Market announcement

Title

2025 3 months consolidated unaudited interim report

Message

COMMENTARY FROM MANAGEMENT

Merko  Ehitus posted  revenue of  EUR 85.2 million  and net  profit of EUR 10.5
million  in Q1 2025. Real estate development accounted for 30% of the group's Q1
revenue, having more than doubled in this category compared to the same period a
year ago.

According  to the management of  Merko Ehitus, the results  of the first quarter
are  characterised primarily by increased activity  on the real estate market in
Lithuania  and increase in sales from real estate development, as well as by the
continuing  realisation of  the strong  construction services  portfolio and the
completion of some projects ahead of schedule.

The  real estate market has clearly improved in Lithuania compared to last year.
Although  the sale of new  apartments is not up  significantly in Estonia, Merko
has  increased its market  share there as  well. Whereas real estate development
accounted  for 16% of the group's  revenue in Q1 of  2024, this year it provided
close  to 30%. The low comparison base in  terms of sales volumes in 2024 should
however  be borne  in mind.  Apartment buyers  are currently preferring finished
apartments or ones that will be ready in the short term, with significantly less
appetite  for signing contracts for  units in projects yet  to be launched. As a
result,  the balance of the  group' apartment is kept  at slightly higher levels
than previous years.

In  Q1,  the  group's  companies  signed  a  significantly  higher volume of new
construction  contracts compared to  last year. Although  the balance of secured
order-book is lower than in Q1 of 2024, Merko portfolio is strong and comparable
with   2022 volumes.   The   largest   projects  in  progress  are  wind  farms'
infrastructure  and national defence projects in Lithuania, the V?rme solar park
in  Latvia and City Plaza 2 office building  in Tallinn, as well as the interior
work  on the 28-storey building  in the Arter Quarter,  where Swedbank will move
its headquarters. In recent months, Merko has submitted the best or winning bids
at several large public procurements, but due to the complexity of the projects,
the  customers have not yet made the  final decisions. Merko group concluded new
construction  contracts worth  EUR 50.6 million  in Q1  of 2025, compared to EUR
10.5 million  in the  same period  in 2024. The  secured order-book stood at EUR
332 million at the end of the first quarter.

In  Q1 of 2025, Merko delivered 121 apartments and one commercial unit to buyers
in Estonia, Latvia and Lithuania, compared to 59 apartments and seven commercial
units  in the first quarter  of last year. Revenue  from real estate development
was EUR 26 million in Q1 of 2025 compared to EUR 13 million in Q1 of 2024. In Q1
2025, Merko  launched  Allveelaeva  2 residential  development  in  Tallinn  and
Shnipishki?  Urban in  Vilnius. The  largest developments  under construction were
Uus-Veerenni,   Noblessner   and  Lahekalda  in  Tallinn,  Erminurme  in  Tartu;
Lucavsala, Arena Garden Towers, Viesturd?rzs, Mezhpils?ta and Magnolijas in Riga;
and Vilnel?s Skverai in Vilnius.

The  largest projects under  way in Q1  of 2025 in Estonia  were the Hyatt hotel
building,  Arter  Quarter,  the  City  Plaza  2 office  building in Tallinn, the
national  defence building in Tartu, the  first stage of the Ülemiste multimodal
transport  junction for Rail Baltica and the fourth stage of the mainline of the
Rail  Baltica.  In  Lithuania,  the  largest  ones were wind farm infrastructure
projects  in the  Pag?giai, Telshiai  and Pasvalys  regions and  various national
defence  buildings  and  infrastructures.  In  Latvia,  a  solar  park  in V?rme
Municipality and a student hotel in Riga were under construction.

OVERVIEW OF THE 3 MONTHS RESULTS

PROFITABILITY
2025 3 months'  pre-tax profit was EUR  11.6 million (3M 2024: EUR 5.2 million),
which brought the pre-tax profit margin to 13.6% (3M 2024: 6.4%).
Net  profit attributable to shareholders  for 3 months 2025 was EUR 10.5 million
(3M  2024: EUR  4.4 million)  and  3 months  net  profit  margin  was  12.3% (3M
2024: 5.5%).

REVENUE
2025 3 months'  revenue  was  EUR  85.2 million  (3M 2024: EUR 81.2 million). 3
months'  revenue increased by 5.0% compared to  same period last year. The share
of revenue earned outside Estonia in 3 months 2025 was 45.6% (3M 2024: 62.3%).

SECURED ORDER BOOK
As  of 31 March 2025, the  group's secured order  book was EUR 331.9 million (31
March   2024: EUR  419.0 million).  In  3 months  2025, group  companies  signed
contracts in the amount of EUR 50.6 million (3M 2024: EUR 10.5 million).

REAL ESTATE DEVELOPMENT
In  3 months 2025, the group sold a  total of 121 apartments; in 3 months 2024,
the  group sold  59 apartments. The  group earned  a revenue of EUR 24.7 million
from  sale of own developed apartments  in 3 months 2025 and EUR 10.8 million in
3 months 2024.

CASH POSITION
At  the end of the reporting period, the  group had EUR 78.5 million in cash and
cash  equivalents,  and  equity  of  EUR  264.7 million (61.0% of total assets).
Comparable  figures as  of 31 March  2024 were EUR  88.4 million and  EUR 216.6
million  (50.8% of total assets), respectively. As of 31 March 2025, the group's
net  debt  was  negative  EUR  53.4 million  (31  March 2024: negative EUR 39.6
million).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros

                                                        2025     2024      2024
                                                    3 months 3 months 12 months

 Revenue                                              85,236   81,185   539,049

 Cost of goods sold                                 (70,323) (72,301) (443,162)

 Gross profit                                         14,913    8,884    95,887



 Marketing expenses                                  (1,275)  (1,068)   (5,030)

 General and administrative expenses                 (4,275)  (4,142)  (21,908)

 Other operating income                                  561    1,324     5,724

 Other operating expenses                               (41)    (953)   (2,190)

 Operating profit                                      9,883    4,045    72,483



 Finance income/costs                                  1,717    1,157     3,931

 incl. finance income/costs from investments in
 subsidiaries                                              -        -   (5,087)

 finance income/costs from joint ventures              1,501    1,568     9,951

 interest expense                                      (210)    (655)   (1,823)

 foreign exchange gain (loss)                            115    (190)     (948)

 other financial income (expenses)                       311      434     1,838

 Profit before tax                                    11,600    5,202    76,414



 Corporate income tax expense                        (1,140)    (818)  (11,820)



 Net profit for financial year                        10,460    4,384    64,594

 incl. net profit attributable to equity holders of
 the parent                                           10,460    4,427    64,668

 net profit attributable to non-controlling
 interest                                                  -     (43)      (74)



 Other comprehensive income, which can subsequently
 be classified in the income statement

 Currency translation differences of foreign
 entities                                               (59)      106       105

 Comprehensive income for the period                  10,401    4,490    64,699

 incl. net profit attributable to equity holders of
 the parent                                           10,401    4,526    64,764

 net profit attributable to non-controlling
 interest                                                  -     (36)      (65)

 Earnings per share for profit attributable to
 equity holders of the parent (basic and diluted,
 in EUR)                                                0.59     0.25      3.65

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros

                                               31.03.2025 31.03.2024 31.12.2024

 ASSETS

 Current assets

 Cash and cash equivalents                         78,525     88,353     91,879

 Short-term deposits                               17,000          -     10,000

 Trade and other receivables                       62,815     58,929     51,419

 Prepaid corporate income tax                         105          6        270

 Inventories                                      197,861    196,518    196,521

                                                  356,306    343,806    350,089

 Non-current assets

 Investments in joint ventures                     23,072     23,483     21,571

 Other shares and securities                           80         80         80

 Other long-term loans and receivables             19,044     20,427     40,196

 Deferred income tax assets                         4,830      4,998      5,056

 Investment property                               12,525     16,740     12,606

 Property, plant and equipment                     17,419     16,093     17,147

 Intangible assets                                    388        487        350

                                                   77,358     82,308     97,006



 TOTAL ASSETS                                     433,664    426,114    447,095



 LIABILITIES

 Current liabilities

 Borrowings                                        10,110     12,909     21,303

 Payables and prepayments                         114,153    134,216    129,786

 Income tax liability                               6,487      6,335      7,101

 Short-term provisions                              8,564     10,551      7,678

                                                  139,314    164,011    165,868

 Non-current liabilities

 Long-term borrowings                              15,002     35,882     12,102

 Deferred income tax liability                      6,539      4,489      6,148

 Other long-term payables                           8,150      5,342      8,719

                                                   29,691     45,713     26,969



 TOTAL LIABILITIES                                169,005    209,724    192,837



 EQUITY

 Non-controlling interests                              -      (191)          -

 Equity attributable to equity holders of the
 parent

 Share capital                                      7,929      7,929      7,929

 Statutory reserve capital                            793        793        793

 Currency translation differences                   (100)      (739)       (41)

 Retained earnings                                256,037    208,598    245,577

                                                  264,659    216,581    254,258

 TOTAL EQUITY                                     264,659    216,390    254,258



 TOTAL LIABILITIES AND EQUITY                     433,664    426,114    447,095

Interim  report is attached to the announcement  and is also published on NASDAQ
Tallinn and Merko's web page (group.merko.ee (https://group.merko.ee/en/)).

Urmas Somelar
Head of Finance
AS Merko Ehitus
+372 650 1250
[email protected] (mailto:[email protected])

AS Merko Ehitus (group.merko.ee (https://group.merko.ee/en/)) group companies
construct buildings and infrastructure and develop real estate. We create a
better living environment and build the future. We operate in Estonia, Latvia
and Lithuania. As at the end of 2024, the group employed 605 people, and the
group's revenue for 2024 was EUR 539 million.