Interim report
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m merko AS MERKO EHITUS GROUP 2026 6 months and II quarter consolidated unaudited interim report Business name : AS Merko Ehitus Main activities : Commercial Register No .: Address : Holding companies General contracting of construction Real estate development 11520257 Postal address : Phone : E - mail : Web site : Financial year : Reporting period : Järvevana tee 9G , 11314 Tallinn Pärnu mnt 141 , 11314 Tallinn +372 650 1250 group@merko.ee group.merko.ee 01.01.2026 31.12.2026 01.01.2026 30.06.2026 Supervisory Board : Toomas Annus , Indrek Neivelt , Kristina Siimar , Tõnu Toomik Management Board : Ivo Volkov , Urmas Somelar Auditor : Ernst & Young Baltic AS
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 2 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 ........................................................................................................................................................................................... 27 NOTE 4 EARNINGS AND DIVIDENDS PER SHARE .......................................................................................................................................................... 27 NOTE 5 CASH AND CASH EQUIVALENTS ..........................................................................................................................................................................28 NOTE 6 TRADE AND OTHER RECEIVABLES .....................................................................................................................................................................28 NOTE 7 INVENTORIES ............................................................................................................................................................................................................28 NOTE 8 OTHER LONG-TERM LOANS AND RECEIVABLES ........................................................................................................................................... 29 NOTE 9 INVESTMENT PROPERTY ...................................................................................................................................................................................... 29 NOTE 10 PROPERTY, PLANT AND EQUIPMENT ............................................................................................................................................................. 29 NOTE 11 INTANGIBLE ASSETS ............................................................................................................................................................................................. 30 NOTE 12 BORROWINGS ......................................................................................................................................................................................................... 30 NOTE 13 PAYABLES AND PREPAYMENTS ....................................................................................................................................................................... 31 NOTE 14 SHORT-TERM PROVISIONS ................................................................................................................................................................................ 31 NOTE 15 OTHER LONG-TERM PAYABLES ........................................................................................................................................................................ 31 NOTE 16 RELATED PARTY TRANSACTIONS .................................................................................................................................................................... 32 NOTE 17 CONTINGENT LIABILITIES ....................................................................................................................................................................................34 DEFINITION OF RATIOS ................................................................................................................................................................................................................. 35
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 3 BRIEF OVERVIEW OF THE GROUP 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 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 ESTONIA LATVIA LITHUANIA Construction service AS Merko Ehitus Eesti OÜ Merko Kaevandused Road construction Tallinna Teede AS Real estate development OÜ Merko Kodud Construction service SIA Merko Būve Construction service UAB Merko Statyba Real estate development SIA Merko Mājas Real estate development UAB Merko Būstas
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 4 PURPOSE BUSINESS PRINCIPLES We create a better living environment. We build the future. We construct buildings and infrastructure and develop real estate. We operate in Estonia, Latvia and Lithuania. We operate as one Merko. We see opportunities, act upon them and have a long-term view. Our focus is on profitable growth. MERKO VALUES MERKO ESSENCE STRATEGY AS Merko Ehitus subsidiaries provide construction services in the field of building and infrastructure construction and devel op 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. I am competent I keep my word I care and take responsibility I initiate and make it happen I look for new ideas Customer and partner Preferred choice for those who value quality Society Creating future and valuing heritage Investor Attractive long term investment Employee Caring and development- oriented employer
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 5 MANAGEMENT REPORT COMMENTARY FROM MANAGEMENT Merko Ehitus generated revenue of EUR 93 million in the second quarter of 2026 and EUR 150 million in the first half of the y ear. Net profit amounted to EUR 8.5 million for the second quarter and EUR 12.8 million for the first six months of 2026. As of th e end of the first half of the year, the company’s secured order-book reached an all-time high of EUR 836 million. According to the management of Merko Ehitus, there was an increase in activity in both the construction services and development segment in the second quarter. Several large-scale projects secured last year entered a more active construction phase, which was reflected in Merko’s revenue figures. In addition, more than twice as many apartments were delivered to customers in the second quarter as in the first quarter of this year . The increase in construction input prices that anticipated in the first quarter has materialised, and there are currently no developments in the economy or global politics that would suggest any easing of price pressures. There were no unexpected changes i n the construction and real estate markets during the second quarter, and all of Merko’s home markets performed in line with expectations. In early July, completed all preparatory stages required for the development of the Rūdninkai defence force campus project . The contract entered into full force, and construction activities have now commenced in full scale. The construction cost of the two phases exceeds 370 million euros in total, and the project’s contribution to revenue will increase significantly in the coming quarters. In the second quarter, signed new construction contracts worth approximately 80 million euros, including the main building, an event c enter and infrastructure in Krulli quarter in Tallinn. As of the end of the first half of the year, the group’s companies secured order-book reached an all-time high of EUR 836 million. Following a prolonged period of growth, activity in Vilnius’s new apartment market has moderated somewhat, while the pace of signing new presale agreements has picked up in Riga. During the second quarter, group launched the construction of more than 160 apartments in Riga, including the Pētersala residential development, which incorporates architecturally significant herit age buildings, as well as the second phase of the Magnolijas development. The market for new residential developments in Tallinn is moving at a pace similar to last year. Across all Merko’s home markets, customers remain highly price-sensitive, with the majority of transactions involving more affordable apartments. During the first six months of the year, Merko delivered 120 apartments and five commercial units to buyers and launched the construction and sales of 204 apartments and four commercial units. As of the end of the first half of the year, Merko had a total of 1,253 apartments under construction and completed, of which approximately 40% are covered by presale agreements. In the second quarter of 2026, major development projects included Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Õielehe near Tallinn, and Erminurme and Leedri in Tartu; Lucavsala, Arena Garden Towers and Mežpilsēta in Riga; and Vilnelės Skverai and Šnipiškių Urban in Vilnius. In Estonia, the group’s larger construction projects in progress during the second 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, a hotel and event centre in Pärnu, the Rail Baltica Ülemiste passenger terminal, and the fourth stage of the Rail Baltica main line in Harju County, including the Tallinn –Pärnu section. In Lithuania, the major projects under construction were wind farm infrastructure faciliti es in the Pagėgiai and Telšiai districts and the Rūdninkai military campus. In Latvia, the group was engaged in the construction of mil itary campuses, a student hotel in Riga, and wind farm infrastructure facilities in the Smiltene municipality. 2026 6M REVENUE 150 MILLION EUROS AS OF 30.06.2026 SECURED ORDER BOOK 836 MILLION EUROS
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 6 OVERVIEW OF THE II QUARTER AND 6 MONTHS RESULTS PROFITABILITY 2026 6 months’ pre-tax profit was EUR 10.8 million and Q2 2026 was EUR 9.1 million (6M 2025: EUR 23.5 million and Q2 2025 was EUR 11.9 million), which brought the pre-tax profit margin to 7.2% (6M 2025: 14.0%). Net profit attributable to shareholders for 6 months 2026 was EUR 12.8 million (6M 2025: EUR 21.7 million) and for Q2 2026 net profit attributable to shareholders was EUR 8.5 million (Q2 2025: EUR 11.2 million). 6 months net profit margin was 8.6% (6M 2025: 12.9%). REVENUE Q2 2026 revenue was EUR 92.7 million (Q2 202 5: EUR 82.6 million) and 6 months’ revenue was EUR 1 49.9 million (6M 202 5: EUR 167.9 million). 6 months’ revenue decreased by 10.7% compared to same period last year. The share of revenue earned outside Estonia in 6 months 2026 was 41.2% (6M 2025: 43.8%). SECURED ORDER BOOK As of 30 June 202 6, the group’s secured order book was EUR 835.7 million (30 June 202 5: EUR 4 43.8 million). In 6 months 2026, group companies signed contracts in the amount of EUR 486.4 million (6M 202 5: EUR 223.1 million). In Q2 202 6, new contracts were signed in the amount of EUR 79.6 million (Q2 2025: EUR 172.6 million). REAL ESTATE DEVELOPMENT In 6 months 2026, the group sold a total of 120 apartments; in 6 months 2025, the group sold 222 apartments. The group earned a revenue of EUR 27.6 million from sale of own developed apartments in 6 months 202 6 and EUR 44.9 million in 6 months 2025. In Q2 of 2026 a total of 84 apartments were sold, compared to 101 apartments in Q2 2025, and earned a revenue of EUR 20.6 million from sale of own developed apartments (Q2 2025: EUR 20.2 million). CASH POSITION At the end of the reporting period, the group had EUR 39.6 million in cash and cash equivalents, and equity of EUR 2 51.1 million (57.4% of total assets). Comparable figures as of 30 June 2025 were EUR 25.9 million and EUR 242.3 million (60.1% of total assets), respectively. As of 30 June 2026, the group’s net debt was EUR 29.6 million (30 June 2025: negative EUR 1.1 million).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 7 OUTLOOK OF CONSTRUCTION AND REAL ESTATE MARKET CONSTRUCTION SERVICES Although it is still too early to sum up the year, the war with Iran will most likely prove to have been the single factor with the greatest impact. Together with Ukraine's systematic attacks on Russian oil-processing facilities, it will keep energy prices above their 2025 levels, and the resulting inflationary pressures will inevitably feed through into virtually every area of economic life. The impact was felt particularly sharply in the construction sector in the second quarter, when the prices of materials and construction equipment increased. At the time of writing the war with Iran is once again escalating into a full - scale conflict, making a new period of faster growth in the prices of key inputs (labour and energy ) an increasingly unavoidable reality for the economy . The persistence of inflationary pressures over a longer period also means that prices are likely to continue rising through the end of this year, even in markets where activity remains subdued. There is little prospect of the upward pressure on prices comi ng to an end: the expected changes to the ETS/ETS2 framework have turned out to be largely cosmetic, while the ECB left its key interest ra tes unchanged in July. At this point, talking about a fall in prices is simply pointless. We maintain our view that construction price indices will not decline over the coming year. If anything, the greater risk is that we are heading towards another wave of price increases. The lack of private -sector orders and intense competition continue to leave the construction sector heavily dependent on public - sector and publicly funded projects. While Lithuania has recorded strong construction activity for the past three years, in parallel with economic growth, and Latvia's construction sector returned to growth as early as the end of 2024, activity in Estonia remained stagnant throughout 2025. Against this backdrop, the sharp increase in construction volumes in the first quarter of 202 6 came as a surprise, particularly given the unfavourable weather conditions for construction activity at the beginning of the year. Several Rail Baltica projects were under way in Estonia, while the recovery in residential construction also undoubtedly co ntributed to the increase in volumes. Orders for defence -related facilities remain high across all three Baltic states . At the time of writing, Eurostat has not yet published construction volume indices for the second quarter, but we expect activity to have increased in construction. Given that the construction order book is heavily weighted towards the public sector, further developments will depend to a significant extent on the resolution or escalation of the ongoing armed conflicts. While rising energy prices are expected to put downward pressure on construction volumes, the geopolitical uncertainty and the course of the war in Ukraine continue to influence the scale of defence -related and energy -independence investment by the Baltic states. We continue to view the growth outlook in our key markets positively, with moderate growth i n the Baltic construction sector among our base-case expectations. DEVELOPMENT OF APARTMENTS Newly built home prices across the Baltics continue to diverge. The Lithuanian price index continues to show strong growth, with absolute price levels in Vilnius already overtaking those in Tallinn. Weaker consumer confidence in Estonia is keeping the market generall y subdued. In Latvia, where transaction activity increased in the first half of 2026, activity has shifted towards the lower -priced segment despite already lower absolute price levels, resulting in a decline in average prices. A common feature across all t hree markets is weakening demand from the upper -middle-class segment, which is likely to be affected both by slower growth in financial wealth and by demographic trends. According to Swedbank's Baltic Housing Affordability Index, Riga was the most affordable Baltic capital at the beginning of 2026. Housing affordability in Tallinn and Vilnius has declined despite wage growth and the efforts of many developers to bring more affordable (lower-priced) new-build developments to the market. Although inflation and interest rates are once again expected to rise against the backdrop of higher energy prices, we still expect the market volume of new developments to remain stable in 2026. Demand for more affordable housing is growing, and if suff icient numbers of lower -priced new homes are not brought to market, some of this demand will spill over into the secondary market. Despite the shift in activity towards the lower -priced segment, we believe that the probability of an increase in the price index remains statistically higher than the probability of a decline.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 8 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 c oncrete works and, through the joint ventures operating under Connecto brand, Merko provides services for the construction of energ y infrastructure. In addition, the group company Tallinn Teede AS offers road construction services in Estonia. million EUR 6M 2026 6M 2025 VARIANCE Q2 2026 Q2 2025 VARIANCE 12M 2025 Revenue 118.3 120.1 -1.5% 70.1 61.0 +14.8% 237.6 % of total revenue 78.9% 71.5% 75.6% 73.8% 76.4% Operating profit 3.0 8.8 -65.5% 2.9 5.1 -43.3% 25.7 Operating profit margin 2.6% 7.3% 4.1% 8.3% 10.8% In the 6 months of 2026, the revenue of the construction service segment was EUR 118.3 million (6M 2025: EUR 120.1 million). The sales revenue of construction service has decreased by 1.5% compared to the same period last year. The const ruction service segment revenue for 6 months 2026 made up 78.9% of the group’ s total revenue (6M 2025: 71.5%). In this segment, the group earned a n operating profit of EUR 3.0 million for 6 months ( 6M 2025: EUR 8.8 million). The operating profit margin was 2.6% (6M 2025: 7.3%). 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, in half-year totals still affected by Q1 seasonality. Larger projects in progress in the second quarter in construction service segment in Estonia included the office buildings City Plaza 2 and Viktor Masing house, the event centre and main building with infrastructure of the Krulli Quarter 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 defence campus, 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 6M 2026 6M 2025 VARIANCE Q2 2026 Q2 2025 VARIANCE 12M 2025 Revenue 31.6 47.8 -33.9% 22.6 21.6 +4.5% 73.4 incl. revenue from sale of apartments 27.6 44.9 20.6 20.2 67.8 % of total revenue 21.1% 28.5% 24.4% 26.2% 23.6% Operating profit 7.0 11.9 -40.8% 5.2 4.9 +5.9% 13.4 Operating profit margin 22.2% 24.8% 23.0% 22.7% 18.2% In 6 months 2026, the group sold a total of 120 apartments (incl. 4 apartments in a joint venture) and 5 commercial premises; in 6 months 2025, 222 apartments (incl. 8 apartments in a joint venture) and 2 commercial premises. The group earned a revenue of EUR 27.6 million (VAT not included) from sale of developed apartments in 6 months 2026 and EUR 44.9 million in 6 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.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 9 In 6 months of 2026, real estate development segment revenues decreased by 33.9% compared to the same period last year and formed 21.1% of the group’s total revenue (6 months of 2025: 28.5%). The segment’s operating profit for the 6 months of 2026 amounted to EUR 7.0 million (6 months of 2025: EUR 11.9 million) and the operating profit margin was 22.2% (6 months of 2025: 24.8%). 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 6 months of 2026, the group launched the construction of a total of 204 new apartments in the Baltic states (6 months of 2025: 713 apartments). In the 6 months, the group invested a total of EUR 42.6 million (6 months of 2025: EUR 22.5 million) in the ongoing development projects. After the reporting date, the group has started the construction of 50 apartments in Lahekalda VII stage apartments development project in Tallinn. 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 30 June 2026, the group's inventories included land plots with development potential, where the construction works have not started, in the amount of EUR 87.3 million (30.06.2025: EUR 83.8 million). GROUP’S INVENTORIES WITH DEVELOPMENT POTENTIAL BY COUNTRY million EUR 30.06.2026 30.06.2025 31.12.2025 Estonia 30.8 30.7 30.9 Latvia 21.1 23.3 22.5 Lithuania 34.7 28.4 34.7 Norway 0.7 1.4 0.7 Total 87.3 83.8 88.8 In 6 months of 2026, the group has not obtained new land plots for real estate development purposes (6 months of 2025: in the amount of EUR 7.3 million). SECURED ORDER BOOK As of 30 June 2026, the group’s secured order book amounted to EUR 835.7 million, compared to EUR 443.8 million as of 30 June 2025, having increased approximately 88% 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 6 months of 20 26, EUR 486.4 million worth of new contracts were signed , which is EUR 263.3 million more compared to the same period of the previous year (6 months of 2025: EUR 223.1 million). The value of new contracts signed in the second quarter of 2026 amounted to EUR 7 9.6 million; in the second quarter of 202 5 the value of new contracts signed amounted to EUR 172.6 million. LARGEST CONSTRUCTION CONTRACTS SIGNED IN THE SECOND QUARTER OF 2026 BRIEF DESCRIPTION OF CONTRACT COUNTRY COMPLETION TIME VALUE MILLION EUR Construction contract or the construction of a commercial building named Kasvuhoone in Tallinn at Krulli Quarter Estonia Q2 2028 41.0 Construction contract amendment to the design-and-build contract from 5 September 2024, for the construction of an office building in Tallinn Estonia Q1 2028 11.6 Construction contract for the construction of an event centre in Tallinn at Krulli Quarter Estonia September 2027 7.0 Construction contract for the construction of infrastructure in the Krulli Quarter in Tallinn Estonia Summer 2028 7.0 As of 30 June 2026, the private sector orders accounted for approximately 25% of the total balance in the group’s secured order book (30.06.2025: approximately 27%). 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.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 10 CASH FLOWS At the end of reporting period, the group had cash and cash equivalents in the amount of EUR 39.6 million ( 30.06.2025: EUR 25.9 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 54.1 million, of which all was unused (30.06.2025: EUR 49.4 million, of which almost all was unused). The 6-month cash flow from operating activity was negative at EUR 31.6 million (6 months of 2025: negative EUR 8.8 million), cash flow from investing activity was positive at EUR 16.4 million (6 months of 2025: negative EUR 14.5 million) and the cash flow from financing activity was positive at EUR 13.4 million (6 months of 2025: negative EUR 42.7 million). The cash flow from operating activities had positive effect from EBITDA of EUR 10.3 million (6 months of 2025: positive effect of EUR 20.1 million) and from the changes in trade and other payables related to operating activities of EUR 6.0 million (6 months of 2025: negative effect of EUR 8.4 million). The negative effects to cash flow from operating activities came from the changes in receivables and liabilities related to construction contracts of EUR 15.1 million (6 months 2025: negative effect of EUR 5.4 million), from the change in trade and other receivables related to operating activities of EUR 2.5 million (6 months of 2025: negative effect of EUR 0.8 million), from the change in the provisions of EUR 3.5 million (6 months of 2025: negative effect of EUR 5.1 million) and from the change in inventories of EUR 24.1 million (6 months of 202 5: positive effect of EUR 0.1 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 1.0 million (6 months of 20 25: EUR 0.6 million) and corporate income tax was paid at EUR 1.5 million (6 months of 2025: EUR 8.7 million). To support cash flows from operating activit ies, 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 (15.8% as of 30.06.2026; 6.1% as of 30.06.2025; 8.0% as of 31.12.2025). Cash flows from investing activities include negative effect from the acquisition of non -current asset s in the amount of EUR 1.0 million (6 months of 2025: EUR 2.2 million). The positive impact in cash flows from investing activities came from the sale of non-current assets in the amount of EUR 0.3 million (6 months of 202 5: EUR 0.1 million), from the net change in short -term deposits of EUR 12.0 million (6 months of 2025: negative cash flow in the net amount of EUR 13.0 million) as well EUR 5.0 million from the dividends received from the joint venture (6 months of 2025: EUR 0) and EUR 0.3 million interest received from the banks (6 months of 2025: EUR 0.6 million). In cash flows from financing, the larger negative factors were the dividend payment in the amount of EUR 22.1 million (6 months of 2025: EUR 33.6 million), the repayments of lease liabilities in the amount of EUR 0.6 million (6 months of 2025: net negative cash flow of EUR 1.2 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 0.8 million (6 months of 2025: negative cash flow in the net amount of EUR 0.8 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 36.9 million, which resulted from the increase in loans taken for residential development projects (6 months of 2025: net negative cash flow of EUR 0.0 million) and from the net change in loans related to other activities in the amount of EUR 0.0 million (6 months of 2025: net negative cash flow of EUR 7.1 million).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 11 RATIOS (attributable to equity holders of the parent) INCOME STATEMENT SUMMARY 6M 2026 6M 2025 6M 2024 Q2 2026 Q2 2025 Q2 2024 12M 2025 Revenue million EUR 149.9 167.9 203.6 92.7 82.6 122.4 310.9 Gross profit million EUR 17.4 29.1 23.7 11.9 14.2 14.8 55.9 Gross profit margin % 11.6 17.3 11.6 12.9 17.1 12.1 18.0 Operating profit million EUR 8.4 18.6 14.7 7.0 8.7 10.7 34.3 Operating profit margin % 5.6 11.1 7.2 7.6 10.6 8.7 11.0 Pre-tax profit million EUR 10.8 23.5 18.3 9.1 11.9 13.1 44.8 Pre-tax profit margin % 7.2 14.0 9.0 9.8 14.4 10.7 14.4 Net profit million EUR 12.8 21.7 17.4 8.5 11.2 13.1 39.9 attributable to equity holders of the parent million EUR 12.8 21.7 17.5 8.5 11.2 13.1 39.9 attributable to non- controlling interest million EUR - - (0.0) - - 0.0 - Net profit margin % 8.6 12.9 8.6 9.2 13.6 10.7 12.8 Other income statement indicators 6M 2026 6M 2025 6M 2024 Q2 2026 Q2 2025 Q2 2024 12M 2025 EBITDA million EUR 10.3 20.1 16.3 8.1 9.5 11.4 37.5 EBITDA margin % 6.9 12.0 8.0 8.7 11.5 9.4 12.0 General expense ratio % 6.7 6.8 5.4 5.9 7.1 4.7 7.5 Labour cost ratio % 13.6 13.6 11.1 11.6 14.1 8.6 16.2 Revenue per employee thousand EUR 245 283 334 151 139 201 516 OTHER SIGNIFICANT INDICATORS 30.06.2026 30.06.2025 30.06.2024 31.12.2025 Return on equity % 12.0 27.7 21.2 15.6 Return on assets % 7.4 15.8 10.6 9.7 Return on invested capital % 10.9 30.0 20.4 16.2 Assets million EUR 437.9 403.5 418.3 415.0 Equity million EUR 251.1 242.3 206.4 260.6 Equity attributable to equity holders of the parent million EUR 251.1 242.3 206.5 260.6 Equity ratio % 57.4 60.1 49.4 62.8 Debt ratio % 15.8 6.1 8.0 8.0 Current ratio times 3.0 2.5 1.9 2.9 Quick ratio times 0.9 1.0 0.8 0.9 Accounts receivable turnover days 39 41 51 50 Accounts payable turnover days 52 49 45 56 Average number of employees people 612 593 610 603 Secured order book million EUR 835.7 443.8 437.5 466.9 Ratio definitions are provided on page 35 of the report.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 12 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 gr oup 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 30 June 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 (30.06.2025: EUR 0.4 million). Below is presented an overview of the key legal disputes and proceedings, which have taken place or ended during 20 26 or are ongoing as of 30 June 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, announce d 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 suc h conclusions. SIA Merks was sold with sufficient provisions to cover a potential fine. EMPLOYEES AND LABOUR COSTS As of 30 June 2026, Merko Ehitus group employed 635 people (including temporary and part -time staff). Compared to the same period last year, the number of group’s employees increased by 30 (+5.0%). The number of employees increased in Estonia, Latvia and Lithuania. 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 6 months 2026, the labour cost was EUR 20.4 million ( 6 months 20 25: EUR 22.8 million), which decreased by 10.4% compared to the same period previous year and the labour cost ratio remained at the same level, i.e. 13.6% 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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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 13 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 30 June 2026, the company has 17,700,000 shares. The number of shares has not changed during 2026. A total of 16,617 transactions were conducted with the shares of Merko Ehitus in 6 months of 2026, with 0.43 million shares (2.4% of total shares) traded, generating a turnover of EUR 12.6 million (comparable figures in 6 months 2025 were accordingly: 18,056 transactions with 0.58 million shares traded (3.3% of total shares), generating a turnover of EUR 16.4 million). The lowest value- per-share transaction was recorded at the price of EUR 26.75 and the highest at EUR 33.10 per share (6 months of 2025: EUR 20.90 and EUR 33.35, accordingly). On 30 June 2026, the closing price of the share was EUR 26.80 (30.06.2025: EUR 31.35). As of 30 June 2026, by the Nasdaq Baltic stock exchange, the market capitalisation of AS Merko Ehitus was EUR 474.4 million, which has decreased by 14.5% compared to the end of the equivalent period of the prior year (30.06.2025: EUR 554.9 million). 30.06.2026 30.06.2025 30.06.2024 31.12.2025 Number of shares 17,700,000 17,700,000 17,700,000 17,700,000 Earnings per share (EPS), euros 0.73 1.22 0.99 2.26 Equity per share, euros 14.60 14.07 11.77 14.48 P/B ratio 1.84 2.23 1.40 2.16 P/E ratio 15.26 8.06 6.60 13.88 Market value, million EUR 474.4 554.9 291.0 554.0 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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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 14 STRUCTURE OF SHAREHOLDERS ACCORDING TO NUMBER OF SHARES AS OF 30.06.2026 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% 1,354,864 7.66% 10,001 – 100,000 47 0.35% 968,904 5.47% 1,001-10,000 526 3.89% 1,416,786 8.00% 101-1,000 2,937 21.74% 966,115 5.46% 1-100 9,993 73.97% 250,645 1.42% Total 13,510 100% 17,700,000 100% SHAREHOLDERS OF AS MERKO EHITUS AS OF 30.06.2026 AND CHANGE COMPARED TO THE PREVIOUS QUARTER NUMBER OF SHARES % OF TOTAL 30.06.2026 % OF TOTAL 31.03.2026 CHANGE AS Riverito 12,742,686 71.99% 71.99% - OÜ Midas Invest 434,100 2.45% 2.41% 7,000 Firebird Republics Fund Ltd 339,706 1.92% 1.92% (665) Firebird Avrora Fund Ltd 208,611 1.18% 1.18% (665) OÜ Alar Invest 136,000 0.77% 0.77% - Clearstream Europe AG 121,383 0.69% 0.70% (3,304) Firebird Fund L.P. 115,064 0.65% 0.65% (665) Siseinfo OÜ 100,000 0.56% 0.56% - AB SEB Bankas 46,798 0.26% 0.26% 1,348 Andrus Rand 43,850 0.25% 0.21% 6,000 Total largest shareholders 14,288,198 80.72% 80.67% 9,049 Total other shareholders 3,411,802 19.28% 19.33% (9,049) 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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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 15 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 a 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 a 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 Mājas (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 ha d 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 effi ciency 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 30 June 2026, the management structure is as follows: *In Estonia, the sister companies Merko Ehitus Eesti AS , Merko Kodud OÜ and Tallinna Teede A S 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. Subsequent to the reporting date, a transaction was completed in respect of UAB VPSP B and UAB VPSP C, subsidiaries of AS Merko Ehitus established to implement the Rūdninkai military campus public -private partnership (PPP) project. As a result, ELL Real Estate Holding B.V., a subsidiary of AS Kapitel, acquired a 70% controlling interest in the companies by buying newly issued shares as part of a share capital increase. 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 202 5. The dividends in the sum of EUR 22.1 million (EUR 1 .25 per share) 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 AS MERKO EHITUS ESTONIA LATVIA LITHUANIA
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 16 decided to appoint the audit company Ernst & Young Baltic AS as the auditor of AS Merko Ehitus for the financial years 202 6 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 §1356 of the Securities Market Act was also approved. 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 Võhma 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 plan s the activities of the company, organise s the management of the company and supervise s 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 30 June 2026, the Supervisory Board of AS Merko Ehitus had four members: Toomas Annus (chairman), Tõnu Toomik, 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. 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 30 June 2026, the Management Board of AS Merko Ehitus had two members: Ivo Volkov (Chairman) and Urmas Somelar.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 17 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, 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 30 June 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 Mājas - Egija Smila (Chairman), Roberts Rēboks 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) Changes in the management of group subsidiaries According to a decision of AS Merko Ehitus, the powers of the Member of the Supervisory Board of AS Merko Ehitus Eesti, Mr. Urmas Somelar, have been extended until 31 May 2029. The Supervisory Board of AS Merko Ehitus Eesti will continue with four members: Mr. Ivo Volkov (the Chairman), Mr. Tõnu Toomik, Mr. Urmas Somelar and Mr. Martin Rebane.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 18 MANAGEMENT BOARD'S DECLARATION Members of the Management Board of AS Merko Ehitus declare and confirm that the consolidated unaudited interim report for the 6 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 06.08.2026 Urmas Somelar Member of the Management Board 06.08.2026
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 19 INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME unaudited in thousand euros Note 2026 6 months 2025 6 months 2026 II quarter 2025 II quarter 2025 12 months Revenue 2 149,893 167,882 92,670 82,646 310,941 Cost of goods sold 3 (132,508) (138,811) (80,761) (68,488) (255,081) Gross profit 17,385 29,071 11,909 14,158 55,860 Marketing expenses (2,724) (2,701) (1,395) (1,426) (5,823) General and administrative expenses (7,289) (8,747) (4,072) (4,472) (17,478) Other operating income 1,244 1,083 736 522 2,285 Other operating expenses (257) (96) (135) (55) (501) Operating profit 8,359 18,610 7,043 8,727 34,343 Finance income/costs 2,428 4,901 2,045 3,184 10,425 incl. finance income/costs from joint ventures 2,451 4,844 2,133 3,343 10,381 interest expense (359) (395) (186) (185) (836) foreign exchange gain (loss) 176 (14) (28) (129) (18) other financial income (expenses) 160 466 126 155 898 Profit before tax 10,787 23,511 9,088 11,911 44,768 Corporate income tax expense 2,056 (1,835) (588) (695) (4,850) Net profit for financial year 12,843 21,676 8,500 11,216 39,918 Other comprehensive income, which can subsequently be classified in the income statement Currency translation differences of foreign entities (143) 7 22 66 20 Comprehensive income for the period 12,700 21,683 8,522 11,282 39,938 Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) 4 0.73 1.22 0.48 0.63 2.26 The notes set out on pages 23-34 are an integral part of these interim financial statements.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 20 CONSOLIDATED STATEMENT OF FINANCIAL POSITION unaudited in thousand euros Note 30.06.2026 30.06.2025 31.12.2025 ASSETS Current assets Cash and cash equivalents 5 39,593 25,862 41,424 Short-term deposits 6,000 23,000 18,000 Trade and other receivables 6 59,491 75,989 43,658 Prepaid corporate income tax 486 934 1,347 Inventories 7 245,853 196,552 219,812 351,423 322,337 324,241 Non-current assets Investments in joint ventures 29,408 26,415 31,957 Other shares and securities 80 80 80 Other long-term loans and receivables 8 20,109 18,645 20,658 Deferred income tax assets 3,221 4,789 2,874 Investment property 9 11,174 12,475 12,395 Property, plant and equipment 10 21,770 18,171 22,117 Intangible assets 11 669 593 714 86,431 81,168 90,795 TOTAL ASSETS 437,854 403,505 415,036 LIABILITIES Current liabilities Borrowings 12 7,830 9,712 3,079 Payables and prepayments 13 95,921 112,484 95,920 Income tax liability 111 112 510 Deferred income from government grant 5 - 2 Short-term provisions 14 11,494 9,165 10,426 115,361 131,473 109,937 Non-current liabilities Long-term borrowings 12 61,339 15,018 30,012 Deferred income tax liability 3,923 6,623 7,448 Other long-term payables 15 6,090 8,080 7,073 71,352 29,721 44,533 TOTAL LIABILITIES 186,713 161,194 154,470 EQUITY Share capital 7,929 7,929 7,929 Statutory reserve capital 793 793 793 Currency translation differences (164) (34) (21) Retained earnings 242,583 233,623 251,865 TOTAL EQUITY 251,141 242,311 260,566 TOTAL LIABILITIES AND EQUITY 437,854 403,505 415,036 The notes set out on pages 23-34 are an integral part of these interim financial statements.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 21 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 - - - 21,676 21,676 Other comprehensive income - - 7 - 7 Total comprehensive income (loss) for the reporting period - - 7 21,676 21,683 Dividends (Note 4) - - - (33,630) (33,630) Total transactions with owners - - - (33,630) (33,630) Balance as of 30.06.2025 7,929 793 (34) 233,623 242,311 Balance as at 31.12.2025 7,929 793 (21) 251,865 260,566 Profit (loss) for the reporting period - - - 12,843 12,843 Other comprehensive income - - (143) - (143) Total comprehensive income (loss) for the reporting period - - (143) 12,843 12,700 Dividends (Note 4) - - - (22,125) (22,125) Total transactions with owners - - - (22,125) (22,125) Balance as at 30.06.2026 7,929 793 (164) 242,583 251,141 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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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 22 CONSOLIDATED CASH FLOW STATEMENT unaudited in thousand euros Note 2026 6 months 2025 6 months 2025 12 months Cash flows from operating activities Operating profit 8,359 18,610 34,343 Adjustments: Depreciation and impairment 1,984 1,483 3,182 (Profit)/loss from sale of non-current assets (148) (87) (244) Change in receivables and liabilities related to construction contracts (15,128) (5,364) (11,901) Interest income from operating activities (908) (929) (1,832) Change in provisions (3,473) (5,064) (101) Change in government grant 4 - 2 Change in trade and other receivables related to operating activities (2,546) (774) 21,613 Change in inventories (24,081) 138 (22,929) Change in trade and other payables related to operating activities 5,960 (8,373) (15,194) Interest received 912 965 1,850 Interest paid (963) (573) (1,176) Other finance income (costs) (80) (95) (221) Corporate income tax paid (1,494) (8,741) (9,045) Total cash flows from operating activities (31,602) (8,804) (1,653) Cash flows from investing activities Acquisition of joint venture - - (5) Net change in purchase of deposits with maturities greater than 3 months 12,000 (13,000) (8,000) Purchase of investment property (168) (38) (128) Purchase of property, plant and equipment (excl. leased assets) (898) (1,897) (6,124) Proceeds from sale of property, plant and equipment 281 86 269 Purchase of intangible assets (67) (315) (503) Interest received 273 622 1,208 Dividends received 5,000 - - Total cash flows from investing activities 16,421 (14,542) (13,283) Cash flows from financing activities Proceeds from borrowings 38,375 3,816 14,816 Repayments of borrowings (2,266) (11,694) (15,045) Repayments of lease liabilities (634) (1,163) (1,660) Dividends paid (22,125) (33,630) (33,630) Total cash flows from financing activities 13,350 (42,671) (35,519) Net increase/decrease in cash and cash equivalents (1,831) (66,017) (50,455) Change of deposits with maturities greater than 3 months (12,000) 13,000 8,000 Total change (13,831) (53,017) (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 - - - Cash and cash equivalents at the end of the period 5 39,593 25,862 41,424 Deposits with maturities greater than 3 months at the end of period 6,000 23,000 18,000 Total at the end of the period 45,593 48,862 59,424 The notes set out on pages 23-34 are an integral part of these interim financial statements.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 23 NOTES NOTE 1 ACCOUNTING POLICIES USED The consolidated interim financial statements of the AS Merko Ehitus group for 6 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 20 25 financial statements. The accounting methods used to prepare the interim financial statements are in conformity with the International Financial Reporting Standards as th ey were adopted by the European Union. 2025 audited annual report and 2025 6 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 6 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.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 24 2026 6 months Construction service Real estate development Total segments Revenue 144,088 63,052 207,140 Elimination (25,773) (31,474) (57,247) Revenue from clients 118,315 31,578 149,893 incl. timing of revenue recognition at a point in time 1,550 29,254 30,804 timing of revenue recognition over time 116,765 2,324 119,089 Operating profit (loss) 3,042 7,021 10,063 Profit (loss) before tax 5,696 6,778 12,474 incl. interest income from operating activities 5 903 908 depreciation (1,576) (408) (1,984) recognition of provisions (1,050) (2,403) (3,453) reversal of provisions 543 - 543 profit from joint ventures 2,575 (124) 2,451 other finance income (costs) 153 (101) 52 incl. interest income 206 9 215 interest expenses (38) (260) (298) Assets 30.06.2026 111,550 279,279 390,829 incl. joint ventures 20,894 8,514 29,408 2025 6 months Construction service Real estate development Total segments Revenue 130,166 61,705 191,871 Elimination (10,072) (13,917) (23,989) Revenue from clients 120,094 47,788 167,882 incl. timing of revenue recognition at a point in time 694 45,674 46,368 timing of revenue recognition over time 119,400 2,114 121,514 Operating profit (loss) 8,808 11,862 20,670 Profit (loss) before tax 13,958 11,618 25,576 incl. interest income from operating activities 43 878 921 depreciation (1,160) (323) (1,483) recognition of provisions (572) (1,388) (1,960) profit from joint ventures 4,740 104 4,844 other finance income (costs) 470 (304) 166 incl. interest income 533 37 570 interest expenses (46) (304) (350) Assets 30.06.2025 116,221 236,259 352,480 incl. joint ventures 18,079 8,336 26,415 2026 II quarter Construction service Real estate development Total segments Revenue 85,194 40,988 126,182 Elimination (15,106) (18,406) (33,512) Revenue from clients 70,088 22,582 92,670 incl. timing of revenue recognition at a point in time 807 21,396 22,203 timing of revenue recognition over time 69,281 1,186 70,467
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 25 2026 II quarter Construction service Real estate development Total segments Operating profit (loss) 2,885 5,203 8,088 Profit (loss) before tax 5,107 5,012 10,119 incl. interest income from operating activities - 445 445 depreciation (827) (196) (1,023) recognition of provisions (730) (2,202) (2,932) reversal of provisions 276 - 276 profit from joint ventures 2,138 (5) 2,133 other finance income (costs) 136 (175) (39) incl. interest income 164 3 167 interest expenses (21) (135) (156) Assets’ change in II quarter 14,288 16,708 30,996 incl. joint ventures (2,862) (5) (2,867) 2025 II quarter Construction service Real estate development Total segments Revenue 65,846 29,870 95,716 Elimination (4,814) (8,256) (13,070) Revenue from clients 61,032 21,614 82,646 incl. timing of revenue recognition at a point in time 458 20,710 21,168 timing of revenue recognition over time 60,574 904 61,478 Operating profit (loss) 5,088 4,912 10,000 Profit (loss) before tax 8,517 4,669 13,186 incl. interest income from operating activities - 431 431 depreciation (585) (164) (749) recognition of provisions (230) (211) (441) profit from joint ventures 3,278 65 3,343 other finance income (costs) 195 (275) (80) incl. interest income 223 12 235 interest expenses (21) (147) (168) Assets’ change in II quarter 15,770 916 16,686 incl. joint ventures 3,278 65 3,343 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
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 26 2025 12 months Construction service Real estate development Total segments 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 30.06.2026 the group holds assets in the amount of EUR 47,025 thousand (30.06.2025: EUR 51,025 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 6 months 2025 6 months 2026 II quarter 2025 II quarter 2025 12 months Pre-tax profit from reporting segments 12,474 25,576 10,119 13,186 49,448 Other operating profit (loss) (1,705) (2,060) (1,045) (1,274) (4,681) incl. recognition of provisions - - - - (43) finance income (costs) 18 (5) 14 (1) 1 incl. interest income (expenses) 57 48 33 33 93 Total profit before tax 10,787 23,511 9,088 11,911 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 6 months 2025 6 months 2026 II quarter 2025 II quarter 2025 12 months Estonia 88,164 59% 94,395 56% 55,006 59% 48,008 58% 170,771 55% Latvia 38,526 26% 17,087 10% 18,463 20% 9,781 12% 51,562 17% Lithuania 23,203 15% 56,400 34% 19,201 21% 24,857 30% 88,608 28% Total 149,893 100% 167,882 100% 92,670 100% 82,646 100% 310,941 100% CONTRACT ASSETS AND LIABILITIES in thousand euros 30.06.2026 30.06.2025 31.12.2025 Accrued income from construction services (Note 6) 15,904 11,228 3,164 Prepayments for construction services (Note 13) (21,522) (38,511) (23,910) Advance payments received for construction contract works (Notes 13, 15) (3,211) (9,075) (8,274) Recognised provision for onerous construction contracts (Note 14) (106) (20) (7)
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 27 NON-CURRENT ASSETS (EXCEPT FOR FINANCIAL ASSETS AND DEFERRED INCOME TAX) BY LOCATION OF ASSETS in thousand euros 30.06.2026 30.06.2025 31.12.2025 Estonia 54,704 48,435 57,292 Latvia 7,360 6,743 7,515 Lithuania 1,037 2,556 2,456 Total 63,101 57,734 67,263 NOTE 3 COST OF GOODS SOLD in thousand euros 2026 6 months 2025 6 months 2026 II quarter 2025 II quarter 2025 12 months Construction services and properties purchased for resale 81,142 96,176 52,644 44,238 153,944 Materials 17,236 12,594 9,500 8,910 30,625 Labour costs 13,834 14,236 7,004 7,302 34,204 Construction mechanisms and transport 5,020 2,838 2,929 1,774 8,301 Design 3,958 3,419 2,138 2,062 7,717 Real estate management costs 688 716 349 309 1,345 Depreciation 1,412 1,074 769 546 2,288 Impairment of inventories - - - - 1,000 Provisions 2,910 1,960 2,656 441 4,798 Other expenses 6,308 5,798 2,772 2,906 10,859 Total cost of goods sold 132,508 138,811 80,761 68,488 255,081 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 6 months 2025 6 months 2026 II quarter 2025 II quarter 2025 12 months Net profit (loss) attributable to shareholders (in thousand EUR) 12,843 21,676 8,500 11,216 39,918 Weighted average number of ordinary shares (thousand pcs) 17,700 17,700 17,700 17,700 17,700 Earnings (loss) per share (in euros) 0.73 1.22 0.48 0.63 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 paid dividends of EUR 22,125 thousand, i.e. EUR 1.25 per share (in 2025 were paid EUR 33,630 thousand). On that, the company did not incur income tax obligation, as the dividend payments were covered by dividends already paid to the parent company by subsidiaries. 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 3 0.06.2026 the balance of deferred income tax liability includes deferred income tax on dividends in the amount of 2,284 thousand euros (30.06.2025: EUR 5,032 thousand euros; 31.12.2025: EUR 5,787 thousand euros). As of 3 0.06.2026, the parent company AS Merko Ehitus has EUR 37,981 thousand (30.06.2025: EUR 24,735 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. As at 30.06.2026, it is possible to pay out dividends to shareholders from retained earnings in the amount of EUR 197,442 thousand (30.06.2025: EUR 187,641 thousand; 31.12.2025: EUR 201,880 thousand). Considering the dividends received and income tax withheld on foreign income totalling EUR 10,713 thousand (30.06.2025: EUR 6,977 thousand; 31.12.2025: EUR 6,977 thousand), the corresponding income tax on dividends would amount to EUR 44,977 thousand (30.06.2025: EUR 45,948 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.
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 28 NOTE 5 CASH AND CASH EQUIVALENTS in thousand euros 30.06.2026 30.06.2025 31.12.2025 Bank accounts 39,539 18,330 34,802 Overnight deposits 54 4,532 6,622 Term deposits with maturities of 3 months of less - 3,000 - Total cash and cash equivalents 39,593 25,862 41,424 NOTE 6 TRADE AND OTHER RECEIVABLES in thousand euros 30.06.2026 30.06.2025 31.12.2025 Trade receivables Accounts receivable 35,643 55,987 31,003 Allowance for doubtful receivables (46) (1) - 35,597 55,986 31,003 Tax prepayments excluding corporate income tax Value added tax 1,486 994 689 Other taxes 35 62 2 1,521 1,056 691 Accrued income from construction services 15,904 11,228 3,164 Other short-term receivables Short-term loans - - 500 Interest receivables 16 - 19 Other short-term receivables 86 105 115 102 105 634 Prepayments for services Prepayments for construction services 5,138 6,650 7,186 Prepaid insurance 859 591 692 Other prepaid expenses 370 373 288 6,367 7,614 8,166 Total trade and other receivables 59,491 75,989 43,658 incl. other short-term receivables and prepayments to related parties (Note 16) 1,731 5,167 1,393 NOTE 7 INVENTORIES in thousand euros 30.06.2026 30.06.2025 31.12.2025 Materials 681 695 553 Work-in-progress 120,873 69,443 102,274 Finished goods 35,596 41,717 27,249 Goods for resale Registered immovables purchased for resale/development 87,289 83,795 88,850 Other goods purchased for resale 1,090 401 696 88,379 84,196 89,546 Prepayments for inventories Prepayments for real estate properties 8 13 8 Prepayments for other inventories 316 488 182 324 501 190 Total inventories 245,853 196,552 219,812
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 29 NOTE 8 OTHER LONG-TERM LOANS AND RECEIVABLES in thousand euros 30.06.2025 30.06.2025 31.12.2025 Long-term loan receivables 3,075 - 2,800 Long-term receivables from customers of construction services 17,034 18,645 17,858 Total other long-term loans and receivables 20,109 18,645 20,658 incl. long-term loan receivables from related parties (Note 16) 3,075 - 2,800 NOTE 9 INVESTMENT PROPERTY in thousand euros 30.06.2026 30.06.2025 31.12.2025 Land 6,109 6,109 6,109 Right of superficies at carrying amount Cost 29 29 29 Accumulated depreciation (17) (16) (16) 12 13 13 Buildings at carrying amount Cost 6,625 8,026 8,026 Accumulated depreciation (1,913) (1,756) (1,926) 4,712 6,270 6,100 Construction in progress 341 83 173 Total investment property 11,174 12,475 12,395 NOTE 10 PROPERTY, PLANT AND EQUIPMENT in thousand euros 30.06.2026 30.06.2025 31.12.2025 Land 1,266 1,266 1,266 Buildings at carrying amount* Cost 10,722 7,469 8,055 Accumulated depreciation (4,190) (3,694) (3,880) 6,532 3,775 4,175 Machinery and equipment at carrying amount* Cost 20,710 19,859 20,089 Accumulated depreciation (11,352) (10,612) (10,913) 9,358 9,247 9,176 Other fixtures at carrying amount Cost 6,849 3,922 6,723 Accumulated depreciation (2,721) (2,400) (2,346) 4,128 1,522 4,377 Construction in progress and prepayments for property, plant and equipment 486 2,361 3,123 Total property, plant and equipment 21,770 18,171 22,117 * As of 30 June 2026, the balance of buildings at carrying amount includes leased assets in a sum of EUR 634 thousand (30.06.2025: EUR 280 thousand; 31.12.2025: EUR 770 thousand). The balance of machinery and equipment at carrying amount includes leased assets in a sum of EUR 3,769 thousand (30.06.2025: EUR 3,425 thousand; 31.12.2025: EUR 3,627 thousand).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 30 NOTE 11 INTANGIBLE ASSETS in thousand euros 30.06.2026 30.06.2025 31.12.2025 Goodwill Cost 1 1 1 Software at carrying amount Cost 2,035 1,537 2,031 Accumulated depreciation (1,430) (1,270) (1,318) 605 267 713 Prepayments for intangible assets 63 325 - Total intangible assets 669 593 714 NOTE 12 BORROWINGS in thousand euros 30.06.2026 30.06.2025 31.12.2025 Lease liabilities* Lease liabilities balance 4,404 3,724 4,435 incl. current portion 1,159 873 1,131 non-current portion 2...5 years 3,245 2,851 3,304 Bank loans Loan balance 64,426 20,632 28,317 incl. current portion 6,332 8,465 1,609 non-current portion 2...5 years 58,094 12,167 26,708 Loans from other entities Loan balance 339 374 339 incl. current portion 339 374 339 Total loans Loans balance 64,765 21,006 28,656 incl. current portion 6,671 8,839 1,948 non-current portion 2…5 years 58,094 12,167 26,708 Total borrowings 69,169 24,730 33,091 incl. current portion 7,830 9,712 3,079 non-current portion 2...5 years 61,339 15,018 30,012 * As of 30 June 2026, the lease liabilities include a balance of EUR 585 thousand to related parties (30.06.2025: EUR 129 thousand; 31.12.2025: EUR 675 thousand) (Note 16).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 31 NOTE 13 PAYABLES AND PREPAYMENTS in thousand euros 30.06.2026 30.06.2025 31.12.2025 Trade payables 37,640 43,938 33,970 Payables to employees 11,122 12,223 15,230 Tax liabilities, except for corporate income tax Value added tax 3,522 2,435 2,311 Personal income tax 499 666 647 Social security tax 1,446 1,447 1,637 Unemployment insurance tax 53 53 73 Contributions to mandatory funded pension 46 38 65 Other taxes 375 232 310 5,941 4,871 5,043 Prepayments for construction services 21,522 38,511 23,910 Other liabilities Interest liabilities 233 87 140 Other liabilities 204 132 169 437 219 309 Prepayments received * 19,259 12,722 17,458 Total payables and prepayments 95,921 112,484 95,920 incl. payables to related parties (Note 16) 102 35 58 * As of 3 0 June 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 2,497 thousand (30.06.2025: EUR 7,017 thousand; 31.12.2025: EUR 7,070 thousand) and of prepayments received in connection with residential properties (apartment buyers) in a sum of EUR 16,762 thousand (30.06.2025: EUR 5,705 thousand; 31.12.2025: EUR 10,388 thousand) (Note 2). NOTE 14 SHORT-TERM PROVISIONS in thousand euros 30.06.2026 30.06.2025 31.12.2025 Provision for warranty obligation for construction 5,085 4,960 5,183 Provision for costs of projects sold and work-in-progress projects 5,993 3,598 4,448 Provision for onerous construction contracts 106 20 7 Provision for legal costs and claims filed 110 387 377 Other provisions 200 200 411 Total short-term provisions 11,494 9,165 10,426 NOTE 15 OTHER LONG-TERM PAYABLES in thousand euros 30.06.2026 30.06.2025 31.12.2025 Trade payables 5,213 5,962 5,758 Prepayments received * 714 2,058 1,204 Other long-term liabilities 121 60 88 Other long-term provisions 42 - 23 Other long-term payables total 6,090 8,080 7,073 * As of 3 0 June 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 714 thousand (30.06.2025: EUR 2, 058 thousand; 31.12.2025: EUR 1,204 thousand) (Note 2).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 32 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 30.06.2026, 30.06.2025 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 30.06.2026 30.06.2025 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 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 Statinių 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 Būve 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
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 33 Ownership and voting rights % Location Area of operation 30.06.2026 30.06.2025 31.12.2025 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 6 months 2025 6 months 2025 12 months Provided services and goods sold Joint ventures 6,431 1,248 4,907 Entities under common control 120 28,834 39,975 Members of the management 197 11 22 Total services provided and goods sold 6,748 30,093 44,904 Interest income Joint ventures 100 56 100 Entities under common control - 8 8 Total interest income 100 64 108 Purchased services and goods Joint ventures 440 1 177 Entities under common control 71 43 87 Total purchased services and goods 511 44 264 BALANCES WITH RELATED PARTIES in thousand euros 30.06.2026 30.06.2025 31.12.2025 Receivables from related parties Loans granted (Note 8) Joint venture 3,075 - 2,800 Receivables and prepayments (Note 6) Joint ventures 1,707 599 1,172 Entities under common control 24 4,554 24 Members of the management - 14 197 Total receivables and prepayments 1,731 5,167 1,393 Total receivables from related parties 4,806 5,167 4,193 Payables to related parties Lease liabilities (Note 12) Entities under common control 585 129 675 Payables and prepayments (Note 13) Joint ventures 97 - 39 Entities under common control 5 35 19 Total payables and prepayments 102 35 58 Total payables to related parties 687 164 733 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 6 months of 2026 were EUR 936 thousand (6 months of 2025: EUR 1,353 thousand; 12 months of 2025: EUR 2,537 thousand).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 34 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 6 months of 2026, the Management Board members of AS Merko Ehitus did not receive benefits (6 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 30.06.2026: 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 - - Tõnu Toomik 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 two members: Ivo Volkov and Urmas Somelar. Shares held by members of the Management Board of AS Merko Ehitus as of 30.06.2026: NO OF SHARES % OF SHARES Ivo Volkov Chairman of the Management Board 4,137 0.02% Urmas Somelar Member of the Management Board - - 4,137 0.02% NOTE 17 CONTINGENT LIABILITIES in thousand euros The group has obtained the following guarantees from financial institutions and issued suret ies 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 t he group is unable to meet its contractual obligations. Management estimates that additional expenses related to these guarantees are unlikely. 30.06.2026 30.06.2025 31.12.2025 Performance period’s warranty to the customer 25,167 39,856 46,243 Tender warranty 100 55 100 Guarantee for warranty period 17,050 8,675 17,342 Prepayment guarantee 4,558 9,797 7,773 Contracts of surety 8,941 12,219 6,755 Total contingent liabilities 55,816 70,602 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. 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).
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AS MERKO EHITUS CONSOLIDATED INTERIM REPORT 35 DEFINITION OF RATIOS Gross profit margin (%) = Gross profit Revenue Operating profit margin (%) = Operating profit Revenue EBT margin (%) = Pre-tax profit Revenue Net profit margin (%) = Net profit (attributable to equity holders of the parent) Revenue Return on equity, ROE (%) = Net profit (attributable to equity holders of the parent) 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) 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 Debt ratio (%) = Interest-bearing liabilities Total assets Current ratio = Current assets Current liabilities Quick ratio = Current assets - inventories Current liabilities Accounts receivable turnover(days) = Trade receivables of the current 4 quarters (average) x 365 Revenue of the current 4 quarters Accounts payable turnover (days) = Payables to suppliers of the current 4 quarters (average) x 365 Cost of goods sold of the current 4 quarters EBITDA (million EUR) = Operating profit + depreciation EBITDA margin (%) = Operating profit + depreciation Revenue General expense ratio (%) = Marketing expenses + General and administrative expenses Revenue Labour cost ratio (%) = Labour costs Revenue Revenue per employee (EUR) = Revenue Number of employees (average) Earnings per share, EPS (EUR) = Net profit (attributable to equity holders of the parent) Number of shares Equity/share (EUR) = Shareholders equity (average of the current 4 quarters) Number of shares Dividend per share (EUR) = Payable dividends Number of shares Dividend rate (%) = Payable dividends x 100 Net profit (attributable to equity holders of the parent) Dividend yield (%) = Dividends payable per share Share price 31.12 P/E = Share price 30.06 Earnings per share of the current 4 quarters P/B = Share price 30.06 Equity per share (average of the current 4 quarters) Market value = Share price 30.06 x Number of shares