Börsiteade

Pealkiri

2023 III quarter and 9 months consolidated interim report (unaudited)

Teade

Economic environment

The  rapid changes  in the  construction market  due to the economic environment
have  continued, complicating  the growth  plans of  companies and other related
industries  in  the  sector,  and  limiting  their  courage  to act. Coping with
difficult  circumstances and falling construction  volumes are keywords for most
companies in the field.
In  2022, the construction price  index increased by  17.8% year-on-year and the
increase has continued in 2023. The temporary decrease in construction prices in
the second quarter has been replaced by an increase in the third quarter. In the
third quarter of this year, the construction price index increased 0.3% compared
to the second quarter and 3.2% compared to the same time last year.
2023 will  be most affected by the sharp  fall in confidence to make investments
because  of high inflation and an environment  of soaring interest rates. At the
same  time, labour costs  have continued to  rise rapidly. In  an environment of
decreased demand, these factors hold back the decline in construction prices.

Group result

The group's third quarter and 9 months of 2023 are characterised by a decline in
sales revenue, improved profitability, and an increase in the order book.
The  group's  sales  revenue  for  the  9 months  of  2023 amounted  to EUR200,384
thousand, down about 16% from the previous period. The decrease in sales revenue
in  both segments,  15% in the  Buildings segment  and 20% in the Infrastructure
segment,  is expected and is due to  the decrease in construction volumes in the
market.  Although the  group has  been successful  in signing new contracts this
year, they did not have a significant impact on the revenue during the reporting
period.
The  group's profitability has improved despite difficult market conditions. The
restructuring  of  the  Infrastructure  segment,  which  started in 2022 and was
completed  in  the  first  half  of  2023, will  have  a  significant  impact on
profitability.  Through the  elimination of  duplicative activities,  the use of
resources  has been made more efficient  and thereby the profitability improved.
Nordecon  group's gross  profit for  the 9 months  of 2023 was  EUR8,770 thousand,
representing  margin of 4.4% (9M  2022: 2.2%) in 9 months and  5.3% in the third
quarter (3Q 2022: 2.3%).
As  at  30 September  2023, the  order  book  of  the group amounted to EUR251,155
thousand.  Compared to the same period last year, the volume of unfinished works
has  increased by 33%. In the 9 months of 2023, new contracts totalling EUR303,761
thousand were signed, including EUR95,301 thousand in the third quarter.

Condensed consolidated interim statement of financial position

 EUR'000                                       30 September 2023 31 December 2022
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                              13,936            7,238

 Trade and other receivables                            53,052           48,084

 Prepayments                                             5,283            6,728

 Inventories                                            31,640           25,454

 Total current assets                                  103,911           87,504

 Non-current assets

 Other investments                                          76               76

 Trade and other receivables                             8,992            8,604

 Investment property                                     5,547            8,347

 Property, plant and equipment                          16,195           17,669

 Intangible assets                                      15,160           15,134

 Total non-current assets                               45,970           49,830

 TOTAL ASSETS                                          149,881          137,334



 LIABILITIES

 Current liabilities

 Borrowings                                             16,487           17,193

 Trade payables                                         72,220           65,144

 Other payables                                          9,505            8,324

 Deferred income                                        13,987            6,996

 Provisions                                              1,810            1,288

 Total current liabilities                             114,009           98,945

 Non-current liabilities

 Borrowings                                              5,414            6,311

 Trade payables                                          2,211            2,769

 Provisions                                              2,754            2,049

 Total non-current liabilities                          10,379           11,129

 TOTAL LIABILITIES                                     124,388          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                                     3,268            3,316

 Retained earnings                                         239            2,691

 Total equity attributable to owners of the
 parent                                                 20,415           22,915

 Non-controlling interests                               5,078            4,345

 TOTAL EQUITY                                           25,493           27,260

 TOTAL LIABILITIES AND EQUITY                          149,881          137,334

Condensed consolidated interim statement of comprehensive income

 EUR'000                            9M 2023  Q3 2023   9M 2022  Q3 2022      2022
-------------------------------------------------------------------------------
 Revenue                          200,384   76,565   239,175   89,919   322,860

 Cost of sales                  (191,614) (72,526) (233,911) (87,836) (314,365)

 Gross profit                       8,770    4,039     5,264    2,083     8,495



 Marketing and distribution
 expenses                           (562)    (245)     (313)    (127)      (490

 Administrative expenses          (6,016)  (2,164)   (5,139)  (2,021)   (7,287)

 Other operating income               304      (9)     1,920       64     2,049

 Other operating expenses           (212)     (10)     (392)    (116)     (462)

 Operating profit (loss)            2,284    1,611     1,340    (117)     2,305



 Finance income                       291      146       174       28       258

 Finance costs                    (2,343)    (531)   (2,702)  (1,325)   (3,740)

 Net finance costs                (2,052)    (385)   (2,528)  (1,297)   (3,482)



 Profit (loss) before tax             232    1,226   (1,188)  (1,414)   (1,177)

 Income tax expense                 (596)        0     (200)        0     (264)

 Profit (loss) for the period       (364)    1,226   (1,388)  (1,414)   (1,441)



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

 Exchange differences on
 translating foreign operations      (48)    (302)       762    1,021     1,368

 Total other comprehensive
 income (expense)                    (48)    (302)       762    1,021     1,368

 TOTAL COMPREHENSIVE INCOME
 (EXPENSE)                          (412)      924     (626)    (393)      (73)



 Profit (loss) attributable to:

 - Owners of the parent           (2,452)       41   (2,651)  (1,723)   (3,650)

 - Non-controlling interests        2,088    1,185     1,263      309     2,209

 Profit (loss) for the period       (364)    1,226   (1,388)  (1,414)   (1,441)



 Comprehensive income (expense)
 attributable to:

 - Owners of the parent           (2,500)    (261)   (1,889)    (702)   (2,282)

 - Non-controlling interests        2,088    1,185     1,263      309     2,209

 Comprehensive income (expense)
 for the period                     (412)      924     (626)    (393)      (73)



 Earnings per share
 attributable to owners of the
 parent:

 Basic earnings per share (EUR)      (0.08)     0.00    (0.08)   (0.05) (0.12)

 Diluted earnings per share (EUR)    (0.08)     0.00    (0.08)   (0.05) (0.12)

Condensed consolidated interim statement of cash flows

  EUR'000                                                   9M 2023     9M 2022
------------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                            249,453     281,240

  Cash paid to suppliers                                (211,054)   (255,661)

  VAT paid                                                (8,563)     (6,348)

  Cash paid to and for employees                         (18,225)    (19,192)

  Income tax paid                                           (574)       (244)

  Net cash from (used in) operating activities             11,037       (205)



  Cash flows from investing activities

  Acquisition of property, plant and equipment              (318)       (289)

  Proceeds from sale of property, plant and equipment         384         537

  Loans provided                                            (524)        (18)

  Repayments of loans provided                                 12          14

  Dividends received                                           12           6

  Interest received                                            25           5

  Net cash from (used in) investing activities              (409)         255



  Cash flows from financing activities

  Proceeds from loans received                              1,344       3,264

  Repayments of loans received                              (799)     (3,134)

  Lease payments made                                     (2,194)     (2,619)

  Interest paid                                             (935)       (722)

  Dividends paid                                          (1,347)       (792)

  Net cash used in financing activities                   (3,931)     (4,003)



  Net cash flow                                             6,697     (3,953)



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

  Effect of movements in foreign exchange rates                 1        (13)

  Change in cash and cash equivalents                       6,697     (3,953)

  Cash and cash equivalents at end of period               13,936       5,065

Financial review

Financial performance

The  group's profitability  has improved  in challenging  market conditions. The
restructuring  of the group's Infrastructure segment, which was started in 2022
and  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.
Nordecon  ended the nine months  of 2023 with a gross  profit of EUR8,770 thousand
(9M 2022: EUR5,264 thousand). Profitability improved year on year with the group's
gross margin rising to 4.4% for the nine months (9M 2022: 2.2%) and 5.3% for the
third  quarter (Q3 2022: 2.3%). The two main  operating segments earned a profit
and  improved their profitability in both the third quarter and nine months. The
gross  margins of the Buildings segment were  5.3% for the nine months and 5.9%
for  the third quarter  (9M 2022: 3.4% and Q3  2022: 2.7%). The gross margins of
the Infrastructure segment were lower: 2.0% for the nine months and 4.5% for the
third quarter (9M 2022: (2.0)% and Q3 2022: 2.0%).
The  group's  administrative  expenses  for  the  nine-month  period were EUR6,016
thousand.  Compared with a year earlier,  administrative expenses grew by around
17% (9M  2022: EUR5,139  thousand)  due  to  growth  in  staff costs. The ratio of
administrative  expenses to revenue (12 months  rolling) increased year on year,
rising to 2.9% (9M 2022: 2.2%).
The group earned an operating profit of EUR2,284 thousand in the first nine months
of  2023 (9M 2022: EUR1,340 thousand).  EBITDA for the  period was EUR4,854 thousand
(9M  2022: EUR3,920  thousand).  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  finance  costs are affected by exchange rate
fluctuations  in the group's foreign  markets and the rise  in interest rates as
the  group's loan burden  is relatively high.  During the nine  months of 2023,
exchange  rate  movements  were  favourable  and  the  translation  of the loans
provided  to the  group's Ukrainian  and Swedish  subsidiaries in euros into the
local  currencies gave rise to  a net exchange gain  of EUR66 thousand (9M 2022: a
loss of EUR916 thousand).
The  group ended the  period with a  net loss of  EUR364 thousand (9M 2022: EUR1,388
thousand).  The net loss attributable to owners  of the parent, Nordecon AS, was
EUR2,452 thousand (9M 2022: EUR2,651 thousand).

Cash flows

Operating  activities in the nine  months of 2023 produced a  net cash inflow of
EUR11,037  thousand (9M 2022: an outflow of EUR205 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  of  the  period  resulted  in  a net cash outflow of EUR409
thousand  (9M 2022: an inflow of EUR255  thousand). Investments in property, plant
and  equipment amounted to  EUR318 thousand (9M  2022: EUR289 thousand) and proceeds
from  the sale of  property, plant and  equipment amounted to  EUR384 thousand (9M
2022: EUR537  thousand). Loans  provided amounted  to EUR524  thousand (9M 2022: EUR18
thousand).
Financing  activities  of  the  period  generated  a  net cash outflow of EUR3,931
thousand  (9M 2022: an outflow of EUR4,003  thousand). The largest items were cash
flows  related to loans and leases.  Loans received amounted to EUR1,344 thousand,
consisting  of  the  use  overdrafts  and  development  loans  (9M  2022: EUR3,264
thousand).  Repayments  of  loans  received  were EUR799 thousand (9M 2022: EUR3,134
thousand),   consisting  of  regular  repayments  of  long-term  investment  and
development   loans.  Lease  payments  were  EUR2,194  thousand  (9M  2022: EUR2,619
thousand).  Dividends paid in  the first nine  months of 2023 amounted to EUR1,347
thousand (9M 2022: EUR792 thousand).
The  group's cash and cash equivalents  at 30 September 2023 amounted to EUR13,936
thousand (30 September 2022: EUR5,065 thousand).

Key financial figures and ratios

 Figure/ratio                     9M 2023      9M 2022      9M 2021        2022
-------------------------------------------------------------------------------
 Revenue (EUR'000)                  200,384      239,175      208,894     322,860

 Revenue change                   (16.2)%        14.5%         (4)%       11.9%

 Net loss (EUR'000)                   (364)      (1,388)        (368)     (1,441)

 Net  loss  attributable  to
 owners    of   the   parent
 (EUR'000)                          (2,452)      (2,651)        (796)     (3,650)

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

 Earnings per share (EUR)            (0.08)       (0.08)       (0.03)      (0.12)

 Administrative  expenses to
 revenue                             3.0%         2.1%         2.0%        2.3%

 Administrative  expenses to
 revenue (rolling)                   2.9%         2.2%         2.1%        2.3%

 EBITDA (EUR'000)                     4,854        3,920        2,961       5,766

 EBITDA margin                       2.4%         1.6%         1.4%        1.8%

 Gross margin                        4.4%         2.2%         2.3%        2.6%

 Operating margin                    1.1%         0.6%         0.2%        0.7%

 Operating  margin excluding
 gain  on  non-current asset
 sales                               1.0%         0.4%         0.1%        0.6%

 Net margin                        (0.2)%       (0.6)%       (0.2)%      (0.4)%

 Return on invested capital          1.9%       (1.1)%         1.7%      (0.5)%

 Return on equity                  (1.4)%       (5.1)%       (1.0)%      (5.2)%

 Equity ratio                         17%        17.8%        22.9%       19.8%

 Return on assets                    0.3%       (1.0)%       (0.3)%      (1.1)%

 Gearing                            16.8%        36.6%        32.1%       32.0%

 Current ratio                       0.91         0.90         0.98        0.88

                             30 Sept 2023 30 Sept 2022 30 Sept 2021 31 Dec 2022
-------------------------------------------------------------------------------
 Order     book
 (EUR'000)                               251,155 188,847      293,141     149,799
-------------------------------------------------------------------------------

Performance by geographical market

Revenue  generated outside Estonia, mostly in Finland and Ukraine, accounted for
2% of  the group's total revenue  for the nine months  of 2023. Despite the war,
Nordecon's  construction volumes in Ukraine have increased year on year. In June
we completed and delivered on time a modular kindergarten with a bomb shelter in
the  city of Ovruch and  started building phase II  of the kindergarten project.
Finnish revenues, which include mainly 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.

              9M 2023   9M 2022   9M 2021   2022
-------------------------------------------------
  Estonia         98%       96%       95%    96%

  Finland          1%        2%        4%     2%

  Ukraine          1%        0%        1%     0%

  Lithuania        0%        1%        0%     1%

  Latvia           0%        1%        0%     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 may decline sharply while the volumes of another may grow more
rapidly.
The  group's revenue for the nine  months of 2023 was EUR200,384 thousand, roughly
16% lower  than  in  the  same  period  last  year, when the figure was EUR239,175
thousand.  The Buildings segment generated revenue  of EUR165,047 thousand and the
Infrastructure  segment revenue  of EUR35,295  thousand. The corresponding figures
for the same period in 2022 were EUR195,157 thousand and EUR43,845 thousand. Revenue
declined  by  15% in  the  Buildings  segment  and  by20%  in the Infrastructure
segment.  The  decrease  in  both  segments  was expected and is attributable to
market  contraction.  Although  the  group  has  been  successful in winning new
contracts  in 2023, these did not  yet affect revenue for  the period. The steep
fall in the revenue of the Infrastructure segment to its practically lowest-ever
level  is  directly  related  to  cutbacks  in  the  investments  of the largest
customer,  the Transport Administration. This  is counterbalanced to some extent
by  the group's success in securing  renewable energy projects: the construction
of wind farms and Rail Baltica account for an increasing share of the revenue of
the Infrastructure segment.

  Revenue by operating segment   9M 2023   9M 2022   9M 2021   2022
--------------------------------------------------------------------
  Buildings                          75%       78%       72%    81%

  Infrastructure                     25%       22%       28%    19%

Subsegment revenues

In  the Buildings  segment, the  revenues of  all subsegments decreased compared
with  the same  period in  2022. The largest  revenue contributors are still the
public   buildings  and  the  apartment  buildings  subsegments  whose  revenues
decreased  less. The revenues of the commercial buildings and the industrial and
warehouse  facilities subsegments, however, contracted significantly, falling by
20% and 41% year on year, respectively.
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   apartment  buildings  subsegment  earns  most  of  its  revenue  from  the
construction  of apartment buildings  for third parties.  During the period, the
largest projects of this kind were the design and construction of the Luccaranna
and  the  Kastanikodu  housing  estates  near  Tallinn. Revenue generated by the
group's  own development operations amounted to EUR7,917 thousand (9M 2022: EUR7,880
thousand).  Nordecon  continues  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 bank of
the river Emajõgi (https://emajoeresidents.ee), in Tartu. The group is moving on
with  the design and  preconstruction activities of  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 commercial and residential  complex Vektor and the Ahtri 4
office  building  in  Tallinn,  the  design  and  construction  of  the  Männiku
commercial  building in the Kandiküla district in Tartu, and the construction of
a   biopharmaceuticals   manufacturing   facility  for  Icosagen  AS  in  Kambja
municipality.
The  largest  projects  under  construction  in  the  industrial  and  warehouse
facilities  subsegment  are  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                     9M 2023   9M 2022   9M 2021   2022
---------------------------------------------------------------------------
  Commercial buildings                      23%       23%       30%    24%

  Public buildings                          33%       29%       29%    30%

  Apartment buildings                       30%       29%       29%    28%

  Industrial and warehouse facilities       14%       19%       12%    18%

The  largest revenue  contributor in  the Infrastructure  segment is  still road
construction  and maintenance although its revenue has decreased year on year by
around  32%. 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 continues to deliver
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 three wind farms (Saarde,
Tootsi-Sopi  and Aidu)  in Estonia,  have nearly  doubled compared with the same
period  last  year.  The  revenue  of  the  environmental engineering subsegment
comprises  revenue from the design and construction works related to elimination
of residual pollution from the Erra river and the Kiviõli ditch.

  Infrastructure segment              9M 2023   9M 2022   9M 2021   2022
-------------------------------------------------------------------------
  Road construction and maintenance       60%       80%       85%    75%

  Other engineering                       31%       16%        5%    20%

  Specialist engineering                   0%        4%        5%     5%

  Environmental engineering                9%        0%        5%     0%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at EUR251,155 thousand at 30 September 2023, reflecting 33% growth compared to the
same  period last year. In the third  quarter, the group signed new contracts of
EUR95,301  thousand (Q3 2022: EUR48,408 thousand).  High construction prices (mainly
due  to labour cost inflation)  in combination with high  interest rates and low
demand  have caused the  postponement of development  projects. The time between
the  submission of a bid and contract award, also in case of public procurement,
can  extend to several  months, which has  also affected the  group's order book
this  year. 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  will  partly  counterbalance  the  decline  in the
investments  of the  Transport Administration.  While public  investments in the
buildings  construction  segment  have  also  decreased, investments in national
defence  infrastructure are going  to increase according  to currently available
information  and this is a subsegment where Nordecon has traditionally been very
successful.

                    30 Sept 2023 30 Sept 2022 30 Sept 2021 31 Dec 2022
----------------------------------------------------------------------
 Order book (EUR'000)      251,155      188,847      293,141     149,799

The  Buildings segment accounts for 87%, and the Infrastructure segment for 13%
of  the  group's  order  book  (30  September  2022: 91% and  9%, respectively).
Compared with 30 September 2022, both segments have increased their order books:
the  Buildings segment by  27% and the Infrastructure  segment by 86%. The order
book  of the Buildings segment has grown mainly through new contracts secured by
the  public buildings subsegment.  The order book  of the Infrastructure segment
has  increased mainly  through contracts  awarded to  the road  construction and
maintenance and other engineering subsegments.
Larger contracts secured in the third quarter include:

  * the reconstruction of the building of the Karlova school at Lina 2 in Tartu
    with an approximate cost of EUR6,800 thousand;
  * the construction of a commercial building at Pirni 7/2 in Tallinn with an
    approximate cost of EUR3,250 thousand;
  * the design and construction of a defence forces' study building in the Tartu
    Raadi campus under a contract with the Centre for Defence Investment with an
    approximate cost of EUR13,000 thousand;
  * the design and construction of storage facilities in Luunja and Nõo
    municipalities (Tartu county) under a contract with the Centre for Defence
    Investment with an approximate cost of EUR45,000 thousand;
  * the construction of a building complex at Saue (Harju county) with an
    approximate cost of EUR3,300 thousand;
  * the design and construction of storage facilities in Ämari under a contract
    with the Centre for Defence Investment with an approximate cost of EUR3,700
    thousand;
  * the reconstruction of substations with the installation of physical
    protection facilities in the Poltava, Zhytomyr, Volyn and Ivano-Frankivsk
    regions in Ukraine with an approximate cost of EUR7,000 thousand;
  * the construction of a building for the Police and Border Guard Board and the
    Rescue Board at Kilingi-Nõmme with an approximate cost of EUR3,700 thousand;
  * the design and construction of storage facilities in Ida-Viru county under a
    contract with the Centre for Defence Investment with an approximate cost of
    EUR8,000 thousand.

Based  on the size of the group's order  book, including the share of work to be
performed  in  2023 and  2024, and  the  overall  situation  in the construction
market,  management  forecasts  that  in  2023 the group's revenue will decrease
compared  with 2022. Increasing competition and cost inflation, particularly the
growth  in labour costs, will continue to drive up input prices, which will keep
profit  margins under pressure. In an  environment of stiff competition, we will
avoid  taking unjustified  risks whose  realisation in  the contract performance
phase  would have an adverse impact on the group's results. Our focus remains on
cost  control as  well as  pre-construction and  design activities, where we can
deploy our professional competitive advantages.

People

Employees and staff costs

The  group's average number  of employees in  the nine months  of 2023 was 567,
including  382 engineers and technical  professionals (ETP). Headcount decreased
by  around 15% year  on year,  mainly due  to the  restructuring of  the group's
infrastructure construction business.

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

                  9M 2023   9M 2022   9M 2021   2022
-----------------------------------------------------
  ETP                 382       437       432    432

  Workers             185       232       258    226

  Total average       567       669       690    658

The  group's staff costs for the nine  months of 2023, including all taxes, were
EUR19,900  thousand compared with  EUR19,932 thousand in  the same period last year.
Against  a backdrop  of continued  upward pressure  on wages,  labour costs have
remained  at a level comparable to the  same period last year because the number
of employees has decreased.
The  service fees  of the  members of  the council  of Nordecon  AS for the nine
months  of 2023 were EUR129  thousand and associated  social security charges were
EUR43 thousand (9M 2022: EUR112 thousand and EUR37 thousand, respectively).
The  service fees of the members of the  board of Nordecon AS were EUR424 thousand
and  associated  social  security  charges  were  EUR140  thousand  (9M 2022: EUR310
thousand and EUR102 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:

                                                 9M 2023 9M 2022 9M 2021  2022
------------------------------------------------------------------------------
 Nominal labour productivity (rolling), (EUR '000)   488.4   475.7   416.5 490.4

 Change against the comparative period, %           2.7%   14.2%    4.0% 16.5%



 Nominal labour cost efficiency (rolling), (EUR)      10.4    12.0    11.1  11.8

 Change against the comparative period, %        (12.8)%    8.1%    6.9%  2.9%

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