Market announcement

Title

2022 III quarter and 9 months consolidated interim report (unaudited)

Message

Despite  the  difficult  economic  environment,  the  group's  9-month result is
characterized  by an increase in sales revenue and operating profit. Results for
the Buildings and Infrastructure segments differ significantly.
Although the profitability of the Buildings segment decreased in the 3rd quarter
compared  to the  same period  last year,  in 9 months,  despite the increase in
input  prices, profitability has improved compared to the same period last year,
and we predict that the margin will continue to improve.
The result of the Infrastructure segment - a segment with high fixed costs - has
been  illustrated by the decrease in sales  revenue that is directly affected by
the  decision made  by the  main customer,  the Transport Administration, in the
spring  of 2022 to reduce investments in infrastructure construction. Due to the
sharp  decrease  in  investments  in  road  construction,  the group has already
reorganized  its road construction sub-segment in order to ensure more efficient
use  of resources  and return  to profit  through the elimination of duplicative
activities.
As  of 30.09.2022, the order  book of the  group was 188,847 thousand euros. The
profile  of new contracts  signed in the  third quarter of  2022 is dominated by
wind  farm  construction  in  Estonia  and  Lithuania  and  the  construction of
apartment   buildings.   The   group  also  continued  with  successful  housing
development  projects in Tartu  (Mõisavahe Homes, Emajõe  Residence) and started
new projects in Tallinn (Kivimäe Süda) and Pärnu (Seiler Quarter).
The  group's gross  profitability was  2.2% in 9 months  of 2022 and 2.7% in the
third  quarter. The group  ended 9 months with  a net loss,  which is due to the
write-down  of Ukrainian  investments made  in the  1st quarter and the exchange
rate  loss due to the  devaluation of the Ukrainian  hryvnia in the 3rd quarter.
Both  expenses are non-cash financial expense and  the exchange rate loss has no
effect on the consolidated equity of the group.

Condensed consolidated interim statement of financial position

 EUR'000                                       30 September 2022 31 December 2021
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                               5,065            9,031

 Trade and other receivables                            61,220           48,091

 Prepayments                                             7,801            4,947

 Inventories                                            26,647           25,637

 Total current assets                                  100,733           87,706

 Non-current assets

 Other investments                                          76               76

 Trade and other receivables                             8,664            9,206

 Investment property                                     8,233            5,599

 Property, plant and equipment                          17,045           17,433

 Intangible assets                                      15,098           15,051

 Total non-current assets                               49,116           47,365

 TOTAL ASSETS                                          149,849          135,071



 LIABILITIES

 Current liabilities

 Borrowings                                             17,546           16,289

 Trade payables                                         69,790           57,324

 Other payables                                          8,291            7,459

 Deferred income                                        14,992           11,539

 Provisions                                              1,452              707

 Total current liabilities                             112,071           93,318

 Non-current liabilities

 Borrowings                                              5,879            7,405

 Trade payables                                          3,414            4,178

 Provisions                                              1,778            2,044

 Total non-current liabilities                          11,071           13,627

 TOTAL LIABILITIES                                     123,142          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                                     2,710            1,948

 Retained earnings                                       3,690            6,341

 Total equity attributable to owners of the
 parent                                                 23,308           25,197

 Non-controlling interests                               3,399            2,929

 TOTAL EQUITY                                           26,707           28,126

 TOTAL LIABILITIES AND EQUITY                          149,849          135,071

Condensed consolidated interim statement of comprehensive income

 EUR'000                            9M 2022  Q3 2022   9M 2021  Q3 2021      2021
-------------------------------------------------------------------------------
 Revenue                          239,175   89,919   208,894   90,928   288,534

 Cost of sales                  (233,911) (87,836) (203,999) (87,339) (284,513)

 Gross profit                       5,264    2,083     4,895    3,589     4,021



 Marketing and distribution
 expenses                           (313)    (127)     (394)    (180)     (559)

 Administrative expenses          (5,139)  (2,021)   (4,267)  (1,434)   (6,053)

 Other operating income             1,920       64       198       71       519

 Other operating expenses           (392)    (116)      (93)     (64)   (2,264)

 Operating profit (loss)            1,340    (117)       339    1,982   (4,336)



 Finance income                       174       28       877      340       958

 Finance costs                    (2,702)  (1,325)     (942)    (277)   (1,320)

 Net finance income (costs)       (2,528)  (1,297)      (65)       63     (362)



 Profit (loss) before income
 tax                              (1,188)  (1,414)       274    2,045   (4,698)

 Income tax expense                 (200)        0     (642)     (23)     (808)

 Profit (loss) for the period     (1,388)  (1,414)     (368)    2,022   (5,506)



 Other comprehensive income
 (expense)

 Exchange differences on
 translating foreign
 operations                           762    1,021     (561)      155     (475)

 Total other comprehensive
 income (expense)                     762    1,021     (561)      155     (475)

 TOTAL COMPREHENSIVE INCOME
 (EXPENSE)                          (626)    (393)     (929)    2,177   (5,981)



 Profit (loss) attributable
 to:

 - Owners of the parent           (2,651)  (1,723)     (796)    1,352   (6,310)

 - Non-controlling interests        1,263      309       428      670       804

 Profit (loss) for the period     (1,388)  (1,414)     (368)    2,022   (5,506)



 Comprehensive income
 (expense) attributable to:

 - Owners of the parent           (1,889)    (702)   (1,357)    1,507   (6,785)

 - Non-controlling interests        1,263      309       428      670       804

 Comprehensive income
 (expense) for the period           (626)    (393)     (929)    2,177   (5,981)



 Earnings per share
 attributable to owners of
 the parent:

 Basic earnings per share (EUR)      (0.08)   (0.05)    (0.03)     0.04    (0.20)

 Diluted earnings per share
 (EUR)                               (0.08)   (0.05)    (0.03)     0.04    (0.20)

Condensed consolidated interim statement of cash flows

  EUR'000                                                    9M 2022     9M 2021
-------------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                             281,240     243,632

  Cash paid to suppliers                                 (255,661)   (214,901)

  VAT paid                                                 (6,348)     (6,548)

  Cash paid to and for employees                          (19,192)    (19,128)

  Income tax paid                                            (244)       (617)

  Net cash (used in) from operating activities               (205)       2,438



  Cash flows from investing activities

  Paid on acquisition of property, plant and equipment       (289)       (134)

  Proceeds from sale of property, plant and equipment          537         246

  Paid on acquisition of intangible assets                       0        (16)

  Loans provided                                              (18)        (18)

  Repayments of loans provided                                  14          83

  Dividends received                                             6           0

  Interest received                                              5           7

  Net cash from investing activities                           255         168



  Cash flows from financing activities

  Proceeds from loans received                               3,264       1,535

  Repayments of loans received                             (3,134)     (3,086)

  Lease payments made                                      (2,619)     (2,388)

  Interest paid                                              (722)       (841)

  Dividends paid                                             (792)     (4,706)

  Net cash used in financing activities                    (4,003)     (9,486)



  Net cash flow                                            (3,953)     (6,880)



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

  Effect of movements in foreign exchange rates               (13)           1

  Decrease in cash and cash equivalents                    (3,953)     (6,880)

  Cash and cash equivalents at end of period                 5,065       5,697

Financial review

Financial performance

Nordecon  ended the  first nine  months of  2022 with a  gross profit  of EUR5,264
thousand (9M 2021: EUR4,895 thousand) and a gross margin of 2.2% (9M 2020: 2.3%).
While  the gross margin  for nine months  remained essentially stable, the gross
margin  for the third quarter, which  was 2.7%, decreased compared with the same
period last year (Q3 2021: 3.9%). The group's gross margin was strongly affected
by  the Infrastructure segment whose performance was significantly weaker than a
year  earlier: it  ended nine  months with  a loss  and the third quarter with a
modest  result. The  segment's gross  margins for  nine months and third quarter
were  (2.0)% and 2.0% in 2022 compared with 1.8% and 4.0% in 2021, respectively.
Its  largest  customer,  the  Transport  Administration,  has  cancelled several
announced  procurements  and  made  significant  cutbacks  in its investments in
2022. This has had a significant effect on the performance of our 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. In the  Buildings segment, the third-quarter gross
margin  was lower than a year earlier but the nine-month gross margin was higher
than a year earlier despite growth in input prices and disruptions in the supply
of  materials. The segment's gross margins for nine months and the third quarter
of 2022 were 3.4% and 2.7%, respectively, compared with 3.0% and 3.8% in 2021.
The  group's administrative expenses for the  first nine months of 2022 amounted
to  EUR5,139 thousand.  Compared with  the same  period last  year, administrative
expenses  grew by around 20% (9M 2021: EUR4,267 thousand) due to a general uptrend
in the cost of goods and services and growth in personnel expenses. The ratio of
administrative  expenses  to  revenue  (12  months rolling) remained essentially
stable at 2.2% (9M 2021: 2.1%).
The group ended the first nine months of 2022 with an operating profit of EUR1,340
thousand  (9M 2021: EUR339  thousand). EBITDA  for the  period amounted  to EUR3,920
thousand  (9M  2021: EUR2,961  thousand).  According  to  the  restructuring  plan
approved  by the creditors  of Swencn AB,  the claims of  the entity's creditors
were to be settled to the extent of 25%. As a result, the group recognised other
income of EUR1,560 thousand in the reporting period.
The  group's finance costs were significantly 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
was  devalued in July and the exchange  rate of the hryvnia weakened against the
euro in the nine months of 2022 by around 13%. Translation of the loans provided
to the group's Ukrainian subsidiaries in euros into the local currency gave rise
to  an  exchange  loss  of  EUR859  thousand  (9M  2021: an  exchange gain of EUR697
thousand).   The   same  movements  in  foreign  exchange  rates  increased  the
translation  reserve  in  equity  by  EUR762  thousand  (9M  2021: reduced by EUR561
thousand)  and the  net effect  of the  exchange differences  on the group's net
assets  was negative  at EUR97  thousand (9M  2021: positive at EUR233 thousand). In
addition, the group wrote down the loan 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  group ended the  period with a  net loss of  EUR1,388 thousand (9M 2021: EUR368
thousand).  The net loss attributable to owners  of the parent, Nordecon AS, was
EUR2,651 thousand (9M 2021: EUR796 thousand).

Cash flows

Operating  activities produced a net cash outflow  of EUR205 thousand in the first
nine months of 2022 (9M 2021: an inflow of EUR2,438 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 EUR255
thousand  (9M 2021: an inflow of EUR168 thousand). The largest items were payments
made  to acquire property,  plant and equipment  of EUR289 thousand (9M 2021: EUR150
thousand)  and proceeds from the  sale of property, plant  and equipment of EUR537
thousand  (9M 2021: EUR246  thousand). Repayments  of loans  provided totalled EUR14
thousand (9M 2021: EUR83 thousand)

Financing  activities generated a net cash outflow of EUR4,003 thousand (9M 2021:
an  outflow of EUR9,486  thousand). The largest  items were cash  flows related to
loans  and  leases.  Proceeds  from  loans  received  totalled  EUR3,264 thousand,
consisting of the use of the overdraft facility and development loans (9M 2021:
EUR1,535  thousand).  Repayments  of  loans  received  totalled  EUR3,134  thousand,
consisting  of regular repayments of  long-term investment and development loans
(9M  2021: EUR3,086 thousand). Lease payments  totalled EUR2,619 thousand (9M 2021:
EUR2,388  thousand). Dividends paid  in the first  nine months of 2022 amounted to
EUR651 thousand (9M 2021: EUR4,706 thousand).
The  group's  cash  and  cash  equivalents  at 30 September 2022 totalled EUR5,065
thousand (30 September 2021: EUR5,697 thousand).

Key financial figures and ratios

 Figure/ratio                     9M 2022      9M 2021      9M 2020        2021
-------------------------------------------------------------------------------
 Revenue (EUR'000)                  239,175      208,894      217,664     288,534

 Revenue change                     14.5%         (4)%        26.4%      (2.5)%

 Net profit (loss) (EUR'000)        (1,388)        (368)        3,004     (5,506)

 Net      profit      (loss)
 attributable  to  owners of
 the parent (EUR'000)               (2,651)        (796)        1,040     (6,310)

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

 Earnings per share (EUR)            (0.08)       (0.03)         0.03      (0.20)

 Administrative  expenses to
 revenue                             2.1%         2.0%         2.4%        2.1%

 Administrative  expenses to
 revenue (rolling)                   2.2%         2.1%         2.7%        2.1%

 EBITDA (EUR'000)                     3,920        2,961        6,512       (797)

 EBITDA margin                       1.6%         1.4%         3.0%      (0.3)%

 Gross margin                        2.2%         2.3%         4.4%        1.4%

 Operating margin                    0.6%         0.2%         1.8%      (1.5)%

 Operating  margin excluding
 gain on asset sales                 0.4%         0.1%         1.8%      (1.6)%

 Net margin                        (0.6)%       (0.2)%         1.4%      (1.9)%

 Return on invested capital        (1.1)%         1.7%         6.2%      (6.5)%

 Return on equity                  (5.1)%       (1.0)%         8.5%     (16.8)%

 Equity ratio                       17.8%        22.9%        25.8%       20.8%

 Return on assets                  (1.0)%       (0.3)%         2.3%      (4.1)%

 Gearing                            36.6%        32.1%        30.2%       28.3%

 Current ratio                       0.90         0.98         1.00        0.94

                             30 Sept 2022 30 Sept 2021 30 Sept 2020 31 Dec 2021
-------------------------------------------------------------------------------
 Order     book
 (EUR'000)                          188,847      293,141      215,494     266,856
-------------------------------------------------------------------------------

Performance by geographical market

Foreign  markets accounted  for around  4% of the  group's total revenue for the
first nine months of 2022, which is similar to the same period last year. Due to
Russia's military invasion of Ukraine, major operations of the group's Ukrainian
subsidiary  Eurocon Ukraine TOV  have been temporarily  suspended: in the second
quarter  it continued  work on  an ongoing  building project  in Kiev  and it is
currently  restoring an administrative building that was damaged during the war.
Ukrainian revenues for the reporting period amounted to EUR770 thousand. The group
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.

              9M 2022   9M 2021   9M 2020   2021
-------------------------------------------------
  Estonia         96%       95%       88%    94%

  Finland          2%        4%        5%     3%

  Latvia           1%        0%        0%     1%

  Lithuania        1%        0%        0%     0%

  Ukraine          0%        1%        1%     2%

  Sweden           0%        0%        6%     0%

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
volatile  and noticeably 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 2022 was EUR239,175 thousand,
roughly  15% larger than in the  same period last year  when the group generated
revenue of EUR208,894 thousand. Revenue growth resulted from the Buildings segment
whose  revenue grew by 26%. The revenue  of the Infrastructure segment decreased
by  19%. The  decline  is  attributable  to  cutbacks  in the investments of the
largest  customer, the Transport Administration, made  due to the spike in input
prices  which was triggered by the impacts of  the war in Ukraine. Growth in the
revenue  of the Buildings segment is mainly supported by major 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 the
first  nine  months  of  2022, the  Buildings  and  the  Infrastructure  segment
generated  revenue of EUR195,157 thousand  and EUR43,845 thousand, respectively. The
corresponding  figures for the first nine  months of 2021 were EUR154,599 thousand
and EUR54,029 thousand.

  Revenue by operating segment   9M 2022   9M 2021   9M 2020   2021
--------------------------------------------------------------------
  Buildings                          78%       72%       75%    75%

  Infrastructure                     22%       28%       25%    25%

Subsegment revenues

The   nine-month   revenue  of  the  commercial  buildings  subsegment  remained
essentially  stable while the  revenues of other  subsegments grew compared with
the  same period last year.  Revenue growth was the  strongest in the industrial
and  warehouse facilities subsegment whose contribution  to the total revenue of
the Buildings segment is still the smallest. The largest subsegments in terms of
revenue  are apartment buildings  and public buildings  which showed nearly 25%
revenue growth.
The  largest projects under construction  in the commercial buildings subsegment
were  the LEED Gold compliant Alma Tomingas office building in Ülemiste City and
the  commercial and residential complex Vektor in  Tallinn, and an IKEA store in
Rae  rural municipality near Tallinn. The  latter was completed and delivered to
the customer on schedule.
The  revenue of the public buildings subsegment has increased significantly year
on  year. 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. During the period under
review,  the largest of them  were the design and  construction of the first two
phases  of the Kalaranna quarter  in Tallinn and the  design and construction of
the  Tiskreoja and Luccaranna housing estates  on the western border of Tallinn.
The  volume  of  our  own  development  operations  (reported  in  the apartment
buildings  subsegment), however, continues to grow  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  EUR7,880 thousand (9M 2021: EUR388 thousand).
In  carrying out our own development  activities, we carefully monitor potential
risks in the housing development market.
The  industrial and  warehouse facilities  subsegment roughly  doubled its nine-
month  revenue compared with last year. The subsegment's largest ongoing project
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                     9M 2022   9M 2021   9M 2020   2021
---------------------------------------------------------------------------
  Commercial buildings                      23%       30%       25%    29%

  Public buildings                          29%       29%       36%    28%

  Apartment buildings                       29%       29%       28%    29%

  Industrial and warehouse facilities       19%       12%       11%    14%

In  the Infrastructure  segment, the  largest revenue  contributor is still road
construction and maintenance although its revenue and proportionate contribution
have  decreased year on  year. 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  around  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 Latvia and Lithuania,
increased year on year.

  Infrastructure segment              9M 2022   9M 2021   9M 2020   2021
-------------------------------------------------------------------------
  Road construction and maintenance       80%       85%       77%    87%

  Other engineering                       16%        5%       18%     6%

  Specialist engineering                   4%        5%        4%     4%

  Environmental engineering                0%        5%        1%     3%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at  EUR188,847 thousand  at 30 September 2022, reflecting  a 36% decrease  year on
year.  In the third quarter of 2022, we signed new contracts of EUR48,408 thousand
(Q3  2021: EUR102,326  thousand).  Russia's  military  invasion of Ukraine and the
consequent sanctions against Russia and Belarus caused disruptions in the supply
chains  of building materials, particularly  metal, wood and oil-based products,
which  continue  to  affect  the  prices  of  relevant  materials.  The surge in
materials  prices  has  caused  a  sharp  increase  in  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 substantially. This has affected the group's order
book through a decline in the order book of the Infrastructure segment.

                    30 Sept 2022 30 Sept 2021 30 Sept 2020 31 Dec 2021
----------------------------------------------------------------------
 Order book (EUR'000)      188,847      293,141      215,494     266,856

The  proportion of  the Buildings  segment in  the group's  total order book has
increased to 91% (30 September 2021: the Buildings segment accounted for 87% and
the  Infrastructure segment for 13% of the total order book). The order books of
both  operating  segments  have  decreased  compared with 30 September 2021: the
order  book  of  the  Buildings  segment  by  33% and  the  order  book  of  the
Infrastructure segment by 55%.
The largest contracts secured in the third quarter were:

  * The construction of foundations for turbines in a wind farm being built near
    the city of Telshiai, Lithuania, with an approximate cost of EUR3,000 thousand.
  * The construction of apartment buildings at Loo, in Jõelähtme rural
    municipality near Tallinn. The approximate cost of phase II of the
    Kastanikodu housing estate is EUR10,300 thousand.
  * The construction of road and electricity networks and foundations for
    turbines in a wind farm being built in Saarde rural municipality in Pärnu
    county (a joint bid). The approximate cost of the works performed by the
    group is EUR3,850 thousand.
  * The design and construction of an extension to the storage facilities of the
    Centre for Defence Investment in Harju county with an approximate cost of
    EUR17,700 thousand.

Based  on the size of the group's order  book, including the share of work to be
performed in 2023, management expects that in 2022 the group's revenue will grow
compared  with 2021. 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.  To mitigate input
price  risk,  we  have  been  signing  cost-plus  contracts  with private sector
customers  (contracts with an  open book arrangement  under which we can invoice
the  customer based  on the  actual costs  incurred plus  an agreed margin). 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  the first nine  months of 2022 was
669, including  437 engineers and technical personnel (ETP). Headcount decreased
by around 3% year on year.

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

                  9M 2022   9M 2021   9M 2020   2021
-----------------------------------------------------
  ETP                 437       432       422    434

  Workers             232       258       261    251

  Total average       669       690       703    685

The  group's personnel expenses for the first nine months of 2022, including all
taxes,  totalled EUR19,932  thousand compared  with EUR18,325  thousand in  the same
period  last year. 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 the first nine
months  of 2022 amounted to EUR112 thousand and associated social security charges
totalled EUR37 thousand (9M 2021: EUR112 thousand and EUR37 thousand, respectively).
The  service fees of  the members of  the board of  Nordecon AS amounted to EUR310
thousand  and  associated  social  security  charges  totalled EUR102 thousand (9M
2021: EUR276 thousand and EUR91 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 2022 9M 2021 9M 2020   2021
-------------------------------------------------------------------------------
 Nominal labour productivity (rolling), (EUR '000)   475.7   416.5   400.4  420.8

 Change against the comparative period, %          14.2%    4.0%   19.5% (0.5)%



 Nominal labour cost efficiency (rolling), (EUR)      12.0    11.1    10.3   11.5

 Change against the comparative period, %           8.1%    6.9%    8.4%   5.5%

The  group's  nominal  labour  productivity  and  nominal labour cost efficiency
improved year on year, mainly due to revenue growth.

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)