Börsiteade

Pealkiri

2024 III quarter and 9 months consolidated interim report (unaudited)

Teade

In the third quarter of this year, the downward trend in the construction market
did   not  experience  a  significant  shift.  Forward-looking  indicators  that
characterize   both  the  construction  market  and  the  broader  macroeconomic
environment are contradictory, making it difficult to predict a market upturn in
the  coming  quarters.  This  uncertainty  affects  both  the public and private
sectors' willingness and confidence to make broad-based investments in buildings
and infrastructure.
Despite  the challenging market conditions, all three key economic indicators of
Nordecon  AS show a positive trend. In the third quarter, the group continued to
see  growth in  profitability and  sales revenue,  and the backlog of unfinished
work increased as well.
The  group's gross profit margin reached 7.1% for the first nine months of 2024
(compared  to  3.3% in  the  first  nine  months  of 2023) and 8.7% in the third
quarter  (compared  to  3.5% in  Q3  2023). Profitability  improved  in both the
Building  and  Infrastructure  segments,  driven  by  better  risk management in
general  contracting projects and the  completion in 2023 of long-term contracts
signed  before the war in Ukraine, which  were impacted by previous years' rapid
growth  in  construction  input  costs.  The  improvement  in the Infrastructure
segment  was partly  influenced by  an investment  made earlier  this year in an
asphalt  concrete  plant,  which  has  reduced  production  costs  and  marked a
significant step forward in materials recycling.
The  group's net  profit for  the first  nine months  amounted to 4,547 thousand
euros (compared to a loss of 2,772 thousand euros for the same period in 2023).
Sales  revenue for the  first nine months  of 2024 was 178,722 thousand euros, a
37% increase  compared to  the sales  revenue from  continuing operations in the
same  period last year. Sales revenue in the building segment grew by 57%, while
it decreased by 18% in the infrastructure segment.
As  of 30 September 2024, the  volume of order  book was 195,628 thousand euros,
marking  an 11% increase  compared to  the same  period last year. New contracts
worth a total of 131,801 thousand euros were signed in the first nine months, of
which 67,771 thousand euros were signed in the third quarter.

Condensed consolidated interim statement of financial position

 EUR'000                                       30 September 2024 31 December 2023
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                              11,476           11,892

 Trade and other receivables                            39,332           37,010

 Prepayments                                             3,951            1,789

 Inventories                                            23,541           25,879

 Total current assets                                   78,300           76,570

 Non-current assets

 Other investments                                          76               76

 Trade and other receivables                             9,607            9,113

 Investment property                                     5,517            5,517

 Property, plant and equipment                          13,264           14,292

 Intangible assets                                      14,961           14,964

 Total non-current assets                               43,425           43,962

 TOTAL ASSETS                                          121,725          120,532



 LIABILITIES

 Current liabilities

 Borrowings                                              8,119           10,188

 Trade payables                                         52,269           39,855

 Other payables                                          8,283            9,241

 Deferred income                                         8,921           20,602

 Provisions                                                651            1,129

 Total current liabilities                              78,243           81,015

 Non-current liabilities

 Borrowings                                              8,888            8,563

 Trade payables                                          5,175            6,011

 Provisions                                              2,493            2,405

 Total non-current liabilities                          16,556           16,979

 TOTAL LIABILITIES                                      94,799           97,994



 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                                     4,288            3,786

 Retained earnings                                       4,292              919

 Total equity attributable to owners of the
 parent                                                 25,488           21,613

 Non-controlling interests                               1,438              925

 TOTAL EQUITY                                           26,926           22,538

 TOTAL LIABILITIES AND EQUITY                          121,725          120,532

Condensed consolidated interim statement of comprehensive income

 EUR'000                            9M 2024  Q3 2024   9M 2023  Q3 2023      2023
-------------------------------------------------------------------------------
 Revenue                          178,722   63,777   130,799   44,273   186,464

 Cost of sales                  (165,955) (58,204) (126,488) (42,745) (182,655)

 Gross profit                      12,767    5,573     4,311    1,528     3,809



 Marketing and distribution
 expenses                           (301)    (129)     (402)    (176)     (497)

 Administrative expenses          (5,011)  (1,638)   (4,337)  (1,353)   (6,564)

 Other operating income               145       68       240       30       286

 Other operating expenses           (628)    (170)     (309)    (123)     (465)

 Operating profit (loss)            6,972    3,704     (497)     (94)   (3,431)



 Finance income                       437      120       267      136       613

 Finance costs                    (2,625)  (1,079)   (2,298)    (515)   (3,356)

 Net finance costs                (2,188)    (959)   (2,031)    (379)   (2,743)



 Profit (loss) before tax           4,784    2,745   (2,528)    (473)   (6,174)

 Income tax expense                 (237)        0     (244)        0     (244)

 Profit (loss) for the period
 from continuing operations         4,547    2,745   (2,772)    (473)   (6,418)

 Profit for the period from a
 discontinued operation                 -        -     2,408    1,699     8,474

 Profit (loss) for the period       4,547    2,745     (364)    1,226     2,056

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

 Exchange differences on
 translating foreign operations       502      337      (48)    (302)       470

 Total other comprehensive
 income (expense)                     502      337      (48)    (302)       470

 TOTAL COMPREHENSIVE INCOME
 (EXPENSE)                          5,049    3,082     (412)      924     2,526



 Profit (loss) attributable to:

 - Owners of the parent             3,373    2,353   (2,452)       41     (942)

 - Non-controlling interests        1,174      392     2,088    1,185     2,998

 Profit (loss) for the period       4,547    2,745     (364)    1,226     2,056



 Comprehensive income (expense)
 attributable to:

 - Owners of the parent             3,875    2,690   (2,500)    (261)     (472)

 - Non-controlling interests        1,174      392     2,088    1,185     2,998

 Comprehensive income (expense)
 for the period                     5,049    3,082     (412)      924     2,526



 Earnings per share from
 continuing operations
 attributable to owners of the
 parent:

 Basic earnings per share (EUR)        0.11     0.07    (0.16)   (0.05)    (0.31)

 Diluted earnings per share (EUR)      0.11     0.07    (0.16)   (0.05)    (0.31)



 Earnings per share from a
 discontinued operation
 attributable to owners of the
 parent:

 Basic earnings per share (EUR)           -        -      0.08     0.05      0.28

 Diluted earnings per share (EUR)         -        -      0.08     0.05      0.28

Condensed consolidated interim statement of cash flows

 EUR'000                                                   9M 2024   9M 2023
--------------------------------------------------------------------------
 Cash flows from operating activities

 Cash receipts from customers                            199,510   249,453

 Cash paid to suppliers                                (173,448) (211,054)

 VAT paid                                                (7,048)   (8,563)

 Cash paid to and for employees                         (15,051)  (18,225)

 Income tax paid                                           (237)     (574)

 Net cash from operating activities                        3,726    11,037



 Cash flows from investing activities

 Paid for acquisition of property, plant and equipment     (289)     (318)

 Proceeds from sale of property, plant and equipment         193       384

 Loans provided                                             (35)     (524)

 Repayments of loans provided                                  1        12

 Dividends received                                            6        12

 Interest received                                           159        25

 Net cash from (used in) investing activities                 35     (409)



 Cash flows from financing activities

 Proceeds from loans received                                902     1,344

 Repayments of loans received                            (1,857)     (799)

 Lease payments                                          (1,689)   (2,194)

 Interest paid                                             (819)     (935)

 Dividends paid                                            (661)   (1,347)

 Net cash used in financing activities                   (4,124)   (3,931)



 Net cash flow                                             (363)     6,697



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

 Effect of movements in foreign exchange rates              (53)         1

 Change in cash and cash equivalents                       (363)     6,697

 Cash and cash equivalents at end of period               11,476    13,936

Financial review

Financial performance

Nordecon  delivered a gross profit of EUR12,767  thousand in the first nine months
of   2024 (9M   2023: EUR4,311   thousand).  The  group's  gross  margin  improved
significantly  year on year, rising to 7.1% for the nine months (9M 2023: 3.3%)
and  8.7% for the  third quarter  (Q3 2023: 3.5%). Both  main operating segments
earned a profit in the nine months and the third quarter, showing a year-on-year
margin  improvement. The gross margin of  the Buildings segment was 8.5% for the
nine  months and 10.2% for the third quarter (9M 2023: 4.5% and Q3 2023: 3.7%).
The  Infrastructure segment's gross margin was lower, reaching 5.1% for the nine
months  and 9.2% for the third  quarter (9M 2023: 2.0% and Q3 2023: 4.5%). While
both   segments   have  improved  their  profit  margins,  the  volumes  of  the
Infrastructure  segment are  low and  therefore most  of the  group's profit was
generated  by the  Buildings segment.  The margin  improvement was  supported by
better  mitigation  of  the  risks  associated  with general contracting and the
expiry last year of a number of long-term contracts signed before the war, which
had  been severely affected  by earlier increases  in construction input prices.
The  improved performance  of the  Infrastructure segment  is partly  due to the
investment  in  an  asphalt  concrete  plant  made  earlier this year, which has
reduced  the  cost  price  and  represents  a  major  step  forward  in material
recycling.
The  group's  administrative  expenses  for  the  first nine months of 2024 were
EUR5,011 thousand. Administrative expenses increased by around 16% compared to the
same  period last year (9M:  EUR4,337 thousand) due to  growth in staff costs. The
ratio  of administrative expenses to revenue  (12 months rolling) decreased year
on year to 3.1% (9M 2023: 3.3%).
The  group ended  the nine  months of  2024 with an  operating profit  of EUR6,972
thousand  (9M 2023: an operating  loss of EUR497  thousand). EBITDA for the period
was EUR9,154 thousand (9M 2023: EUR1,799 thousand).
The  group's finance income and costs are affected by exchange rate fluctuations
in  the group's foreign markets, particularly  movements in the exchange rate of
the Ukrainian hryvnia. During the period, the Ukrainian hryvnia weakened against
the  euro by around 8% and the translation  of the loans provided to the group's
Ukrainian  subsidiaries in euros into the local  currency gave rise to a foreign
exchange  loss  of  EUR534  thousand  (9M  2023: a  foreign  exchange  gain of EUR66
thousand).
The  group's net profit for the period  was EUR4,547 thousand (9M 2023: a net loss
of  EUR2,772  thousand).  The  net  profit  attributable  to owners of the parent,
Nordecon AS, was EUR3,373 thousand (9M 2023: a net loss of EUR2,452 thousand).

Cash flows

Operating  activities produced a net cash inflow  of EUR3,726 thousand in the nine
months  of 2024 (9M 2023: an inflow of EUR11,037 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 inflow of EUR35 thousand
(9M  2023: an  outflow  of  EUR409  thousand).  Investments in property, plant and
equipment  amounted to EUR289 thousand (9M  2023: EUR318 thousand) and proceeds from
the  sale of property, plant and equipment  amounted to EUR193 thousand (9M 2023:
EUR384 thousand). Loans provided amounted to EUR35 thousand (9M 2023: EUR524 thousand)
and interest received amounted to EUR159 thousand (9M 2023: EUR25 thousand).
Financing  activities generated a net cash outflow of EUR4,124 thousand (9M 2023:
an  outflow of  EUR3,931 thousand).  The largest  items were  related to loans and
leases.  Proceeds from loans received amounted to EUR902 thousand (9M 2023: EUR1,344
thousand),  consisting  of  the  use  of  development loans. Repayments of loans
received  totalled  EUR1,857  thousand  (9M  2023: EUR799  thousand),  consisting of
regular  repayments of long-term investment and development loans and the change
in  the overdraft balance. Lease payments  were EUR1,689 thousand (9M 2023: EUR2,194
thousand).  Dividends paid in the nine  months of 2024 amounted to EUR661 thousand
(9M 2023: EUR1,347 thousand).
The  group's  cash  and  cash  equivalents  as  at 30 September 2024 amounted to
EUR11,476 thousand (30 September 2023: EUR13,936 thousand).

Key financial figures and ratios

 Figure/ratio                     9M 2024      9M 2023      9M 2022        2023
-------------------------------------------------------------------------------
 Revenue (EUR'000)*                 178,722      130,799      165,462     186,464

 Revenue change*                    36.6%      (20.9)%         5.4%     (15.4)%

 Net profit (loss) (EUR'000)*         4,547      (2,772)      (2,552)     (6,418)

 Net      profit      (loss)
 attributable  to  owners of
 the parent (EUR'000)                 3,376      (2,452)      (2,651)       (942)

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

 Earnings per share (EUR)              0.11       (0.08)       (0.08)      (0.03)

 Administrative  expenses to
 revenue*                            2.8%         3.3%         2.4%        3.5%

 Administrative  expenses to
 revenue (rolling)*                  3.1%         3.3%         2.3%        3.5%

 EBITDA (EUR'000)*                    9,154        1,799        2,232       (412)

 EBITDA margin*                      5.1%         1.4%         1.3%      (0.2)%

 Gross margin*                       7.1%         3.3%         1.4%        2.0%

 Operating margin*                   3.9%       (0.4)%       (0.1)%      (1.8)%

 Operating  margin excluding
 gain  on  non-current asset
 sales*                              3.8%       (0.6)%       (0.2)%      (2.0)%

 Net margin*                         2.5%       (2.1)%       (1.5)%      (3.4)%

 Return on invested capital           13%        1.9)%       (1.1)%        8.0%

 Return on equity                   18.4%       (1.4)%       (5.1)%        8.3%

 Equity ratio                       22.1%          17%        17.8%       18.7%

 Return on assets                    3.8%         0.3%       (1.0)%        1.6%

 Gearing                            12.6%        16.8%        36.6%       16.6%

 Current ratio                       1.00         0.91         0.90        0.95

                             30 Sept 2024 30 Sept 2023 30 Sept 2022 31 Dec 2023
-------------------------------------------------------------------------------
 Order book (EUR'000)*              195,628      175,539      150,694     216,732
-------------------------------------------------------------------------------

*Continuing operations
Due  to the sale of Nordecon Betoon OÜ  and NOBE Rakennus OY at the beginning of
December  2023, the  business  of  those  companies  has  been  classified  as a
discontinued  operation. The discontinued operation's  revenues and expenses for
comparative  periods are presented  separately in the  consolidated statement of
comprehensive income within Profit (loss) from a discontinued operation.

Performance by geographical market

The  proportion of revenue generated outside Estonia remained stable compared to
the  same period last year. Other  markets accounted for approximately 2% of the
group's  total revenue for the first  nine months of 2024, consisting of revenue
generated  in  Ukraine.  Despite  the  war,  Nordecon's  construction volumes in
Ukraine  have increased.  During the  period, the  group provided services under
contracts  for the reconstruction of  substations and installation of associated
physical  protection systems in the Poltava, Zhytomyr, Volyn and Ivano-Frankivsk
oblasts  in Ukraine, and for the reconstruction  of a building into an apartment
complex  for internally displaced  persons in Ovruch,  Zhytomyr Oblast, Ukraine.
Nordecon  did not generate any revenue and had no ongoing construction contracts
in  the Swedish market. With the sale of  Nordecon Betoon OÜ at the beginning of
December  2023, the group  also withdrew  from the  Finnish market, where it had
operated through Nordecon Betoon OÜ's subsidiary NOBE Rakennus OY. The group was
active on a project basis in Latvia and Lithuania.

              9M 2024   9M 2023   9M 2022   2023
-------------------------------------------------
  Estonia         98%       98%       96%    97%

  Ukraine          2%        1%        0%     2%

  Finland           -        1%        2%     1%

  Lithuania         -        0%        1%     0%

  Latvia            -        0%        1%     0%

Performance by business line

Segment revenues

We  strive to maintain a balance between  the revenues of our two main operating
segments  (Buildings and Infrastructure) as far as market developments allow, as
this  helps  diversify  risks  and  provides  better  opportunities  to continue
construction  activities in more challenging market conditions, where volumes in
one subsegment decline sharply while volumes in another subsegment start to grow
more rapidly.
The  group's revenue  for the  first nine  months of 2024 was EUR178,722 thousand,
approximately  37% higher than in  the same period  last year, when revenue from
continuing  operations  amounted  to  EUR130,799  thousand.  The Buildings segment
generated revenue of EUR149,615 thousand and the Infrastructure segment revenue of
EUR29,068  thousand. The corresponding figures for  the first nine months of 2023
were  EUR95,423 thousand and EUR35,295 thousand.  Revenue generated by the Buildings
segment  increased by 57%, while revenue generated by the Infrastructure segment
decreased  by  18%. The  revenue  growth  and  changes in the performance of the
reportable  segments were expected and in line  with the group's order book. The
decrease in revenue in the Infrastructure segment is mainly due to delays in the
start  of  work  on  the  Rail  Baltica  contracts and reduced investment by the
Transport Administration.

  Revenue by operating segment   9M 2024   9M 2023   9M 2022   2023
--------------------------------------------------------------------
  Buildings                          84%       73%       76%    74%

  Infrastructure                     16%       27%       24%    26%

Subsegment revenues

In the Buildings segment, revenue from the public buildings subsegment more than
doubled  and revenue from the commercial  buildings subsegment increased by 40%
compared  to the same period last year. However, revenue from the industrial and
warehouse facilities subsegment and the apartment buildings subsegment decreased
significantly.  As  the  revenue  contribution  of  the industrial and warehouse
facilities  subsegment was  also modest  in previous  years, the decrease in its
revenue  did not  have a  significant impact  on total  segment revenue, but the
revenue  of the apartment buildings subsegment  fell by 46%, mainly due to lower
revenue  from  the  provision  of  construction  service, reflecting the current
market situation in this subsegment.
The  period's  largest  projects  in  the  public  buildings subsegment were the
construction  of the main building of the Estonian Internal Security Service and
Loodusmaja  (Nature Hub)  in Tallinn,  the design  and construction of warehouse
complexes  for  the  Centre  for  Defence  Investment  in  Luunja  and Nõo rural
municipalities   in  Tartu  County  and  in  Ida-Viru  County,  the  design  and
construction  of a new  study and sports  building for the  Saku Upper Secondary
School near Tallinn, the reconstruction of the building of the Karlova School in
Tartu  and the design  and construction of  a study building  for the Centre for
Defence Investment on the Raadi campus in Tartu.
Revenue  generated by  the apartment  buildings subsegment  consisted of revenue
from  the construction of the commercial  and residential complex Vektor and the
group's  own development projects.  Revenue from our  own development activities
decreased slightly compared to the same period last year and was EUR7,453 thousand
(9M  2023: EUR7,917  thousand).  The  figure  includes  revenue  from  the sale of
apartments  in Tartu -  in the Mõisavahe  Kodu housing estate  and the centrally
located  Emajõe  Residents housing  estate  on  the  banks  of the Emajõgi river
(https://emajoeresidents.ee).  We  continued  to  build  phase  1 of the Seileri
Kvartal  housing estate  in Pärnu  (https://seileri.ee) and  the Tammepärja Kodu
housing  estate in the Tammelinn  district in Tartu (https://tammelinn.ee). Both
development  projects will be  completed in the  first half of 2025. In carrying
out  our own development activities, we carefully monitor potential risks in the
housing development market.
The  largest ongoing  projects in  the commercial  buildings subsegment were the
construction  of the commercial and residential complex Vektor and the LEED Gold
compliant  Golden Gate  office building  at Ahtri  6 in Tallinn,  the design and
construction  of a commercial building at Nõlvakaare 4 at Raadi in Tartu County,
and the construction of a Lidl store in Võru.
A  significant share  of the  revenue generated  by the industrial and warehouse
facilities   subsegment   came   from  the  reconstruction  of  substations  and
installation of associated physical protection systems in the Poltava, Zhytomyr,
Volyn and Ivano-Frankivsk oblasts in Ukraine.

  Buildings segment                     9M 2024   9M 2023   9M 2022   2023
---------------------------------------------------------------------------
  Public buildings                          70%       33%       29%    37%

  Commercial buildings                      21%       23%       23%    23%

  Apartment buildings                        7%       30%       29%    27%

  Industrial and warehouse facilities        2%       14%       19%    13%

The  largest  revenue  contributor  in  the  Infrastructure  segment is the road
construction  and maintenance subsegment whose  revenue for the period decreased
by  around  2% year  on  year.  A  major  share  of  its  revenue  came from the
construction  of an armoured manoeuvre shooting range and roads in Harju County,
the  reconstruction of the Mäeküla-Koeru-Kapu  road section, the construction of
the  Tagadi  ecoduct  (wildlife  crossing)  on  the  Rail  Baltica route and the
provision of road maintenance services in Järva County.

  Infrastructure segment              9M 2024   9M 2023   9M 2022   2023
-------------------------------------------------------------------------
  Road construction and maintenance       94%       60%       80%    63%

  Other engineering                        6%       31%       16%    30%

  Environmental engineering                0%        9%        0%     7%

  Specialist engineering                   0%        0%        4%     0%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at  EUR195,628  thousand  at  30 September 2024. Compared  to the same period last
year,  the order book  has grown by  around 11%. In the  nine months of 2024, we
signed  new  contracts  for  EUR131,801  thousand (9M 2023: EUR191,326 thousand), of
which  EUR67,771 thousand  in the  third quarter  (Q3 2023: EUR90,694 thousand). The
rise  in construction input prices and high  interest rates in recent years have
caused  a  sharp  increase  in  the  final  cost  of  development  projects and,
consequently,  the postponement of the  start of new projects.  There has been a
significant  reduction in investment by  the Transport Administration, which has
had  a direct impact on the order book of our Infrastructure segment. The volume
of  work  procured  for  the  Rail  Baltica  project  has  increased,  partially
offsetting  the decline in  investment by the  Transport Administration, but the
excessive  length of the procurement processes makes it difficult to predict the
potential  start  dates  of  the  work  and  the impact on revenue. While public
investment  in building construction  has also declined,  we see some investment
activity at local authority level.

                     30 Sept 2024 30 Sept 2023 30 Sept 2022 31 Dec 2023
-----------------------------------------------------------------------
 Order book (EUR'000)*      195,628      175,539      150,694     216,732

* Continuing operations

The Buildings segment accounts for 82% and the Infrastructure segment for 18% of
the  group's order book (30 September 2023: 90% and 10%, respectively). Compared
with  30 September 2023, the order book of the Buildings segment has remained at
the  same level while the order book  of the Infrastructure segment has doubled,
mainly  due to  the award  of the  Rail Baltica  contract. The order book of the
Buildings  segment mainly includes contracts secured by the commercial buildings
and public buildings subsegments.
Major contracts secured during the period include:

  * the construction of an armoured manoeuvre shooting range and roads for the
    Centre for Defence Investment in Harju County with an approximate cost of
    EUR5,450 thousand;
  * the construction of a modern war and disaster medicine centre for the Centre
    for Defence Investment in Tartu with an approximate cost of EUR15,000 thousand
    (the group is one of the joint bidders);
  * the construction of a Lidl store in Võru with an approximate cost of EUR3,900
    thousand;
  * the construction of a platform area for Class E aircraft at Tallinn Airport
    with an approximate cost of EUR7,500 thousand;
  * the construction of a building complex in the Port Athena quarter at Väike-
    Turu 7 in Tartu (the complex consists of four six-storey buildings, one
    seven-storey building and a common basement level used mainly for parking)
    with an approximate cost of EUR26,000 thousand;
  * the construction of the Hagudi-Alu section of stage III of the Rail Baltica
    Raplamaa main line railway infrastructure with an approximate cost of
    EUR30,500 thousand;
  * the construction of the LEED Gold standard Uusküla spa hotel on the northern
    shore of Lake Peipus in Alutaguse rural municipality with an approximate
    cost of EUR28,300 thousand;
  * the reconstruction of a building into an apartment complex for internally
    displaced persons in Ovruch, Zhytomyr Oblast, Ukraine with an approximate
    cost of EUR1,800 thousand.

Management  expects  the  group's  revenue  to  increase in 2024 compared to the
revenue  generated  by  continuing  operations  in 2023. In a highly competitive
environment,  we  will  avoid  taking  unjustified  risks that could materialise
during  the contract execution phase  and have an adverse  impact on the group's
results.  We  will  focus  on  cost  management  and pre-construction and design
activities where we can leverage our professional competitive advantages.

People

Employees and staff costs

The  average number  of the  group's employees  (at the  parent company  and the
subsidiaries)  in the nine  months of 2024 was  437, including 283 engineers and
technical  professionals (ETP). Headcount decreased  by around 23% year on year,
due  to  the  restructuring  of  the  group's  Infrastructure segment, which was
completed  in 2023, and the sale  of Nordecon Betoon OÜ  and NOBE Rakennus OY at
the beginning of December 2023.

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

                  9M 2024   9M 2023   9M 2022   2023
-----------------------------------------------------
  ETP                 283       382       437    374

  Workers             154       185       232    184

  Total average       437       567       669    558

The  group's staff costs for the first nine months of 2024, including all taxes,
were  EUR16,178 thousand, compared with EUR14,162 thousand for continuing operations
in  the same period last year. Staff costs increased due to salary increases and
the payment of performance bonuses.
The service fees of the members of the council of Nordecon AS for the first nine
months  of 2024 totalled EUR149  thousand and the  related social security charges
amounted   to   EUR49   thousand   (9M   2023: EUR129  thousand  and  EUR43  thousand,
respectively).
The  service  fees  of  the  members  of  the board of Nordecon AS totalled EUR391
thousand  and the related social security  charges amounted to EUR129 thousand (9M
2023: EUR424 thousand and EUR140 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 the staff costs incurred:

                                                9M 2024 9M 2023 9M 2022    2023
-------------------------------------------------------------------------------
 Nominal labour productivity (rolling), (EUR'000)   557.4   488.4   475.7   499.3

 Change against the comparative period, %         14.1%    2.7%   14.2%    1.8%



 Nominal labour cost efficiency (rolling), (EUR)     11.0    10.4    12.0    10.3

 Change against the comparative period, %          5.0% (12.8)%    8.1% (13.4)%

The  group's nominal labour  productivity for the  period increased year on year
due to a decrease in the average number of employees and an increase in revenue.
Nominal labour cost efficiency also improved, supported by 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)