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2015 3 months consolidated unaudited interim report

The results posted by the Merko Ehitus group in the first quarter of 2015 are in line with expectations and reflect developments on the Baltic construction market in 2014 – a lower volume of orders and pressure on margins from price competition – which will continue to have an effect in 2015 and likely in 2016 as well. The management of the group sees 2015 as challenging for construction companies as regards securing new orders, as growth is not forecasted in the near future on the construction market, preparation of new procurements takes a long time and companies are taking major risks in bidding for construction contracts. Growth prospects on the construction market may start improving from 2016, and thus flexibility and efficiency are very important for construction companies in the near future.

In the first quarter of 2015, Merko Ehitus had sales revenue of EUR 45.6 million (first 3 months of 2014: EUR 48.9 million), of which 41.8% was earned outside Estonia. We are satisfied with the growth of sales revenue from construction services in Latvia; in the 3 months of 2015 the share of Latvian revenue in the group’s revenue has increased to almost 37%. Lithuanian revenue from construction services stayed on par with the figure for the first quarter last year. The volume of new construction contracts cannot be considered satisfactory – in the first quarter, Merko Ehitus signed EUR 22.4 million in new construction contracts compared to EUR 48.6 million in the same period in 2014. Above all due to the interim period in announcement of public procurements funded by the EU and the uncertainty among private customers with regard to launching new developments, it is a great challenge for the group to maintain and grow its secured order book. The group continues to be focused on good cooperation and experience in the field of design services as well as comprehensive supply of design-build services to private customers. For more information please look here.