Market announcement

Title

2021 III quarter and 9 months consolidated interim report (unaudited)

Message

Despite  the  ongoing  impact  of  the  COVID-19 pandemic  and turbulence in the
economy, the Group's efforts have borne fruit and the profitability in the third
quarter  was comparable to the same period in 2020. However, rising input prices
and  supply difficulties continue to put  strong pressure on profit margins. The
results  of the first 9 months of 2021 are characterized by a slight decrease in
operating volumes compared to the same period of the previous year, as well as a
continuous increase of the order book.
As  of  30 September  2021, the  volume  of  the order book amounted to 293,141
thousand  euros, which is  an increase of  36% compared to the  same period last
year.  In the third quarter  of 2021, new contracts were  concluded in the total
value  of 102,326 thousand euros.  Several large-scale contracts  will provide a
significant transition volume to construction in 2022 and 2023 as well.
The  Group's gross  profit margin  for 9 months  decreased compared  to the same
period last year, amounting to 2.3% (9 months 2020: 4.4%). In the third quarter,
the  Group was able to significantly  improve profitability, the margin reaching
3.9% (3rd  quarter 2020: 4.3%). The biggest factor influencing the result of the
buildings  segment is the significant increase  in input prices, which primarily
affects  the contracts concluded in 2020. In order to mitigate the risk of input
prices,  open budget  contracts have  been concluded  with private customers, in
which  the  profit  margin  of  the  main  contractor is fixed. The low share of
asphalt  concrete production  and installation  due to  the nature  of the works
segment's  work  portfolio  has  led  to  a  situation where fixed costs are not
covered  to  a  greater  extent  than  usual.  This  significantly  affects  the
profitability of the segment.
In the light of the general price increase, the Group has reduced administrative
expenses,  which have  decreased by  approximately 20% compared  to the first 9
months of the previous year.
The  Group's sales revenue  for the first  9 months of 2021 was 208,894 thousand
euros,  which decreased by 4% compared to the  same period of the previous year.
An  important  part  of  the  decrease  in  sales revenue is in foreign markets,
especially  in the  Swedish market,  where sales  revenue has decreased by 58%,
Estonian  sales revenue  has increased  by 3% compared  to the  same period last
year.

Condensed consolidated interim statement of financial position

 EUR'000                                       30 September 2021 31 December 2020
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                               5,697           12,576

 Trade and other receivables                            62,735           50,029

 Prepayments                                             3,353            2,678

 Inventories                                            27,405           22,454

 Total current assets                                   99,190           87,737


 Non-current assets

 Other investments                                          76               26

 Trade and other receivables                             8,818            8,654

 Investment property                                     5,639            5,639

 Property, plant and equipment                          17,703           18,053

 Intangible assets                                      15,029           14,966

 Total non-current assets                               47,265           47,338

 TOTAL ASSETS                                          146,455          135,075



 LIABILITIES

 Current liabilities

 Borrowings                                             17,618           18,508

 Trade payables                                         63,125           47,390

 Other payables                                          7,590           11,814

 Deferred income                                        12,047            7,738

 Provisions                                              1,306            1,059

 Total current liabilities                             101,686           86,509


 Non-current liabilities

 Borrowings                                              6,583           7,352,

 Trade payables                                          3,354            2,332

 Provisions                                              1,359            1,647

 Total non-current liabilities                          11,296           11,331

 TOTAL LIABILITIES                                     112,982           97,840



 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                                     1,862            2,423

 Retained earnings                                      11,855           14,543

 Total equity attributable to owners of the
 parent                                                 30,625           33,874

 Non-controlling interests                               2,848            3,361

 TOTAL EQUITY                                           33,473           37,235

 TOTAL LIABILITIES AND EQUITY                          146,455          135,075

Condensed consolidated interim statement of comprehensive income

 EUR'000                            9M 2021  Q3 2021   9M 2020  Q3 2020      2020
-------------------------------------------------------------------------------
 Revenue                          208,894   90,928   217,664   80,866   296,082

 Cost of sales                  (203,999) (87,339) (208,149) (77,358) (285,086)

 Gross profit                       4,895    3,589     9,515   3,508,    10,996



 Marketing and distribution
 expenses                           (394)    (180)     (386)    (184)     (528)

 Administrative expenses          (4,267)  (1,434)   (5,312)  (1,452)   (7,073)

 Other operating income               198       71       273       95       453

 Other operating expenses            (93)     (64)     (138)     (28)     (273)

 Operating profit                     339    1,982     3,952    1,939     3,575



 Finance income                       877      340       270       21     2,995

 Finance costs                      (942)    (277)   (2,102)    (861)   (2,678)

 Net finance income (costs)          (65)       63   (1,832)    (840)       317



 Share of profit of equity-
 accounted investees                    0        0       966      487       734



 Profit before income tax             274    2,045     3,086    1,586     4,626

 Income tax expense                 (642)     (23)      (82)        0     (508)

 Profit (loss) for the period       (368)    2,022     3,004    1,586     4,118



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

 Exchange differences on
 translating foreign
 operations                         (561)      155     1,375      557     1,254

 Total other comprehensive
 income (expense)                   (561)      155     1,375      557     1,254

 TOTAL COMPREHENSIVE INCOME
 (EXPENSE)                          (929)    2,177     4,379    2,143     5,372



 Profit (loss) attributable
 to:

 - Owners of the parent             (796)    1,352     1,040    1,197     2,466

 - Non-controlling interests          428      670     1,964      389     1,652

 Profit (loss) for the period       (368)    2,022     3,004    1,586     4,118



 Comprehensive income
 (expense) attributable to:

 - Owners of the parent           (1,357)    1,507     2,415    1,754     3,720

 - Non-controlling interests          428      670     1,964      389     1,652

 Comprehensive income
 (expense) for the period           (929)    2,177     4,379    2,143     5,372



 Earnings per share
 attributable to owners of
 the parent:

 Basic earnings per share (EUR)      (0.03)     0.04      0.03     0.04 0.08

 Diluted earnings per share
 (EUR)                               (0.03)     0.04      0.03     0.04 0.08

Condensed consolidated interim statement of cash flows

  EUR'000                                                    9M 2021     9M 2020
-------------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                             243,632     267,488

  Cash paid to suppliers                                 (214,901)   (238,592)

  VAT paid                                                 (6,548)     (8,245)

  Cash paid to and for employees                          (19,128)    (20,849)

  Income tax paid                                            (617)        (81)

  Net cash from (used in) operating activities               2,438       (279)



  Cash flows from investing activities

  Paid on acquisition of property, plant and equipment       (134)       (184)

  Proceeds from sale of property, plant and equipment          246         246

  Paid on acquisition of intangible assets                    (16)         (2)

  Acquisition of a subsidiary                                    0         (2)

  Cash received on acquisition of a subsidiary                   0       3,605

  Loans provided                                              (18)        (17)

  Repayments of loans provided                                  83          43

  Dividends received                                             0         251

  Interest received                                              7           8

  Net cash from investing activities                           168       3,948



  Cash flows from financing activities

  Proceeds from loans received                               1,535       2,333

  Repayments of loans received                             (3,086)     (1,949)

  Lease payments made                                      (2,388)     (2,167)

  Interest paid                                              (841)       (790)

  Dividends paid                                           (4,706)       (472)

  Net cash used in financing activities                    (9,486)     (3,045)



  Net cash flow                                            (6,880)         624



  Cash and cash equivalents at beginning of period          12,576       7,032

  Effect of movements in foreign exchange rates                  1        (16)

  Increase (decrease) in cash and cash equivalents         (6,880)         624

  Cash and cash equivalents at end of period                 5,697       7,640

Financial review

Financial performance

Nordecon  ended the  first nine  months of  2021 with a  gross profit  of EUR4,895
thousand (9M 2020: EUR9,515 thousand) and a gross margin of 2.3% (9M 2020: 4.4%).
In  the third quarter, profitability improved significantly: the group delivered
a  gross profit of EUR3,589 thousand (Q3 2020: EUR3,508 thousand) and a gross margin
of  3.9% (Q3  2020: 4.3%). Nine-month  profitability  was strongly influenced by
growth  in  input  prices,  which  mainly  affected  contracts  signed in 2020.
Materials  prices stabilised  somewhat in  the third  quarter, giving grounds to
expect  that the negative impact  of soaring input prices  is going to decrease.
Supply  chain  disruptions,  on  the  other  hand,  persist  and continue to put
pressure  on  the  timely  completion  of  construction  projects. Profitability
decreased  in both operating segments. The gross margin of the Buildings segment
was  3.0% for nine months and 3.8% for  the third quarter compared with 4.7% and
4.0% for  the nine months and third  quarter in 2020. Besides the above factors,
the segment's performance was strongly influenced by one-off expenses related to
the  completion  of  works  on  the  Nysäter  wind farm. The gross margin of the
Infrastructure  segment was 1.8% for nine months  and 4.0% for the third quarter
compared  with 4.6% and  5.9% for the  nine months  and third quarter in 2020. A
decline  in asphalt concrete production and laying works has increased the share
of the segment's uncovered fixed costs.

The  group's  administrative  expenses  for  the  first nine months of 2021 were
EUR4,267  thousand. Compared to  the same period  in 2020, administrative expenses
decreased  by around 20% (9M 2020: EUR5,312 thousand), mainly through a decline in
personnel  expenses. The ratio of administrative  expenses to revenue (12 months
rolling) remained stable at 2.1% (9M 2020: 2.1%).
The  group's operating profit for the nine  months of 2021 was EUR339 thousand (9M
2020: EUR3,952  thousand).  EBITDA  amounted  to  EUR2,961 thousand (9M 2020: EUR6,512
thousand).
The  group's finance income and costs are affected by exchange rate fluctuations
in  the  group's  foreign  markets.  During  the  period,  the Ukrainian hryvnia
strengthened  against  the  euro  by  around  12% while  the  Swedish krona/euro
exchange rate did not change significantly. Translation of the loans provided to
the group's Ukrainian subsidiaries in euros into the local currency gave rise to
an  exchange gain of EUR697  thousand (9M 2020: the exchange  loss on movements in
the  exchange rate of the Ukrainian hryvnia was EUR1,225 thousand and the exchange
gain on movements in the exchange rate of the Swedish krona was EUR84 thousand).
The  group incurred a net loss of  EUR368 thousand (9M 2020: EUR3,004 thousand). The
loss  attributable to owners of  the parent, Nordecon AS,  was EUR796 thousand (9M
2020: EUR1,040 thousand).

Cash flows

Operating  activities  in  the  9 months  of  2021 produced a net cash inflow of
EUR2,438  thousand (9M 2020: an outflow of  EUR279 thousand). Operating cash flow is
strongly  influenced by the fact that the  contracts signed with most public and
private  sector customers do not require them to make advance payments while the
group  has to make  prepayments to subcontractors  and suppliers. In particular,
there  has been  rapid year-on-year  growth in  prepayments for  materials. 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 resulted in a net cash inflow of EUR168 thousand (9M 2020: an
inflow  of  3,948 thousand).  The  largest  items  were  payments  made  for the
acquisition  of  property,  plant  and  equipment  and intangible assets of EUR150
thousand  (9M 2020: EUR186 thousand) and proceeds from the sale of property, plant
and  equipment of  EUR246 thousand  (9M 2020: EUR246  thousand). Repayments of loans
provided  totalled  EUR83  thousand  (9M  2020: EUR43  thousand).  Cash flow for the
comparative  period was  strongly influenced  by the  reclassification of Embach
Ehitus OÜ  from an associate  into a subsidiary,  which generated cash inflow of
EUR3,605 thousand, and dividends received of EUR251 thousand.
Financing  activities generated a net cash outflow of EUR9,486 thousand (9M 2020:
an  outflow of EUR3,045 thousand). The largest  items were loan and lease payments
and  dividends  paid.  Proceeds  from  loans  received totalled EUR1,535 thousand,
consisting  of the use of overdraft  facilities and development loans (9M 2020:
EUR2,333  thousand).  Repayments  of  loans  received  totalled  EUR3,086  thousand,
consisting  of regular repayments of  long-term investment and development loans
(9M  2020: EUR1,949 thousand) Lease  payments totalled EUR2,388  thousand (9M 2020:
EUR2,167  thousand). Dividends paid in the  nine months of 2021 amounted to EUR4,706
thousand (9M 2020: EUR472 thousand).
The  group's  cash  and  cash  equivalents  at 30 September 2021 totalled EUR5,697
thousand (30 September 2020: EUR7,640 thousand).

Key financial figures and ratios

 Figure/ratio                     9M 2021      9M 2020      9M 2019        2020
-------------------------------------------------------------------------------
 Revenue (EUR'000)                  208,894      217,664      172,237     296,082

 Revenue change                      (4)%        26.4%         2.8%       26.5%

 Net profit (loss) (EUR'000)          (368)        3,004        2,876       4,118

 Net profit (loss)
 attributable to owners of the
 parent (EUR'000)                     (796)        1,040        2,532       2,466

 Weighted average number of
 shares                        31,528,585   31,528,585   31,528,585  31,528,585

 Earnings per share (EUR)            (0.03)         0.03         0.08        0.08

 Administrative expenses to
 revenue                             2.0%         2.4%         2.7%        2.4%

 Administrative expenses to
 revenue (rolling)                   2.1%         2.7%         2.8%        2.4%

 EBITDA (EUR'000)                     2,961        6,512        4,732       7,003

 EBITDA margin                       1.4%         3.0%         2.7%        2.4%

 Gross margin                        2.3%         4.4%         4.5%        3.7%

 Operating margin                    0.2%         1.8%         1.5%        1.2%

 Operating margin excluding
 gain on asset sales                 0.1%         1.8%         1.4%        1.2%

 Net margin                        (0.2)%         1.4%         1.7%        1.4%

 Return on invested capital          1.7%         6.2%         5.8%        9.3%

 Return on equity                  (1.0)%         8.5%         8.8%       11.8%

 Equity ratio                       22.9%        25.8%        25.9%       27.6%

 Return on assets                  (0.3)%         2.3%         2.5%        3.3%

 Gearing                            32.1%        30.2%        30.0%       21.1%

 Current ratio                       0.98         1.00         0.93        1.01

                                  30 Sept
                                     2021 30 Sept 2020 30 Sept 2019 31 Dec 2020
-------------------------------------------------------------------------------
 Order book (EUR'000)               293,141      215,494      196,493     215,796
-------------------------------------------------------------------------------


Performance by geographical market

The  revenue contribution  of foreign  markets decreased  significantly year-on-
year,  accounting for around 5% of the group's  total revenue for the first nine
months of 2021.

            9M 2021   9M 2020   9M 2019   2020
-----------------------------------------------
  Estonia       95%       88%       91%    82%

  Finland        4%        5%        4%     6%

  Ukraine        1%        1%        2%     1%

  Sweden         0%        6%        3%    11%

A  major  factor  in  the  decline  was  a steep fall in Swedish revenues, which
dropped  to less than 1% of the total. The amount and share of revenue generated
in Finland and Ukraine remained comparable to the same period last year.
Geographical  diversification  of  the  revenue  base  is a consciously deployed
strategy  by which we mitigate the risks  resulting from excessive reliance on a
single  market. However,  conditions in  some of  our chosen foreign markets are
also   volatile   and  strongly  affect  our  current  results.  Increasing  the
contribution of foreign markets is one of Nordecon's strategic goals.

Performance by business line

Segment revenues

The  group's revenue  for the  first nine  months of 2021 was EUR208,894 thousand,
around  4% lower than a year earlier when revenue amounted to EUR217,664 thousand.
The  decrease  is  largely  attributable  to  revenue  from  foreign  operations
(particularly  Sweden), which dropped by  58%. Revenue generated in Estonia grew
by  3% year  on  year.  In  segment  terms,  revenue  from the Buildings segment
decreased  by 9% while revenue from the  Infrastructure segment grew by 13% year
on  year. In a situation where the order book of the Buildings segment has grown
and  includes  large-scale  design  and  construction  contracts,  the segment's
revenue  decline  partly  results  from  the  fact that design activities, which
precede construction operations, take a long time.

The  low  volumes  of  infrastructure  construction  that continue to affect the
entire construction market also influenced the group's revenue structure. In the
first  nine  months  of  2021, the  Buildings  and  the  Infrastructure  segment
generated  revenue of EUR154,599 thousand  and EUR54,029 thousand, respectively. The
corresponding  figures for  the same  period in  2020 were EUR169,439 thousand and
EUR48,025 thousand.

  Revenue by operating segment   9M 2021   9M 2020   9M 2019   2020
--------------------------------------------------------------------
  Buildings                          72%       75%       70%    72%

  Infrastructure                     28%       25%       30%    28%

Subsegment revenues

In  the Buildings  segment, the  revenues of  all subsegments  decreased year on
year,  except  for  the  commercial  buildings subsegment that posted 7% revenue
growth.  The revenue contributions of the commercial buildings, public buildings
and  apartment buildings  subsegments were  practically equal  while the revenue
generated  by the industrial and warehouse facilities subsegment continued to be
modest.

The  largest projects under construction  in the commercial buildings subsegment
were  a  seven-floor  commercial  building  in  Rotermann City and the LEED Gold
compliant  Alma Tomingas office building in Ülemiste City in Tallinn and an IKEA
concept store in Rae rural municipality near Tallinn.
The  order  book  of  the  public  buildings  subsegment has grown considerably,
supporting  the  subsegment's  annual  revenue  growth.  During  the period, the
subsegment's  largest projects were  an upper secondary  school on the island of
Saaremaa,  the Medical Campus of the  Tartu University Hospital, a family health
centre  in  Tartu,  an  extension  to  the  building  of  the  Estonian  Foreign
Intelligence  Service  in  Rahumäe  tee  in  Tallinn,  the  main building of the
Estonian Internal Security Service in Tallinn and a barracks in Paldiski.
A  significant share  of the  group's apartment  building projects is located in
Tallinn. During the period under review, 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 the city.
The  group  also  continues  to  build  its  own housing development projects in
Tallinn  and Tartu (reported in the  apartment buildings subsegment). During the
period,  work continued on the construction of the first two apartment buildings
in  the Mõisavahe housing  estate (https://moisavahe.ee) and  the development of
plots  for Kivimäe Süda - a new housing estate in the Nõmme district in Tallinn.
The period's revenue from own development projects amounted to EUR388 thousand (9M
2020: EUR2,455  thousand).  In  carrying  out  our  own development activities, we
carefully monitor potential risks in the housing development market.
The  share  of  revenue  generated  by  the  industrial and warehouse facilities
subsegment  remained stable  year on  year. The  largest ongoing  project is the
construction  of  a  factory  complex  for  the  dairy  company E-Piim in Paide.
However, most of the subsegment's projects are small, with an average cost of EUR2
million.  The  largest  projects  of  the  period were a two-floor warehouse and
office  building  in  the  Tähetorni  Technopark  and a logistics centre for the
packaging supplier Pakendikeskus in Tallinn.

  Buildings segment       9M 2021   9M 2020   9M 2019   2020
-------------------------------------------------------------
  Commercial buildings        30%       25%       35%    23%

  Public buildings            29%       36%       28%    37%

  Apartment buildings         29%       28%       30%    28%

  Industrial facilities       12%       11%        7%    12%

In  the  Infrastructure  segment,  the  largest  revenue contributor is the road
construction  and maintenance subsegment, which  increased its revenue by around
21% year on year. The period's largest ongoing projects 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.
The  group has  won several  contracts for  the construction  of small harbours.
During  the period, work  was done on  the construction of  Salmistu harbour and
Vasknarva boat harbour and the expansion of berths in Roomassaare harbour on the
island  of  Saaremaa,  which  accounted  for  a  major  share  of the specialist
engineering revenue.

  Infrastructure segment      9M 2021   9M 2020   9M 2019   2020
-----------------------------------------------------------------
  Road construction               85%       77%       81%    74%

  Other engineering                5%       18%       16%    21%

  Environmental engineering        5%        1%        3%     1%

  Specialist engineering           5%        4%        0%     4%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at  EUR293,141 thousand at 30 September 2021, a 36% increase  year on year. In the
third  quarter, we signed  new contracts of  EUR102,326 thousand (Q3 2020: EUR87,751
thousand).

                    30 Sept 2021 30 Sept 2020 30 Sept 2019 31 Dec 2020
----------------------------------------------------------------------
 Order book (EUR'000)      293,141      215,494      196,493     215,796

The  proportions of the  two main operating  segments in the  group's order book
have  not changed substantially: the Buildings segment still dominates with 87%
while the share of the Infrastructure segment is 13% (30 September 2020: 79% and
21%, respectively).  Compared  with  30 September  2020, the  order  book of the
Buildings  segment has  grown by  51% and the  order book  of the Infrastructure
segment had decreased by 18%.
A major share of the value of new contracts signed in the third quarter was made
up of contracts secured by the Buildings segment, the largest of which were:

  * the construction of Kastani Kodud, a housing estate in Jõelähtme rural
    municipality near Tallinn with a cost of around EUR5,500 thousand;
  * the design and construction of Vektor, a commercial and residential complex
    at Pärnu mnt 137 in Tallinn with a cost of around EUR38,000 thousand;
  * the construction of Roseni Maja, an office building at Ahtri 4 in Tallin
    with a cost of around EUR17,000 thousand;
  * the design and renovation of the sports centre of the Ülenurme Upper
    Secondary School near Tartu with a cost of around EUR5,600 thousand;
  * the design and construction of warehouses and related outdoor infrastructure
    for the Centre for Defence Investment in Harju county with a cost of around
    EUR9,800 thousand.

A  major share of  the order book  of the Buildings  segment is also  made up of
contracts  secured in the first half of 2021 and earlier periods, the largest of
them  including the  construction of  the main  building of the Estonian Foreign
Intelligence Service in Tallinn, an IKEA concept store in Rae rural municipality
near  Tallinn,  a  factory  complex  for  E?Piim  in  Paide,  phase  III  of the
Maarjamõisa  Medical Campus of  the Tartu University  Hospital and the LEED Gold
compliant Alma Tomingas office building in Ülemiste City in Tallinn.
In  the  Infrastructure  segment,  the  order  book of the road construction and
maintenance  subsegment is still  the largest, accounting  for nearly 90% of the
segment's order book. In the third quarter, one large contract was signed:

  * the construction of access roads for the premises of the IKEA concept store
    and a new Kurna-Tuhala circular intersection in Rae rural municipality with
    a cost of around EUR3,500 thousand.

The  order book also includes some large-scale contracts awarded to the group in
the  first half of 2021: the construction  of 2+2 passing lanes on the Kärevere-
Kardla  section of  the Tallinn-Tartu-Võru-Luhamaa  road, the  construction of a
wind  farm in the Targale rural municipality  in Latvia, the expansion of berths
in Roomassaare harbour on the island of Saaremaa and the design and construction
of the outdoor space around Terminal D in Old City Harbour in Tallinn.
Based  on the size of the group's order  book, including the share of work to be
performed  in 2022 and 2023, and  fierce competition in  the general contracting
market,  management expects that in 2021 the  group's revenue will remain on the
same  level as  in 2020. The  current situation,  along with  the rise  in input
prices  and supply-chain  disruptions which  mainly affect  contracts secured in
2020, have  put profit margins under strong pressure. 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.
To  mitigate the input price risk, we have been signing cost-plus contracts with
private  sector customers  (these are  contracts with  an open  book arrangement
under  which we can invoice the customer based on the actual costs incurred plus
the  agreed  margin).  Our  focus  remains  on  cost  control  as  well  as pre-
construction  and  design  activities,  where  we  can  harness our professional
competitive advantages.

People

Employees and personnel expenses

The  group's average number  of employees in  the first nine  months of 2021 was
690, including  432 engineers and technical personnel (ETP). Headcount decreased
by around 2% year on year.

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

                  9M 2021   9M 2020   9M 2019   2020
-----------------------------------------------------
  ETP                 432       422       413    450

  Workers             258       261       276    258

  Total average       690       703       689    708

The group's personnel expenses for the nine months of 2021, including all taxes,
totalled  EUR18,325 thousand  compared with  EUR19,476 thousand  for the same period
last  year.  Personnel  expenses  decreased  by  around  6% year on year, mainly
through  a decrease in the number of  employees, a reduction of salaries carried
out in the middle of 2020 and a decline in the share of performance bonuses.
The  service fees  of the  members of  the council  of Nordecon  AS for the nine
months  of 2021 amounted to EUR112 thousand and associated social security charges
totalled EUR37 thousand (9M 2020: EUR135 thousand and EUR45 thousand, respectively).
The  service fees of  the members of  the board of  Nordecon AS amounted to EUR276
thousand and associated social security charges totalled EUR91 thousand (9M 2020:
EUR357 thousand and EUR118 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:

                                                 9M 2021 9M 2020 9M 2019  2020
------------------------------------------------------------------------------
 Nominal labour productivity (rolling), (EUR '000)   416.5   400.4   335.0 422.9

 Change against the comparative period, %           4.0%   19.5%    5.1% 24.2%



 Nominal labour cost efficiency (rolling), (EUR)      11.1    10.3     9.5  10.9

 Change against the comparative period, %           6.9%    8.4%  (0.6)% 18.0%

The  group's  nominal  labour  productivity  and  nominal labour cost efficiency
improved  year on  year, supported  by slight  revenue growth  in the  past four
quarters and a decrease in both the number of employees and personnel expenses.

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)