Merko Ehitus                  FINANCIAL RESULTS                 05/08/2002



FINANCIAL RESULTS, Q1 2002



COMMENTARY TO FIRST QUARTER 2002 FINANCIAL RESULTS 



Merko Ehitus group 2002 first quarter consolidated and unaudited net sales 

amounted to 293,7 million EEK (18,8 million EUR), and net profit was 

18,8 million EEK (1,2 million EUR).  

The respective figures year ago were net sales of 255,6 million EEK (16,3

million EUR) and net profit of 15,3 million EEK (979 thousand EUR).



Merko Ehitus group deals in the field of construction and with activities 

concerned to that, in Estonia, Latvia and Lithuania. Companies of the group 

Q1 2002 net sales and consolidated net sales (sales outside the group)

were (in thousand EEK):



								

                                                Net Sales       Including

                                                             consolidated

                                                                net sales

Estonian companies			

	Construction	

	AS Merko Ehitus                         178 233         177 508

	AS Gustaf (100% partnership)             28 996          28 457

	AS Merko Tartu (66% partnership)         17 193          17 193

	Production of structures for small houses		

	OÜ Matek (71,6% partnership)              5 181           5 181

	Road construction

	Tallinna Teede AS (100% partnership)      9 147           9 147

	Construction

	AS Normanni Linnagrupp (50% partnership)      -               -

	AS Insenervõrgud (50% partnership)            -               -

	Production of concrete		

	AS Tartu Maja Betoontooted 

	(25% partnership)                        21 996               -

Latvian companies			

	Construction		

	SIA Merks (100% partnership)             33 839          33 839

Lithuanian companies			

	Construction		

	UAB Merko Statyba (100% partnership)     22 360          22 360



Companies of the group Q1 2002 net sales and consolidated net sales 

(sales outside the group) were (in thousand EUR):



                                             Net Sales       Including

                                                             consolidated

                                                             net sales

Estonian companies			

	Construction		

	AS Merko Ehitus                          11 391          11 345

	AS Gustaf (100% partnership)              1 853           1 819

	AS Merko Tartu (66% partnership)          1 099           1 099

	Production of structures for small houses		

	OÜ Matek (71,6% partnership)                331             331

	Road construction

	Tallinna Teede AS (100% partnership)        585             585

	Construction		

	AS Normanni Linnagrupp (50% partnership)      -               -

	AS Insenervõrgud (50% partnership)            -               -

	Production of concrete		

	AS Tartu Maja Betoontooted 

	(25% partnership)                         1 406               -

Latvian companies			

	Construction		

	SIA Merks (100% partnership)              2 163           2 163

Lithuanian companies			

	Construction		

	UAB Merko Statyba (100% partnership)      1 429           1 429



Merko Ehitus group Q1 2002 consolidated data illustrating financial ratios 

were:



                                                Q1 2002             Q1 2001 

Net profit margin                               6,4 %               6,0 %

Operating profit margin                         5,8 %               5,5 %

Return on equity (per year)                     30,3%               35,7%

Return on assets (per year)                     14,5%               13,9%

Current ratio                                   1,7                 1,6

Invoice turnover (per year)                     7,8                 9,4

Equity-to-assets ratio                          49 %                44 % 



Year 2002 Q1 consolidated and unaudited income statement and balance sheet

are compiled in accordance with the principles of the International 

Accounting Standards (IAS), and correspond with the Estonian legal acts 

regulating the accounting principles used. For the first time real estate

investments are reverberated in balance sheet as separate subdivision.

Real estate investments are reported at purchase price.





INCOME STATEMENT Q1 2001				

consolidated, unaudited in thousand EEK and EUR				

				

                                           EEK                    EUR	

                                   2002.a.     2001.a.     2002.a.   2001.a.

                                   1st Q       1st Q       1st Q      1st Q



Sales                              293 684     255 642     18 770      16 338

				

Cost of sales                      262 429     231 694     16 772      14 808



Gross profit                        31 255      23 948      1 998       1 531



Marketing expenses                   2 824       2 404        180         154

Administrative expenses             11 816       8 850        755         566

Other operating income               1 149       1 984         73         127

Other operating expenses               586         696         37          44



Operating profit                    17 178      13 982      1 098         894



Financial income from stocks of 

associated companies                   522          24         33           2

incl. Equity method gains              522          24         33           2

Foreign exchange gain                1 267       2 126         81         136

Other interest and similar income      915       1 586         58         101

Total financial income               2 704       3 736        173         239



Financial expenses related to 

associated companies                   182         724         12          46

incl. Equity method gains              182         724         12          46

Interest expense                        88          44          6           3

Foreign exchange loss                  914       1 257         58          80

Other financial expenses                14          46          1           3

Total financial expenses             1 198       2 071         77         132



Profit(-loss) from normal operat.   18 684      15 647      1 194       1 000

				

Net prof.(loss) for the finan. year 18 684      15 647      1 194       1 000



Minority interest                     -104         325         -7          21



Net profit (- loss) for the group   18 788      15 322      1 201         979

				

Net profit (- loss) per share (basic 

and diluted, in EEK and EUR)          2,12        1,73       0,14        0,11





BALANCE SHEET AS OF 31.03.2002				

consolidated, unaudited in thousand EEK and EUR				



                                      EEK                       EUR	

                            31.03.2002   31.12.2001   31.03.2002   31.12.2001

ASSETS				



Cash and cash equivalents       37 739       60 814        2 412        3 887

				

Marketable securities           35 123       18 516        2 245        1 183

				

Accounts receivable            150 903      186 861        9 644       11 943

Allowance for doubtful receiv.     -38          -53           -2           -3

Total accounts receivable      150 865      186 808        9 642       11 939

				

Receivables from subsidiary and 

parent companies                 1 735        1 735          111          111

Receivables from associated comp.6 941        6 941          444          444

Other short-term receivables    39 165       43 112        2 503        2 755

Total other receivables         47 841       51 788        3 058        3 310

				

Interest receivable              1 318          739           84           47

Other accrued income               106          254            7           16

Total accrued income             1 424          993           91           63

				

Prepaid taxes                   10 838        6 850          693          438

Other prepaid expenses           3 005        1 534          192           98

Total prepaid expenses          13 843        8 384          885          536

				

Raw materials                    1 942        4 041          124          258

Work-in-progress                 7 141        9 092          456          581

Finished goods                   1 436          855           92           55

Merchandise purchased for resale38 319       32 667        2 449        2 088

Prepayments to suppliers        13 069          567          835           36

Construction-in-progress        12 776        5 821          817          372

Due from customers              63 015       35 281        4 027        2 255

Total inventories              137 698       88 324        8 800        5 645

				

Total current assets           424 533      415 627       27 133       26 563

				

Shares in associated companies  12 281       12 489          785          798

Long-term receivables from 

associated companies               468          100           30            6

Other shares, holdings and debt 

securities                       1 800        1 800          115          115

Long-term accounts receivable      488            -           31            -

Miscellaneous long-term receivab.7 667        7 588          490          485

Total long-term financial assets22 704       21 977        1 451        1 405

				

Buildings                       26 934       26 934        1 721        1 721

Accumulated real-estate 

investments depreciation        -7 294       -6 755         -466         -432

Prepayments for real-estate 

investments                     15 855       10 655        1 013          681

Total real-estate investments   35 495       30 834        2 269        1 971

				

Land and buildings              16 116       16 086        1 030        1 028

Ground lease                       458          458           29           29

Plant and equipment             62 279       64 064        3 980        4 094

Other equipment and fixtures    16 792       16 105        1 073        1 029

Accumulated depreciation       -46 997      -46 914       -3 004       -2 998

Self-constructed physical assets 

under construction                 188          173           12           11

Total noncurrent physical assets48 836       49 972        3 121        3 194

				

Purchased concessions, patents, 

licenses, etc.                      95           97            6            6

Goodwill                        -6 434       -6 773         -411         -433

Total intangible assets         -6 339       -6 676         -405         -427

				

Total non-current assets       100 696       96 107        6 436        6 142

				

LIABILITIES AND OWNERS' EQUITY 525 229      511 734       33 568       32 706

				

				

Debentures (except bank loans)  12 636        4 533          808          290

Short-term loans from financial 

institutions                         7            8            0            1

Total debt obligations          12 643        4 541          808          290

				

Customer prepayments            15 065        9 865          963          630

				

Accounts payable to suppliers   93 373      122 504        5 968        7 829

				

Payables to associated companies   226        1 493           14           95

				

Tax liabilities                  6 451       11 842          412          757

				

Payables to employees           11 296       10 165          722          650

Dividends payable                1 595            -          102            -

Interest payable                     4           10            0            1

Other accrued expenses             536          941           34           60

Total accrued expenses          13 431       11 116          858          710

				

Provisions for construction 

warranty liability               4 136        3 737          264          239

Due to customers               106 561       94 572        6 810        6 044

Other current provisions           158          155           10           10

Total current provisions       110 855       98 464        7 085        6 293

				

Total current liabilities      252 044      259 825       16 109       16 606

				

Non-convertible debt             4 204          204          269           13

Accounts payable to suppliers    7 596        7 478          485          478

				

Total non-current liabilities   11 800        7 682          754          491



Total liabilities              263 844      267 507       16 863       17 097



Minority interests               3 989        5 829          255          373

				

OWNERS' EQUITY				

Share capital                   88 500       88 500        5 656        5 656

Share premium                    2 950        2 950          189          189

Mandatory legal reserve          8 205        8 205          524          524

Retained earnings              137 525       49 213        8 789        3 145

Net profit (- loss) for the 

financial year                  18 788       88 312        1 201        5 644

Exchange rate differences        1 428        1 218           91           78



TOTAL OWNERS' EQUITY           257 396      238 398       16 451       15 236

				

TOTAL LIABILITIES AND OWNERS' 

EQUITY                         525 229      511 734       33 568       32 706





Ülo Metsaots

Management Board member

+372 6 105 110