Financial results of
The Group’s revenue for the first quarter of 2020 amounted to
Condensed consolidated interim statement of financial position
EUR ‘000 | ||
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 7,129 | 7,032 |
Trade and other receivables | 37,610 | 37,563 |
Prepayments | 2,514 | 1,813 |
Inventories | 21,382 | 21,142 |
Total current assets | 68,635 | 67,550 |
Non-current assets | ||
Investments in equity-accounted investees | 806 | 2,369 |
Other investments | 26 | 26 |
Trade and other receivables | 8,494 | 8,435 |
Investment property | 6,301 | 5,530 |
Property, plant and equipment | 18,922 | 19,002 |
Intangible assets | 14,664 | 14,736 |
Total non-current assets | 49,213 | 50,098 |
TOTAL ASSETS | 117,848 | 117,648 |
LIABILITIES | ||
Current liabilities | ||
Borrowings | 16,270 | 11,058 |
Trade payables | 38,665 | 40,730 |
Other payables | 9,252 | 7,954 |
Deferred income | 7,301 | 6,391 |
Provisions | 835 | 716 |
Total current liabilities | 72,323 | 66,849 |
Non-current liabilities | ||
Borrowings | 10,409 | 16,326 |
Trade payables | 98 | 98 |
Other payables | 80 | 177 |
Provisions | 1,743 | 1,425 |
Total non-current liabilities | 12,330 | 18,026 |
TOTAL LIABILITIES | 84,653 | 84,875 |
EQUITY | ||
Share capital | 14,379 | 14,379 |
Own (treasury) shares | -660 | -660 |
Share premium | 635 | 635 |
Statutory capital reserve | 2,554 | 2,554 |
Translation reserve | 2,417 | 1,169 |
Retained earnings | 11,209 | 12,383 |
Total equity attributable to owners of the parent | 30,534 | 30,460 |
Non-controlling interests | 2,661 | 2,313 |
TOTAL EQUITY | 33,195 | 32,773 |
TOTAL LIABILITIES AND EQUITY | 117,848 | 117,648 |
Condensed consolidated interim statement of comprehensive income
EUR ‘000 | Q1 2020 | Q1 2019 | 2019 | |
Revenue | 54,924 | 34,524 | 234,071 | |
Cost of sales | -53,736 | -34,478 | -222,302 | |
Gross profit | 1,188 | 46 | 11,769 | |
Marketing and distribution expenses | -128 | -346 | -784 | |
Administrative expenses | -1,799 | -1,493 | -6,837 | |
Other operating income | 149 | 56 | 315 | |
Other operating expenses | -53 | -13 | -193 | |
Operating loss/profit | -643 | -1,750 | 4,270 | |
Finance income | 56 | 271 | 1,277 | |
Finance costs | -1,579 | -364 | -1,219 | |
Net finance costs/income | -1,523 | -93 | 58 | |
Share of loss/profit of equity-accounted investees | -30 | -50 | 585 | |
Loss/profit before income tax | -2,196 | -1,893 | 4,913 | |
Income tax expense | 0 | 0 | -764 | |
Loss/profit for the period | -2,196 | -1,893 | 4,149 | |
Other comprehensive income/expense: Items that may be reclassified subsequently to profit or loss | ||||
Exchange differences on translating foreign operations | 1,248 | -44 | -823 | |
Total other comprehensive income/expense | 1,248 | -44 | -823 | |
TOTAL COMPREHENSIVE EXPENSE/INCOME | -948 | -1,937 | 3,326 | |
Loss/profit attributable to: | ||||
- Owners of the parent | -2,669 | -1,962 | 3,378 | |
- Non-controlling interests | 473 | 69 | 771 | |
Loss/profit for the period | -2,196 | -1,893 | 4,149 | |
Total comprehensive expense/income attributable to: | ||||
- Owners of the parent | -1,421 | -2,006 | 2,555 | |
- Non-controlling interests | 473 | 69 | 771 | |
Total comprehensive expense/income for the period | -948 | -1,937 | 3,326 | |
Earnings per share attributable to owners of the parent: | ||||
Basic earnings per share (EUR) | -0.08 | -0.06 | 0.11 | |
Diluted earnings per share (EUR) | -0.08 | -0.06 | 0.11 |
Condensed consolidated interim statement of cash flows
EUR ‘000 | Q1 2020 | Q1 2019 |
Cash flows from operating activities | ||
Cash receipts from customers | 70,309 | 46,964 |
Cash paid to suppliers | -63,575 | -43,997 |
VAT paid | -2,936 | -846 |
Cash paid to and for employees | -6,116 | -5,292 |
Income tax paid | 0 | -11 |
Net cash used in operating activities | -2,318 | -3,182 |
Cash flows from investing activities | ||
Paid on acquisition of property, plant and equipment | -58 | -43 |
Proceeds from sale of property, plant and equipment | 138 | 18 |
Loans provided | -5 | -9 |
Repayment of loans provided | 3 | 2 |
Acquisition of a subsidiary | -2 | 0 |
Cash received on the acquisition of a subsidiary | 3,605 | 0 |
Dividends received | 245 | 238 |
Interest received | 3 | 2 |
Net cash from investing activities | 3,929 | 208 |
Cash flows from financing activities | ||
Proceeds from loans received | 393 | 1,737 |
Repayment of loans received | -891 | -9 |
Lease payments made | -737 | -828 |
Interest paid | -276 | -208 |
Net cash used in/from financing activities | -1,511 | 692 |
Net cash flow | 100 | -2,282 |
Cash and cash equivalents at beginning of period | 7,032 | 7,678 |
Effect of movements in foreign exchange rates | -3 | -5 |
Increase/decrease in cash and cash equivalents | 100 | -2,282 |
Cash and cash equivalents at end of period | 7,129 | 5,391 |
Financial review
Financial performance
Nordecon ended the first quarter of 2020 with a gross profit of
The Group’s administrative expenses for the first quarter of 2020 totalled
The Group ended the first quarter of 2020 with an operating loss of
Finance costs of the period were strongly influenced by exchange rate fluctuations in the Group’s foreign markets. In the first quarter, the Ukrainian hryvnia and Swedish krona weakened against the euro by 14.7% and 5.6%, respectively. As a result, the Group recognised foreign exchange losses of
The Group’s net loss amounted to
Cash flows
In the first quarter of 2020, operating activities produced a net cash outflow of
Investing activities resulted in a net cash inflow of
Financing activities generated a net cash outflow of
The Group’s cash and cash equivalents totalled
Key financial figures and ratios
Figure/ratio | Q1 2020 | Q1 2019 | Q1 2018 | 2019 |
Revenue (EUR ‘000) | 54,924 | 34,524 | 43,662 | 234,071 |
Revenue change | 59.1% | -20.9% | 4.9% | 4.7% |
Net loss/profit (EUR ‘000) | -2,196 | -1,893 | -1,883 | 4,149 |
Net loss/profit attributable to owners of the parent (EUR ‘000) | -2,669 | -1,962 | -1,806 | 3,378 |
Average number of shares | 31,528,585 | 31,528,585 | 30,913,031 | 31,528,585 |
Earnings per share (EUR) | -0.08 | -0.06 | -0.06 | 0.11 |
Administrative expenses to revenue | 3.3% | 4.3% | 3.8% | 2.9% |
Administrative expenses to revenue (rolling) | 2.8% | 3.1% | 3.1% | 2.9% |
EBITDA (EUR ‘000) | 194 | -1,018 | -944 | 7,311 |
EBITDA margin | 0.4% | -2.9% | -2.2% | 3.1% |
Gross margin | 2.2% | 0.1% | 1.0% | 5.0% |
Operating margin | -1.2% | -5.1% | -3.3% | 1.8% |
Operating margin excluding gain on asset sales | -1.2% | -5.2% | -3.3% | 1.7% |
Net margin | -4.0% | -5.5% | -4.3% | 1.8% |
Return on invested capital | -3.3% | -2.9% | -2.6% | 10.0% |
Return on equity | -6.7% | -5.8% | -5.0% | 12.5% |
Equity ratio | 28.2% | 30.2% | 31.1% | 27.9% |
Return on assets | -2.1% | -1.8% | -1.9% | 3.7% |
Gearing | 32.7% | 38.4% | 35.3% | 33.8% |
Current ratio | 0.95 | 0.97 | 1.01 | 1.01 |
As at 31 March | 2020 | 2019 | 2018 | 2019 |
Order book (EUR ‘000) | 229,018 | 170,509 | 143,589 | 227,545 |
Performance by geographical market
The revenue contribution of foreign markets continued to grow. Revenue earned outside
Q1 2020 | Q1 2019 | Q1 2018 | 2019 | |
86% | 90% | 92% | 89% | |
8% | 1% | 4% | 5% | |
5% | 4% | 1% | 4% | |
1% | 5% | 3% | 2% |
The revenue contribution of the Swedish market grew significantly year on year. We are currently providing general contractor’s services under three building construction contracts in
Geographical diversification of the revenue base is a consciously deployed strategy by which we mitigate the risks resulting from excessive reliance on one market. However, conditions in some of our chosen foreign markets are also volatile and have a strong effect on our current results. Increasing the contribution of foreign markets is one of Nordecon’s strategic targets.
Performance by business line
Segment revenues
We strive to maintain the revenues of our operating segments (Buildings and Infrastructure) as even as possible as this helps diversify risks and provides better opportunities for continuing construction operations in more challenging circumstances where the volumes of one subsegment decline sharply.
The Group’s revenue for the first quarter of 2020 amounted to
The limited volume of infrastructure construction projects, which is affecting the entire Estonian construction market, is also reflected in our revenue structure. In the first quarter of 2020, our Buildings and Infrastructure segments generated revenue of
Operating segments | Q1 2020 | Q1 2019 | Q1 2018 | 2019 |
Buildings | 89% | 82% | 86% | 70% |
Infrastructure | 11% | 18% | 14% | 30% |
Subsegment revenues
All subsegments improved their revenue compared with the same period last year.
Commercial buildings remained the largest revenue source in the Buildings segment. The subsegment’s largest projects of the period were in
The fastest year-on-year growth was delivered by the public buildings subsegment, which increased its revenue more than two times. The subsegment’s biggest projects were the
A significant share of our Estonian apartment building projects is located in
We continue to build our own housing development projects in
Although the revenue of the industrial and warehouse facilities subsegment grew slightly year on year, its proportionate contribution continued to decrease. The contractual costs of projects in progress have decreased, amounting to
Revenue breakdown in the Buildings segment | Q1 2020 | Q1 2019 | Q1 2018 | 2019 |
Commercial buildings | 36% | 39% | 38% | 36% |
Public buildings | 30% | 21% | 23% | 29% |
Apartment buildings | 27% | 30% | 25% | 27% |
Industrial and warehouse facilities | 7% | 10% | 14% | 8% |
Similarly to previous periods, the main revenue source in the Infrastructure segment was road construction and maintenance whose first-quarter revenue is generally modest due to seasonal factors. A significant share of revenue resulted from the performance of construction contracts secured in 2019: the construction of the Kernu bypass, the Kernu filling station and the Haiba junctions on the Tallinn-Pärnu-Ikla road and the construction of roads in the northern and southern parts of the defence forces’ central training area, as well as forest road improvement services provided to the State Forest Management Centre under a number of smaller contracts. We also continued to provide road maintenance services in Järva and Hiiu counties and the Kose maintenance area in Harju county.
Work continued on the construction of a 640-metre waterfront promenade at Sillamäe, which accounted for a significant share of the revenue of the specialist engineering subsegment.
Revenue breakdown in the Infrastructure segment | Q1 2020 | Q1 2019 | Q1 2018 | 2019 |
Road construction and maintenance | 77% | 65% | 85% | 78% |
Specialist engineering (including hydraulic engineering) | 14% | 0% | 0% | 1% |
Other engineering | 5% | 33% | 12% | 18% |
Environmental engineering | 4% | 2% | 3% | 3% |
Order book
The Group’s order book (backlog of contracts signed but not yet performed) stood at
As at | ||||
Order book (EUR ‘000) | 229,018 | 170,509 | 143,589 | 227,545 |
At the reporting date, contracts secured by the Buildings segment and the Infrastructure segment accounted for 81% and 19% of the Group’s total order book, respectively (
Both the apartment buildings and the public buildings subsegment account for a third of the order book of the Buildings segment: 33% and 31%, respectively. A significant share of the order book of the apartment buildings subsegment is made up of a contract of around
Around two thirds of the order book of the Infrastructure segment is made up of contracts secured by the road construction and maintenance subsegment. The largest projects were secured in 2019: the construction of the Kernu bypass, the Kernu filling station and the Haiba junctions on the Tallinn-Pärnu-Ikla road and the reconstruction of the Vinso-Kirmsi section of the Võru-Räpina road. In 2020, the Group as signed five contracts of
At present it is not possible to assess the impacts of the coronavirus (COVID-19) pandemic on the Group’s financial performance as a whole. Based on our order book of which around a third is made up of contracts that will continue into 2021, we expect that in 2020 the Group’s revenue will increase somewhat compared with 2019. In an environment of stiff competition, we have avoided taking unjustified risks whose realisation in the contract performance phase would have an adverse impact on the Group’s results. Despite this, where suitable opportunities arise, we strive to increase the portfolio to counteract the pressure on margins that is caused by the market situation. Our preferred policy is to keep fixed costs under control and monitor market developments closely.
Between the reporting date (
People
Employees and personnel expenses
In the first quarter of 2020, the Group (the parent and the subsidiaries) employed, on average, 695 people, including 429 engineers and technical personnel (ETP). Headcount increased by around 5% compared with the same period in 2019. The number of ETP staff grew, partly due to a change in the Group’s structure: Embach Ehitus OÜ became a subsidiary.
Average number of employees at Group entities (including the parent and the subsidiaries):
Q1 2020 | Q1 2019 | Q1 2018 | 2019 | |
ETP | 429 | 391 | 427 | 414 |
Workers | 266 | 271 | 264 | 273 |
Total average | 695 | 662 | 691 | 687 |
The Group’s personnel expenses for the first quarter of 2020 including all taxes, totalled
The service fees of the members of the council of
The service fees of the members of the board of
We measure the efficiency of our operating activities using the following productivity and efficiency indicators, which are based on the number of employees and personnel expenses incurred:
Q1 2020 | Q1 2019 | Q1 2018 | 2019 | |
Nominal labour productivity (rolling), (EUR ‘000) | 365.8 | 315.5 | 320.4 | 340.6 |
Change against the comparative period, % | 16% | -1.5% | 13.7% | 4.7% |
Nominal labour cost efficiency (rolling), (EUR) | 9.6 | 9.2 | 10.0 | 9.2 |
Change against the comparative period, % | 4.3% | -8.4% | 5.4% | -5.0% |
The Group’s nominal labour productivity and nominal labour cost efficiency increased year on year in connection with revenue growth.
Nordecon (www.nordecon.com) is a group of construction companies whose core business is construction project management and general contracting in the buildings and infrastructures segment. Geographically the Group operates in
Andri Hõbemägi
Head of Investor Relations
Tel: +372 6272 022
Email: andri.hobemagi@nordecon.com
www.nordecon.com
Attachments
- Nordecon_Interim_report_Q1_2020
- NCN investor presentation Q1_2020
© OMX, source