Börsiteade

Pealkiri

2025 12 months and IV quarter consolidated unaudited interim report

Teade

COMMENTARY FROM MANAGEMENT

In  the fourth quarter of 2025, Merko Ehitus generated revenue of EUR 69 million
and  net profit  of EUR  3.2 million; for  the full  year, revenue  was EUR 311
million  and net profit  EUR 39.9 million. In  coordination with the supervisory
board,  the management board of Merko Ehitus proposes paying a dividend of 1.25
euros per share.

According to the management of Merko Ehitus, the results in 2024 were remarkably
strong in terms of both turnover and profit, as contracts signed a few years ago
in  turbulent  market  conditions  reached  completion  and  various large-scale
projects  were delivered.  In 2025, more  typical volumes  and revenue structure
returned,  with real  estate development  playing a  larger role in results. The
group's financial position remains solid and net debt is negative.

In 2025, Merko completed construction of two of the largest projects in history:
the  Arter  Quarter  in  Tallinn  and  the  Pabrad? defence campus in Lithuania.
Gradually improving consumer confidence and economic growth recorded for several
consecutive  quarters are reflected  above all in  increasing demand in the real
estate  market. Private-sector clients remain  cautious in ordering construction
services,   while   tenders   are   dominated  by  large  public-sector  defence
infrastructure projects. As the market is extremely concentrated, competition in
tenders is strong and margins have been driven down to very low levels.

In  2025, Merko  signed  new  construction  contracts worth EUR 363 million, the
largest  of  which  were  agreements  for  the  Rail  Baltica Ülemiste passenger
terminal and the Tallinn-Pärnu main line, a hotel and event centre in Pärnu, the
Viktor  Masing office building  in Tallinn, and  the construction of foundations
for  the Augstkalni wind farm in Latvia.  The balance of secured order-book work
for external clients stood at EUR 467 million at the end of 2025. In 2025, group
companies  signed new construction contracts in a slightly higher volume than in
2024. As  a  result  of  the  long-term  and  thorough  preparatory  work of our
Lithuanian  colleagues, Merko concluded  largest contracts in  the first days of
2026 for  the construction of two stages  of the R?dninkai defence force campus,
which  has by now raised portfolio of  unfinished work for external clients to a
historically highest level of more than 800 million euros.

Companies  operating under the Connecto brand,  in which Merko holds a financial
investment,  also  made  a  strong  contribution  to  the  group's 2025 results.
Connecto's workload has been high over the past couple of years, but the outlook
is  notably more modest  due to the  completion of many  large-scale projects in
2025 and gradually declining investments in energy infrastructure.

The  residential real estate market has taken an upward turn across all our home
markets.  Compared to 2024, in 2025 Merko handed over more apartments to buyers,
signed   significantly  more  pre-sale  agreements  in  Its  developments  under
construction, and launched construction of over three times more apartments, the
majority  of them in  Vilnius, which remains  the most active  market. In 2025,
Merko  delivered  358 apartments  and  3 commercial  units to buyers in Estonia,
Latvia and Lithuania and started the construction and sale of 894 apartments and
21 commercial  premises, of which 26% are covered by pre-sale agreements. Larger
development  projects  underway  in  2025 included  Uus-Veerenni, Noblessner and
Lahekalda  in  Tallinn,  Õielehe  in  the  settlement of Jüri, and Erminurme and
Leedri  in Tartu;  Lucavsala, Arena  Garden Towers  and Mezhpils?ta  in Riga; and
Vilnel?s Skverai and Shnipishki? Urban in Vilnius.

In  the fourth  quarter of  2025, the larger  construction projects  in progress
included  the Tallinn Kullo Hobby Centre and the City Plaza 2 office building in
Tallinn, the National Defence Building in Tartu, and  the hotel and event centre
in Pärnu, as well as the Rail Baltica Ülemiste passenger terminal and the fourth
stage  of  the  Rail  Baltica  mainline  in  Harju  County and the Tallinn-Pärnu
section.  In  Lithuania,  the  largest  construction  projects  were  wind  farm
infrastructure  in  the  Pag?giai,  Telshiai  and  Pasvalys districts, as well as
various  national  defence  buildings  and  infrastructure. In Latvia, a student
hotel  was  under  construction  in  Riga  and  infrastructure facilities at the
Augstkalni wind farm.

OVERVIEW OF THE IV QUARTER AND 12 MONTHS RESULTS

PROFITABILITY
2025 12 months'  pre-tax profit  was EUR  44.8 million and  Q4 2025 was EUR 4.6
million  (12M 2024: EUR  76.4 million and  Q4 2024 was  EUR 26.8 million), which
brought the pre-tax profit margin to 14.4% (12M 2024: 14.2%).
Net  profit attributable to shareholders for 12 months 2025 was EUR 39.9 million
(12M  2024: EUR  64.7 million)  and  for  Q4  2025 net  profit  attributable  to
shareholders  was  EUR  3.2 million  (Q4  2024: EUR 19.9 million). 12 months net
profit margin was 12.8% (12M 2024: 12.0%).

REVENUE
Q4 2025 revenue was EUR 69.1 million (Q4 2024: EUR 160.4 million) and 12 months'
revenue  was EUR 310.9 million (12M 2024: EUR 539.0 million). 12 months' revenue
decreased  by  42.3% compared  to  same  period  last year. The share of revenue
earned outside Estonia in 12 months 2025 was 45.1% (12M 2024: 58.3%).

SECURED ORDER BOOK
As of 31 December 2025, the group's secured order book was EUR 466.9 million (31
December  2024: EUR  340.6 million).  In  12 months 2025, group companies signed
contracts  in the amount of EUR  362.8 million (12M 2024: EUR 338.0 million). In
Q4  2025, new contracts were signed in the amount of EUR 40.1 million (Q4 2024:
EUR 45.9 million).

REAL ESTATE DEVELOPMENT
In 12 months 2025, the group sold a total of 358 apartments; in 12 months 2024,
the  group sold 323 apartments.  The group earned  a revenue of EUR 67.8 million
from  sale of own developed apartments in 12 months 2025 and EUR 58.9 million in
12 months  2024. In Q4 of  2025 a total of  43 apartments were sold, compared to
129 apartments  in Q4 2024, and earned a revenue of EUR 8.1 million from sale of
own developed apartments (Q4 2024: EUR 22.9 million).

CASH POSITION
At  the end of the reporting period, the  group had EUR 41.4 million in cash and
cash  equivalents,  and  equity  of  EUR  260.6 million (62.8% of total assets).
Comparable  figures as of 31 December 2024 were  EUR 91.9 million and EUR 254.3
million  (56.9%  of  total  assets),  respectively.  As of 31 December 2025, the
group's  net debt was  negative EUR 8.3 million  (31 December 2024: negative EUR
58.5 million).

PROPOSAL FOR DISTRIBUTION OF PROFITS
The  Management  Board  proposes  to  the  Supervisory  Board  to  distribute to
shareholders  EUR 22.1 million in dividends (1.25 euros per share) from retained
earnings in 2026. This is equivalent to a 55% dividend rate for 2025.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros

                                         2025      2024        2025        2024
                                    12 months 12 months  IV quarter  IV quarter

 Revenue                              310,941   539,049      69,142     160,373

 Cost of goods sold                 (255,081) (443,162)    (60,332)   (127,565)

 Gross profit                          55,860    95,887       8,810      32,808



 Marketing expenses                   (5,823)   (5,030)     (2,070)     (1,664)

 General and administrative
 expenses                            (17,478)  (21,908)     (4,480)     (6,793)

 Other operating income                 2,285     5,724         688         759

 Other operating expenses               (501)   (2,190)       (230)         322

 Operating profit                      34,343    72,483       2,718      25,432



 Finance income/costs                  10,425     3,931       1,894       1,407

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

 finance income/costs from joint
 ventures                              10,381     9,951       1,895       3,317

 interest expense                       (836)   (1,823)       (225)       (354)

 foreign exchange gain (loss)            (18)     (948)        (37)        (17)

 other financial income (expenses)        898     1,838         261         429

 Profit before tax                     44,768    76,414       4,612      26,839



 Corporate income tax expense         (4,850)  (11,820)     (1,378)     (6,953)



 Net profit for financial year         39,918    64,594       3,234      19,886

 incl. net profit attributable to
 equity holders of the parent          39,918    64,668       3,234      19,887

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



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

 Currency translation differences
 of foreign entities                       20       105          31        (24)

 Comprehensive income for the
 period                                39,938    64,699       3,265      19,862

 incl. net profit attributable to
 equity holders of the parent          39,938    64,764       3,265      19,862

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

 Earnings per share for profit
 attributable to equity holders of
 the parent (basic and diluted, in
 EUR)                                    2.26      3.65        0.18        1.12

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros

                                                     31.12.2025 31.12.2024

 ASSETS

 Current assets

 Cash and cash equivalents                               41,424     91,879

 Short-term deposits                                     18,000     10,000

 Trade and other receivables                             43,658     51,419

 Prepaid corporate income tax                             1,347        270

 Inventories                                            219,812    196,521

                                                        324,241    350,089

 Non-current assets

 Investments in joint ventures                           31,957     21,571

 Other shares and securities                                 80         80

 Other long-term loans and receivables                   20,658     40,196

 Deferred income tax assets                               2,874      5,056

 Investment property                                     12,395     12,606

 Property, plant and equipment                           22,117     17,147

 Intangible assets                                          714        350

                                                         90,795     97,006



 TOTAL ASSETS                                           415,036    447,095



 LIABILITIES

 Current liabilities

 Borrowings                                               3,079     21,303

 Payables and prepayments                                95,920    129,786

 Income tax liability                                       510      7,101

 Deferred income from government grant                        2          -

 Short-term provisions                                   10,426      7,678

                                                        109,937    165,868

 Non-current liabilities

 Long-term borrowings                                    30,012     12,102

 Deferred income tax liability                            7,448      6,148

 Other long-term payables                                 7,073      8,719

                                                         44,533     26,969



 TOTAL LIABILITIES                                      154,470    192,837



 EQUITY

 Non-controlling interests                                    -          -

 Equity attributable to equity holders of the parent

 Share capital                                            7,929      7,929

 Statutory reserve capital                                  793        793

 Currency translation differences                          (21)       (41)

 Retained earnings                                      251,865    245,577

                                                        260,566    254,258

 TOTAL EQUITY                                           260,566    254,258



 TOTAL LIABILITIES AND EQUITY                           415,036    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  2025, the group employed  617 people, and the
group's revenue for 2025 was EUR 311 million.