Investor Presentation • Nov 3, 2022
Investor Presentation
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Investor presentation Q3 2022
Industrial buildings
Public buildings
Residential buildings
Commercial buildings
Other infrastructure Environmental engineering Utility networks
Specialist engineering Bridges, viaducts Port construction Rail construction
Road construction and maintenance Road construction Road maintenance
The Group will grow, mostly organically, with a focus on more efficient use of its existing resources.
In Estonia, we will operate, as market leader, in both the building and infrastructure construction segments.
In Sweden, we will focus on general contracting in Stockholm and the surrounding area.
In Finland, we will focus on general contracting and concrete works in Helsinki and the surrounding area.
In Ukraine, we will focus on general contracting and concrete works, primarily in Kiev and the surrounding area.
Improving profitability through more precise planning of our design and construction operations.
Increasing our design and digitalisation capabilities.
Simplifying and automating work and decision-making processes.
Monitoring the balance between the contract portfolios of different business segments.
Valuing balanced teamwork where youthful energy and drive complement long-term experience.
Noticing and recognising each employee's individual contribution and initiative.
Revenue will grow at least 10% per year.
The contribution of foreign markets will increase to 20% of revenue.
Real estate development revenue will grow to at least 10% of revenue earned in Estonia.
Operating margin per year will be consistently above 3%.
Operating profit per employee will increase to at least 10 thousand euros per year.
On average, at least 30% of profit for the year will be distributed as dividends.
ACTIVITIES
LOCATION Tallinn
CUSTOMER Rotermann City OÜ
ARCHITECT KOKO architects
CONSTRUCTION PERIOD April 2019 - April 2021
CONTRACTOR Nordecon AS
PROJECT MANAGER Oleg Kaas
| The group's revenue for the first nine months of 2022 was $\epsilon$ 239,175 thousand, roughly 15% larger than in the same period last year when the group generated revenue of €208,894 thousand. Revenue growth resulted from the Buildings segment whose revenue grew by 26%. The revenue of the Infrastructure segment decreased by 19%. The decline is attributable to cutbacks in the investments of the largest customer, the Transport Administration. |
Nordecon ended the first nine months of 2022 with a gross profit of $\epsilon$ 5,264 thousand (9M 2021: $\epsilon$ 4,895 thousand) and a gross margin of 2.2% (9M 2020: 2.3%). While the gross margin for nine months remained essentially stable, the gross margin for the third quarter, which was 2.7%, decreased compared with the same period last year (Q3 $2021:3.9\%).$ The group's gross margin was strongly affected by the Infrastructure segment whose performance was significantly weaker than a year earlier. |
The group's administrative expenses for the first nine months of 2022 amounted to $\epsilon$ 5,139 thousand. Compared with the same period last year, administrative expenses grew by around 20% $(9M 2021: \epsilon 4,267$ thousand) due to a general uptrend in the cost of goods and services and growth in personnel expenses. The ratio of administrative expenses to revenue (12 months rolling) remained essentially stable at 2.2% (9M 2021: 2.1%). |
|---|---|---|
| The group ended the first nine months of 2022 with an operating profit of $\epsilon$ 1,340 thousand (9M 2021: €339 thousand). EBITDA for the period amounted to $\epsilon$ 3,920 thousand (9M 2021: €2,961 thousand). |
The group's order book stood at $\epsilon$ 188,847 thousand at 30 September 2022, reflecting a 36% decrease year on year. In the third quarter of 2022, we signed new contracts of $\epsilon$ 48,408 thousand (Q3 2021: €102,326 thousand). |
Operating activities produced a net cash outflow of €205 thousand in the first nine months of 2022 (9M 2021: an inflow of €2,438 thousand). Operating cash flow is increasingly affected by the need to make prepayments to materials suppliers, as well as increased contractual retentions, which extend from 5 to 10% of the contract price. |
LOCATION Kohtla-Järve, Ida-Viru County
CUSTOMER Kohtla-Järve City Government
ARCHITECT
OÜ Zoroaster
CONSTRUCTION PERIOD April 2019 - March 2021
CONTRACTOR Nordecon AS
PROJECT MANAGER Oleg Kaas
The Buildings segment's gross margins for nine months and the third quarter of 2022 were 3.4% and 2.7%, respectively, compared with 3.0% and 3.8% in 2021.
The Infrastructure segment's gross margins for nine months and third quarter were (2.0)% and 2.0% in 2022 compared with 1.8% and 4.0% in 2021, respectively.
| Figure / Ratio | 9M 2020 | 9M 2021 | 9M 2022 |
|---|---|---|---|
| Revenue (EUR '000) | 217 664 | 208894 | 239 175 |
| Revenue change | 26,4% | $-4%$ | 14,5% |
| Net profit/loss (EUR '000) |
3 0 0 4 | $-368$ | $-1.388$ |
| Gross margin | 4.4% | 2,3% | 2,2% |
| EBITDA margin | 3,0% | 1,4% | 1,6% |
| Net margin | 1,4% | $-0,2%$ | $-0,6%$ |
| Administrative expenses to revenue (12 month rolling) |
2.7% | 2,1% | 2,2% |
LOCATION Tartu city
CUSTOMER Tartu Kesklinna Perearstikeskus OÜ
DESIGNER U-Disain OÜ
CONSTRUCTION PERIOD February 2020- August 2021
CONTRACTOR Nordecon Betoon OÜ/ Embach
Ehitus OÜ
PROJECT MANAGER Ahti Kala
$\blacksquare$ Estonia $\blacksquare$ Finland $\blacksquare$ Latvia $\blacksquare$ Ukraine = Lithuania Sweden
Foreign markets accounted for around 4% of the group's total revenue for the first nine months of 2022, which is similar to the same period last year.
of Ukraine, full-scale operations group's Ukrainian of the subsidiary Eurocon Ukraine TOV have been temporarily suspended: in the third quarter the subsidiary continued work on one building project in Kiev.
Lithuania it where building two wind farms in the Swedish market. reporting period.
Due to Russia's military invasion The group operates on a The group did not generate any project basis in Latvia and revenue and had no ongoing was construction contracts in the
The group's order book stood at €188,847 thousand at 30 September 2022, reflecting a 36% decrease year on year.
The proportion of the Buildings segment in the group's total order book has increased to 91% (30 September 2021: 87%).
The order books of both operating segments have decreased compared with 30 September 2021: the order book of the Buildings segment by 33% and the order book of the Infrastructure segment by 55%.
LOCATION Rae, Harju County
CUSTOMER Rae Rural Municipality Government
DESIGNER Sweco Projekt AS
CONSTRUCTION PERIOD November 2019 - May 2021
CONTRACTOR Nordecon AS
PROJECT MANAGER Silver Sein
In the first nine months of 2022, the Buildings and the Infrastructure segment generated revenue of €195,157 thousand and $\epsilon$ 43,845 respectively. thousand. The corresponding figures for the first nine months of 2021 were €154,599 thousand and €54,029 thousand.
The nine-month revenue of the commercial buildings subsegment remained essentially stable while the revenues of other subsegments grew compared with the same period last цеаг.
The largest subsegments in terms of revenue are apartment buildings and public buildings which showed nearly 25% revenue growth.
In the Infrastructure segment, the largest revenue contributor is still road construction and maintenance although its and revenue proportionate contribution have decreased year on year.
ONORDECON
LOCATION Käina, Hiiu County
CUSTOMER Hiiumaa Consumers Cooperative Association
ARCHITECT DAGOpen Arhitektuuribüroo
CONSTRUCTION PERIOD December 2020- June 2021
CONTRACTOR Nordecon Betoon OÜ
PROJECT MANAGER Reino Mälk
| shares | Number of Ownership interest (%) |
|
|---|---|---|
| AS Nordic Contractors | 16 563 145 | 51.16 |
| Luksusjaht AS | 4 3 1 4 6 4 2 | 13.33 |
| Toomas Luman | 687000 | 2.12 |
| Olegs Radcenko | 580 000 | 1.79 |
| Lembit Talpsepp | 376 239 | 1.16 |
| Nõmme Erahariduse SA | 370 370 | 1.14 |
| SEB Pank AS clients | 300 000 | 0.93 |
| SEB Life and Pension Baltic SE | ||
| Estonian Branch | 255 000 | 0.79 |
| Genadi Bulatov | 250 600 | 0.77 |
| Svenska Handelsbanken clients | 210 556 | 0.65 |
Nordecon AS Tel: +372 615 4400 www.nordecon.com Toompuiestee 35, Tallinn 10149 Estonia
Head of Investor Relations Andri Hõbemägi Tel: +372 615 4400 [email protected]
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