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Merko Ehitus Interim / Quarterly Report 2026
2220_rns_2026-05-07_cd8cc25b-a903-4360-911d-c218f8d45c24.pdf
Interim / Quarterly Report
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merko
AS MERKO EHITUS
GROUP
2026 3 months
consolidated unaudited interim report
Business name: AS Merko Ehitus
Main activities: Holding companies
General contracting of construction
Real estate development
Commercial Register No.: 11520257
Address: Järvevana tee 9G, 11314 Tallinn
Postal address: Pärnu mnt 141, 11314 Tallinn
Phone: +372 650 1250
E-mail: [email protected]
Web site: group.merko.ee
Financial year: 01.01.2026 – 31.12.2026
Reporting period: 01.01.2026 – 31.03.2026
Supervisory Board: Toomas Annus, Indrek Neivelt, Kristina Siimar, Tõnu Toomik
Management Board: Ivo Volkov, Urmas Somelar
Auditor: Ernst & Young Baltic AS
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
TABLE OF CONTENTS
BRIEF OVERVIEW OF THE GROUP...3
MANAGEMENT REPORT...5
MANAGEMENT BOARD'S DECLARATION...18
INTERIM FINANCIAL STATEMENTS...19
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME...19
CONSOLIDATED STATEMENT OF FINANCIAL POSITION...20
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY...21
CONSOLIDATED CASH FLOW STATEMENT...22
NOTES...23
NOTE 1 ACCOUNTING POLICIES USED...23
NOTE 2 OPERATING SEGMENTS...23
NOTE 3 COST OF GOODS SOLD...26
NOTE 4 EARNINGS AND DIVIDENDS PER SHARE...26
NOTE 5 CASH AND CASH EQUIVALENTS...27
NOTE 6 TRADE AND OTHER RECEIVABLES...27
NOTE 7 INVENTORIES...28
NOTE 8 OTHER LONG-TERM LOANS AND RECEIVABLES...28
NOTE 9 INVESTMENT PROPERTY...28
NOTE 10 PROPERTY, PLANT AND EQUIPMENT...29
NOTE 11 INTANGIBLE ASSETS...29
NOTE 12 BORROWINGS...30
NOTE 13 PAYABLES AND PREPAYMENTS...30
NOTE 14 SHORT-TERM PROVISIONS...31
NOTE 15 OTHER LONG-TERM PAYABLES...31
NOTE 16 RELATED PARTY TRANSACTIONS...31
NOTE 17 CONTINGENT LIABILITIES...34
DEFINITION OF RATIOS...35
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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BRIEF OVERVIEW OF THE GROUP
Companies in the Merko Ehitus group develop real estate, construct buildings and infrastructure.
We operate in Estonia, Latvia and Lithuania. We create a better living environment and build the future.
We are the largest listed construction company and residential developer in the Baltics
The construction company with the largest equity in the Baltics, long-term capability to self-finance its projects
A strong position on the Baltic construction market, the leading residential real estate developer
International quality, environmental protection and occupational safety certificates ISO 9001, ISO 14001, ISO 45001
SHARES
The shares are listed in the Main List of NASDAQ Tallinn since 1997.
The main shareholder is AS Riverito (72%)
2025 KEY FIGURES
Revenue 310.9 million euros
Net profit 39.9 million euros
613 employees
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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MERKO VALUES
MERKO ESSENCE
STRATEGY
AS Merko Ehitus subsidiaries provide construction services in the field of building and infrastructure construction and develop residential real estate in their home markets of Estonia, Latvia and Lithuania. We want to be the preferred partner for those who value quality, both in the performance of construction works and in the development and sale of apartments, as well as in contributing to society. As a caring and development-oriented employer, we ensure that our employees are professional and motivated, each of whom contributes to the joint result of each company, each unit and Merko itself. By focusing on profitability, cost base efficiency and the best employees, we ensure the investor a long-term profitable investment.
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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MANAGEMENT REPORT
COMMENTARY FROM MANAGEMENT
Merko Ehitus generated revenue of EUR 57 million in the first quarter of 2026, with a net profit of EUR 4.3 million. As of the end of the first quarter, the company's secured order book reached an all-time high of EUR 826 million.
According to the management of Merko Ehitus, the first-quarter results were in line with expectations. By mid-2025, the group had completed several large-scale projects that made a significant contribution to revenue and profit, while also creating a high comparison base for the first half of this year. Although the results for the first quarter of 2026 were lower than in the same period last year, they are comparable to the results of preceding years.
The private sector remains cautious in placing orders, and the market continues to be driven primarily by public sector tenders in defence and infrastructure. In January, Merko signed the largest contracts in history for the construction of two phases of the Rüdninkai military campus in Lithuania. Under these PPP contracts group is responsible for building sections B and C of the campus and managing them for more than ten years after completion. In March, Merko also launched construction works on a military campus in Latvia. The total construction cost of these projects in Lithuania and Latvia exceeds EUR 400 million, which has increased the order book to a record-high level of EUR 826 million. For large-scale construction projects, the preparation and design phases are lengthy, meaning their impact on revenue will become more visible toward the end of 2026. For current year, the goal is to exceed last year's sales revenue. It is important to note that due to the scale of these projects, results are more volatile, as the impact of each individual project is substantial. This was already observed last year with the Arter and Pabradė projects and will remain the case in the coming years. In the first quarter of 2026, Merko signed new construction contracts worth EUR 407 million.
Global uncertainty persists. In addition to the war in Ukraine, a new crisis hotspot has emerged in the Strait of Hormuz, constraining one of the world's key energy and oil supply routes and raising concerns not only about oil prices but also about availability. This has a significant impact on the construction sector, as oil is not only a direct energy source but also a key raw material for the chemical and plastics industries. For construction companies, this creates additional risks, particularly in fulfilling long-term, non-indexed contracts signed over the past year. The successful completion of such projects and the performance of construction companies will depend on the willingness of clients and contractors to cooperate.
In real estate development, there are seeing the effects of the market downturn from three to four years ago, which led the group to launch fewer new developments at that time. As a result, Merko reported significantly fewer apartment handovers in the first quarter. Demand for new apartments has increased over the past 12-18 months, enabling the group to start construction on a larger number of new apartments, which creates a solid basis for improved results going forward. Over 800 apartments are scheduled for completion this year, with a substantial proportion located in Vilnius, the most active market. Over 40% of the apartments under construction have already been pre-sold.
In the first quarter of 2026, major development projects included Uus-Veerenni, Noblessner and Lahekalda in Tallinn; Erminurme and Leedri in Tartu; Lucavsala, Arena Garden Towers and Mežpilsēta in Riga; and Vilnelės Skverai and Šnipiškių Urban in Vilnius. During the first three months of the year, Merko delivered 36 apartments and 3 commercial units to buyers and launched the construction and sales of 38 apartments in the Ūielehe project in Jūri.
In Estonia, the company's largest ongoing projects in the first quarter of 2026 included the City Plaza 2 and Viktor Masing office buildings, the Kullo Hobby Centre 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, major construction projects included wind farm infrastructure in the Pagėgiai and Telšiai regions and the Rüdninkai military campus. In Latvia, Merko was engaged in the construction of a student hotel in Riga and wind farm infrastructure in the Smiltene municipality.
2026 3M REVENUE 57 MILLION EUROS
AS OF 31.03.2026 SECURED ORDER BOOK 826 MILLION EUROS
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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OVERVIEW OF THE 3 MONTHS RESULTS
PROFITABILITY
2026 3 months' pre-tax profit was EUR 1.7 million (3M 2025: EUR 11.6 million), which brought the pre-tax profit margin to 3.0% (3M 2025: 13.6%).
Net profit attributable to shareholders for 3 months 2026 was EUR 4.3 million (3M 2025: EUR 10.5 million) and 3 months net profit margin was 7.6% (3M 2025: 12.3%).
REVENUE
2026 3 months' revenue was EUR 57.2 million (3M 2025: EUR 85.2 million). 3 months' revenue decreased by 32.9% compared to same period last year. The share of revenue earned outside Estonia in 3 months 2026 was 42.1% (3M 2025: 45.6%).
SECURED ORDER BOOK
As of 31 March 2026, the group's secured order book was EUR 825.8 million (31 March 2025: EUR 331.9 million). In 3 months 2026, group companies signed contracts in the amount of EUR 406.8 million (3M 2025: EUR 50.6 million).
REAL ESTATE DEVELOPMENT
In 3 months 2026, the group sold a total of 36 apartments; in 3 months 2025, the group sold 121 apartments. The group earned a revenue of EUR 7.0 million from sale of own developed apartments in 3 months 2026 and EUR 24.7 million in 3 months 2025.
CASH POSITION
At the end of the reporting period, the group had EUR 40.6 million in cash and cash equivalents, and equity of EUR 264.7 million (62.3% of total assets). Comparable figures as of 31 March 2025 were EUR 78.5 million and EUR 264.7 million (61.0% of total assets), respectively. As of 31 March 2026, the group's net debt was EUR 8.5 million (31 March 2025: negative EUR 53.4 million).
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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OUTLOOK OF CONSTRUCTION AND REAL ESTATE MARKET
CONSTRUCTION SERVICES
Despite the outbreak of the Iran war on the last day of February, changes in construction-related indices remained within their usual ranges in the first quarter overall. The rise in energy prices is reflected in the construction price index with a lag, and similarly, inflationary pressures reach construction wage and material costs with at least a six-month delay. A secondary effect of this lag is the spreading of increases of universal input prices – labour and energy – over a longer period. From forecast angle, such distribution over time results in a continued steady rise, and the decline in construction prices anticipated by many investors has not and will not materialise – prices continue to increase even in markets with low activity. These developments do not exclude the possibility of another price shock in the event of negative developments in the Iran war or the expansion of hostilities to new regions. No prerequisites are fulfilled for a halt in price growth, let alone a decline. We
maintain our position that construction price indices will not decrease this year, and that the next meaningful movements will be seen after new political agreements related to the Green Deal and/or a stabilisation of global tensions.
The continued scarcity of private sector orders and intense competition have increased the sector's dependence on public sector or publicly funded contracts. The growth in construction volumes in Estonia and Latvia anticipated in the annual report's economic commentary materialised only in Latvia, where the market was active not only in the defence sector but also in renewable energy and residential construction. In Estonia, although many Rail Baltica projects were underway, their volumes remained modest, and the slight growth in residential construction was unable to compensate for the stagnation in renewable energy facilities. Orders for defence-related facilities remain at a high level across all Baltic countries. At the time of preparing the report, Eurostat had not yet published construction volume indices for the first quarter, but volumes likely declined due to postponed works caused by cold weather in January and February in both road construction and general construction. Future developments depend directly on the resolution or
escalation of ongoing armed conflicts. While the Iran war primarily affects investors' budgets through energy prices, the course of the war in Ukraine and the associated threat assessments directly influence the volume of defence-related orders placed by governments. Despite the inflationary pressures stemming from energy prices as a result of the Iran war, we continue to assess the economic growth outlook in our key markets as positive, including expecting moderate growth in the construction sector in the Baltics.
DEVELOPMENT OF APARTMENTS
The markets for new residential developments in the Baltics have increasingly diverged. While Lithuania continues to demonstrate strong growth and prices in Vilnius have already begun to surpass those in Tallinn, weaker consumer confidence indices in Estonia and Latvia are keeping those markets subdued. In the final months of 2025, we observed a halt in the new development market in Estonia; in Latvia, this occurred somewhat earlier. However, the market as a whole has not stalled, as banks continue to report high volumes of housing loan issuance. It is likely that buyer interest has shifted from new developments to somewhat more affordable properties available on the secondary market. Although Eurostat's price index data may suggest that a price correction occurred in Estonia at the end of 2025, we believe this reflects a higher share of lower-priced suburban apartments.
Riga was clearly the most affordable Baltic capital at the end of the year, but both Tallinn and Vilnius have also improved affordability due to wage growth outpacing the increase in new housing prices. Although inflation is expected to accelerate against the backdrop of rising energy prices and interest rate increases have already materialised, we still expect a stable market for new developments in 2026. Growth may be weaker and shorter than anticipated, but there are currently no evident factors that would cause a decline.
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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BUSINESS ACTIVITIES
The group business reporting is divided into two business segments:
- construction service;
- real estate development.
CONSTRUCTION SERVICE
The construction service in Baltic states consists of services in the fields of general construction, civil engineering and concrete works and, through the joint ventures operating under Connecto brand, Merko provides services for the construction of energy infrastructure. In addition, the group company Tallinn Teede AS offers road construction services in Estonia.
million EUR
| 3M 2026 | 3M 2025 | VARIANCE | 12M 2025 | |
|---|---|---|---|---|
| Revenue | 48.2 | 59.1 | -18.3% | 237.6 |
| % of total revenue | 84.3% | 69.3% | 76.4% | |
| Operating profit | 0.2 | 3.7 | -95.8% | 25.7 |
| Operating profit margin | 0.3% | 6.3% | 10.8% |
In the 3 months of 2026, the revenue of the construction service segment was EUR 48.2 million (3M 2025: EUR 59.1 million). The sales revenue of construction service has decreased by 18.3% compared to the same period last year. The construction service segment revenue for 3 months 2026 made up 84.3% of the group's total revenue (3M 2025: 69.3%). In this segment, the group earned an operating profit of EUR 0.2 million for 3 months (3M 2025: EUR 3.7 million). The operating profit margin was 0.3% (3M 2025: 6.3%). The operating profit margin was mainly impacted by the expiration of successful contracts highlighted in previous periods and a return to sector's more typical margins in a highly competitive environment, additionally affected by Q1 seasonality.
Larger projects in progress in the first quarter in construction service segment in Estonia included the office buildings City Plaza 2 and Viktor Masing house, as well as Hobby Centre Kullo in Tallinn, the national defence building in Tartu, the hotel and event-centre in Pärnu, the Rail Baltic's Ülemiste passenger terminal as well as the fourth stage of Rail Baltica Harjumaa mainline and mainline Tallinn-Pärnu section. In Lithuania, larger projects were construction of wind farm infrastructure works in Pagėgiai and Telšiai districts and Rūdninkai Defence Force Campus were underway. In Latvia, the group was working on the construction of a student hotel in Riga as well wind farm infrastructure works in Smiltene parish.
REAL ESTATE DEVELOPMENT
The real estate development segment includes residential real estate development and construction of joint venture projects, long-term real estate investments in Estonia, Latvia and Lithuania. To ensure the finest quality, as well as maximum convenience and assurance for apartment buyers, Merko handles all phases of development: acquisition of the real estate, planning, design of the development project, construction, marketing and sales, and warranty-period customer service.
million EUR
| 3M 2026 | 3M 2025 | VARIANCE | 12M 2025 | |
|---|---|---|---|---|
| Revenue | 9.0 | 26.2 | -65.6% | 73.4 |
| incl. revenue from sale of apartments | 7.0 | 24.7 | 67.8 | |
| % of total revenue | 15.7% | 30.7% | 23.6% | |
| Operating profit | 1.8 | 7.0 | -73.8% | 13.4 |
| Operating profit margin | 20.2% | 26.6% | 18.2% |
In 3 months 2026, the group sold a total of 36 apartments (incl. 2 apartments in a joint venture) and 3 commercial premises; in 3 months 2025, 121 apartments (incl. 2 apartments in a joint venture) and 1 commercial premise. The group earned a revenue of EUR 7.0 million (VAT not included) from sale of developed apartments in 3 months 2026 and EUR 24.7 million in 3 months 2025. In the revenue and operating profit of the real estate development segment also are reflected the sales of commercial premises and parking spaces of the real estate development projects and the result of public-private-partnership contracts, based on which the group companies provide property management services for earlier constructed buildings. For development projects in joint venture, the profit from development gained from sale of those apartments to end-customers is recognised in the group's reporting based on the equity method.
In 3 months of 2026, real estate development segment revenues decreased by 65.6% compared to the same period last year and formed 15.7% of the group's total revenue (3 months of 2025: 30.7%).
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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The segment's operating profit for the 3 months of 2026 amounted to EUR 1.8 million (3 months of 2025: EUR 7.0 million) and the operating profit margin was 20.2% (3 months of 2025: 26.6%). The profitability of the apartment development projects varies by project and depends greatly on the cost structure of the specific project, including the land acquisition price.
In 3 months of 2026, the group launched the construction of a total of 38 new apartments in the Baltic states (3 months of 2025: 312 apartments). In the 3 months, the group invested a total of EUR 18.4 million (3 months of 2025: EUR 10.0 million) in the ongoing development projects.
After the reporting date, the group has started the construction of 105 apartments in the Pētersala residential development project in Riga.
One of the group's objectives is to keep a sufficient portfolio of land plots to ensure stable inventory of property development projects, which considers the market conditions. As of 31 March 2026, the group's inventories included land plots with development potential, where the construction works have not started, in the amount of EUR 88.7 million (31.03.2025: EUR 87.8 million).
GROUP'S INVENTORIES WITH DEVELOPMENT POTENTIAL BY COUNTRY
million EUR
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Estonia | 30.8 | 30.9 | 30.9 |
| Latvia | 22.5 | 23.3 | 22.5 |
| Lithuania | 34.7 | 32.2 | 34.7 |
| Norway | 0.7 | 1.4 | 0.7 |
| Total | 88.7 | 87.8 | 88.8 |
In 3 months of 2026, the group has not obtained new land plots for real estate development purposes (3 months of 2025: in the amount of EUR 7.3 million).
SECURED ORDER BOOK
As of 31 March 2026, the group's secured order book amounted to EUR 825.8 million, compared to EUR 331.9 million as of 31 March 2025, having increased approximately 149% in the annual comparison. The secured order book excludes the group's own residential development projects and construction works related to developing real estate investments.
In 3 months of 2026, EUR 406.8 million worth of new contracts were signed, which is almost eight times more compared to the same period of the previous year (3 months of 2025: EUR 50.6 million).
LARGEST CONSTRUCTION CONTRACTS SIGNED IN THE FIRST QUARTER OF 2026
| BRIEF DESCRIPTION OF CONTRACT | COUNTRY | COMPLETION TIME | VALUE MILLION EUR |
|---|---|---|---|
| Public-private partnership (PPP) contracts containing the design and construction works of the Parts B and C of the Rūdninkai Defence Force Campus in Lithuania | Lithuania | 374.0 | |
| Design-and-build contract for construction of defence campus with permanent accommodations buildings and real-life support area infrastructure in Latvia | Latvia | Q3 2027 | 30.0 |
As of 31 March 2026, the private sector orders accounted for approximately 21% of the total balance in the group's secured order book (31.03.2025: approximately 44%). The growth in the public sector's share is primarily driven by Rail Baltica and defence-related contracts. Private sector clients still remain cautious, assessing profitability conservatively and viewing risks as high in the context of weak economic growth. Planned high-priority public sector investments are proceeding despite the factors holding back the private sector.
The group is focusing on the existing home markets, keeping a diversified operating portfolio as a strategic aim, balancing construction activities with real estate development in different countries.
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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CASH FLOWS
At the end of reporting period, the group had cash and cash equivalents in the amount of EUR 40.6 million (31.03.2025: EUR 78.5 million). As the group's cash position continues to be strong, the group has not utilised all its credit lines of existing overdrafts and loan agreements within reporting period. As of the end of the reporting period, the group entities had concluded overdraft contracts with banks in a total amount of EUR 52.8 million, all of which were unused (31.03.2025: EUR 51.1 million, of which almost all was unused).
The 3-month cash flow from operating activity was negative at EUR 13.1 million (3 months of 2025: positive EUR 2.5 million), cash flow from investing activity was negative at EUR 3.4 million (3 months of 2025: negative EUR 7.5 million) and the cash flow from financing activity was positive at EUR 15.7 million (3 months of 2025: negative EUR 8.3 million).
The cash flow from operating activities had positive effect from EBITDA of EUR 2.3 million (3 months of 2025: positive effect of EUR 10.6 million), from the changes in trade and other payables related to operating activities of EUR 2.4 million (3 months of 2025: negative effect of EUR 9.9 million) and from the change in trade and other receivables related to operating activities of EUR 14.0 million (3 months of 2025: positive effect of EUR 13.6 million). The negative effects to cash flow from operating activities came from the changes in receivables and liabilities related to construction contracts of EUR 13.5 million (3 months 2025: negative effect of EUR 3.3 million), from the change in the provisions of EUR 4.3 million (3 months of 2025: negative effect of EUR 5.9 million) and from the change in inventories of EUR 13.0 million (3 months of 2025: negative effect of EUR 1.2 million). The cash flows from inventories are mainly affected by the construction and sales cyclicality of developed apartments: the negative cash flow is due to the increase in the volume of inventories related to the construction of apartments, then the positive cash flow is due to the decrease in inventories at the sale of the apartments. Interest was paid EUR 0.4 million (3 months of 2025: EUR 0.3 million) and corporate income tax was paid at EUR 0.6 million (3 months of 2025: EUR 1.0 million).
To support cash flows from operating activities, including increased volumes in apartment development, the group has raised additional external capital. At the same time, the debt ratio has remained at a moderate level (11.5% as of 31.03.2026; 5.8% as of 31.03.2025; 8.0% as of 31.12.2025).
Cash flows from investing activities include negative effect from the acquisition of non-current assets in the amount of EUR 0.6 million (3 months of 2025: EUR 0.9 million) as well from the net change in short-term deposits of EUR 3.0 million (3 months of 2025: negative cash flow in the net amount of EUR 7.0 million). The positive impact in cash flows from investing activities came from the sale of non-current assets in the amount of EUR 0.1 million (3 months of 2025: EUR 0) and EUR 0.1 million interest received from the banks (3 months of 2025: EUR 0.4 million).
In cash flows from financing, the larger negative factors were the repayments of lease liabilities in the amount of EUR 0.3 million (3 months of 2025: net negative cash flow of EUR 0.3 million) and the net change in loans related to net amount of loans received and repaid of project specific loans obtained using investment property as collateral in the amount of EUR 0.4 million (3 months of 2025: negative cash flow in the net amount of EUR 0.4 million). Positive cash flow from financing activity resulted from the net change in loans received and repaid in connection with development projects in the amount of EUR 16.4 million, which resulted from the increase in loans taken for residential development projects (3 months of 2025: net negative cash flow of EUR 0.6 million).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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RATIOS
(attributable to equity holders of the parent)
| INCOME STATEMENT SUMMARY | 3M 2026 | 3M 2025 | 3M 2024 | 12M 2025 | |
|---|---|---|---|---|---|
| Revenue | million EUR | 57.2 | 85.2 | 81.2 | 310.9 |
| Gross profit | million EUR | 5.5 | 14.9 | 8.9 | 55.9 |
| Gross profit margin | % | 9.6 | 17.5 | 10.9 | 18.0 |
| Operating profit | million EUR | 1.3 | 9.9 | 4.0 | 34.3 |
| Operating profit margin | % | 2.3 | 11.6 | 5.0 | 11.0 |
| Pre-tax profit | million EUR | 1.7 | 11.6 | 5.2 | 44.8 |
| Pre-tax profit margin | % | 3.0 | 13.6 | 6.4 | 14.4 |
| Net profit | million EUR | 4.3 | 10.5 | 4.4 | 39.9 |
| attributable to equity holders of the parent | million EUR | 4.3 | 10.5 | 4.4 | 39.9 |
| attributable to non-controlling interest | million EUR | - | - | (0.0) | - |
| Net profit margin | % | 7.6 | 12.3 | 5.5 | 12.8 |
| Other income statement indicators | 3M 2026 | 3M 2025 | 3M 2024 | 12M 2025 | |
| --- | --- | --- | --- | --- | --- |
| EBITDA | million EUR | 2.3 | 10.6 | 4.9 | 37.5 |
| EBITDA margin | % | 4.0 | 12.5 | 6.0 | 12.0 |
| General expense ratio | % | 7.9 | 6.5 | 6.4 | 7.5 |
| Labour cost ratio | % | 17.0 | 13.1 | 14.8 | 16.2 |
| Revenue per employee | thousand EUR | 95 | 143 | 134 | 516 |
| OTHER SIGNIFICANT INDICATORS | 31.03.2026 | 31.03.2025 | 31.03.2024 | 31.12.2025 | |
| --- | --- | --- | --- | --- | --- |
| Return on equity | % | 13.2 | 29.5 | 21.9 | 15.6 |
| Return on assets | % | 8.2 | 16.1 | 11.1 | 9.7 |
| Return on invested capital | % | 12.4 | 31.2 | 20.5 | 16.2 |
| Assets | million EUR | 425.2 | 433.7 | 426.1 | 415.0 |
| Equity | million EUR | 264.7 | 264.7 | 216.4 | 260.6 |
| Equity attributable to equity holders of the parent | million EUR | 264.7 | 264.7 | 216.6 | 260.6 |
| Equity ratio | % | 62.3 | 61.0 | 50.8 | 62.8 |
| Debt ratio | % | 11.5 | 5.8 | 11.5 | 8.0 |
| Current ratio | times | 3.2 | 2.6 | 2.1 | 2.9 |
| Quick ratio | times | 1.0 | 1.1 | 0.9 | 0.9 |
| Accounts receivable turnover | days | 47 | 42 | 42 | 50 |
| Accounts payable turnover | days | 57 | 47 | 40 | 56 |
| Average number of employees | people | 602 | 594 | 608 | 603 |
| Secured order book | million EUR | 825.8 | 331.9 | 419.0 | 466.9 |
Ratio definitions are provided on page 35 of the report.
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RISK MANAGEMENT
Risk management is part of strategic management and is inseparable from daily operations of the group. In managing risks, the main objective of the group is to determine most significant risks and to manage these risks in a balanced way so that the group achieves its strategic and financial objectives.
Merko Ehitus divides risks into four main categories: business risk, market risk (incl. interest risk and foreign exchange risk), financial risk (incl. credit risk and liquidity risk) and operational risk (incl. health and safety risk and environmental risk). The topic of risk management has been thoroughly covered on the group's website: group.merko.ee/en/investors/risk-management/.
Legal risk
Due to different interpretations of contracts, regulations and laws related to group's principal activities, there is a risk that some buyers, contractors or supervisory authorities evaluate the company's activities from the perspective of laws or contracts from a different position and dispute the legitimacy of the company's activities.
As of 31 March 2026, a provision has been set up at the group in the amount of EUR 0.1 million for covering potential claims and legal costs (31.03.2025: EUR 0.4 million).
Below is presented an overview of the key legal disputes and proceedings, which have taken place or ended during 2026 or are ongoing as of 31 March 2026 and which concern group entities is presented:
Latvia
Latvian Competition Council administrative proceeding
On 9 August 2021, SIA Merks, a subsidiary of AS Merko Ehitus, received the decision of the Latvian Competition Council in the administrative proceedings initiated with regard to the company in 2019. The Group has disclosed information about the proceedings on an ongoing basis in stock market notices, annual and interim reports and in the relevant subsection of the website.
On 13 September 2021, SIA Merks and AS Merko Ehitus contested the decision of the Latvian Competition Council in the Latvian administrative court. Before the court decision comes into effect, the fine of EUR 2.7 million levied by the Competition Council will not become payable and the possible claims for damages of third persons will not be subject to review nor other possible consequences arising from law will be applicable before the court decision enters into force. Currently it has not been possible to assess reliably the impact of potential damage claims on the company due to the large number of inputs open to change, the lack of practice of implementing joint and several liability and the ambiguity of other legal aspects.
The last court session to discuss the content of the appeal claim took place on 26 September 2023. In its judgement, announced on 25 January 2024, the court of appeal upheld the decision of the Competition Council. On 26 February 2024, SIA Merks and AS Merko Ehitus filed an appeal in cassation with the Supreme Court of Latvia in appeal against the decision of the Latvian Competition Council. On 23 December 2025, the Supreme Court of Latvia annulled the previous decisions and sent the dispute back to the court of appeal for a new hearing, finding that the use of materials collected during secret surveillance as evidence in administrative proceedings was not permissible. At the time of writing, there was no further information on the next deadlines and steps in the proceedings.
AS Merko Ehitus continues to hold the conclusions of the Latvian Competition Council with regard to the business activities of SIA Merks both factually and legally unjustified and will use all the possibilities granted under the rule of law to overturn such conclusions.
SIA Merks was sold with sufficient provisions to cover a potential fine.
EMPLOYEES AND LABOUR COSTS
As of 31 March 2026, Merko Ehitus group employed 616 people (including temporary and part-time staff). Compared to the same period last year, the number of group's employees increased by 12 (+2.0%). The number of employees decreased in Estonia and increased in Latvia.
Professionals with longstanding experience are the company's key value. The group's objective is to pay its employees competitive salary. The interests of employees and the company are balanced by performance-based remuneration.
The group defines labour cost as salary (incl. fixed salary, additional pay, holiday pay, and performance pay), taxes based on salary, fringe benefits and taxes on fringe benefits. In 3 months 2026, the labour cost was EUR 9.7 million (3 months 2025: EUR 11.1 million), which decreased by 12.6% compared to the same period previous year and the labour cost ratio increased by 3.9 pp from 13.1% to 17.0% in comparable periods.
ETHICAL BUSINESS PRACTICES
Group's core values include ethical business practices, considered a long-term important success factor. By following highly ethical principles, we promote profitable growth, gain the trust of our stakeholders, and support fair competition and equal treatment.
We conduct business honestly, follow ethical principles in our activities and make sure our employees know and follow business ethics standards in their everyday work. To embed the principles the Group has established a Code of Business Ethics.
The topic of business ethics has been thoroughly covered on the group's website: group.merko.ee/en/corporate-responsibility/.
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SHARE AND SHAREHOLDERS
INFORMATION ON SECURITY
| Issuer | AS Merko Ehitus |
|---|---|
| Name of security | Share of Merko Ehitus |
| Ticker | MRK1T |
| Residency of issuer | Estonia |
| Stock Exchange List | Nasdaq Tallinn, Baltic Main List |
| Industry | Construction |
| ISIN | EE3100098328 |
| Nominal value | Without nominal value |
| Number of issued securities | 17,700,000 |
| Number of listed securities | 17,700,000 |
| Currency | EUR |
| Listing date | 11 August 2008 |
The shares of Merko Ehitus are listed in the Main List of Nasdaq Tallinn. As of 31 March 2026, the company has 17,700,000 shares. The number of shares has not changed during 2026.
A total of 9,285 transactions were conducted with the shares of Merko Ehitus in 3 months of 2026, with 0.24 million shares (1.4% of total shares) traded, generating a turnover of EUR 7.4 million (comparable figures in 3 months 2025 were accordingly: 6,848 transactions with 0.21 million shares traded (1.2% of total shares), generating a turnover of EUR 5.1 million). The lowest value-per-share transaction was recorded at the price of EUR 27.00 and the highest at EUR 33.10 per share (3 months of 2025: EUR 20.90 and EUR 26.50, accordingly). On 31 March 2026, the closing price of the share was EUR 27.10 (31.03.2025: EUR 26.20). As of 31 March 2026, by the Nasdaq Baltic stock exchange, the market capitalisation of AS Merko Ehitus was EUR 479.7 million, which has increased by 3.4% compared to the end of the equivalent period of the prior year (31.03.2025: EUR 463.7 million).
| 31.03.2026 | 31.03.2025 | 31.03.2024 | 31.12.2025 | |
|---|---|---|---|---|
| Number of shares | 17,700,000 | 17,700,000 | 17,700,000 | 17,700,000 |
| Earnings per share (EPS), euros | 0.25 | 0.59 | 0.25 | 2.26 |
| Equity per share, euros | 14.48 | 13.56 | 11.48 | 14.48 |
| P/B ratio | 1.87 | 1.93 | 1.44 | 2.16 |
| P/E ratio | 14.19 | 6.56 | 6.55 | 13.88 |
| Market value, million EUR | 479.7 | 463.7 | 292.1 | 554.0 |
Ratio definitions are provided on page 35 of the report.
CHANGE IN THE PRICE AND TRANSACTION VOLUME OF MERKO EHITUS SHARE AT NASDAQ TALLINN STOCK EXCHANGE IN 2026
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STRUCTURE OF SHAREHOLDERS ACCORDING TO NUMBER OF SHARES AS OF 31.03.2026
| NUMBER OF SHARES | NUMBER OF SHAREHOLDERS | % OF SHAREHOLDERS | NUMBER OF SHARES | % OF SHARES |
|---|---|---|---|---|
| 1,000,001 - ... | 1 | 0.01% | 12,742,686 | 71.99% |
| 100,001 – 1,000,000 | 6 | 0.04% | 1,353,163 | 7.64% |
| 10,001 – 100,000 | 46 | 0.34% | 975,959 | 5.51% |
| 1,001-10,000 | 529 | 3.92% | 1,415,207 | 8.00% |
| 101-1,000 | 2,899 | 21.51% | 960,398 | 5.43% |
| 1-100 | 9,999 | 74.18% | 252,587 | 1.43% |
| Total | 13,480 | 100% | 17,700,000 | 100% |
SHAREHOLDERS OF AS MERKO EHITUS AS OF 31.03.2026 AND CHANGE COMPARED TO THE PREVIOUS QUARTER
| NUMBER OF SHARES | % OF TOTAL 31.03.2026 | % OF TOTAL 31.12.2025 | CHANGE | |
|---|---|---|---|---|
| AS Riverito | 12,742,686 | 71.99% | 71.99% | - |
| OÜ Midas Invest | 427,100 | 2.41% | 2.41% | - |
| Firebird Republics Fund Ltd | 340,371 | 1.92% | 1.99% | (11,791) |
| Firebird Avrora Fund Ltd | 209,276 | 1.18% | 1.19% | (1,939) |
| OÜ Alar Invest | 136,000 | 0.77% | 0.77% | - |
| Clearstream Europe AG | 124,687 | 0.70% | 0.69% | 1,712 |
| Firebird Fund L.P. | 115,729 | 0.65% | 0.66% | (900) |
| Siseinfo OÜ | 100,000 | 0.56% | 0.56% | - |
| AB SEB Bankas | 45,450 | 0.26% | 0.25% | 2,038 |
| Swedbank AS clients | 40,470 | 0.23% | 0.23% | (296) |
| Total largest shareholders | 14,281,769 | 80.69% | 80.75% | (11,176) |
| Total other shareholders | 3,418,231 | 19.31% | 19.25% | 11,176 |
| Total | 17,700,000 | 100% | 100% | - |
PERFORMANCE OF THE SHARE OF MERKO EHITUS AND COMPARISON INDEX OMX BALTIC BENCHMARK PRICE INDEX IN 2026
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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.
According to the current dividends policy the objective is paying the shareholders 50-70% of the annual profit.
On 28 April 2026, the shareholders of AS Merko Ehitus approved the Supervisory Board's proposal to the shareholders to pay out the total amount of EUR 22.1 million (EUR 1.25 per share) as dividends from net profit brought forward, which is equivalent to a 55% dividend rate and an 4.0% dividend yield for the year 2025 (using the share price as of 31 December 2025). Comparable figures in 2025 were accordingly: EUR 33.6 million (EUR 1.90 per share) as dividends, which is equivalent to a 52% dividend rate and an 9.1% dividend yield for the year 2024 (using the share price as at 31 December 2024).
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE AND STRUCTURE
AS Merko Ehitus operates as a holding company for group of companies in Estonia, Latvia and Lithuania that offer complete solutions in the field of construction and real estate development. The group's largest companies are AS Merko Ehitus Eesti (100%), OÜ Merko Kodud (100%), Tallinna Teede AS (100%), SIA Merko Mäjas (100%), UAB Merko Statyba (100%) and UAB Merko Bustas (100%).
The main area of activity of the holding company is developing and implementing strategies for the Merko Ehitus group's various business segments by way of planning resources, deciding on major investments, targeting and overseeing the activity of subsidiaries and coordinating partner relations. In the first quarter, the holding company AS Merko Ehitus had a three-member Management Board: Ivo Volkov, Tõnu Toomik and Urmas Somelar. Due to election to the Supervisory Board at AGM, Tõnu Toomik resigned from the Management Board on 04.05.2026.
The overview of the Management Board and Supervisory Board have been presented on pages 16-17 and in Note 16 of the interim financial statements, and published, together with the track record and photographs, on the company's website at group.merko.ee/en/corporate-governance-2/.
It is important to maintain a simple organisational structure in the group and in management to be guided primarily by the group's objectives and requirements. For the purposes of maximum efficiency in the group management, we in some cases differentiate the management structure and legal structure. Management of the group's operating activity takes place in a country-specific manner and is coordinated at the level of the holding company.
As of 31 March 2026, the management structure is as follows:
*In Estonia, the sister companies Merko Ehitus Eesti AS, Merko Kodud OÜ and Tallinna Teede AS are from the group's point of view managed based on the same principles, but have their executive management formed completely independent from each other.
GROUP'S LEGAL STRUCTURE
The group's legal structure is predominantly based on economic and legal rationality and does not in all cases conform one-to-one to the group's management structure. The detailed list of group companies is provided in Note 16 of the interim financial statements.
GENERAL MEETING OF SHAREHOLDERS
The company's highest governing body is the General Meeting of Shareholders, the competencies of which are established by legislation and the articles of association of the company.
The annual general meeting of shareholders was held on 28 April 2026. The general meeting resolved to approve the annual report and the profit allocation proposal for 2025. The dividends in the sum of EUR 22.1 million (EUR 1.25 per share) will be paid out to the shareholders on 14 May 2026.
The general meeting confirmed four-member Supervisory Board until 06.05.2028 and elected Toomas Annus, Indrek Neivelt and Tõnu Toomik as the members of the Supervisory Board for a term of office to 6 May 2029 (inclusive). In addition, the shareholders decided to appoint the audit company Ernst & Young Baltic AS as the auditor of AS Merko Ehitus for the financial years 2026 to 2027 and to pay the remuneration for auditing in accordance with the contract to be entered into with Ernst & Young Baltic AS. The general meeting approved the principles of remuneration of the members of the Management Board of AS Merko Ehitus ("AS Merko Ehitus juhatuse liikmete tasustamise põhimõtted ja kontrolli protseduur") and the goal of gender balance required by §135⁵ of the Securities Market Act was also approved.
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The Management Board made a presentation on the company's financial results and future prospects.
In accordance with the Commercial Code, its Articles of Association and Good Governance Code, AS Merko Ehitus calls the annual and extraordinary general meeting of shareholders by notifying the shareholders through the Tallinn Stock Exchange and by publishing a meeting call in one national daily newspaper at least 3 weeks in advance. The general meeting shall be held at the place shown in the notice, on a working day and between 9 a.m. and 6 p.m., enabling most of the shareholders to participate in the General Meeting of Shareholders.
Before their publication, agendas of annual and extraordinary general meetings of the company's shareholders are approved by the Supervisory Board that shall also present to the general meeting subjects for discussion and voting. Agenda items of the general meeting, recommendations of the Supervisory Board with relevant explanations, procedural guidance for participation in the general meeting and how and when new agenda items can be proposed are published together with the notice on calling the general meeting.
General meetings can be attended by any shareholder or their authorised representative. AS Merko Ehitus does not allow participation in general meetings by electronic means of communication equipment, since the deployment of reliable solutions for the identification of shareholders, some of whom reside abroad, while ensuring the privacy of participating shareholders, would be too complicated and costly.
Annual and extraordinary general meeting of shareholders shall be chaired by an independent person. In 2026, the general meeting was chaired by attorney-at-law Vesse Vöhma who introduced the procedure for conducting the general meeting and the procedure of asking questions from the Management Board and Supervisory Board about the company's activities.
On behalf of the company, usually the Chairman of the Management Board shall participate in the General Meeting of AS Merko Ehitus, and if necessary, other members of the Management and Supervisory Boards shall be involved. The company's auditor is also invited to the Annual General Meeting.
The AGM of AS Merko Ehitus held in 2026 was attended by Ivo Volkov (Chairman of the Management Board), Tõnu Toomik (Member of the Management Board), Urmas Somelar (Head of Finance). The Supervisory Board was represented by Indrek Neivelt, per agreement between the members of the Supervisory Board. This time the auditing company did not send its representative to the meeting.
SUPERVISORY BOARD
The Supervisory Board plans the activities of the company, organises the management of the company and supervises the activities of the Management Board. The Supervisory Board notifies the general meeting of shareholders of the results of a review. The Chairman of the Supervisory Board organises the work of the Supervisory Board. The main duties of the Supervisory Board are to approve the group's material strategic and tactical decisions and to supervise the activities of the group's Management Board. The Supervisory Board's actions are guided by the company's articles of association, guidelines of the general meeting, and law.
According to the Articles of Association of AS Merko Ehitus, the Supervisory Board has 3 to 5 members who shall be elected for the term of three years.
As of 31 March 2026, the Supervisory Board of AS Merko Ehitus had three members: Toomas Annus (Chairman), Indrek Neivelt and Kristina Siimar, of whom, in accordance with the requirements of the Corporate Governance Recommendations, Kristina Siimar and Indrek Neivelt were independent members.
From 5 May 2026, the Supervisory Board of AS Merko Ehitus had four members: Toomas Annus (chairman), Tõnu Toomik, Indrek Neivelt and Kristina Siimar.
MANAGEMENT BOARD
The Management Board is a governing body, which represents and manages AS Merko Ehitus in its daily activities in accordance with the law and the Articles of Association. The Management Board has to act in the most economically purposeful manner, taking into consideration the best interests of the company and all shareholders, while ensuring the company's sustainable development in accordance with set objectives and strategy. To ensure that the company's interests are met in the best way possible, the Management and Supervisory Boards shall extensively collaborate. At least once a quarter, a joint meeting of the Supervisory and Management Boards shall take place, in which the Management Board shall inform the Supervisory Board of significant issues regarding the company's business operations, the fulfilment of the company's short and long-term goals and the risks possibly influencing it. For every meeting of the Supervisory Board, the Management Board shall prepare a management report and submit it well in advance of the meeting so that the Supervisory Board can study it. The Management Board prepares reports for the Supervisory Board also in between the meetings, if it is considered necessary by the Supervisory Board or its Chairperson.
Pursuant to the Articles of Association approved at the general meeting of shareholders in 2012, the Management Board may have up to three members.
As of 31 March 2026, the Management Board of AS Merko Ehitus had three members: Mr. Ivo Volkov (Chairman), Mr. Tõnu Toomik and Mr. Urmas Somelar.
From 5 May 2026, the Management Board of AS Merko Ehitus had two members: Mr. Ivo Volkov (Chairman) and Mr. Urmas Somelar.
The responsibilities of Ivo Volkov, Chairman of the Management Board, include, among others, fulfilling daily obligations of the CEO of AS Merko Ehitus, managing and representing the company, ensuring compliance with the Articles of Association, legal acts,
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organising the work of the Management Board and supervisory boards of the more important subsidiaries, coordinating the development of strategies and providing for their implementation, being responsible for strategic business development and finance. Tõnu Toomik was responsible for the management of the portfolio of properties and coordination of construction and development segments activities across the whole group. Urmas Somelar is responsible for the financial management, investor relations and compliance.
SUPERVISORY AND MANAGEMENT BOARDS OF SUBSIDIARIES
Authorisation and responsibility of supervisory boards of subsidiaries of AS Merko Ehitus are based on their Articles of Association and intragroup rules. Generally, Supervisory Boards of subsidiaries consist of members of the Management Board and Supervisory Board of the company that is the main shareholder of the specific subsidiary. Supervisory Board meetings of the most significant subsidiaries are held usually once a month, otherwise according to the group's needs, Articles of Association of subsidiaries and legal provisions. Generally, no separate fee is paid to members of the Supervisory Board of subsidiaries. Members of the Supervisory Board will also receive no severance benefits in case their contract of service is terminated before due date or not extended. The chairman or member of the Management Board of the subsidiary shall be named by the subsidiary's Supervisory Board.
Below are the supervisory boards and management boards of the significant subsidiaries that are wholly-owned by AS Merko Ehitus as of 31 March 2026:
| COMPANY | SUPERVISORY BOARD | MANAGEMENT BOARD |
|---|---|---|
| AS Merko Ehitus Eesti | Ivo Volkov (Chairman), Tõnu Toomik, Martin Rebane, Urmas Somelar | Jaan Mäe (Chairman), Veljo Viitmann |
| OÜ Merko Kodud | - | Indrek Tarto |
| OÜ Merko Residential Investments | - | Ivo Volkov, Urmas Somelar |
| SIA Merko Mäjas | - | Egija Smila (Chairman), Roberts Réboks |
| UAB Merko Statyba | Ivo Volkov (Chairman), Tõnu Toomik, Urmas Somelar | Saulius Putrimas (Chairman) Jaanus Rästas |
| UAB Merko Bustas | Ivo Volkov (Chairman), Tõnu Toomik, Urmas Somelar | Saulius Putrimas (Manager) |
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MANAGEMENT BOARD'S DECLARATION
Members of the Management Board of AS Merko Ehitus declare and confirm that the consolidated unaudited interim report for the 3 months of 2026, which consists of the management report and the interim financial statements, prepared according to the current International Financial Reporting Standards as adopted by the European Union, provides, to the best of their knowledge, a true and fair view of the development of business operations, assets, liabilities, financial position, results of the operations, cash flows, and profit or loss of AS Merko Ehitus and the consolidated undertakings as a whole, includes a description of the principal risks and uncertainties, and reflects transactions with related parties. The parent company and the companies, which are part of the consolidation group, are going concerns.
| Ivo Volkov | Chairman of the Management Board | 07.05.2026 |
|---|---|---|
| Urmas Somelar | Member of the Management Board | 07.05.2026 |
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INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
| | Note | 2026
3 months | 2025
3 months | 2025
12 months |
| --- | --- | --- | --- | --- |
| Revenue | 2 | 57,223 | 85,236 | 310,941 |
| Cost of goods sold | 3 | (51,747) | (70,323) | (255,081) |
| Gross profit | | 5,476 | 14,913 | 55,860 |
| Marketing expenses | | (1,329) | (1,275) | (5,823) |
| General and administrative expenses | | (3,217) | (4,275) | (17,478) |
| Other operating income | | 508 | 561 | 2,285 |
| Other operating expenses | | (122) | (41) | (501) |
| Operating profit | | 1,316 | 9,883 | 34,343 |
| Finance income/costs | | 383 | 1,717 | 10,425 |
| incl. finance income/costs from joint ventures | | 318 | 1,501 | 10,381 |
| interest expense | | (173) | (210) | (836) |
| foreign exchange gain (loss) | | 204 | 115 | (18) |
| other financial income (expenses) | | 34 | 311 | 898 |
| Profit before tax | | 1,699 | 11,600 | 44,768 |
| Corporate income tax expense | | 2,644 | (1,140) | (4,850) |
| Net profit for financial year | | 4,343 | 10,460 | 39,918 |
| Other comprehensive income, which can subsequently be classified in the income statement | | | | |
| Currency translation differences of foreign entities | | (165) | (59) | 20 |
| Comprehensive income for the period | | 4,178 | 10,401 | 39,938 |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 4 | 0.25 | 0.59 | 2.26 |
The notes set out on pages 23-34 are an integral part of these interim financial statements.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| Note | 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|---|
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | 5 | 40,573 | 78,525 | 41,424 |
| Short-term deposits | 21,000 | 17,000 | 18,000 | |
| Trade and other receivables | 6 | 38,583 | 62,815 | 43,658 |
| Prepaid corporate income tax | 1,080 | 105 | 1,347 | |
| Inventories | 7 | 233,114 | 197,861 | 219,812 |
| 334,350 | 356,306 | 324,241 | ||
| Non-current assets | ||||
| Investments in joint ventures | 32,275 | 23,072 | 31,957 | |
| Other shares and securities | 80 | 80 | 80 | |
| Other long-term loans and receivables | 8 | 20,265 | 19,044 | 20,658 |
| Deferred income tax assets | 3,163 | 4,830 | 2,874 | |
| Investment property | 9 | 12,362 | 12,525 | 12,395 |
| Property, plant and equipment | 10 | 22,048 | 17,419 | 22,117 |
| Intangible assets | 11 | 694 | 388 | 714 |
| 90,887 | 77,358 | 90,795 | ||
| TOTAL ASSETS | 425,237 | 433,664 | 415,036 | |
| LIABILITIES | ||||
| Current liabilities | ||||
| Borrowings | 12 | 3,140 | 10,110 | 3,079 |
| Payables and prepayments | 13 | 90,481 | 114,153 | 95,920 |
| Income tax liability | 809 | 6,487 | 510 | |
| Deferred income from government grant | 4 | - | 2 | |
| Short-term provisions | 14 | 9,790 | 8,564 | 10,426 |
| 104,224 | 139,314 | 109,937 | ||
| Non-current liabilities | ||||
| Long-term borrowings | 12 | 45,942 | 15,002 | 30,012 |
| Deferred income tax liability | 3,901 | 6,539 | 7,448 | |
| Other long-term payables | 15 | 6,426 | 8,150 | 7,073 |
| 56,269 | 29,691 | 44,533 | ||
| TOTAL LIABILITIES | 160,493 | 169,005 | 154,470 | |
| EQUITY | ||||
| Share capital | 7,929 | 7,929 | 7,929 | |
| Statutory reserve capital | 793 | 793 | 793 | |
| Currency translation differences | (186) | (100) | (21) | |
| Retained earnings | 256,208 | 256,037 | 251,865 | |
| TOTAL EQUITY | 264,744 | 264,659 | 260,566 | |
| TOTAL LIABILITIES AND EQUITY | 425,237 | 433,664 | 415,036 |
The notes set out on pages 23-34 are an integral part of these interim financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
unaudited
in thousand euros
Equity attributable to equity holders of the parent
| Share capital | Statutory reserve capital | Currency translation differences | Retained earnings | Total | |
|---|---|---|---|---|---|
| Balance as at 31.12.2024 | 7,929 | 793 | (41) | 245,577 | 254,258 |
| Profit (loss) for the reporting period | - | - | - | 10,460 | 10,460 |
| Other comprehensive income | - | - | (59) | - | (59) |
| Total comprehensive income (loss) for the reporting period | - | - | (59) | 10,460 | 10,401 |
| Balance as of 31.03.2025 | 7,929 | 793 | (100) | 256,037 | 264,659 |
| Balance as at 31.12.2025 | 7,929 | 793 | (21) | 251,865 | 260,566 |
| Profit (loss) for the reporting period | - | - | - | 4,343 | 4,343 |
| Other comprehensive income | - | - | (165) | - | (165) |
| Total comprehensive income (loss) for the reporting period | - | - | (165) | 4,343 | 4,178 |
| Balance as at 31.03.2026 | 7,929 | 793 | (186) | 256,208 | 264,744 |
The share capital of AS Merko Ehitus consists of 17,700,000 shares without nominal value.
The notes set out on pages 23-34 are an integral part of these interim financial statements.
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CONSOLIDATED CASH FLOW STATEMENT
unaudited
in thousand euros
| | Note | 2026
3 months | 2025
3 months | 2025
12 months |
| --- | --- | --- | --- | --- |
| Cash flows from operating activities | | | | |
| Operating profit | | 1,316 | 9,883 | 34,343 |
| Adjustments: | | | | |
| Depreciation and impairment | | 961 | 733 | 3,182 |
| (Profit)/loss from sale of non-current assets | | (10) | (26) | (244) |
| Change in receivables and liabilities related to construction contracts | | (13,462) | (3,321) | (11,901) |
| Interest income from operating activities | | (463) | (498) | (1,832) |
| Change in provisions | | (4,273) | (5,931) | (101) |
| Change in government grant | | 3 | - | 2 |
| Change in trade and other receivables related to operating activities | | 14,019 | 13,573 | 21,613 |
| Change in inventories | | (13,012) | (1,208) | (22,929) |
| Change in trade and other payables related to operating activities | | 2,430 | (9,915) | (15,194) |
| Interest received | | 467 | 518 | 1,850 |
| Interest paid | | (404) | (290) | (1,176) |
| Other finance income (costs) | | (38) | (39) | (221) |
| Corporate income tax paid | | (620) | (959) | (9,045) |
| Total cash flows from operating activities | | (13,086) | 2,520 | (1,653) |
| Cash flows from investing activities | | | | |
| Acquisition of associate | | - | - | (5) |
| Net change in purchase of deposits with maturities greater than 3 months | | (3,000) | (7,000) | (8,000) |
| Purchase of investment property | | (51) | (4) | (128) |
| Purchase of property, plant and equipment (excl. leased assets) | | (547) | (843) | (6,124) |
| Proceeds from sale of property, plant and equipment | | 128 | 26 | 269 |
| Purchase of intangible assets | | (36) | (76) | (503) |
| Interest received | | 72 | 352 | 1,208 |
| Total cash flows from investing activities | | (3,434) | (7,545) | (13,283) |
| Cash flows from financing activities | | | | |
| Proceeds from borrowings | | 16,500 | 3,256 | 14,816 |
| Repayments of borrowings | | (521) | (11,301) | (15,045) |
| Repayments of lease liabilities | | (310) | (285) | (1,660) |
| Dividends paid | | - | - | (33,630) |
| Total cash flows from financing activities | | 15,669 | (8,330) | (35,519) |
| Net increase/decrease in cash and cash equivalents | | (851) | (13,355) | (50,455) |
| Change of deposits with maturities greater than 3 months | | 3,000 | 7,000 | 8,000 |
| Total change | | 2,149 | (6,355) | (42,455) |
| Cash and cash equivalents at the beginning of the period | 5 | 41,424 | 91,879 | 91,879 |
| Deposits with maturities greater than 3 months at the beginning of period | | 18,000 | 10,000 | 10,000 |
| Total at the beginning of the period | | 59,424 | 101,879 | 101,879 |
| Effect of exchange rate changes | | - | 1 | - |
| Cash and cash equivalents at the end of the period | 5 | 40,573 | 78,525 | 41,424 |
| Deposits with maturities greater than 3 months at the end of period | | 21,000 | 17,000 | 18,000 |
| Total at the end of the period | | 61,573 | 95,525 | 59,424 |
The notes set out on pages 23-34 are on integral part of these interim financial statements.
22
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NOTES
NOTE 1 ACCOUNTING POLICIES USED
The consolidated interim financial statements of the AS Merko Ehitus group for 3 months 2026 were prepared in accordance with the requirements of IAS 34 "Interim Financial Reporting" for condensed interim financial statements. The interim financial statements follow the same accounting principles and methods used in the 2025 financial statements. The accounting methods used to prepare the interim financial statements are in conformity with the International Financial Reporting Standards as they were adopted by the European Union. 2025 audited annual report and 2025 3 months unaudited interim report comparative figures are presented in the present financial report.
According to the best knowledge of the Management Board, the consolidated interim financial statements for the 3 months 2026 presents a true and fair view of the group's economic results based on the principle of going concern. The influence of seasonality of construction and the influence of the cyclical nature of development activity on the period's results can be considered insignificant.
NOTE 2 OPERATING SEGMENTS
in thousand euros
The top operating decision-maker, i.e. the Management Board of parent company AS Merko Ehitus, monitors the business operations of the group by operating segments and countries.
Reporting of the group's operations are segmented as:
- construction service,
- real estate development.
Construction service segment includes in Baltic states the services in the fields of general construction, civil engineering, electrical construction and concrete works services, additionally in Estonia road construction. Other operating areas (managerial services, supervision service, etc.) are insignificant to the group and they are reported within the construction service segment. The real estate development segment primarily consists of the group's own real estate development – construction and sale; to a lesser degree, it also includes real estate maintenance and leasing.
The business result of a segment is assessed based on external revenue, operating profit and profit before tax of the business segment. The operating profit and profit before tax of the segment is composed of the income and expenditure related to the segment. Other income and expenses not related to the segments are attributable to the activities of holding companies and are monitored at group level.
Additional information on the segments is provided in the Business activities chapter of the Management report.
In the segment reporting, all inter-segment income and expenses have been eliminated from the pre-tax profit of the segments and all unrealised internal profits have been eliminated from the segment assets.
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
| 2026 3 months | Construction service | Real estate development | Total segments |
|---|---|---|---|
| Revenue | 58,894 | 22,064 | 80,958 |
| Elimination | (10,667) | (13,068) | (23,735) |
| Revenue from clients | 48,227 | 8,996 | 57,223 |
| incl. timing of revenue recognition at a point in time | 743 | 7,858 | 8,601 |
| timing of revenue recognition over time | 47,484 | 1,138 | 48,622 |
| Operating profit (loss) | 157 | 1,818 | 1,975 |
| Profit (loss) before tax | 589 | 1,766 | 2,355 |
| incl. interest income from operating activities | 5 | 458 | 463 |
| depreciation | (749) | (212) | (961) |
| recognition of provisions | (320) | (201) | (521) |
| reversal of provisions | 267 | - | 267 |
| profit from joint ventures | 437 | (119) | 318 |
| other finance income (costs) | 17 | 74 | 91 |
| incl. interest income | 42 | 6 | 48 |
| interest expenses | (17) | (125) | (142) |
| Assets 31.03.2026 | 97,262 | 262,571 | 359,833 |
| incl. joint ventures | 23,756 | 8,519 | 32,275 |
| 2025 3 months | Construction service | Real estate development | Total segments |
| --- | --- | --- | --- |
| Revenue | 64,320 | 31,835 | 96,155 |
| Elimination | (5,258) | (5,661) | (10,919) |
| Revenue from clients | 59,062 | 26,174 | 85,236 |
| incl. timing of revenue recognition at a point in time | 236 | 24,964 | 25,200 |
| timing of revenue recognition over time | 58,826 | 1,210 | 60,036 |
| Operating profit (loss) | 3,720 | 6,950 | 10,670 |
| Profit (loss) before tax | 5,441 | 6,949 | 12,390 |
| incl. interest income from operating activities | 43 | 447 | 490 |
| depreciation | (575) | (159) | (734) |
| recognition of provisions | (342) | (1,177) | (1,519) |
| profit from joint ventures | 1,462 | 39 | 1,501 |
| other finance income (costs) | 275 | (29) | 246 |
| incl. interest income | 310 | 25 | 335 |
| interest expenses | (25) | (157) | (182) |
| Assets 31.03.2025 | 100,451 | 235,343 | 335,794 |
| incl. joint ventures | 14,801 | 8,271 | 23,072 |
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
| 2025 12 months | Construction service | Real estate development | Total segments |
|---|---|---|---|
| Revenue | 264,948 | 110,698 | 375,646 |
| Elimination | (27,380) | (37,325) | (64,705) |
| Revenue from clients | 237,568 | 73,373 | 310,941 |
| incl. timing of revenue recognition at a point in time | 2,194 | 69,156 | 71,350 |
| timing of revenue recognition over time | 235,374 | 4,217 | 239,591 |
| Operating profit (loss) | 25,660 | 13,364 | 39,024 |
| Profit (loss) before tax | 36,389 | 13,059 | 49,448 |
| incl. interest income from operating activities | 55 | 1,769 | 1,824 |
| depreciation | (2,454) | (655) | (3,109) |
| impairment of inventories | - | (1,000) | (1,000) |
| recognition of provisions | (2,342) | (2,810) | (5,152) |
| reversal of provisions | 196 | - | 196 |
| profit from joint ventures | 9,980 | 401 | 10,381 |
| other finance income (costs) | 906 | (638) | 268 |
| incl. interest income | 1,065 | 46 | 1,111 |
| interest expenses | (78) | (617) | (695) |
| Assets 31.12.2025 | 99,571 | 252,063 | 351,634 |
| incl. joint ventures | 23,319 | 8,638 | 31,957 |
In addition to the segment assets, as at 31.03.2026 the group holds assets in the amount of EUR 65,404 thousand (31.03.2025: EUR 97,870 thousand; 31.12.2025: EUR 63,402 thousand) that cannot be associated with a specific segment or the allocation of which to segments would be impracticable. The unallocated assets of the group comprise cash and cash equivalents, deposits, tax prepayments, other receivables and an unallocated portion of property, plant and equipment.
RECONCILIATION OF THE PRE-TAX PROFIT OF SEGMENTS AND THE GROUP
in thousand euros
| 2026 3 months | 2025 3 months | 2025 12 months | |
|---|---|---|---|
| Pre-tax profit from reporting segments | 2,355 | 12,390 | 49,448 |
| Other operating profit (loss) | (660) | (786) | (4,681) |
| incl. recognition of provisions | - | - | (43) |
| finance income (costs) | 4 | (4) | 1 |
| incl. interest income (expenses) | 24 | 15 | 93 |
| Total profit before tax | 1,699 | 11,600 | 44,768 |
Other income and expenses, which are not directly associated with segments, are associated with holding companies.
REVENUE BY CLIENT LOCATION
in thousand euros and percentages
| 2026 3 months | 2025 3 months | 2025 12 months | ||||
|---|---|---|---|---|---|---|
| Estonia | 33,158 | 58% | 46,387 | 54% | 170,771 | 55% |
| Latvia | 20,063 | 35% | 7,306 | 9% | 51,562 | 17% |
| Lithuania | 4,002 | 7% | 31,543 | 37% | 88,608 | 28% |
| Total | 57,223 | 100% | 85,236 | 100% | 310,941 | 100% |
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
CONTRACT ASSETS AND LIABILITIES
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Accrued income from construction services (Note 6) | 11,834 | 12,801 | 3,164 |
| Prepayments for construction services (Note 13) | (19,118) | (42,127) | (23,910) |
| Advance payments received for construction contract works (Notes 13, 15) | (6,347) | (8,159) | (8,274) |
| Recognised provision for onerous construction contracts (Note 14) | (12) | (35) | (7) |
NON-CURRENT ASSETS (EXCEPT FOR FINANCIAL ASSETS AND DEFERRED INCOME TAX) BY LOCATION OF ASSETS
in thousand euros
| 31.03.2025 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Estonia | 57,684 | 44,175 | 57,292 |
| Latvia | 7,443 | 6,696 | 7,515 |
| Lithuania | 2,332 | 2,613 | 2,456 |
| Total | 67,459 | 53,484 | 67,263 |
NOTE 3 COST OF GOODS SOLD
in thousand euros
| | 2026
3 months | 2025
3 months | 2025
12 months |
| --- | --- | --- | --- |
| Construction services and properties purchased for resale | 28,498 | 51,938 | 153,944 |
| Materials | 7,736 | 3,684 | 30,625 |
| Labour costs | 6,830 | 6,934 | 34,204 |
| Construction mechanisms and transport | 2,091 | 1,064 | 8,301 |
| Design | 1,821 | 1,357 | 7,717 |
| Real estate management costs | 339 | 407 | 1,345 |
| Depreciation | 643 | 528 | 2,288 |
| Impairment of inventories | - | - | 1,000 |
| Provisions | 254 | 1,519 | 4,798 |
| Other expenses | 3,535 | 2,892 | 10,859 |
| Total cost of goods sold | 51,747 | 70,323 | 255,081 |
NOTE 4 EARNINGS AND DIVIDENDS PER SHARE
Basic earnings per share for profit attributable to equity holders of the parent have been derived by dividing the net profit attributable to shareholders by the weighted average number of shares.
| | 2026
3 months | 2025
3 months | 2025
12 months |
| --- | --- | --- | --- |
| Net profit (loss) attributable to shareholders (in thousand EUR) | 4,343 | 10,460 | 39,918 |
| Weighted average number of ordinary shares (thousand pcs) | 17,700 | 17,700 | 17,700 |
| Earnings (loss) per share (in euros) | 0.25 | 0.59 | 2.26 |
The group did not have any potential ordinary shares to be issued, therefore the diluted earnings per share equal the basic earnings per share.
Dividends payable are recognised after the approval of profit allocation by the shareholders. In accordance with the profit allocation decision, in 2026 the parent company AS Merko Ehitus will pay dividends of EUR 22,125 thousand, i.e. EUR 1.25 per share (in 2025 were paid EUR 33,630 thousand).
Pursuant to IAS 12, the deferred income tax expense and liability will be recognized in AS Merko Ehitus group consolidated financial statements based on the share of net profit in the year ended that is planned to be paid out as dividends in the foreseeable future.
As at 31.03.2026 the balance of deferred income tax liability includes deferred income tax on dividends in the amount of 2,246 thousand euros (31.03.2025: EUR 4,937 thousand euros; 31.12.2025: EUR 5,787 thousand euros).
As of 31.03.2026, the parent company AS Merko Ehitus has EUR 24,735 thousand (31.03.2025: EUR 9,296 thousand; 31.12.2025: EUR 24,735 thousand) in dividends received from subsidiaries in previous periods and income from abroad, on which the income tax has been withheld.
26
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
As at 31.03.2026, it is possible to pay out dividends to shareholders from retained earnings in the amount of EUR 205,139 thousand (31.03.2025: EUR 201,676 thousand; 31.12.2025: EUR 201,880 thousand). Considering the dividends received and income tax withheld on foreign income totalling EUR 6,977 thousand (31.03.2025: EUR 2,621 thousand; 31.12.2025: EUR 6,977 thousand), the corresponding income tax on dividends would amount to EUR 50,883 thousand (31.03.2025: EUR 54,261 thousand; 31.12.2025: EUR 49,964 thousand). The calculation of additional income tax on dividends is based on the income tax rate of 22% (22/78 of net dividends). The income tax related to disbursement of dividends is recognised as a liability and income tax expense upon the announcement of dividends.
NOTE 5 CASH AND CASH EQUIVALENTS
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Bank accounts | 35,729 | 75,455 | 34,802 |
| Overnight deposits | 4,844 | 3,070 | 6,622 |
| Total cash and cash equivalents | 40,573 | 78,525 | 41,424 |
NOTE 6 TRADE AND OTHER RECEIVABLES
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Trade receivables | |||
| Accounts receivable | 18,623 | 44,618 | 31,003 |
| Allowance for doubtful receivables | - | (1) | - |
| 18,623 | 44,617 | 31,003 | |
| Tax prepayments excluding corporate income tax | |||
| Value added tax | 965 | 675 | 689 |
| Other taxes | 25 | 36 | 2 |
| 990 | 711 | 691 | |
| Accrued income form construction services | 11,834 | 12,801 | 3,164 |
| Other short-term receivables | |||
| Short-term loans | - | - | 500 |
| Interest receivables | 15 | - | 19 |
| Other short-term receivables | 70 | 29 | 115 |
| 85 | 29 | 634 | |
| Prepayments for services | |||
| Prepayments for construction services | 6,008 | 3,400 | 7,186 |
| Prepaid insurance | 660 | 780 | 692 |
| Other prepaid expenses | 383 | 477 | 288 |
| 7,051 | 4,657 | 8,166 | |
| Total trade and other receivables | 38,583 | 62,815 | 43,658 |
| incl. other short-term receivables and prepayments to related parties (Note 16) | 1,215 | 2,550 | 1,393 |
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
NOTE 7 INVENTORIES
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Materials | 616 | 680 | 553 |
| Work-in-progress | 120,294 | 66,046 | 102,274 |
| Finished goods | 22,674 | 42,464 | 27,249 |
| Goods for resale | |||
| Registered immovables purchased for resale/development | 88,720 | 87,854 | 88,850 |
| Other goods purchased for resale | 579 | 405 | 696 |
| 89,299 | 88,259 | 89,546 | |
| Prepayments for inventories | |||
| Prepayments for real estate properties | 8 | 13 | 8 |
| Prepayments for other inventories | 223 | 399 | 182 |
| 231 | 412 | 190 | |
| Total inventories | 233,114 | 197,861 | 219,812 |
NOTE 8 OTHER LONG-TERM LOANS AND RECEIVABLES
in thousand euros
| 31.03.2025 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Long-term loan receivables | 2,800 | - | 2,800 |
| Long-term receivables from customers of construction services | 17,465 | 19,044 | 17,858 |
| Total other long-term loans and receivables | 20,265 | 19,044 | 20,658 |
| incl. long-term loan receivables from related parties (Note 16) | 2,800 | - | 2,800 |
NOTE 9 INVESTMENT PROPERTY
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Land | 6,109 | 6,109 | 6,109 |
| Right of superficies at carrying amount | |||
| Cost | 29 | 29 | 29 |
| Accumulated depreciation | (16) | (16) | (16) |
| 13 | 13 | 13 | |
| Buildings at carrying amount | |||
| Cost | 8,026 | 8,026 | 8,026 |
| Accumulated depreciation | (2,010) | (1,672) | (1,926) |
| 6,016 | 6,354 | 6,100 | |
| Construction in progress | 224 | 49 | 173 |
| Total investment property | 12,362 | 12,525 | 12,395 |
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
NOTE 10 PROPERTY, PLANT AND EQUIPMENT
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Land | 1,266 | 1,266 | 1,266 |
| Buildings at carrying amount* | |||
| Cost | 10,720 | 7,468 | 8,055 |
| Accumulated depreciation | (4,065) | (3,606) | (3,880) |
| 6,655 | 3,862 | 4,175 | |
| Machinery and equipment at carrying amount* | |||
| Cost | 20,395 | 19,623 | 20,089 |
| Accumulated depreciation | (11,273) | (10,271) | (10,913) |
| 9,122 | 9,352 | 9,176 | |
| Other fixtures at carrying amount | |||
| Cost | 6,824 | 3,799 | 6,723 |
| Accumulated depreciation | (2,476) | (2,354) | (2,346) |
| 4,348 | 1,445 | 4,377 | |
| Construction in progress and prepayments for property, plant and equipment | 657 | 1,494 | 3,123 |
| Total property, plant and equipment | 22,048 | 17,419 | 22,117 |
- As of 31 March 2026, the balance of buildings at carrying amount includes leased assets in a sum of EUR 696 thousand (31.03.2025: EUR 322 thousand; 31.12.2025: EUR 770 thousand). The balance of machinery and equipment at carrying amount includes leased assets in a sum of EUR 3,729 thousand (31.03.2025: EUR 3,859 thousand; 31.12.2025: EUR 3,627 thousand).
NOTE 11 INTANGIBLE ASSETS
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Goodwill | |||
| Cost | 1 | 1 | 1 |
| Software at carrying amount | |||
| Cost | 2,031 | 1,537 | 2,031 |
| Accumulated depreciation | (1,374) | (1,236) | (1,318) |
| 657 | 301 | 713 | |
| Prepayments for intangible assets | 36 | 86 | - |
| Total intangible assets | 694 | 388 | 714 |
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
NOTE 12 BORROWINGS
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Lease liabilities* | |||
| Lease liabilities balance | 4,448 | 4,274 | 4,435 |
| incl. current portion | 1,193 | 1,010 | 1,131 |
| non-current portion 2...5 years | 3,255 | 3,264 | 3,304 |
| Bank loans | |||
| Loan balance | 44,295 | 20,464 | 28,317 |
| incl. current portion | 1,608 | 8,726 | 1,609 |
| non-current portion 2...5 years | 42,687 | 11,738 | 26,708 |
| Loans from other entities | |||
| Loan balance | 339 | 374 | 339 |
| incl. current portion | 339 | 374 | 339 |
| Total loans | |||
| Loans balance | 44,634 | 20,838 | 28,656 |
| incl. current portion | 1,947 | 9,100 | 1,948 |
| non-current portion 2...5 years | 42,687 | 11,738 | 26,708 |
| Total borrowings | 49,082 | 25,112 | 33,091 |
| incl. current portion | 3,140 | 10,110 | 3,079 |
| non-current portion 2...5 years | 45,942 | 15,002 | 30,012 |
- As of 31 March 2026, the lease liabilities include a balance of EUR 630 thousand to related parties (31.03.2025: EUR 143 thousand; 31.12.2025: EUR 675 thousand) (Note 16).
NOTE 13 PAYABLES AND PREPAYMENTS
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Trade payables | 36,655 | 44,504 | 33,970 |
| Payables to employees | 11,822 | 11,404 | 15,230 |
| Tax liabilities, except for corporate income tax | |||
| Value added tax | 703 | 1,973 | 2,311 |
| Personal income tax | 640 | 914 | 647 |
| Social security tax | 1,658 | 2,249 | 1,637 |
| Unemployment insurance tax | 70 | 80 | 73 |
| Contributions to mandatory funded pension | 86 | 99 | 65 |
| Other taxes | 261 | 195 | 310 |
| 3,418 | 5,510 | 5,043 | |
| Prepayments for construction services | 19,118 | 42,127 | 23,910 |
| Other liabilities | |||
| Interest liabilities | 160 | 87 | 140 |
| Other liabilities | 213 | 133 | 169 |
| 373 | 220 | 309 | |
| Prepayments received * | 19,095 | 10,388 | 17,458 |
| Total payables and prepayments | 90,481 | 114,153 | 95,920 |
| incl. payables to related parties (Note 16) | 54 | 39 | 58 |
- As of 31 March 2026, the balance of prepayments received consists of prepayments received in connection with construction contracts (advance payments received for construction contract works) in a sum of EUR 5,293 thousand (31.03.2025: EUR 5,212 thousand; 31.12.2025: EUR 7,070 thousand) and of prepayments received in connection with residential properties (apartment buyers) in a sum of EUR 13,802 thousand (31.03.2025: EUR 5,176 thousand; 31.12.2025: EUR 10,388 thousand) (Note 2).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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NOTE 14 SHORT-TERM PROVISIONS
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Provision for warranty obligation for construction | 5,155 | 5,131 | 5,183 |
| Provision for costs of projects sold and work-in-progress projects | 4,244 | 2,729 | 4,448 |
| Provision for onerous construction contracts | 12 | 35 | 7 |
| Provision for legal costs and claims filed | 110 | 398 | 377 |
| Other provisions | 269 | 271 | 411 |
| Total short-term provisions | 9,790 | 8,564 | 10,426 |
NOTE 15 OTHER LONG-TERM PAYABLES
in thousand euros
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Trade payables | 5,247 | 5,203 | 5,758 |
| Prepayments received * | 1,054 | 2,947 | 1,204 |
| Other long-term liabilities | 89 | - | 88 |
| Other long-term provisions | 36 | - | 23 |
| Other long-term payables total | 6,426 | 8,150 | 7,073 |
- As of 31 March 2026, the balance of prepayments received consists of prepayments received in connection with construction contracts (advance payments received for construction contract works) in a sum of EUR 1,054 thousand (31.03.2025: EUR 2,947 thousand; 31.12.2025: EUR 1,204 thousand) (Note 2).
NOTE 16 RELATED PARTY TRANSACTIONS
In compiling the group report, the following entities have been considered as related parties:
- parent company AS Riverito;
- shareholders of AS Riverito with significant influence over AS Merko Ehitus through AS Riverito;
- other shareholders with significant influence;
- other subsidiaries under control of AS Riverito shareholders or so-called sister companies, in the Note 'Entities under common control';
- associates and joint ventures;
- key members of the management (supervisory and management board), their close relatives and entities under their control or significant influence.
Significant influence is presumed to exist when the person has more than 20% of the voting power.
The parent of AS Merko Ehitus is AS Riverito. As at 31.03.2026, 31.03.2025 and 31.12.2025, AS Riverito owned 71.99% of the shares of AS Merko Ehitus. The ultimate controlling party of the group is Mr. Toomas Annus.
AS MERKO EHITUS SUBSIDIARIES AND JOINT VENTURES
| Ownership and voting rights % | Location | Area of operation | |||
|---|---|---|---|---|---|
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |||
| Subsidiaries | |||||
| AS Merko Ehitus Eesti | 100 | 100 | 100 | Estonia, Tallinn | Construction |
| OÜ Tähelinna Kinnisvara | 100 | 100 | 100 | Estonia, Tallinn | Real estate |
| OÜ Vahi Lastehoid | 100 | 100 | 100 | Estonia, Tallinn | Real estate |
| OÜ Merko Kaevandused | 100 | 100 | 100 | Estonia, Tallinn | Mining |
| Tallinna Teede AS | 100 | 100 | 100 | Estonia, Tallinn | Road construction |
| OÜ Merko Kodud | 100 | 100 | 100 | Estonia, Tallinn | Real estate |
| UAB Merko Statyba | 100 | 100 | 100 | Lithuania, Vilnius | Construction |
| UAB Timana | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB VPSP 2 | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB VPSP Projektai | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
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| Ownership and voting rights % | Location | Area of operation | |||
|---|---|---|---|---|---|
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |||
| UAB VPSP B | 100 | - | 100 | Lithuania, Vilnius | Real estate |
| UAB VPSP C | 100 | - | 100 | Lithuania, Vilnius | Real estate |
| OÜ Merko Property | 100 | 100 | 100 | Estonia, Tallinn | Real estate |
| UAB Balsiu Mokyklos SPV | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB Merko Bustas | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB MN Projektas | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB MN 2 Projektas | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB MB Projektas | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB Statiniu Priežiūra ir Administravimas | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| UAB MB 4 Projektas | 100 | 100 | 100 | Lithuania, Vilnius | Real estate |
| OÜ Merko Investments | 100 | 100 | 100 | Estonia, Tallinn | Holding |
| SIA Merko Büve | 100 | 100 | 100 | Latvia, Riga | Construction |
| PS MB.MEE | 100 | 100 | 100 | Latvia, Riga | Construction |
| PS MB.MS | 100 | 100 | 100 | Latvia, Riga | Construction |
| SIA Merko Management Latvia | 100 | 100 | 100 | Latvia, Riga | Real estate |
| OÜ Merko Residential Investments | 100 | 100 | 100 | Estonia, Tallinn | Holding |
| SIA Merko Mājas | 100 | 100 | 100 | Latvia, Riga | Real estate |
| SIA Ropažu Priedes | 100 | 100 | 100 | Latvia, Riga | Real estate |
| SIA Zakusala Estates | 100 | 100 | 100 | Latvia, Riga | Real estate |
| Merko Investments AS | 100 | 100 | 100 | Norway, Sofiemyr | Holding |
| Løkenskogen Bolig AS | 100 | 100 | 100 | Norway, Sofiemyr | Real estate |
| OÜ Merko Ehitus Ventures | 100 | 100 | 100 | Estonia, Tallinn | Holding |
| Joint ventures | |||||
| Kodusadam OÜ | 50 | 50 | 50 | Estonia, Tallinn | Real estate |
| Turu 18 Kodud OÜ | 50 | - | 50 | Estonia, Tallinn | Real estate |
| Krulli Kodud OÜ | 50 | - | 50 | Estonia, Tallinn | Real estate |
| OÜ Connecto Varad | 50 | 50 | 50 | Estonia, Tallinn | Holding |
Additional information on the changes during the reported period is provided in chapter Corporate Governance in Management report.
GOODS AND SERVICES
in thousand euros
| 2026 3 months | 2025 3 months | 2025 12 months | |
|---|---|---|---|
| Provided services and goods sold | |||
| Joint ventures | 2,426 | 242 | 4,907 |
| Entities under common control | 35 | 12,990 | 39,975 |
| Members of the management | 197 | - | 22 |
| Total services provided and goods sold | 2,658 | 13,232 | 44,904 |
| Interest income | |||
| Joint ventures | 55 | 56 | 100 |
| Entities under common control | - | 8 | 8 |
| Total interest income | 55 | 64 | 108 |
| Purchased services and goods | |||
| Joint ventures | 141 | 1 | 177 |
| Entities under common control | 37 | 21 | 87 |
| Total purchased services and goods | 178 | 22 | 264 |
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
in thousand euros
BALANCES WITH RELATED PARTIES
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Receivables from related parties | |||
| Loans granted (Note 8) | |||
| Joint venture | 2,800 | - | 2,800 |
| Receivables and prepayments (Note 6) | |||
| Joint ventures | 1,083 | 175 | 1,172 |
| Entities under common control | 67 | 2,375 | 24 |
| Members of the management | 65 | - | 197 |
| Total receivables and prepayments | 1,215 | 2,550 | 1,393 |
| Total receivables from related parties | 4,015 | 2,550 | 4,193 |
| Payables to related parties | |||
| Lease liabilities (Note 12) | |||
| Entities under common control | 630 | 143 | 675 |
| Payables and prepayments (Note 13) | |||
| Joint ventures | 48 | - | 39 |
| Entities under common control | 6 | 39 | 19 |
| Total payables and prepayments | 54 | 39 | 58 |
| Total payables to related parties | 684 | 182 | 733 |
REMUNERATION OF THE MEMBERS OF THE SUPERVISORY AND MANAGEMENT BOARDS
The cost of remuneration to members of the Supervisory Board and Management Board of AS Merko Ehitus incl. basic salaries and performance pay, as well as taxes and changes in reserves for the 3 months of 2026 were EUR 268 thousand (3 months of 2025: EUR 499 thousand; 12 months of 2025: EUR 2,537 thousand).
SEVERANCE BENEFITS OF MEMBERS OF THE SUPERVISORY AND MANAGEMENT BOARDS
Authorization agreements have been concluded with the Supervisory Board members, according to which no severance benefits are paid to them upon termination of the contract. In the 3 months of 2026, the Management Board members of AS Merko Ehitus did not receive benefits (3 months of 2025: EUR 0; 12 months of 2025: EUR 0).
MEMBERS OF THE SUPERVISORY AND MANAGEMENT BOARD
Track record and photographs of the members of the Supervisory Board can be found on AS Merko Ehitus website at group.merko.ee/en/management-and-supervisory-board/.
Shares held by members of the Supervisory Board of AS Merko Ehitus as of 31.03.2026:
| NO OF SHARES | % OF SHARES | ||
|---|---|---|---|
| Toomas Annus (AS Riverito) * | Chairman of the Supervisory Board | 12,742,686 | 71.99% |
| Indrek Neivelt (OÜ Trust IN) | Member of the Supervisory Board | 31,635 | 0.18% |
| Kristina Siimar | Member of the Supervisory Board | - | - |
| 12,774,321 | 72.17% |
- Toomas Annus controls through a holding company the majority of the votes determined by shares in AS Riverito. Thus, the shares of AS Riverito and the votes determined by it in AS Merko Ehitus (12,742,686 shares) are considered to be under the control of Toomas Annus.
The Management Board of the holding company AS Merko Ehitus has three members: Ivo Volkov, Tõnu Toomik and Urmas Somelar.
Shares held by members of the Management Board of AS Merko Ehitus as of 31.03.2026:
| NO OF SHARES | % OF SHARES | ||
|---|---|---|---|
| Ivo Volkov | Chairman of the Management Board | 4,137 | 0.02% |
| Tõnu Toomik | Member of the Management Board | - | - |
| Urmas Somelar | Member of the Management Board | - | - |
| 4,137 | 0.02% |
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
NOTE 17 CONTINGENT LIABILITIES
in thousand euros
The group has obtained the following guarantees from financial institutions and issued sureties to guarantee the group's obligations to third parties. These amounts represent the maximum right of claim by third persons against the group in case the group is unable to meet its contractual obligations. Management estimates that additional expenses related to these guarantees are unlikely.
| 31.03.2026 | 31.03.2025 | 31.12.2025 | |
|---|---|---|---|
| Performance period's warranty to the customer | 33,354 | 37,196 | 46,243 |
| Tender warranty | 100 | 71 | 100 |
| Guarantee for warranty period | 17,028 | 20,821 | 17,342 |
| Prepayment guarantee | 6,310 | 9,797 | 7,773 |
| Payment guarantee | - | 57 | - |
| Contracts of surety | 7,934 | 2,108 | 6,755 |
| Total contingent liabilities | 64,726 | 70,050 | 78,213 |
Performance period's warranty to the customer - warranty provider guarantees to the customer that the contractor's obligations arising from construction contract will be adequately fulfilled.
Tender warranty - warranty provider guarantees to the customer arranging the tender process that the tenderer will sign a contract as per tender conditions.
Guarantee for warranty period - guarantee provider guarantees to the customer that the construction defects discovered during the warranty period will be eliminated.
Prepayment guarantee - guarantee provider guarantees to the customer that advances will be reimbursed, if contractor fails to deliver goods or services agreed.
Payment guarantee - guarantee provider guarantees repayments of the customer's/developer's loan and/or guarantee provider guarantees to the customer payment for goods or services.
Contracts of surety - the group guarantees the timely fulfilment of group member's liabilities towards a third party (e.g. providing services by a certain date in the agreed amount).
34
AS MERKO EHITUS CONSOLIDATED INTERIM REPORT
merko
DEFINITION OF RATIOS
| Gross profit margin (%) | Gross profit | Revenue |
|---|---|---|
| Operating profit | ||
| Operating profit margin (%) | Operating profit | Revenue |
| Pre-tax profit | ||
| EBT margin (%) | Pre-tax profit | Revenue |
| Net profit (attributable to equity holders of the parent) | ||
| Net profit margin (%) | Net profit (attributable to equity holders of the parent) | Revenue |
| Net profit (attributable to equity holders of the parent) of the current 4 quarters | ||
| Return on equity, ROE (%) | Net profit (attributable to equity holders of the parent) | Shareholders equity (average of the current 4 quarters) |
| Shareholders equity (average of the current 4 quarters) | ||
| Return on assets, ROA (%) | Net profit (attributable to equity holders of the parent) | Net profit (attributable to equity holders of the current 4 quarters) |
| Total assets (average of the current 4 quarters) | ||
| Return on invested capital, ROIC (%) | (Profit before tax + interest expense - foreign exchange gain (loss) + other financial income) | of the current 4 quarters |
| (Shareholders equity (average) + interest-bearing liabilities (average)) of the current 4 quarters | ||
| Equity ratio (%) | Shareholders' equity | Total assets |
| Interest-bearing liabilities | ||
| Debt ratio (%) | Interest-bearing liabilities | Total assets |
| Current assets | ||
| Current ratio | Current liabilities | Current assets - inventories |
| Current liabilities | ||
| Quick ratio | Current assets - inventories | Current liabilities |
| Current liabilities | ||
| Accounts receivable turnover(days) | Trade receivables of the current 4 quarters (average) x 365 | Revenue of the current 4 quarters |
| Payables to suppliers of the current 4 quarters (average) x 365 | ||
| Accounts payable turnover (days) | Cost of goods sold of the current 4 quarters | Cost of goods sold of the current 4 quarters |
| Operating profit + depreciation | ||
| EBITDA (million EUR) | Operating profit + depreciation | Operating profit + depreciation |
| Revenue | ||
| EBITDA margin (%) | Revenue | Revenue |
| Marketing expenses + General and administrative expenses | ||
| General expense ratio (%) | Marketing expenses + General and administrative expenses | Revenue |
| Revenue | ||
| Labour cost ratio (%) | Labour costs | Revenue |
| Revenue | ||
| Revenue per employee (EUR) | Revenue | Number of employees (average) |
| Number of shares | ||
| Earnings per share, EPS (EUR) | Net profit (attributable to equity holders of the parent) | Number of shares |
| Shareholders equity (average of the current 4 quarters) | ||
| Equity/share (EUR) | Shareholders equity (average of the current 4 quarters) | Number of shares |
| Payable dividends | ||
| Dividend per share (EUR) | Payable dividends | Number of shares |
| Payable dividends x 100 | ||
| Dividend rate (%) | Payable dividends x 100 | Net profit (attributable to equity holders of the parent) |
| Dividends payable per share | ||
| Dividend yield (%) | Dividends payable per share | Share price 31.12 |
| Share price 31.03 | ||
| P/E | Share price 31.03 | Earnings per share of the current 4 quarters |
| Share price 31.03 | ||
| P/B | Share price 31.03 | Equity per share (average of the current 4 quarters) |
| Equity per share price 31.03 x Number of shares |