Börsiteade

Pealkiri

2024 12 months and IV quarter consolidated unaudited interim report

Teade

COMMENTARY FROM MANAGEMENT

Merko  Ehitus posted revenue  of EUR 160.4 million  and net profit  of EUR 19.9
million  in Q4 of 2024. The respective figures for the entire year 2024 were EUR
539 million  and EUR 64.7 million. Approximately  90% of revenue came from sales
of  construction services and 53% was earned  in Lithuania. In coordination with
the  supervisory board,  the management  board of  Merko Ehitus  proposes to the
general shareholder meeting to pay out EUR 1.90 per share as dividends.

According  to the management of Merko  Ehitus, the solid results of 2024 stemmed
from  the right decisions in terms of  focusing on selected sectors and specific
projects,  and the teams' superb work  both in terms of efficient implementation
of  projects and management of risks  and expenses. In 2024, contracts signed in
the  turbulent 2021-2022 period, the bulk of  the construction on Arter Quarter,
the  tram line to Old City Harbour,  TKM Group logistics centre, the third stage
of  Vilneles Skverai  apartment development  in Vilnius  and construction of the
large-scale  Lithuanian  wind  energy  infrastructure  were  completed.  A joint
venture in which the group has a 50% holding, Connecto Infra, delivered a strong
performance  in  whole  year  of  2024. The  Merko Group's financial position is
strong  and net  debt negative;  and the  lower need  for loans  translated into
savings on financial expenses during a period of higher interest rates.

During  the last two years, the group's  Lithuanian team started work on a large
number  of complicated wind farm infrastructure  projects. They were able to tap
into the economy of scale effect and build a record 87 turbine foundations using
what  was effectively an industrial production process, at a consistent pace and
record  speed. In addition, risks  were avoided, and all  of it together yielded
significant  savings on  expenses. Expenses  were also  reduced by the fact that
work on a national defence site in Lithuania are executed ahead of schedule.

During  2024, the group's  companies entered  into close  to one-third fewer new
contracts  than in 2023 and the secured  order book was significantly lower than
the previous year. Construction contracts generally have a term of 18-24 months,
and considering the economic climate, low investments and procurements being won
with  very  low  prices  seen  since  2023 a  complicated  2025 and 2026 for the
Estonian and Latvian construction sector can be expected. As for developments in
Lithuania, there are grounds for much greater optimism there. In 2024, companies
of Merko Group signed new construction contracts worth EUR 338 million, which is
nearly one-third less than in 2023 (EUR 501 million). As at the end of the year,
the group's balance of secured order-book was EUR 341 million.

Due  to the  changed market  situation, the  results of  real estate development
division  are significantly more modest than in previous years. The 2024 revenue
was  only 40% of that of 2023, yet Merko  has managed to retain profitability in
this  business area. Despite the softer real  estate market, the default rate on
obligational  contracts did not  increase and it  has been succeeded in reducing
balance  of apartments still waiting to  be sold. The weakest economic sentiment
is seen in Estonia and the strongest sentiment is in Lithuania, where the market
for  new apartments is active and we are increasing our supply. In Latvia, it is
hoped  to stay at the  current market levels and  in Estonia, buoyed by the more
active  real estate aftermarket, there  are looking ahead to  growth in sales of
new real estate.

In  2024, Merko delivered 323 apartments  and 11 commercial units  to buyers. In
the  course  of  the  year,  Merko  launched  construction  and sales of 259 new
apartments,  and as of the end of the year, our balance stood at 633 apartments,
of which 17% were covered by preliminary sale contracts. The largest development
projects  in progress were, in  Tallinn, Uus-Veerenni, Noblessner and Lahekalda;
in  Tartu, Erminurme;  while in  Riga the  leaders were  Lucavsala, Arena Garden
Towers,  Viesturd?rzs,  Mezhpils?ta  and  Magnolijas;  and  in  Vilnius, Vilnel?s
Skverai.

In  2024, the  largest  projects  in  progress  in  Estonia  were  the TKM Group
logistics  centre,  the  Hampton  by  Hilton  and  Hyatt  hotel buildings, Arter
Quarter,  the  City  Plaza  2 office  building  in Tallinn, the Estonian Defence
Forces  buildings at Ämari base,  a tram line between  Old City Harbour and Rail
Baltica  Ülemiste passenger terminal, the first stage of the Ülemiste multimodal
transport   junction  and  the  Rail  Baltica's  Tõdva  highway  overpasses.  In
Lithuania,  the  largest  sites  under  way  were  the  wind farm infrastructure
projects  in  Kelm?,  Pag?giai  and  Telshiai  regions, a substation in Kelm? and
various national defence buildings and infrastructure. In Latvia, a solar energy
farm in V?rme municipality and a student hotel in Riga were under construction.

OVERVIEW OF THE IV QUARTER AND 12 MONTHS RESULTS

PROFITABILITY
2024 12 months'  pre-tax profit was  EUR 76.4 million and  Q4 2024 was EUR 26.8
million  (12M 2023: EUR  52.0 million and  Q4 2023 was  EUR 18.1 million), which
brought the pre-tax profit margin to 14.2% (12M 2023: 11.1%).
Net  profit attributable to shareholders for 12 months 2024 was EUR 64.7 million
(12M  2023: EUR  46.0 million)  and  for  Q4  2024 net  profit  attributable  to
shareholders  was EUR  19.9 million (Q4  2023: EUR 13.9 million).  12 months net
profit margin was 12.0% (12M 2023: 9.9%).

REVENUE
Q4  2024 revenue  was  EUR  160.4 million  (Q4  2023: EUR 126.5 million) and 12
months'  revenue was EUR 539.0 million (12M 2023: EUR 466.3 million). 12 months'
revenue  increased  by  15.6% compared  to  same  period last year. The share of
revenue earned outside Estonia in 12 months 2024 was 58.3% (12M 2023: 39.3%).

SECURED ORDER BOOK
As of 31 December 2024, the group's secured order book was EUR 340.6 million (31
December  2023: EUR  477.5 million).  In  12 months 2024, group companies signed
contracts  in the amount of EUR  338.0 million (12M 2023: EUR 500.8 million). In
Q4  2024, new contracts were signed in the amount of EUR 45.9 million (Q4 2023:
EUR 121.4 million).

REAL ESTATE DEVELOPMENT
In 12 months 2024, the group sold a total of 323 apartments; in 12 months 2023,
the  group sold 948 apartments.  The group earned  a revenue of EUR 58.9 million
from sale of own developed apartments in 12 months 2024 and EUR 137.5 million in
12 months  2023. In Q4 of 2024 a total  of 129 apartments were sold, compared to
283 apartments in Q4 2023, and earned a revenue of EUR 22.9 million from sale of
own developed apartments (Q4 2023: EUR 31.4 million).

CASH POSITION
At  the end of the reporting period, the  group had EUR 91.9 million in cash and
cash  equivalents,  and  equity  of  EUR  254.3 million (56.9% of total assets).
Comparable  figures as of 31 December 2023 were  EUR 77.3 million and EUR 212.1
million  (49.9%  of  total  assets),  respectively.  As of 31 December 2024, the
group's  net debt was negative EUR  58.5 million (31 December 2023: negative EUR
22.5 million).

PROPOSAL FOR DISTRIBUTION OF PROFITS
The  Management  Board  proposes  to  the  Supervisory  Board  to  distribute to
shareholders  EUR 33.6 million in dividends (1.90 euros per share) from retained
earnings in 2025. This is equivalent to a 52% dividend rate for 2024.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros

                                           2024      2023       2024       2023
                                      12 months 12 months IV quarter IV quarter

 Revenue                                539,049   466,304    160,373    126,466

 Cost of goods sold                   (443,162) (401,267)  (127,565)  (104,625)

 Gross profit                            95,887    65,037     32,808     21,841



 Marketing expenses                     (5,030)   (4,312)    (1,664)    (1,299)

 General and administrative expenses   (21,908)  (19,423)    (6,793)    (6,527)

 Other operating income                   5,724     4,171        759        772

 Other operating expenses               (2,190)     (991)        322      (377)

 Operating profit                        72,483    44,482     25,432     14,410



 Finance income/costs                     3,931     7,500      1,407      3,735

 incl. finance income/costs from
 investments in subsidiaries            (5,087)         -    (1,968)          -

 finance income/costs from joint
 ventures                                 9,951    10,220      3,317      4,159

 interest expense                       (1,823)   (2,697)      (354)      (686)

 foreign exchange gain (loss)             (948)     (153)       (17)         39

 other financial income (expenses)        1,838       130        429        223

 Profit before tax                       76,414    51,982     26,839     18,145



 Corporate income tax expense          (11,820)   (6,081)    (6,953)    (4,254)



 Net profit for financial year           64,594    45,901     19,886     13,891

 incl. net profit attributable to
 equity holders of the parent            64,668    46,048     19,887     13,900

 net profit attributable to non-
 controlling interest                      (74)     (147)        (1)        (9)



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

 Currency translation differences of
 foreign entities                           105      (41)       (24)       (25)

 Comprehensive income for the period     64,699    45,860     19,862     13,866

 incl. net profit attributable to
 equity holders of the parent            64,764    45,993     19,862     13,877

 net profit attributable to non-
 controlling interest                      (65)     (133)          -       (11)

 Earnings per share for profit
 attributable to equity holders of
 the parent (basic and diluted, in
 EUR)                                      3.65      2.60       1.12       0.79

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros

                                                     31.12.2024 31.12.2023

 ASSETS

 Current assets

 Cash and cash equivalents                               91,879     77,330

 Short-term deposits                                     10,000          -

 Trade and other receivables                             51,419     68,754

 Prepaid corporate income tax                               270          2

 Inventories                                            196,521    195,435

                                                        350,089    341,521

 Non-current assets

 Investments in joint ventures                           21,571     21,915

 Other shares and securities                                 80         80

 Other long-term loans and receivables                   40,196     24,490

 Deferred income tax assets                               5,056      3,298

 Investment property                                     12,606     16,823

 Property, plant and equipment                           17,147     16,613

 Intangible assets                                          350        520

                                                         97,006     83,739



 TOTAL ASSETS                                           447,095    425,260



 LIABILITIES

 Current liabilities

 Borrowings                                              21,303     19,673

 Payables and prepayments                               129,786    133,898

 Income tax liability                                     7,101      4,260

 Short-term provisions                                    7,678     10,451

                                                        165,868    168,282

 Non-current liabilities

 Long-term borrowings                                    12,102     35,142

 Deferred income tax liability                            6,148      4,441

 Other long-term payables                                 8,719      5,495

                                                         26,969     45,078



 TOTAL LIABILITIES                                      192,837    213,360



 EQUITY

 Non-controlling interests                                    -      (155)

 Equity attributable to equity holders of the parent

 Share capital                                            7,929      7,929

 Statutory reserve capital                                  793        793

 Currency translation differences                          (41)      (838)

 Retained earnings                                      245,577    204,171

                                                        254,258    212,055

 TOTAL EQUITY                                           254,258    211,900



 TOTAL LIABILITIES AND EQUITY                           447,095    425,260

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.