English Estonian
Published: 2008-05-09 08:30:52 CEST
Nordecon
Quarterly report
CONSOLIDATED INTERIM FINANCIAL STATEMENTS FIRST QUARTER OF 2008
CONSOLIDATED INTERIM FINANCIAL STATEMENTS FIRST QUARTER OF 2008

DIRECTORS'
REPORT                                                               

Eesti
Ehitus is a group of construction companies whose core business is
general
contracting and construction management in the construction of
buildings and    
structures in Estonia, Latvia, Lithuania and Ukraine. In
addition, in Estonia   
our companies act as independent contractors in road
construction and           
maintenance, environmental engineering, the
assembly of reinforced concrete     
elements, and the performance of
cast-on-site concrete works. The parent of the 
Group is AS Eesti Ehitus, a
company registered and located in Tallinn, Estonia.
In addition to the parent
company, there are more than 20 subsidiaries in the
Group. AS Eesti Ehitus
Group employs more than 1100 people. Since 18
May 2006, the company's shares
have been quoted in the main list of the NASDAQ
OMX Tallinn Stock Exchange.



Our mission                                                              
      
We are committed to providing premier value added design and
construction       
services by creating a successful partnership with our
customers.	              
We seek to add value to the company by motivating
our employees and providing   
them with clear development opportunities and a
contemporary work environment.  

Our vision                                 
                                    
We strive to be a construction group
which can always surpass the customer's    
expectations.                     
                                             

Shared values                 
                                                 
Quality                     
                                                   
We are professionals - we
apply appropriate and effective construction          
techniques and
technologies and observe generally accepted quality standards. We
provide our
customers with integrated cost efficient solutions. We are         

environmentally aware and operate sustainably. We value our employees by     
  
providing them with a modern work environment which encourages creativity
and a 
motivation system which fosters initiative.                            
        
Reliability                                                          
          
We always keep our promises and honour our agreements. We act
openly and        
transparently. We consistently support and promote the best
construction        
practices. We do not take risks at the expense of our
customers.                
Innovation                                         
                            
We are innovative and creative engineers. We take
maximum advantage of the      
benefits offered by information technology. We
inspire our employees to grow    
through continuous training and balanced
career opportunities.                  

THE GROUP'S STRUCTURE               
                                           

The unaudited consolidated
financial statements of AS Eesti Ehitus as at and for
the first quarter of
2008 comprise the results of the parent and its            
subsidiaries and
the Group's interests in associates:                          
     
------------------------------------------------------------------------------
     --
|
Direct and indirect ownership interests of AS Eesti        |                
|
| Ehitus:                                                    |              
 
     |
-----------------------------------------------------------------------------
     ---
|
Company          |           31 March 2008 | 31 March 2007 |     31 December
|
|                  |                         |               |           
2007
     |
-----------------------------------------------------------------------------
     ---
|
AS Linnaehitus   | Estonia    |     100.0% |        100.0% |          100.0%
     |
-----------------------------------------------------------------------------
     ---
|
AS Aspi          | Estonia    |     100.0% |        100.0% |          100.0%
     |
-----------------------------------------------------------------------------
     ---
|
AS Järva Teed    | Estonia    |     100.0% |        100.0% |          100.0%
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Hiiu Teed     | Estonia    |     100.0% |        100.0% |          100.0%
     |
-----------------------------------------------------------------------------
     ---
|
Estcon OY        | Finland    |     100.0% |        100.0% |          100.0%
     |
-----------------------------------------------------------------------------
     ---
|
OÜ EE Ressursid  | Estonia    |     100.0% |        100.0% |          100.0%
     |
-----------------------------------------------------------------------------
     ---
|
UAB Eurocon LT   | Lithuania  |      70.0% |          0.0% |           70.0%
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Eurocon       | Estonia    |      66.5% |         64.0% |           64.0%
     |
-----------------------------------------------------------------------------
     ---
|
TOV Eurocon      | Ukraine    |      66.5% |         61.4% |           61.4%
|
| Ukraine          |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
TOV Eurocon West | Ukraine    |      66.5% |         61.4% |           61.4%
     |
-----------------------------------------------------------------------------
     ---
|
Instar Property  | Estonia    |      66.5% |            0% |              0%
|
| OÜ               |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
TOV Instar       | Ukraine    |      66.5% |            0% |              0%
|
| Property         |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
TOV Bukovina     | Ukraine    |      65.8% |         60.8% |           60.8%
|
| Developments     |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Mapri Projekt | Estonia    |      52.0% |         52.0% |           52.0%
     |
-----------------------------------------------------------------------------
     ---
|
AS Eston Ehitus  | Estonia    |      52.0% |            0% |           52.0%
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Kaurits       | Estonia    |      52.0% |         52.0% |           52.0%
     |
-----------------------------------------------------------------------------
     ---
|
OÜ DSN           | Estonia    |      34.3% |          0.0% |           34.3%
|
| Ehitusmasinad    |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
Infra Ehitus OÜ  | Estonia    |      52.0% |         52.0% |           52.0%
     |
-----------------------------------------------------------------------------
     ---
|
SIA Abagars      | Latvia     |      34.3% |         34.3% |           34.3%
     |
-----------------------------------------------------------------------------
     ---
|
SIA Vides Tikli  | Latvia     |      34.3% |         34.3% |           34.3%
     |
-----------------------------------------------------------------------------
     ---
|
TOV V.I. Center  | Ukraine    |      34.6% |         32.0% |           32.0%
|
| 	          |            |            |               |                
     |
-----------------------------------------------------------------------------
     ---
|
TOV EA Reng      | Ukraine    |      33.9% |         31.3% |           31.3%
|
| Proekt           |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
TOV Eurobeton    | Ukraine    |         0% |         30.7% |              0%
     |
-----------------------------------------------------------------------------
     ---
|
TOV              | Ukraine    |      33.3% |         30.7% |           30.7%
|
| Technopolis-2    |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
TOV Baltik       | Ukraine    |      33.3% |          0.0% |           30.7%
|
| Development      |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Kastani       | Estonia    |      26.0% |        26.0%  |           26.0%
|
| Kinnisvara       |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Sepavara      | Estonia    |      26.0% |            0% |             26%
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Kalda Kodu    | Estonia    |      22.9% |            0% |           22.9%
     |
-----------------------------------------------------------------------------
     ---
|
TOV Passage      | Ukraine    |     19.3%* |         55.3% |          17.8%*
|
| Theatre          |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
OÜ Crislivnica   | Estonia    |      17.7% |            0% |           17.7%
     |
-----------------------------------------------------------------------------
     ---
|
P/S BKT          | Latvia     |      17.2% |         17.2% |           17.2%
     |
-----------------------------------------------------------------------------
     ---
|
TOV European     | Ukraine    |       6.7% |            0% |            6.1%
|
| House            |            |            |               |              
 
     |
-----------------------------------------------------------------------------
     ---
|
OÜ E-Trading     | Estonia    |       6.2% |            0% |            6.2%
     |
-----------------------------------------------------------------------------
     ---
*
Based on preliminary agreements already signed, 61 per cent of the investment

in TOV Passage Theatre has been recognised as a non-current asset held for
sale 
(see note 5 to the consolidated financial statements).                  
       

Changes in the Group's structure during the first quarter of 2008
 
             
Acquisitions of interests and establishment of subsidiaries     
               
On 5 February 2008, OÜ Eurocon acquired a further 4 per cent
stake in TOV       
Eurocon Ukraine, raising its interest in the entity to 100
per cent.            
On 12 February 2008, AS Eesti Ehitus acquired a 2.5 per
cent stake in OÜ Eurocon
from a minority shareholder, increasing its interest
in OÜ Eurocon to 66.5 per  
cent.                                             
                             
On 18 February 2008, AS Eesti Ehitus' subsidiary
OÜ Eurocon established a       
wholly-owned subsidiary - Instar Property OÜ.
At the date of establishment, the 
share capital of Instar Property OÜ was
40,000 kroons (approx. 2,557 euros).    
Instar Property OÜ is going to
operate as a holding company for the Group's     
direct and indirect
interests in development projects performed in Ukraine.     

Changes in the
Group's structure after the reporting date                       
Acquisitions
of interests                                                       
On 2 May
2008, AS Eesti Ehitus' wholly-owned subsidiary AS ASPI acquired a 56   
per
cent stake in the Latvian entity SIA Abagars. ASPI acquired the interest   

from its subsidiary OÜ Kaurits.                                              
  

Divestment of interests                                                  
      
On 4 April 2008, AS Eesti Ehitus transferred a 4 per cent interest in
Eurocon OÜ
to a Ukrainian resident. The divestment was performed by increasing
share       
capital.                                                         
              
On 10 April 2008, AS Eesti Ehitus' subsidiary Eurocon Ukraine
LLC divested a 33 
per cent stake in the Ukrainian company TOV Passage
Theatre.                    
On 14 April 2008, AS Eesti Ehitus' subsidiary
Eurocon Ukraine LLC divested      
itself of a 50 per cent stake in the
Ukrainian company TOV Baltic Development.  

Financial review                
                                               
Profitability and cash flows  
                                                 
Compared with a year ago,
the Group's profitability indicators have improved.   
Gross margin for the
first quarter was 13 per cent (Q1 2007: 12 per cent), the  
ratio of
administrative expenses to revenue was around 5 per cent (Q1 2007:     
around
5 per cent), and operating margin was 8 per cent (Q1 2007: 7 per cent). 


The Group ended the reporting period with consolidated net profit of 44.9  
    
million kroons (2.9 million euros), a 43 per cent increase on the 31.4
million  
kroons (2 million euros) earned a year ago. The profit attributable
to equity   
holders of the parent amounted to 46.1 million kroons (2.9
million euros)       
against 29.5 million kroons (1.9 million euros) for the
first quarter of 2007.  

Net operating cash flow was significantly better
than in the first quarter of   
2007: operating activities generated cash
inflow of 36 million kroons (2.3      
million euros), whereas the first
quarter of 2007 ended with net cash outflow of
5.5 million kroons (0.35
million kroons). Negative investing cash flows are     
mainly attributable to
payments made under contracts concluded in prior periods.
Thanks to strong
positive operating and financing cash flows, cash and cash     
equivalents
grew by 136 million kroons (8.7 million euros).                     

Key
financial figures and ratios                                               
     
------------------------------------------------------------------------------
     --
|
Ratio / figure                 | Q1 2008 |   Q1 2007 |   Q1 2006 |      2007
     |
-----------------------------------------------------------------------------
     ---
|
Weighted average number of     | 30,756, | 30,756,72 | 30,756,72 | 30,756,72
|
| shares                         |     728 |        8* |        8* |        
8
     |
-----------------------------------------------------------------------------
     ---
|
Earnings per share (in kroons) |    1.50 |      0.96 |      0.59 |      8.70
     |
-----------------------------------------------------------------------------
     ---
|
Earnings per share (in euros)  |     0.1 |      0.06 |      0.04 |      0.56
     |
-----------------------------------------------------------------------------
          ---
---------------------------------------------------------------------------
     -----
|
Revenue growth                 |   38.2% |     63.8% |      7.8% |     49.9%
     |
-----------------------------------------------------------------------------
     ---
|
Average number of employees    |    1102 |      1009 |       772 |      1103
     |
-----------------------------------------------------------------------------
     ---
|
Revenue per employee (in       |     702 |       555 |       443 |     3,402
|
| thousands of kroons)           |         |           |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Revenue per employee (in       |      45 |        35 |        28 |       217
|
| thousands of euros)            |         |           |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Personnel expenses to revenue, |   13.6% |     13.3% |     12.9% |     12.3%
|
| %                              |         |           |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Administrative expenses to     |    5.6% |      5.3% |      6.1% |      4.7%
|
| revenue, %                     |         |           |           |        
 
     |
-----------------------------------------------------------------------------
          ---
---------------------------------------------------------------------------
     -----
|
EBITDA (in thousands of        |  77,166 |    51,619 |    33,990 |   370,574
|
| kroons)                        |         |           |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
EBITDA (in thousands of euros) |   4,932 |     3,299 |     2,172 |    23,684
     |
-----------------------------------------------------------------------------
     ---
|
EBITDA margin, %               |   10.0% |      9.2% |      9.9% |      9.9%
     |
-----------------------------------------------------------------------------
     ---
|
Gross margin, %                |   13.1% |     11.8% |      8.8% |     13.3%
     |
-----------------------------------------------------------------------------
     ---
|
Operating margin, %            |    7.9% |      6.7% |      8.1% |      8.2%
     |
-----------------------------------------------------------------------------
     ---
|
Operating margin excluding     |    7.6% |      6.2% |      2.7% |      8.0%
|
| gains on asset sales, %        |         |           |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Net margin, %                  |    5.8% |      5.6% |      5.1% |      7.7%
     |
-----------------------------------------------------------------------------
     ---
|
Return on invested capital, %  |    3.9% |      5.7% |      5.5% |     32.7%
     |
-----------------------------------------------------------------------------
     ---
|
Return on assets, %            |    3.3% |      2.7% |      2.9% |     17.1%
     |
-----------------------------------------------------------------------------
     ---
|
Return on equity, %            |    5.4% |      6.2% |      8.8% |     44.7%
     |
-----------------------------------------------------------------------------
     ---
|
Equity ratio, %                |   38.0% |     38.3% |     21.8% |     36.9%
     |
-----------------------------------------------------------------------------
     ---
|
Gearing, %                     |   18.9% |     19.3% |     12.3% |     13.5%
     |
-----------------------------------------------------------------------------
     ---
|
Current ratio                  |    1.65 |      1.41 |      1.17 |      1.30
     |
-----------------------------------------------------------------------------
     ---
|
                               |      31 |  31 March |  31 March |        31
|
|                                |   March |      2007 |      2006 | 
December |
|                                |    2008 |           |          
|      2007
     |
-----------------------------------------------------------------------------
     ---
|
Order backlog (in thousands of | 3,368,6 | 3,197,000 | 1,775,931 | 2,526,652
|
| kroons)                        |      80 |           |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Order backlog (in thousands of | 215,298 |   204,326 |   113,503 |   161,482
|
| euros)                         |         |           |           |        
 
     |
-----------------------------------------------------------------------------
     ---
*
For comparability, the weighted average number of shares is the number of    

shares after the bonus issues.                                               
 
     

----------------------------------------------------------------------------
     ----
|
Earnings per share (EPS) = net       | Operating margin excluding gains on  
|
| profit attributable to equity        | asset sales = (operating profit -  
  |
| holders of the parent / weighted     | gains on sale of property, plant
and  |
| average number of shares outstanding | equipment - gains on sale of
real     |
| Revenue per employee = revenue /     | estate) / revenue         
           |
| average number of employees          | Net margin = net profit
for the       |
| Personnel expenses to revenue =      | period / revenue
Return on invested   |
| personnel expenses / revenue         | capital =
(profit before tax +        |
| Administrative expenses to revenue = |
interest expense) / the period's      |
| administrative expenses / revenue   
| average (interest-bearing liabilities |
| EBITDA = earnings before interest,
  | + equity)                             |
| taxes, depreciation and
amortisation | Return on assets = operating profit / |
| EBITDA margin =
EBITDA / revenue     | the period's average total assets     |
| Gross margin
= gross profit /        | Return on equity = net profit for the |
| revenue   
                          | period /the period's average total    |
|
Operating margin = operating profit  | equity                               
|
| / revenue                            | Equity ratio = total equity / total
  |
|                                      | equity and liabilities           
    |
|                                      | Gearing = (interest-bearing    
      |
|                                      | liabilities - cash and cash  
        |
|                                      | equivalents) / (interest
bearing      |
|                                      | liabilities + equity) 
               |
|                                      | Current ratio =
total current assets  |
|                                      | / total
current liabilities          
     |
-----------------------------------------------------------------------------
     ---

Revenue
                                                                       

Revenue distribution by geographical segments                                
 
     
------------------------------------------------------------------------------
     --
|
                     |     Q1 2008 |     Q1 2007 |     Q1 2006 |        2007
     |
-----------------------------------------------------------------------------
     ---
|
Estonia              |       81.9% |       83.3% |       95.4% |       87.9%
     |
-----------------------------------------------------------------------------
     ---
|
Ukraine              |       16.2% |       16.7% |        4.6% |       11.6%
     |
-----------------------------------------------------------------------------
     ---
|
Lithuania            |        1.9% |          0% |          0% |        0.5%
     |
-----------------------------------------------------------------------------
     ---
|
Latvia               |          0% |          0% |          0% |          0%
     |
-----------------------------------------------------------------------------
     ---

The
Group has launched operations in Lithuania, thereby implementing the       

strategy of dispersing risks by expanding to different geographical areas. In
  
addition, the Group has consistently increased its operations in Ukraine
and has
penetrated the Latvian market. Latvian revenue should grow in
connection with an
increase in the Group's interest in Abagars SIA (see
Changes in the Group's     
structure after the reporting date).              
                             

Business review                               
                                 

The core business of Eesti Ehitus Group is
general contracting and construction 
management in the construction of
buildings and structures. In addition, the    
Group is involved in road
construction and maintenance, environmental           
engineering, concrete
works and real estate development.                        
Consolidated
revenue for the first quarter of 2008 amounted to 773.5 million    
kroons
(49.4 million kroons), 38 per cent up on the 559.7 million kroons (35.8 

million euros) generated in the first quarter of 2007.  The Group tries to   
  
maintain the revenues generated by its two segments in balance as this
helps    
disperse risks and provides a more solid foundation under stressed  
           
circumstances. In line with the corporate strategy, the proportion
of           
development revenue is consistently maintained at a relatively
low level (at or 
below 20 per cent).                                         
                   
The residential and non-residential segment contributed
648.2 million kroons    
(41.4 million euros) and the civil engineering
segment 116.7 million kroons (7.5
million euros) of total construction
contract revenue. The corresponding figures
for the first quarter of 2007 were
307.4 million kroons and 248.0 million kroons
(19.6 million euros and 15.8
million euros) respectively. It should be noted    
that in contrast to the
first quarter of 2007, the beginning of 2008 was        
customary for the
civil engineering segment and more comparable with 2006       
because the
number of large projects was small and operating volumes therefore  
less
significant.                                                              
     

----------------------------------------------------------------------------
     ----
|
Revenue by segments                 |         |         |          |        
     |
-----------------------------------------------------------------------------
     ---
|
Business segments                   | Q1 2008 | Q1 2007 | Q1 2006  |  2007  
     |
-----------------------------------------------------------------------------
     ---
|
Residential and non-residential     |   85%   |   55%   |   73%    |   53%  
     |
-----------------------------------------------------------------------------
     ---
|
Civil engineering                   |   15%   |   45%   |   27%    |   47%  
     |
-----------------------------------------------------------------------------
     ---
|
Revenue distribution in the         | Q1 2008 | Q1 2007 | Q1 2006  |  2007  
|
| Residential and non-residential     |         |         |          |      
  |
| segment                             |         |         |          |    
   
     |
-----------------------------------------------------------------------------
     ---
|
Residential buildings               |   9%    |   18%   |   19%    |   12%  
     |
-----------------------------------------------------------------------------
     ---
|
Public buildings                    |   14%   |   18%   |   10%    |   16%  
     |
-----------------------------------------------------------------------------
     ---
|
Commercial buildings                |   63%   |   50%   |   45%    |   61%  
     |
-----------------------------------------------------------------------------
     ---
|
Industrial and warehouse facilities |   14%   |   14%   |   26%    |   11%  
     |
-----------------------------------------------------------------------------
          ---

-------------------------------------------------------------------------
     -------
|
Revenue distribution in the Civil   | Q1 2008 | Q1 2007  | Q1 2006*  | 2007 
|
| engineering segment                 |         |          |           |    
 
     |
-----------------------------------------------------------------------------
     ---
|
Road construction and maintenance   |   53%   |   24%    |     -     |  41% 
     |
-----------------------------------------------------------------------------
     ---
|
Port construction                   |   14%   |   58%    |     -     |  33% 
     |
-----------------------------------------------------------------------------
     ---
|
Environmental engineering           |   6%    |   18%    |     -     |  13% 
     |
-----------------------------------------------------------------------------
     ---
|
Other engineering                   |   27%   |    -     |     -     |  13% 
     |
-----------------------------------------------------------------------------
     ---
*
In 2006, the Civil engineering segment was not divided into sub-segments. 
   

At 31 March 2008 the Group's order backlog was 3,369 million kroons (215
million
euros), only a slight improvement on the 3,197 million kroons (204
million      
euros) posted a year ago, but a fairly strong result considering
the changes in 
the construction market and the economic environment in the
second half of 2007 
and the first quarter of 2008.                           
                      

The largest construction contracts signed in the
first quarter of 2008:        
     

----------------------------------------------------------------------------
     ----
|
Brief description of contract              | Cost              | Expected   
|
|                                            |                   | delivery 
  |
|                                            | (EEK '000 / EUR   |        
    |
|                                            | '000)             |      
     
     |
-----------------------------------------------------------------------------
     ---
|
Rehabilitation of the Rõhu-Puhja Section   | 92,336 / 5,901    | August 2009
|
| of National Road 92                        |                   |          
 
     |
-----------------------------------------------------------------------------
     ---
|
Construction of Berths No 8 and 9 at       | 316,363 / 20,219  | May 2009   
|
| Paldiski South Harbour                     |                   |          
 
     |
-----------------------------------------------------------------------------
     ---
|
Design and construction of Science Centre  | 179,100 / 11,447  | August 2010
|
| AHHAA Building                             |                   |          
 
     |
-----------------------------------------------------------------------------
     ---

People
and personnel expenses                                                   

In
the first quarter of 2008, the Group employed, on average, 1102 people,     

including 500 engineers. The proportion of engineers and technical personnel 
  
(ETP) has increased significantly during the past couple of years due to
the    
growth of the Group and the size of the contracts. We expect the trend
to       
continue, among other things, because of the Group's growth in
Lithuania, Latvia
and Ukraine.                                                
                   
Number of employees:                                      
                    
     
------------------------------------------------------------------------------
     --
|
    Period      |        ETP         |     Workers      |   Total average   
     |
-----------------------------------------------------------------------------
     ---
|
    Q1 2008     |        456         |       646        |        1102       
     |
-----------------------------------------------------------------------------
     ---
|
    Q1 2007     |        396         |       613        |        1009       
     |
-----------------------------------------------------------------------------
     ---
|
    Q1 2006     |        292         |       480        |        772        
     |
-----------------------------------------------------------------------------
     ---
|
     2007       |        425         |       678        |        1103       
     |
-----------------------------------------------------------------------------
     ---

The
Group's personnel expenses for the first quarter of 2008 totalled 105.4    

million kroons (6.7 million euros), a 42 per cent increase on the first
quarter 
of 2007. The rise in personnel expenses is attributable to the
acquisition of   
subsidiaries and the Group's personnel policy.              
                   
In the first quarter of 2008, the remuneration of the
Group's council totalled  
270 thousand kroons (17 thousand euros) and the
remuneration of the Group's     
board amounted to 2,575 thousand kroons (165
thousand euros). The corresponding 
figures for the first quarter of 2007 were
270 thousand kroons (17 thousand     
euros) and 1,788 thousand kroons (114
thousand euros) respectively.             

Share and shareholders           
                                             
     

----------------------------------------------------------------------------
     ----
|
ISIN code                             | EE3100039496                        
     |
-----------------------------------------------------------------------------
     ---
|
Short name of the security            | EEH1T                               
     |
-----------------------------------------------------------------------------
     ---
|
Nominal value                         | 10.00 kroons / 0.64 euros           
     |
-----------------------------------------------------------------------------
     ---
|
Total number of securities            | 30,756,728                          
     |
-----------------------------------------------------------------------------
     ---
|
Number of listed securities           | 30,756,728                          
     |
-----------------------------------------------------------------------------
     ---
|
Listing date                          | 18 May 2006                         
     |
-----------------------------------------------------------------------------
     ---


Risks
                                                                         


Business risks                                                             
    
To manage daily construction risks, Group companies purchase Contractors'
All   
Risks insurance. Depending on the nature of the project, both general
frame     
agreements and specially tailored project-specific contracts are
used. In       
addition, as a rule, subcontractors are required to secure the
performance of   
their obligations with a bank guarantee issued for the
benefit of AS Eesti      
Ehitus. To remedy builder-caused deficiencies which
may be detected during the  
warranty period, all Group companies create
warranty provisions. At the end of  
the first quarter of 2008, the provisions
totalled 11.8 million kroons (0.76    
million euros). The corresponding
figure for the first quarter of 2007 was 7    
million kroons (0.5 million
euros).                                             

Credit risk            
                                                        
For credit risk
management, a potential customer's settlement behaviour and    

creditworthiness are analysed already in the tendering stage. Subsequent to
the 
conclusion of a contract, customers' settlement behaviour is monitored on
an    
ongoing basis from the making of an advance payment to adherence to the
        
contractual settlement schedule, which usually depends on the
documentation of  
the delivery of work performed. We believe that the system
in place allows us to
respond to customers' settlement difficulties with
sufficient speed. As at the  
end of the reporting period, our customers'
settlement practice was good.       

Liquidity risk                         
                                        
Free funds are placed in overnight or
fixed-interest term deposits with the     
largest banks in Estonia. To ensure
timely settlement of liabilities,           
approximately two weeks' working
capital is kept in current accounts or         
overnight deposits. Where
necessary, overdraft facilities are used.             

Interest rate risk   
                                                          
The loans taken
from banks operating in Estonia and Ukraine have fixed interest 
rates.
Finance lease contracts have floating interest rates and are linked to  

EURIBOR. Compared with the first quarter of 2007, the Group's loan
liabilities  
have increased by 368 million kroons (24 million euros) or 127
per cent and     
interest expense has grown by 5.2 million kroons (0.33
million euros).          

Currency risk                                     
                             
As a rule, construction contracts and
subcontractors' service contracts are made
in the currency of the host
country: in Estonia, contracts are made in Estonian 
kroons, in Ukraine in
Ukrainian grivnas. In Ukraine, some materials supply      
contracts are made
in euro. In addition, the Group's parent AS Eesti Ehitus     
settles accounts
with its Ukrainian subsidiary Eurocon Ukraine LLC in euro but  
the volumes
are immaterial. The Ukrainian grivna fluctuates slightly against the
US
dollar. Therefore, in Ukraine the fluctuations of the grivna against the
euro
give rise to a currency risk but possibilities for hedging the risk in   
      
cooperation with local banks are almost non-existent. In the first
quarter of   
2008, the Group's foreign exchange loss from Ukrainian
operations amounted to   
11.4 million kroons (0.73 million euros).           
                           
                                                  
                             
Outlook for the near future                     
                               
We believe that in the construction sector the
deceleration in economic growth  
will trigger the following trends:          
                                   
The construction sector will become more
dependent on public procurement tenders
and the number and pricing of
infrastructure, environment and other projects    
launched with the support
of European Union funds.
                              
The importance of
infrastructure projects will increase and, accordingly,       
critical
success factors will include specialised engineering expertise and the

availability of specialised resources.
                                     
    
Housing development and construction volumes will shrink and the number
of      
related companies will decrease (consolidation). The consolidation
process will 
heighten competition and exert downward pressure on profit
margins.
             
The past few years' labour deficit in the construction
sector will decline and, 
consequently, the growth in personnel expenses will
normalise.
                  
Real estate developers' ability to service
existing loans and take new ones will
weaken due to a decrease in their
creditworthiness. For construction companies, 
this may mean an increase in
doubtful and irrecoverable receivables.
            
We have prepared
ourselves for changes in the economic environment by dispersing
our risks
between activities (for a number of years the proportion of          

residential construction has not exceeded 10-15 per cent) and markets (the   
  
importance of the Estonian market will decline as the importance of other  
    
markets increases).                                                      
      


Consolidated interim balance sheet                                 
            

Unaudited                                                      
               
     
------------------------------------------------------------------------------
     --
|
EEK '000                         | Note |   31 March |  31 March |    31 Dec
|
|                                  |      |       2008 |      2007 |     
2007
     |
-----------------------------------------------------------------------------
     ---
|
ASSETS                           |      |            |           |          
     |
-----------------------------------------------------------------------------
     ---
|
Current assets                   |      |            |           |          
     |
-----------------------------------------------------------------------------
     ---
|
Cash and cash equivalents        |      |    372,537 |   133,446 |   236,112
     |
-----------------------------------------------------------------------------
     ---
|
Trade receivables                |   2  |    359,718 |   332,990 |   511,819
     |
-----------------------------------------------------------------------------
     ---
|
Other receivables and            |   3  |    245,195 |   179,173 |   264,551
|
| prepayments                      |      |            |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Deferred tax assets              |      |      1,905 |     1,015 |     1,905
     |
-----------------------------------------------------------------------------
     ---
|
Inventories                      |   4  |    431,055 |   293,298 |   393,529
     |
-----------------------------------------------------------------------------
     ---
|
Non-current assets held for sale |   5  |     43,362 |         0 |    43,362
     |
-----------------------------------------------------------------------------
     ---
|
Total current assets             |      |  1,453,772 |   939,922 | 1,447,963
     |
-----------------------------------------------------------------------------
     ---
|
Non-current assets               |      |            |           |          
     |
-----------------------------------------------------------------------------
     ---
|
Long-term investments            |    7 |     91,828 |    51,051 |   111,686
     |
-----------------------------------------------------------------------------
     ---
|
Investment property              |    8 |    133,753 |    24,199 |   133,984
     |
-----------------------------------------------------------------------------
     ---
|
Property, plant and equipment    |    9 |    276,167 |   233,859 |   221,748
     |
-----------------------------------------------------------------------------
     ---
|
Intangible assets                |   10 |    290,356 |   164,581 |   273,223
     |
-----------------------------------------------------------------------------
     ---
|
Total non-current assets         |      |    792,104 |   473,690 |   740,641
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL ASSETS                     |      |  2,245,876 | 1,413,612 | 2,191,919
     |
-----------------------------------------------------------------------------
     ---
|
LIABILITIES                      |      |            |           |          
     |
-----------------------------------------------------------------------------
     ---
|
Current liabilities              |      |            |           |          
     |
-----------------------------------------------------------------------------
     ---
|
Interest-bearing loans and       |   12 |    151,184 |    77,270 |   135,856
|
| borrowings                       |      |            |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Trade payables                   |      |    291,656 |   185,979 |   335,754
     |
-----------------------------------------------------------------------------
     ---
|
Tax liabilities                  |      |     48,411 |    44,900 |    54,771
     |
-----------------------------------------------------------------------------
     ---
|
Other payables and advances      |   13 |    382,168 |   352,058 |   574,722
|
| received                         |      |            |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Provisions                       |   14 |      8,078 |     5,214 |    12,458
     |
-----------------------------------------------------------------------------
     ---
|
Total current liabilities        |      |    881,497 |   665,421 | 1,113,561
     |
-----------------------------------------------------------------------------
     ---
|
Non-current liabilities          |      |            |           |          
     |
-----------------------------------------------------------------------------
     ---
|
Interest-bearing loans and       |   12 |    506,308 |   211,761 |   263,723
|
| borrowings                       |      |            |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Other liabilities                |      |        761 |       490 |       714
     |
-----------------------------------------------------------------------------
     ---
|
Provisions                       |   14 |      3,739 |     1,885 |     4,328
     |
-----------------------------------------------------------------------------
     ---
|
Total non-current liabilities    |      |    510,808 |   214,136 |   268,765
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL LIABILITIES                |      |  1,392,305 |   879,557 | 1,382,326
     |
-----------------------------------------------------------------------------
     ---
|
EQUITY                           |      |            |           |          
     |
-----------------------------------------------------------------------------
     ---
|
Minority interest                |      |     87,067 |    35,271 |    90,095
     |
-----------------------------------------------------------------------------
     ---
|
Share capital                    |   15 |    307,567 |   153,784 |   307,567
     |
-----------------------------------------------------------------------------
     ---
|
Share premium                    |  15  |          0 |   108,465 |         0
     |
-----------------------------------------------------------------------------
     ---
|
Statutory capital reserve        |      |     21,426 |     4,158 |    11,766
     |
-----------------------------------------------------------------------------
     ---
|
Translation reserve              |      |      4,574 |     2,292 |     2,354
     |
-----------------------------------------------------------------------------
     ---
|
Retained earnings                |  15  |    432,937 |   230,085 |   397,810
     |
-----------------------------------------------------------------------------
     ---
|
Total equity attributable to     |      |    766,504 |   498,784 |   719,497
|
| equity holders of the parent     |      |            |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL EQUITY                     |      |    853,571 |   534,055 |   809,592
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL LIABILITIES AND EQUITY     |      |  2,245,876 | 1,413,612 | 2,191,918
     |
-----------------------------------------------------------------------------
          ---
---------------------------------------------------------------------------
     -----

Consolidated
interim balance sheet                                             


Unaudited                                                                  
   
     
------------------------------------------------------------------------------
     --
|
EUR '000                         | Note | 31 March |    31 March |    31 Dec
|
|                                  |      |     2008 |        2007 |     
2007
     |
-----------------------------------------------------------------------------
     ---
|
ASSETS                           |      |          |             |          
     |
-----------------------------------------------------------------------------
     ---
|
Current assets                   |      |          |             |          
     |
-----------------------------------------------------------------------------
     ---
|
Cash and cash equivalents        |      |   23,809 |       8,529 |    15,090
     |
-----------------------------------------------------------------------------
     ---
|
Trade receivables                |   2  |   22,990 |      21,282 |    32,711
     |
-----------------------------------------------------------------------------
     ---
|
Other receivables and            |   3  |   15,671 |      11,451 |    16,908
|
| prepayments                      |      |          |             |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Deferred tax assets              |      |      122 |          65 |       122
     |
-----------------------------------------------------------------------------
     ---
|
Inventories                      |   4  |   27,549 |      18,745 |    25,151
     |
-----------------------------------------------------------------------------
     ---
|
Non-current assets held for sale |   5  |    2,771 |           0 |     2,771
     |
-----------------------------------------------------------------------------
     ---
|
Total current assets             |      |   92,913 |      60,072 |    92,542
     |
-----------------------------------------------------------------------------
     ---
|
Non-current assets               |      |          |             |          
     |
-----------------------------------------------------------------------------
     ---
|
Long-term investments            |    7 |    5,869 |       3,263 |     7,138
     |
-----------------------------------------------------------------------------
     ---
|
Investment property              |    8 |    8,548 |       1,547 |     8,563
     |
-----------------------------------------------------------------------------
     ---
|
Property, plant and equipment    |    9 |   17,650 |      14,946 |    14,172
     |
-----------------------------------------------------------------------------
     ---
|
Intangible assets                |   10 |   18,557 |      10,519 |    17,462
     |
-----------------------------------------------------------------------------
     ---
|
Total non-current assets         |      |   50,625 |      30,274 |    47,336
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL ASSETS                     |      |  143,538 |      90,346 |   140,089
     |
-----------------------------------------------------------------------------
     ---
|
LIABILITIES                      |      |          |             |          
     |
-----------------------------------------------------------------------------
     ---
|
Current liabilities              |      |          |             |          
     |
-----------------------------------------------------------------------------
     ---
|
Interest-bearing loans and       |   12 |    9,662 |       4,938 |     8,683
|
| borrowings                       |      |          |             |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Trade payables                   |      |   18,640 |      11,886 |    21,459
     |
-----------------------------------------------------------------------------
     ---
|
Tax liabilities                  |      |    3,094 |       2,870 |     3,501
     |
-----------------------------------------------------------------------------
     ---
|
Other payables and advances      |   13 |   24,425 |      22,501 |    36,731
|
| received                         |      |          |             |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Provisions                       |   14 |      516 |         333 |       796
     |
-----------------------------------------------------------------------------
     ---
|
Total current liabilities        |      |   56,338 |      42,528 |    71,170
     |
-----------------------------------------------------------------------------
     ---
|
Non-current liabilities          |      |          |             |          
     |
-----------------------------------------------------------------------------
     ---
|
Interest-bearing loans and       |   12 |   32,359 |      13,534 |    16,855
|
| borrowings                       |      |          |             |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Other liabilities                |      |       49 |          31 |        46
     |
-----------------------------------------------------------------------------
     ---
|
Provisions                       |   14 |      239 |         120 |       277
     |
-----------------------------------------------------------------------------
     ---
|
Total non-current liabilities    |      |   32,647 |      13,686 |    17,177
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL LIABILITIES                |      |   88,985 |      56,214 |    88,347
     |
-----------------------------------------------------------------------------
     ---
|
EQUITY                           |      |          |             |          
     |
-----------------------------------------------------------------------------
     ---
|
Minority interest                |      |    5,565 |       2,254 |     5,758
     |
-----------------------------------------------------------------------------
     ---
|
Share capital                    |   15 |   19,657 |       9,829 |    19,657
     |
-----------------------------------------------------------------------------
     ---
|
Share premium                    |  15  |        0 |       6,932 |         0
     |
-----------------------------------------------------------------------------
     ---
|
Statutory capital reserve        |      |    1,369 |         266 |       752
     |
-----------------------------------------------------------------------------
     ---
|
Translation reserve              |      |      292 |         146 |       150
     |
-----------------------------------------------------------------------------
     ---
|
Retained earnings                |  15  |   27,670 |      14,705 |    25,425
     |
-----------------------------------------------------------------------------
     ---
|
Total equity attributable to     |      |   48,989 |      31,878 |    45,984
|
| equity holders of the parent     |      |          |             |        
 
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL EQUITY                     |      |   54,553 |      34,132 |    51,742
     |
-----------------------------------------------------------------------------
     ---
|
TOTAL LIABILITIES AND EQUITY     |      |  143,538 |      90,346 |   140,089
     |
-----------------------------------------------------------------------------
     ---


Consolidated
interim income statement                                          
     

----------------------------------------------------------------------------
     ----
|
                                   | Note |  Q1 2008 |   Q1 2007 |      2007
|
| Unaudited                          |      |          |           |        
  |
| EEK '000                           |      |          |           |      
   
     |
-----------------------------------------------------------------------------
     ---
|
Revenue                            |  17, |  773,510 |   559,735 | 3,752,028
|
|                                    |   18 |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Cost of sales                      |   19 |  672,156 |   493,785 | 3,252,051
     |
-----------------------------------------------------------------------------
     ---
|
Gross profit                       |      |  101,354 |    65,950 |   499,977
     |
-----------------------------------------------------------------------------
          ---
---------------------------------------------------------------------------
     -----
|
Marketing expenses                 |      |      827 |       532 |     2,395
     |
-----------------------------------------------------------------------------
     ---
|
Administrative expenses            |   20 |   43,493 |    29,856 |   176,273
     |
-----------------------------------------------------------------------------
     ---
|
Other operating income             |   21 |    7,122 |     2,970 |    16,411
     |
-----------------------------------------------------------------------------
     ---
|
Other operating expenses           |   21 |    3,113 |     1,234 |    30,256
     |
-----------------------------------------------------------------------------
     ---
|
Operating profit                   |      |   61,043 |    37,298 |   307,464
     |
-----------------------------------------------------------------------------
     ---
|
Financial income                   |   22 |    4,559 |     9,825 |    31,486
     |
-----------------------------------------------------------------------------
     ---
|
Financial expenses                 |   22 |   19,851 |     6,037 |    30,028
     |
-----------------------------------------------------------------------------
     ---
|
Net financial items                |      |  -15,292 |     3,788 |     1,458
     |
-----------------------------------------------------------------------------
     ---
|
Share of profit of equity          |      |       16 |       757 |       856
|
| accounted investees                |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Share of loss of equity accounted  |      |      728 |       238 |     4,031
|
| investees                          |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Net share of profit and loss of    |      |     -712 |       519 |    -3,175
|
| equity accounted investees         |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Profit before income tax           |      |   45,039 |    41,605 |   305,747
     |
-----------------------------------------------------------------------------
     ---
|
Income tax expense                 |   23 |      145 |    10,192 |    15,976
     |
-----------------------------------------------------------------------------
     ---
|
Profit for the period              |      |   44,894 |    31,413 |   289,771
     |
-----------------------------------------------------------------------------
     ---
|
Attributable to:                   |      |          |           |          
     |
-----------------------------------------------------------------------------
     ---
|
   Equity holders of the parent    |      |   46,138 |    29,492 |   267,482
     |
-----------------------------------------------------------------------------
     ---
|
   Minority interest               |      |   -1,244 |     1,921 |    22,289
     |
-----------------------------------------------------------------------------
     ---
|
Basic earnings per share (in       |   15 |     1.50 |      0.96 |      8.70
|
| kroons)*                           |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Diluted earnings per share (in     |   15 |     1.50 |      0.96 |      8.70
|
| kroons)*                           |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---


*
For comparability, the weighted average number of shares used is the number
of
shares after the bonus issues, i.e. 30,756,728 shares                      
    


Consolidated interim income statement                                
         
     

----------------------------------------------------------------------------
     ----
|
Unaudited                          | Note |  Q1 2008 |   Q1 2007 |      2007
|
| EUR '000                           |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Revenue                            |  17, |   49,436 |    35,774 |    239798
|
|                                    |   18 |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Cost of sales                      |   19 |   42,959 |    31,559 |    207844
     |
-----------------------------------------------------------------------------
     ---
|
Gross profit                       |      |    6,478 |     4,215 |    31,954
     |
-----------------------------------------------------------------------------
          ---
---------------------------------------------------------------------------
     -----
|
Marketing expenses                 |      |       53 |        34 |       153
     |
-----------------------------------------------------------------------------
     ---
|
Administrative expenses            |   20 |    2,780 |     1,908 |    11,266
     |
-----------------------------------------------------------------------------
     ---
|
Other operating income             |   21 |      455 |       190 |     1,049
     |
-----------------------------------------------------------------------------
     ---
|
Other operating expenses           |   21 |      199 |        79 |     1,934
     |
-----------------------------------------------------------------------------
     ---
|
Operating profit                   |      |    3,901 |     2,384 |    19,651
     |
-----------------------------------------------------------------------------
     ---
|
Financial income                   |   22 |      291 |       628 |     2,012
     |
-----------------------------------------------------------------------------
     ---
|
Financial expenses                 |   22 |    1,269 |       386 |     1,919
     |
-----------------------------------------------------------------------------
     ---
|
Net financial items                |      |     -977 |       242 |        93
     |
-----------------------------------------------------------------------------
     ---
|
Share of profit of equity          |      |        1 |        48 |        55
|
| accounted investees                |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Share of loss of equity accounted  |      |       47 |        15 |       258
|
| investees                          |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Net share of profit and loss of    |      |      -46 |        33 |      -203
|
| equity accounted investees         |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Profit before income tax           |      |    2,879 |     2,659 |    19,541
     |
-----------------------------------------------------------------------------
     ---
|
Income tax expense                 |   23 |        9 |       651 |     1,021
     |
-----------------------------------------------------------------------------
     ---
|
Profit for the period              |      |    2,869 |     2,008 |    18,520
     |
-----------------------------------------------------------------------------
     ---
|
Attributable to:                   |      |          |           |          
     |
-----------------------------------------------------------------------------
     ---
|
   Equity holders of the parent    |      |    2,949 |     1,885 |    17,095
     |
-----------------------------------------------------------------------------
     ---
|
   Minority interest               |      |      -80 |       123 |     1,425
     |
-----------------------------------------------------------------------------
     ---
|
Basic earnings per share (in       |   15 |     0.10 |      0.06 |      0.56
|
| euros)*                            |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---
|
Diluted earnings per share (in     |   15 |     0.10 |      0.06 |      0.56
|
| euros)*                            |      |          |           |        
 
     |
-----------------------------------------------------------------------------
     ---


*
For comparability, the weighted average number of shares used is the number
of
shares after the bonus issues, i.e. 30,756,728 shares.

1 EUR = 15,6466
EEK



Eesti Ehitus is a group of construction companies whose core
business is general
contracting and construction management in the
construction of buildings and    
structures in Estonia, Latvia, Lithuania and
Ukraine. In addition, in Estonia   
our companies act as independent
contractors in road construction and           
maintenance, environmental
engineering, the assembly of reinforced concrete     
elements, and the
performance of cast-on-site concrete works. The parent of the 
Group is AS
Eesti Ehitus, a company registered and located in Tallinn, Estonia.
In
addition to the parent company, there are more than 20 subsidiaries in
the
Group. The consolidated revenue of the Group in 2007 was 3,8 billion
kroons
(240 million euros) and the consolidated net profit was 290 million
kroons (19
million euros). AS Eesti Ehitus Group employs more than 1100
people. Since 18
May 2006, the company's shares have been quoted in the main
list of the NASDAQ
OMX Tallinn Stock Exchange. 



Raimo Talviste
AS
Eesti Ehitus
Head of Investor Relations
Tel: +372 6400 445
Email:
raimo.talviste@eestiehitus.ee
 


eeh_1q2008_uni_fin_eng.pdf