Börsiteade

Pealkiri

2021 IV quarter and 12 months consolidated interim report (unaudited)

Teade

The key words for 2021 are the rapid recovery of the construction market volumes
that  fell in 2020 and the sharp rise in input prices, which put strong pressure
on  the cost of previously concluded long-term construction contracts. The whole
year  has been characterized by difficult availability of materials and a large-
scale  rise in prices,  to which in  the second half  of the year  was added the
accelerating growth of labour costs.
Gerd Müller, Chairman of the Management Board of Nordecon AS:
"The year 2021 was undoubtedly full of challenges for the Nordecon Group. As the
largest  market participant, we have  had to bear the  same proportion of market
risks.  Given the turbulence caused by the pandemic, our people have done a very
good  job and we have been able to  hand over the objects on time. The difficult
market  situation has put pressure  on us to make  additional efforts to develop
and  deploy our  digital solutions.  We can  see that  the key to more efficient
process management is for the general contractor to achieve greater efficiency.
Dealing  with the price shock  in the construction market  tested the results of
both  of our main  operating segments. Despite  the extremely difficult economic
environment  for  the  construction  service  provider,  we were able to achieve
operating  profit in our home  market in Estonia. All  reported losses have been
earned from non-recurring losses in the Swedish market. "
The  Group's  gross  profitability  decreased  compared  to  the  previous year,
amounting  to  1.4% (2020:  3.7%). Profitability  was  mainly affected by rising
input  prices and supply problems. In 2021, the Group carried out a large number
of construction contracts concluded in 2020, which did not yet take into account
the  necessary  flexibility  due  to  the  rapid change in the market situation.
Another  important factor is the small  share of asphalt concrete production and
installation  due to the nature of the  Group's work portfolio, due to which the
fixed costs are not covered to a greater extent than usual.
In  the Swedish market,  the group made  significant losses. Expenses related to
the  completion  of  construction  works  of  apartment buildings and wind farms
totalled  3,346 thousand  euros,  to  which  was  added  a  credit loss from the
inclusion  of  receivables  from  the  customer  in the amount of 2,144 thousand
euros.
The  Group's  sales  revenue  in  2021 amounted to 288,534 thousand euros (2020:
296,082 thousand  euros). Compared to the previous year, Estonia's sales revenue
has increased by 13%, the reason for the 2.5% decrease in total sales revenue is
the decrease in sales volumes in foreign markets.
The  volume of  unfinished construction  contracts entered  into by  the Group's
companies is 266,856 thousand euros as of 31 December 2021, which is an increase
of  approximately  24% compared  to  the  previous  year. In 2021, new contracts
totalling  314,758 thousand euros were entered into. Considering the size of the
portfolio  of unfinished works, including the volume to be transferred to 2023,
an increase in operating volumes can be forecast in 2022.

Condensed consolidated interim statement of financial position

 EUR'000                                        31 December 2021 31 December 2020
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                               9,031           12,576

 Trade and other receivables                            48,091           50,029

 Prepayments                                             4,947            2,638

 Inventories                                            25,637           22,454

 Total current assets                                   87,706           87,697

 Non-current assets

 Investments in equity-accounted investees                   0                0

 Other investments                                          76               26

 Trade and other receivables                             9,206            8,654

 Investment property                                     5,599            5,639

 Property, plant and equipment                          17,433           18,053

 Intangible assets                                      15,051           14,966

 Total non-current assets                               47,365           47,338

 TOTAL ASSETS                                          135,071          135,035



 LIABILITIES

 Current liabilities

 Borrowings                                             16,289           18,508

 Trade payables                                         57,287           46,932

 Other payables                                          7,496           12,232

 Deferred income                                        11,539            7,738

 Provisions                                                707            1,059

 Total current liabilities                              93,318           86,469

 Non-current liabilities

 Borrowings                                              7,405            7,352

 Trade payables                                          4,178            2,332

 Provisions                                              2,044            1,647

 Total non-current liabilities                          13,627           11,331

 TOTAL LIABILITIES                                     106,945           97,800



 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                                     1,948            2,423

 Retained earnings                                       6,341           14,543

 Total equity attributable to owners of the
 parent                                                 25,197           33,874

 Non-controlling interests                               2,929            3,361

 TOTAL EQUITY                                           28,126           37,235

 TOTAL LIABILITIES AND EQUITY                          135,071          135,035

Condensed consolidated interim statement of comprehensive income

 EUR'000                                     Q4 2021  12M 2021  Q4 2020  12M 2020
-------------------------------------------------------------------------------
 Revenue                                    79,640   288,534   78,418   296,082

 Cost of sales                            (80,514) (284,513) (76,937) (285,086)

 Gross profit (loss)                         (874)     4,021    1,481    10,996



 Marketing and distribution expenses         (165)     (559)    (142)     (528)

 Administrative expenses                   (1,786)   (6,053)  (1,761)   (7,073)

 Other operating income                        321       519      180       453

 Other operating expenses                  (2,171)   (2,264)    (135)     (273)

 Operating profit (loss)                   (4,675)   (4,336)    (377)     3,575



 Finance income                                 81       958    2,725     2,995

 Finance costs                               (378)   (1,320)    (576)   (2,678)

 Net finance income (costs)                  (297)     (362)    2,149       317



 Share of profit (loss) of equity-
 accounted investees                             0         0    (232)       734



 Profit (loss) before income tax           (4,972)   (4,698)    1,540     4,626

 Income tax expense                          (166)     (808)    (426)     (508)

 Profit (loss) for the period              (5,138)   (5,506)    1,114     4,118



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

 Exchange differences on translating
 foreign operations                             85     (475)    (121)     1,254

 Total other comprehensive income
 (expense)                                      85     (475)    (121)     1,254

 TOTAL COMPREHENSIVE INCOME (EXPENSE)      (5,053)   (5,981)      993     5,372



 Profit (loss) attributable to:

 - Owners of the parent                    (5,514)   (6,310)    1,426     2,466

 - Non-controlling interests                   376       804    (312)     1,652

 Profit (loss) for the period              (5,138)   (5,506)    1,114     4,118



 Comprehensive income attributable to:

 - Owners of the parent                    (5,429)   (6,785)    1,305     3,720

 - Non-controlling interests                   376       804    (312)     1,652

 Comprehensive income (expense) for the
 period                                    (5,053)   (5,981)      993     5,372



 Earnings per share attributable to
 owners of the parent:

 Basic earnings per share (EUR)               (0.17)    (0.20)     0.05 0.08

 Diluted earnings per share (EUR)             (0.17)    (0.20)     0.05 0.08

Condensed consolidated interim statement of cash flows

  EUR'000                                                   12M 2021    12M 2020
-------------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                             352,378     345,552

  Cash paid to suppliers                                 (310,183)   (305,500)

  VAT paid                                                 (8,140)     (9,909)

  Cash paid to and for employees                          (25,893)    (27,409)

  Income tax paid                                            (797)       (291)

  Net cash from operating activities                         7,365       2,443



  Cash flows from investing activities

  Paid on acquisition of property, plant and equipment       (232)       (254)

  Paid on acquisition of intangible assets                    (19)        (17)

  Proceeds from sale of property, plant and equipment          489         332

  Cash received on acquisition of a subsidiary                   0       3,605

  Proceeds from sale of an investment in an associate            0       3,596

  Loans provided                                              (34)        (17)

  Repayments of loans provided                                  96          44

  Dividends received                                             0         974

  Interest received                                             12          23

  Net cash from investing activities                           312       8,286



  Cash flows from financing activities

  Proceeds from loans received                               1,922       2,026

  Repayments of loans received                             (3,766)     (2,629)

  Lease payments made                                      (3,318)     (3,086)

  Interest paid                                            (1,051)       (927)

  Dividends paid                                           (5,000)       (472)

  Other payments                                              (12)        (77)

  Net cash used in financing activities                   (11,225)     (5,165)



  Net cash flow                                            (3,548)       5,564



  Cash and cash equivalents at beginning of period          12,576       7,032

  Effect of movements in foreign exchange rates                  3        (20)

  Increase (decrease) in cash and cash equivalents         (3,548)       5,563

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

Financial review

Financial performance

The  Nordecon group  ended 2021 with  a gross  profit of  EUR4,021 thousand (2020:
EUR10,996  thousand)  and  a  gross  margin  of  1.4% (2020:  3.7%). Gross margins
decreased  in both operating segments. The gross margin of the Buildings segment
was 2.0% for the year and a negative 0.7% for the fourth quarter (2020: 3.6%; Q4
2020: 0.7%). The  figures of the  Infrastructure segment were  1.0% for the year
and  a  negative  1.4% for  the  fourth quarter (2020: 5.1%; Q4 2020: 6.1%). The
gross margin of the Buildings segment was mainly influenced by:

  * Growth in input prices, which mainly affected contracts signed in 2020. The
    prices of raw materials and supplies stabilised somewhat in the third
    quarter but soaring energy prices and labour costs had a strong impact on
    fourth-quarter inputs.
  * Supply chain disruptions, which continue to put pressure on the timely
    completion of construction projects. Extensions of contract terms cause
    additional costs.
  * One-off losses in the Swedish market. The costs related to the completion of
    two projects (the Nysäter wind farm and an apartment building) totalled
    EUR3,346 thousand.

The performance of the Infrastructure segment was also influenced by the upswing
in  materials prices, especially the prices  of metal and energy carriers, which
increased  the production cost of asphalt concrete. Another factor was the order
book  structure: the  share of  projects involving  the production and laying of
asphalt  concrete was  small and  thus the  share of  uncovered fixed  costs was
higher than usual.
The group's administrative expenses for 2021 were EUR6,053 thousand. Compared with
2020, administrative  expenses decreased by  around 14% (2020: EUR7,073 thousand),
mainly  through a  decline in  personnel expenses.  The ratio  of administrative
expenses to revenue (12 months rolling) was 2.1% (2020: 2.4%).
The  group ended 2021 with an operating loss of EUR4,336 thousand (2020: operating
profit  of EUR3,575 thousand). Operating profit was affected by the recognition of
credit  losses of EUR2,144 thousand.  A major share of  the credit losses resulted
from  expensing the receivables  due from a  customer of the Swedish subsidiary.
EBITDA  was negative at  EUR797 thousand and  EBITDA margin was  negative at 0.3%
(2020: positive at EUR7,003 thousand and 2.4%).
The  group's finance income and costs are affected by exchange rate fluctuations
in  the  group's  foreign  markets.  During  the  period,  the Ukrainian hryvnia
strengthened against the euro by around 12% while the Swedish krona strengthened
against  the euro by around 2%. Translation of the loans provided to the group's
subsidiaries  in euros into the Ukrainan hryvnias and Swedish krona gave rise to
exchange  gains  of  EUR711  thousand  and  EUR16  thousand,  respectively (2020: an
exchange  loss  of  EUR1,485  thousand  and  an  exchange  gain  of  EUR24 thousand,
respectively).  Finance income for  2020 was also influenced  by the sale of the
group's  investment in the  associate Pigipada OÜ,  which produced sales gain of
EUR2,749 thousand.
The  group incurred a net loss of EUR5,506  thousand (2020: earned a net profit of
EUR4,118  thousand). The loss  attributable to owners  of the parent, Nordecon AS,
was EUR6,310 thousand (2020: a profit of EUR2,466 thousand).

Cash flows

Operating  activities produced  a net  cash inflow  of EUR7,365  thousand in 2021
(2020:  EUR2,443 thousand). 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 and
materials  suppliers.  The  share  of  prepayments  increased in 2021 due to the
COVID-19 pandemic.  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 EUR312 thousand (2020:
8,286 thousand). Investments in the acquisition of property, plant and equipment
and  intangible assets totalled EUR251 thousand (2020: EUR271 thousand) and proceeds
from  the sale of property, plant and equipment amounted to EUR489 thousand (2020:
EUR332  thousand). Cash flow for the comparative period was strongly influenced by
the  reclassification of Embach  Ehitus OÜ from an  associate into a subsidiary,
which  generated cash inflow of EUR3,605 thousand,  and the sale of the investment
in the associate Pigipada OÜ, which generated cash inflow of EUR3,596 thousand.
Financing  activities generated a net cash outflow of EUR11,225 thousand (2020: an
outflow  of EUR5,165  thousand). The  largest items  were loan and lease payments.
Proceeds  from loans received totalled EUR1,922 thousand, consisting of the use of
overdraft  facilities and development loans  (2020: EUR2,026 thousand). Repayments
of  loans received totalled EUR3,766 thousand, consisting of regular repayments of
long-term  investment  and  development  loans  (2020:  EUR2,629  thousand). Lease
payments  totalled EUR3,318  thousand (2020:  EUR3,086 thousand).  Dividends paid in
2021 amounted to EUR5,000 thousand (2020: EUR472 thousand).
The  group's  cash  and  cash  equivalents  at  31 December 2021 totalled EUR9,031
thousand (31 December 2020: EUR12,576 thousand).

Key financial figures and ratios

 Figure/ratio                                        2021       2020       2019
-------------------------------------------------------------------------------
 Revenue (EUR'000)                                  288,534    296,082    234,071

 Revenue change                                    (2.5)%      26.5%       4.7%

 Net profit (loss) (EUR'000)                        (5,506)      4,118      4,149

 Net  profit (loss) attributable  to owners of
 the parent (EUR'000)                               (6,310)      2,466      3,378

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

 Earnings per share (EUR)                            (0.20)       0.08       0.11

 Administrative expenses to revenue                  2.1%       2.4%       2.9%

 EBITDA (EUR'000)                                     (797)      7,003      7,311

 EBITDA margin                                     (0.3)%       2.4%       3.1%

 Gross margin                                        1.4%       3.7%       5.0%

 Operating margin                                  (1.5)%       1.2%       1.8%

 Operating  margin  excluding  gain  on  asset
 sales                                             (1.6)%       1.1%       1.7%

 Net margin                                        (1.9)%       1.4%       1.8%

 Return on invested capital                        (6.5)%       9.3%      10.0%

 Return on equity                                 (16.8)%      11.8%      12.5%

 Equity ratio                                       20.8%      27.6%      27.9%

 Return on assets                                  (4.1)%       3.3%       3.7%

 Gearing                                            28.3%      21.1%      33.8%

 Current ratio                                       0.94       1.01       1.01

 At 31 December                                      2021       2020       2019

 Order book (EUR'000)                               266,856    215,796    227,545

Performance by geographical market

Revenue  earned outside Estonia decreased  substantially in 2021, accounting for
6% of the group's total revenue.

            2021   2020   2019
-------------------------------
  Estonia    94%    82%    89%

  Finland     3%     6%     4%

  Ukraine     2%     1%     2%

  Latvia      1%     0%     0%

  Sweden      0%    11%     5%

The  contribution of foreign markets declined primarily due to the impact of the
Swedish  market where sales  plummeted because previously  started projects were
being  completed and no new contracts were signed. The share of Finnish revenues
decreased  as well. Revenue earned in Ukraine  remained stable year on year. The
group  also does project-based work in Latvia where we were building a wind farm
in 2021.
Geographical  diversification  of  the  revenue  base  is a consciously deployed
strategy  by which we mitigate the risks  resulting from excessive reliance on a
single  market. However,  conditions in  some of  our chosen foreign markets are
also volatile and affect our current results.

Performance by business line

Segment revenues

We strive to maintain the revenues of our two main operating segments (Buildings
and  Infrastructure) as balanced as possible  because this helps diversify risks
and provides better opportunities for continuing construction operations in more
challenging  market conditions where  the volumes of  one or several subsegments
substantially decline.
The  group's  revenue  for  2021 was  EUR288,534  thousand,  2.5% down from a year
earlier   when  revenue  amounted  to  EUR296,082  thousand.  Revenue  decline  is
attributable to a decrease in foreign revenues, particularly no revenue from the
Swedish  market. Revenue generated  in Estonia grew  by 13% compared with a year
earlier.  In segment terms, revenue from the Buildings segment decreased by 5%,
primarily  due to the revenue  change in the Swedish  market, while revenue from
the  Infrastructure segment grew  by 7% year on  year. In a  situation where the
order  book of the Buildings segment has grown to include large-scale design and
construction  contracts, the segment's revenue is also affected by the fact that
design activities, which precede construction, take a long time.
The  low  volumes  of  infrastructure  construction  that continue to affect the
entire  construction  market  also  influence  the group's revenue structure. In
2021, the Buildings and the Infrastructure segment generated revenue of EUR216,070
thousand and EUR72,115 thousand, respectively. The corresponding figures for 2020
were EUR228,515 thousand and EUR67,142 thousand.

  Revenue by operating segment   2021   2020   2019
----------------------------------------------------
  Buildings                       75%    72%    70%

  Infrastructure                  25%    28%    30%

Subsegment revenues

In  the Buildings segment, the revenue  contributions of the commercial, public,
and  apartment buildings  subsegments were  practically equal  while the revenue
generated  by the industrial and warehouse facilities subsegment continued to be
modest.  Revenue from the commercial and the industrial and warehouse facilities
subsegments  grew by  21% and 13% year-on-year,  respectively. Revenue  from the
apartment  buildings  subsegment  remained  stable  and  revenue from the public
buildings subsegment decreased by around 23%.
The  largest projects under construction  in the commercial buildings subsegment
were  a  seven-floor  commercial  building  in  Rotermann City and the LEED Gold
compliant Alma Tomingas office building in Ülemiste City in Tallinn, and an IKEA
concept store in Rae rural municipality near Tallinn.
The  order  book  of  the  public  buildings  subsegment has grown considerably,
supporting  the  subsegment's  revenue  growth  in  2022. The  largest  projects
completed  in the  reporting period  included an  upper secondary  school on the
island  of  Saaremaa,  a  family  health  centre  in  Tartu, an extension to the
building of the Estonian Foreign Intelligence Service in Rahumäe tee in Tallinn,
and a barracks in Paldiski. We continued work on the Medical Campus of the Tartu
University  Hospital and  the main  building of  the Estonian  Internal Security
Service in Tallinn.
A  significant share  of the  group's 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 housing estate on the western border of the city.
The  group  also  continues  to  build  its  own housing development projects in
Tallinn  and Tartu (reported in the  apartment buildings subsegment). During the
period,  work continued on the construction of the first two apartment buildings
in  the  Mõisavahe  housing  estate  in  Tartu  (https://moisavahe.ee)  and  the
development  of  plots  for  Kivimäe  Süda  -  a new housing estate in the Nõmme
district in Tallinn. The period's revenue from own development projects amounted
to  EUR3,097 thousand (2020: EUR2,866 thousand). In carrying out our own development
activities,  we  carefully  monitor  potential  risks in the housing development
market.
The   largest  ongoing  project  in  the  industrial  and  warehouse  facilities
subsegment is the construction of a factory complex for the dairy company E-Piim
in  Paide. However, most of the subsegment's projects are small, with an average
cost  of  EUR2  million.  The  largest  projects  of  the  period were a two-floor
warehouse  and office building  in the Tähetorni  Technopark, a logistics centre
for  the packaging supplier Pakendikeskus in  Tallinn, and a production building
for Viljandi Aken ja Uks in Piiri street in Viljandi.

  Buildings segment                     2021   2020   2019
-----------------------------------------------------------
  Apartment buildings                    29%    28%    27%

  Commercial buildings                   29%    23%    36%

  Public buildings                       28%    37%    29%

  Industrial and warehouse facilities    14%    12%     8%

In  the  Infrastructure  segment,  the  largest  revenue contributor is the road
construction  and maintenance subsegment, which  increased its revenue by around
11% year on year. The period's largest ongoing projects were the construction of
the  Väo junction on the eastern border  of Tallinn and 2+2 passing lanes on the
Kärevere-Kardla  section of the Tallinn-Tartu-Võru-Luhamaa road, the performance
of  earthworks  on  the  Võõbu-Mäo  section  of  the Tallinn-Tartu road, and the
reconstruction  and rehabilitation  of national  roads in  Hiiu county.  We also
delivered  road maintenance  services in  Järva and  Hiiu counties  and the Kose
maintenance area in Harju county.
The  group has  won several  contracts for  the construction  of small harbours.
During  the period, work  was done on  the construction of  Salmistu harbour and
Vasknarva boat harbour and the expansion of berths in Roomassaare harbour on the
island  of  Saaremaa,  which  accounted  for  a  major  share  of the specialist
engineering revenue.

  Infrastructure segment      2021   2020   2019
-------------------------------------------------
  Road construction            87%    74%    78%

  Other engineering            10%    21%    18%

  Environmental engineering     3%     1%     3%

  Specialist engineering        0%     4%     1%

Order book

The group's order book (backlog of contracts signed but not yet performed) stood
at EUR266,856 thousand at 31 December 2021, a 24% increase year on year. In 2021,
we  signed new  contracts of  EUR314,758 thousand,  including contracts of EUR37,612
thousand  signed in the fourth quarter.  The corresponding figures for 2020 were
EUR236,577  thousand and  EUR55,511 thousand.  The group  was equally  successful in
winning both public and private contracts.

  At 31 December          2021      2020      2019
---------------------------------------------------
  Order book (EUR'000)   266,856   215,796   227,545

The  proportions of the  two main operating  segments in the  group's order book
have not changed substantially: the Buildings segment continues to dominate with
87% while the share of the Infrastructure segment is 13% (31 December 2020: 81%
and  19%, respectively). Compared with  31 December 2020, the order  book of the
Buildings  segment has  grown by  37% and the  order book  of the Infrastructure
segment  had decreased by  34%. The decline in  the Infrastructure order book is
attributable   to   a   lack   of   large-scale  contracts  with  the  Transport
Administration.
A  significant share of  the order book  of the Buildings  segment is made up of
contracts  signed  in  2021, the  largest  of  which  include:  the  design  and
construction  of commercial and residential  complex Vektor, the construction of
the  main  building  of  the  Estonian  Foreign  Intelligence Service and office
building  Roseni Maja in  Tallinn and the  design and construction of warehouses
and  related outdoor  infrastructure for  the Centre  for Defence  Investment in
Harju  county. The order book also includes some large-scale contracts signed in
earlier periods such as the construction of phase III of the Maarjamõisa Medical
Campus  of the  Tartu University  Hospital and  a factory  complex for E-Piim in
Paide.
A  major share of  the value of  new contracts signed  in the fourth quarter was
made  up of  contracts secured  by the  Buildings segment,  the largest of which
were:

  * the construction of building III in the Porto Franco development in Kai
    street in Tallinn (a joint bid);
  * the design and construction of an expansion to the production building of
    Viljandi Aken ja Uks in Raua street in Viljandi.

In  the  Infrastructure  segment,  the  order  book of the road construction and
maintenance  subsegment is still  the largest, accounting  for nearly 88% of the
segment's  order book.  The largest  projects include:  the construction of 2+2
passing  lanes on the Kärevere-Kardla  section of the Tallinn-Tartu-Võru-Luhamaa
road,  the design and construction of the outdoor space around Terminal D in Old
City Harbour in Tallinn and the construction of access roads for the premises of
the IKEA concept store and a new Kurna-Tuhala circular intersection in Rae rural
municipality.  We also continued  to deliver road  maintenance services in Järva
county under a five-year contract signed in 2020.
Based  on the size of the group's order  book, including the share of work to be
performed in 2023, management expects that in 2022 the group's revenue will grow
compared  with 2021. The  uptrend in  the prices  of energy  carriers and labour
costs, however, will continue to increase input prices and thus undermine profit
margins.  In  an  environment  of  stiff  competition,  we  have  avoided taking
unjustified risks whose realisation in the contract performance phase would have
an  adverse impact on the group's results.  To mitigate the input price risk, we
have  been signing cost-plus contracts with  private sector customers (these are
contracts  with an open book arrangement under which we can invoice the customer
based on the actual costs incurred plus the agreed margin). Our focus remains on
cost  control as  well as  pre-construction and  design activities, where we can
harness our professional competitive advantages.

People

Employees and personnel expenses

The group's average number of employees in 2021 was 685, including 434 engineers
and technical personnel (ETP). Headcount decreased by around 3% year on year.

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

                  2021   2020   2019
-------------------------------------
  ETP              434    450    414

  Workers          251    258    273

  Total average    685    708    687

The  group's personnel expenses for  2021, including all taxes, totalled EUR25,054
thousand  compared with EUR27,130 thousand  for 2020. Personnel expenses decreased
by around 8% year on year, mainly through a decrease in the number of employees,
a  decline in  the share  of performance  bonuses, and  a reduction  of salaries
carried out in the middle of 2020.
The  service fees of the members of the council of Nordecon AS for 2021 amounted
to  EUR150 thousand and  associated social security  charges totalled EUR50 thousand
(2020: EUR165 thousand and EUR54 thousand, respectively).
The  service fees of  the members of  the board of  Nordecon AS amounted to EUR369
thousand  and associated social  security charges totalled  EUR122 thousand (2020:
EUR432 thousand and EUR143 thousand, respectively).

Labour productivity and labour cost efficiency

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

                                   2021    2020    2019
--------------------------------------------------------
  Labour productivity, (EUR '000)   420.8   422.9   340.6

  Change, %                       -0.5%   24.2%    4.7%



  Labour cost efficiency, (EUR)      11.5    10.9     9.2

  Change, %                        5.5%   18.0%   -5.0%

The  group's nominal labour productivity for  the period remained essentially at
the  same level as a year earlier.  Nominal labour cost efficiency improved year
on year, supported by a decrease in personnel expenses.

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)