Börsiteade

Pealkiri

2023 IV quarter and 12 months consolidated interim report (unaudited)

Teade

Economic environment

The  construction market has  experienced rapid evolution  in recent years, with
notable trends emerging in 2023 following developments that began in 2022. These
shifts  have  profoundly  impacted  companies  within  the  construction sector.
Persistently  high inflation and interest rates  have sustained an atmosphere of
tension.  According to Statistics Estonia, the construction price index has seen
consecutive   increases,   while   escalating  labour  costs  further  drive  up
construction  prices. Despite this upward trend in the construction price index,
input  prices have  stabilized somewhat  in the  latter half  of the year due to
decreased  demand. However,  this stabilization  is insufficient  to immediately
spur  demand,  leading  to  challenges  in  executing  planned  investments with
allocated  resources.  This  situation  is  mirrored  in both private and public
sector decision-making processes. Stakeholders are constantly seeking strategies
to  align pre-existing business  plans with significant  changes in input costs,
resulting  in  prolonged  pre-construction  phases.  The duration between tender
submission  and  conclusion  of  contract  can  extend  over  several  months, a
phenomenon  evident  in  public  sector  procurements  as  well.  Public  sector
investments,  which have been a significant  market influencer, are projected to
decrease further in 2024.

Group result

In  2023, the  group's  sales  revenue  totalled  EUR278,382  thousand,  marking a
decrease  of approximately  14% compared to  the previous  year. This decline in
revenue  was  anticipated,  reflecting  the  overall  decrease  in  construction
activity  within the market. Notably, while  the volume of the Buildings segment
decreased  by 19%, the  sales revenue  of the  Infrastructure segment defied the
market   trend,   experiencing   an   8% increase.  This  upward  trajectory  in
infrastructure  sales  revenue  can  be  attributed  to  significant projects in
renewable  energy  and  the  accelerated  construction of Rail Baltica. However,
investments from one of the segment's key clients, the Transport Administration,
saw a notable decrease during this period.
Despite successfully securing new contracts throughout the year, their impact on
the overall sales revenue remained relatively modest in the reporting period.
Nonetheless,  the group's  profitability improved,  showcasing resilience amidst
challenging  market  conditions.  Gross  profitability  for  the  Nordecon Group
reached  3.7% (up  from  2.6% in  2022), with  improvements observed in both the
Buildings   and   Infrastructure   segments.   The  completion  of  the  group's
Infrastructure  segment reorganization,  initiated in  2022 and finalized in the
first  half of  2023, significantly contributed  to this enhanced profitability.
Streamlining  operations  and  optimizing  resource  utilization  led to greater
efficiency  and improved profitability. However, the  group did incur a one-time
loss  in the reporting  year due to  a long-term building  segment contract from
2019, impacted by the rapid escalation of construction prices in recent years.
As  of December  31, 2023, the group's  order book  stood at  EUR216,732 thousand,
reflecting  an  approximate  45% increase  in  unfinished  work  compared to the
previous  year. Throughout 2023, new contracts  totalling EUR276,901 thousand were
signed,  including EUR85,575  thousand worth  of contracts  in the  fourth quarter
alone.

Condensed consolidated interim statement of financial position

 EUR'000                                        31 December 2023 31 December 2022
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                              11,892            7,238

 Trade and other receivables                            37,010           48,084

 Prepayments                                             1,789            6,728

 Inventories                                            25,879           25,454

 Total current assets                                   76,570           87,504

 Non-current assets

 Other investments                                          76               76

 Trade and other receivables                             9,113            8,604

 Investment property                                     5,517            8,347

 Property, plant and equipment                          14,292           17,669

 Intangible assets                                      14,964           15,134

 Total non-current assets                               43,962           49,830

 TOTAL ASSETS                                          120,532          137,334



 LIABILITIES

 Current liabilities

 Borrowings                                             10,188           17,193

 Trade payables                                         39,797           65,144

 Other payables                                          9,299            8,324

 Deferred income                                        20,602            6,996

 Provisions                                              1,129            1,288

 Total current liabilities                              81,015           98,945

 Non-current liabilities

 Borrowings                                              8,563            6,311

 Trade payables                                          6,011            2,769

 Provisions                                              2,405            2,049

 Total non-current liabilities                          16,979           11,129

 TOTAL LIABILITIES                                      97,994          110,074



 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                                     3,786            3,316

 Retained earnings                                         919            2,691

 Total equity attributable to owners of the
 parent                                                 21,613           22,915

 Non-controlling interests                                 925            4,345

 TOTAL EQUITY                                           22,538           27,260

 TOTAL LIABILITIES AND EQUITY                          120,532          137,334

Condensed consolidated interim statement of comprehensive income

 EUR'000                                     Q4 2023      2023  Q4 2022      2022
-------------------------------------------------------------------------------
 Revenue                                    77,998   278,382   83,685   322,860

 Cost of sales                            (76,442) (268,056) (80,454) (314,365)

 Gross profit                                1,556    10,326    3,231     8,495



 Marketing and distribution expenses         (153)     (715)    (177)     (490)

 Administrative expenses                   (2,899)   (8,915)  (2,148)   (7,287)

 Other operating income                         45       349      129     2,049

 Other operating expenses                    (277)     (489)     (70)     (462)

 Operating profit (loss)                   (1,728)       556      965     2,305



 Finance income                              5,219     5,510       84       258

 Finance costs                             (1,071)   (3,414)  (1,037)   (3,740)

 Net finance income (costs)                  4,148     2,096    (953)   (3,482)



 Profit (loss) before tax                    2,420     2,652       12   (1,177)

 Income tax expense                              0     (596)     (64)     (264)

 Profit (loss) for the period                2,420     2,056     (52)   (1,441)



 Other comprehensive income (expense)
 Items that may be reclassified
 subsequently

 Exchange differences on translating
 foreign operations                            518       470      606     1,368

 Total other comprehensive income
 (expense)                                     518       470      606     1,368

 TOTAL COMPREHENSIVE INCOME (EXPENSE)        2,938     2,526      554      (73)



 Profit (loss) attributable to:

 - Owners of the parent                      1,510     (942)    (998)   (3,650)

 - Non-controlling interests                   910     2,998      946     2,209

 Profit (loss) for the period                2,420     2,056     (52)   (1,441)



 Comprehensive income (expense)
 attributable to:

 - Owners of the parent                      2,028     (472)    (392)   (2,282)

 - Non-controlling interests                   910     2,998      946     2,209

 Comprehensive income (expense) for the
 period                                      2,938     2,526      554      (73)



 Earnings per share attributable to
 owners of the parent:

 Basic earnings per share (EUR)                 0.05    (0.03)   (0.03)   (0.12)

 Diluted earnings per share (EUR)               0.05    (0.03)   (0.03)   (0.12)

Condensed consolidated interim statement of cash flows

  EUR'000                                               12M 2023    12M 2022
---------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                         345,372     390,195

  Cash paid to suppliers                             (294,828)   (351,483)

  VAT paid                                            (12,337)     (8,880)

  Cash paid to and for employees                      (24,715)    (26,075)

  Income tax paid                                        (615)       (291)

  Net cash from operating activities                    12,877       3,466



  Cash flows from investing activities

  Acquisition of PPE                                     (362)       (688)

  Acquisition of intangible assets                           0       (122)

  Proceeds from sale of PPE                                431         816

  Sale of subsidiary, net cash flow                      (970)           0

  Loans provided                                         (531)        (25)

  Repayments of loans provided                              22          25

  Dividends received                                        12           6

  Interest received                                         50           9

  Net cash from (used in) investing activities         (1,348)          21



  Cash flows from financing activities

  Proceeds from loans received                           1,197       4,581

  Repayments of loans received                         (2,291)     (4,879)

  Lease payments                                       (3,060)     (3,481)

  Interest paid                                        (1,232)       (984)

  Dividends paid                                       (1,494)       (488)

  Other payments                                             6         (8)

  Net cash used in financing activities                (6,874)     (5,259)



  Net cash flow                                          4,655     (1,772)



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

  Effect of movements in foreign exchange rates            (1)        (21)

  Change in cash and cash equivalents                    4,655     (1,772)

  Cash and cash equivalents at end of period            11,892       7,238

Financial review

Financial performance

The  group's  profitability  has  improved  in  challenging  market  conditions.
Nordecon  ended  2023 with  a  gross  profit  of  EUR10,326 thousand (2022: EUR8,495
thousand)  and a gross  margin of 3.7% (2022:  2.6%). Profitability improved for
both  operating  segments,  although  the  fourth  quarter  performance  of  the
Buildings  segment was  weaker than  a year  earlier. The  gross margins  of the
Buildings segment were 4.4% for the full year and 3.2% for the fourth quarter of
2023 (2022:  4.1%, Q4: 6.7%). The  gross margins  of the  Infrastructure segment
were 3.1% for the full year and (2.8)% for the fourth quarter (2022: (2.4)%, Q4:
(12.1)%). The restructuring of the group's Infrastructure segment, which started
in  2022 and was  completed in  the first  half of  2023, has had  a significant
positive  impact.  Elimination  of  duplication  of  work has increased resource
efficiency  and thus profitability.  Due to the  surge in construction prices in
recent  years,  the  Buildings  segment  recorded  a one-off loss on a long-term
contract signed in 2019.
The group's administrative expenses for 2023 were EUR8,915 thousand. Compared with
2022, administrative  expenses grew by 22% (2022: EUR7,287 thousand) due to growth
in  staff costs  and an  overall rise  in the  prices of goods and services. The
ratio  of administrative expenses to revenue (12 months rolling) was 3.2% (2022:
2.3%).
The  group earned  an operating  profit of  EUR556 thousand  in 2023 (2022: EUR2,305
thousand). EBITDA for the period was EUR3,938 thousand and EBITDA margin was 1.4%
(2022:   EUR5,766   thousand  and  1.8%). Operating  profit  and  EBITDA  for  the
comparative   period  were  influenced  by  other  income  of  EUR1,560  thousand,
recognised after the approval of the restructuring plan of Swencn AB.
The  group's finance income and  costs resulted in net  finance income of EUR2,096
thousand  (2022: net finance costs of EUR3,482  thousand). The sale of the group's
subsidiary  Nordecon  Betoon  OÜ  had  the  strongest  effect on finance income.
Finance  income and costs  are also influenced  by exchange rate fluctuations in
the  group's foreign  markets, particularly  in Ukraine.  In 2023, the Ukrainian
hryvnia  weakened against  the euro  by around  8%. The translation of the loans
received  by the group's Ukrainian subsidiaries in euros into the local currency
gave  rise  to  an  exchange  loss  of  EUR480  thousand  (2022:  a loss of EUR1,416
thousand).  In 2022, finance  income was  affected by  the write-down  of a loan
granted to the Ukrainian associate V.I. Center TOV by EUR825 thousand. Neither the
foreign exchange loss nor the write-down affected cash flow.
The  group ended the year with a net profit of EUR2,056 thousand (2022: a net loss
of EUR1,441 thousand). The net loss attributable to owners of the parent, Nordecon
AS, was EUR942 thousand (2022: a net loss of EUR3,650 thousand).

Cash flows

Operating  activities produced  a net  cash inflow  of EUR12,877 thousand in 2023
(2022: an inflow of EUR3,466 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 materials suppliers. 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 outflow of EUR1,348 thousand (2022: an
inflow  of EUR21 thousand). Payments made to acquire property, plant and equipment
and  intangible  assets  amounted  to  EUR362  thousand  (2022: EUR810 thousand) and
proceeds  from  the  sale  of  property,  plant  and  equipment amounted to EUR431
thousand  (2022: EUR816 thousand). Loans provided amounted to EUR531 thousand (2022:
EUR25  thousand). Proceeds from the sale of the subsidiary Nordecon Betoon OÜ were
EUR9,050  thousand  and  cash  outflow  from  the  group's  statement of financial
position  as a result  of the sale  was EUR10,030 thousand;  the net effect of the
transaction on the group's statement of cash flows was EUR(970) thousand.
Financing  activities generated a net cash  outflow of EUR6,874 thousand (2022: an
outflow  of EUR5,259 thousand). The largest items were cash flows related to loans
and  leases. Loans received  amounted to EUR1,197  thousand, consisting of the use
overdrafts  and development loans  (2022: EUR4,581 thousand).  Repayments of loans
received  were EUR2,291  thousand (2022:  EUR4,879 thousand),  consisting of regular
repayments  of long-term investment  and development loans.  Lease payments were
EUR3,060  thousand  (2022:  EUR3,481  thousand).  Dividends paid in 2023 amounted to
EUR1,494 thousand (2022: EUR488 thousand).
The  group's cash and  cash equivalents at  31 December 2023 amounted to EUR11,892
thousand (31 December 2022: EUR7,238 thousand).

Key financial figures and ratios

 Figure/ratio                                      2023        2022        2021
-------------------------------------------------------------------------------
 Revenue (EUR'000)                                278,382     322,860     288,534

 Revenue change                                 (13.8)%       11.9%      (2.5)%

 Net profit (loss) (EUR'000)                        2,056     (1,441)     (5,506)

 Net profit (loss) attributable to owners
 of the parent (EUR'000)                            (942)     (3,650)     (6,310)

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

 Earnings per share (EUR)                          (0.03)      (0.12)      (0.20)

 Administrative expenses to revenue                3.2%        2.3%        2.1%

 EBITDA (EUR'000)                                   3,938       5,766       (797)

 EBITDA margin                                     1.4%        1.8%      (0.3)%

 Gross margin                                      3.7%        2.6%        1.4%

 Operating margin                                  0.2%        0.7%      (1.5)%

 Operating  margin excluding gain on non-
 current asset sales                               0.1%        0.6%      (1.6)%

 Net margin                                        0.7%      (0.4)%      (1.9)%

 Return on invested capital                        8.0%      (0.5)%      (6.5)%

 Return on equity                                  8.3%      (5.2)%     (16.8)%

 Equity ratio                                     18.7%       19.8%       20.8%

 Return on assets                                  1.6%      (1.1)%      (4.1)%

 Gearing                                          16.6%       32.0%       28.3%

 Current ratio                                     0.95        0.88        0.94

                                            31 Dec 2023 31 Dec 2022 31 Dec 2021

 Order book (EUR'000)                             216,732     149,799     266,856

Performance by geographical market

Revenue  generated outside Estonia, mostly in Ukraine and Finland, accounted for
approximately  3% of the group's total revenue in 2023. Despite the ongoing war,
Nordecon's construction volumes in Ukraine have increased. In 2023, we completed
and delivered construction phases I and II of a modular kindergarten with a bomb
shelter  in  the  city  of  Ovruch.  Work  continues  on  the  reconstruction of
substations and the installation of their physical protection. Finnish revenues,
which  mainly  include  subcontracting  revenue  from  the provision of concrete
works,  have decreased. 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,  but  in  the  period  under review Lithuania
accounted for less than 1% of the group's revenue and the group did not earn any
revenue in Latvia.

              2023   2022   2021
---------------------------------
  Estonia      97%    96%    94%

  Ukraine       2%     0%     2%

  Finland       1%     2%     3%

  Lithuania     0%     1%     0%

  Latvia        0%     1%     1%

Performance by business line

Segment revenues

We strive to maintain the revenues of our two main operating segments (Buildings
and  Infrastructure)  in  balance,  if  this  is permitted by market conditions,
because this helps diversify risks and provides better opportunities to continue
construction  operations in more challenging market conditions where the volumes
of  one subsegment decline  sharply while the  volumes of another  may grow more
rapidly.
The  group's revenue for  2023 was EUR278,382 thousand,  roughly 14% lower than in
2022, when  the figure  was EUR322,860  thousand. The  Buildings segment generated
revenue  of EUR211,082 thousand and the  Infrastructure segment revenue of EUR67,233
thousand.  The corresponding figures for 2022 were EUR260,585 thousand and EUR62,048
thousand.  The overall decrease  in revenue was  expected and is attributable to
market  contraction.  Revenue  declined  by  19% in  the  Buildings segment, but
increased by 8% in the Infrastructure segment. Although the group was successful
in  winning new  contracts in  2023, these did  not yet  affect revenue  for the
period. High construction prices, mainly due to increased labour costs, combined
with  high interest rates and low demand,  have delayed the start of development
projects. The time lag between bidding and contract award may be several months,
including for work tendered by the public sector. This also affected the group's
order book in the reporting period. Investments by the Transport Administration,
one of the main customers of the Infrastructure segment, have decreased sharply,
and  the segment's revenue growth is  mainly driven by renewable energy projects
and the pick-up in the Rail Baltica construction works.

  Revenue by operating segment   2023   2022   2021
----------------------------------------------------
  Buildings                       76%    81%    75%

  Infrastructure                  24%    19%    25%

Subsegment revenues

In  the Buildings segment, the largest contributor is still the public buildings
subsegment, with revenue for 2023 roughly at the same level as in 2022. In other
subsegments,  revenues have  contracted significantly:  by 40% in the industrial
and   warehouse  facilities  subsegment,  by  21% in  the  commercial  buildings
subsegment and by 22% in the apartment buildings subsegment.
The  period's  largest  projects  in  the  public  buildings subsegment were 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, the construction of the
building  and outdoor premises of the  Karlsson kindergarten in Viljandi and the
construction  of the Viljandi  Rescue Station. The  extension of the Maarjamõisa
Medical  Campus of the University of Tartu Hospital (construction phase III) was
completed in 2023 after a construction period of around three years.
The  apartment  buildings  subsegment  generates  most  of  its revenue from the
construction  of apartment buildings  for third parties.  During the period, the
largest  projects  were  the  design  and  construction  of  the  Luccaranna and
Kastanikodu   housing  estates  near  Tallinn.  Revenue  from  the  group's  own
development  operations amounted  to EUR10,273  thousand (2022: EUR11,459 thousand).
Nordecon  is continuing  the development  of the  Mõisavahe Kodu  housing estate
(https://moisavahe.ee)  and  the  construction  of  the Emajõe Residents housing
estate, which is situated near the city centre on the banks of the Emajõgi river
(https://emajoeresidents.ee)  in Tartu.  The group  is also  proceeding with the
design  and preconstruction activities for the Seileri Kvartal housing estate in
Pärnu  (https://seileri.ee/en). In carrying out  our own development activities,
we carefully monitor potential risks in the housing development market.
The   largest   projects   in  the  commercial  buildings  subsegment  were  the
construction  of the Vektor commercial and  residential complex and the Ahtri 4
and  Kopli 68A office buildings  in Tallinn, the  design and construction of the
Männiku  commercial  building  in  the  Kandiküla  district  of  Tartu,  and the
construction  of a biopharmaceutical  manufacturing facility for  Icosagen AS in
Kambja municipality.
The  largest  projects  under  construction  in  the  industrial  and  warehouse
facilities  subsegment  were  a  production  facility  for  E-Piim  in  Paide, a
production  and office building for Harju Elekter  AS in Hüüru, and a production
and office building in Maardu.

  Buildings segment                     2023   2022   2021
-----------------------------------------------------------
  Public buildings                       37%    30%    28%

  Apartment buildings                    27%    28%    29%

  Commercial buildings                   23%    24%    29%

  Industrial and warehouse facilities    13%    18%    14%

The  largest revenue  contributor in  the Infrastructure  segment is  still road
construction  and maintenance although  in 2023 its revenue  decreased by around
17%. During  the period, a major share of the subsegment's revenue resulted from
the  construction  of  the  Tagadi  ecoduct  on  the  Rail  Baltica  route,  the
construction    of    the    Neanurme-Pikknurme    2+1 road   section   of   the
Tallinn-Tartu-Võru-Luhamaa  road in Jõgeva county  and the reconstruction of the
Hageri-Kohila  road  section  in  Harju  county.  The  group  also provides road
maintenance services in Järva county.
The  amount and share of revenue  generated by the other engineering subsegment,
which  is currently involved in the  construction of two wind farms (Tootsi-Sopi
and Aidu) in Estonia, increased significantly compared with 2022. The revenue of
the  environmental engineering subsegment  includes revenue from  the design and
construction of the Erra river and the Kiviõli ditch remediation projects.

  Infrastructure segment              2023   2022   2021
---------------------------------------------------------
  Road construction and maintenance    63%    78%    87%

  Other engineering                    30%    20%    10%

  Specialist engineering                0%     2%     0%

  Environmental engineering             7%     0%     3%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at  EUR216,732 thousand at 31 December 2023, reflecting 45% growth compared to the
end of 2022. In 2023, new contracts were signed for EUR276,901 thousand, including
contracts  of  EUR85,575  thousand  signed  in  the  fourth quarter (excluding the
contracts  signed  in  2023 by  Nordecon  Betoon  OÜ, the subsidiary sold at the
beginning  of  December).  The  corresponding  amounts  for  2022 were  EUR163,498
thousand and EUR25,381 thousand.

                       31 December 2023   31 December 2022   31 December 2021
------------------------------------------------------------------------------
  Order book (EUR'000)            216,732            149,799            266,856

In  terms of  the breakdown  of the  order book  between the  two main operating
segments,  the  share  of  the  Buildings  segment has further increased: it now
accounts  for 96% of  the group's  order book,  while the Infrastructure segment
accounts for 4% (31 December 2022: 88% and 12%, respectively). Compared with 31
December  2022, the order book of the Buildings segment has increased by 58% and
that  of  the  Infrastructure  segment  has  decreased  by  47%. The  volume  of
investments  made by the Transport Administration has decreased sharply and this
has  had a  direct impact  on the  size of  the order book of the Infrastructure
segment.  The volume of procurements for  the Rail Baltica project has increased
and  is  partly  offsetting  the  decline  in  investments made by the Transport
Administration.  Public investment  in building  construction has also declined,
but  according to currently available information investment in national defence
infrastructure,  a  subsegment  in  which  Nordecon  has traditionally been very
successful, will increase.
A  significant proportion of contracts secured in the fourth quarter were signed
by the Buildings segment. The largest of these were:

  * the design and construction of the LEED Gold compliant Golden Gate office
    building at Ahtri 6 in Tallinn with an approximate cost of EUR23,500 thousand;
  * the design and construction of a commercial building at Nõlvakaare 4 in
    Raadi village in Tartu county with an approximate cost of EUR4,900 thousand;
  * the construction of Loodusmaja (Nature Hub) at Vesilennuki 12 in Tallinn
    with an approximate cost of EUR54,300 thousand.

Although  the  order  book  has  increased,  management expects that in 2024 the
group's  business volumes will decline compared  to 2023, mainly due to the sale
of  Nordecon Betoon OÜ. The increase in materials and energy prices and the rise
in  labour costs will continue  to push up input  prices, which will keep profit
margins  under pressure.  In a  fiercely competitive  environment, we will avoid
taking  unjustified risks that could materialise in the contract execution phase
and  have an adverse impact on the group's results. We will continue to focus on
cost  control and pre-construction and design  activities, where we can leverage
our professional competitive advantages.

People

Employees and staff costs

The group's average number of employees in 2023 was 558, including 374 engineers
and  technical professionals  (ETP). Headcount  decreased by  around 15% year on
year,  due to  the restructuring  of the  group's Infrastructure segment and the
sale of Nordecon Betoon OÜ at the beginning of December 2023.

Average  number  of  employees  at  group  companies  (incl.  the parent and the
subsidiaries):

                  2023   2022   2021
-------------------------------------
  ETP              374    432    434

  Workers          184    226    251

  Total average    558    658    685

The  group's staff  costs for  2023, including all  taxes, were EUR27,145 thousand
compared  with EUR27,248 thousand for 2022. Against a backdrop of continued upward
pressure on wages, labour costs have remained at a level comparable to last year
because the number of employees has decreased.
The service fees of the members of the council of Nordecon AS for 2023 were EUR179
thousand  and the  associated social  security charges  were EUR59 thousand (2022:
EUR150 thousand and EUR50 thousand, respectively).
The  service fees of the members of the  board of Nordecon AS were EUR775 thousand
and  the  associated  social  security  charges  were  EUR255 thousand (2022: EUR417
thousand  and EUR138 thousand, respectively).  The fees include severance payments
and  associated  social  security  charges  for  one  member of the board, which
amounted to EUR222 thousand (2022: nil) and EUR73 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 staff costs incurred:

                                                       2023    2022     2021
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  Nominal labour productivity (rolling), (EUR '000)     499.3   490.4    420.8

  Change against the comparative period, %             1.8%   16.5%   (0.5)%



  Nominal labour cost efficiency (rolling), (EUR)        10.3    11.8     11.5

  Change against the comparative period, %          (13.4)%    2.9%     5.5%

The  group's nominal labour productivity increased year on year, mainly due to a
decrease in the number of staff. Revenue decline has reduced nominal labour cost
efficiency.

Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
Email: andri.hobemagi@nordecon.com (mailto:andri.hobemagi@nordecon.com)
www.nordecon.com (http://www.nordecon.com)