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News Article | April 17, 2017
Site: www.prweb.com

VT MÄK, (MAK), a company of Vision Technologies Systems, Inc. (VT Systems), today announced that the University of Alabama in Huntsville (UAH) is using MAK’s VR-Forces simulation software to recreate the Battle of 73 Easting, a major United States victory during the 1991 Persian Gulf War, enhancing its students’ learning experience. With VR-Forces, graduate students at UAH have achieved increasingly accurate replication of the historical results. The simulations are directed by Mikel D. Petty, Ph.D, Associate Professor of Computer Science and Senior Scientist for M&S, Information Technology and Systems Center at UAH. “The Battle of 73 Easting is arguably the best-documented battle in U.S. history, which makes it a perfect application for both simulation analysis and historical study,” said Dr. Petty. “Then-Capt. H.R. McMaster’s Eagle Troop of the Second Armored Cavalry Regiment aggressively engaged a much larger Iraqi armored force, destroying a large part of it in only twenty-three minutes. Simulation improves our ability to study the tactics of Eagle Troop and the rest of the regiment from a historical perspective, and recreating historical events in simulation provides insight into the accuracy and capabilities of the simulation.” VR-Forces is MAK’s complete simulation solution software. It is a powerful and flexible Computer Generated Forces platform that populates simulated synthetic environments with battlefield entities. Users can create scenarios full of custom, lifelike entities with specific behaviors, making it an ideal platform for training and education. The VR-Forces software also allows students to alter the parameters of the battle and compare simulation results with historical events. This year, under Dr. Petty’s guidance, his students will be investigating the change in outcome given a national scenario in which the Iraqi forces were able to use modern T-14 Russian Armata battle tanks in 1991. “This is a great application of VR-Forces,” said Dan Schimmel, President and CEO of VT MÄK. “We’re thrilled to see a famous battle simulated and analyzed by Dr. Petty and his students at the University of Alabama in Huntsville.“ “MAK has been very accommodating in allowing my students to use VR-Forces for their academic projects,” said Dr. Petty. “The intuitive nature of their graphical user interface and the accuracy of their simulation results make VR-Forces an excellent technology to enhance learning for modeling and simulation students.”


Credit: This work is a derivative from Vasco da Gama Bridge by Duncan Rawlinson used under CC BY-NC 2.0 and licensed by Alejandro Dominguez-Lopez, University of Alcala, under CC BY-NC 2.0.... IMAGE:  Researchers developed a faster strain-temperature sensor that features 1 million sensing points over a single 10-kilometer of standard fiber. It could be useful for monitoring the integrity of large structures... view more WASHINGTON -- Today, there is great interest in using distributed sensors to continually monitor the structural health of large structures such as dams or bridges. With 1 million sensing points, a newly developed fiber optic distributed sensor could offer significantly faster detection of structural problems than is currently available. "With fiber-based sensors, it is possible to precisely detect erosion or cracking before a dam fails, for example," said Alejandro Dominguez-Lopez from the University of Alcala (UAH) in Spain, from the research team that developed the new sensor. "Earlier detection of a problem means it might be possible to prevent it from getting worse or could provide more time for evacuation." Fiber optic distributed sensors are ideal for monitoring infrastructure because they can be used in harsh environments and in areas that lack a nearby power supply. If a single fiber is placed along the length of a bridge, for example, changes in the structure at any of the sensing points along the optical fiber will cause detectable changes in the light traveling down the fiber. Although the popularity of fiber optic distributed sensors is growing, they are currently used primarily to detect leaks in oil pipes and to monitor for landslides along railroads. In The Optical Society (OSA) journal Optics Letters, Dominguez-Lopez and his colleagues from UAH and the Swiss Federal Institute of Technology (EPFL) report the first fiber optic distributed sensor that can sense strain and temperature changes from 1 million sensing points over a 10-kilometer optical fiber in less than 20 minutes. Strain, which is a measure of deformation, indicates how much mechanical stress is on an object or structure. The new sensor is about 4.5 times faster than previously reported sensors with 1 million sensing points. Although there isn't a magic number, more sensing points means fewer fiber-optic units are needed to monitor an entire structure. This simplifies the overall sensing scheme and could potentially reduce costs. "Because we have such a large density of sensing points -- one per centimeter -- our optimized sensor could also be used for monitoring in applications such as avionics and aerospace, where it's important to know what is happening in every inch of a plane wing, for example," said Dominguez-Lopez. The new sensor uses an approach known as Brillouin optical time domain analysis, which requires pulsed and continuous wave laser signals to interact. The researchers discovered that the traditional method of generating the continuous signal caused distortions in the system at higher laser powers. These problems could be avoided by changing the way that laser signal was generated, allowing them to increase the laser power and hence improve the sensing performance. "The detrimental effects that we studied and corrected have been affecting the performance of commercially-available Brillouin optical time domain sensors for some time," said Dominguez-Lopez. "If manufacturers incorporate our optimization into their sensors, it could improve performance, particularly in terms of acquisition speed." Using the new approach, the researchers demonstrated that they could measure the temperature of a hot spot to within 3 degrees Celsius from the end of a 10-kilometer long fiber. The researchers are now working to make the sensor even faster by looking for ways to further reduce the acquisition time. They also want to increase the density of sensing points to more than one per centimeter, which could allow the technology to expand into completely new areas such as biomedical applications. The optical fibers could also potentially be adapted for use in textiles, where the sensors could help to monitor a person's health or screen for disease. For example, the researchers think it might possible to use the fiber optic sensors to detect temperature deviations that are present in breast cancer. For this type of application, more sensing points in a smaller area would be more important than using a particularly long fiber. "In our paper, we not only identified a major limitation of this sensing technique but also demonstrated a way to overcome that constraint," said Dominguez-Lopez. "The new sensor could enable improved structural monitoring and help move this sensing technology into exciting new research areas and applications." Optics Letters offers rapid dissemination of new results in all areas of optics with short, original, peer-reviewed communications. Optics Letters covers the latest research in optical science, including optical measurements, optical components and devices, atmospheric optics, biomedical optics, Fourier optics, integrated optics, optical processing, optoelectronics, lasers, nonlinear optics, optical storage and holography, optical coherence, polarization, quantum electronics, ultrafast optical phenomena, photonic crystals and fiber optics. Founded in 1916, The Optical Society (OSA) is the leading professional organization for scientists, engineers, students and entrepreneurs who fuel discoveries, shape real-life applications and accelerate achievements in the science of light. Through world-renowned publications, meetings and membership initiatives, OSA provides quality research, inspired interactions and dedicated resources for its extensive global network of optics and photonics experts. For more information, visit: osa.org.


"With fiber-based sensors, it is possible to precisely detect erosion or cracking before a dam fails, for example," said Alejandro Dominguez-Lopez from the University of Alcala (UAH) in Spain, from the r research team that developed the new sensor. "Earlier detection of a problem means it might be possible to prevent it from getting worse or could provide more time for evacuation." Fiber optic distributed sensors are ideal for monitoring infrastructure because they can be used in harsh environments and in areas that lack a nearby power supply. If a single fiber is placed along the length of a bridge, for example, changes in the structure at any of the sensing points along the optical fiber will cause detectable changes in the light traveling down the fiber. Although the popularity of fiber optic distributed sensors is growing, they are currently used primarily to detect leaks in oil pipes and to monitor for landslides along railroads. In The Optical Society (OSA) journal Optics Letters, Dominguez-Lopez and his colleagues from UAH and the Swiss Federal Institute of Technology (EPFL) report the first fiber optic distributed sensor that can sense strain and temperature changes from 1 million sensing points over a 10-kilometer optical fiber in less than 20 minutes. Strain, which is a measure of deformation, indicates how much mechanical stress is on an object or structure. The new sensor is about 4.5 times faster than previously reported sensors with 1 million sensing points. Although there isn't a magic number, more sensing points means fewer fiber-optic units are needed to monitor an entire structure. This simplifies the overall sensing scheme and could potentially reduce costs. "Because we have such a large density of sensing points—one per centimeter—our optimized sensor could also be used for monitoring in applications such as avionics and aerospace, where it's important to know what is happening in every inch of a plane wing, for example," said Dominguez-Lopez. The new sensor uses an approach known as Brillouin optical time domain analysis, which requires pulsed and continuous wave laser signals to interact. The researchers discovered that the traditional method of generating the continuous signal caused distortions in the system at higher laser powers. These problems could be avoided by changing the way that laser signal was generated, allowing them to increase the laser power and hence improve the sensing performance. "The detrimental effects that we studied and corrected have been affecting the performance of commercially-available Brillouin optical time domain sensors for some time," said Dominguez-Lopez. "If manufacturers incorporate our optimization into their sensors, it could improve performance, particularly in terms of acquisition speed." Using the new approach, the researchers demonstrated that they could measure the temperature of a hot spot to within 3 degrees Celsius from the end of a 10-kilometer long fiber. The researchers are now working to make the sensor even faster by looking for ways to further reduce the acquisition time. They also want to increase the density of sensing points to more than one per centimeter, which could allow the technology to expand into completely new areas such as biomedical applications. The optical fibers could also potentially be adapted for use in textiles, where the sensors could help to monitor a person's health or screen for disease. For example, the researchers think it might possible to use the fiber optic sensors to detect temperature deviations that are present in breast cancer. For this type of application, more sensing points in a smaller area would be more important than using a particularly long fiber. "In our paper, we not only identified a major limitation of this sensing technique but also demonstrated a way to overcome that constraint," said Dominguez-Lopez. "The new sensor could enable improved structural monitoring and help move this sensing technology into exciting new research areas and applications." Explore further: Ultra-high-speed optical fiber sensor enables detection of structural damage in real time More information: Alejandro Dominguez-Lopez et al, Resolving 1 million sensing points in an optimized differential time-domain Brillouin sensor, Optics Letters (2017). DOI: 10.1364/OL.42.001903


News Article | May 11, 2017
Site: www.prnewswire.com

The OTC 2017 featured a special procurement seminar on Ukraine organized by the U.S. Commercial Service in Ukraine, with support from Burisma Group. The event brought together representatives of Ukrainian and foreign oil & gas producers, embassies, NGOs and industry experts to address Ukraine's gas market future, business challenges and opportunities. Among key speakers at the seminar were the Senior Commercial Officer of the U.S. Commercial Service in Ukraine Jim Lindley, the Senior Oil and Gas Sector Specialist Myroslava Myrtsalo, the CEO of Ukrgazvydobuvannia Oleg Prokhorenko and the Advisor to the Board of Directors at Burisma Group Vadym Pozharskyi. In his address entitled 'Private gas production as a key to ensuring national energy security and independence', Vadym Pozharskyi, Advisor to the Board of the Burisma Group, focused on the need to boost Ukraine's domestic gas production. He talked about new ways to increase gas output, the importance of cooperation with the public sector and Burisma's state-of-the-art technology and oil and gas services. "Based on our 2017 corporate program, we will be investing circa UAH 3 billion in exploration and production. We are proud to produce billions of cubic meters of gas and contribute billions of hryvnias to the state budget of Ukraine. The huge advantage of the OTC for Ukraine is that it offers latest technologies allowing us to ramp up Ukraine's domestic gas production," Vadym Pozharskyi explained. The address also discussed how Ukraine offers an attractive investment environment and growth opportunities to oil and gas and service companies. It also recognised the effort and progress the country has made. In May, Burisma Group will be introducing the largest drilling rig in Ukraine. Vadym Pozharskyi extended an invitation to all participants of the OTC 2017 seminar on Ukraine to attend the event. For more detailed information please contact our press-centre: media@burisma.com Founded in 1969, the OTC is one of the key oil and gas industry events focused on offshore exploration, drilling and production. The NRG Park hosted over 2,300 companies from 100 countries that brought their projects and technologies. This year, the tradeshow attracted a record number of attendees - over 90,000 traders, managers, businessmen, engineers and scientists. The OTC is ranked among 200 largest tradeshows held annually in the United States and is among 10 largest gatherings in terms of attendance. Burisma Group is an independent oil and gas company operating in Ukraine. Since its launch in 2002, the Company has rapidly become one of the largest independent gas producers in the country. Burisma has been engaged in oil and gas exploration and production for more than 10 years. The core business is located in Ukraine, where the Group is the largest independent natural gas producer. Burisma is a market leader with annualized natural gas production circa 1,1 BCM and over 30% market share. Burisma is seeking for opportunities to expand its portfolio to other countries. Burisma has a state-of-the-art equipment and many years of experience to provide best services for oil and gas companies around the world. For more information, please visit http://burisma.com/en/


News Article | May 11, 2017
Site: globenewswire.com

Nordeconi kontserni brutokasum 2017. aasta I kvartalis oli 624 tuhat eurot (I kvartal 2016: 1 153 tuhat eurot). Brutokasumlikkus oli I kvartalis 1,5% (I kvartal 2016: 4,2%). Järjest tihedamaks muutuvates konkurentsitingimustes on Kontserni brutokasumlikkus võrreldes eelmise aastaga vähenenud. Turumuutustest tingitud tugevale survele kasumlikkuse osas juhtis Kontserni juhtkond tähelepanu juba ka 2016. aastal. Aruandeperioodi kasum teeniti hoonete ehituse segmendis, kus aga marginaalid vähenesid tuntavalt võrreldes eelmise aasta sama perioodiga moodustades 4,1% (I kvartal 2016: 10,7%). Kasumlikkuse vähenemine on osaliselt tingitud ka Kontserni Rootsi tütarettevõtte kahjumist seonduvalt esimese sõlmitud lepingu alusel rajatud hoone lõpufaasis ilmnenud kuludega, mida ei suudetud piisavalt ette näha uuele turule sisenedes. Ootuspäraselt tagasihoidlik oli rajatiste segmendi tulemus, kuigi võrreldes eelmise aasta sama perioodiga on segmendi kahjumlikkus vähenenud. Segmendi kahjumi peamiseks põhjuseks on talviste oma jõududega teostatavate tööde (suuremahulised pinnasetööd) puudumine ning segmendi suur püsikulude katmata osa. Kontserni üldhalduskulud moodustasid 2017. aasta I kvartalis 1 457 tuhat eurot. Võrreldes eelmise aasta sama perioodiga on üldkulud mõnevõrre kasvanud (I kvartal 2016: 1 292 tuhat eurot), kuid 12 kuu libisev üldhalduskulude osakaal müügitulust on võrreldes eelmise aasta sama perioodiga vähenenud, moodustades 3,2 % (I kvartal 2016: 3,6%). Vaatamata tehtud muutustele Kontserni struktuuris ning jätkuvale panustamisele välisturgudel, millega paratamatult kaasneb ka planeeritud üldhalduskulude kasv käivitusperioodil, on kulude kasvu piiravad meetmed Kontsernis jätkuvalt hästi töötanud ning üldhalduskulusid on hoitud alla eesmärgistatud piiri, s.o 4% müügitulust. 2017. aasta I kvartali äritegevuse netorahavoog moodustas -6 647 tuhat eurot (I kvartal 2016: -2 818 tuhat eurot). Esimese kvartali negatiivne äritegevuse rahavoog on tsüklilisele ehitustegevusele iseloomulik. Suuremad püsikulud ja ettevalmistused aktiivsema, eelkõige rajatiste, ehitusperioodi alustamiseks II kvartalis hoiavad väljaminekud võrreldes sissetulekutega kõrgetena. Lisaks mõjutab äritegevuse rahavoogu ostjate ja tarnijate maksetähtaegade erinevus ning ettemaksete puudumine nii riigi- kui ka eratellijate lepingutes situatsioonis, kus Kontsernil tuleb tasuda ettemakseid allhankijatele, materjalide soetamisel, jne. Kontsern tegeleb igapäevaselt tellijate ja allhankijate maksetähtaegade ühtlustamisega ning kasutab selleks peamiselt faktooringut. Lisaks müügiarvete faktoorimisele on Kontsern sõlminud ostufaktooringu raamlepingu, mille raames on võimalik allhankijatel, kellel puudub finantseerimisasutustest faktooringlimiidi taotlemiseks piisav krediidivõimekus, kasutada Kontserni limiiti. Rootsi osakaal müügitulus on võrreldes eelmise aasta sama perioodiga oluliselt kasvanud.  Aruandeperioodil jätkus kahe korterelamu ehitamine ning alustati kolmanda objekti projekteerimise ja ehituse ettevalmistustöödega. Ukraina osakaal Kontserni müügitulus on vähenenud, kuid tegevusmahud on võrreldaval tasemel 2016. aasta I kvartaliga, kus on töös eelkõige üks hoonete ehituse valdkonna suuremahuline leping. Müügitulu osakaal Soomes koosneb betoonitööde töövõtust hoonete segmendis. Müügitulu hajutamine erinevate geograafiliste segmentide vahel on olnud Kontserni juhtkonna poolt valitud strateegia, mille abil hajutada riske, mis tulenevad liigsest kontsentreeritusest ühele turule. Samas on majandusolud ka osadel valitud välisturgudel ebastabiilsed ning mõjutavad tuntavalt Kontserni jooksvaid tulemusi. Välisturgude osakaalu kasvatamine on Kontserni üks strateegilisi lähtekohti. Kontserni nägemust edasisest äritegevusest välisturgudel on selgitatud tegevusaruande peatükis „Väljavaated Kontserni tegutsemisturgudele“. * Tegevussegmentide vaheline jaotus tegevusaruandes tugineb projektide liigitamisele lähtuvalt nende sisust (st hoonete või rajatiste valdkond). Raamatupidamisaruande segmendiaruandes on hoonete ja rajatiste valdkondade vaheline jaotus tehtud tütarettevõtete põhilise tegevusvaldkonna järgi (IFRS 8 „Tegevussegmendid“ nõudeid järgides). Tütarettevõte, kelle põhitegevus toimub rajatiste segmendis, on raamatupidamisaruandes kajastatud vastavas segmendis. Tegevusaruandes on tütarettevõtte poolt tehtud tööd kajastatud vastavalt nende sisule. Erinevused kahe aruande vahel ei ole olulised, kuna Kontserni ettevõtted on spetsialiseerunud pigem konkreetsetele valdkondadele, v.a tütarettevõte Nordecon Betoon OÜ, kelle tegevus jaguneb hoonete ja rajatiste segmendi vahel. Emaettevõtte näitajad on mõlemas aruandes jagatud lähtuvalt tööde sisust. Kontsern jätkab omaarenduste ehitust (kajastub korterelamute segmendis) nii Tartus kui ka Tallinnas. Tartus, Tammelinnas, on nelja esimese arendusetapi käigus valminud 5 kortermaja, mille müük on olnud väga edukas. Valminud hoonetest on kõik korterid müüdud. 2017. aasta I kvartalis alustati V etapi, 24 korteriga neljakorruselise korterelamu, ehitusega ning VI etapi ettevalmistöödega (www.tammelinn.ee). V etapis, mis valmib 2017. aasta augustis, on  24 korterist eelmüügilepingud sõlmitud või tehtud broneering 23-le korterile ning VI etapis, mis valmib 2017. aasta detsembris, on  broneeritud ligikaudu pooled korterid. Aruandeperioodil lõpetati Tallinnas, Magasini 29 arendusprojekti (www.magasini.ee) viienda, viimase, ridaelamu ehitus. Jätkub Tallinnas Hane tänaval kahe, kokku 30 korteriga, korterelamu ehitus ja müük. Arendades jätkuvalt oma kinnisvara jälgib Kontsern tähelepanelikult võimalikke riske elamuarenduse turul seoses hüppeliselt suurenenud müügipakkumiste, aga ka suhtelise sisendhindade tõusuga. Rajatiste segmendis on juba pikalt domineerinud teedeehituse ja -hoolduse alamsegment, mille osakaal 2017. aasta I kvartalis võrreldes eelmise aasta sama perioodiga on veelgi suurenenud. Kontsern jätkas teehooldelepingute teostamist Järva ja Hiiu maakonnas ning Harju maakonnas Keila ja Kose hooldepiirkonnas. Teostati väikesemahulise teedeehituse töid, muuhulgas jätkusid tööd Tallinnas Logi tänaval ning Vanasadamas. Olulise osas aruandeperioodi mahust moodustasid Riigimetsa Majandamise Keskusele metsateede korrastamise tööd. Kontserni juhtkonna hinnangul jääb ka 2017. aastal teedeehituse segment rajatiste segmendi kõige olulisemaks valdkonnaks. Erinevalt eelnevast kahest aastast, kui olulise osa segmendi mahust moodustasid väikese või keskmise suurusega rekonstrueerimise ja taastusremondi töövõtud, on Kontsern sõlminud kahe suurobjekti ehituslepingud: 2016. aasta lõpul Tallinn-Pärnu-Ikla maantee Ääsmäe-Kohatu lõigule 2+1 möödasõitude ehitus ning peale aruandeperioodi lõppu, 2017. aasta aprillis, Haabertsi ristmiku rekonstrueerimine Tallinnas. Nii keskkonnaehituse kui ka välisvõrkude (muud rajatised koosseisus) alamsegmendi sõlmitud lepingud on väiksemahulised ning alamsegmendi kasv on vähetõenäoline. Insenerehituse alamsegmendis ei ole aruande kirjutamise hetkel näha tellijate poolt tehtavaid vesiehitusega seotud suuremaid investeeringuid. Samuti on keerulisemate insenerehituslike tööde lisandumine pigem ebaregulaarne. Hoonete segmendi teostamata tööde portfell suurenes võrreldes eelmise aasta sama perioodiga ligikaudu 18%. Mahtude oluline suurenemine on toimunud ärihoonete ning tööstus- ja laohoonete alamsegmentides, millest esimese kasvu mõjutavad eelkõige Tallinna Ülemist Citysse Lõõtsa 12 büroohoone ja Lõõtsa 11 parkimishoone ning Pärnus Martensi maja ehitamine. 2017. aasta I kvartalis sõlmiti leping Pärnusse Metsä Wood vineeritehase ehitamiseks, mis toetab tööstus- ja laohoonete alamsegmendi teostamata tööde portfelli kasvu. Mõnevõrra on vähenenud ühiskondlike hoonete ja korterelamute alamsegmendi teostamata tööde portfellid, kuid vaatamata sellele on suurim teostamata tööde portfell Kontsernis jätkuvalt korterelamute alamsegmendis. Korterelamute portfelli mõjutavad 2016. aastal  sõlmitud suuremahulised lepingud, sealhulgas Tallinnas Pirita tee 20a Meerhofi 2.0 hoonetekompleksi, Virbi 10 ja Sõjakooli 12 ning Ukrainas Kiievi oblastis Brovary linnas viie korterelamu ehitamiseks. 2017. aasta algul lisandus eelpool nimetatud objektidele leping Rootsis (Väsby Terrass) 8-korruseline kortermaja ehitamiseks. Ühiskondlike hoonete teostamata tööde portfellist moodustavad olulise osa Tapa kaitseväelinnaku depoo ning soomusmanöövervõime taristu, söökla ja kasarmu ehitus. Konkurents on kõikides segmentides jätkuvalt väga tugev. 2017. aastal ei ole ette näha hüppelist avalike investeeringute kasvu võrreldes 2016. aastaga. Konkurentsist tulenev hinnasurve ehituse pakkumishindadele on selgelt tuntav, samas toimub see olukorras, kus ehitussisendite hinnad on viimastes kvartalistes olnud  mõõdukas, kuid pidevas tõusutrendis. Lisaks teada ja tuntud peatöövõtjatele sekkuvad üha enam ka senised alltöövõtjad, seda tingituna eelkõige riiklike ja omavalitsuse tellijate jätkuvast poliitikast hoida riigihangetel kvalifitseerumise nõudeid madalal, tuues nii kohati kvaliteedi ohvriks odavaimale hinnale. Kontsern teadvustab riske, mis kaasnevad tihedas konkurentsis ja tõusule pöördunud sisendhindade keskkonnas sõlmitud lepingute teostamisega. Olukorras, kus pole võimalik sisendhindu tuntavalt langetada ning valitseb tihe konkurents, on pikaajaliste ehituslepingute sõlmimine ebamõistlikult madala hinnaga riskantne, kuna negatiivsete muutuste korral majanduses võivad need kujuneda kiiresti kahjumlikeks. Kontsern seab sellistes tingimustes ehitusteenuse hinnakujundusel tähtsale kohale lepingu täitmisega kaasnevate riskide mõistliku tasakaalu ja range kulude kontrolli. Ehitusteenuse nõudluse suurimaks mõjutajaks on jätkuvalt avaliku sektori investeeringute maht, mis on omakorda sõltuvuses EL struktuurifondidest saadavast kaasrahastamisest. 2014. aastal alanud EL eelarveperioodil (2014-2020) eraldatakse Eestile toetusi 5,9 miljardit eurot, mis ületab eelmise eelarveperioodi toetuste mahtu, kuid samas on ehitusse suunatav toetuse osakaal tunduvalt väiksem. Eelmainitu mõju ehitussektorile hakkas väheselt määral avalduma 2016. aasta II poolaastal ning usutavasti protsess kiireneb järgnevatel perioodidel. Samuti mõjutab äritegevust eelkõige aastaaegadest tingitud ehitustegevuse sesoonsus, mis avaldab enim mõju rajatiste ehitamisele välitingimustes (teed, sadamad, pinnasetööd jms). Valdkonna tegevuse hajutamiseks on Kontsern muuhulgas sõlminud teehoolduslepinguid, kus on aastaringne hooldamiskohustus. Kontserni äritegevuse strateegilise ülesehituse kohaselt aitab rajatiste valdkonna hooajalisust kompenseerida hoonete valdkond, kus nimetatud mõjud on väiksemad. Sellest lähtuvalt on Kontserni pikaajaline eesmärk hoida kahte valdkonda paindlikult suhtelises tasakaalus (vt ka tegevusaruande peatükk „Äritegevus tegevusvaldkondade lõikes“). Samuti kasutavad Kontserni ettevõtted jätkuvalt võimalusel erinevaid tehnilisi lahendusi, mis lubaksid töötada tõhusamalt ka muutuvates tingimustes. Lisaks otseselt ehitustegevusega seotud riskidele on Kontsern viimasel paaril aastal pööranud teravdatud tähelepanu tegevusriskidele ajal, mis eelneb ehitustegevusele. Eelkõige puudutab see pakkumistegevust, sh pakkumustingimustele vastamist ning pakkumiseelarvete koostamist. Planeerimisstaadiumis tehtud vigade mõju on üldjuhul tagasipööramatu ning toob turuolukorras, kus ehituslepingute hinnad tellijatega on fikseeritud, kaasa reaalse rahalise kahju. Kontserni intressikandvad võlakohustused pankade ees on nii fikseeritud kui ka ujuvate intressimääradega. Kapitalirendi lepingud on valdavalt ujuva intressimääraga. Ujuva intressimäära baasiks on enamiku lepingute puhul Euribor. Kontserni intressikandvad võlakohustused on eelmise aasta sama perioodiga võrreldes suurenenud  3 169 tuhat eurot. Suurenenud on nii laenu- kui ka kapitalirendi kohustused (vt lisaks „Likviidsusrisk“). Seisuga 31.03.2017 oli Kontsernil intressikandvaid kohustusi summas 23 649 tuhat eurot (31.03.2016: 20 480 tuhat eurot). Intressikulud olid 2017. aasta I kvartalis 128 tuhat eurot (I kv 2016: 147 tuhat eurot). Kontserni intressirisk väljendub eelkõige ujuvintresside baasmäärade võimalikus tõusus (EURIBOR, EONIA või laenuandja enda poolt arvutatav baasmäär), millega kaasneks Kontserni suhteliselt suure laenukoormuse juures intressikulude märgatav suurenemine koos negatiivse mõjuga kasumile. Riski maandamiseks on Kontsern lähtunud põhimõttest, et madalate turuintresside korral sõlmitakse lepingud võimalusel fikseeritud intressimääraga, kuid see on pankade poolt pakutud laenutoodete osas osutunud keeruliseks. Seega on uued lepingud sõlmitud enamjaolt ujuvate intressimääradega. Kontsern on sõlminud tuletistehingu lepingu, et juhtida eelpool nimetatud ostetud asfaltbetoonitehase kapitalirendilepingu intressimäärade muutumisega seotud riske. 2014. aasta algul Ukraina ja Venemaa vahel puhkenud erimeelsuste tõttu pingestunud Ukraina poliitiline ja majanduslik keskkond ning 2015. aasta algul Ukraina keskpanga poolt indikatiivse valuutakursi määramise lõpetamine on tinginud UAH kursi ebastabiilsuse. 2017. aasta I kvartalis on UAH kurss euro suhtes püsinud suhteliselt stabiilsena, nõrgenedes euro vastu ligikaudu 1,9%. Kontserni Ukrainas asuvatele tütarettevõtetele tähendas see eurodes saadud laenude ümberhindamist kohalikku valuutasse ning sealt tekkivaid täiendavaid kursikahjumeid summas 49 tuhat eurot (I kvartal 2016: 291 tuhat eurot). Finantsinstrumentidega seotud kursikasumid ja -kahjumid kajastuvad koondkasumiaruande kirjetel „finantstulud“ ja „finantskulud“. Põhitegevusega seotud nõuete ja kohustuste ümberhindamisest valuutakursi kasumit või kahjumit ei saadud. Kontsern tegutseb Ukrainas eratellijatele suunatud ehituse peatöövõtu ja projektijuhtimisega hoonete valdkonnas. Ebastabiilne poliitiline ja majanduslik olukord piirab jätkuvalt äritegevuseks vajalike otsuste vastuvõtmist, kuid ehitustegevus Kiievis ja tema lähiümbruses ei ole peatunud. Kontserni äritegevus Ukrainas 2017. aastal jätkub eelkõige Kiievi regioonis. 2016. aasta lõpu seisuga teostamata tööde portfelli mahule tuginedes jääb Kontserni juhtkonna hinnangul 2017. aasta tegevusmaht võrreldavale tasemele 2016. aastaga. Vaatamata sõjalisele konfliktile Ida-Ukrainas ei ole turuolukord Kiievis Kontserni jaoks halvenenud võrreldes aasta või paari taguse ajaga. Rasked olud on vähendanud märgatavalt kohalike ebaefektiivsete (ehitus) ettevõtete arvu ning normaalse majanduse taastudes tulevikus on Kontsernil tunduvalt paremad väljavaated mahtude ja ka kasumlikkuse kasvatamiseks. Ukraina valitsuse viimased jõulised otsused ümbrikupalka saava tööjõu osakaalu vähendamiseks riigis on kindlasti sammud õiges suunas ning peaksid pikemas perspektiivis parandama ka Kontserni positsiooni ehitusturul. Kontserni juhtkond hindab regulaarselt ja kriitiliselt kohaliku ehitusturu seisu ning restruktureerib vajadusel vastavalt ka Ukraina äritegevusega seotud tegevust. Ida-Ukraina kriisi laienedes Kiievisse (milline tõenäosus on aruande koostamise ajal äärmiselt kaheldav) ollakse valmis ka tegevuse koheseks peatamiseks. Kontsern jätkab võimaluste otsimist kahest konserveeritud kinnisvaraprojektist väljumiseks lõplikult või ehituslepingu sõlmimiseks võimaliku uue omanikuga. Kontserni tegevus Soome turul on keskendunud seni peamiselt betoonitööde alltöövõtule, kuid möödunud aastate kogemusele tuginedes on Kontsern alustamas ettevalmistustöödega, laiendamaks tegevust ka peatöövõtuturule. Kohalik betoonitööde töövõtuturg võimaldab konkureerida valitud projektides, kus tellijale on tähtis saada kõik betoonitööd ühe kindla taustaga ettevõtte käest. Kontsern tegutseb Soomes siiski tasakaalukalt ja püüdes vältida ülemääraseid riske. Kontsern alustas tegevust Rootsis 2015. aasta juulis, kui Kontsern ostis 100%-lise osaluse Rootsi Kuningriigis registreeritud äriühingus SWENCN AB. Rootsi turul on kavas osutada peamiselt elamute ja mitteeluhoonete ehitusteenust eelkõige Kesk-Rootsi regioonis. Tulenevalt järjest omandatavatest kogemustest uuel turul on Kontsern pidanud olulisimaks sõlmitud lepingute kvaliteetset ja tähtaegset täitmist ning maksnud seetõttu ka mõnevõrra lõivu kasumlikkusele. Pidades silmas pikemat eesmärki ja soovi ehitada üles elujõuline ning tugev organisatsioon edukaks tegevuseks Rootsi turul, on Kontserni juhtkond jätkuvalt positiivne seniste arengute osas ning näeb võimalusi jätkuvaks kasvuks. Nordeconi kontsern (www.nordecon.com) hõlmab ettevõtteid, mis on keskendunud hoonete ja rajatiste ehitamise projektijuhtimisele ja peatöövõtule. Geograafiliselt tegutsevad kontserni ettevõtted Eestis, Ukrainas, Soomes ja Rootsis. Kontserni emaettevõte Nordecon AS on registreeritud ja asub Tallinnas, Eestis. Kontserni kuulub lisaks emaettevõttele üle 10 tütarettevõtte. Kontserni 2016. aasta konsolideeritud müügitulu oli 183 miljonit eurot. Nordeconi kontsern annab hetkel tööd ligi 720 inimesele. Alates 18.05.2006 on emaettevõtte aktsiad noteeritud NASDAQ OMX Tallinna Börsi põhinimekirjas.


Human emission of heat-trapping gases is causing the Earth to warm. We’ve known that for many decades. In fact, there are no reputable scientists that dispute this fact. There are, however, a few scientists who don’t think the warming will be very much or that we should worry about it. These contrarians have been shown to be wrong over and over again, like in the movie Groundhog Day. And, a new study just out shows they may have another error. But, despite being wrong, they continue to claim Earth’s warming isn’t something to be concerned about. Perhaps the darlings of the denialist community are two researchers out of Alabama (John Christy and Roy Spencer). They rose to public attention in the mid-1990s when they reportedly showed that the atmosphere was not warming and was actually cooling. It turns out they had made some pretty significant errors and when other researchers identified those errors, the new results showed a warming. To provide perspective, we know the Earth is warming because we can measure it. Most of the heat (93%) goes into the oceans and we have sensors measuring ocean temperatures that show this. We also know about warming because we have thermometers and other sensors all over the planet measuring the temperature at the surface or in the first few meters of air at the surface. Those temperatures are rising too. We are also seeing ice melting and sea level rising around the planet. So, the evidence is clear. What Christy and Spencer focus on is the temperatures measured far above the Earth’s surface in the troposphere and the stratosphere. Generally, over the past few decades these two scientists have claimed the troposphere temperatures are not rising very rapidly. This argument has been picked up to deny the reality of human caused climate change – but it has been found to be wrong. What kinds of errors have been made? Well first, let’s understand how these two researchers measure atmospheric temperatures. They are not using thermometers, rather they are using microwave signals from the atmosphere to deduce temperatures. The microwave sensors are on satellites which rapidly circle the planet. Some of the problems they have struggled with relate to satellite altitudes (they slowly fall over their lifetimes, and this orbital decay biases the readings); satellite drift (their orbits shift east-west a small amount causing an error); they errantly include stratosphere temperatures in their lower atmosphere readings; and they have incorrect temperature calibration on the satellites. It’s pretty deep stuff, but I have written about the errors multiple times here, and here for people who want a deeper dive into the details. It’s important to recognize that there are four other groups that make similar measurement estimates, so it’s possible to compare the temperatures of one group against another. The new paper, completed by Eric Swanson and published by the American Meteorological Society compares the results from three different groups. He focused on measurements made over the Arctic region. His comparison found two main differences amongst the three groups that suggests the errors. To better appreciate the issues, the satellites have instruments called Microwave Sounding Units (MSUs) or more recently, Advanced Microwave Soundings Units (AMSUs). These instruments allow reconstruction of the lower troposphere (TLT), the mid-troposphere temperature (TMT), and the lower stratosphere temperature (TLS). But the measurements are not at a specific location (like a thermometer) - they are smeared out over large spaces. As a consequence, it’s possible to have one layer of the atmosphere contaminate the results of another layer. You wouldn’t for instance, want your measurement of the troposphere (lower atmosphere) to include part of the stratosphere (above the troposphere). Among the key differences among the research teams are their methods to ensure this contamination is minimized. According to the recent paper, which was published in January 2017: The author compared the Christy/Spencer data (UAH data) with another group (the RSS group) and found that the results diverged during the 1986-1988 time period. This shift “could arise from a step change or bias in either series.” When the author compared UAH with the third group (NOAA), the difference was still evident. However, when he compared RSS to NOAA, there was hardly a difference. The author also noted that the timing of this divergence coincided with the merging of a new satellite NOAA-9, and this satellite has previously been identified as a source of error in the UAH results. But the author continued the analysis to more recent times and found another anomaly in 2005 which has since been corrected in NOAA. Look, measuring temperatures from satellites flying high above Earth is hard. No one doubts that. But let’s not be deluded into thinking these satellites are more accurate than thermometers (as some people suggest). Let’s also not blindly accept low-ball warming information from research teams that have long histories of revising their data. I created the image below a few years ago to show the upward revisions made by the Christy/Spencer team over time in their global troposphere temperatures. It is relevant to be reminded of these revisions; had we believed the results from the 1990s, we’d still think the world was cooling, and we’d still be wrong.


News Article | May 11, 2017
Site: globenewswire.com

This announcement includes Nordecon AS’s consolidated financial statements for the first quarter of 2017 (unaudited), overview of the key events influencing the period’s financial result, outlook for the market and description of the main risks. Interim report is attached to the announcement and is also published on NASDAQ Tallinn and Nordecon’s web page (http://www.nordecon.com/for-investor/financial-reports/interim-reports). Period’s investor presentation are attached to the announcement and are also published on Nordecon’s web page (http://www.nordecon.com/for-investor/investor-presentations). Nordecon Group ended the first  quarter of 2017 with a gross profit of 624 thousand euros (Q1 2016: 1,153 thousand euros) and a gross margin of 1.5% (Q1 2016: 4.2%). The gross margin weakened year on year due to stiffer competition. We drew attention to the fact that changes in the market situation would put pressure on profitability already in 2016. We earned our first-quarter gross profit in the building construction segment although the gross margin of our Buildings segment dropped to 4.1% (Q1 2016: 10.7%). The decline in profitability is partly attributable to the loss of the Swedish subsidiary, which incurred some costs in the final stage of its first building construction contract which were not fully foreseen on entering the new market. Our results in the infrastructure construction segment were expectedly modest although the loss of our Infrastructure segment decreased compared with a year earlier. The main reasons for the segment’s loss were its lack of self-performed work (major earthworks, etc.) during the winter season and a large share of uncovered fixed costs. Administrative expenses for the first quarter of 2017 totalled 1,457 thousand euros. Compared with a year earlier, administrative expenses grew slightly (Q1 2016: 1,292 thousand euros) but the ratio of administrative expenses to revenue (12 months rolling) decreased to 3.2% (Q1 2016: 3.6%). Although we made changes to the Group’s structure and continued investing in foreign markets which unavoidably and expectedly increases administrative expenses in the start-up phase, our cost-control measures continued to produce good results and we were able to keep administrative expenses below the target ceiling of 4% of revenue. Operating loss for the first quarter of 2017 amounted to 992 thousand euros (Q1 2016: an operating loss of 213 thousand euros). EBITDA was negative at 503 thousand euros (Q1 2016: positive at 233 thousand euros). During the period, the euro/Ukrainian hryvnia exchange rate was relatively stable and our exchange losses from adverse movements in the euro/Ukrainian hryvnia exchange rate were considerably smaller than a year earlier.  In the first quarter, the Ukrainian currency weakened against the euro by around 1.9%, which meant that Group entities whose functional currency is the hryvnia had to restate their euro-denominated liabilities. Exchange losses reported in finance costs totalled 49 thousand euros (Q1 2016: 291 thousand euros). The Group’s net loss amounted to 1,086  thousand euros (Q1 2016: a net loss of 409 thousand euros), of which net loss attributable to owners of the parent, Nordecon AS, was 1,087 thousand euros (Q1 2016: 570 thousand euros). In the first quarter of 2017, operating activities produced a net cash outflow of 6,647 thousand euros (Q1 2016:  an outflow of 2,818 thousand euros). Negative operating cash flow is typical of the first quarter and stems from the cyclical nature of the construction business. In the second quarter, larger fixed costs and preparations made for more active construction operations, particularly in the infrastructure segment, cause outflows to exceed inflows. In addition, operating cash flow is influenced by a mismatch between the settlement terms agreed with customers and subcontractors and the fact that neither public nor private sector customers are required to make advance payments while we have to make prepayments to subcontractors, materials suppliers, etc. We deal with equalising the settlement terms agreed with customers and suppliers on a daily basis, mostly through factoring. In addition to factoring accounts receivable, we have concluded a frame agreement for reverse factoring which enables our subcontractors who do not have sufficient credit standing to obtain a factoring limit from a financing institution to use our limit. Investing activities produced a net cash inflow of 138 thousand euros (Q1 2016: an outflow of 88 thousand euros). The largest items were payments for property, plant and equipment of 33 thousand euros (Q1 2016: 103 thousand euros) and dividends received of 147 thousand euros (Q1 2016: 3 thousand euros). Financing activities generated a net cash inflow of 2,640 thousand euros (Q1 2016: an inflow of 808 thousand euros). Financing cash flows were strongly influenced by loan and lease transactions. Proceeds from loans received totalled 3,430 thousand euros, consisting of use of overdrafts and development loans (Q1 2016: 1,562 thousand euros). Compared with a year ago, there was slight growth in finance lease payments which totalled 480 thousand euros (Q1 2016: 395 thousand euros). The rise in finance lease payments is attributable to large-scale investments in road construction equipment (including the acquisition of a new asphalt concrete plant) made in the second quarter. At 31 March 2017, the Group’s cash and cash equivalents totalled 5,917 thousand euros (31 March 2016: 4,236 thousand euros). Management’s commentary on liquidity risks is presented in the chapter Description of the main risks. In the first quarter of 2017, Nordecon earned around 9% of its revenue outside Estonia compared with 7% in the same period last year. The proportion of revenue generated in the Swedish market increased considerably compared with a year earlier. We continued to build two apartment buildings and started preparations for the design and construction of a third one. Although the proportion of revenue generated in Ukraine decreased, the amount of Ukrainian revenues remained comparable to the first quarter of 2016. In Ukraine, most of the revenue resulted from one large building construction contract. Our Finnish revenues resulted from concrete works in the building construction segment. 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 selected foreign markets are also volatile and have a strong impact on our current results. Increasing the contribution of foreign markets is one of Nordecon’s strategic targets. Our vision of our foreign operations is described in the chapter Outlooks of the Group’s geographical markets. We strive to maintain the revenues of our operating segments (Buildings and Infrastructure) in balance as this helps disperse risks and provides better opportunities for continuing construction operations in more challenging circumstances when the operating volumes of a sub-segment fall sharply. Nordecon’s revenue for the first quarter of 2017 amounted to 41,604 thousand euros, a roughly 50% increase on the 27,731 thousand euros generated in the first quarter of 2016. Revenues increased in both the Buildings and the Infrastructure segment. The general contraction of the infrastructure construction market has also influenced our revenue structure. In the first quarter of 2017, our Buildings segment and Infrastructure segment generated revenue of 36,711 thousand euros and 4,487 thousand euros respectively. The corresponding figures for the first quarter of 2016 were 24,411 thousand euros and 3,108 thousand euros (see note 8). Our order book has a similar structure: at the end of the first quarter 77% of contracts secured but not yet performed was attributable to the Buildings segment (Q1 2016: 70%). * In the Directors’ report, projects have been allocated to operating segments based on their nature (i.e., building or infrastructure construction). In the segment reporting presented in the financial statements, allocation is based on the subsidiaries’ main field of activity (as required by IFRS 8 Operating Segments). In the financial statements, the results of a subsidiary that is primarily engaged in infrastructure construction are presented in the Infrastructure segment. In the Directors’ report, the revenues of such a subsidiary are presented based on their nature. The differences between the two reports are not significant because in general Group entities specialise in specific areas except for the subsidiary Nordecon Betoon OÜ that is involved in both building and infrastructure construction. The figures for the parent company are allocated in both parts of the interim report based on the nature of the work. In the Buildings segment, the strongest revenue contributors were the apartment buildings and the public buildings sub-segments where most of the Group’s revenue resulted from general contracting. In Estonia, a substantial share of our apartment building projects is located in Tallinn. In the first quarter, the main revenue contributors were the Meerhof 2.0 apartment building complex at Pirita tee 20a and apartment buildings at Kopli 4a, Kopli 6 and Virbi 10. The contributions of foreign markets sustained growth. In Ukraine, we continued to build a residential quarter in the city of Brovary in the Kiev region. In Sweden, we continued to build two apartment buildings and began preparations for the design and construction of a third, 8-floor apartment building in Stockholm. We continue to build our own developments (reported in the apartment buildings sub-segment) in both Tartu and Tallinn. We have completed 5 apartment buildings in the first four phases of our Tammelinn project in Tartu and sales have been highly successful. By the reporting date, all completed apartments were sold. In the first quarter of 2017, we began building phase V which comprises a four-floor apartment building with 24 apartments and launched preparations for phase VI (www.tammelinn.ee). In phase V, which will be completed in August 2017, 23 of the 24 apartments are covered with pre-sale agreements or reservations and in phase VI, which will be completed in December 2017, around half of the apartments have already been reserved. In the first quarter, we completed the fifth and last terraced house in our Magasini 29 development project in Tallinn (www.magasini.ee). We continue to build two apartment buildings with a total of 30 apartments in Hane street in Tallinn. In carrying out our development activities, we monitor carefully potential risks in the housing development market that stem from rapid growth in the supply of new housing as well as a relative increase in input prices. The key factor which influenced the results of the public buildings sub-segment was growth in the state’s investment in national defence. In the first quarter, we continued the design and construction of the Lintsi warehouse complex and the construction of a depot, infrastructure for armoured vehicles, a canteen and a barracks at the Tapa military base. In addition, we delivered to the customer Ugala Theatre in Viljandi. The revenues of the commercial buildings sub-segment grew somewhat compared with the first quarter of 2016.  We continued to build the office and retail complex Viimsi Äritare and an office building at Lõõtsa 12 in Ülemiste City and to renovate the machinery hall of the historical Luther furniture factory into a modern office building. Based on our order book, we expect the commercial buildings sub-segment to post year-on-year revenue growth. The revenues of the industrial and warehouse facilities sub-segment decreased year on year. The period’s largest projects were the construction of Harmet’s production and warehouse facilities at Kumna, near Tallinn, the construction of a co-generation plant at Kehra and phase III (fourth floor) in the reconstruction of the pig fattening unit of Rakvere Farmid AS (EKSEKO). We began preparations for building the Metsä Wood plywood factory in Pärnu. For a long time, the main revenue source in the Infrastructure segment has been road construction and in the first quarter of 2017 its revenue contribution (compared to a year earlier) grew even further. We continued to render road maintenance services in the Järva and Hiiu counties and the Keila and Kose maintenance areas of the Harju county. The period’s road construction projects were small: we continued the reconstruction of Logi street in Tallinn and construction work at the Old City Harbour. A large share of the period’s revenues resulted from forest road improvement services provided to the State Forest Management Centre. We believe that road construction will remain the main revenue source in the Infrastructure segment through 2017. In contrast to the two previous years, when most of the segment’s revenues resulted from small or medium-sized reconstruction or rehabilitation projects, this year we have two large contracts:  construction of a 2+1 road (a road with passing lanes) on the Ääsmäe-Kohatu section of the Tallinn-Pärnu-Ikla road which was secured at the end of 2016 and reconstruction of the Haabersti intersection which was secured after the end of the reporting period in April 2017. The contracts secured by the environmental engineering and other engineering (utility network construction) sub-segments are small and growth of the sub-segments’ revenues is unlikely. At the date of release of this report, there is no sign of any major hydraulic engineering projects to be announced and demand for other complex engineering work also tends to be irregular. At 31 March 2017, the Group’s order book (backlog of contracts signed but not yet performed) stood at 130,109 thousand euros, an 8% increase year on year. At the reporting date, contracts secured by the Buildings segment and the Infrastructure segment accounted for 77% and 23% of the Group’s order book respectively (31 March 2016: 70% and 30% respectively). Compared with a year earlier, the order book of the Buildings segment has grown by around 18%. The order books of the commercial buildings and the industrial and warehouse facilities sub-segments have increased substantially, the first one primarily through contracts for the construction of an office building at Lõõtsa 12 and a multi-storey car par at Lõõtsa 11 in Ülemiste City in Tallinn and the Martens house in Pärnu. In the first quarter of 2017, we secured a contract for building a plywood factory for Metsä Wood in Pärnu, which increased the order book of the industrial and warehouse facilities sub-segment. The order books of the public buildings and the apartment buildings sub-segments have decreased slightly but the order book of the apartment buildings sub-segment is still the largest. The order book of the apartment buildings sub-segment is influenced by large contracts secured in 2016 including projects for the construction of the Meerhof 2.0 apartment building complex at Pirita tee 20a, apartment buildings at Virbi 10 and Sõjakooli 12, and five apartment buildings in the city of Brovary in the Kiev region in Ukraine. At the beginning of 2017, we secured a contract for building an eight-floor apartment building (Väsby Terrass) in Sweden. The largest contracts in the order book of the public buildings sub-segment are those for the construction of a depot, infrastructure for armoured vehicles, a canteen and a barracks for the Tapa military base. Compared with a year ago, the order book of the Infrastructure segment has decreased by around 16%. 83% of the segment’s order book is made up of work awarded to the road construction and maintenance sub-segment whose order book has also decreased slightly compared with a year earlier. A major project in the road construction portfolio is the contract signed for building a 2+1 road (a road with passing lanes) on the Ääsmäe-Kohatu section of the Tallinn-Pärnu-Ikla road which was secured in 2016. We continue to provide road maintenance services in four road maintenance areas: Keila, Järva, Hiiu, and Kose. According to our estimates, in 2017 the volume of public investment will not increase substantially compared with 2016. Thus, we expect that in 2017 the revenues of the Infrastructure segment will remain more or less at the same level as in 2016 (for further information, see the Business risks section of the chapter Description of the main risks). Based on growth in the Group’s order book and developments in our selected markets, we forecast year-on-year revenue growth for 2017. In an environment of exceptionally stiff competition, we have tried to avoid taking unjustified risks whose realisation in the contract performance phase would have an adverse impact on the Group’s results. Instead, our policy is to keep costs under control and monitor market developments with due care. Between the reporting date (31 March 2017) and the date of release of this report, Group companies have secured additional construction contracts in the region of 33,263 thousand euros. In the first quarter of 2017, the Group (the parent and the subsidiaries) employed, on average, 716 people including 413 engineers and technical personnel (ETP). The number of employees, particularly the ETP staff, has increased year on year by around 10% in connection with growth in Group’s business operations. Average number of the Group’s employees (at the parent and the subsidiaries) Our personnel expenses for the first quarter of 2017 including all taxes totalled 4,479 thousand euros (Q1 2016: 4,109 thousand euros), a roughly 9% increase year on year. The growth in personnel expenses is mainly attributable to a larger headcount. The service fees of the members of the council of Nordecon AS for the first quarter of 2017 amounted to 34 thousand euros and associated social security charges totalled 11 thousand euros (Q1 2016: 34 thousand euros and 11 thousand euros respectively). The service fees of the members of the board of Nordecon AS amounted to 94 thousand euros and associated social security charges totalled 31 thousand euros (Q1 2016: 87 thousand euros and 28 thousand euros respectively). 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: The Group’s nominal labour productivity and labour cost efficiency increased year on year, mainly through revenue growth. The main factors which affect the Group’s business volumes and profit margins are competition in the construction market and changes in the demand for construction services. Competition continues to be stiff in all segments of the construction market and in 2017 public investment is not expected to grow substantially compared with 2016. Thus, builders’ bid prices are under strong competitive pressure in a situation where the prices of construction inputs have been trending upwards moderately but consistently for several quarters. Bidders include not only well-known general contractors but also former subcontractors. This is mainly attributable to the state and local governments’ policy to keep the qualification requirements of public procurement tenders low, which sometimes results in the sacrifice of quality to the lowest possible price. We acknowledge the risks inherent in the performance of contracts signed in an environment of stiff competition and rising input prices. Securing a long-term construction contract at an unreasonably low price in a situation where input prices cannot be lowered noticeably and competition is tough is risky because negative developments in the economy may quickly render the contract onerous. In setting our prices in such an environment, we focus on ensuring a reasonable balance of contract performance risks and tight cost control. Demand for construction services continues to be strongly influenced by the volume of public investment, which in turn depends on the co-financing received from the EU structural funds. Total support allocated to Estonia during the current EU budget period (2014-2020) amounts to 5.9 billion euros, exceeding the figure of the previous financial framework, but the amounts earmarked for construction work are substantially smaller. Projects supported by the EU began to have a limited impact on the construction sector in the second half of 2016 and in the next periods the process is expected to accelerate. In the light of the above factors, we see some opportunities for achieving year-on-year business growth in 2017: business growth in Estonia is supported by positive developments in our selected foreign markets. Our action plan foresees flexible resource allocation aimed at finding more profitable contracts and performing them effectively. According to its business model, Nordecon operates in all segments of the construction market. Therefore, we are somewhat better positioned than companies that operate in one narrow (and in the current market situation particularly some infrastructure) segment. Our business is also influenced by seasonal changes in weather conditions, which have the strongest impact on infrastructure construction where a lot of work is done outdoors (road and port construction, earthwork, etc.). To disperse the risk, we secure road maintenance contracts that generate year-round business. Our strategy is to counteract the seasonality of infrastructure operations with building construction that is less exposed to seasonal fluctuations. Our long-term goal is to be flexible and keep our two operating segments in relative balance (see also the chapter Performance by business line). Where possible, our entities implement different technical solutions that allow working efficiently also in changeable conditions. To manage their daily construction risks, Group companies purchase contractors’ all risks insurance. Depending on the nature of the project and the requests of the customer, both general frame agreements and special, project-specific insurance contracts are used. In addition, as a rule, subcontractors are required to secure performance of their obligations with a bank guarantee provided to a Group company or the Group retains part of the amount due until the contract has been completed. To remedy construction deficiencies which may be detected during the warranty period, Group companies create warranty provisions based on their historical experience. At 31 March 2017, the Group’s warranty provisions (including current and non-current ones) totalled 1,176 thousand euros (31 March 2016: 1,137 thousand euros). In addition to managing the risks directly related to construction operations, in recent years we have also sought to mitigate the risks inherent in preliminary activities. In particular, we have focused on the bidding process, i.e., compliance with the procurement terms and conditions, and budgeting. The errors made in the planning stage are usually irreversible and, in a situation where the price is contractually fixed, may result in a direct financial loss. During the period, we recognised credit losses of 30 thousand euros. In the comparative period, there were no credit losses. The overall credit risk exposure of receivables is low because the solvency of prospective customers is evaluated, the share of public sector customers is large, and customers’ settlement behaviour is consistently monitored. The main indicator of the realisation of credit risk is settlement default that exceeds 180 days along with no activity on the part of the debtor that would confirm the intent to settle. The Group remains exposed to higher than usual liquidity risk. At the reporting date, the Group’s current assets exceeded its current liabilities 1.01-fold (31 March 2016: 1.02-fold). The key factor which influences the current ratio is the classification of the Group’s loans to its Ukrainian associates as non-current assets and the banks’ general policy not to refinance interest-bearing liabilities (particularly overdrafts) for a period exceeding twelve months. Because the political and economic situation in Ukraine is still complicated, we believe that the Group’s Ukrainian investment properties cannot be realised in the short term. Accordingly, as at the reporting date the Group’s loans to its Ukrainian associates of 8,716 thousand euros are classified as non-current assets. For better cash flow management, we use overdraft facilities and factoring by which we counter the mismatch between the settlement terms agreed with customers and subcontractors.  Under IFRS EU, borrowings have to be classified into current and non-current based on contract terms in force at the reporting date. At 31 March 2017, the Group’s short-term borrowings totalled 17,504 thousand euros. After the end of the reporting period, we have refinanced short-term borrowings of 5,763 thousand euros, of which settlement of 3,913 thousand euros has been deferred to 2018 and settlement of 1,850 thousand euros has been deferred to 2019. At the reporting date, the Group’s cash and cash equivalents totalled 5,917 thousand euros (31 March 2016: 4,236 thousand euros). Our interest-bearing liabilities to banks have both fixed and floating interest rates. Finance lease liabilities have mainly floating interest rates. The base rate for most floating-rate contracts is EURIBOR. Compared with the same period last year, interest-bearing borrowings grew by 3,169 thousand euros. Both loan and finance lease liabilities increased (see also the section Liquidity risk). At 31 March 2017, interest-bearing borrowings totalled 23,649 thousand euros (31 March 2016: 20,480 thousand euros). Interest expense for the first quarter of 2017 amounted to 128 thousand euros (Q1 2016: 147 thousand euros). The main source of interest rate risk is a possible rise in the variable component of floating interest rates (EURIBOR, EONIA or the creditor’s own base rate). In the light of the Group’s relatively heavy loan burden this would cause a significant rise in interest expense, which would have an adverse impact on profit. We mitigate the risk by pursuing a policy of entering, where possible, into fixed-rate contracts when the market interest rates are low. As regards loan products offered by banks, observance of the policy has proved difficult and most new contracts have a floating interest rate. We have entered into a derivative contract to manage the risks resulting from changes in the interest rates of the finance lease contract for the acquisition of a new asphalt concrete plant. As a rule, the prices of construction contracts and subcontracts are fixed in the currency of the host country, i.e., in euros (EUR), Ukrainian hryvnias (UAH), and Swedish kronas (SEK). The exchange rate of the hryvnia has been unstable because the political and economic environment in Ukraine continues to be complicated due to the conflict between Ukraine and Russia which broke out at the beginning of 2014 and at the beginning of 2015 the National Bank of Ukraine decided to discontinue determination of the national currency’s indicative exchange rate. In the first quarter of 2017, the hryvnia/euro exchange rate was relatively stable: the hryvnia weakened against the euro by around 1.9%. For our Ukrainian subsidiaries, this meant additional foreign exchange losses from the translation of their euro-denominated loans into the local currency. Relevant exchange losses totalled 49 thousand euros (Q1 2016: 291 thousand euros). Exchange gains and losses on financial instruments are recognised in Finance income and Finance costs respectively. Translation of receivables and liabilities from operating activities did not give rise to any exchange gains or losses. The reciprocal receivables and liabilities of our Ukrainian and non-Ukrainian entities which are connected with the construction business and denominated in hryvnias do not give rise to exchange losses. Nor do the loans provided to the  Ukrainian associates in euros give rise to exchange losses that ought to be recognised in the Group’s accounts. Due to movements in the Swedish krona/euro exchange rate in the first quarter of 2017, translation of operating receivables and payables did not result in any exchange gain or loss (Q1 2016: an exchange loss of 2 thousand euros). The prior period exchange loss was recognised in Other operating expenses. We do not use derivatives to hedge currency risk. In Ukraine, we provide general contracting and project management services to private sector customers in the segment of building construction. Political and economic instability continues to restrict the adoption of business decisions but construction activity in Kiev and the surrounding area has not halted. In 2017, we will continue our operations in Ukraine primarily in the Kiev region. Based on our order book as at the end of 2016, we expect that in 2017 our operating volumes will remain at a level comparable to 2016. Despite the military conflict in eastern Ukraine, for Nordecon the market situation in Kiev has not deteriorated compared with a year or two ago. Hard times have reduced the number of inefficient local (construction) companies and when the economy normalises we will have considerably better prospects for increasing our operations and profitability. The Ukrainian government’s recent crackdown on cash-in-hand work is definitely a step in the right direction, which in the long term should also improve our position in the Ukrainian construction market. We assess the situation in the Ukrainian market regularly and critically and are ready to restructure our operations as and when necessary. Should the crisis in eastern Ukraine spread to Kiev (which at the date of release of this report is highly unlikely), we can suspend our operations immediately. We continue to seek opportunities for exiting our two real estate projects which have been put on hold or signing a construction contract with a prospective new owner. In Finland, we have provided mainly subcontracting services in the concrete segment but, based on experience gained, have started preparations for expanding into the general contracting market. The local concrete work market allows competing for projects where the customer wishes to source all concrete works from one reliable partner. Our policy is to maintain a rational approach and avoid taking excessive risks. We entered the Swedish market in July 2015, when we acquired a 100% stake in SWENCN AB, a company registered in the Kingdom of Sweden. In the Swedish market we intend to offer mainly the construction of residential and non-residential buildings, particularly in central Sweden. On gaining experience in the new market, we have prioritised quality and observance of deadlines and have therefore accepted a certain decrease in profitability. As regards our longer-term goals and the plan to build a viable and strong organisation that would compete successfully in the Swedish market, we are positive about the developments so far and see potential for sustaining business 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 Estonia, Ukraine, Finland and Sweden. The parent of the Group is Nordecon AS, a company registered and located in Tallinn, Estonia. In addition to the parent company, there are more than 10 subsidiaries in the Group. The consolidated revenue of the Group in 2016 was 183 million euros. Currently Nordecon Group employs close to 720 people. Since 18 May 2006 the company's shares have been quoted in the main list of the NASDAQ OMX Tallinn Stock Exchange.


News Article | May 11, 2017
Site: globenewswire.com

Nordeconi kontserni brutokasum 2017. aasta I kvartalis oli 624 tuhat eurot (I kvartal 2016: 1 153 tuhat eurot). Brutokasumlikkus oli I kvartalis 1,5% (I kvartal 2016: 4,2%). Järjest tihedamaks muutuvates konkurentsitingimustes on Kontserni brutokasumlikkus võrreldes eelmise aastaga vähenenud. Turumuutustest tingitud tugevale survele kasumlikkuse osas juhtis Kontserni juhtkond tähelepanu juba ka 2016. aastal. Aruandeperioodi kasum teeniti hoonete ehituse segmendis, kus aga marginaalid vähenesid tuntavalt võrreldes eelmise aasta sama perioodiga moodustades 4,1% (I kvartal 2016: 10,7%). Kasumlikkuse vähenemine on osaliselt tingitud ka Kontserni Rootsi tütarettevõtte kahjumist seonduvalt esimese sõlmitud lepingu alusel rajatud hoone lõpufaasis ilmnenud kuludega, mida ei suudetud piisavalt ette näha uuele turule sisenedes. Ootuspäraselt tagasihoidlik oli rajatiste segmendi tulemus, kuigi võrreldes eelmise aasta sama perioodiga on segmendi kahjumlikkus vähenenud. Segmendi kahjumi peamiseks põhjuseks on talviste oma jõududega teostatavate tööde (suuremahulised pinnasetööd) puudumine ning segmendi suur püsikulude katmata osa. Kontserni üldhalduskulud moodustasid 2017. aasta I kvartalis 1 457 tuhat eurot. Võrreldes eelmise aasta sama perioodiga on üldkulud mõnevõrre kasvanud (I kvartal 2016: 1 292 tuhat eurot), kuid 12 kuu libisev üldhalduskulude osakaal müügitulust on võrreldes eelmise aasta sama perioodiga vähenenud, moodustades 3,2 % (I kvartal 2016: 3,6%). Vaatamata tehtud muutustele Kontserni struktuuris ning jätkuvale panustamisele välisturgudel, millega paratamatult kaasneb ka planeeritud üldhalduskulude kasv käivitusperioodil, on kulude kasvu piiravad meetmed Kontsernis jätkuvalt hästi töötanud ning üldhalduskulusid on hoitud alla eesmärgistatud piiri, s.o 4% müügitulust. 2017. aasta I kvartali äritegevuse netorahavoog moodustas -6 647 tuhat eurot (I kvartal 2016: -2 818 tuhat eurot). Esimese kvartali negatiivne äritegevuse rahavoog on tsüklilisele ehitustegevusele iseloomulik. Suuremad püsikulud ja ettevalmistused aktiivsema, eelkõige rajatiste, ehitusperioodi alustamiseks II kvartalis hoiavad väljaminekud võrreldes sissetulekutega kõrgetena. Lisaks mõjutab äritegevuse rahavoogu ostjate ja tarnijate maksetähtaegade erinevus ning ettemaksete puudumine nii riigi- kui ka eratellijate lepingutes situatsioonis, kus Kontsernil tuleb tasuda ettemakseid allhankijatele, materjalide soetamisel, jne. Kontsern tegeleb igapäevaselt tellijate ja allhankijate maksetähtaegade ühtlustamisega ning kasutab selleks peamiselt faktooringut. Lisaks müügiarvete faktoorimisele on Kontsern sõlminud ostufaktooringu raamlepingu, mille raames on võimalik allhankijatel, kellel puudub finantseerimisasutustest faktooringlimiidi taotlemiseks piisav krediidivõimekus, kasutada Kontserni limiiti. Rootsi osakaal müügitulus on võrreldes eelmise aasta sama perioodiga oluliselt kasvanud.  Aruandeperioodil jätkus kahe korterelamu ehitamine ning alustati kolmanda objekti projekteerimise ja ehituse ettevalmistustöödega. Ukraina osakaal Kontserni müügitulus on vähenenud, kuid tegevusmahud on võrreldaval tasemel 2016. aasta I kvartaliga, kus on töös eelkõige üks hoonete ehituse valdkonna suuremahuline leping. Müügitulu osakaal Soomes koosneb betoonitööde töövõtust hoonete segmendis. Müügitulu hajutamine erinevate geograafiliste segmentide vahel on olnud Kontserni juhtkonna poolt valitud strateegia, mille abil hajutada riske, mis tulenevad liigsest kontsentreeritusest ühele turule. Samas on majandusolud ka osadel valitud välisturgudel ebastabiilsed ning mõjutavad tuntavalt Kontserni jooksvaid tulemusi. Välisturgude osakaalu kasvatamine on Kontserni üks strateegilisi lähtekohti. Kontserni nägemust edasisest äritegevusest välisturgudel on selgitatud tegevusaruande peatükis „Väljavaated Kontserni tegutsemisturgudele“. * Tegevussegmentide vaheline jaotus tegevusaruandes tugineb projektide liigitamisele lähtuvalt nende sisust (st hoonete või rajatiste valdkond). Raamatupidamisaruande segmendiaruandes on hoonete ja rajatiste valdkondade vaheline jaotus tehtud tütarettevõtete põhilise tegevusvaldkonna järgi (IFRS 8 „Tegevussegmendid“ nõudeid järgides). Tütarettevõte, kelle põhitegevus toimub rajatiste segmendis, on raamatupidamisaruandes kajastatud vastavas segmendis. Tegevusaruandes on tütarettevõtte poolt tehtud tööd kajastatud vastavalt nende sisule. Erinevused kahe aruande vahel ei ole olulised, kuna Kontserni ettevõtted on spetsialiseerunud pigem konkreetsetele valdkondadele, v.a tütarettevõte Nordecon Betoon OÜ, kelle tegevus jaguneb hoonete ja rajatiste segmendi vahel. Emaettevõtte näitajad on mõlemas aruandes jagatud lähtuvalt tööde sisust. Kontsern jätkab omaarenduste ehitust (kajastub korterelamute segmendis) nii Tartus kui ka Tallinnas. Tartus, Tammelinnas, on nelja esimese arendusetapi käigus valminud 5 kortermaja, mille müük on olnud väga edukas. Valminud hoonetest on kõik korterid müüdud. 2017. aasta I kvartalis alustati V etapi, 24 korteriga neljakorruselise korterelamu, ehitusega ning VI etapi ettevalmistöödega (www.tammelinn.ee). V etapis, mis valmib 2017. aasta augustis, on  24 korterist eelmüügilepingud sõlmitud või tehtud broneering 23-le korterile ning VI etapis, mis valmib 2017. aasta detsembris, on  broneeritud ligikaudu pooled korterid. Aruandeperioodil lõpetati Tallinnas, Magasini 29 arendusprojekti (www.magasini.ee) viienda, viimase, ridaelamu ehitus. Jätkub Tallinnas Hane tänaval kahe, kokku 30 korteriga, korterelamu ehitus ja müük. Arendades jätkuvalt oma kinnisvara jälgib Kontsern tähelepanelikult võimalikke riske elamuarenduse turul seoses hüppeliselt suurenenud müügipakkumiste, aga ka suhtelise sisendhindade tõusuga. Rajatiste segmendis on juba pikalt domineerinud teedeehituse ja -hoolduse alamsegment, mille osakaal 2017. aasta I kvartalis võrreldes eelmise aasta sama perioodiga on veelgi suurenenud. Kontsern jätkas teehooldelepingute teostamist Järva ja Hiiu maakonnas ning Harju maakonnas Keila ja Kose hooldepiirkonnas. Teostati väikesemahulise teedeehituse töid, muuhulgas jätkusid tööd Tallinnas Logi tänaval ning Vanasadamas. Olulise osas aruandeperioodi mahust moodustasid Riigimetsa Majandamise Keskusele metsateede korrastamise tööd. Kontserni juhtkonna hinnangul jääb ka 2017. aastal teedeehituse segment rajatiste segmendi kõige olulisemaks valdkonnaks. Erinevalt eelnevast kahest aastast, kui olulise osa segmendi mahust moodustasid väikese või keskmise suurusega rekonstrueerimise ja taastusremondi töövõtud, on Kontsern sõlminud kahe suurobjekti ehituslepingud: 2016. aasta lõpul Tallinn-Pärnu-Ikla maantee Ääsmäe-Kohatu lõigule 2+1 möödasõitude ehitus ning peale aruandeperioodi lõppu, 2017. aasta aprillis, Haabertsi ristmiku rekonstrueerimine Tallinnas. Nii keskkonnaehituse kui ka välisvõrkude (muud rajatised koosseisus) alamsegmendi sõlmitud lepingud on väiksemahulised ning alamsegmendi kasv on vähetõenäoline. Insenerehituse alamsegmendis ei ole aruande kirjutamise hetkel näha tellijate poolt tehtavaid vesiehitusega seotud suuremaid investeeringuid. Samuti on keerulisemate insenerehituslike tööde lisandumine pigem ebaregulaarne. Hoonete segmendi teostamata tööde portfell suurenes võrreldes eelmise aasta sama perioodiga ligikaudu 18%. Mahtude oluline suurenemine on toimunud ärihoonete ning tööstus- ja laohoonete alamsegmentides, millest esimese kasvu mõjutavad eelkõige Tallinna Ülemist Citysse Lõõtsa 12 büroohoone ja Lõõtsa 11 parkimishoone ning Pärnus Martensi maja ehitamine. 2017. aasta I kvartalis sõlmiti leping Pärnusse Metsä Wood vineeritehase ehitamiseks, mis toetab tööstus- ja laohoonete alamsegmendi teostamata tööde portfelli kasvu. Mõnevõrra on vähenenud ühiskondlike hoonete ja korterelamute alamsegmendi teostamata tööde portfellid, kuid vaatamata sellele on suurim teostamata tööde portfell Kontsernis jätkuvalt korterelamute alamsegmendis. Korterelamute portfelli mõjutavad 2016. aastal  sõlmitud suuremahulised lepingud, sealhulgas Tallinnas Pirita tee 20a Meerhofi 2.0 hoonetekompleksi, Virbi 10 ja Sõjakooli 12 ning Ukrainas Kiievi oblastis Brovary linnas viie korterelamu ehitamiseks. 2017. aasta algul lisandus eelpool nimetatud objektidele leping Rootsis (Väsby Terrass) 8-korruseline kortermaja ehitamiseks. Ühiskondlike hoonete teostamata tööde portfellist moodustavad olulise osa Tapa kaitseväelinnaku depoo ning soomusmanöövervõime taristu, söökla ja kasarmu ehitus. Konkurents on kõikides segmentides jätkuvalt väga tugev. 2017. aastal ei ole ette näha hüppelist avalike investeeringute kasvu võrreldes 2016. aastaga. Konkurentsist tulenev hinnasurve ehituse pakkumishindadele on selgelt tuntav, samas toimub see olukorras, kus ehitussisendite hinnad on viimastes kvartalistes olnud  mõõdukas, kuid pidevas tõusutrendis. Lisaks teada ja tuntud peatöövõtjatele sekkuvad üha enam ka senised alltöövõtjad, seda tingituna eelkõige riiklike ja omavalitsuse tellijate jätkuvast poliitikast hoida riigihangetel kvalifitseerumise nõudeid madalal, tuues nii kohati kvaliteedi ohvriks odavaimale hinnale. Kontsern teadvustab riske, mis kaasnevad tihedas konkurentsis ja tõusule pöördunud sisendhindade keskkonnas sõlmitud lepingute teostamisega. Olukorras, kus pole võimalik sisendhindu tuntavalt langetada ning valitseb tihe konkurents, on pikaajaliste ehituslepingute sõlmimine ebamõistlikult madala hinnaga riskantne, kuna negatiivsete muutuste korral majanduses võivad need kujuneda kiiresti kahjumlikeks. Kontsern seab sellistes tingimustes ehitusteenuse hinnakujundusel tähtsale kohale lepingu täitmisega kaasnevate riskide mõistliku tasakaalu ja range kulude kontrolli. Ehitusteenuse nõudluse suurimaks mõjutajaks on jätkuvalt avaliku sektori investeeringute maht, mis on omakorda sõltuvuses EL struktuurifondidest saadavast kaasrahastamisest. 2014. aastal alanud EL eelarveperioodil (2014-2020) eraldatakse Eestile toetusi 5,9 miljardit eurot, mis ületab eelmise eelarveperioodi toetuste mahtu, kuid samas on ehitusse suunatav toetuse osakaal tunduvalt väiksem. Eelmainitu mõju ehitussektorile hakkas väheselt määral avalduma 2016. aasta II poolaastal ning usutavasti protsess kiireneb järgnevatel perioodidel. Samuti mõjutab äritegevust eelkõige aastaaegadest tingitud ehitustegevuse sesoonsus, mis avaldab enim mõju rajatiste ehitamisele välitingimustes (teed, sadamad, pinnasetööd jms). Valdkonna tegevuse hajutamiseks on Kontsern muuhulgas sõlminud teehoolduslepinguid, kus on aastaringne hooldamiskohustus. Kontserni äritegevuse strateegilise ülesehituse kohaselt aitab rajatiste valdkonna hooajalisust kompenseerida hoonete valdkond, kus nimetatud mõjud on väiksemad. Sellest lähtuvalt on Kontserni pikaajaline eesmärk hoida kahte valdkonda paindlikult suhtelises tasakaalus (vt ka tegevusaruande peatükk „Äritegevus tegevusvaldkondade lõikes“). Samuti kasutavad Kontserni ettevõtted jätkuvalt võimalusel erinevaid tehnilisi lahendusi, mis lubaksid töötada tõhusamalt ka muutuvates tingimustes. Lisaks otseselt ehitustegevusega seotud riskidele on Kontsern viimasel paaril aastal pööranud teravdatud tähelepanu tegevusriskidele ajal, mis eelneb ehitustegevusele. Eelkõige puudutab see pakkumistegevust, sh pakkumustingimustele vastamist ning pakkumiseelarvete koostamist. Planeerimisstaadiumis tehtud vigade mõju on üldjuhul tagasipööramatu ning toob turuolukorras, kus ehituslepingute hinnad tellijatega on fikseeritud, kaasa reaalse rahalise kahju. Kontserni intressikandvad võlakohustused pankade ees on nii fikseeritud kui ka ujuvate intressimääradega. Kapitalirendi lepingud on valdavalt ujuva intressimääraga. Ujuva intressimäära baasiks on enamiku lepingute puhul Euribor. Kontserni intressikandvad võlakohustused on eelmise aasta sama perioodiga võrreldes suurenenud  3 169 tuhat eurot. Suurenenud on nii laenu- kui ka kapitalirendi kohustused (vt lisaks „Likviidsusrisk“). Seisuga 31.03.2017 oli Kontsernil intressikandvaid kohustusi summas 23 649 tuhat eurot (31.03.2016: 20 480 tuhat eurot). Intressikulud olid 2017. aasta I kvartalis 128 tuhat eurot (I kv 2016: 147 tuhat eurot). Kontserni intressirisk väljendub eelkõige ujuvintresside baasmäärade võimalikus tõusus (EURIBOR, EONIA või laenuandja enda poolt arvutatav baasmäär), millega kaasneks Kontserni suhteliselt suure laenukoormuse juures intressikulude märgatav suurenemine koos negatiivse mõjuga kasumile. Riski maandamiseks on Kontsern lähtunud põhimõttest, et madalate turuintresside korral sõlmitakse lepingud võimalusel fikseeritud intressimääraga, kuid see on pankade poolt pakutud laenutoodete osas osutunud keeruliseks. Seega on uued lepingud sõlmitud enamjaolt ujuvate intressimääradega. Kontsern on sõlminud tuletistehingu lepingu, et juhtida eelpool nimetatud ostetud asfaltbetoonitehase kapitalirendilepingu intressimäärade muutumisega seotud riske. 2014. aasta algul Ukraina ja Venemaa vahel puhkenud erimeelsuste tõttu pingestunud Ukraina poliitiline ja majanduslik keskkond ning 2015. aasta algul Ukraina keskpanga poolt indikatiivse valuutakursi määramise lõpetamine on tinginud UAH kursi ebastabiilsuse. 2017. aasta I kvartalis on UAH kurss euro suhtes püsinud suhteliselt stabiilsena, nõrgenedes euro vastu ligikaudu 1,9%. Kontserni Ukrainas asuvatele tütarettevõtetele tähendas see eurodes saadud laenude ümberhindamist kohalikku valuutasse ning sealt tekkivaid täiendavaid kursikahjumeid summas 49 tuhat eurot (I kvartal 2016: 291 tuhat eurot). Finantsinstrumentidega seotud kursikasumid ja -kahjumid kajastuvad koondkasumiaruande kirjetel „finantstulud“ ja „finantskulud“. Põhitegevusega seotud nõuete ja kohustuste ümberhindamisest valuutakursi kasumit või kahjumit ei saadud. Kontsern tegutseb Ukrainas eratellijatele suunatud ehituse peatöövõtu ja projektijuhtimisega hoonete valdkonnas. Ebastabiilne poliitiline ja majanduslik olukord piirab jätkuvalt äritegevuseks vajalike otsuste vastuvõtmist, kuid ehitustegevus Kiievis ja tema lähiümbruses ei ole peatunud. Kontserni äritegevus Ukrainas 2017. aastal jätkub eelkõige Kiievi regioonis. 2016. aasta lõpu seisuga teostamata tööde portfelli mahule tuginedes jääb Kontserni juhtkonna hinnangul 2017. aasta tegevusmaht võrreldavale tasemele 2016. aastaga. Vaatamata sõjalisele konfliktile Ida-Ukrainas ei ole turuolukord Kiievis Kontserni jaoks halvenenud võrreldes aasta või paari taguse ajaga. Rasked olud on vähendanud märgatavalt kohalike ebaefektiivsete (ehitus) ettevõtete arvu ning normaalse majanduse taastudes tulevikus on Kontsernil tunduvalt paremad väljavaated mahtude ja ka kasumlikkuse kasvatamiseks. Ukraina valitsuse viimased jõulised otsused ümbrikupalka saava tööjõu osakaalu vähendamiseks riigis on kindlasti sammud õiges suunas ning peaksid pikemas perspektiivis parandama ka Kontserni positsiooni ehitusturul. Kontserni juhtkond hindab regulaarselt ja kriitiliselt kohaliku ehitusturu seisu ning restruktureerib vajadusel vastavalt ka Ukraina äritegevusega seotud tegevust. Ida-Ukraina kriisi laienedes Kiievisse (milline tõenäosus on aruande koostamise ajal äärmiselt kaheldav) ollakse valmis ka tegevuse koheseks peatamiseks. Kontsern jätkab võimaluste otsimist kahest konserveeritud kinnisvaraprojektist väljumiseks lõplikult või ehituslepingu sõlmimiseks võimaliku uue omanikuga. Kontserni tegevus Soome turul on keskendunud seni peamiselt betoonitööde alltöövõtule, kuid möödunud aastate kogemusele tuginedes on Kontsern alustamas ettevalmistustöödega, laiendamaks tegevust ka peatöövõtuturule. Kohalik betoonitööde töövõtuturg võimaldab konkureerida valitud projektides, kus tellijale on tähtis saada kõik betoonitööd ühe kindla taustaga ettevõtte käest. Kontsern tegutseb Soomes siiski tasakaalukalt ja püüdes vältida ülemääraseid riske. Kontsern alustas tegevust Rootsis 2015. aasta juulis, kui Kontsern ostis 100%-lise osaluse Rootsi Kuningriigis registreeritud äriühingus SWENCN AB. Rootsi turul on kavas osutada peamiselt elamute ja mitteeluhoonete ehitusteenust eelkõige Kesk-Rootsi regioonis. Tulenevalt järjest omandatavatest kogemustest uuel turul on Kontsern pidanud olulisimaks sõlmitud lepingute kvaliteetset ja tähtaegset täitmist ning maksnud seetõttu ka mõnevõrra lõivu kasumlikkusele. Pidades silmas pikemat eesmärki ja soovi ehitada üles elujõuline ning tugev organisatsioon edukaks tegevuseks Rootsi turul, on Kontserni juhtkond jätkuvalt positiivne seniste arengute osas ning näeb võimalusi jätkuvaks kasvuks. Nordeconi kontsern (www.nordecon.com) hõlmab ettevõtteid, mis on keskendunud hoonete ja rajatiste ehitamise projektijuhtimisele ja peatöövõtule. Geograafiliselt tegutsevad kontserni ettevõtted Eestis, Ukrainas, Soomes ja Rootsis. Kontserni emaettevõte Nordecon AS on registreeritud ja asub Tallinnas, Eestis. Kontserni kuulub lisaks emaettevõttele üle 10 tütarettevõtte. Kontserni 2016. aasta konsolideeritud müügitulu oli 183 miljonit eurot. Nordeconi kontsern annab hetkel tööd ligi 720 inimesele. Alates 18.05.2006 on emaettevõtte aktsiad noteeritud NASDAQ OMX Tallinna Börsi põhinimekirjas.


News Article | May 11, 2017
Site: globenewswire.com

This announcement includes Nordecon AS’s consolidated financial statements for the first quarter of 2017 (unaudited), overview of the key events influencing the period’s financial result, outlook for the market and description of the main risks. Interim report is attached to the announcement and is also published on NASDAQ Tallinn and Nordecon’s web page (http://www.nordecon.com/for-investor/financial-reports/interim-reports). Period’s investor presentation are attached to the announcement and are also published on Nordecon’s web page (http://www.nordecon.com/for-investor/investor-presentations). Nordecon Group ended the first  quarter of 2017 with a gross profit of 624 thousand euros (Q1 2016: 1,153 thousand euros) and a gross margin of 1.5% (Q1 2016: 4.2%). The gross margin weakened year on year due to stiffer competition. We drew attention to the fact that changes in the market situation would put pressure on profitability already in 2016. We earned our first-quarter gross profit in the building construction segment although the gross margin of our Buildings segment dropped to 4.1% (Q1 2016: 10.7%). The decline in profitability is partly attributable to the loss of the Swedish subsidiary, which incurred some costs in the final stage of its first building construction contract which were not fully foreseen on entering the new market. Our results in the infrastructure construction segment were expectedly modest although the loss of our Infrastructure segment decreased compared with a year earlier. The main reasons for the segment’s loss were its lack of self-performed work (major earthworks, etc.) during the winter season and a large share of uncovered fixed costs. Administrative expenses for the first quarter of 2017 totalled 1,457 thousand euros. Compared with a year earlier, administrative expenses grew slightly (Q1 2016: 1,292 thousand euros) but the ratio of administrative expenses to revenue (12 months rolling) decreased to 3.2% (Q1 2016: 3.6%). Although we made changes to the Group’s structure and continued investing in foreign markets which unavoidably and expectedly increases administrative expenses in the start-up phase, our cost-control measures continued to produce good results and we were able to keep administrative expenses below the target ceiling of 4% of revenue. Operating loss for the first quarter of 2017 amounted to 992 thousand euros (Q1 2016: an operating loss of 213 thousand euros). EBITDA was negative at 503 thousand euros (Q1 2016: positive at 233 thousand euros). During the period, the euro/Ukrainian hryvnia exchange rate was relatively stable and our exchange losses from adverse movements in the euro/Ukrainian hryvnia exchange rate were considerably smaller than a year earlier.  In the first quarter, the Ukrainian currency weakened against the euro by around 1.9%, which meant that Group entities whose functional currency is the hryvnia had to restate their euro-denominated liabilities. Exchange losses reported in finance costs totalled 49 thousand euros (Q1 2016: 291 thousand euros). The Group’s net loss amounted to 1,086  thousand euros (Q1 2016: a net loss of 409 thousand euros), of which net loss attributable to owners of the parent, Nordecon AS, was 1,087 thousand euros (Q1 2016: 570 thousand euros). In the first quarter of 2017, operating activities produced a net cash outflow of 6,647 thousand euros (Q1 2016:  an outflow of 2,818 thousand euros). Negative operating cash flow is typical of the first quarter and stems from the cyclical nature of the construction business. In the second quarter, larger fixed costs and preparations made for more active construction operations, particularly in the infrastructure segment, cause outflows to exceed inflows. In addition, operating cash flow is influenced by a mismatch between the settlement terms agreed with customers and subcontractors and the fact that neither public nor private sector customers are required to make advance payments while we have to make prepayments to subcontractors, materials suppliers, etc. We deal with equalising the settlement terms agreed with customers and suppliers on a daily basis, mostly through factoring. In addition to factoring accounts receivable, we have concluded a frame agreement for reverse factoring which enables our subcontractors who do not have sufficient credit standing to obtain a factoring limit from a financing institution to use our limit. Investing activities produced a net cash inflow of 138 thousand euros (Q1 2016: an outflow of 88 thousand euros). The largest items were payments for property, plant and equipment of 33 thousand euros (Q1 2016: 103 thousand euros) and dividends received of 147 thousand euros (Q1 2016: 3 thousand euros). Financing activities generated a net cash inflow of 2,640 thousand euros (Q1 2016: an inflow of 808 thousand euros). Financing cash flows were strongly influenced by loan and lease transactions. Proceeds from loans received totalled 3,430 thousand euros, consisting of use of overdrafts and development loans (Q1 2016: 1,562 thousand euros). Compared with a year ago, there was slight growth in finance lease payments which totalled 480 thousand euros (Q1 2016: 395 thousand euros). The rise in finance lease payments is attributable to large-scale investments in road construction equipment (including the acquisition of a new asphalt concrete plant) made in the second quarter. At 31 March 2017, the Group’s cash and cash equivalents totalled 5,917 thousand euros (31 March 2016: 4,236 thousand euros). Management’s commentary on liquidity risks is presented in the chapter Description of the main risks. In the first quarter of 2017, Nordecon earned around 9% of its revenue outside Estonia compared with 7% in the same period last year. The proportion of revenue generated in the Swedish market increased considerably compared with a year earlier. We continued to build two apartment buildings and started preparations for the design and construction of a third one. Although the proportion of revenue generated in Ukraine decreased, the amount of Ukrainian revenues remained comparable to the first quarter of 2016. In Ukraine, most of the revenue resulted from one large building construction contract. Our Finnish revenues resulted from concrete works in the building construction segment. 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 selected foreign markets are also volatile and have a strong impact on our current results. Increasing the contribution of foreign markets is one of Nordecon’s strategic targets. Our vision of our foreign operations is described in the chapter Outlooks of the Group’s geographical markets. We strive to maintain the revenues of our operating segments (Buildings and Infrastructure) in balance as this helps disperse risks and provides better opportunities for continuing construction operations in more challenging circumstances when the operating volumes of a sub-segment fall sharply. Nordecon’s revenue for the first quarter of 2017 amounted to 41,604 thousand euros, a roughly 50% increase on the 27,731 thousand euros generated in the first quarter of 2016. Revenues increased in both the Buildings and the Infrastructure segment. The general contraction of the infrastructure construction market has also influenced our revenue structure. In the first quarter of 2017, our Buildings segment and Infrastructure segment generated revenue of 36,711 thousand euros and 4,487 thousand euros respectively. The corresponding figures for the first quarter of 2016 were 24,411 thousand euros and 3,108 thousand euros (see note 8). Our order book has a similar structure: at the end of the first quarter 77% of contracts secured but not yet performed was attributable to the Buildings segment (Q1 2016: 70%). * In the Directors’ report, projects have been allocated to operating segments based on their nature (i.e., building or infrastructure construction). In the segment reporting presented in the financial statements, allocation is based on the subsidiaries’ main field of activity (as required by IFRS 8 Operating Segments). In the financial statements, the results of a subsidiary that is primarily engaged in infrastructure construction are presented in the Infrastructure segment. In the Directors’ report, the revenues of such a subsidiary are presented based on their nature. The differences between the two reports are not significant because in general Group entities specialise in specific areas except for the subsidiary Nordecon Betoon OÜ that is involved in both building and infrastructure construction. The figures for the parent company are allocated in both parts of the interim report based on the nature of the work. In the Buildings segment, the strongest revenue contributors were the apartment buildings and the public buildings sub-segments where most of the Group’s revenue resulted from general contracting. In Estonia, a substantial share of our apartment building projects is located in Tallinn. In the first quarter, the main revenue contributors were the Meerhof 2.0 apartment building complex at Pirita tee 20a and apartment buildings at Kopli 4a, Kopli 6 and Virbi 10. The contributions of foreign markets sustained growth. In Ukraine, we continued to build a residential quarter in the city of Brovary in the Kiev region. In Sweden, we continued to build two apartment buildings and began preparations for the design and construction of a third, 8-floor apartment building in Stockholm. We continue to build our own developments (reported in the apartment buildings sub-segment) in both Tartu and Tallinn. We have completed 5 apartment buildings in the first four phases of our Tammelinn project in Tartu and sales have been highly successful. By the reporting date, all completed apartments were sold. In the first quarter of 2017, we began building phase V which comprises a four-floor apartment building with 24 apartments and launched preparations for phase VI (www.tammelinn.ee). In phase V, which will be completed in August 2017, 23 of the 24 apartments are covered with pre-sale agreements or reservations and in phase VI, which will be completed in December 2017, around half of the apartments have already been reserved. In the first quarter, we completed the fifth and last terraced house in our Magasini 29 development project in Tallinn (www.magasini.ee). We continue to build two apartment buildings with a total of 30 apartments in Hane street in Tallinn. In carrying out our development activities, we monitor carefully potential risks in the housing development market that stem from rapid growth in the supply of new housing as well as a relative increase in input prices. The key factor which influenced the results of the public buildings sub-segment was growth in the state’s investment in national defence. In the first quarter, we continued the design and construction of the Lintsi warehouse complex and the construction of a depot, infrastructure for armoured vehicles, a canteen and a barracks at the Tapa military base. In addition, we delivered to the customer Ugala Theatre in Viljandi. The revenues of the commercial buildings sub-segment grew somewhat compared with the first quarter of 2016.  We continued to build the office and retail complex Viimsi Äritare and an office building at Lõõtsa 12 in Ülemiste City and to renovate the machinery hall of the historical Luther furniture factory into a modern office building. Based on our order book, we expect the commercial buildings sub-segment to post year-on-year revenue growth. The revenues of the industrial and warehouse facilities sub-segment decreased year on year. The period’s largest projects were the construction of Harmet’s production and warehouse facilities at Kumna, near Tallinn, the construction of a co-generation plant at Kehra and phase III (fourth floor) in the reconstruction of the pig fattening unit of Rakvere Farmid AS (EKSEKO). We began preparations for building the Metsä Wood plywood factory in Pärnu. For a long time, the main revenue source in the Infrastructure segment has been road construction and in the first quarter of 2017 its revenue contribution (compared to a year earlier) grew even further. We continued to render road maintenance services in the Järva and Hiiu counties and the Keila and Kose maintenance areas of the Harju county. The period’s road construction projects were small: we continued the reconstruction of Logi street in Tallinn and construction work at the Old City Harbour. A large share of the period’s revenues resulted from forest road improvement services provided to the State Forest Management Centre. We believe that road construction will remain the main revenue source in the Infrastructure segment through 2017. In contrast to the two previous years, when most of the segment’s revenues resulted from small or medium-sized reconstruction or rehabilitation projects, this year we have two large contracts:  construction of a 2+1 road (a road with passing lanes) on the Ääsmäe-Kohatu section of the Tallinn-Pärnu-Ikla road which was secured at the end of 2016 and reconstruction of the Haabersti intersection which was secured after the end of the reporting period in April 2017. The contracts secured by the environmental engineering and other engineering (utility network construction) sub-segments are small and growth of the sub-segments’ revenues is unlikely. At the date of release of this report, there is no sign of any major hydraulic engineering projects to be announced and demand for other complex engineering work also tends to be irregular. At 31 March 2017, the Group’s order book (backlog of contracts signed but not yet performed) stood at 130,109 thousand euros, an 8% increase year on year. At the reporting date, contracts secured by the Buildings segment and the Infrastructure segment accounted for 77% and 23% of the Group’s order book respectively (31 March 2016: 70% and 30% respectively). Compared with a year earlier, the order book of the Buildings segment has grown by around 18%. The order books of the commercial buildings and the industrial and warehouse facilities sub-segments have increased substantially, the first one primarily through contracts for the construction of an office building at Lõõtsa 12 and a multi-storey car par at Lõõtsa 11 in Ülemiste City in Tallinn and the Martens house in Pärnu. In the first quarter of 2017, we secured a contract for building a plywood factory for Metsä Wood in Pärnu, which increased the order book of the industrial and warehouse facilities sub-segment. The order books of the public buildings and the apartment buildings sub-segments have decreased slightly but the order book of the apartment buildings sub-segment is still the largest. The order book of the apartment buildings sub-segment is influenced by large contracts secured in 2016 including projects for the construction of the Meerhof 2.0 apartment building complex at Pirita tee 20a, apartment buildings at Virbi 10 and Sõjakooli 12, and five apartment buildings in the city of Brovary in the Kiev region in Ukraine. At the beginning of 2017, we secured a contract for building an eight-floor apartment building (Väsby Terrass) in Sweden. The largest contracts in the order book of the public buildings sub-segment are those for the construction of a depot, infrastructure for armoured vehicles, a canteen and a barracks for the Tapa military base. Compared with a year ago, the order book of the Infrastructure segment has decreased by around 16%. 83% of the segment’s order book is made up of work awarded to the road construction and maintenance sub-segment whose order book has also decreased slightly compared with a year earlier. A major project in the road construction portfolio is the contract signed for building a 2+1 road (a road with passing lanes) on the Ääsmäe-Kohatu section of the Tallinn-Pärnu-Ikla road which was secured in 2016. We continue to provide road maintenance services in four road maintenance areas: Keila, Järva, Hiiu, and Kose. According to our estimates, in 2017 the volume of public investment will not increase substantially compared with 2016. Thus, we expect that in 2017 the revenues of the Infrastructure segment will remain more or less at the same level as in 2016 (for further information, see the Business risks section of the chapter Description of the main risks). Based on growth in the Group’s order book and developments in our selected markets, we forecast year-on-year revenue growth for 2017. In an environment of exceptionally stiff competition, we have tried to avoid taking unjustified risks whose realisation in the contract performance phase would have an adverse impact on the Group’s results. Instead, our policy is to keep costs under control and monitor market developments with due care. Between the reporting date (31 March 2017) and the date of release of this report, Group companies have secured additional construction contracts in the region of 33,263 thousand euros. In the first quarter of 2017, the Group (the parent and the subsidiaries) employed, on average, 716 people including 413 engineers and technical personnel (ETP). The number of employees, particularly the ETP staff, has increased year on year by around 10% in connection with growth in Group’s business operations. Average number of the Group’s employees (at the parent and the subsidiaries) Our personnel expenses for the first quarter of 2017 including all taxes totalled 4,479 thousand euros (Q1 2016: 4,109 thousand euros), a roughly 9% increase year on year. The growth in personnel expenses is mainly attributable to a larger headcount. The service fees of the members of the council of Nordecon AS for the first quarter of 2017 amounted to 34 thousand euros and associated social security charges totalled 11 thousand euros (Q1 2016: 34 thousand euros and 11 thousand euros respectively). The service fees of the members of the board of Nordecon AS amounted to 94 thousand euros and associated social security charges totalled 31 thousand euros (Q1 2016: 87 thousand euros and 28 thousand euros respectively). 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: The Group’s nominal labour productivity and labour cost efficiency increased year on year, mainly through revenue growth. The main factors which affect the Group’s business volumes and profit margins are competition in the construction market and changes in the demand for construction services. Competition continues to be stiff in all segments of the construction market and in 2017 public investment is not expected to grow substantially compared with 2016. Thus, builders’ bid prices are under strong competitive pressure in a situation where the prices of construction inputs have been trending upwards moderately but consistently for several quarters. Bidders include not only well-known general contractors but also former subcontractors. This is mainly attributable to the state and local governments’ policy to keep the qualification requirements of public procurement tenders low, which sometimes results in the sacrifice of quality to the lowest possible price. We acknowledge the risks inherent in the performance of contracts signed in an environment of stiff competition and rising input prices. Securing a long-term construction contract at an unreasonably low price in a situation where input prices cannot be lowered noticeably and competition is tough is risky because negative developments in the economy may quickly render the contract onerous. In setting our prices in such an environment, we focus on ensuring a reasonable balance of contract performance risks and tight cost control. Demand for construction services continues to be strongly influenced by the volume of public investment, which in turn depends on the co-financing received from the EU structural funds. Total support allocated to Estonia during the current EU budget period (2014-2020) amounts to 5.9 billion euros, exceeding the figure of the previous financial framework, but the amounts earmarked for construction work are substantially smaller. Projects supported by the EU began to have a limited impact on the construction sector in the second half of 2016 and in the next periods the process is expected to accelerate. In the light of the above factors, we see some opportunities for achieving year-on-year business growth in 2017: business growth in Estonia is supported by positive developments in our selected foreign markets. Our action plan foresees flexible resource allocation aimed at finding more profitable contracts and performing them effectively. According to its business model, Nordecon operates in all segments of the construction market. Therefore, we are somewhat better positioned than companies that operate in one narrow (and in the current market situation particularly some infrastructure) segment. Our business is also influenced by seasonal changes in weather conditions, which have the strongest impact on infrastructure construction where a lot of work is done outdoors (road and port construction, earthwork, etc.). To disperse the risk, we secure road maintenance contracts that generate year-round business. Our strategy is to counteract the seasonality of infrastructure operations with building construction that is less exposed to seasonal fluctuations. Our long-term goal is to be flexible and keep our two operating segments in relative balance (see also the chapter Performance by business line). Where possible, our entities implement different technical solutions that allow working efficiently also in changeable conditions. To manage their daily construction risks, Group companies purchase contractors’ all risks insurance. Depending on the nature of the project and the requests of the customer, both general frame agreements and special, project-specific insurance contracts are used. In addition, as a rule, subcontractors are required to secure performance of their obligations with a bank guarantee provided to a Group company or the Group retains part of the amount due until the contract has been completed. To remedy construction deficiencies which may be detected during the warranty period, Group companies create warranty provisions based on their historical experience. At 31 March 2017, the Group’s warranty provisions (including current and non-current ones) totalled 1,176 thousand euros (31 March 2016: 1,137 thousand euros). In addition to managing the risks directly related to construction operations, in recent years we have also sought to mitigate the risks inherent in preliminary activities. In particular, we have focused on the bidding process, i.e., compliance with the procurement terms and conditions, and budgeting. The errors made in the planning stage are usually irreversible and, in a situation where the price is contractually fixed, may result in a direct financial loss. During the period, we recognised credit losses of 30 thousand euros. In the comparative period, there were no credit losses. The overall credit risk exposure of receivables is low because the solvency of prospective customers is evaluated, the share of public sector customers is large, and customers’ settlement behaviour is consistently monitored. The main indicator of the realisation of credit risk is settlement default that exceeds 180 days along with no activity on the part of the debtor that would confirm the intent to settle. The Group remains exposed to higher than usual liquidity risk. At the reporting date, the Group’s current assets exceeded its current liabilities 1.01-fold (31 March 2016: 1.02-fold). The key factor which influences the current ratio is the classification of the Group’s loans to its Ukrainian associates as non-current assets and the banks’ general policy not to refinance interest-bearing liabilities (particularly overdrafts) for a period exceeding twelve months. Because the political and economic situation in Ukraine is still complicated, we believe that the Group’s Ukrainian investment properties cannot be realised in the short term. Accordingly, as at the reporting date the Group’s loans to its Ukrainian associates of 8,716 thousand euros are classified as non-current assets. For better cash flow management, we use overdraft facilities and factoring by which we counter the mismatch between the settlement terms agreed with customers and subcontractors.  Under IFRS EU, borrowings have to be classified into current and non-current based on contract terms in force at the reporting date. At 31 March 2017, the Group’s short-term borrowings totalled 17,504 thousand euros. After the end of the reporting period, we have refinanced short-term borrowings of 5,763 thousand euros, of which settlement of 3,913 thousand euros has been deferred to 2018 and settlement of 1,850 thousand euros has been deferred to 2019. At the reporting date, the Group’s cash and cash equivalents totalled 5,917 thousand euros (31 March 2016: 4,236 thousand euros). Our interest-bearing liabilities to banks have both fixed and floating interest rates. Finance lease liabilities have mainly floating interest rates. The base rate for most floating-rate contracts is EURIBOR. Compared with the same period last year, interest-bearing borrowings grew by 3,169 thousand euros. Both loan and finance lease liabilities increased (see also the section Liquidity risk). At 31 March 2017, interest-bearing borrowings totalled 23,649 thousand euros (31 March 2016: 20,480 thousand euros). Interest expense for the first quarter of 2017 amounted to 128 thousand euros (Q1 2016: 147 thousand euros). The main source of interest rate risk is a possible rise in the variable component of floating interest rates (EURIBOR, EONIA or the creditor’s own base rate). In the light of the Group’s relatively heavy loan burden this would cause a significant rise in interest expense, which would have an adverse impact on profit. We mitigate the risk by pursuing a policy of entering, where possible, into fixed-rate contracts when the market interest rates are low. As regards loan products offered by banks, observance of the policy has proved difficult and most new contracts have a floating interest rate. We have entered into a derivative contract to manage the risks resulting from changes in the interest rates of the finance lease contract for the acquisition of a new asphalt concrete plant. As a rule, the prices of construction contracts and subcontracts are fixed in the currency of the host country, i.e., in euros (EUR), Ukrainian hryvnias (UAH), and Swedish kronas (SEK). The exchange rate of the hryvnia has been unstable because the political and economic environment in Ukraine continues to be complicated due to the conflict between Ukraine and Russia which broke out at the beginning of 2014 and at the beginning of 2015 the National Bank of Ukraine decided to discontinue determination of the national currency’s indicative exchange rate. In the first quarter of 2017, the hryvnia/euro exchange rate was relatively stable: the hryvnia weakened against the euro by around 1.9%. For our Ukrainian subsidiaries, this meant additional foreign exchange losses from the translation of their euro-denominated loans into the local currency. Relevant exchange losses totalled 49 thousand euros (Q1 2016: 291 thousand euros). Exchange gains and losses on financial instruments are recognised in Finance income and Finance costs respectively. Translation of receivables and liabilities from operating activities did not give rise to any exchange gains or losses. The reciprocal receivables and liabilities of our Ukrainian and non-Ukrainian entities which are connected with the construction business and denominated in hryvnias do not give rise to exchange losses. Nor do the loans provided to the  Ukrainian associates in euros give rise to exchange losses that ought to be recognised in the Group’s accounts. Due to movements in the Swedish krona/euro exchange rate in the first quarter of 2017, translation of operating receivables and payables did not result in any exchange gain or loss (Q1 2016: an exchange loss of 2 thousand euros). The prior period exchange loss was recognised in Other operating expenses. We do not use derivatives to hedge currency risk. In Ukraine, we provide general contracting and project management services to private sector customers in the segment of building construction. Political and economic instability continues to restrict the adoption of business decisions but construction activity in Kiev and the surrounding area has not halted. In 2017, we will continue our operations in Ukraine primarily in the Kiev region. Based on our order book as at the end of 2016, we expect that in 2017 our operating volumes will remain at a level comparable to 2016. Despite the military conflict in eastern Ukraine, for Nordecon the market situation in Kiev has not deteriorated compared with a year or two ago. Hard times have reduced the number of inefficient local (construction) companies and when the economy normalises we will have considerably better prospects for increasing our operations and profitability. The Ukrainian government’s recent crackdown on cash-in-hand work is definitely a step in the right direction, which in the long term should also improve our position in the Ukrainian construction market. We assess the situation in the Ukrainian market regularly and critically and are ready to restructure our operations as and when necessary. Should the crisis in eastern Ukraine spread to Kiev (which at the date of release of this report is highly unlikely), we can suspend our operations immediately. We continue to seek opportunities for exiting our two real estate projects which have been put on hold or signing a construction contract with a prospective new owner. In Finland, we have provided mainly subcontracting services in the concrete segment but, based on experience gained, have started preparations for expanding into the general contracting market. The local concrete work market allows competing for projects where the customer wishes to source all concrete works from one reliable partner. Our policy is to maintain a rational approach and avoid taking excessive risks. We entered the Swedish market in July 2015, when we acquired a 100% stake in SWENCN AB, a company registered in the Kingdom of Sweden. In the Swedish market we intend to offer mainly the construction of residential and non-residential buildings, particularly in central Sweden. On gaining experience in the new market, we have prioritised quality and observance of deadlines and have therefore accepted a certain decrease in profitability. As regards our longer-term goals and the plan to build a viable and strong organisation that would compete successfully in the Swedish market, we are positive about the developments so far and see potential for sustaining business 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 Estonia, Ukraine, Finland and Sweden. The parent of the Group is Nordecon AS, a company registered and located in Tallinn, Estonia. In addition to the parent company, there are more than 10 subsidiaries in the Group. The consolidated revenue of the Group in 2016 was 183 million euros. Currently Nordecon Group employs close to 720 people. Since 18 May 2006 the company's shares have been quoted in the main list of the NASDAQ OMX Tallinn Stock Exchange.


News Article | May 11, 2017
Site: www.prnewswire.co.uk

The OTC 2017 featured a special procurement seminar on Ukraine organized by the U.S. Commercial Service in Ukraine, with support from Burisma Group. The event brought together representatives of Ukrainian and foreign oil & gas producers, embassies, NGOs and industry experts to address Ukraine's gas market future, business challenges and opportunities. Among key speakers at the seminar were the Senior Commercial Officer of the U.S. Commercial Service in Ukraine Jim Lindley, the Senior Oil and Gas Sector Specialist Myroslava Myrtsalo, the CEO of Ukrgazvydobuvannia Oleg Prokhorenko and the Advisor to the Board of Directors at Burisma Group Vadym Pozharskyi. In his address entitled 'Private gas production as a key to ensuring national energy security and independence', Vadym Pozharskyi, Advisor to the Board of the Burisma Group, focused on the need to boost Ukraine's domestic gas production. He talked about new ways to increase gas output, the importance of cooperation with the public sector and Burisma's state-of-the-art technology and oil and gas services. "Based on our 2017 corporate program, we will be investing circa UAH 3 billion in exploration and production. We are proud to produce billions of cubic meters of gas and contribute billions of hryvnias to the state budget of Ukraine. The huge advantage of the OTC for Ukraine is that it offers latest technologies allowing us to ramp up Ukraine's domestic gas production," Vadym Pozharskyi explained. The address also discussed how Ukraine offers an attractive investment environment and growth opportunities to oil and gas and service companies. It also recognised the effort and progress the country has made. In May, Burisma Group will be introducing the largest drilling rig in Ukraine. Vadym Pozharskyi extended an invitation to all participants of the OTC 2017 seminar on Ukraine to attend the event. For more detailed information please contact our press-centre: media@burisma.com Founded in 1969, the OTC is one of the key oil and gas industry events focused on offshore exploration, drilling and production. The NRG Park hosted over 2,300 companies from 100 countries that brought their projects and technologies. This year, the tradeshow attracted a record number of attendees - over 90,000 traders, managers, businessmen, engineers and scientists. The OTC is ranked among 200 largest tradeshows held annually in the United States and is among 10 largest gatherings in terms of attendance. Burisma Group is an independent oil and gas company operating in Ukraine. Since its launch in 2002, the Company has rapidly become one of the largest independent gas producers in the country. Burisma has been engaged in oil and gas exploration and production for more than 10 years. The core business is located in Ukraine, where the Group is the largest independent natural gas producer. Burisma is a market leader with annualized natural gas production circa 1,1 BCM and over 30% market share. Burisma is seeking for opportunities to expand its portfolio to other countries. Burisma has a state-of-the-art equipment and many years of experience to provide best services for oil and gas companies around the world. For more information, please visit http://burisma.com/en/

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