Market announcement

Title

2016 12 months and IV quarter consolidated unaudited interim report

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Tallinn, Estonia, 2017-02-09 07:00 CET (GLOBE NEWSWIRE) --




COMMENTARY OF THE CHAIRMAN OF THE MANAGEMENT BOARD

Merko Ehitus posted revenue of EUR 252 million in 2016, remaining on par with
the last year; the net profit amounted to EUR 6.1 million. The group continued
to implement its long-term apartment-building strategy, investing a total of
EUR 73 million in residential development. The company's Management Board
proposes to pay 119% of retained earnings – EUR 0.41 per share – in dividends
to shareholders. 

The group’s management considers the last year complicated, in which despite
active residential construction in the Baltic capitals, the construction market
as a whole failed to show any growth. Public investments in infrastructure
objects have also remained in a slump for several years. The group’s
infrastructure construction volumes were lagging behind expectations in 2016.
The management estimates that to cover the expenditure, the prices bid in
procurements are very low in the current market situation, and do not endorse
any growth in the construction capacity of civil engineering projects on the
construction market in general. The growth in residential development and
private sector orders allowed Merko Ehitus to maintain revenue on last year's
level, but at the same time the management is not satisfied with the
profitability on the construction service segment. Price competition in
buildings construction procurements is extremely tight, slimming down the
margins and forcing both main contractors and contracting entities to take huge
risks. The management considers that efficiency and management of contractual
risks is becoming increasingly important. The group’s results for 2016 were
also affected by the delay in the launch of construction on several major
objects. We were only able to actively continue with these projects at the end
of the year. 

The group’s management confirms to make an effort to maintain lead position in
Estonia in terms of both main contracting and apartment development, and we see
opportunities to boost profit by enhancing internal efficiency. The strategy of
growing beyond Estonian borders will also continue to be pursued – while nearly
one-third of our business is currently carried out abroad, we have set our
sights on the corresponding target of 50%. Even though the construction service
revenue posted in the Latvian and Lithuanian market in 2016 has decreased to
some extent, compared to the previous period – a circumstance attributable to
the completion of several major projects at the end of 2015 – we have gradually
enhanced our capacity and improved our position on the main contracting markets
of these countries. In Latvia, we remain competitive in most private and public
sector procurements. In Lithuania, we hold the biggest market share among
international orders, and are planning active participation in public
procurements. In Norway, our long-term objective is to develop the capacity for
major construction projects and gain the clients' trust as a company operating
on the local market. 

In 2016, the group posted revenue of EUR 252.0 million, net profit of EUR 6.1
million and profit before taxes of EUR 7.3 million. The revenue for Q4 2016
amounted to EUR 78.6 million, net profit to EUR 1.4 million and profit before
taxes to EUR 1.6 million. In 2016, the group signed new construction contracts
in the total amount of EUR 202.4 million, of which EUR 61.9 million in Q4. As
at 31 December 2016, the group's secured order book amounted to EUR 269.6
million. Major objects still in progress in Q4 included T1 shopping centre,
Maakri Quarter, Telia's head office in WoHo Quarter and the Tallinn Airport
tramway in Tallinn, passenger terminal of Riga International Airport in Riga
and Kauno/Algirdo residential and office complex in Vilnius. 

Real estate development remains a key business area for the group, generating
nearly 30% of the group's revenue in 2016. In 2016, we invested a total of
nearly EUR 73 million in residential development, including EUR 53.6 million in
apartment construction and EUR 19.1 million in new land plots in order to
secure our long-term apartment-building strategy. We acquired new land plots in
the heart of Tallinn and Vilnius in Q4. The apartment markets of Tallinn and
Vilnius continue to be in a good shape. Riga has yet to achieve the expected
potential, but Merko remains relatively well-positioned for any growth in
demand. In general, the management is very pleased with the results of
apartment sales, having gained the apartment buyers trust and demonstrated the
value of the Merko brand as the developer, builder and seller of living
environments and apartments. Depending on the market dynamics, Merko is
planning to launch the construction of 650–700 new apartments in the Baltic
countries this year, investing nearly EUR 45 million in work-in-progress and
new development projects. 

In 2016, the group sold 493 apartments for a total of EUR 56.6 million (w/o
VAT), compared to the 403 apartments and EUR 61.4 million (w/o VAT) in 2015. In
Q4, 225 apartments were sold in the total amount of EUR 27.0 million (w/o VAT).
Merko launched the construction of 344 apartments in 2016, plus the Galiezers
and Rinktines projects launched at the beginning of 2017, with a total of 216
apartments. Major development projects currently under construction by Merko
include Tartu mnt 52, Noblessner Homeport and Paepargi apartment buildings in
Tallinn, Skanstes Parks and Gai?ezers in Riga and the Rinktines Urban in
Vilnius. 

The Management Board of AS Merko Ehitus proposes to pay EUR 7.3 million (EUR
0.41 per share) in dividends to shareholders at the expense of retained
earnings, with the dividend rate for 2016 thus amounting to 119%. The group’s
management has made the proposal to pay dividends to shareholders above the
current dividend policy rate, considering the return on equity posted in 2016,
the group's investment capacity and the outlook for growth of the construction
market. The management remains hopeful that the engineering construction
volumes will continue to grow, even though the projects will not be actually
launched before the second half of 2017, or later. 



OVERVIEW OF THE 12 MONTHS AND IV QUARTER RESULTS

PROFITABILITY

Net profit in 12M 2016 was EUR 6.1 million (12M 2015: EUR 10.0 million), having
decreased by 38.8% compared to the same period last year and net profit margin
decreased to 2.4% (12M 2015: 4.0%). Q4 net profit was EUR 1.4 million (Q4 2015:
EUR 4.4 million), having decreased by 68.3% in the annual comparison. Profit
before tax in 12M 2016 was EUR 7.3 million (12M 2015: EUR 11.7 million), which
is equivalent to a profit before tax margin of 2.9% (12M 2015: 4.7%). Q4 profit
before tax was EUR 1.6 million (Q4 2015: EUR 4.7 million). 

REVENUE

Revenue in 12M 2016 was EUR 252.0 million (12M 2015: EUR 251.0 million), which
has increased by 0.4% compared to last year. Q4 revenue was EUR 78.6 million
(Q4 2015: EUR 66.4 million). The share of revenue earned outside Estonia has
decreased in 12M 2016 amounted to 32% (12M 2015: 38%) and the share of revenue
earned in Estonia has increased to 68% (12M 2015: 62%). The number of
apartments (493 units, incl. 21 apartments in joint ventures) sold in 12 months
of 2016 has increased by 22.3% and the revenue from apartment sales (EUR 56.6
million) has decreased by 7.8% (12 months of 2015: 403 units, revenues of EUR
61.4 million). 

CASH POSITION

At the end of the reporting period, the group had EUR 33.5 million in cash and
cash equivalents and equity EUR 122.8 million (51.6% of total assets).
Comparable figures as at 31 December 2015 were accordingly EUR 39.9 million and
EUR 125.7 million (59.5% of total assets). As at 31 December 2016 the group had
net debt of EUR 12.5 million (31 December 2015: negative EUR 8.7 million). 

SECURED ORDER BOOK

As at 31 December 2016, the group’s secured order book had grown to EUR 269.6
million (31 December 2015: EUR 246.9 million). In 12M 2016, group companies
signed new contracts in the amount of EUR 202.4 million (12M 2015: EUR 247.0
million). Q4 2016 new contracts signed in amount of EUR 61.9 million (Q4 2015:
EUR 94.8 million). 

PROPOSAL FOR DISTRIBUTION OF PROFITS

The Management Board proposes to distribute to shareholders EUR 7.3 million
(EUR 0.41 per share) in dividends from retained earnings in 2017. This is
equivalent to a 119% dividend rate for 2016. 



                                 12M      12M  Varianc      Q4  Q4 2015  Varianc
                                2016     2015        e    2016                 e
--------------------------------------------------------------------------------
Revenue           million      252.0    251.0    +0.4%    78.6     66.4   +18.3%
                   EUR                                                          
--------------------------------------------------------------------------------
EBITDA            million       11.2     15.5   -27.7%     2.8      5.6   -49.8%
                   EUR                                                          
--------------------------------------------------------------------------------
EBITDA margin     %              4.4      6.2   -28.0%     3.6      8.4   -57.5%
--------------------------------------------------------------------------------
EBIT              %              7.7     12.5   -38.2%     1.6      4.9   -66.2%
--------------------------------------------------------------------------------
EBIT margin       %              3.1      5.0   -38.5%     2.1      7.3   -71.4%
--------------------------------------------------------------------------------
Profit before     million        7.3     11.7   -37.7%     1.6      4.7   -66.5%
 tax               EUR                                                          
--------------------------------------------------------------------------------
PBT margin        %              2.9      4.7   -38.0%     2.0      7.0   -71.6%
--------------------------------------------------------------------------------
Net profit        million        6.1     10.0   -38.8%     1.4      4.4   -68.3%
 (parent)          EUR                                                          
--------------------------------------------------------------------------------
Net profit        %              2.4      4.0   -39.0%     1.8      6.7   -73.2%
 margin                                                                         
--------------------------------------------------------------------------------
EPS               EUR           0.35     0.56   -38.8%    0.08     0.25   -68.3%
--------------------------------------------------------------------------------



                                    31.12.2016  31.12.2015  Variance
--------------------------------------------------------------------
ROE (on yearly basis)  %                   5.0         8.0    -37.7%
--------------------------------------------------------------------
Equity ratio           %                  51.6        59.5    -13.3%
--------------------------------------------------------------------
Secured order book     million EUR       269.6       246.9     +9.2%
--------------------------------------------------------------------
Total assets           million EUR       237.8       211.1    +12.7%
--------------------------------------------------------------------
Number of employees    people              797         791     +0.8%
--------------------------------------------------------------------



OPERATING RESULTS

Revenue and operating profit

Merko Ehitus group generated a total of EUR 252.0 million in revenue in 12
months of 2016 (12 months of 2015: EUR 251.0 million). 48.6% of the revenue was
generated in Estonian construction service, 20.9% in other home markets
construction service and 30.5% in and real estate development segment (12
months of 2015: 43.3% in Estonian construction service, 28.7% in other home
markets construction service and 28.0% in real estate development segment).
Compared to the 12 months of 2015 the group revenue has remained essentially on
the same level. The revenue was slightly below management's expectations mainly
due to a somewhat slower than expected launch of several large-scale projects
in the first half of the year. This is above all due to circumstances on the
customer side as the design work and obtaining related approvals has kept
construction from being launched at the expected rate in a number of projects
across the Baltics. Another factor is the generally lower number of large-scale
projects with respect to the comparison period. Compared to the 12 months of
the previous year in the 12 months of 2016 the share of other home markets
construction service revenue in the group’s revenue has decreased from 28.7% to
20.9% and the share of Estonian construction service has increased from 43.3%
to 48.6%. Revenue in Q4 2016 was EUR 78.6 million, in spite of the continuing
general downtrend in the Baltic construction market, which has inceased by
18.3% compared to the previous year (Q4 2015: EUR 66.4 million). The main
changes in the revenue structure compared to the same period last year lie in
the growth in revenue from Estonian construction services’ general construction
projects and in the increase in the sales revenue of construction services from
joint venture projects and a one-off increase in revenues from immovable
properties in the real estate development segment. At the same time, revenue is
down from Estonian construction services’ civil engineering projects and in the
other home markets constructions service segment. This trend has been in line
with the group’s expectations, considering the distribution of the secured
order book as at the end of 2015 and the slump in new construction orders in
Latvia and Lithuania. The sales revenue earned in Norway is a new component in
the group’s turnover this year. 

In 12 months of 2016 the group’s operating profit from development and
construction activities totalled EUR 7.7 million (12 months of 2015: EUR 12.5
million) and in Q4 2016 EUR 1.6 million (Q4 2015: EUR 4.9 million). The 12
months operating profit margin (3.1%) has decreased by 1.9 pp compared to the
same period last year (12 months of 2015: 5.0%). The group’s aim is to preserve
the profitability both in the Estonian but also other home markets construction
service domain in spite of the prevailing competition situation on the
construction market and the decrease in sales volumes in regard to previously
higher-margin civil engineering projects, which was supported by somewhat of a
drop in input prices, but which may not continue. Considering the small size of
the Estonian market, the current situation – where 4-6 large-scale building
construction projects have been launched simultaneously – means occasionally
limited capability for subcontractors to carry out work or to do so under
reasonable conditions, which in turn puts pressure on the general contractors’
margins. Operating profit margin has also been impacted to some extent by the
recovery in profitability in the real estate development segment, which depends
largely on the price of the land as part of the total specific project expenses
and is thus different on a project basis. The level of operating profit
compared to that of last year was additionally influenced by higher marketing,
general and administrative expenses, mainly due to the additional activity in
Norway, where the group is investing into capability to build a project
management system in order to solidify prospects of concluding larger general
contracting agreements in the years ahead. The increase in marketing and
general administrative expenses in Latvia can be attributed to the costs
incurred on maintaining the team against the drop in project volumes, and the
corresponding expenses in Lithuania to the change in classification of certain
expenditure items. 

The scarcity of projects and the ever-tightening competition in the
construction sector poses a great challenge in the maintaining of the current
level of operating profit in all segments. The number of companies
participating in tenders and the risk of low pricing bids is high in all three
Baltic states. 

Profit before tax and net profit

In 12 months of 2016, the group’s profit before tax totalled EUR 7.3 million
(12 months of 2015: EUR 11.7 million) and net profit attributable to equity
holders of the parent was EUR 6.1 million (12 months of 2015: EUR 10.0
million). Group’s profit before tax margin was 2.9% (12 months of 2015: 4.7%)
and the net profit margin was 2.4% (12 months of 2015: 4.0%). Both the group’s
profit before tax (EUR 7.3 million) and the profit before tax margin (2.9%)
have decreased compared to the same period last year (12 months of 2015: EUR
11.7 million and 4.7%, respectively). 

In Q4 of 2016, the group’s pre-tax profit totalled EUR 1.6 million and net
profit was EUR 1.4 million as compared to the pre-tax profit of EUR 4.7 million
and net profit of EUR 4.4 million in Q4 of 2015. Similarly to the 12 months of
2016 group’s quarterly profit before tax (EUR 1.6 million) and the quarterly
profit before tax margin (2.0%) have decreased compared to the same period last
year (Q4 2015: EUR 4.7 million and 7.0%). 

In the second quarter of 2016, the group paid EUR 9.0 million in dividends,
which incurred additional income tax expense in the amount of EUR 0.6 million.
The situation in the second quarter of 2015 was alike, when the group paid EUR
7.3 million in dividends, with the exception that then the group incurred
additional income tax expense in the amount of EUR 0.9 million. 



Business segments

The group operates mainly in Estonian, Latvian and Lithuanian market through
its subsidiaries. By purchasing a majority shareholding the group has formed
the basis for entering the Norwegian market starting from Q1 2016. Depending on
the country the group provides construction services and real estate
development services across the following business segments: Estonian
construction service (incl. construction services on project basis in Finland),
other home markets construction service (incl. construction services in Latvia,
Lithuania and Norway) and real estate development. The group’s segment
structure is aligned with group’s management structure. 

Estonian construction service (incl. construction services on project basis in
Finland) and other home markets construction service (incl. construction
services in Latvia, Lithuania and Norway) segments include all projects of the
respective countries pertaining to construction services: 

  -- General construction consists of the construction of different buildings,
     from commercial and office buildings, retail and entertainment centres to
     public sector and residential and specialised industrial buildings. Group
     companies provide strategic consulting and quality complete solutions as
     part of the general contracting service of construction according to the
     customer's requirements: preparation, design, construction, interior and
     warranty service. In the field of general construction, the group operates
     in all three Baltic countries and starting from Q1 2016 also in Norway.

  -- The civil engineering projects the group constructs include port, waste
     management and road structures (bridges, tunnels, overpasses, roads),
     electrical construction of up to 330 kV, various environmental protection
     structures, water treatment plants, both open-cut and trenchless
     construction of water and sewerage pipelines and other various engineering
     projects. Complex and unique engineering projects require specialised
     knowledge and a good partnership with the customer and local authorities.
     In this area the group operates in Estonia and Latvia.

  -- In the road construction division, the group carries out road construction
     and builds the associated infrastructure, road maintenance and maintenance
     repair. In the area or road construction the group operates only in
     Estonia.

Real estate development is based on the development of real estate in the
ownership of the group, encompassing development of apartment projects,
long-term investments into real estate and real estate projects executed for
business purposes, and to a minor extent also real estate maintenance and
lease. In this segment, similarly to before, the group recognises projects
being developed in all of the different countries. 

Estonian construction service

The Estonian construction services segment consists of various services in the
field of general construction, civil engineering (including construction of
electrical and external networks) and road construction and construction
services on project basis in Finland. 

In the 12 months of 2016, the revenue of the Estonian construction service
segment was EUR 122.4 million (12 months of 2015: EUR 108.6 million), having
increased by 12.7% from the same period last year. The 12 months revenue
includes revenue from Finnish projects in the amount of EUR 0.6 million (12
months of 2015: EUR 2.8 million). The revenues have clearly decreased in the
field of civil engineering and increased in the field of general construction.
The increase in revenue in the segment is primarily influenced by the fact that
several large-scale general construction projects launched in 2015. The
Estonian construction service segment revenues for 12 months 2016 were 48.6% of
the group’s revenue, forming the largest proportion in the group’s revenue,
having increased by 12.2% in the yearly comparison. 

In this segment, the group earned a gross profit of EUR 7.6 million for 12
months (12 months of 2015: EUR 10.4 million). In 12 months of 2016, the gross
margin of the Estonian construction service segment was 6.2%, which decreased
by approximately 1/3 compared to the 12 months of 2015 (9.6%), mainly due to
the scarcity of projects in the field of civil engineering. We do not consider
this as a satisfactory result, despite the close competition on the Estonian
construction services market, in a situation where new contracts have not been
concluded in the desired level at new procurements, especially at public
procurements, and where the construction market volumes have decreased. We are
continually critically monitoring any changes in the volume of work-in-progress
and also constantly improving the efficiencies of internal project management
processes. We have reduced and re-allocated staff within the group and, in
order to maintain the efficiency of the cost base, made preparations with the
aim for responding to further market changes. 

Our major projects in the fourth quarter in Tallinn included the design and
construction works of office building located at Mustamäe tee 3, Maakri Kvartal
business complex, Tallink Tennis Centre, BAUHAUS DIY store, T1 shopping centre
and Poordi st 1 residential and commercial building, construction of the
airport tram line infrastructure, construction work on the passenger walkway at
Vanasadama Harbour quay no. 5 and the renovation of quays 6 and 7 at Vene-Balti
Harbour. Additionally the construction works of Viru Infantry Battalion
technology park buildings and facilities, Juuliku road junction and road
section at Tallinn roundabout and the road maintenance works done under the
service agreement with Tallinn had a significant impact. 

Other home markets construction service

The Other home markets construction service segment consists of general
construction work in Latvia, Lithuania and stating from the first quarter of
2016 also in Norway and provision of civil engineering services in Latvia. 

The revenue of the other home markets construction service segment amounted to
EUR 52.7 million in the 12 months of 2016 (12 months of 2015: EUR 72.0
million), which is 26.8% less than in the 12 months of 2015. If the other home
markets construction service segment revenues of 12 months of 2015 formed 28.7%
of the group’s revenue, then during 12 months of the current year the segments
revenues have decreased to 20.9%. The change in this percentage was in line
with expectations, considering the lower level of new contracts signed in
Latvia and Lithuania during 2015 and the 2015 comparison base, where
large-scale projects were finished in Latvia, such as Liepaja Concert Hall and
Polipaks NT manufacturing and logistics centre. 

The 12 month gross profit of the other home markets construction service
segment amounted to EUR 2.2 million (12 months of 2015: EUR 4.8 million) and
the gross profit margin was 4.1% (12 months of 2015: 6.7%), which decreased by
38.5% compared to the same period previous year. Merko’s strategic position in
Latvia is currently strong, as we are now among the leading general contractors
there and see opportunities for growing our business volumes. In Lithuania, we
are continuing on our strategic plan to focus first and foremost on external
customers who make up the predominant part of the group’s Lithuanian
construction contracts portfolio. In Norway, the group is performing
smaller-scale agreements, but we are actively working on building project
management capability and systems to conclude larger general contracting
agreements in the years ahead. The group’s continued focus is on increasing the
revenues outside Estonia. 

In the fourth quarter of 2016, the main ongoing projects included in the other
home markets construction service segment were the construction works of
Kauno/Algirdo residential complex with office premises in Vilnius, the
construction works of the second phase of the passenger terminal in Riga
International Airport, the construction works of apartment building Magdal?nas
nami and Ka??u 20 apartement building in Riga. 

Real estate development

The real estate development segment includes residential construction, the
development of apartment projects, long-term real estate investments and
commercial real estate projects. 

The group sold a total of 493 apartments (incl. 21 apartments in joint
ventures) in 12 months of 2016 at the total value of EUR 56.6 million (excl.
VAT), compared to 403 apartments and EUR 61.4 million in 12 months of 2015. In
Q4 of 2016 a total of 225 apartments (incl. 21 apartments in joint ventures)
were sold at the total value of EUR 27.0 million (excl. VAT), (Q4 2015: 155
apartments and EUR 18.8 million). In 12 months of 2016, the group has earned
EUR 9.2 million of revenue from the sale of immovable properties (12 months of
2015: EUR 6.6 million). Q4 2016 revenue from the sale of immovable properties
was EUR 0.5 million (Q4 2015: EUR 4.4 million). The construction service
revenue from projects developed by joint ventures in 12 months of 2016 was EUR
7.7 million (12 months of 2015: EUR 0.5 million). Q4 2016 revenue from the sale
of construction service to projects developed by a joint ventures was EUR 2.4
million (Q4 2015: EUR 0.3 million). 

Although in 12 months of 2016 real estate development segment revenues have
increased by 9.2% compared to the same period last year, then despite
approximately a 1/5 of more apartments sold, the revenues from apartment sales
have decreased by approximately 10%. The decline is primarily influenced by
sales of apartments in a more exclusive development in the reference period
where the sales price per apartment was higher than the apartments sold during
2016. The group's apartment sales were in line with the expectations. By the
end of the year, we succeeded in eliminating all administrative hindrances
related to the issue of permits of use in Latvia and Lithuania, allowing to
deliver to the buyers more apartments than forecasted at the end of Q3. 

In the 12 months of 2016 the share of revenue from the real estate development
segment formed as anticipated 30.5% of the group’s total revenue (12 months of
2015: 28.0%), having increased in a year by 8.8%. 

The 12-month gross profit of the real estate development segment amounted to
EUR 9.2 million (12 months of 2015: EUR 7.8 million) and the gross profit
margin was 12.0% (12 months of 2015: 11.0%), which increased by 8.8% compared
to the same period previous year. The profitability of the apartment
development projects varies by project and depends greatly on the cost
structure of the specific project, incl. the land acquisition price. The
profitability of the apartments sold in the 12 months of 2016 was higher than
in the reference period, but on the other hand the sector’s gross profit of the
12 months was also significantly influenced by the fact that the one-time
effect of revenues from the sale of immovable properties that are strategically
not needed by the group, the profitability of which is not comparable with a
situation where the value of land is increased by passing through all phases of
the development process. In the 12 months of 2016, the gross profit margin has
also been reduced, in comparison with 2015, by the significant growth in the
volume of construction service projects developed by joint ventures, where the
profit from construction has been generated in the course of construction and
the profit from development is realised at a later stage, upon sale of
apartments to the final customer, based on the equity method. 

At the end of the period, group’s inventory comprised 220 apartments where a
preliminary agreement had been signed: 62 completed apartments (42 in Estonia,
10 in Latvia and 10 in Lithuania) and 158 apartments under construction (140 in
Estonia and 18 in Latvia). The sale of these apartments had not yet been
finalised and delivered to customers, because the development site is still
under construction or the site was completed at the end of the reporting period
and the sales transactions have not all been finalised yet. 

As at 31 December 2016, the group had a total of 314 apartments for active sale
(as at 31 December 2015: 497 apartments), for which there are no pre-sale
agreements and of which 158 have been completed (95 in Estonia, 30 in Latvia
and 33 in Lithuania) and 156 are under construction (88 in Estonia and 68 in
Latvia). The slight decrease in the number of apartments on active sale as at
31 December 2016, compared to 31 December 2015 is mainly due to the lower
volume of projects launched in the current year. 

In 12 months of 2016, we launched the construction of a total of 344 new
apartments in the Baltic states (12 months of 2015: 574 apartments). 

After the balance sheet date, the Group has also launched two apartment
development projects: 

  -- in Latvia the construction of Gai?ezera nami residential development with
     96 apartments at Mežciems district in Riga, located between L?duma,
     Gai?ezera and Hipokr?ta streets;
  -- In Lithuania the construction of Rinktin?s Urban residential development
     project with 120 apartments in the city centre of Vilnius, located at the
     corner of Rinktin?s and Ceikiniu streets.

In the 12 months of this year, the group has invested a total of EUR 53.6
million (12 months of 2015: EUR 42.4 million) in new development projects
launched in 2016 as well as projects already in progress from previous year. 

We will continue to invest in residential real estate projects and in 2017, the
group plans to launch the construction of approximately 650-700 (incl. 60-160
apartments in joint ventures) new apartments in the Baltic states. In 2016,
construction was started on 344 apartments, which is about 150 units less than
the level planned in early 2016 (500-550 new apartments) mainly due to the
delay in receiving building permits for projects. The investment level in 2017
in both development projects initiated in the previous years and new projects
to be launched in 2017 is in the range of EUR 45 million (2016: EUR 53.6
million invested). 

One of our objectives is to keep a moderate portfolio of land plots to ensure
stable inventory of property development projects considering the market
conditions. At 31 December 2016, the group's inventories included land plots
with the development potential, where the construction works have not started,
of EUR 63.2 million (31.12.2015: EUR 58.0 million). 

In the 12 months of 2016, the group has purchased new land plots at an
acquisition cost of EUR 19.1 million purposes (12 months of 2015: acquired
different new land plots in Tallinn, Estonia at an acquisition cost of EUR 6.6
million and in Vilnius, Lithuania at an acquisition cost of EUR 5.1 million).
In Q4 of 2016, the group acquired the Pakraš?io street immovable property in
the city centre of Vilnius, Lithuania at an acquisition cost of EUR 2.3
million, where nearly 200 apartments will be developed in the years ahead; in
the area located between Veerenni, Tehnika and Vana-Lõuna streets in Tallinn a
development area of approximately 12 hectares at an acquisition cost of EUR
16.8 million, which allows the construction of approximately 1,600 apartments.
The purchase of the Veerenni land plot constitutes one of the group's biggest
investments in the last 5 years, and serves to reinforce the group's long-term
strategy in Estonia. The construction of the first buildings on the site is
scheduled to be launched at the end of 2017. Depending on the apartment market
dynamics, the entire development area can be built up within 10-15 years. 

The comparison period development activities investments additionally include
the signing of a notarised contract of sale of registered immovable in Q1 2015,
under which all of the real estate governed by an option agreement in Tallinn
were realised for total of EUR 4.0 million. In Q2 2015 AS Merko Ehitus group
50% joint venture Kodusadam OÜ additionally signed a contract for the
acquisition of approximately 1.7 hectares of land in the Noblessner quarter, an
historically prestigious industrial area in Tallinn with great potential, for
development purpose to build approximately 200 apartments. The first apartment
building in the development project, Staapli 4, is now under construction and
will be completed by the end of 2017. 

Based on its long-term strategy, the group will continue investing in land
plots, and is searching for new land plots with development potential, in 2017
above all, in Estonia and Lithuania. 

In the second quarter of 2016, the group completed the competition for an
international development and architectural concept for the Latvian Zakusala
development area (close to 1,500 apartments). A total of eleven entries came in
from Estonia, Norway, Poland and Latvia. The competition was organised based on
the regulations handed down by the Latvian Architects Union. Six entries from
among the works submitted met the qualifications. A five-member jury picked an
entry by RUUME arhitekti (https://ruumearhitekti.wordpress.com/), a practice of
young Latvian architects, as the winner. The group will continue preparations
in order to launch construction in the development area in 3-5 years’ time. 



Secured order book

As at 31 December 2016, the group’s secured order book (without own
developments) amounted to EUR 269.6 million as compared to EUR 246.9 million as
at 31 December 2015, having increased by approximately 10% in the annual
comparison. The secured order book excludes the group's own residential
development projects and construction work related to developing real estate
investments. 

In 12 months of 2016, EUR 202.4 million worth of new contracts were signed
(without own developments) as compared to EUR 247.0 million in same period last
year. The value of new contracts signed (without own developments) in the
fourth quarter of 2016 amounted to EUR 61.9 million (Q4 2015: EUR 94.8
million). 

After the balance sheet date, the group concluded two large construction
contracts: 

  -- On 11 January 2016, AS Merko Ehitus group company UAB Merko Statyba and PK
     INVEST UAB, part of AS Pro Kapital Grupp group, entered into a contract to
     perform the design and construction works of the residential complex in
     Šaltiniu Namai quarter, located at 10 Aguonui street, Vilnius. The contract
     value is EUR 10.8 million. The works are scheduled for completion by
     January of 2019.
  -- On 24 January 2016, AS Merko Ehitus Eesti – a subsidiary of AS Merko Ehitus
     – signed a contract with AS Mainor Ülemiste, the developer of Ülemiste
     City, to perform the design and construction works of Öpiku maja second
     office building, located at Sepise 9/Valukoja 8, Tallinn, Estonia. The
     value of the contract is approximately EUR 15.5 million. The works are
     scheduled for completion in the second half of 2018.

Of the contracts signed in the 12 months of 2016, private sector orders
accounted for the majority proportion, which is also represented in the group’s
secured order book as at the end of the reporting period, where private sector
orders from projects in progress constitute approximately 70% (31.12.2015:
approximately 80%). Apart from a few large-scale procurements where Merko
companies were not as optimistic as our competitors in bidding at a low price,
the share of government contracts in the 12 months of 2016 has been very
modest. The group continues to focus on comprehensive design and construction
contracts. In this regard, five important contracts were signed in the 12
months of 2016 (incl. none in Q4 2016). 

The portfolio of contracts stands relatively strong compared to the same period
of the last few years (31.12.2015: EUR 246.9 million; 31.12.2014: EUR 179.1
million). Yet aside from individual larger-scale agreements in Estonia, the
secured order book balance is not satisfactory. This is particularly the case
in regard to public procurements in Estonia. Considering the beginning phase of
the current EU funding period, the volume of public procurements has stayed at
the previous year’s level and at the moment we predict that the volume of
public procurements will start to increase in 2017. 

Traditionally the share of Estonian construction activity has been the highest
in the group's revenues. Given the weak growth outlook of the Estonian
construction market, the group's goal is to increase the volume of construction
orders from outside Estonia. Thus, we will continue to identify and strengthen
the groups competitive advantages and are closely monitoring the development
and opportunities both in the Baltic states and the Nordic countries. In the
last few years, the group has taken part in various individual Finnish, Swedish
and Norwegian construction procurements in a selective and project-based manner
in order to gain experience and regarding the conditions and requirements set
out in these countries for qualifying for construction company procurements, as
well as assess the risks so as to evaluate potential competitive advantages for
entering these markets. In March 2016, the group concluded a transaction
through which it acquired a controlling holding in Peritus Entreprenør AS, a
Norwegian construction company that provides general construction services. In
2016, the group will continue implementing its chosen strategy with the goal of
increasing revenue earned on new markets, focusing above all on the Norwegian
market and taking part in a project-based manner in Finnish and Swedish
construction procurements as well. 



Cash flows

As at 31 December 2016 the group had cash equivalents in the amount of EUR 33.5
million (31.12.2015: EUR 39.9 million). The group's cash level is lower
compared to the same period last year; still, the financial position is
continually strong, as the group has not utilised its credit lines of existing
overdrafts and loan agreements. 

The 12-month cash flow from operating activity was negative at EUR 12.0 million
(12 months of 2015: positive EUR 7.4 million), cash flow from investing
activity was negative at EUR 0.6 million (12 months of 2015: negative EUR 0.8
million) and the cash flow from financing activity was positive at EUR 6.3
million (12 months of 2015: negative EUR 18.3 million). 

The cash flow from operating activity was mostly influenced by the EBITDA
(operating profit adjusted with depreciation and amortisation) EUR 11.2 million
(12 months of 2015: EUR 15.5 million), by the positive change in receivables
and liabilities related to construction contracts recognised under the stage of
completion method EUR 3.7 million (12 months of 2015: positive change of EUR
2.2 million), by the negative change in the provisions EUR 0.5 million (12
months of 2015: negative change of EUR 1.5 million), by the negative change in
trade and other receivables related to operating activities EUR 18.0 million,
incl. a net change in financing co-financed projects of EUR 0.0 million and VAT
prepayment related to Veerenni development area aquisition in the amount of EUR
3.4 million, which was returned in January of 2017 (12 months of 2015: positive
change of EUR 10.0 million, incl. a negative change in financing co-financed
projects of EUR 4.2 million), by the negative change in inventory EUR 14.1
million, incl. negative cash flow from purchase of new land plots in the amount
of EUR 19.1 million and positive cash flow from sale of immovable properties in
the amount of EUR 8.7 million (12 months of 2015: positive change of EUR 10.9
million, incl. negative cash flow from purchase of new land plots in the amount
of EUR 11.7 million and positive cash flow from sale of immovable properties in
the amount of EUR 5.4 million), by the positive change in trade and other
payables related to operating activities EUR 8.9 million (12 months of 2015:
negative change of EUR 27.2 million, incl. significant negative outflow from
the realization of an option agreement in the amount of EUR 4.0 million but
also from the advances for real estate development projects), interest received
EUR 1.5 million (12 months of 2015: EUR 1.8 million), interest paid EUR 0.7
million (12 months of 2015: EUR 0.9 million) and by the corporate income tax
paid EUR 1.7 million (12 months of 2015: EUR 1.8 million). 

To support cash flows arising from operating activity, the group has been
cautious in raising additional external capital, including factoring. At the
same time, the debt ratio has remained at a moderate level (19.3% as at
31.12.2016; 14.8% as at 31.12.2015). 

Cash flows from investment activities include negative cash flow from the
acquisition of non-current asset in the amount of EUR 3.0 million (12 months of
2015: EUR 0.8 million) and the positive cash flow from the sale of non-current
assets in the amount of EUR 1.1 million (12 months of 2015: EUR 0.3 million).
The group mainly invested in non-current assets for the purpose of renewing its
fleet of machinery in the road construction segment. Cash flows from investment
activities in 12 months of 2015 was also positively impacted by the acquisition
of majority shareholding in subsidiary Peritus Entreprenør AS (related to the
offering of construction services on Norwegian market) in the amount of EUR 1.2
million. Cash flows from investing activities in 2015 also include an
additional contribution to the share capital of the joint venture OÜ Unigate in
the amount of EUR 0.4 million. 

The largest single negative item in cash flows from financing was the dividend
payment of EUR 9.0 million (12 months of 2015: EUR 7.3 million). Cash flows
from financing activities in 2015 also a one-time share capital reduction
payment to the shareholders in the amount of EUR 4.1 million. Project specific
loans obtained using investment property as collateral were repaid in the
amount of EUR 0.6 million (12 months of 2015: positive cash flow in the net
amount of EUR 0.6 million, incl. refinancing of an investment loan in the
amount of EUR 1.2 million). Net of loans received and loans repaid in
connection with development projects amounted to positive cash flow of EUR 3.9
million (12 months of 2015: net negative cash flow of EUR 4.6 million) and
finance lease principal repayments of EUR 0.9 million (12 months of 2015: EUR
2.2 million). In addition, over the 12 months of 2016, the group made
repayments in the amount of EUR 2.0 million to related party Järvevana OÜ
pursuant to the terms and conditions of an overdraft agreement between the
parties. The group has not used bank loans to finance all ongoing development
projects – and this is the case particularly in Estonia, where many advance
sales were agreed in the early phase of construction. If all of the new land
plots acquired by the group both in the 12 months of 2015 were financed in full
from the group’s resources without drawing on external funding, then at the end
of 2016 EUR 12.5 million was engaged in short-term loan from the parent company
AS Riverito to purchase the Veerenni development area. The loan was refinanced
at the beginning of 2017 with long-term loans from various credit institutions. 

The Q4 2016 cash flow from operating activity was negative at EUR 0.9 million
(Q4 2015: positive EUR 23.4 million), cash flow from investing activity was
negative at EUR 0.6 million (Q4 2015: negative EUR 0.7 million) and the cash
flow from financing activity was positive at EUR 14.3 million (Q4 2015:
negative EUR 2.8 million). 

The quarterly cash flows from operating activities were negative primarily as a
result of the EUR 16.8 million investment into Veerenni development area and
short-term VAT prepayment related to the investment in the amount of EUR 3.4
million (which was refunded in January 2017). On the negative side the
quarterly cash flows was additionally influenced by investments into ongoing
apartment development projects in the amount of EUR 8.8 million, which was
partially offset by a slightly higher than usual positive cash flow from the
sale of apartments. 

The third quarter cash flows from investment activities included a negative
cash flow from the purchase of non-current asset in the amount of EUR 1.1
million and a positive cash flow in the amount of EUR 0.5 million from the sale
of non-current assets, which were both mainly related to the renewal of
equipment in the road construction segment. 

The quarterly cash flow from financing activities was positive mainly due to
short-term loan received from parent company AS Riverito to finance the
acquisition of Veerenni development are in the amount of EUR 12.5 million. 



Dividends and dividend policy

The distribution of dividends to the shareholders of the company is recorded as
a liability in the financial statements as of the moment when the payment of
dividends is approved by the company’s shareholders. 

At the meeting held on 8 April 2013, the Management Board and Supervisory Board
of AS Merko Ehitus reviewed the company’s strategic development trends and
approved the long-term financial objectives until 2018, under which a new
objective of paying the shareholders 50-70% of the annual profit as dividends
was established. The achievement of this objective is an important priority for
the group. 

The annual general meeting of shareholders of AS Merko Ehitus held at 27 April
2016 approved the Supervisory Board’s proposal to pay the shareholders the
total amount of EUR 9.0 million (EUR 0.51 per share) as dividends from net
profit brought forward, which is equivalent to a 90% dividend rate and a 6.0%
dividend yield for the year 2015 (using the share price as at 31 December
2015), (comparable figures in 2015 were accordingly: EUR 7.3 million (EUR 0.41
per share) as dividends, which is equivalent to a 58% dividend rate and a 5.7%
dividend yield (using the share price as at 31 December 2014)). 

According to the Estonian Income Tax Law §50 section 11 AS Merko Ehitus can pay
certain portion of dividends without any additional income tax expense and
liabilities occurring due to previously received and taxed distribution of
profits from subsidiaries. Taking into account the dividends already paid to
the parent company by the subsidiaries during 2016, the group incurred
additional income tax expense in connection with the disbursement of dividends
of EUR 0.6 million (Q2 2015: EUR 0.9 million) in Estonia in the second quarter
of 2016.The dividend payment to the shareholders took place on 20 May 2016. 

The Management Board proposes to pay the shareholders EUR 7.3 million as
dividends from net profits brought forward (EUR 0.41 per share) in 2017, which
is equivalent to a 119% dividend rate and a 4.5% dividend yield for the year
2016 (using the share price as at  31  December  2016). The  proposal  to  pay 
dividends  beyond  the  established  dividend  policy  rate  is  based  on  the
 return on equity posted in 2016, the group's strong liquidity position, which
has ensured investment capability and the prospects of the construction market,
where the volumes of civil engineering procurements are expected to rise in the
near future but projects will not be actually started until the end of 2017 or
later.Taking into account the dividends already paid to the parent company and
planned to be paid by foreign subsidiaries in early 2017, the group will incur
income tax expenses of approximately EUR 0.9 million in 2017 in Estonia in
connection with disbursement of dividends. 



Ratios
(attributable to equity holders of the parent)

                                         12M     12M     12M     Q4     Q4    Q4
                                        2016    2015    2014   2016   2015  2014
--------------------------------------------------------------------------------
Income statement summary                                                        
--------------------------------------------------------------------------------
Revenue                      million   252.0   251.0   252.3   78.6   66.4  70.1
                               EUR                                              
--------------------------------------------------------------------------------
Gross profit                 million    19.0    23.0    24.7    5.0    7.7   8.5
                               EUR                                              
--------------------------------------------------------------------------------
Gross profit margin            %         7.5     9.1     9.8    6.4   11.6  12.1
--------------------------------------------------------------------------------
Operating profit             million     7.7    12.5    14.0    1.6    4.9   5.5
                               EUR                                              
--------------------------------------------------------------------------------
Operating profit margin        %         3.1     5.0     5.5    2.1    7.3   7.8
--------------------------------------------------------------------------------
Profit before tax            million     7.3    11.7    13.3    1.6    4.7   5.3
                               EUR                                              
--------------------------------------------------------------------------------
PBT margin                     %         2.9     4.7     5.3    2.0    7.0   7.6
--------------------------------------------------------------------------------
Net profit                   million     6.0     9.8    12.3    1.3    4.3   4.8
                               EUR                                              
--------------------------------------------------------------------------------
attributable to equity       million     6.1    10.0    12.4    1.4    4.4   4.8
 holders of the parent         EUR                                              
--------------------------------------------------------------------------------
attributable to              million   (0.1)   (0.2)   (0.1)  (0.1)  (0.1)   0.0
 non-controlling interest      EUR                                              
--------------------------------------------------------------------------------
Net profit margin              %         2.4     4.0     4.9    1.8    6.7   6.8
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Other income statement                                                          
 indicators                                                                     
--------------------------------------------------------------------------------
EBITDA                       million    11.2    15.5    16.4    2.8    5.6   6.2
                               EUR                                              
--------------------------------------------------------------------------------
EBITDA margin                  %         4.4     6.2     6.5    3.6    8.4   8.9
--------------------------------------------------------------------------------
General expense ratio          %         5.3     4.8     4.9    4.9    5.1   4.9
--------------------------------------------------------------------------------
Labour cost ratio              %        11.7    12.2    11.9    9.6   12.4  11.3
--------------------------------------------------------------------------------
Revenue per employee        thousand     325     322     319    101     85    89
                               EUR                                              
--------------------------------------------------------------------------------



Other significant indicators               31.12.2016  31.12.2015  31.12.2014
-----------------------------------------------------------------------------
Return on equity                   %              5.0         8.0        10.1
-----------------------------------------------------------------------------
Return on assets                   %              2.8         4.4         5.0
-----------------------------------------------------------------------------
Return on invested capital         %              5.1         7.9         8.8
-----------------------------------------------------------------------------
Equity ratio                       %             51.6        59.5        51.0
-----------------------------------------------------------------------------
Debt ratio                         %             19.3        14.8        15.1
-----------------------------------------------------------------------------
Current ratio *                  times            2.9         3.2         2.3
-----------------------------------------------------------------------------
Quick ratio *                    times            1.1         1.2         1.1
-----------------------------------------------------------------------------
Accounts receivable turnover     days              37          39          56
-----------------------------------------------------------------------------
Accounts payable turnover        days              38          39          39
-----------------------------------------------------------------------------
Average number of employees      people           776         779         790
-----------------------------------------------------------------------------
Secured order book            million EUR       269.6       246.9       179.1
-----------------------------------------------------------------------------



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited

in thousand euros

                                             2016       2015      2016      2015
                                        12 months  12 months        IV        IV
                                                               quarter   quarter
--------------------------------------------------------------------------------
Revenue                                   251,970    251,012    78,593    66,448
--------------------------------------------------------------------------------
Cost of goods sold                      (232,961)  (228,044)  (73,555)  (58,749)
--------------------------------------------------------------------------------
Gross profit                               19,009     22,968     5,038     7,699
--------------------------------------------------------------------------------
Marketing expenses                        (3,281)    (3,230)     (904)     (883)
--------------------------------------------------------------------------------
General and administrative expenses      (10,076)    (8,907)   (2,960)   (2,478)
--------------------------------------------------------------------------------
Other operating income                      2,466      1,943       668       595
--------------------------------------------------------------------------------
Other operating expenses                    (399)      (278)     (201)      (77)
--------------------------------------------------------------------------------
Operating profit                            7,719     12,496     1,641     4,856
--------------------------------------------------------------------------------
Finance income/costs                        (440)      (804)      (79)     (199)
--------------------------------------------------------------------------------
incl. finance income/costs from joint         163      (138)        97      (32)
 ventures                                                                       
--------------------------------------------------------------------------------
finance income/costs from other                 2          3         1         2
 long-term investments                                                          
--------------------------------------------------------------------------------
interest expense                            (610)      (756)     (172)     (181)
--------------------------------------------------------------------------------
foreign exchange gain (loss)                  (6)        (3)         1       (2)
--------------------------------------------------------------------------------
other financial income (expenses)              11         90       (6)        14
--------------------------------------------------------------------------------
Profit before tax                           7,279     11,692     1,562     4,657
--------------------------------------------------------------------------------
Corporate income tax expense              (1,275)    (1,857)     (241)     (386)
--------------------------------------------------------------------------------
Net profit for financial year               6,004      9,835     1,321     4,271
--------------------------------------------------------------------------------
incl. net profit attributable to            6,122     10,000     1,408     4,445
 equity holders of the parent                                                   
--------------------------------------------------------------------------------
net profit attributable to                  (118)      (165)      (87)     (174)
 non-controlling interest                                                       
--------------------------------------------------------------------------------
Other comprehensive income, which can                                           
 subsequently be classified in the                                              
 income statement                                                               
--------------------------------------------------------------------------------
Currency translation differences of            19          2      (11)         1
 foreign entities                                                               
--------------------------------------------------------------------------------
incl. net profit attributable to               18          1       (9)         1
 equity holders of the parent                                                   
--------------------------------------------------------------------------------
net profit attributable to                      1          -       (2)         -
 non-controlling interest                                                       
--------------------------------------------------------------------------------
Comprehensive income for the period         6,023      9,837     1,310     4,272
--------------------------------------------------------------------------------
incl. net profit attributable to            6,140     10,002     1,399     4,446
 equity holders of the parent                                                   
--------------------------------------------------------------------------------
net profit attributable to                  (117)      (165)      (89)     (174)
 non-controlling interest                                                       
--------------------------------------------------------------------------------
Earnings per share for profit                0.35       0.56      0.08      0.25
 attributable to equity holders of the                                          
 parent (basic and diluted, in EUR)                                             
--------------------------------------------------------------------------------



CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited

in thousand euros

                                                     31.12.2016  31.12.2015
---------------------------------------------------------------------------
ASSETS                                                                     
---------------------------------------------------------------------------
Current assets                                                             
---------------------------------------------------------------------------
Cash and cash equivalents                                33,544      39,905
---------------------------------------------------------------------------
Trade and other receivables                              45,566      24,854
---------------------------------------------------------------------------
Prepaid corporate income tax                                617         421
---------------------------------------------------------------------------
Inventories                                             123,364     109,090
---------------------------------------------------------------------------
                                                        203,091     174,270
---------------------------------------------------------------------------
Non-current assets                                                         
---------------------------------------------------------------------------
Long-term financial assets                               15,805      16,703
---------------------------------------------------------------------------
Deferred income tax assets                                1,325       1,423
---------------------------------------------------------------------------
Investment property                                       4,108       4,371
---------------------------------------------------------------------------
Property, plant and equipment                            12,838      13,442
---------------------------------------------------------------------------
Intangible assets                                           673         879
---------------------------------------------------------------------------
                                                         34,749      36,818
---------------------------------------------------------------------------
                                                                           
---------------------------------------------------------------------------
TOTAL ASSETS                                            237,840     211,088
---------------------------------------------------------------------------
                                                                           
---------------------------------------------------------------------------
LIABILITIES                                                                
---------------------------------------------------------------------------
Current liabilities                                                        
---------------------------------------------------------------------------
Borrowings                                               21,485       5,525
---------------------------------------------------------------------------
Payables and prepayments                                 56,259      43,266
---------------------------------------------------------------------------
Income tax liability                                        278         711
---------------------------------------------------------------------------
Short-term provisions                                     5,637       5,013
---------------------------------------------------------------------------
                                                         83,659      54,515
---------------------------------------------------------------------------
Non-current liabilities                                                    
---------------------------------------------------------------------------
Long-term borrowings                                     24,516      25,660
---------------------------------------------------------------------------
Deferred income tax liability                             1,122         788
---------------------------------------------------------------------------
Other long-term payables                                  2,061       1,159
---------------------------------------------------------------------------
                                                         27,699      27,607
---------------------------------------------------------------------------
                                                                           
---------------------------------------------------------------------------
TOTAL LIABILITIES                                       111,358      82,122
---------------------------------------------------------------------------
                                                                           
---------------------------------------------------------------------------
EQUITY                                                                     
---------------------------------------------------------------------------
Non-controlling interests                                 3,692       3,268
---------------------------------------------------------------------------
Equity attributable to equity holders of the parent                        
---------------------------------------------------------------------------
Share capital                                             7,929       7,929
---------------------------------------------------------------------------
Statutory reserve capital                                   793       1,200
---------------------------------------------------------------------------
Currency translation differences                          (645)       (663)
---------------------------------------------------------------------------
Retained earnings                                       114,713     117,232
---------------------------------------------------------------------------
                                                        122,790     125,698
---------------------------------------------------------------------------
TOTAL EQUITY                                            126,482     128,966
---------------------------------------------------------------------------
                                                                           
---------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY                            237,840     211,088
---------------------------------------------------------------------------



Interim report and the investor presentation are attached to the announcement
and are also published on NASDAQ Tallinn and Merko’s web page (group.merko.ee). 



Signe Kukin
Group CFO
AS Merko Ehitus
+372 650 1250
[email protected]



AS Merko Ehitus (group.merko.ee) group consists of Estonia’s leading
construction company AS Merko Ehitus Eesti, the Latvian-market-oriented SIA
Merks, UAB Merko Statyba that is operating on the Lithuanian market, Peritus
Entreprenør AS construction company in Norway and the real estate development
business unit along with real estate holding companies. As at the end of 2016,
the group employed 797 people and the company’s 2016 revenue was EUR 252
million.