2024 IV quarter and 12 months consolidated interim report (unaudited)
The year 2024 was successful for the Nordecon Group. Profitability improved
significantly, and revenue increased. The general contracting market remains
highly competitive, and developers' confidence is low. No change is expected in
the volume of public sector orders for the consecutive year. Consequently, the
group does not foresee significant growth in investments or the construction
market in 2025.
The group's gross profit margin in 2024 was 7.5% (2023: 2.0%), and in the fourth
quarter, it reached 9% (Q4 2023: (1)%). The group's net profit amounted to
EUR5,162 thousand (2023: a loss from continuing operations of EUR6,418 thousand).
Profitability improved significantly in both the Buildings and Infrastructure
segments.
Revenue for 2024 was EUR223,925 thousand, which is 20% higher compared to the
revenue from continuing operations in the previous year. Revenue in the
Buildings segment increased by 36%, while revenue in the Infrastructure segment
decreased by 25%. The revenue growth aligns with the group's project portfolio
volume, as do the changes across segments. The revenue increase in the buildings
segment was primarily driven by higher revenue from public buildings. Major
projects in 2024 included Saku Upper Secondary School, Loodusmaja (Nature Hub),
and various projects for the Centre for Defence Investment. The decline in
infrastructure segment revenue was mainly due to delays in the start of
contractual work for Rail Baltica and reduced investment volumes from the
Transport Administration.
As of 31 December 2024, the order book of the group's companies amounted to
EUR209,489 thousand. Compared to the same period last year, the volume of
outstanding work has decreased by 3%, but it still provides a solid starting
position for 2025. Over 12 months, new contracts worth a total of EUR181,437
thousand were signed, of which EUR49,636 thousand were signed in the fourth
quarter.
Condensed consolidated interim statement of financial position
EUR'000 31 December 2024 31 December 2023
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ASSETS
Current assets
Cash and cash equivalents 8,195 11,892
Trade and other receivables 29,449 37,010
Prepayments 3,543 1,789
Inventories 28,091 25,879
Total current assets 69,278 76,570
Non-current assets
Other investments 77 76
Trade and other receivables 10,681 9,113
Investment property 5,517 5,517
Property, plant and equipment 13,247 14,292
Intangible assets 14,951 14,964
Total non-current assets 44,473 43,962
TOTAL ASSETS 113,751 120,532
LIABILITIES
Current liabilities
Borrowings 12,626 10,188
Trade payables 36,735 39,797
Other payables 10,344 9,299
Deferred income 12,472 20,602
Provisions 1,333 1,129
Total current liabilities 73,510 81,015
Non-current liabilities
Borrowings 5,720 8,563
Trade payables 5,091 6,011
Other payables 462 0
Provisions 2,364 2,405
Total non-current liabilities 13,637 16,979
TOTAL LIABILITIES 87,147 97,994
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 4,034 3,786
Retained earnings 4,746 919
Total equity attributable to owners of the
parent 25,688 21,613
Non-controlling interests 916 925
TOTAL EQUITY 26,604 22,538
TOTAL LIABILITIES AND EQUITY 113,751 120,532
Condensed consolidated interim statement of comprehensive income
EUR'000 Q4 2024 12M 2024 Q4 2023 12M 2023
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Revenue 45,203 223,925 55,665 186,464
Cost of sales (41,200) (207,155) (56,167) (182,655)
Gross profit (loss) 4,003 16,770 (502) 3,809
Marketing and distribution expenses (121 (422) (95) (497)
Administrative expenses (2,867) (7,878) (2,227) (6,564)
Other operating income 141 286 46 286
Other operating expenses (67) (695) (156) (465)
Operating profit (loss) 1,089 8,061 (2,934) (3,431)
Finance income 241 678 346 613
Finance costs (386) (3,011) (1,058) (3,356)
Net finance costs (145) (2,333) (712) (2,743)
Profit (loss) before tax 944 5,728 (3,646) (6,174)
Income tax expense (326) (563) 0 (244)
Profit (loss) for the period from
continuing operations 618 5,165 (3,646) (6,418)
Profit for the period from a
discontinued operation - - 6,066 8,474
Profit for the period 618 5,165 2,420 2,056
Other comprehensive income (expense)
Items that may be reclassified
subsequently to
profit or loss
Exchange differences on translating
foreign operations (254) 248 518 470
Total other comprehensive income
(expense) (254) 248 518 470
TOTAL COMPREHENSIVE INCOME 364 5,413 2,938 2,526
Profit (loss) attributable to:
- Owners of the parent 454 3,827 1,510 (942)
- Non-controlling interests 164 1,338 910 2,998
Profit for the period 618 5,165 2,420 2,056
Comprehensive income (expense)
attributable to:
- Owners of the parent 200 4,075 2,028 (472)
- Non-controlling interests 164 1,338 910 2,998
Comprehensive income for the period 364 5,413 2,938 2,526
Earnings per share from continuing
operations attributable to owners of
the parent:
Basic earnings per share (EUR) 0.01 0.12 (0.15) (0.31)
Diluted earnings per share (EUR) 0.01 0.12 (0.15) (0.31)
Earnings per share from a discontinued
operation attributable to owners of
the parent:
Basic earnings per share (EUR) - - 0.20 0.28
Diluted earnings per share (EUR) - - 0.20 0.28
Condensed consolidated interim statement of cash flows
EUR'000 12M 2024 12M 2023
--------------------------------------------------------------------------
Cash flows from operating activities
Cash receipts from customers 273,153 345,372
Cash paid to suppliers (243,445) (294,828)
VAT paid (9,272) (12,337)
Cash paid to and for employees (19,964) (24,715)
Income tax paid (237) (615)
Net cash from operating activities 235 12,877
Cash flows from investing activities
Paid for acquisition of property, plant and equipment (328) (362)
Proceeds from sale of property, plant and equipment 319 431
Sale of subsidiary, net cash flow 0 (970)
Loans provided (36) (531)
Repayments of loans provided 5 22
Dividends received 6 12
Interest received 307 50
Net cash from (used in) investing activities 273 (1,348)
Cash flows from financing activities
Proceeds from loans received 1,896 1,197
Repayments of loans received (1,633) (2,291)
Lease payments (2,220) (3,060)
Interest paid (990) (1,232)
Dividends paid (1,347) (1,494)
Other payments 116 6
Net cash used in financing activities (4,178) (6,874)
Net cash flow (3,670) 4,655
Cash and cash equivalents at beginning of period 11,892 7,238
Effect of movements in foreign exchange rates (27) (1)
Change in cash and cash equivalents (3,670) 4,655
Cash and cash equivalents at end of period 8,195 11,892
Financial review
Financial performance
Nordecon delivered a gross profit of EUR16,770 thousand in 2024 (2023: EUR3,809
thousand). The group's gross margin improved significantly, rising to 7.5% for
the year (2023: 2.0%) and 9% for the fourth quarter (Q4 2023: (1)%).
Profitability improved for both operating segments. The gross margin of the
Buildings segment was 8.9% for the year and 10.7% for the fourth quarter (2023:
3.0% and Q4 2023: (0.3)%). The Infrastructure segment's gross margin was lower,
reaching 4.0% for the year and (0.3)% for the fourth quarter (2023: 1.3% and Q4
2023: (0.6)%). The margin improvement was supported by better mitigation of the
risks associated with general contracting and the expiry in 2023 of a number of
long-term contracts signed before the war, which had been severely affected by
the previous years' surge in input prices. The improved performance of the
Infrastructure segment is partly due to the investment made in an asphalt
concrete plant in early 2024, which has reduced the cost price of the product
and represents a major step forward in material recycling.
The group's administrative expenses for 2024 were EUR7,878 thousand.
Administrative expenses increased by around 20% compared to 2023 (2023: EUR6,564
thousand). The rise resulted from staff costs, which increased due to the
recognition of provisions for performance-based remuneration in connection with
the group's results for 2024. The ratio of administrative expenses to revenue
(12 months rolling) was 3.5% (2023: 3.5%).
The group ended 2024 with an operating profit of EUR8,061 thousand (2023: an
operating loss of EUR3,431 thousand). EBITDA for the period was EUR11,025 thousand
and EBITDA margin was 4.9% (2023: negative EBITDA of EUR412 thousand and negative
EBITDA margin of 0.2%).
The group's finance income and costs are affected by exchange rate fluctuations
in the group's foreign markets, particularly movements in the exchange rate of
the Ukrainian hryvnia. In 2024, the Ukrainian hryvnia weakened against the euro
by around 4% and the translation of the loans provided to the group's Ukrainian
subsidiaries in euros into the local currency gave rise to a foreign exchange
loss of EUR247 thousand (2023: a foreign exchange loss of EUR480 thousand). Total
exchange losses for the year were EUR258 thousand (2023: EUR480 thousand).
The group's net profit for 2024 was EUR5,165 thousand (2023: a loss of EUR6,418
thousand). The net profit attributable to owners of the parent, Nordecon AS, was
EUR3,827 thousand (2023: a net loss of EUR942 thousand).
Cash flows
Operating activities produced a net cash inflow of EUR235 thousand in 2024 (2023:
an inflow of EUR12,877 thousand). Operating cash flow is strongly influenced by
the fact that the contracts signed with most public and private sector customers
do not require them to make advance payments, while the group has to make
prepayments to subcontractors and materials suppliers. Cash inflow is also
reduced by contractual retentions, which extend from 5 to 10% of the contract
price and are released at the end of the construction period only.
Investing activities of the period resulted in a net cash inflow of EUR273
thousand (2023: an outflow of EUR1,348 thousand). Investments in property, plant
and equipment totalled EUR328 thousand (2023: EUR362 thousand) and proceeds from the
sale of property, plant and equipment amounted to EUR319 thousand (2023: EUR431
thousand). Loans provided amounted to EUR36 thousand (2023: EUR531 thousand) and
interest received amounted to EUR307 thousand (2023: EUR50 thousand). The cash flow
for 2023 was influenced by the sale of the subsidiary Nordecon Betoon OÜ, which
resulted in a net cash outflow of EUR970 thousand.
Financing activities generated a net cash outflow of EUR4,178 thousand (2023: an
outflow of EUR6,874 thousand). The largest items were related to loans and leases.
Proceeds from loans received amounted to EUR1,896 thousand (2023: EUR1,197
thousand), consisting of the use of development loans. Repayments of loans
received totalled EUR1,633 thousand (2023: EUR2,291 thousand), consisting of regular
repayments of long-term investment and development loans and the change in the
overdraft balance. Lease payments were EUR2,220 thousand (2023: EUR3,060 thousand).
Dividends paid in 2024 amounted to EUR1,347 thousand (2023: EUR1,494 thousand).
The group's cash and cash equivalents as at 31 December 2024 amounted to EUR8,195
thousand (31 December 2023: EUR11,892 thousand).
Key financial figures and ratios
Figure/ratio 2024 2023 2022
-------------------------------------------------------------------------------
Revenue (EUR'000)* 223,925 186,464 220,285
Revenue change* 20.1% (15.4)% 2.6%
Net profit (loss) (EUR'000)* 5,165 (6,418) (4,099)
Net profit (loss) attributable to owners of
the parent (EUR'000) 3,827 (942) (3,650)
Average number of shares 31,528,585 31,528,585 31,528,585
Earnings per share (EUR) 0.12 (0.03) (0.12)
Administrative expenses to revenue* 3.5% 3.5% 2.6%
EBITDA (EUR'000)* 11,025 (412) 2,791
EBITDA margin* 4.9% (0.2)% 1.3%
Gross margin* 7.5% 2.0% 1.8%
Operating margin* 3.6% (1.8)% (0.2)%
Operating margin excluding gain on non-
current asset sales* 3.5% (2.0)% (0.4)%
Net margin* 2.3% (3.4)% (1.9)%
Return on invested capital 15.6% 8.0% (0.5)%
Return on equity 21.0% 8.3% (5.2)%
Equity ratio 23.4% 18.7% 19.8%
Return on assets 4.4% 1.6% (1.1)%
Gearing 22.6% 16.6% 32.0%
Current ratio 0.94 0.95 0.88
At 31 December 2024 2023 2022
Order book (EUR'000)* 209,489 216,732 127,618
* Continuing operations
Due to the sale of Nordecon Betoon OÜ and NOBE Rakennus OY at the beginning of
December 2023, the comparative figures for 2023 and 2022 only include the
results of the continuing operations. The results of the discontinued operation
for the comparative periods are presented separately in the consolidated
statement of comprehensive income within Profit for the period from a
discontinued operation.
Performance by geographical market
Revenue generated outside Estonia, in Ukraine, accounted for approximately 2% of
the group's total revenue in 2024. The volume of our Ukrainian operations
remained comparable to the previous year. During the period, we provided
services under contracts for the reconstruction of substations and installation
of associated physical protection systems in the Poltava, Zhytomyr, Volyn and
Ivano-Frankivsk oblasts in Ukraine, and for the reconstruction of a building
into an apartment complex for internally displaced persons in Ovruch, Zhytomyr
Oblast, Ukraine. Nordecon did not generate any revenue and had no ongoing
construction contracts in the Swedish market. With the sale of Nordecon Betoon
OÜ at the beginning of December 2023, the group also withdrew from the Finnish
market, where it had been operating through Nordecon Betoon OÜ's subsidiary NOBE
Rakennus OY. The group was active on a project basis in Latvia and Lithuania.
2024 2023 2022
---------------------------------
Estonia 98% 97% 97%
Ukraine 2% 2% 1%
Finland - 1% 0%
Lithuania - 0% 2%
Latvia - 0% 1%
Performance by business line
Segment revenues
We strive to maintain a balance between the revenues of our two main operating
segments (Buildings and Infrastructure) as far as market developments allow, as
this helps diversify risks and provides better opportunities to continue
construction activities in more challenging market conditions, where volumes in
one subsegment decline sharply while volumes in another subsegment start to grow
more rapidly.
The group's revenue for 2024 was EUR223,925 thousand, approximately 20% higher
than in 2023, when revenue from continuing operations amounted to EUR186,464
thousand. The Buildings segment generated revenue of EUR187,573 thousand and the
Infrastructure segment revenue of EUR36,299 thousand. The corresponding figures
for 2023 were EUR138,134 thousand and EUR48,263 thousand. Revenue generated by the
Buildings segment increased by 36%, while revenue generated by the
Infrastructure segment decreased by 25%. Revenue growth and changes in the
performance of the two reportable segments were expected and in line with the
group's order book. Revenue growth in the Buildings segment was driven by higher
revenue in the public buildings subsegment. The decrease in revenue in the
Infrastructure segment was mainly due to delays in the start of work on the Rail
Baltica contracts and reduced investment by the Transport Administration.
Revenue by operating segment 2024 2023 2022
--------------------------------------------------------
Buildings 84% 74% 84%
Infrastructure 16% 26% 16%
Subsegment revenues
In the Buildings segment, revenue from the public buildings and commercial
buildings subsegments increased by 80% and 72%, respectively, while revenue from
the industrial and warehouse facilities subsegment and the apartment buildings
subsegment decreased compared to the previous year. As the revenue contribution
of the industrial and warehouse facilities subsegment was also modest in
previous years, its revenue decline did not have a significant impact on total
segment revenue. However, revenue from the apartment buildings subsegment fell
by 57%, mainly due to lower construction services revenue, reflecting the
current market situation in this subsegment.
The period's largest projects in the public buildings subsegment were the
construction of the main building of the Estonian Internal Security Service and
Loodusmaja (Nature Hub) in Tallinn, the design and construction of warehouse
complexes for the Centre for Defence Investment in Luunja and Nõo rural
municipalities in Tartu County and in Ida-Viru County, the design and
construction of a new study and sports building for the Saku Upper Secondary
School near Tallinn, the reconstruction of the building of the Karlova School in
Tartu and the design and construction of a study building for the Centre for
Defence Investment on the Raadi campus in Tartu.
Revenue generated by the apartment buildings subsegment consisted of revenue
from the construction of the commercial and residential complex Vektor and the
group's own development projects. Revenue from our own development activities
decreased compared to the previous year and was EUR7,685 thousand (2023: EUR10,273
thousand). The figure includes revenue from the sale of apartments in Tartu - in
the Mõisavahe Kodu housing estate and the centrally located Emajõe
Residents housing estate on the banks of the Emajõgi river
(https://emajoeresidents.ee). We continued to build phase 1 of the Seileri
Kvartal housing estate in Pärnu (https://seileri.ee) and the Tammepärja Kodu
housing estate in the Tammelinn district in Tartu (https://tammelinn.ee). Both
development projects will be completed in the first half of 2025. In carrying
out our own development activities, we carefully monitor potential risks in the
housing development market.
The largest ongoing projects in the commercial buildings subsegment were the
construction of the commercial and residential complex Vektor and the LEED Gold
compliant Golden Gate office building at Ahtri 6 in Tallinn, the design and
construction of a commercial building at Nõlvakaare 4 at Raadi in Tartu County,
and the construction of a Lidl store in Võru.
A significant share of the revenue generated by the industrial and warehouse
facilities subsegment came from the reconstruction of substations and
installation of associated physical protection systems in the Poltava, Zhytomyr,
Volyn and Ivano-Frankivsk oblasts in Ukraine.
Buildings segment 2024 2023 2022
-----------------------------------------------------------
Public buildings 70% 37% 30%
Commercial buildings 21% 23% 24%
Apartment buildings 6% 27% 28%
Industrial and warehouse facilities 3% 13% 18%
The largest revenue contributor in the Infrastructure segment was the road
construction and maintenance subsegment whose revenue decreased by around 22%
compared to the previous year. A major share of its revenue came from the
construction of an armoured manoeuvre shooting range and roads in Harju County,
the reconstruction of the Mäeküla-Koeru-Kapu road section, the construction of
the Tagadi ecoduct (wildlife crossing) on the Rail Baltica route and the
provision of road maintenance services in Järva County.
Infrastructure segment 2024 2023 2022
-------------------------------------------------------------
Road construction and maintenance 90% 63% 78%
Other engineering 10% 30% 20%
Specialist engineering 0% 0% 2%
Environmental engineering 0% 7% 0%
Order book
The group's order book (backlog of contracts signed but not yet performed) as at
31 December 2024 stood at EUR209,489 thousand. Compared to the end of 2023, the
order book has decreased by around 3%. In 2024, we signed new contracts for
EUR181,437 thousand, of which EUR49,636 thousand in the fourth quarter (2023:
EUR276,901 thousand and Q4 2023: EUR85,575 thousand).
In terms of the breakdown of the order book between the two main operating
segments, the share of the Infrastructure segment has increased compared to the
end of last year. The Buildings segment accounts for 82% and the Infrastructure
segment for 18% of the group's order book (31 December 2023: 96% and 4%,
respectively). The order book of the Buildings segment includes mainly contracts
secured in the commercial and public buildings subsegments. Public investment in
building construction has declined overall, with some activity at local
government level. The stabilisation of construction input prices and the decline
in interest rates have not yet significantly boosted private investment.
Compared to 31 December 2023, the order book of the Buildings segment has
declined by 17% and the order book of the Infrastructure segment has almost
quadrupled, mainly due to the award of a Rail Baltica contract.
At 31 December 2024 2023 2022
----------------------------------------------------
Order book (EUR'000)* 209,489 216,732 127,618
*Continuing operations
Major contracts secured in 2024 include:
* the construction of an armoured manoeuvre shooting range and roads for the
Centre for Defence Investment in Harju County with an approximate cost of
EUR5,450 thousand;
* the construction of a modern war and disaster medicine centre for the Centre
for Defence Investment in Tartu with an approximate cost of EUR15,000 thousand
(the group is one of the joint bidders);
* the construction of a Lidl store in Võru with an approximate cost of EUR3,900
thousand;
* the construction of a platform area for Class E aircraft at Tallinn Airport
with an approximate cost of EUR7,500 thousand;
* the construction of a building complex in the Port Athena quarter at Väike-
Turu 7 in Tartu (the complex consists of four six-storey buildings, one
seven-storey building and a common basement level used mainly for parking)
with an approximate cost of EUR26,000 thousand;
* the construction of the Hagudi-Alu section of stage III of the Rail Baltica
Raplamaa main line railway infrastructure with an approximate cost of
EUR30,500 thousand;
* the construction of the LEED Gold standard Uusküla spa hotel on the northern
shore of Lake Peipus in Alutaguse rural municipality with an approximate
cost of EUR28,300 thousand;
* the reconstruction of a building into an apartment complex for internally
displaced persons in Ovruch, Zhytomyr Oblast, Ukraine with an approximate
cost of EUR1,800 thousand;
* the construction of a new television building for Estonian Public
Broadcasting in Tallinn with an approximate cost of EUR40,100 thousand;
* the renovation of the Tallinn Art Hall building at Vabaduse 6/8 in Tallinn
with an approximate cost of EUR7,990 thousand.
Based on the size of the order book and the general outlook for the economy and
the construction market, the group's management expects business volumes in
2025 to remain broadly at the same level as in 2024. In a highly competitive
environment, we have avoided taking unjustified risks that could materialise
during the contract execution phase and adversely affect the group's results.
The main focus is on managing fixed costs, increasing productivity and
effectively executing pre-construction and design activities to leverage our
professional competitive advantages.
People
Employees and staff costs
The average number of the group's employees (at the parent company and the
subsidiaries) in 2024 was 435, including 281 engineers and technical
professionals (ETP). Headcount decreased by around 22% compared to the previous
year. The decline in the number of staff was influenced by the restructuring of
the Infrastructure segment, which was completed in 2023, and the sale of
Nordecon Betoon OÜ and NOBE Rakennus OY at the beginning of December 2023.
Average number of employees at group companies (the parent company and the
subsidiaries):
2024 2023 2022
-------------------------------------
ETP 281 374 432
Workers 154 184 226
Total average 435 558 658
The group's staff costs for 2024, including all taxes, were EUR24,170 thousand
compared with EUR19,637 thousand for continuing operations in 2023. The main
growth drivers were performance-based compensation, which increased due to the
group's improved performance, and salary increases.
Remuneration of the council and the board
In 2024, the service fees of the members of the council of Nordecon AS totalled
EUR199 thousand and the related social security charges amounted to EUR66 thousand
(2023: EUR179 thousand and EUR59 thousand, respectively).
During the period, the group recognised a liability for the performance-based
compensation of the members of the council of EUR198 thousand (2023: EUR0) and the
related social security charges of EUR65 thousand. Of the liability, EUR125 thousand
will be paid out in 2025 and the payment of the remainder is linked to the
achievement of the targets for 2025.
The service fees of the members of the board of Nordecon AS totalled EUR524
thousand and the related social security charges amounted to EUR173 thousand
(2023: EUR775 thousand and EUR255 thousand, respectively). The fees for 2023 include
benefits of EUR222 thousand paid in connection with the expiry of a service
contract of a member of the board.
During the period, the group recognised a liability for the performance-based
compensation of the members of the board of EUR741 thousand (2023: EUR0) and the
related social security charges of EUR245 thousand. Of the liability, EUR467
thousand will be paid out in 2025 and the payment of the remainder is linked to
the achievement of the targets for 2025.
Labour productivity and labour cost efficiency
We measure the efficiency of our operating activities using the following
productivity and efficiency indicators, which are based on the number of
employees and the staff costs incurred:
2024 2023 2022
-----------------------------------------------------------------------------
Nominal labour productivity (rolling), (EUR'000) 514.3 499.3 490.4
Change against the comparative period, % 3.0% 1.8% 16.5%
Nominal labour cost efficiency (rolling), (EUR) 9.3 10.3 11.8
Change against the comparative period, % (9.7)% (13.4)% (2.9)%
The group's nominal labour productivity increased compared to the previous year,
mainly due to a decrease in the number of staff. Labour cost efficiency
decreased due to a decline in revenue.
Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
Email: [email protected] (mailto:[email protected])
www.nordecon.com (http://www.nordecon.com)