Merko Ehitus

Earnings Release • May 16, 2025

2025 3 months consolidated unaudited interim report

2025 3 months consolidated unaudited interim report

COMMENTARY FROM MANAGEMENT

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

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

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

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

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

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

OVERVIEW OF THE 3 MONTHS RESULTS

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

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

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

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

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros

                                                    2025     2024      2024
                                                3 months 3 months 12 months

Revenue 85,236 81,185 539,049

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

Gross profit 14,913 8,884 95,887

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

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

Other operating income 561 1,324 5,724

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

Operating profit 9,883 4,045 72,483

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

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

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

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

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

other financial income (expenses) 311 434 1,838

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

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

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

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

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

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

Currency translation differences of foreign
entities (59) 106 105

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

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

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

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros

                                           31.03.2025 31.03.2024 31.12.2024

ASSETS

Current assets

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

Short-term deposits 17,000 - 10,000

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

Prepaid corporate income tax 105 6 270

Inventories 197,861 196,518 196,521

                                              356,306    343,806    350,089

Non-current assets

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

Other shares and securities 80 80 80

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

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

Investment property 12,525 16,740 12,606

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

Intangible assets 388 487 350

                                               77,358     82,308     97,006

TOTAL ASSETS 433,664 426,114 447,095

LIABILITIES

Current liabilities

Borrowings 10,110 12,909 21,303

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

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

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

                                              139,314    164,011    165,868

Non-current liabilities

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

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

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

                                               29,691     45,713     26,969

TOTAL LIABILITIES 169,005 209,724 192,837

EQUITY

Non-controlling interests - (191) -

Equity attributable to equity holders of the
parent

Share capital 7,929 7,929 7,929

Statutory reserve capital 793 793 793

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

Retained earnings 256,037 208,598 245,577

                                              264,659    216,581    254,258

TOTAL EQUITY 264,659 216,390 254,258

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

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

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

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