Annual report 2021

Download 2020 annual report

Nordecon in

2021

Rotermanni Ajamaja

Nordecon in

2021

Nordecon at a glance

Nordecon is a company with over 30 years of experience and one of the largest construction groups in Estonia. Our core business is carrying out design and construction projects as a general contractor. We offer the construction of residential, commercial and public buildings as well as roads, port facilities and other infrastructure assets. We work daily to make public space across Estonia better, more comfortable, safer and in every way more attractive.

Our main market is Estonia but we also operate in Finland, Sweden and Ukraine.

Nordecon’s people are professionals committed to delivering quality and aspiring for continuous professional growth. We are proud of our expert and experienced team that can offer high-quality cutting-edge solutions and is able to overcome any construction and reconstruction challenges, regardless of their complexity.

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Group structure at 31 December 2021, including interests in subsidiaries and associates

Group structure

Strategic agenda for 2019-2022

  • The group will grow, mostly organically, with a focus on a more efficient use of its existing resources.
  • In Estonia, we will operate, as a market leader, in both the building and infrastructure construction segments.
  • In Sweden, we will focus on general contracting in Stockholm and the surrounding area.
  • In Finland, we will focus on general contracting and concrete works in Helsinki and the surrounding area.
  • In Ukraine, we will focus on general contracting and concrete works, primarily in Kiev and the surrounding area.
  • Improving profitability through more precise planning of our design and construction operations.
  • Increasing our design and digitalisation capabilities.
  • Simplifying and automating work and decision-making processes.
  • Monitoring the balance between the contract portfolios of different business segments.
  • Valuing balanced teamwork and making sure that youthful energy and drive complement long-term experience.
  • Noticing and recognising each employee’s individual contribution and initiative.
  • Revenue will grow by at least 10% per year.
  • Foreign markets’ contribution will increase to 20% of revenue.
  • Real estate development revenue will grow to 10% of revenue earned in Estonia.
  • Operating margin for the year will be consistently above 3%.
  • Operating profit per employee will increase to at least €10 thousand per year.
  • We will, on average, distribute at least 30% of profit for the year as dividends.

Nordecon’s key figures for 2021

289 mln €

(2020: 296 mln EUR)

Revenue

(2.5)%

(2020: 26.5%)

Revenue change, year on year

€267m

(2020: €216m)

Order book at the year-end

€315m

(2020: €237m)

Value of new contracts signed

114

(2020: 136)

Projects delivered to customers

685

(2020: 708)

Employees

14/0

(2020: 19/0)

Accidents / Fatal injuries at work (incl. subcontractors)

0

(2020: 0)

Environmental pollution, discrimination and corruption incidents

€0.2m

(2020: €0.2m)

Donations to community projects and charities

€289m

(2020: €296m)

Revenue

(2.5)%

(2020: 26.5%)

Revenue change, year on year

€267m

(2020: €216m)

Order book at the year-end

€315m

(2020: €237m)

Value of new contracts signed

114

(2020: 136)

Projects delivered to customers

685

(2020: 708)

Employees

14/0

(2020: 19/0)

Accidents / Fatal injuries at work (incl. subcontractors)

0

(2020: 0)

Environmental pollution, discrimination and corruption incidents

€0.2m

(2020: €0.2m)

Donations to community projects and charities

Construction market

The year 2021 was a period of unusually rapid change for practically all industries. In the construction sector, particularly building construction, many plans which had been postponed in 2020 due to COVID-19 were launched at an accelerated pace. Demand surged across Europe, affecting the availability and prices of building materials. Some product groups such as steel, wood and oil-based products saw their fastest ever price gain.

Building construction grew by 12% and infrastructure construction by 4% compared with 2020. Estonian construction companies’ total output (construction volume) also grew compared with 2019, when the previous record was set. The Estonian construction market was strongly influenced by growth in building construction. Both new building construction and renovation and reconstruction volumes increased. The rise in infrastructure construction was mainly attributable to repair and reconstruction works.

The market continues to be strongly influenced by investments made by the public sector, which grew in 2021 at the same pace as the market. Growing demand and soaring input prices have raised construction prices by an estimated 30%.

The Construction Price Index grew by 8.3% in 2021. The rise is mainly attributable to growth in materials prices but the effects of a sharp rise in energy prices and labour costs are increasing as well. The shortage of skilled and qualified labour (including project and site managers) has not decreased and the sector continues to need additional competent professionals, including foreign labour whose contribution has supported recent years’ market growth.

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Our work

Nordecon’s key strengths are high service quality and professional engineers. In particular, our skills and competencies give us a clear competitive edge in large-scale and complex projects. In 2021, we worked hard to meet previously agreed deadlines in a changed market situation and to maintain good relations with customers. Despite the pandemic, we were able to maintain strong leadership and work on our construction sites was not interrupted.

We secured a record amount of new contracts in 2021 and are working on a number of truly large-scale projects. Building construction, which accounts for three fourths of work completed, continues to dominate our portfolio.

Operating segments
2021
2020
2019
2018
2017
Buildings
75%
72%
70%
72%
74%
Infrastructure
25%
28%
30%
28%
26%

In the Buildings segment, the revenue contributions of the commercial, public, and apartment buildings subsegments were practically equal while the revenue generated by the industrial and warehouse facilities subsegment continued to be modest in 2021. Revenue from the commercial buildings and the industrial and warehouse facilities subsegments grew by 21% and 13% year-on-year, respectively. Revenue from the apartment buildings subsegment remained stable and revenue from the public buildings subsegment decreased by around 23%.

The largest projects under construction in the commercial buildings subsegment were Ajamaja – a seven-floor commercial building in Rotermann City and the LEED Gold certified Alma Tomingas office building in Ülemiste City in Tallinn and an IKEA store in Rae rural municipality near Tallinn.

The largest projects completed in 2021 were an upper secondary school on the island of Saaremaa, a family health centre in Tartu, an extension to the Estonian Foreign Intelligence Service building in Rahumäe tee in Tallinn, and a barracks in Paldiski. We continued work on the Medical Campus of the Tartu University Hospital and the main building of the Estonian Internal Security Service in Tallinn.

A significant share of the group’s apartment building projects is located in Tallinn. In 2021, the largest of them were the design and construction of the first two phases of the Kalaranna Quarter and the design and construction of the Tiskreoja housing estate on the western border of Tallinn.

The largest ongoing project in the industrial and warehouse facilities subsegment is the construction of a factory complex for the dairy company E-Piim in Paide.

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Revenue breakdown in Buildings segment
2021
2020
2019
2018
2017
Public buildings
29%
23%
36%
35%
25%
Apartment buildings
28%
37%
29%
25%
19%
Commercial buildings
29%
28%
27%
25%
30%
Industrial and warehouse facilities
14%
12%
8%
15%
26%

In the Infrastructure segment, the largest revenue contributor is still the road construction and maintenance subsegment, which increased its revenue by around 11% year on year. The largest projects in 2021 were the construction of the Väo junction on the eastern border of Tallinn and 2+2 passing lanes on the Kärevere-Kardla section of the Tallinn-Tartu-Võru-Luhamaa road, the performance of earthworks on the Võõbu-Mäo section of the Tallinn-Tartu road, and the reconstruction and rehabilitation of national roads in Hiiu county. We also continued to deliver road maintenance services in Järva and Hiiu counties and the Kose maintenance area in Harju county.

We have won several contracts for the construction of small harbours. In 2021, we built Salmistu harbour and Vasknarva boat harbour and expanded quays in Roomassaare harbour on the island of Saaremaa.

Revenue breakdown in the Infrastructure segment
2021
2020
2019
2018
2017
Road construction and maintenance
87%
74%
78%
89%
86%
Other engineering
6%
18%
21%
7%
8%
Specialist engineering (including hydraulic engineering)
4%
4%
1%
0%
0%
Environmental engineering
3%
1%
3%
4%
6%

Foreign markets

Besides Estonia, group entities currently operate in Sweden, Finland and Ukraine. In 2021 we also has projects running in Latvia.

In Ukraine, we are mainly involved in general contracting and project management in the segment of building construction. Our business volumes in 2021 remained at a level comparable to a year earlier. We have currently suspended our activities in Ukraine due to the war in order to minimise risks and wait until the situation improves.

In Finland, we mainly offer subcontracting services in the concrete work segment. The local concrete work market allows competing for projects where the customer wishes to source all concrete works from one reliable partner. In recent years, we have also secured some smaller contracts as a general contractor.

In 2021, we completed work on construction projects that had been started in 2019 and 2020 and at the year-end we did not have any projects in progress in Sweden. On 22 July 2021, our Swedish subsidiary Swencn AB filed an application with the Nacka District Court in Stockholm to initiate corporate restructuring proceedings. Through restructuring, Swencn AB wants to overcome the difficulties in paying bills, restructure creditors’ claims and improve its liquidity. The purpose of the restructuring is to ensure equal treatment of creditors and the continuation of the activities of Swencn AB. the restructuring plan On 21 February 2022, the Nacka District Court in Stockholm, Sweden, confirmed approved.

We also operate on a project basis in Latvia, where we participated in the construction of a wind farm in Targale in 2021 (a joint project).

 
2021
2020
2019
2018
2017
Estonia
94%
82%
89%
93%
94%
Sweden
0%
11%
5%
2%
3%
Finland
3%
6%
4%
1%
1%
Ukraine
2%
1%
2%
4%
2%
Latvia
1%
0%
0%
0%
0%

Sustainability

In its role as an industry leader, Nordecon promotes major changes in the construction sector which have a positive impact on society: sustainability, efficiency, digitalisation and climate goals.

We invest in responsible construction site management with a particular focus on safety, efficient work arrangement, communication with stakeholders, sustainability and environmental awareness.

Nordecon’s role and responsibilities in society as a whole include:

  • Making a positive contribution to society by creating jobs, paying taxes, buying goods and services, delivering capital growth for investors and supporting social initiatives
  • Operating openly, honestly, ethically and transparently
  • Developing and maintaining good customer relations by collaborating with customers and business partners in an open and professional manner and by offering expertise and advice
  • Seeking continuously more efficient operating and engineering solutions by tapping into innovation and improving technological capabilities and management competencies
  • Building safe and high-quality buildings and infrastructure assets
  • Building sustainably and constantly improving our capacity to carry out projects that meet the customers’ highest expectations regarding environmentally friendly buildings
  • Contributing to the creation of tastefully and comprehensively designed buildings and public space
  • Creating a safe and motivating work environment for employees and supporting employee development
  • Promoting the engineering profession, alleviating the shortage of qualified and skilled labour, and strengthening the group’s image as a well-managed employer that offers employees an opportunity to work on ambitious projects

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Sustainability

In its role as an industry leader, Nordecon promotes major changes in the construction sector which have a positive impact on society: sustainability, efficiency, digitalisation and climate goals.

We invest in responsible construction site management with a particular focus on safety, efficient work arrangement, communication with stakeholders, sustainability and environmental awareness.

Nordecon’s role and responsibilities in society as a whole include:

  • Making a positive contribution to society by creating jobs, paying taxes, buying goods and services, delivering capital growth for investors and supporting social initiatives
  • Operating openly, honestly, ethically and transparently
  • Developing and maintaining good customer relations by collaborating with customers and business partners in an open and professional manner and by offering expertise and advice
  • Seeking continuously more efficient operating and engineering solutions by tapping into innovation and improving technological capabilities and management competencies
  • Building safe and high-quality buildings and infrastructure assets
  • Building sustainably and constantly improving our capacity to carry out projects that meet the customers’ highest expectations regarding environmentally friendly buildings
  • Contributing to the creation of tastefully and comprehensively designed buildings and public space
  • Creating a safe and motivating work environment for employees and supporting employee development
  • Promoting the engineering profession, alleviating the shortage of qualified and skilled labour, and strengthening the group’s image as a well-managed employer that offers employees an opportunity to work on ambitious projects

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Quality

Our quality metrics are properly managed projects and buildings and infrastructure assets which are delivered on time and meet the required quality standards. Nordecon’s customers are satisfied when we deliver high construction quality, act transparently and communicate openly. Our operations are based on conscious and systematic quality management, a key outcome of which is safety. We make no concessions in matters related to the safety of the buildings and infrastructure assets delivered by us.

At the parent company, each project is assigned a quality coefficient which reflects compliance with safety rules, deadlines and technical requirements, defect resolution effectiveness and customer feedback, and determines the performance-related pay of the project team.

The key factors that helped us maintain high customer satisfaction in a changed market environment in 2021 were the expertise and professionalism of our people. To gather customer feedback more systematically, our subsidiaries Nordecon Betoon OÜ and Embach Ehitus OÜ have started implementing a warranty claims and complaints management system.

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The compliance of the management system designed and implemented by Nordecon with the requirements of quality management standard ISO 9001, environmental management standard ISO 14001 and occupational health and safety management standard ISO 45001 is verified by the certificates issued by DNV.

ISO 9001

Safety

One of our main responsibilities is to ensure the security of our construction sites and to create a safe and ergonomic work environment so as to prevent accidents and occupational diseases.

We consistently train and inform employees in matters related to health and safety, prepare relevant action plans for construction sites, supply everyone with proper work and personal protection equipment, and analyse incidents and accidents to prevent their recurrence. We regularly carry out walk-through inspections of our construction sites to make sure that all work is properly and safely organised. We also support our employees’ physical and mental wellbeing.

In 2021, we paid a lot of attention to preventing the spread of COVID-19 and promoting proper use of safety equipment.

2021
Group’s workforce
Subcontractors’ workforce
2020
Group’s workforce
Subcontractors’ workforce
Work-related safety incidents
8
12
3
35
Minor accidents at work
5
7
6
8
Serious accidents at work
0
2
2
3
Fatal accidents at work
0
0
0
0

Environmental impacts

We strive to avoid risks and negative environmental impacts and to keep the surrounding environment clean.

The most significant environmental aspects of the group’s operations are related to the materials used and the waste produced in the construction process, possible pollution of soil and water bodies, impacts on wildlife and vegetation, and carbon and other emissions to air. We draw up an environmental plan for each construction project and regularly check and update it. Environmental awareness and an economical approach also help avoid additional costs.

There is a clear trend towards more sustainable buildings and infrastructure. This is mainly attributable to the EU energy efficiency measures as well as a rise in the importance of green thinking and customers’ desire to reduce their maintenance costs. Our goal is to make sure that our team can implement more sustainable solutions and to advise customers who seek more environmentally friendly options.

  • Green space design is becoming a trend in new building projects – in the Alma Tomingas office building and the commercial and residential complex Vektor green areas were designed along with the building.
  • The use of wood and recycled materials in building construction is increasing. The trend is driven by the public sector but the interest of the private sector is growing as well. The Saaremaa Upper Secondary School and Ehituse Mäemaja, a study and research building of Tallinn University of Technology, both built by Nordecon AS, were among the finalists of the Wood Building of the Year 2021 competition.
  • Group companies Tariston and Kaurits invested significantly in plant and equipment in 2021 in order to replace obsolete machines with new and more environmentally friendly ones.

Green transition is fuelling wind farm development. We can offer experience and expertise in this area. Our subsidiary NOBE has a team that was involved in the construction of the Nysäter wind farm in Sweden and is currently building the Targale wind farm in Latvia.

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Giving back to society

Nordecon directly contributes to society by delivering well-planned, high-quality and safe buildings and infrastructure assets. However, we also invest in the development of the construction industry, the engineering profession and young talent.

Nordecon works closely with professional associations, universities and professional qualification authorities in all matters related to the construction business.

We make proposals for the improvement of procurement terms and conditions and the development of standards in the construction industry. We participate in cooperation projects and communicate with different stakeholder groups. Promoting the engineering profession is particularly important to make the construction business more attractive for young talent and ensure that new construction engineers will continue to enter the labour market.

  • We spent €232,000 on various support activities in 2021.
  • We signed a five-year cooperation agreement with Tallinn University of Technology that provides a framework for our substantive collaboration. We help create better opportunities for civil engineering students, offer internships and participate in construction-related research.
  • We support initiatives, events and activities aimed at the development of digital construction such as the Digital Construction Cluster, Digital Construction Hackathon, BuildIT, Enginaator and BIMSummit Estonia.
  • We became a supporter of the Estonian Association of Civil Engineers and participated in a campaign aimed at promoting construction jobs among young people.
  • We supported sports for young people, education, culture and local communities.

Digital construction

Nordecon has set up a business technology department which leads new projects and makes sure that the group has a systematic approach to digitalisation. Our units and management collaborated closely in 2021. BIM and Bauhub were integrated into all projects and our staff began using them on a daily basis.

A new KPI system was created that provides a quick overview of the state of construction projects and makes the management process more effective and efficient. In addition, web-based time management and budgeting programmes were upgraded and some features of the Bauhub environment were developed to improve the documentation of construction work.

We have also implemented other IT solutions to do our work more quickly, conveniently and smartly. For example, we have Simple-BIM for budgeting, Dalux for viewing and checking 3D models on smart devices on the construction site, and BlueBeam for exchanging the content of PDF documents. Our subsidiary NOBE uses Hausing, an electronic management tool that provides both the contractor and the customer with a good overview of warranty work.

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Digital construction

Nordecon has set up a business technology department which leads new projects and makes sure that the group has a systematic approach to digitalisation. Our units and management collaborated closely in 2021. BIM and Bauhub were integrated into all projects and our staff began using them on a daily basis.

A new KPI system was created that provides a quick overview of the state of construction projects and makes the management process more effective and efficient. In addition, web-based time management and budgeting programmes were upgraded and some features of the Bauhub environment were developed to improve the documentation of construction work.

We have also implemented other IT solutions to do our work more quickly, conveniently and smartly. For example, we have Simple-BIM for budgeting, Dalux for viewing and checking 3D models on smart devices on the construction site, and BlueBeam for exchanging the content of PDF documents. Our subsidiary NOBE uses Hausing, an electronic management tool that provides both the contractor and the customer with a good overview of warranty work.

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Our people

Competent and motivated staff play a key role in Nordecon’s success. We provide our employees with a modern and professional work environment and support their personal growth and development. The group is involved in large-scale and complex construction projects which offer new and interesting challenges. We employ people of different ages, genders and ethnicities as well as people with special needs.

Nordecon takes a strategic approach to employer reputation and brand and invests in promoting the construction industry. We pay particular attention to young people and annually organise events designed to attract new talent. We retain staff through engagement and inclusion, recognition, joint events and open communication. We have joined the Family Friendly Employer Programme and pay attention to mental health topics.

  • In 2021, the Nordecon group employed 685 people including 84% men and 16% women. The average length of employment with us is 7.5 years.
  • In the Most Attractive Employers survey conducted by Instar EBC among the students of higher and vocational education institutions in 2021, engineering and technology students rated Nordecon AS the second most attractive employer.
  • The average number of training hours per person in 2021 was 9.5 for managers and ETP (engineers and technical personnel) and 8.7 for workers. We operate an internship programme to attract young talent. Last year, interns played a bigger than usual role in our work. Interest was high and the parent company offered internships to 22 people. Interns included a lot of young women, which is a welcome development from the point of view of workforce diversity.

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Awards and public recognition

Construction Project of the Year 2021. In the category of buildings, the award given by the Estonian Association of Architectural and Consulting Engineering Companies went to Ajamaja, an office building in the Rotermann Quarter in Tallinn.

Builder of the Year 2021. Ahti Kala (Embach Ehitus OÜ) won the competition organised by the Estonian Association of Construction Entrepreneurs.

Young Civil Engineer of the Year 2021. Martin Talvik, Nordecon AS’s works manager on the Ajamaja project won the title awarded by the Estonian Association of Civil Engineers.

Wood Building of the Year 2021. At the competition organised by the Estonian Forest and Wood Industries Association, the Saaremaa Upper Secondary School received the Raitwood Façade Prize and a Special Prize from the readers of the website Delfi Moodne Kodu. The Ehituse Mäemaja of Tallinn University of Technology won the Arcwood Special Award for Use of Glued Laminated Timber.

Estonian Association of Interior Architects Award of the Year 2021. The interior architecture solution of the Ehituse Mäemaja of Tallinn University of Technology received one of the three annual awards given by the Estonian Association of Interior Architects.

Concrete Building of the Year 2020. The study and accommodation building of the Estonian Academy of Security Sciences Learning Centre in Narva and the University of Tartu Narva College won a Special Award in the competition organised by the Estonian Concrete Association.

Concrete Building of the Year 2021. The construction work of the Kindluse school won a Special Award from the construction news website of the business paper Äripäev.

Attractive Employer of the Year 2021. Engineering students rated Nordecon AS the second most attractive employer in Estonia.

Best Asphalt Paving Contractor. The Road Management Division of the Transport Administration recognised Tariston AS for its efforts in improving asphalt pavement quality in 2021.

Construction Project of the Year 2021. In the category of buildings, the award given by the Estonian Association of Architectural and Consulting Engineering Companies went to Ajamaja, an office building in the Rotermann Quarter in Tallinn.

Builder of the Year 2021. Ahti Kala (Embach Ehitus OÜ) won the competition organised by the Estonian Association of Construction Entrepreneurs.

Young Civil Engineer of the Year 2021. Martin Talvik, Nordecon AS’s works manager on the Ajamaja project won the title awarded by the Estonian Association of Civil Engineers.

Wood Building of the Year 2021. At the competition organised by the Estonian Forest and Wood Industries Association, the Saaremaa Upper Secondary School received the Raitwood Façade Prize and a Special Prize from the readers of the website Delfi Moodne Kodu. The Ehituse Mäemaja of Tallinn University of Technology won the Arcwood Special Award for Use of Glued Laminated Timber.

Estonian Association of Interior Architects Award of the Year 2021. The interior architecture solution of the Ehituse Mäemaja of Tallinn University of Technology received one of the three annual awards given by the Estonian Association of Interior Architects.

Concrete Building of the Year 2020. The study and accommodation building of the Estonian Academy of Security Sciences Learning Centre in Narva and the University of Tartu Narva College won a Special Award in the competition organised by the Estonian Concrete Association.

Concrete Building of the Year 2021. The construction work of the Kindluse school won a Special Award from the construction news website of the business paper Äripäev.

Attractive Employer of the Year 2021. Engineering students rated Nordecon AS the second most attractive employer in Estonia.

Best Asphalt Paving Contractor. The Road Management Division of the Transport Administration recognised Tariston AS for its efforts in improving asphalt pavement quality in 2021.