AS MERKO EHITUS                 FINANCIAL RESULTS                20.05.2005



FINANCIAL RESULTS 3M 2005



COMMENTARY TO 3M 2005 FINANCIAL RESULTS



Merko Ehitus group 3M 2005 consolidated and unaudited net sales amounted to

626 million kroons (40 million euros) and net profit was 66.8 million kroons

(4.3 million euros) incl. 54.8 million kroons which was gained from general

business activities and 12 million kroons from the disposal of surplus real

estate, which was sold in order to achieve the strategic aims of the company.



Compared to the same period in the previous year Group’s turnover decreased

by 18.7 percent and profit increased by 12.8 percent.



Companies of the Group 3M 2005 net sales and consolidated net sales

(sales outside the Group) were (in thousand kroons and euros):



                                                   Sales            including

                                                                 consolidated

                                                                    net sales



                                            EEK      EUR        EEK       EUR

Estonian companies

   Construction

   AS Merko Ehitus                      374 546   23 938     374 546   23 938

   AS Gustaf (100% partnership)          14 712      940      13 861      886

   OÜ Gustaf Tallinn (80% partnership)   27 427    1 753      27 427    1 753

   AS Merko Tartu (66% partnership)      30 822    1 970      27 842    1 779

   Tallinna Teede AS (100% partnership)  11 228      718      10 969      701

   Construction

   AS Normanni Linnagrupp(50% partnership)3 186      204           -        -

   Production of concrete

   AS Tartu Maja Betoontooted

   (25% partnership)                     39 403    2 518           -        -

   Communication networks

   AS Telegrupp (45% partnership)        11 021      704           -        -

Latvian companies

   Construction

   SIA Merks (100% partnership)         110 564    7 066     110 564     7 066

Lithuanian companies

   Construction

   UAB Merko Statyba (100% partnership)  35 482    2 268      35 482     2 268





The ratios and calculation methods characterizing the operating activities of

the Group were as follows:



                                         3M 2005       3M 2004



Net profit margin                          8,8 % *       6,2 % *

Operating profit margin                    9,4 %         8,1 %

Return on equity (per year)               35,6 %        48,0 %

Return on assets (per year)               20,3 %        20,9 %

Current ratio                              2,0           1,7

Equity-to-assets ratio                    56,8 %        46,6 %

The share of general expenses in sales     4,8 %         2,5 %

The share of labor costs in sales          7,8 %         5,1 %



* without extraordinary profit



Net profit margin: Net profit / Sales

Operating profit margin: Operating profit / Sales

Return on equity: Net profit* x 4 / Average equity during the period*

Return on assets: Net profit* x 4 / Average assets during the period

Current ratio: Current assets / Current liabilities

Equity-to-assets ratio: Owners equity / Total assets

The share of general expenses in sales: General expenses / Sales

The share of labor costs in sales: Labor costs / Sales



* calculated for the shareholders of the parent company 



Year 2005 3M interim consolidated and unaudited income statement and balance

sheet are compiled in accordance with the principles of the International

Financial Reporting Standards (IFRS).





INCOME STATEMENT 3M 2005

consolidated, unaudited in thousand EEK and EUR



                                           EEK                   EUR

                                   3M 2005     3M 2004    3M 2005    3M 2004



Sales                              626 023     770 161     40 010     49 222

Sales costs                       (533 911)   (700 058)   (34 123)   (44 742)



Gross profit                        92 112      70 103      5 887      4 480



Marketing expenses                  (5 210)     (3 386)      (333)      (216)

Administrative expenses            (27 365)    (16 212)    (1 749)    (1 036)

Other operating income                 305      12 522         19        800

Other operating expenses              (786)       (613)       (50)       (39)



Operating profit                    59 056      62 414      3 774      3 989



Financial income and expenses

from stocks of subsidiaries              0        (299)         0        (19)

Financial income and expenses

from stocks of associate companies   6 931          82        443          5

Financial income and expenses from

other long-term financial investments  110           -          7          -

Interest expense                      (381)       (444)       (24)       (28)

Foreign exchange gain                  760         579         49         37

Other financial income and expense   1 533      (1 630)        98       (104)

Total financial income and expenses  8 953      (1 712)       572       (109)



Profit before taxes                 68 009      60 702      4 346      3 880



Income tax                            (327)       (974)       (21)       (63)



Net profit for fiscal year          67 682      59 728      4 325      3 817

  incl. net profit attributable

        to minority shareholders    66 830      59 221      4 271      3 785

        net profit attributable

        to parent company              852         507         53         32



Parent company's net profit per share

(basic and diluted, in EEK and EUR)   7,55        6,69       0,48       0,43





BALANCE SHEET AS OF 31.03.2005

consolidated, unaudited in thousand EEK and EUR



                                       EEK                      EUR

                             31.03.2005   31.12.2004  31.03.2005  31.12.2004

ASSETS

Current assets

Cash                             86 405      141 812       5 522       9 063

Short-term financial investments     45       11 775           3         753

Receivables and prepayments     647 606      499 165      41 390      31 903

Inventories                     384 704      351 332      24 586      22 454

Total current assets          1 118 760    1 004 084      71 501      64 173



Non-current assets

Long-term financial investments  58 642       55 438       3 748       3 543

Real estate investments          48 255       61 389       3 084       3 924

Tangible assets                 151 505      131 765       9 683       8 421

Intangible assets                 2 171        1 110         139          71

Total non-current assets        260 573      249 702      16 654      15 959



TOTAL ASSETS                  1 379 333    1 253 786      88 155      80 132



LIABILITIES AND OWNERS' EQUITY

Current liabilities

Raised loans                     16 372       12 578       1 047         804

Liabilities and prepayments     543 951      488 170      34 764      31 200

Current provisions                5 337        5 784         341         369

Total current liabilities       565 660      506 532      36 152      32 373



Non-current liabilities

Loans, bonds and finance

lease liabilities                14 012       14 046         896         898

Other long-term payables          8 060        8 038         515         514

Total non-current liabilities    22 072       22 084       1 411       1 412



Total liabilities               587 732      528 616      37 563      33 785



Owners' equity

Minority interest                 7 452        7 200         476         460

Equity attributable to parent company's shareholders

Share capital                    88 500       88 500       5 656       5 656

Share premium                     2 950        2 950         189         189

Mandatory legal reserve           8 850        8 850         566         566

Other reserves                   (5 314)      (4 663)       (340)       (298)

Undistributed profit            689 163      622 333      44 045      39 774

Total equity attributable to

parent company's shareholders   784 149      717 970      50 116      45 887

Total owners' equity            791 601      725 170      50 592      46 347



TOTAL LIABILITIES

AND OWNERS' EQUITY            1 379 333    1 253 786      88 155      80 132





Alar Lagus

Member of Board

+372 6 805 109