 million euros).   
Compared with the first half-year where operating activities generated cash     
inflow, the nine-month period ended in an outflow mostly on account of cyclical 
fluctuations in project-related cash flows. The customers' contractual          
settlement terms have become longer (up to 60 days) and in the case of some     
projects payments have been deferred until the next year. On the other hand, the
Group has completed or is completing major projects whose retentions for        
warranty and similar performance will be paid after the signature of the final  
delivery documents. According to estimates, these amounts will be settled in the
last quarter when most project-related payments to subcontractors have already  
been made. Receipts from central and local government institutions that are     
funded from the state budget should also increase before the beginning of the   
next fiscal year.                                                               

Investing activities generated a net inflow of 9.9 million kroons (0.6 million  
euros) compared with a net outflow of 45.9 million kroons (2.9 million euros)   
for the first nine months of 2009. A significant proportion of cash outflows    
from investing activities (9.6 million kroons/0.6 million euros) is attributable
to the disposal of the subsidiary Nordecon Infra SIA and the discontinuance of  
its consolidation (see note 4 to the interim financial statements). A           
significant proportion of cash inflows resulted from the disposal of property,  
plant and equipment and investment properties that generated receipts of 20.2   
million kroons (1.3 million euros).                                             

Financing activities resulted in a net cash outflow of 78.5 million kroons (5.0 
million euros) compared with an outflow of 79.8 million kroons (5.0 million     
euros) in the first nine months of 2009. The internal structure of financing    
cash flows has remained stable. The Group is raising less debt capital than is  
required for settling its existing loan liabilities on a timely basis.          
Key financial figures and ratios                                                
--------------------------------------------------------------------------------
| Figure / ratio            |   9M 2010 |    9M 2009 |    9M 2008 |       2009 |
--------------------------------------------------------------------------------
| Weighted average number   | 30,756,72 | 30,756,728 | 30,756,728 | 30,756,728 |
| of shares                 |         8 |            |            |            |
--------------------------------------------------------------------------------
| Earnings per share (in    |     -2.91 |       2.13 |       5.06 |      -1.49 |
| kroons)                   |           |            |            |            |
--------------------------------------------------------------------------------
| Earnings per share (in    |     -0.19 |       0.14 |       0.32 |      -0.09 |
| euros)                    |           |            |            |            |
--------------------------------------------------------------------------------
| Revenue growth            |    -40.2% |     -32.7% |       9.9% |     -37.5% |
--------------------------------------------------------------------------------
| Average number of         |       808 |      1,110 |      1,267 |      1,128 |
| employees                 |           |            |            |            |
--------------------------------------------------------------------------------
| Revenue per employee (in  |     1,457 |      1,773 |      2,306 |      2,144 |
| thousands of kroons)      |           |            |            |            |
--------------------------------------------------------------------------------
| Revenue per employee (in  |        93 |        113 |        147 |        137 |
| thousands of euros)       |           |            |            |            |
--------------------------------------------------------------------------------
| Personnel expenses to     |     14.0% |      14.2% |      12.4% |      15.0% |
| revenue                   |           |            |            |            |
--------------------------------------------------------------------------------
| Administrative expenses   |      4.5% |       4.9% |       4.7% |       5.2% |
| to revenue                |           |            |            |            |
--------------------------------------------------------------------------------
| EBITDA* (in thousands of  |   -32,109 |     97,471 |    234,230 |      4,308 |
| kroons)                   |           |            |            |            |
--------------------------------------------------------------------------------
| EBITDA* (in thousands of  |    -2,052 |      6,230 |     14,970 |        275 |
| euros)                    |           |            |            |            |
--------------------------------------------------------------------------------
| EBITDA margin             |     -2.7% |       5.0% |       8.0% |       0.2% |
--------------------------------------------------------------------------------
| Gross margin              |     -0.7% |       8.4% |      10.7% |       5.6% |
--------------------------------------------------------------------------------
| Operating margin          |     -6.0% |       2.3% |       6.1% |      -5.2% |
--------------------------------------------------------------------------------
| Operating margin          |     -6.3% |       2.1% |       6.0% |      -5.4% |
| excluding gains on asset  |           |            |            |            |
| sales                     |           |            |            |            |
--------------------------------------------------------------------------------
| Net margin                |     -8.3% |       2.4% |       6.3% |      -3.7% |
--------------------------------------------------------------------------------
| Return on invested        |     -7.4% |       5.3% |      18.9% |      -4.1% |
| capital                   |           |            |            |            |
--------------------------------------------------------------------------------
| Return on assets          |     -3.9% |       1.9% |       7.7% |      -6.0% |
--------------------------------------------------------------------------------
| Return on equity          |    -14.7% |       5.5% |      21.7% |     -11.4% |
--------------------------------------------------------------------------------
| Equity ratio              |     36.7% |      36.9% |      35.5% |      37.1% |
--------------------------------------------------------------------------------
| Gearing                   |     33.0% |      25.7% |      28.7% |      26.4% |
--------------------------------------------------------------------------------
| Current ratio             |      1.56 |       1.43 |       1.42 |       1.47 |
--------------------------------------------------------------------------------
|                           |   30 Sept |    30 Sept |    30 Sept |     31 Dec |
|                           |      2010 |       2009 |       2008 |       2009 |
--------------------------------------------------------------------------------
| Order book (in thousands  | 1,399,269 |  1,612,160 |  3,042,654 |  1,530,661 |
| of kroons)                |           |            |            |            |
--------------------------------------------------------------------------------
| Order book (in thousands  |    89,430 |    103,036 |    194,461 |     97,827 |
| of euros)                 |           |            |            |            |
--------------------------------------------------------------------------------
* On calculating EBITDA, non-cash expenses include depreciation and amortisation
as well as impairment losses on goodwill.                                       
--------------------------------------------------------------------------------
| Earnings per share (EPS) = net     | Operating margin excluding gains on     |
| profit attributable to equity      | asset sales = (operating profit - gains |
| holders of the parent / weighted   | on sale of property, plant and          |
| average number of shares           | equipment - gains on sale of real       |
| outstanding                        | estate) / revenue                       |
| Revenue per employee = revenue /   | Net margin = net profit for the period  |
| average number of employees        | / revenue                               |
| Personnel expenses to revenue =    | Return on invested capital = (profit    |
| personnel expenses / revenue       | before tax + interest expense) / the    |
| Administrative expenses to revenue | period's average (interest-bearing      |
| = administrative expenses /        | liabilities + equity)                   |
| revenue                            | Return on assets = operating profit /   |
| EBITDA = earnings before interest, | the period's average total assets       |
| taxes, depreciation and            | Return on equity = net profit for the   |
| amortisation                       | period /the period's average total      |
| EBITDA margin = EBITDA / revenue   | equity                                  |
| Gross margin = gross profit /      | Equity ratio = total equity / total     |
| revenue                            | equity and liabilities                  |
| Operating margin = operating       | Gearing = (interest-bearing liabilities |
| profit / revenue                   | - cash and cash equivalents) /          |
|                                    | (interest bearing liabilities + equity) |
|                                    | Current ratio = total current assets /  |
|                                    | total current liabilities               |
--------------------------------------------------------------------------------

Performance by geographical market                                              
In the first nine months of 2010, revenue earned outside Estonia accounted for  
around 4% of the Group's total revenue. A year ago, the contribution of foreign 
markets was around 15%. The decrease results from the Group's decision to sell  
its Latvian operations in 2010 (see also the chapter Major changes in the       
Group's structure in the first nine months of 2010). In addition, in contrast to
the first nine months of 2009 the Group did not earn any revenue in Lithuania.  
The proportion of the Group's Ukrainian revenues has increased somewhat but     
mainly on account of a decrease in its Estonian revenues. The Group's vision of 
its further operations in the Latvian, Lithuanian and Ukrainian markets is      
presented in the chapter Outlooks of the Group's geographical markets.          
--------------------------------------------------------------------------------
|                       |    9M 2010 |     9M 2009 |     9M 2008 |        2009 |
--------------------------------------------------------------------------------
| Estonia               |      95.8% |       84.9% |       80.1% |         86% |
--------------------------------------------------------------------------------
| Ukraine               |       3.0% |        2.2% |       13.4% |          3% |
--------------------------------------------------------------------------------
| Lithuania             |         0% |        0.5% |        2.4% |          0% |
--------------------------------------------------------------------------------
| Latvia                |         0% |       12.3% |        4.1% |         11% |
--------------------------------------------------------------------------------
| Belarus               |       1.2% |          0% |          0% |          0% |
--------------------------------------------------------------------------------
In the reporting period, the Group started performing a project-based           
construction contract in Belarus and at the end of the nine-month period related
revenues accounted for around 1% of the Group's total revenue. The project in   
Belarus will continue until the end of the first half of 2011. Concrete works in
Finland do not yet account for a percentage of consolidated revenue.            
Revenue distribution between different geographical segments is a consciously   
deployed strategy by which the Group avoids excessive reliance on a single      
market. Although in the long-term perspective the Group's strategy foresees     
increasing foreign operations, in the short-term perspective the Group will     
focus on the Estonian market and seizing opportunities in an environment that it
knows best and that entails comparatively fewer identified market risks.        


Performance by business line                                                    
The core business of Nordecon International Group is general contracting and    
project management in buildings and infrastructure construction. The Group is   
involved, among other things, in the construction of commercial and industrial  
buildings and facilities, road construction and maintenance, environmental      
engineering, concrete works and real estate development.                        
Consolidated revenue for the first nine months of 2010 amounted to 1,177.5      
million kroons (75.3 million euros), a 40% decrease from the 1,967.6 million    
kroons (125.8 million euros) generated in the first nine months of 2009. Above  
all, the downturn is attributable to a significant decline in the demand for    
construction services in all of the Group's markets and, in the first quarter,  
an exceptionally snowy and cold winter that had the strongest impact on the     
Infrastructure segment where most of the work is done outdoors. In addition, the
absolute revenue figure has been influenced by stiff competition that lowers the
construction prices.                                                            

The Group aims to maintain the revenues generated by its business 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 view of estimated demand for apartments, in subsequent
years the proportion of housing construction revenue will remain within the     
strategic 20% limit.                                                            

Segment revenue                                                                 
At the end of the first nine months of 2010, the Group's infrastructure         
construction revenues exceeded those of buildings construction. Considering that
for some time most of the construction market tenders have been related to      
infrastructure (primarily projects financed with the support of the state and   
the EU structural funds) and that the Infrastructure segment accounts for       
roughly two thirds of the Group's order book, this was to be expected. However, 
the difference is not great because the current buildings construction contracts
have a shorter term than those of infrastructure construction. It is quite clear
that in the foreseeable future the contribution of the Infrastructure segment   
will dominate over that of Buildings.                                           
During the first nine months of 2010 the Buildings and Infrastructure segments  
generated revenue of 545.4 million kroons (34.9 million euros) and 612.6 million
kroons (39.2 million euros) respectively. The corresponding figures for nine    
months of 2009 were 872.1 million kroons (55.7 million euros) and 1,075.9       
million kroons (68.8 million euros).                                            
Revenue distribution between segments*                                          
--------------------------------------------------------------------------------
| Business segments                 | 9M 2010 |  9M 2009 |  9M 2008 |     2009 |
--------------------------------------------------------------------------------
| Buildings                         |     47% |      44% |      64% |      45% |
--------------------------------------------------------------------------------
| Infrastructure                    |     53% |      56% |      36% |      55% |
--------------------------------------------------------------------------------

Revenue distribution within segments                                            
Distribution of projects within the Buildings segment has changed significantly 
compared with a year ago as well as with historical annual averages. There are  
two main reasons for this. The scarcity of projects forces companies to compete 
in all market segments and the number of contracts awarded is small compared    
with bids made. Such a situation does not allow concentrating on a specific     
business area. Another important factor is the general economic environment.    
During the past year, private companies' investments in commercial and          
industrial buildings and facilities have been almost nonexistent while local    
governments' investments in schools, nurseries and public buildings have        
increased, partly thanks to the support received from the EU structural funds.  
The proportion of industrial buildings in the Group's portfolio is large mainly 
because of the ongoing construction of the Ahtme peak load boiler plant. The    
Group builds apartment buildings for external customers as a general contractor,
not a developer. Revenue distribution within the segment should remain similar  
also in the last quarter.		                                                     
--------------------------------------------------------------------------------
| Revenue distribution within the   | 9M 2010 |  9M 2009 |  9M 2008 |     2009 |
| Buildings segment                 |         |          |          |          |
--------------------------------------------------------------------------------
| Commercial buildings              |     24% |      64% |      59% |      66% |
--------------------------------------------------------------------------------
| Industrial and warehouse          |     31% |       9% |      16% |      10% |
| facilities                        |         |          |          |          |
--------------------------------------------------------------------------------
| Public buildings                  |     33% |      23% |      14% |      18% |
--------------------------------------------------------------------------------
| Apartment buildings               |     12% |       4% |      11% |       6% |
--------------------------------------------------------------------------------

As anticipated, as at the end of the first nine months over two thirds of the   
revenue generated by the Infrastructure segment is attributable to road         
construction and maintenance. The construction of other engineering facilities  
(mostly water and wastewater networks) is an area where the Group has won many  
tenders. Therefore, the contribution of other engineering projects will remain  
relatively large until the end of the year. The contribution of environmental   
engineering projects (e.g. the closure of landfills) has remained stable        
compared with 2009. Hydraulic engineering that depends heavily on the ports'    
investment policies has plummeted to an all-time low and its recovery at the end
of the year is not likely.                                                      
--------------------------------------------------------------------------------
| Revenue distribution within the  |  9M 2010 |  9M 2009 |  9M 2008 |     2009 |
| Infrastructure segment           |          |          |          |          |
--------------------------------------------------------------------------------
| Road construction and            |      69% |      43% |      52% |      49% |
| maintenance                      |          |          |          |          |
--------------------------------------------------------------------------------
| Specialist engineering           |       1% |      16% |      19% |      12% |
| (including hydraulic             |          |          |          |          |
| engineering)                     |          |          |          |          |
--------------------------------------------------------------------------------
| Other engineering                |      22% |      31% |      23% |      31% |
--------------------------------------------------------------------------------
| Environmental engineering        |       8% |      10% |       6% |       8% |
--------------------------------------------------------------------------------

Order book                                                                      
At 30 September 2010, the Group's order book stood at 1,399.3 million kroons    
(89.4 million euros), 13% down from the 1,612.2 million kroons (103.0 million   
euros) posted a year ago. Over the past quarters, the decline in the Group's    
order book has notably decelerated and the forward order book has levelled off  
at around 1,350 to 1,500 million kroons (86 to 95 million euros).               

--------------------------------------------------------------------------------
|                               |  9M 2010 |   9M 2009 |   9M 2008 |      2009 |
--------------------------------------------------------------------------------
| Order book, in thousands of   |1,399,269 | 1,612,160 | 3,042,654 | 1,530,661 |
| kroons                        |          |           |           |           |
--------------------------------------------------------------------------------
| Order book, in thousands of   |   89,430 |   103,036 |   194,461 |    97,827 |
| euros                         |          |           |           |           |
--------------------------------------------------------------------------------
At 72% the Infrastructure segment continues to account for a significant        
proportion of the Group's total order book (9M 2009: 66%).                      
The value of the order portfolio has decreased due to the downturn in the       
construction market. In absolute terms, the order book figures have also been   
influenced by the year-over-year decrease in construction prices. In many       
segments of the construction market the decrease in input prices has ceased or  
turned to a rise. Therefore, in the near future the Group's management will     
focus on improving the profitability of the contract portfolio rather than      
increasing its size or growth rate.                                             
Between the reporting date (30 September 2010) and the date of release of this  
report, Group companies have been awarded additional construction contracts of  
approximately 50 million kroons (3.2 million euros).                            

People                                                                          
Staff and personnel expenses                                                    
In the first nine months of 2010, the Group (including the parent and the       
subsidiaries) employed, on average, 808 people including around 380 engineers   
and technical personnel (ETP). A significant one-off decrease in the number of  
staff is attributable to the divestment of the Latvian subsidiary Nordecon Infra
SIA in the first quarter of 2010. At the end of 2009, the Nordecon Infra SIA    
subgroup employed over 160 people. In addition to disposals of companies, the   
number of staff has decreased on account of downsizing (lay-offs and termination
of contracts). In a situation where construction volumes are expected to        
continue shrinking throughout the year, the headcount may decrease even further.
In connection with the seasonal nature of the construction business, in the     
second and third quarters the number of staff increased through fixed-term      
contracts but at the end of the year the impact of temporary hires will         
disappear.                                                                      
Average number of the Group's employees (including the parent and its           
subsidiaries:                                                                   
--------------------------------------------------------------------------------
|                     |     9M 2010 |     9M 2009 |     9M 2008 |         2009 |
--------------------------------------------------------------------------------
| ETP                 |         380 |         456 |         525 |          467 |
--------------------------------------------------------------------------------
| Workers             |         428 |         654 |         742 |          661 |
--------------------------------------------------------------------------------
| Total average       |         808 |       1,110 |       1,267 |        1,128 |
--------------------------------------------------------------------------------
The Group's personnel expenses for the first nine months of 2010 including all  
associated taxes totalled 165.1 million kroons (10.6 million euros), a 33%      
decrease compared with the 247.2 million kroons (15.8 million euros) incurred in
the first nine months of 2009.                                                  
Personnel expenses have declined on account of downsizing and the cutting of    
basic salaries. In 2009, employee salaries were 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.                                                               

In the first nine months of 2010, the remuneration of the members of the council
of Nordecon International AS including associated social security charges       
amounted to 1,077 thousand kroons (69 thousand euros). The corresponding figure 
for the first nine months of 2009 was also 1,077 thousand kroons (69 thousand   
euros). The remuneration and benefits of the members of the board of Nordecon   
International AS including social security charges totalled 1,493 thousand      
kroons (95 thousand euros) compared with 2,701 thousand kroons (173 thousand    
euros) for the first nine months of 2009. The remuneration of the board has     
decreased because in the comparative period the board had three members whereas 
in the reporting period the number was two.                                     

Changes in the board of Nordecon International AS                               
Due to the contraction of the Group's foreign operations, Priit Tiru who was    
responsible for coordinating the Group's foreign operations and strategic       
management of the buildings construction division was removed from the board of 
Nordecon International AS early based on a council resolution effective as of 1 
November 2010.                                                                  
In connection with the plan to merge Nordecon International AS with its         
subsidiaries Nordecon Infra AS and Nordecon Ehitus AS (see the chapter          
Significant changes in the Group's structure in 2011), the council appointed to 
the board of the entity that will form after the merger new members who will    
take office in January 2011. Jaano Vink will continue as chairman of the board. 
Members of the board will be Avo Ambur, Marko Raudsik and Erkki Suurorg who all 
have long-term experience in the construction sector as well as in the Nordecon 
International Group.                                                            


Outlooks of the Group's geographical markets                                    

Estonia                                                                         
The Group's management believes that in the last quarter of 2010 the Estonian   
construction market will be characterised by the following features:            
- Total demand in the construction market will remain heavily dependent on      
public procurement tenders and projects performed with the support of the       
European Union funds. Project initiation success depends on the administrative  
capabilities of the central and local government which have improved compared   
with previous periods. However, the demand resulting from public sector projects
will not be able to compensate for the steep contraction of the buildings       
construction market that remains abandoned by most private sector companies and 
individuals. Accordingly, the Group's management forecasts that by the end of   
2010 the total volume of the construction market will have decreased by over 50%
compared with 2008.                                                             
- The number of residential and general buildings construction companies is     
decreasing. Companies engaged in the sector are seeking opportunities for       
penetrating also other market segments such as infrastructure. This has         
heightened competition which, in turn, has increased the number of companies    
going bankrupt or needing corporate rehabilitation. The trend will continue     
through 2010. The Group does not forecast a significant number of mergers or    
takeovers because in the current market situation this would not have sufficient
business rationale.                                                             
- Compared with 2008 and 2009, the decrease in construction prices has ceased in
2010 and input prises will continue rising also in subsequent periods. In such a
situation, performance of long-term construction contracts undertaken at        
unreasonably low margins or below cost may have extremely adverse consequences  
and may cause serious financial difficulties for companies that have not noticed
the trend or have decided to ignore it due to cash flow problems.               
- Banks have divided companies operating in the construction market into        
different risk categories. The banks' risk exposures still include the real     
estate and investment loans granted to companies engaged in real estate         
development. In 2010, the survival of a number of companies will depend on the  
banks' risk management principles. On the other hand, the banks have indicated  
that they are again willing to start financing the construction sector although 
to a limited extent                                                             
- Because of the increasing importance of infrastructure projects, the key      
competitive advantages will include industry-specific (engineering and          
technical) expertise, experience and references as well as the availability of  
relevant resources.                                                             
- Construction projects' financing principles have changed. There are now       
additional requirements to the co-funding to be provided by the builder during  
the construction period. Moreover, contractual settlement terms have lengthened 
and there are settlement defaults. All this will increase the companies'        
liquidity risks.                                                                

Latvia and Lithuania                                                            
In February 2010, the Group sold its loss-generating Latvian subsidiary Nordecon
Infra SIA whose core business was construction of water and wastewater networks.
According to the Group's assessment, the Latvian construction market will be    
undergoing extensive adjustment to the recessionary environment through         
2010-2011. Therefore, in the next few years the Group will continue operating in
Latvia on a project basis, through its Estonian subsidiaries, involving partners
where necessary. Continuation of project-based business assumes that the        
projects can be performed profitably. The decision does not change the Group's  
long-term strategic objectives in the Latvian market, i.e. the objective of     
operating there in the future through local subsidiaries.                       
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 had a direct impact on the construction       
market. The commercial and residential construction markets (the Group company  
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 operations of the Group's Lithuanian subsidiary        
Nordecon Statyba UAB have been suspended and the Group is monitoring the market 
situation. The temporary suspension of operations does not cause any major costs
for the Group. The Group's management does not rule out the possibility that the
Lithuanian operations will remain suspended also after 2010. The decision does  
not change the Group's long-term strategic objectives in the Lithuanian         
construction market, i.e. the objective of operating there in the future through
local subsidiaries.                                                             

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    
decreased substantially. The situation in the sector is not expected to improve 
until after the second half of 2010. This implies, above all, the need for tight
cost control.                                                                   
Activities on development projects that require major investment have been      
suspended to minimise the risks until the situation in the Ukrainian and global 
financial markets eases up (the Group has currently interests in two development
projects that have been conserved)                                              
The main risks in the Ukrainian market are connected with the low administrative
efficiency of the central and local government and the judicial system,         
inflation, and the availability of quality construction inputs. Demand is mainly
undermined by the customers' 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. It is also clear that the
political climate has stabilised after the presidential elections, which should 
pave the way for an improvement in the general economic climate. This, in turn, 
would revive investment by local and foreign companies who account for a        
significant proportion of the Group's customers in the Ukrainian market.        
Notwithstanding the above, the Group believes that the construction market of a 
country with a population of 46 million will offer excellent business           
opportunities also in the future. The Group's key success factor is relatively  
little competition among project management companies (the Group offers flexible
construction management in combination with European practices and competencies)
compared with the real needs of a normally functioning construction market. 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 significantly
in the long-term perspective.                                                   


Description of the main risks                                                   

Business risks                                                                  
Management believes that in the near future the main business risk will be stiff
competition that induces construction companies to bid unreasonably low prices  
in a situation where input prices have started rising and may cause steep       
losses. The situation is aggravated by the fact that the need for winning       
contracts that would cover fixed costs and overheads at a level ensuring normal 
operating capacities is increasing. The Group's management expects to mitigate  
the risks by tight cost control and effective cost cutting as well as thorough  
analyses of new projects.                                                       

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 special 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 30 September 2010, the     
provisions (including current and non-current ones) totalled 20.8 million kroons
(1.3 million euros). At 30 September 2009, the corresponding figure was 17.4    
million kroons (1.1 million euros).                                             

Credit risk                                                                     
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. At the end 
of the reporting period, our customers' settlement behaviour was good in the    
current economic situation; however, there were also some large problem         
customers. The proportion of overdue receivables has increased, which heightens 
the risk of future credit losses. 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.                                                                        

At the end of nine months, expenses from the write-down of receivables and      
income from the recovery of expensed items were practically in balance. In the  
comparative period, expenses from the write-down of receivables totalled 18.6   
million kroons (1.2 million euros). In the fourth quarter, the Group's          
management will analyse to what extent the receivables related to the           
construction of the Pärnu Centre should be written down. The receivables total  
42.4 million kroons (2.7 million euros). In the reporting period, the Group     
wrote down loans granted to legal persons that were related to the same project 
by 40.2 million kroons (2.6 million euros).                                     

Liquidity risk                                                                  
Free funds are placed in overnight or fixed-interest term deposits with the     
largest banks in 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 1.56-fold (30 Sept 2009: 1.43-fold) and available cash funds        
totalled 116.9 million kroons (7.5 million euros) (30 Sept 2009: 241.4 million  
kroons / 15.4 million euros).                                                   

Interest rate risk                                                              
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 30 September 2010, the Group's interest-bearing loans and borrowings
totalled 481.7 million kroons (30.8 million euros), a 128.7 million kroon (8.2  
million euro) decrease year-over-year. Interest expense for the first nine      
months of 2010 amounted to 11.5 million kroons (0.7 million euros). Compared    
with the first nine months of 2009, interest expense has contracted by 8.5      
million kroons (0.5 million euros), primarily on account of a decrease in loans 
and borrowings.                                                                 
The Group's interest rate risk results mainly from two factors: an increase in  
the base rate for floating interest rates (EURIBOR) and insufficient operating  
cash flow that may render the Group unable to settle its interest expense. The  
first factor is mitigated by fixing, where possible, the interest rates of      
liabilities during the period of low market interest rates. The realisation of  
the cash flow risk depends on the success of operating activities. The Group    
does not use derivatives to hedge the interest rate risk.                       

Currency risk                                                                   
As a rule, construction contracts and subcontractors' service contracts are made
in the currency of the host country: in Estonia in Estonian kroons (EEK) and in 
Ukraine in Ukrainian hryvnas (UAH). In connection with shrinkage in operations  
in Latvia and Lithuania, the currency risks of those countries are no longer    
relevant. Services purchased from other countries are mostly priced in euros,   
which does not constitute a currency risk for the Group's Estonian 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    
ceased.                                                                         
The Group's exchange gains and losses for the first nine months of 2010 resulted
in a net exchange loss of 5.7 million kroons (0.4 million euros). In the        
comparative period, exchange differences resulted in a net exchange gain of 6.9 
million kroons (0.4 million euros).                                             


Condensed consolidated interim statement of financial position                  
--------------------------------------------------------------------------------
| EEK`000                                 |    30 Sept 2010 |      31 Dec 2009 |
--------------------------------------------------------------------------------
| ASSETS                                  |                 |                  |
--------------------------------------------------------------------------------
| Current assets                          |                 |                  |
--------------------------------------------------------------------------------
| Cash and cash equivalents               |         116,933 |          225,191 |
--------------------------------------------------------------------------------
| Trade and other receivables             |         667,157 |          644,704 |
--------------------------------------------------------------------------------
| Prepayments                             |          33,425 |           30,595 |
--------------------------------------------------------------------------------
| Inventories                             |         374,323 |          389,328 |
--------------------------------------------------------------------------------
| Non-current assets held for sale        |           4,948 |            4,617 |
--------------------------------------------------------------------------------
| Total current assets                    |       1,196,786 |        1,294,435 |
--------------------------------------------------------------------------------
| Non-current assets                      |                 |                  |
--------------------------------------------------------------------------------
| Investments in equity accounted         |           1,955 |            2,191 |
| investees                               |                 |                  |
--------------------------------------------------------------------------------
| Other investments                       |             414 |              414 |
--------------------------------------------------------------------------------
| Trade and other receivables             |          26,740 |           33,329 |
--------------------------------------------------------------------------------
| Investment property                     |          77,135 |           87,975 |
--------------------------------------------------------------------------------
| Property, plant and equipment           |         150,288 |          204,115 |
--------------------------------------------------------------------------------
| Intangible assets                       |         248,028 |          268,233 |
--------------------------------------------------------------------------------
| Total non-current assets                |         504,560 |          596,257 |
--------------------------------------------------------------------------------
| TOTAL ASSETS                            |       1,701,346 |        1,890,692 |
--------------------------------------------------------------------------------
| LIABILITIES                             |                 |                  |
--------------------------------------------------------------------------------
| Current liabilities                     |                 |                  |
--------------------------------------------------------------------------------
| Loans and borrowings                    |         187,056 |          262,959 |
--------------------------------------------------------------------------------
| Trade payables                          |         434,050 |          377,925 |
--------------------------------------------------------------------------------
| Other payables                          |          74,268 |           94,580 |
--------------------------------------------------------------------------------
| Deferred income                         |          60,577 |          136,438 |
--------------------------------------------------------------------------------
| Provisions                              |          12,413 |           10,364 |
--------------------------------------------------------------------------------
| Total current liabilities               |         768,364 |          882,266 |
--------------------------------------------------------------------------------
| Non-current liabilities                 |                 |                  |
--------------------------------------------------------------------------------
| Loans and borrowings                    |         294,691 |          294,328 |
--------------------------------------------------------------------------------
| Trade payables                          |           3,276 |            4,846 |
--------------------------------------------------------------------------------
| Other payables                          |           1,500 |            1,500 |
--------------------------------------------------------------------------------
| Provisions                              |           8,428 |            7,041 |
--------------------------------------------------------------------------------
| Total non-current liabilities           |         307,895 |          307,715 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES                       |       1,076,259 |        1,189,981 |
--------------------------------------------------------------------------------
| EQUITY                                  |                 |                  |
--------------------------------------------------------------------------------
| Share capital                           |         307,567 |          307,567 |
--------------------------------------------------------------------------------
| Statutory capital reserve               |          40,024 |           40,012 |
--------------------------------------------------------------------------------
| Translation reserve                     |          -3,573 |           -3,201 |
--------------------------------------------------------------------------------
| Retained earnings                       |         255,749 |          345,280 |
--------------------------------------------------------------------------------
| Total equity attributable to equity     |         599,767 |          689,658 |
| holders of the parent                   |                 |                  |
--------------------------------------------------------------------------------
| Non-controlling interest                |          25,320 |           11,053 |
--------------------------------------------------------------------------------
| TOTAL EQUITY                            |         625,087 |          700,711 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY            |       1,701,346 |        1,890,692 |
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
| EUR`000                                 |    30 Sept 2010 |      31 Dec 2009 |
--------------------------------------------------------------------------------
| ASSETS                                  |                 |                  |
--------------------------------------------------------------------------------
| Current assets                          |                 |                  |
--------------------------------------------------------------------------------
| Cash and cash equivalents               |           7,473 |           14,392 |
--------------------------------------------------------------------------------
| Trade and other receivables             |          42,639 |           41,204 |
--------------------------------------------------------------------------------
| Prepayments                             |           2,136 |            1,955 |
--------------------------------------------------------------------------------
| Inventories                             |          23,924 |           24,883 |
--------------------------------------------------------------------------------
| Non-current assets held for sale        |             316 |              295 |
--------------------------------------------------------------------------------
| Total current assets                    |          76,489 |           82,729 |
--------------------------------------------------------------------------------
| Non-current assets                      |                 |                  |
--------------------------------------------------------------------------------
| Investments in equity accounted         |             125 |              140 |
| investees                               |                 |                  |
--------------------------------------------------------------------------------
| Other investments                       |              26 |               26 |
--------------------------------------------------------------------------------
| Trade and other receivables             |           1,709 |            2,130 |
--------------------------------------------------------------------------------
| Investment property                     |           4,930 |            5,623 |
--------------------------------------------------------------------------------
| Property, plant and equipment           |           9,605 |           13,045 |
--------------------------------------------------------------------------------
| Intangible assets                       |          15,852 |           17,143 |
--------------------------------------------------------------------------------
| Total non-current assets                |          32,247 |           38,108 |
--------------------------------------------------------------------------------
| TOTAL ASSETS                            |         108,736 |          120,837 |
--------------------------------------------------------------------------------
| LIABILITIES                             |                 |                  |
--------------------------------------------------------------------------------
| Current liabilities                     |                 |                  |
--------------------------------------------------------------------------------
| Loans and borrowings                    |          11,955 |           16,806 |
--------------------------------------------------------------------------------
| Trade payables                          |          27,741 |           24,154 |
--------------------------------------------------------------------------------
| Other payables                          |           4,747 |            6,045 |
--------------------------------------------------------------------------------
| Deferred income                         |           3,872 |            8,720 |
--------------------------------------------------------------------------------
| Provisions                              |             793 |              662 |
--------------------------------------------------------------------------------
| Total current liabilities               |          49,107 |           56,387 |
--------------------------------------------------------------------------------
| Non-current liabilities                 |                 |                  |
--------------------------------------------------------------------------------
| Loans and borrowings                    |          18,834 |           18,811 |
--------------------------------------------------------------------------------
| Trade payables                          |             209 |              310 |
--------------------------------------------------------------------------------
| Other payables                          |              96 |               96 |
--------------------------------------------------------------------------------
| Provisions                              |             539 |              450 |
--------------------------------------------------------------------------------
| Total non-current liabilities           |          19,678 |           19,667 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES                       |          68,785 |           76,054 |
--------------------------------------------------------------------------------
| EQUITY                                  |                 |                  |
--------------------------------------------------------------------------------
| Share capital                           |          19,657 |           19,657 |
--------------------------------------------------------------------------------
| Statutory capital reserve               |           2,558 |            2,557 |
--------------------------------------------------------------------------------
| Translation reserve                     |            -228 |             -205 |
--------------------------------------------------------------------------------
| Retained earnings                       |          16,345 |           22,067 |
--------------------------------------------------------------------------------
| Total equity attributable to equity     |          38,332 |           44,077 |
| holders of the parent                   |                 |                  |
--------------------------------------------------------------------------------
| Non-controlling interest                |           1,618 |              706 |
--------------------------------------------------------------------------------
| TOTAL EQUITY                            |          39,950 |           44,784 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY            |         108,736 |          120,837 |
--------------------------------------------------------------------------------

Condensed consolidated interim statement of comprehensive income                
--------------------------------------------------------------------------------
|  EEK`000          |  Q3 2010 |   Q3 2009 |   9M 2010 |   9M 2009 |      2009 |
--------------------------------------------------------------------------------
| Revenue           |  592,311 |   742,546 | 1,177,511 | 1,967,640 | 2,418,880 |
--------------------------------------------------------------------------------
| Cost of sales     | -555,651 |  -661,677 | -1,186,05 |-1,802,418 |-2,282,575 |
|                   |          |           |         5 |           |           |
--------------------------------------------------------------------------------
| Gross profit /    |   36,660 |    80,869 |    -8,544 |   165,222 |   136,305 |
| loss              |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution      |   -1,316 |    -2,427 |    -4,442 |    -6,790 |    -9,416 |
| expenses          |          |           |           |           |           |
--------------------------------------------------------------------------------
| Administrative    |  -17,143 |   -30,532 |   -52,700 |   -95,882 |  -125,206 |
| expenses          |          |           |           |           |           |
--------------------------------------------------------------------------------
| Other operating   |    2,116 |     2,279 |     7,774 |    22,177 |    25,592 |
| income            |          |           |           |           |           |
--------------------------------------------------------------------------------
| Other operating   |   -5,387 |   -10,745 |   -12,720 |   -40,118 |  -154,014 |
| expenses          |          |           |           |           |           |
--------------------------------------------------------------------------------
| Operating profit  |   14,930 |    39,444 |   -70,632 |    44,609 |  -126,739 |
| / loss            |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income    |    1,790 |     4,907 |    44,070 |    35,809 |    86,513 |
--------------------------------------------------------------------------------
| Finance expenses  |  -44,547 |    -3,933 |   -67,773 |   -26,845 |   -33,934 |
--------------------------------------------------------------------------------
| Net finance       |  -42,757 |       974 |   -23,703 |     8,964 |    52,579 |
| income / expense  |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share of profit / |   -3,736 |       583 |    -4,367 |    -1,523 |    -7,666 |
| loss of equity    |          |           |           |           |           |
| accounted         |          |           |           |           |           |
| investees         |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss     |  -31,563 |    41,001 |   -98,702 |    52,050 |   -81,826 |
| before income tax |          |           |           |           |           |
--------------------------------------------------------------------------------
| Income tax        |     -635 |      -578 |     1,177 |     5,317 |    -7,618 |
| expense / income  |          |           |           |           |           |
--------------------------------------------------------------------------------
| Profit / loss for |  -32,198 |    41,579 |   -97,525 |    46,733 |   -89,444 |
| the period        |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other             |          |           |           |           |           |
| comprehensive     |          |           |           |           |           |
| income / expense: |          |           |           |           |           |
--------------------------------------------------------------------------------
| Exchange          |    1,113 |      -769 |      -372 |    -2,480 |       905 |
| differences on    |          |           |           |           |           |
| translating       |          |           |           |           |           |
| foreign           |          |           |           |           |           |
| operations        |          |           |           |           |           |
--------------------------------------------------------------------------------
| Total other       |    1,113 |      -769 |      -372 |    -2,480 |       905 |
| comprehensive     |          |           |           |           |           |
| income / expense  |          |           |           |           |           |
| for the period    |          |           |           |           |           |
--------------------------------------------------------------------------------
| TOTAL             |  -31,085 |    40,810 |   -97,897 |    44,253 |   -88,539 |
| COMPREHENSIVE     |          |           |           |           |           |
| INCOME / EXPENSE  |          |           |           |           |           |
| FOR THE PERIOD    |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss     |          |           |           |           |           |
| attributable to:  |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Owners of the   |  -30,257 |    42,260 |   -89,531 |    65,436 |   -45,740 |
| parent            |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Non-controlling |   -1,941 |    -2,681 |    -7,994 |   -18,703 |   -43,704 |
| interests         |          |           |           |           |           |
--------------------------------------------------------------------------------
| Profit / loss for |  -32,198 |    41,579 |   -97,525 |    46,733 |   -89,444 |
| the period        |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total             |          |           |           |           |           |
| comprehensive     |          |           |           |           |           |
| income / expense  |          |           |           |           |           |
| attributable to:  |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Owners of the   |  -29,144 |    42,776 |   -89,903 |    65,245 |   -44,835 |
| parent            |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Non-controlling |   -1,941 |    -1,966 |    -7,994 |   -20,992 |   -43,704 |
| interests         |          |           |           |           |           |
--------------------------------------------------------------------------------
| Total             |  -31,085 |    40,810 |   -97,897 |    44,253 |   -88,539 |
| comprehensive     |          |           |           |           |           |
| income / expense  |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per      |          |           |           |           |           |
| share             |          |           |           |           |           |
| attributable to   |          |           |           |           |           |
| owners of the     |          |           |           |           |           |
| parent:           |          |           |           |           |           |
--------------------------------------------------------------------------------
| Basic earnings    |    -0.98 |      1.37 |     -2.91 |      2.13 |     -1.49 |
| per share (EEK)   |          |           |           |           |           |
--------------------------------------------------------------------------------
| Diluted earnings  |    -0.98 |      1.37 |     -2.91 |      2.13 |     -1.49 |
| per share (EEK)   |          |           |           |           |           |
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
| EUR`000           |  Q3 2010 |   Q3 2009 |   9M 2010 |   9M 2009 |      2009 |
--------------------------------------------------------------------------------
| Revenue           |   37,856 |    47,457 |    75,257 |   125,755 |   154,595 |
--------------------------------------------------------------------------------
| Cost of sales     |  -35,512 |   -42,289 |   -75,803 |  -115,196 |  -145,883 |
--------------------------------------------------------------------------------
| Gross profit /    |    2,344 |     5,168 |      -546 |    10,560 |     8,711 |
| loss              |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution      |      -84 |      -155 |      -284 |      -434 |      -602 |
| expenses          |          |           |           |           |           |
--------------------------------------------------------------------------------
| Administrative    |   -1,096 |    -1,951 |    -3,368 |    -6,128 |    -8,002 |
| expenses          |          |           |           |           |           |
--------------------------------------------------------------------------------
| Other operating   |      135 |       146 |       497 |      1417 |     1,636 |
| income            |          |           |           |           |           |
--------------------------------------------------------------------------------
| Other operating   |     -345 |      -687 |      -813 |    -2,564 |    -9,843 |
| expenses          |          |           |           |           |           |
--------------------------------------------------------------------------------
| Operating profit  |      954 |     2,521 |    -4,514 |     2,851 |    -8,100 |
| / loss            |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income    |      114 |       314 |     2,817 |     2,289 |     5,529 |
--------------------------------------------------------------------------------
| Finance expenses  |   -2,847 |      -251 |    -4,332 |    -1,716 |    -2,169 |
--------------------------------------------------------------------------------
| Net finance       |   -2,733 |        62 |    -1,515 |       573 |     3,360 |
| income / expense  |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share of profit / |     -239 |        37 |      -279 |       -97 |      -490 |
| loss of equity    |          |           |           |           |           |
| accounted         |          |           |           |           |           |
| investees         |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss     |   -2,017 |     2,620 |    -6,308 |     3,326 |    -5,230 |
| before income tax |          |           |           |           |           |
--------------------------------------------------------------------------------
| Income tax        |      -41 |       -37 |        75 |       340 |      -487 |
| expense / income  |          |           |           |           |           |
--------------------------------------------------------------------------------
| Profit / loss for |   -2,058 |     2,657 |    -6,233 |     2,986 |    -5,717 |
| the period        |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other             |          |           |           |           |           |
| comprehensive     |          |           |           |           |           |
| income / expense: |          |           |           |           |           |
--------------------------------------------------------------------------------
| Exchange          |       71 |       -49 |       -24 |      -159 |        58 |
| differences on    |          |           |           |           |           |
| translating       |          |           |           |           |           |
| foreign           |          |           |           |           |           |
| operations        |          |           |           |           |           |
--------------------------------------------------------------------------------
| Total other       |       71 |       -49 |       -24 |      -159 |        58 |
| comprehensive     |          |           |           |           |           |
| income / expense  |          |           |           |           |           |
| for the period    |          |           |           |           |           |
--------------------------------------------------------------------------------
| TOTAL             |   -1,987 |     2,608 |    -6,257 |     2,828 |    -5,659 |
| COMPREHENSIVE     |          |           |           |           |           |
| INCOME / EXPENSE  |          |           |           |           |           |
| FOR THE PERIOD    |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit / loss     |          |           |           |           |           |
| attributable to:  |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Owners of the   |   -1,934 |     2,828 |    -5,722 |     4,182 |    -2,923 |
| parent            |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Non-controlling |     -124 |      -171 |      -511 |    -1,195 |    -2,793 |
| interests         |          |           |           |           |           |
--------------------------------------------------------------------------------
| Profit / loss for |   -2,058 |     2,657 |    -6,233 |     2,986 |    -5,717 |
| the period        |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total             |          |           |           |           |           |
| comprehensive     |          |           |           |           |           |
| income / expense  |          |           |           |           |           |
| attributable to:  |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Owners of the   |   -1,863 |     2,734 |    -5,746 |     4,170 |    -2,865 |
| parent            |          |           |           |           |           |
--------------------------------------------------------------------------------
| - Non-controlling |     -124 |      -126 |      -511 |    -1,342 |    -2,793 |
| interests         |          |           |           |           |           |
--------------------------------------------------------------------------------
| Total             |   -1,987 |     2,608 |    -6,257 |     2,828 |    -5,659 |
| comprehensive     |          |           |           |           |           |
| income / expense  |          |           |           |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per      |          |           |           |           |           |
| share             |          |           |           |           |           |
| attributable to   |          |           |           |           |           |
| owners of the     |          |           |           |           |           |
| parent:           |          |           |           |           |           |
--------------------------------------------------------------------------------
| Basic earnings    |    -0.06 |      0.09 |     -0.19 |      0.14 |     -0.10 |
| per share (EUR)   |          |           |           |           |           |
--------------------------------------------------------------------------------
| Diluted earnings  |    -0.06 |      0.09 |     -0.19 |      0.14 |     -0.10 |
| per share (EUR)   |          |           |           |           |           |
--------------------------------------------------------------------------------


Condensed consolidated interim statement of cash flows                          
--------------------------------------------------------------------------------
|                         |         EEK`000         |         EUR`000          |
--------------------------------------------------------------------------------
|                         |    9M 2010 |    9M 2009 |    9M 2010 |     9M 2009 |
--------------------------------------------------------------------------------
| Cash flows from         |            |            |            |             |
| operating activities    |            |            |            |             |
--------------------------------------------------------------------------------
| Cash receipts from      |  1,245,679 |  2,581,192 |     79,613 |     164,968 |
| customers               |            |            |            |             |
--------------------------------------------------------------------------------
| Cash paid to suppliers  | -1,066,956 | -2,089,618 |    -68,191 |    -133,551 |
--------------------------------------------------------------------------------
| VAT paid                |    -46,600 |    -79,100 |     -2,978 |      -5,055 |
--------------------------------------------------------------------------------
| Cash paid to and for    |   -170,672 |   -331,652 |    -10,908 |     -21,196 |
| employees               |            |            |            |             |
--------------------------------------------------------------------------------
| Income tax paid         |     -1,188 |     -9,867 |        -76 |        -631 |
--------------------------------------------------------------------------------
| Net cash from/used in   |    -39,737 |     70,955 |     -2,540 |       4,535 |
| operating activities    |            |            |            |             |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from         |            |            |            |             |
| investing activities    |            |            |            |             |
--------------------------------------------------------------------------------
| Acquisition of          |     -1,359 |     -1,317 |        -87 |         -84 |
| property, plant and     |            |            |            |             |
| equipment               |            |            |            |             |
--------------------------------------------------------------------------------
| Acquisition of          |          0 |     -7,588 |          0 |        -485 |
| intangible assets       |            |            |            |             |
--------------------------------------------------------------------------------
| Proceeds from sale of   |      9,635 |      5,118 |        616 |         327 |
| property, plant and     |            |            |            |             |
| equipment and           |            |            |            |             |
| intangible assets       |            |            |            |             |
--------------------------------------------------------------------------------
| Proceeds from sale of   |     10,600 |       -200 |        677 |         -13 |
| investment property     |            |            |            |             |
--------------------------------------------------------------------------------
| Acquisition of          |         27 |    -11,688 |          1 |        -747 |
| subsidiaries, net of    |            |            |            |             |
| cash acquired           |            |            |            |             |
--------------------------------------------------------------------------------
| Disposal of             |     -9,675 |          0 |       -618 |           0 |
| subsidiaries, net of    |            |            |            |             |
| cash transferred        |            |            |            |             |
--------------------------------------------------------------------------------
| Acquisition of          |     -5,020 |     -6,000 |       -321 |        -383 |
| associates              |            |            |            |             |
--------------------------------------------------------------------------------
| Proceeds from disposal  |          0 |      7,024 |          0 |         449 |
| of associates           |            |            |            |             |
--------------------------------------------------------------------------------
| Acquisition of          |          0 |    -20,000 |          0 |      -1,278 |
| interests in joint      |            |            |            |             |
| ventures                |            |            |            |             |
--------------------------------------------------------------------------------
| Loans granted           |     -7,772 |    -84,843 |       -497 |      -5,422 |
--------------------------------------------------------------------------------
| Repayment of loans      |      8,750 |     61,040 |        559 |       3,901 |
| granted                 |            |            |            |             |
--------------------------------------------------------------------------------
| Dividends received      |         61 |         61 |          4 |           4 |
--------------------------------------------------------------------------------
| Interest received       |      4,608 |     12,524 |        295 |         800 |
--------------------------------------------------------------------------------
| Net cash from / used in |      9,855 |    -45,869 |        630 |      -2,931 |
| investing activities    |            |            |            |             |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from         |            |            |            |             |
| financing activities    |            |            |            |             |
--------------------------------------------------------------------------------
| Proceeds from loans     |     83,012 |    193,432 |      5,305 |      12,427 |
| received                |            |            |            |             |
--------------------------------------------------------------------------------
| Repayment of loans      |   -116,143 |   -179,952 |     -7,423 |     -11,501 |
| received                |            |            |            |             |
--------------------------------------------------------------------------------
| Dividends paid          |          0 |    -31,933 |          0 |      -2,041 |
--------------------------------------------------------------------------------
| Payment of finance      |    -30,507 |    -37,648 |     -1,950 |      -2,406 |
| lease liabilities       |            |            |            |             |
--------------------------------------------------------------------------------
| Interest paid           |    -14,629 |    -23,344 |       -935 |      -1,492 |
--------------------------------------------------------------------------------
| Other payments made     |       -248 |       -307 |        -16 |         -20 |
--------------------------------------------------------------------------------
| Net cash used in        |    -78,515 |    -79,752 |     -5,017 |      -5,033 |
| financing activities    |            |            |            |             |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow           |   -108,397 |    -54,666 |     -6,928 |      -3,494 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash           |    225,191 |    296,184 |     14,392 |      18,930 |
| equivalents at          |            |            |            |             |
| beginning of period     |            |            |            |             |
--------------------------------------------------------------------------------
| Effect of exchange rate |        139 |        -92 |          9 |          -6 |
| fluctuations            |            |            |            |             |
--------------------------------------------------------------------------------
| Decrease  in cash and   |   -108,397 |    -54,666 |     -6,928 |      -3,494 |
| cash equivalents        |            |            |            |             |
--------------------------------------------------------------------------------
| Cash and cash           |    116,933 |    241,426 |      7,473 |      15,430 |
| equivalents at end of   |            |            |            |             |
| period                  |            |            |            |             |
--------------------------------------------------------------------------------


Nordecon International 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
and Finland. 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 2009 was 2.4 billion kroons (155 million euros). Currently
Nordecon International Group employs nearly 750 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: [email protected] 
www.nordecon.com



1. nordecon_report_3q_2010.pdf <PDF>
   (https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=325498)