Börsiteade

Pealkiri

2020 II quarter and 6 months consolidated interim report (unaudited)

Teade

Nordecon  Group's financial results of the first half of 2020 as compared to the
same  period  from  the  last  year  are  characterised by substantial growth in
revenue,  improved gross and  operating margins as  well as exchange rate losses
related  to Ukranian hryvnia.  Also, the order  book has increased  year on year
with new substantial contracts signed in July adding to this figure. At the same
time,  the volume of private orders  has decreased significantly, which has been
directly influenced by the worldwide COVID-19 crisis and the rapid deterioration
of economic conditions. This has resulted in increased price pressure put on the
main  contractors by the demand side, whereas  on the other side there has still
been  no expected decrease in the input  prices. In these circumstances there is
strong pressure on profit margins.

Condensed consolidated interim statement of financial position

 EUR '000                                         30 June 2020 31 December 2019
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                               9,421            7,032

 Trade and other receivables                            53,272           37,563

 Prepayments                                             3,987            1,813

 Inventories                                            22,856           21,142

 Total current assets                                   89,536           67,550


 Non-current assets

 Investments in equity-accounted investees               1,316            2,369

 Other investments                                          26               26

 Trade and other receivables                             8,575            8,435

 Investment property                                     6,301            5,530

 Property, plant and equipment                          18,401           19,002

 Intangible assets                                      14,815           14,736

 Total non-current assets                               49,434           50,098

 TOTAL ASSETS                                          138,970          117,648



 LIABILITIES

 Current liabilities

 Borrowings                                             17,215           11,058

 Trade payables                                         51,339           40,730

 Other payables                                         10,492            7,954

 Deferred income                                         9,824            6,391

 Provisions                                                628              716

 Total current liabilities                              89,498           66,849


 Non-current liabilities

 Borrowings                                              8,776           16,326

 Trade payables                                          2,889               98

 Other payables                                            177              177

 Provisions                                              1,731            1,425

 Total non-current liabilities                          13,573           18,026

 TOTAL LIABILITIES                                     103,071           84,875



 EQUITY

 Share capital                                          14,379           14,379

 Own (treasury) shares                                    -660             -660

 Share premium                                             635              635

 Statutory capital reserve                               2,554            2,554

 Translation reserve                                     1,984            1,169

 Retained earnings                                      13,723           12,383

 Total equity attributable to owners of the
 parent                                                 32,615           30,460

 Non-controlling interests                               3,284            2,313

 TOTAL EQUITY                                           35,899           32,773

 TOTAL LIABILITIES AND EQUITY                          138,970          117,648

Condensed consolidated interim statement of comprehensive income

 EUR '000                             H1 2020 Q2 2020  H1 2019 Q2 2019     2019
-------------------------------------------------------------------------------
 Revenue                              136,798  81,874  100,441  65,917  234,071

 Cost of sales                       -130,791 -77,055  -97,147 -62,669 -222,302

 Gross profit                           6,007   4,819    3,294   3,248   11,769



 Marketing and distribution
 expenses                                -202     -74     -498    -152     -784

 Administrative expenses               -3,860  -2,061   -3,048  -1,555   -6,837

 Other operating income                   178      29       67      11      315

 Other operating expenses                -110     -57      -20      -7     -193

 Operating profit/loss                  2,013   2,656     -205   1,545    4,270



 Finance income                           249     193      495     224    1,277

 Finance costs                         -1,241     338     -663    -299   -1,219

 Net finance costs/income                -992     531     -168     -75       58



 Share of profit of equity-
 accounted investees                      479     510      252     302      585



 Profit/loss before income tax          1,500   3,697     -121   1,772    4,913

 Income tax expense                       -81     -81     -453    -453     -764

 Profit/loss for the period             1,419   3,616     -574   1,319    4,149



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

 Exchange differences on
 translating foreign operations           815    -434     -262    -218     -823

 Total other comprehensive
 income/expense                           815    -434     -262    -218     -823

 TOTAL COMPREHENSIVE
 INCOME/EXPENSE                         2,234   3,182     -836   1,101    3,326



 Profit/loss attributable to:

 - Owners of the parent                  -156   2,513     -793   1,169    3,378

 - Non-controlling interests            1,575   1,103      219     150      771

 Profit/loss for the period             1,419   3,616     -574   1,319    4,149



 Total comprehensive
 income/expense attributable to:

 - Owners of the parent                   659   2,079   -1,055     951    2,555

 - Non-controlling interests            1,575   1,103      219     150      771

 Total comprehensive
 income/expense for the period          2,234   3,182     -836   1,101    3,326



 Earnings per share attributable
 to owners of the parent:

 Basic earnings per share (EUR)         -0.01    0.08    -0.03    0.04 0.11

 Diluted earnings per share (EUR)       -0.01    0.08    -0.03    0.04 0.11

Condensed consolidated interim statement of cash flows

  EUR '000                                                H1 2020   H1 2019
----------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                            154,207   108,300

  Cash paid to suppliers                                 -132,626   -93,163

  VAT paid                                                 -6,055    -2,104

  Cash paid to and for employees                          -13,658   -11,385

  Income tax paid                                             -81      -146

  Net cash from operating activities                        1,787     1,502



  Cash flows from investing activities

  Paid on acquisition of property, plant and equipment       -102      -165

  Proceeds from sale of property, plant and equipment         165        99

  Acquisition of a subsidiary                                  -2         0

  Cash received on acquisition of a subsidiary              3,605         0

  Loans provided                                              -14       -14

  Repayment of loans provided                                  21         6

  Dividends received                                          251       244

  Interest received                                             5         5

  Net cash from investing activities                        3,929       175



  Cash flows from financing activities

  Proceeds from loans received                              1,228     3,328

  Repayment of loans received                              -2,077    -2,265

  Lease payments made                                      -1,487    -1,574

  Interest paid                                              -508      -481

  Dividends paid                                             -472    -2,129

  Net cash used in financing activities                    -3,316    -3,121



  Net cash flow                                             2,400    -1,444



  Cash and cash equivalents at beginning of period          7,032     7,678

  Effect of movements in foreign exchange rates               -11       -14

  Increase/decrease in cash and cash equivalents            2,400    -1,444

  Cash and cash equivalents at end of period                9,421     6,220

Financial review

Financial performance

Nordecon  ended the  first half  of 2020 with  a gross  profit of 6,007 thousand
euros (H1 2019: 3,294 thousand euros). The gross margin improved noticeably year
on  year, rising  to 4.4% for  the first  half (H1  2019: 3.3%) and 5.9% for the
second  quarter (Q2 2019: 4.9%). Both  of our operating  segments, Buildings and
Infrastructure,  earned a  profit in  the first  half and  the second quarter of
2020. The  gross margin of  the Buildings segment,  which was 5.0% for the first
half  and 5.5% for the second quarter, dropped somewhat compared the same period
in  2019 (H1  2019: 5.5% and  Q2  2019: 6.1%). The  slight  margin  decrease  is
attributable  to  a  housing  development  project  completed  in  Sweden, which
resulted  in a loss. The Infrastructure segment, on the other hand, succeeded in
improving its gross margin substantially. This was supported by an earlier start
of  the  road  construction  season  and  a  strong order book. Asphalt concrete
production  in the second quarter  grew year on year,  providing cover for fixed
costs,  the largest  share of  which is  made up  of costs  related to plant and
equipment   required   for   asphalt   concrete   production   and  laying.  The
Infrastructure segment's gross margins were 3.4% for the first half and 8.7% for
the  second quarter compared  to ?1.4% and 3.5% in  the corresponding periods in
2019.
The  Group's administrative expenses for the  first half of 2020 totalled 3,860
thousand  euros. Compared  to the  same period  in 2019, administrative expenses
increased   by   around   27% (H1   2019: 3,048 thousand  euros).  The  rise  is
attributable  to growth  in personnel  expenses and  depreciation as well as the
fact  that  Embach  Ehitus  OÜ  became  a  subsidiary of the Group. The ratio of
administrative expenses to revenue (12 months rolling) decreased compared to the
same period last year and was 2.8% (H1 2019: 2.9%).
The  Group  ended  the  first  half  of  2020 with an operating profit of 2,013
thousand  euros (H1 2019: an  operating loss of  205 thousand euros). EBITDA was
positive at 3,694 thousand euros (H1 2019: 1,281 thousand euros).
Finance   income   and  costs  continued  to  be  influenced  by  exchange  rate
fluctuations  in the Group's  foreign markets. During  the period, the Ukrainian
hryvnia  weakened against the  euro by 11.8% and  the Group recognised a foreign
exchange  loss of 704 thousand  euros from the  translation of loans provided to
the  Ukrainian subsidiaries in euros (H1  2019: an exchange gain of 377 thousand
euros). The Swedish krona/euro exchange rate did not change significantly in the
first half of 2020. The exchange gain recognised in finance income in connection
with  the translation of  the loan provided  to the Swedish  subsidiary in euros
amounted  to  132 thousand  euros  (H1  2019: an  exchange  loss of 206 thousand
euros). On the other hand, the movements in foreign exchange rates increased the
foreign  currency translation reserve in equity by 815 thousand euros (H1 2019:
reduced by 262 thousand euros).
The  Group's net profit amounted to 1,419 thousand euros (H1 2019: a net loss of
574 thousand  euros). The amount attributable to  owners of the parent, Nordecon
AS, was a loss of 156 thousand euros (H1 2019: a loss of 793 thousand euros).

Cash flows

In  the first half of  2020, operating activities produced a  net cash inflow of
1,787 thousand  euros  (H1  2019: an  inflow  of  1,502 thousand euros). The key
factor  that affects operating cash flow  is the mismatch between the settlement
terms  agreed with customers and suppliers. Operating cash flow is also 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, materials suppliers, etc. Cash inflow
is  also reduced  by contractual  retentions, which  extend from 5 to 10% of the
contract price and are released at the end of the construction period only.
Investing  activities resulted in a net  cash inflow of 3,929 thousand euros (H1
2019: an  inflow  of  175 thousand  euros).  The  transaction with the strongest
impact  was the  transformation of  Embach Ehitus  OÜ from  an associate  into a
subsidiary,  which generated cash inflow of  3,605 thousand euros. Cash flow was
also  influenced by  payments made  for the  acquisition of  property, plant and
equipment of 102 thousand euros (H1 2019: 165 thousand euros), proceeds from the
sale  of  property,  plant  and  equipment  of  165 thousand euros (H1 2019: 99
thousand  euros)  and  dividends  received  of 251 thousand euros (H1 2019: 244
thousand euros).
Financing  activities generated a  net cash outflow  of 3,316 thousand euros (H1
2019: an outflow of 3,121 thousand euros). The largest items were loan and lease
payments  and  dividends  paid.  Proceeds  from  loans  received totalled 1,228
thousand  euros, comprising  the use  of the  overdraft facility and development
loans  (H1 2019: 3,328 thousand euros).  Loan repayments totalled 2,077 thousand
euros (H1 2019: 2,265 thousand euros), consisting of regular repayments of long-
term  investment and  development loans.  Lease payments totalled 1,487 thousand
euros (H1 2019: 1,574 thousand euros). Dividends paid in the first half of 2020
amounted to 472 thousand euros (H1 2019: 2,129 thousand euros).
The  Group's cash and cash equivalents  totalled 9,421 thousand euros at 30 June
2020 (30  June 2019: 6,220 thousand euros). Management's commentary on liquidity
risks is presented in the chapter Description of the main risks.

Key financial figures and ratios

 Figure/ratio                     H1 2020      H1 2019      H1 2018        2019
-------------------------------------------------------------------------------
 Revenue (EUR '000)               136,798      100,441      105,658     234,071

 Revenue change                       36%          -5%           2%        4.7%

 Net profit/loss (EUR '000)         1,419         -574         -524       4,149

 Net profit/loss
 attributable to owners of
 the parent
 (EUR '000)                          -156         -793         -532       3,378

 Weighted average number of
 shares                        31,528,585   31,528,585   30,986,585  31,528,585

 Earnings per share (EUR)            0.00        -0.03        -0.02        0.11

 Administrative expenses to
 revenue                             2.8%         3.0%         3.2%        2.9%

 Administrative expenses to
 revenue (rolling)                   2.8%         2.9%         3.1%        2.9%

 EBITDA (EUR '000)                  3,694        1,281          606       7,311

 EBITDA margin                       2.7%         1.3%         0.6%        3.1%

 Gross margin                        4.4%         3.3%         3.0%        5.0%

 Operating margin                    1.5%        -0.2%        -0.4%        1.8%

 Operating margin excluding
 gain on asset sales                 1.5%        -0.3%        -0.4%        1.7%

 Net margin                          1.0%        -0.6%        -0.5%        1.8%

 Return on invested capital          3.3%         0.6%         0.5%       10.0%

 Return on equity                    4.1%        -1.8%        -1.6%       12.5%

 Equity ratio                       25.8%        25.5%        25.4%       27.9%

 Return on assets                    1.1%        -0.5%        -0.4%        3.7%

 Gearing                            26.8%        36.7%        35.2%       33.8%

 Current ratio                       1.00         0.93         0.98        1.01

 As at                       30 June 2020 30 June 2019 30 June 2018 31 Dec 2019
-------------------------------------------------------------------------------
 Order book
 (EUR '000)                       187,018      179,691      131,552     227,545
-------------------------------------------------------------------------------


Performance by geographical market

The  revenue contribution of  foreign markets continued  to grow. Revenue earned
outside  Estonia accounted  for 12% of  total revenue  for in  the first half of
2020 compared with 9% for the same period in 2019.

            H1 2020   H1 2019   H1 2018   2019
-----------------------------------------------
  Estonia       88%       91%       93%    89%

  Sweden         6%        2%        2%     5%

  Finland        5%        4%        1%     4%

  Ukraine        1%        3%        4%     2%

The  revenue contribution of the Swedish market grew significantly year on year.
During  the period, we worked in Sweden on three building construction contracts
secured  as  a  general  contractor  and  one concrete work subcontract. Finnish
revenues  remained stable compared  with the same  period last year and resulted
from  concrete works in the building  construction segment. Revenue generated in
the Ukrainian market and its proportionate share in our total revenue decreased.
Geographical  diversification  of  the  revenue  base  is a consciously deployed
strategy by which we mitigate the risks resulting from excessive reliance on one
market.  However,  conditions  in  some  of  our chosen foreign markets are also
volatile  and  have  a  strong  effect  on  our  current results. Increasing the
contribution  of foreign  markets is  one of  Nordecon's strategic  targets. Our
vision of the Group's foreign operations is described in the chapter Outlooks of
the Group's geographical markets.

Performance by business line

Segment revenues

The  Group's revenue for in the  first half of 2020 amounted to 136,798 thousand
euros,  a roughly 36% improvement on the 100,441 thousand euros generated in the
first  half of 2019. Based on the order  book at the end of 2019, revenue growth
was  entirely  expected.  Growth  was  driven  by  the  Buildings  segment which
increased  revenue by  48%. The revenue  of the  Infrastructure segment remained
comparable to the first half of 2019.
The  limited volume of infrastructure  construction projects, which is affecting
the  entire  Estonian  construction  market,  is  also  reflected in our revenue
structure.  In the first half of 2020, our Buildings and Infrastructure segments
generated   revenue   of   112,607 thousand  euros  and  24,106 thousand  euros,
respectively.  The  corresponding  figures  for  in  the first half of 2019 were
76,065 thousand euros and 24,213 thousand euros.

  Operating segments   H1 2020   H1 2019   H1 2018   2019
----------------------------------------------------------
  Buildings                81%       74%       76%    70%

  Infrastructure           19%       26%       24%    30%

Subsegment revenues

All  subsegments in the  Buildings segment improved  their revenue year on year.
The  strongest  revenue  contributors  were  the  public  buildings,  commercial
buildings  and apartment buildings subsegments while the revenue contribution of
the industrial and warehouse facilities subsegment continued to be modest.
The  largest revenue  source in  the Buildings  segment was the public buildings
subsegment,  which increased  its revenue  more than  two times  compared to the
first  half of 2019. The subsegment's biggest projects were the Estonian Academy
of  Security Sciences and  the University of  Tartu Learning Centre  in Narva, a
storage complex at the defence forces' base at Tapa, Kindluse Kool - a new basic
school  in Järveküla  near Tallinn  and the  Annelinn upper  secondary school in
Tartu.
During  the period, the largest projects  of the commercial buildings subsegment
were  in Tallinn: the reconstruction and extension of the building of Terminal D
in  the Old City  Harbour, construction works  in phase I  and concrete works in
phase  II of  the Porto  Franco commercial  and office  development next  to the
Admiralty  Basin, and the  construction of a  seven-floor commercial building in
Rotermann City and a multi-storey car park at Sepapaja 1.
A  significant share of  our Estonian apartment  building projects is located in
Tallinn. During the period under review, the largest of them were the design and
construction of the first two phases of the Kalaranna quarter and the design and
construction of the Tiskreoja residential area on the western border of Tallinn.
Similarly  to previous periods,  a major share  of the subsegment's revenue came
from the construction of apartment buildings in Sweden.
We  continue to build our own housing  development projects in Tallinn and Tartu
(reported  in  the  apartment  buildings  subsegment).  During  the  period,  we
completed  a five-floor apartment building with 24 apartments at Võidujooksu 8c
in  Tallinn (www.voidujooksu.ee). Revenue  from our own  real estate development
operations  amounted to 2,354 thousand euros (H1 2019: 3,792 thousand euros). In
carrying  out our  own real  estate development  activities, we  monitor closely
potential risks in the housing development market.
The  amount  and  share  of  revenue  generated  by the industrial and warehouse
facilities  subsegment grew  year on  year. However,  the values  of projects in
progress  have decreased, amounting to 2 million  euros on average. Based on the
order  book, we  expect that  the subsegment's  revenue contribution will remain
modest in 2020.

 Revenue breakdown in the Buildings segment H1 2020 H1 2019 H1 2018 2019
------------------------------------------------------------------------
 Public buildings                               34%     24%     26%  29%

 Commercial buildings                           30%     35%     36%  36%

 Apartment buildings                            27%     33%     23%  27%

 Industrial and warehouse facilities             9%      8%     15%   8%

Similarly  to previous  periods, the  main revenue  source in the Infrastructure
segment  was road construction  and maintenance. A  significant share of revenue
resulted  from the  performance of  construction contracts  secured in 2019: the
construction  of  the  Kernu  bypass  and  the  Kernu  filling station and Haiba
junctions on the Tallinn-Pärnu-Ikla road, the reconstruction of the Vinso-Kirmsi
section  of the Võru-Räpina road  and the construction of  roads in the northern
and  southern  parts  of  the  defence  forces'  central  training area. We also
continued  to provide road  maintenance services in  Järva and Hiiu counties and
the Kose maintenance area in Harju county.
The  revenue of the  other engineering subsegment  is strongly influenced by the
construction of foundations for 73 wind turbines in the Nysäter wind farm, which
being built in northern Sweden, near Sundsvall.
Work  continued  on  the  construction  of  a  640-metre waterfront promenade at
Sillamäe,  which  accounted  for  a  significant  share  of  the  revenue of the
specialist engineering subsegment.

 Revenue breakdown in the Infrastructure segment H1 2020 H1 2019 H1 2018 2019
-----------------------------------------------------------------------------
 Road construction and maintenance                   80%     77%     90%  78%

 Other engineering                                   14%     20%      7%  18%

 Specialist engineering (incl. hydraulic)             5%      0%      0%   1%

 Environmental engineering                            1%      3%      3%   3%

Order book

The Group's order book (backlog of contracts signed but not yet performed) stood
at  187,018 thousand euros at  30 June 2020, a 4% increase  year on year. In the
second   quarter,   we   signed  new  contracts  of  47,850 thousand  euros  (Q2
2019: 65,901 thousand  euros). Between the reporting date (30 June 2020) and the
date  of  release  of  this  report,  Group  companies  have  secured additional
construction  contracts in the  region of 62,679 thousand  euros, the largest of
which  are the contracts for the construction of a new academic building for the
Saaremaa  Upper Secondary School and phase III of the Maarjamõisa Medical Campus
of the Tartu University Hospital (Tartu Ülikooli Kliinikum).

 As at                 30 June 2020 30 June 2019 30 June 2018 31 Dec 2019
-------------------------------------------------------------------------
 Order book (EUR '000)      187,018      179,691      131,552     227,545

At  the  reporting  date,  contracts  secured  by  the Buildings segment and the
Infrastructure  segment  accounted  for  76% and  24% of the Group's total order
book,  respectively (30  June 2019: 81% and  19%, respectively). Compared to 30
June  2019, the order book of the Buildings  segment has decreased by around 3%
and the order book of the Infrastructure segment has increased by 33%.
Both  the apartment buildings and the  public buildings subsegment account for a
third  of the order book of  the Buildings segment: 32% and 30%, respectively. A
significant  share of  the order  book of  the apartment buildings subsegment is
made up of a contract of around 40 million euros for the design and construction
of  the first two phases  of the Kalaranna quarter  in Tallinn. The subsegment's
order  book also includes the work secured but not yet performed in Sweden where
the  Group continues  to build  two apartment  buildings: one  near Uppsala city
centre  and the other in the Bromma district  in Stockholm. A major share of the
order  book of the public buildings subsegment is made up of contracts signed in
2019 for  the  construction  of  the  Kohtla-Järve  sports  and health centre, a
storage  complex at the defence forces' base at Tapa and Kindluse Kool - a basic
school  in  Järveküla  near  Tallinn.  In  2020, the  portfolio has increased by
contracts  for  the  extension  of  the  office building of the Estonian Foreign
Intelligence  Service in Rahumäe tee in Tallinn and the construction of a family
health  centre and multi-storey car park  for Tartu Kesklinna Perearstikeskus in
Tartu  and two contracts for  the reconstruction of two  schools in East Ukraine
with the total value of 3.5 million euros. A significant share of the order book
of  the industrial and  warehouse facilities subsegment  is made up of contracts
for  the  construction  of  a  dairy  complex  for  E?Piim in Paide and two shed
complexes  in Finland. The order book of the commercial buildings subsegment has
decreased  substantially year  on year.  The largest  project in  progress is in
Tallinn:  the construction of a new seven-floor commercial building in Rotermann
City.
Contracts  secured by the  road construction and  maintenance subsegment account
for  65% of the order book of the  Infrastructure segment. The size of the order
book  is strongly influenced by  the contract secured in  the second quarter for
the construction of the Väo junction on the eastern border of Tallinn. In 2020,
we  have also  signed five  contracts of  2-3 million euros  each and 12 million
euros  in total with the National  Road Administration. Nordecon Group continues
to  provide road  maintenance services  in three  road maintenance areas: Järva,
Hiiu  and Kose. Other engineering contracts account for 24% of the order book of
the  Infrastructure  segment.  A  major  share  of  the  order book of the other
engineering  subsegment  is  made  up  of  a  contract  secured  in 2019 for the
construction  of foundations  for 73 wind  turbines in  the Nysäter wind farm in
northern Sweden, near Sundsvall.
Based  on our  order book  where around  half is  made up of contracts that will
continue  into 2021 and  2022, we expect  that in  2020 the Group's revenue will
increase  compared with  2019. However, the  volume of  orders placed by private
sector  customers  has  dropped  significantly.  Customers'  pressure on general
contractors  for lowering prices has increased while the input prices offered by
subcontractors have not decreased as expected. This has put profit margins under
strong  pressure. In an environment of stiff competition, we have avoided taking
unjustified risks whose realisation in the contract performance phase would have
an  adverse impact on the Group's results. Our preferred policy is to keep fixed
costs under control and monitor market developments closely.

People

Employees and personnel expenses

In the first half of 2020, the Group (the parent and the subsidiaries) employed,
on  average, 707 people, including 442 engineers  and technical personnel (ETP).
Headcount  increased by  around 4% compared  with the  same period  in 2019. The
number  of engineers and technical personnel grew, partly due to a change in the
Group's structure: Embach Ehitus OÜ became a subsidiary.

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

                  H1 2020   H1 2019   H1 2018   2019
-----------------------------------------------------
  ETP                 442       405       426    414

  Workers             265       273       268    273

  Total average       707       678       694    687

The  Group's personnel expenses for the  first half of 2020 including all taxes,
totalled  13,703 thousand  euros.  The  figure  for  the  first half of 2019 was
11,036 thousand euros. Personnel expenses grew by around 24% year on year due to
the  payment of performance  bonuses as well  as the fact  that Emabch Ehitus OÜ
became a subsidiary as described above.
The service fees of the members of the council of Nordecon AS for the first half
of  2020 amounted to  93 thousand euros  and associated  social security charges
totalled  31 thousand euros  (H1 2019: 94 thousand  euros and 31 thousand euros,
respectively).
The  service fees of  the members of  the board of  Nordecon AS amounted to 266
thousand euros and associated social security charges totalled 88 thousand euros
(H1 2019: 278 thousand euros and 93 thousand euros, respectively).

Labour productivity and labour cost efficiency

We  measure  the  efficiency  of  our  operating  activities using the following
productivity  and  efficiency  indicators,  which  are  based  on  the number of
employees and personnel expenses incurred:

                                                  H1 2020 H1 2019 H1 2018  2019
-------------------------------------------------------------------------------
 Nominal labour productivity (rolling), (EUR
 '000)                                              385.4   321.5   327.4 340.6

 Change against the comparative period, %           19.9%   -1.8%   10.4%  4.7%



 Nominal labour cost efficiency (rolling), (EUR)      9.7     9.3     9.9   9.2

 Change against the comparative period, %            3.7%   -6.3%   -2.1% -5.0%

The  Group's  nominal  labour  productivity  and  nominal labour cost efficiency
increased year on year in connection with revenue growth.

Nordecon (www.nordecon.com (http://www.nordecon.com)) is a group of construction
companies  whose core  business is  construction project  management and general
contracting  in the  buildings and  infrastructures segment.  Geographically the
Group  operates in Estonia, Sweden, Finland and Ukraine. The parent of the Group
is  Nordecon  AS,  a  company  registered  and  located in Tallinn, Estonia. The
consolidated  revenue  of  the  Group  in  2019 was 234 million euros. Currently
Nordecon  Group  employs  close  to  710 people. Since 18 May 2006 the company's
shares have been quoted in the main list of the NASDAQ Tallinn Stock Exchange.

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)