Market announcement

Title

2022 IV quarter and 12 months consolidated interim report (unaudited)

Message

Despite   the   continuing  turbulence  of  the  economic  environment  and  the
significant  impact of the war in Ukraine  on the construction sector, the group
achieved a positive result in its core business.
The  year 2022 is characterized by a 12% increase  in sales revenue of the group
compared  to the previous financial year,  reaching the highest sales revenue in
history,  322,860 thousand euros.  81% of the  sales revenue  was related to the
Buildings  segment. The gross margin was  2.6% (1.4% in 2021). Also, in 2022 the
group returned to operating profit, which amounted to 2,305 thousand euros.
Gross  profitability  increased  in  the  Buildings  segment, the Infrastructure
segment  remained in loss. Profitability was  affected by the continued increase
in  input prices - the construction price index increased by 17% compared to the
previous  financial year.  Problems with  the supply  of materials  extended the
terms  of  several  construction  contracts,  which  caused additional costs for
projects  under construction. The  result of the  high fixed cost Infrastructure
segment  and the  decrease in  its sales  revenue are  directly affected  by the
decision  made by the main customer, the Transport Administration, in the spring
of  2022 to significantly reduce investments  in infrastructure construction. To
manage  the  impact  of  this  decision,  the  group  has  reorganized  its road
construction  sub-segment in order  to ensure a  more efficient use of resources
and return to profit through the elimination of duplicative activities.
Russia's  invasion  of  Ukraine  in  February  2022 had  a  strong effect on the
exchange  rate  of  the  Ukrainian  hryvnia  -  the  group  has recorded a total
extraordinary loss of 2,353 thousand euros from the exchange rate changes of the
Ukrainian  hryvnia  and  the  write-off  of  the group's previous investments in
Ukraine. Being a non-cash expense, it has still significant impact, resulting in
net loss for the financial year of 1,441 thousand euros.
The group's order book as of 31.12.2022 decreased by 44% year-on-year, amounting
to  149,799 thousand euros. The decrease in  the contract portfolio reflects the
general  state of the construction industry and  the caution of the clients. The
rise  in the prices of materials, energy  carriers and other inputs and the rise
in  interest rates due to the increase  in the Euribor have caused a significant
increase  in the cost of development projects  and the postponement of the start
of  new projects.  In 2023, the  group has  additionally signed new construction
contracts worth around 73,280 thousand euros.

Condensed consolidated interim statement of financial position

 EUR'000                                        31 December 2022 31 December 2021
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                               7,238            9,031

 Trade and other receivables                            48,084           48,091

 Prepayments                                             6,728            4,947

 Inventories                                            25,454           25,637

 Total current assets                                   87,504           87,706

 Non-current assets

 Other investments                                          76               76

 Trade and other receivables                             8,604            9,206

 Investment property                                     8,347            5,599

 Property, plant and equipment                          17,669           17,433

 Intangible assets                                      15,134           15,051

 Total non-current assets                               49,830           47,365

 TOTAL ASSETS                                          137,334          135,071



 LIABILITIES

 Current liabilities

 Borrowings                                             17,193           16,289

 Trade payables                                         65,109           57,287

 Other payables                                          8,359            7,496

 Deferred income                                         6,996           11,539

 Provisions                                              1,288              707

 Total current liabilities                              98,945           93,318

 Non-current liabilities

 Borrowings                                              6,311            7,405

 Trade payables                                          2,769            4,178

 Provisions                                              2,049            2,044

 Total non-current liabilities                          11,129           13,627

 TOTAL LIABILITIES                                     110,074          106,945



 EQUITY

 Share capital                                          14,379           14,379

 Own (treasury) shares                                   (660)            (660)

 Share premium                                             635              635

 Statutory capital reserve                               2,554            2,554

 Translation reserve                                     3,316            1,948

 Retained earnings                                       2,691            6,341

 Total equity attributable to owners of the
 parent                                                 22,915           25,197

 Non-controlling interests                               4,345            2,929

 TOTAL EQUITY                                           27,260           28,126

 TOTAL LIABILITIES AND EQUITY                          137,334          135,071

Condensed consolidated interim statement of comprehensive income

 EUR'000                                     Q4 2022  12M 2022  Q4 2021  12M 2021
-------------------------------------------------------------------------------
 Revenue                                    83,685   322,860   79,640   288,534

 Cost of sales                            (80,454) (314,365) (80,514) (284,513)

 Gross profit (loss)                         3,231     8,495    (874)     4,021



 Marketing and distribution expenses         (177)     (490)    (165)     (559)

 Administrative expenses                   (2,148)   (7,287)  (1,786)   (6,053)

 Other operating income                        129     2,049      321       519

 Other operating expenses                     (70)     (462)  (2,171)   (2,264)

 Operating profit (loss)                       965     2,305  (4,675)   (4,336)



 Finance income                                 84       258       81       958

 Finance costs                             (1,037)   (3,740)    (378)   (1,320)

 Net finance costs                           (953)   (3,482)    (297)     (362)



 Profit (loss) before income tax                12   (1,177)  (4,972)   (4,698)

 Income tax expense                           (64)     (264)    (166)     (808)

 Loss for the period                          (52)   (1,441)  (5,138)   (5,506)



 Other comprehensive income (expense)
 Items that may be reclassified
 subsequently to
 profit or loss

 Exchange differences on translating
 foreign operations                            606     1,368       85     (475)

 Total other comprehensive income
 (expense)                                     606     1,368       85     (475)

 TOTAL COMPREHENSIVE INCOME (EXPENSE)          554      (73)  (5,053)   (5,981)



 Profit (loss) attributable to:

 - Owners of the parent                      (998)   (3,650)  (5,514)   (6,310)

 - Non-controlling interests                   946     2,209      376       804

 Loss for the period                          (52)   (1,441)  (5,138)   (5,506)



 Comprehensive income (expense)
 attributable to:

 - Owners of the parent                      (392)   (2,282)  (5,429)   (6,785)

 - Non-controlling interests                   946     2,209      376       804

 Comprehensive income (expense) for the
 period                                        554      (73)  (5,053)   (5,981)



 Earnings per share attributable to
 owners of the parent:

 Basic earnings per share (EUR)               (0.03)    (0.12)   (0.17)   (0.20)

 Diluted earnings per share (EUR)             (0.03)    (0.12)   (0.17)   (0.20)

Condensed consolidated interim statement of cash flows

  EUR'000                                                   12M 2022    12M 2021
-------------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                             389,548     352,378

  Cash paid to suppliers                                 (351,682)   (310,183)

  VAT paid                                                 (8,880)     (8,140)

  Cash paid to and for employees                          (26,075)    (25,893)

  Income tax paid                                            (291)       (797)

  Net cash from operating activities                         2,620       7,365



  Cash flows from investing activities

  Paid on acquisition of property, plant and equipment       (688)       (232)

  Paid on acquisition of intangible assets                   (122)        (19)

  Proceeds from sale of property, plant and equipment          816         489

  Loans provided                                              (25)        (34)

  Repayments of loans provided                                  25          96

  Dividends received                                             6           0

  Interest received                                              9          12

  Net cash from investing activities                            21         312



  Cash flows from financing activities

  Proceeds from loans received                               4,631       1,922

  Repayments of loans received                             (4,231)     (3,766)

  Lease payments made                                      (3,333)     (3,318)

  Interest paid                                              (984)     (1,051)

  Dividends paid                                             (488)     (5,000)

  Other payments made                                          (8)        (12)

  Net cash used in financing activities                    (4,413)    (11,225)



  Net cash flow                                            (1,772)     (3,548)



  Cash and cash equivalents at beginning of period           9,031      12,576

  Effect of movements in foreign exchange rates               (21)           3

  Decrease in cash and cash equivalents                    (1,772)     (3,548)

  Cash and cash equivalents at end of period                 7,238       9,031

Financial review

Financial performance

Nordecon  ended  2022 with  a  gross  profit  of  EUR8,495  thousand (2021: EUR4,021
thousand) and a gross margin of 2.6% (2021: 1.4%). Margin improvement was due to
the  Buildings segment, which  strongly improved its  gross margin. However, the
performance  of the Infrastructure segment, which  ended both the fourth quarter
and  the year with a loss, was less  than satisfactory. The gross margins of the
Buildings segment were 4.1% for the full year and 6.7% for the fourth quarter of
2022 compared  with 2.0% for the full year and  (0.7)% for the fourth quarter in
2021. The  gross margins of the Infrastructure  segment, on the other hand, were
(2.4)%  for the full year and (12.1)% for the fourth quarter compared with 1.0%
for  the  full  year  and  (1.4)%  in  2021. The key factors, which affected the
performance of both segments were as follows:

  * rampantly rising input prices (the construction price index increased by
    17.8% year on year), which had a particularly strong impact on large and
    long-term construction contracts secured before 2022;
  * persisting difficulties with the supply of materials, which make it
    difficult to complete construction projects on time but contract extensions
    involve additional costs.

The  largest customer, the Transport Administration, cancelled several announced
procurements  and made significant cutbacks in its investments in 2022. This has
had  a significant effect on the performance of the Infrastructure segment whose
fixed  costs are  high. In  response to  a sharp  decrease in  road construction
investments, we have reorganised our road construction operations and eliminated
duplication  of  activities  to  ensure  more  efficient  use  of  resources and
profitability.
The  group's  administrative  expenses  for  2022 amounted  to  EUR7,287 thousand.
Compared  with a year earlier, administrative expenses grew by 20% (2021: EUR6,053
thousand)  due to a general uptrend in the cost of goods and services and growth
in  personnel  expenses.  The  ratio  of  administrative expenses to revenue (12
months rolling) was 2.3% (2021: 2.1%).
The  group  earned  an  operating  profit  of  EUR2,305 thousand in 2022 (2021: an
operating  loss of  EUR4,336 thousand).  EBITDA for  the period amounted to EUR5,766
thousand  and  the  EBITDA  margin  was  1.8% (2021: EBITDA was negative at EUR797
thousand and the EBITDA margin was (0.3)%).
The  group's  finance  costs  were  strongly  affected by the events in Ukraine.
Russia's  invasion  of  Ukraine  in  February  2022 had  a  strong effect on the
exchange rate of the Ukrainian hryvnia, which was already unstable. The hryvnia,
which  was devalued in July, weakened  against the euro by approximately 21% and
the  Swedish krona  weakened against  the euro  by approximately 8% in 2022. The
translation  of the loans provided to the group's subsidiaries in euros into the
local  currency gave rise to an exchange loss of EUR1,416 thousand on movements in
the exchange rate of the Ukrainian hryvnia and an exchange loss of EUR112 thousand
on  movements in the exchange  rate of Swedish krona  (2021: an exchange gain of
EUR711  thousand on movements in the exchange rate of the Ukrainian hryvnia and an
exchange  gain of  EUR16 thousand  on movements  in the  exchange rate  of Swedish
krona).  The same movements in foreign  exchange rates increased the translation
reserve  in equity by EUR1,368  thousand (2021: reduced by  EUR475 thousand) and the
net effect of the exchange differences on the group's net assets was negative at
EUR160  thousand (2021: positive  at EUR256 thousand).  In addition, the group wrote
down  the loans  provided to  the Ukrainian  associate V.I.  Center TOV  by EUR825
thousand.  Due to the lack  of more recent reliable  data, the fair value of the
loan was measured using the inputs of the valuation reports issued at the end of
2021 by an internationally recognised independent appraiser. The asset had to be
written  down due to the time factor, i.e. the deferral of the completion of the
development  projects. The foreign exchange loss  and the impairment loss on the
loan  were non-cash transactions with  a total effect of  EUR2,353 thousand on the
net result for 2022.
The group ended the year with a net loss of EUR1,441 thousand (2021: a net loss of
EUR5,506  thousand). The net  loss attributable to  owners of the parent, Nordecon
AS, was EUR3,650 thousand (2021: a net loss of EUR6,310 thousand).

Cash flows

Operating  activities produced  a net  cash inflow  of EUR2,620  thousand in 2022
(2021:  an  inflow  of  EUR7,365  thousand).  Operating  cash flow is increasingly
affected  by the  need to  make prepayments  to materials  suppliers, which have
grown  due to spikes in materials prices and continuing supply disruptions, in a
situation  where  the  contracts  signed  with  both  public  and private sector
customers do not require them to make advance payments.
Cash  inflow is also  reduced by contractual  retentions, which extend from 5 to
10% of  the  contract  price  and  are  released  at the end of the construction
period only.
Investing activities of the period resulted in a net cash inflow of EUR21 thousand
(2021: an inflow of EUR312 thousand). Payments made to acquire property, plant and
equipment  and intangible assets amounted to EUR810 thousand (2021: EUR251 thousand)
and  proceeds  from  the  sale  of  property,  plant and equipment totalled EUR816
thousand (2021: EUR489 thousand).
Financing  activities generated a net cash  outflow of EUR4,413 thousand (2021: an
outflow of EUR11,225 thousand). The largest items were cash flows related to loans
and leases. Proceeds from loans received totalled EUR4,631 thousand, consisting of
the use of the overdraft facility and development loans (2021: EUR1,922 thousand).
Repayments  of loans received amounted to EUR4,231 thousand, consisting of regular
repayments   of   long-term  investment  and  development  loans  (2021:  EUR3,766
thousand).  Lease  payments  totalled  EUR3,333  thousand (2021: EUR3,318 thousand).
Dividends paid in 2022 amounted to EUR488 thousand (2021: EUR5,000 thousand).
The  group's  cash  and  cash  equivalents  at  31 December 2022 totalled EUR7,238
thousand (31 December 2021: EUR9,031 thousand).

Key financial figures and ratios

 Figure/ratio                                        2022       2021       2020
-------------------------------------------------------------------------------
 Revenue (EUR'000)                                  322,860    288,534    296,082

 Revenue change                                     11.9%     (2.5)%      26.5%

 Net profit (loss) (EUR'000)                        (1,441)    (5,506)      4,118

 Net  profit (loss) attributable  to owners of
 the parent (EUR'000)                               (3,650)    (6,310)      2,466

 Average number of shares                      31,528,585 31,528,585 31,528,585

 Earnings per share (EUR)                            (0.12)     (0.20)       0.08

 Administrative expenses to revenue                  2.3%       2.1%       2.4%

 EBITDA (EUR'000)                                     5,766      (797)      7,003

 EBITDA margin                                       1.8%     (0.3)%       2.4%

 Gross margin                                        2.6%       1.4%       3.7%

 Operating margin                                    0.7%     (1.5)%       1.2%

 Operating  margin  excluding  gain  on  asset
 sales                                               0.6%     (1.6)%       1.1%

 Net margin                                        (0.4)%     (1.9)%       1.4%

 Return on invested capital                        (0.5)%     (6.5)%       9.3%

 Return on equity                                  (5.2)%    (16.8)%      11.8%

 Equity ratio                                       19.8%      20.8%      27.6%

 Return on assets                                  (1.1)%     (4.1)%       3.3%

 Gearing                                            32.0%      28.3%      21.1%

 Current ratio                                       0.88       0.94       1.01



 At 31 December                                      2022       2021       2020

 Order book (EUR'000)                               149,799    266,856    215,796

Performance by geographical market

The  revenue  contribution  of  foreign  markets decreased substantially year on
year,  dropping to  4% of the  group's total  revenue for  2022. Due to Russia's
military  invasion of Ukraine, the business  volumes of our Ukrainian subsidiary
Eurocon  Ukraine TOV have plummeted. The subsidiary halted its operations during
the  first  months  of  the  war  but  in  the  second quarter resumed work on a
previously  started  building  project  in  Kiev  and  is  now also restoring an
administrative  building of the Kiev TV tower,  which was damaged in the war. At
the  end of  the year,  we signed  a contract  for the  construction of concrete
structures for a modular kindergarten, a bomb shelter and outdoor infrastructure
in  the city of Ovruch. Ukrainian revenues  for the reporting period amounted to
EUR1,202  thousand.  Nordecon  did  not  generate  any  revenue and had no ongoing
construction  contracts in the  Swedish market. The  group operates on a project
basis  in  Latvia  and  Lithuania  where  it  was building two wind farms in the
reporting period. Finnish revenues mainly consist of subcontracting revenue from
concrete works.

              2022   2021   2020
---------------------------------
  Estonia      96%    94%    82%

  Finland       2%     3%     6%

  Lithuania     1%     0%     0%

  Latvia        1%     1%     0%

  Ukraine       0%     2%     1%

  Sweden        0%     0%    11%

Performance by business line

Segment revenues

We strive to maintain the revenues of our two main operating segments (Buildings
and  Infrastructure) as balanced as possible  because this helps diversify risks
and provides better opportunities for continuing construction operations in more
challenging  market conditions where  the volumes of  one or several subsegments
may substantially decline.
The  group's revenue for 2022 was EUR322,860  thousand, roughly 12% larger than in
2021 when  the group generated revenue of  EUR288,543 thousand. The revenue of the
Buildings  segment grew by  21% while the revenue  of the Infrastructure segment
decreased  by 14%. Revenue decline in the Infrastructure segment is attributable
to   cutbacks  in  the  investments  of  the  largest  customer,  the  Transport
Administration, made due to the effects of the war in Ukraine that have caused a
rampant  surge in input prices. The growth delivered by the Buildings segment is
mainly underpinned by large contracts secured in 2021.
The  low  volumes  of  infrastructure  construction  that continue to affect the
entire  construction  market  also  influence  the group's revenue structure. In
2022, the  Buildings segment and the Infrastructure segment generated revenue of
EUR260,585  thousand and EUR62,048 thousand, respectively. The corresponding figures
for 2021 were EUR216,070 thousand and EUR72,115 thousand.

  Revenue by operating segment   2022   2021   2020
----------------------------------------------------
  Buildings                       81%    75%    72%

  Infrastructure                  19%    25%    28%

Subsegment revenues

The  revenue of the commercial  buildings subsegment remained essentially stable
while  the revenues  of other  subsegments grew  compared with 2021. The largest
revenue  contributors in the Buildings segment were the public buildings and the
apartment  buildings subsegments, which increased their revenue by 31% and 21%,
respectively. The strongest revenue growth (57%) was delivered by the industrial
and warehouse facilities subsegment, which contributed 18% to the revenue of the
Buildings segment.
The  revenue of the public buildings subsegment grew significantly compared with
a  year  earlier.  The  largest  projects  in  progress  during  the period were
construction  works in  the Medical  Campus of  the Tartu University Hospital in
Tartu,  the construction of the main  building of the Estonian Internal Security
Service  in  Tallinn,  the  design  and  construction  of storage facilities and
utility  networks for the Centre for Defence  Investment in Harju county and the
design  and renovation  of the  Ülenurme upper  secondary school in Kambja rural
municipality near Tartu.
The   apartment  buildings  subsegment  earns  most  of  its  revenue  from  the
construction  of apartment buildings for third parties. In the reporting period,
the  largest of them were  the design and construction  of the Tiskreoja and the
Luccaranna  housing estates on the western border  of Tallinn. The volume of our
own  development operations  (reported in  the apartment  buildings subsegment),
however,  has grown as  well. We have  development projects in  both Tallinn and
Tartu.  During the period,  work continued on  the construction of the Mõisavahe
Kodu housing estate in Tartu (https://moisavahe.ee) and the development of plots
for  Kivimäe Süda, a new housing estate  in the Nõmme district in Tallinn, where
we  have started preparations  for phase II  - the construction  of an apartment
building (https://www.kivimaesuda.ee/en). We have also started the design of the
Seiler  Quarter  housing  estate  in  Pärnu  (https://seileri.ee).  The period's
revenue from own development projects amounted to EUR11,459 thousand (2021: EUR3,097
thousand).  In carrying out our own development activities, we carefully monitor
potential risks in the housing development market.
The  largest projects of the commercial buildings subsegment were the commercial
and residential complex Vektor in Tallinn, the LEED Gold compliant Alma Tomingas
office  building in Ülemiste  City and an  IKEA store in  Rae rural municipality
near  Tallinn. The latter two have been  completed and delivered to the customer
on time.
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 but  there are  also smaller  projects such  as the  construction of a
production building at Kurna tee in Harju county and the design and construction
of an extension to the production building of Viljandi Aken ja Uks AS.

  Buildings segment                     2022   2021   2020
-----------------------------------------------------------
  Public buildings                       30%    28%    37%

  Apartment buildings                    28%    29%    28%

  Commercial buildings                   24%    29%    23%

  Industrial and warehouse facilities    18%    14%    12%

In  the Infrastructure  segment, the  largest revenue  contributor is still road
construction  and maintenance although its revenue has decreased year on year by
roughly  28%. During the period, a major share  of its revenue resulted from the
performance  of  contracts  secured  in  2021, the  largest  of  which  were the
construction  of  2+2 passing  lanes  on  the  Kärevere-Kardla  section  of  the
Tallinn-Tartu-Võru-Luhamaa  road and the design  and construction of the outdoor
area  near  Terminal  D  in  Old  City  Harbour  in  Tallinn, as well as smaller
contracts  of EUR2-3 million  each signed in  2022. The group continued to deliver
road maintenance services in Järva county.
The  revenue contribution  of other  engineering, which  is currently generating
most  of its revenue from the construction  of wind farms in Estonia, Latvia and
Lithuania, increased year on year.

  Infrastructure segment              2022   2021   2020
---------------------------------------------------------
  Road construction and maintenance    78%    87%    74%

  Other engineering                    20%    10%    21%

  Specialist engineering                2%     0%     4%

  Environmental engineering             0%     3%     1%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at EUR149,799 thousand at 31 December 2022, reflecting a roughly 44% decrease year
on  year.  In  2022, we  signed  new  contracts  of  EUR163,498 thousand, of which
contracts  of EUR25,381 thousand in the  fourth quarter. The corresponding figures
for  2021 were EUR314,758  thousand and  EUR37,612 thousand.  The surge in materials
prices  and  a  rise  in  interest  rates  due  to  the increase in EURIBOR have
substantially  increased  the  costs  of  development  projects  as  well as the
postponement  of new projects. As mentioned in the previous chapters, the volume
of investments made by the Transport Administration has decreased significantly.
This  has affected the group's order book through a decline in the order book of
the  Infrastructure segment. On  the other hand,  the volume of procurements for
the  Rail Baltica project has increased  and this has partly counterbalanced the
decline  in  the  investments  of  the  Transport  Administration.  While public
investments   in   the  buildings  construction  segment  have  also  decreased,
investments  in national defence infrastructure  are going to increase according
to  currently available  information and  this a  subsegment where  Nordecon has
traditionally been very successful.

  At 31 December          2022      2021      2021
---------------------------------------------------
  Order book (EUR'000)   149,799   266,856   215,796

The  proportions of the  two main operating  segments in the  group's order book
have not changed substantially: the Buildings segment continues to dominate with
88% while the share of the Infrastructure segment is 12% (31 December 2021: 87%
and  13%, respectively). The order  books of both  the Buildings segment and the
Infrastructure segment have decreased compared with 31 December 2021: by 45% and
32%, respectively.
A  major share of contracts  secured in the fourth  quarter were attributable to
the Buildings segment. The largest of them were:

  * the construction of a biological pharmaceuticals manufacturing facility for
    Icosagen AS in Kambja rural municipality in Tartu county with an approximate
    cost of EUR4,000 thousand;
  * the construction of the building and outdoor premises for the Karlsson
    kindergarten in Viljandi city with an approximate cost of EUR5,100 thousand;
  * the construction of the Tagadi ecoduct on the route of Rail Baltica in Harju
    county with an approximate cost of EUR5,300 thousand;
  * the construction of the Viljandi Rescue Station building with an approximate
    cost of EUR3,900 thousand.

Between  the end  of the  financial year  (31 December  2022) and the  date this
report  is  authorised  for  issue,  group  companies  have  secured  additional
construction  contracts  of  approximately  EUR73,280  thousand. The new contracts
include,  for example, the design and  construction of the Sopi-Tootsi wind farm
in  the  northern  part  of  Pärnu  County  with  an approximate cost of EUR67,300
thousand,  which was won  in a joint  bid. The group's  share of the cost of the
contract is 50%.
Based  on the size of the group's order book, management forecasts that in 2023
the  group's revenue will decrease compared with 2022. The uptrend in the prices
of  materials, energy carriers and labour costs  will continue to drive up input
prices,  which will  increase pressure  on profit  margins. In an environment of
stiff competition, we have avoided taking unjustified risks whose realisation in
the  contract  performance  phase  would  have  an adverse impact on the group's
results.  Our  focus  remains  on  cost  control as well as pre-construction and
design activities, where we can deploy our professional competitive advantages.

People

Employees and personnel expenses

The group's average number of employees in 2022 was 658, including 432 engineers
and technical personnel (ETP). Headcount decreased by around 4% year on year.

Average  number of  employees at  group entities  (including the  parent and the
subsidiaries):

                  2022   2021   2020
-------------------------------------
  ETP              432    434    450

  Workers          226    251    258

  Total average    658    685    708

The  group's personnel expenses for  2022, including all taxes, totalled EUR27,248
thousand   compared  with  EUR25,054  thousand  in  2021. Personnel  expense  have
increased by around 9% in connection with growth in wages and salaries.
The  service fees of the members of the council of Nordecon AS for 2022 amounted
to  EUR150 thousand and  associated social security  charges totalled EUR50 thousand
(2021: EUR150 thousand and EUR50 thousand, respectively).
The  service fees of  the members of  the board of  Nordecon AS amounted to EUR417
thousand  and associated social  security charges totalled  EUR138 thousand (2021:
EUR369 thousand and EUR122 thousand, respectively).

Labour productivity and labour cost efficiency

We  measure  the  efficiency  of  our  operating  activities using the following
productivity  and  efficiency  indicators,  which  are  based  on  the number of
employees and personnel expenses incurred:

                                              2022     2021    2020
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  Nominal labour productivity (th. EUR)        490.4    420.8   422.9

  Change against the comparative period, %   16.5%   (0.5)%   24.2%



  Nominal labour cost efficiency (EUR)          11.8     11.5    10.9

  Change against the comparative period, %    2.9%     5.5%   18.0%

The  group's  nominal  labour  productivity  and  nominal labour cost efficiency
improved year on year, mainly due to revenue growth. Nominal labour productivity
was also influenced by a decrease in the number of staff.

Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
Email: [email protected] (mailto:[email protected])
www.nordecon.com (http://www.nordecon.com)