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Extraordinary shareholders’ general meeting 19.02.2008

Summary about information published in extraordinary AGM of AS Merko Ehitus held on February 19th 2008.

1. Preliminary, unaudited financial results of year 2007.

A presentation was given by member of the board Mr Alar Lagus. The preliminary, unaudited financial results of year 2007 are published here.

There were no decisions adopted regarding the agenda item.

2. Prospects of the construction sector in Estonia and the Baltic states in the following years and AS Merko Ehitus’s position.
A presentation was given by chairman of the board Mr Tõnu Toomik. The summary of the presentation is published here.

There were no decisions adopted regarding the agenda item.

3. A legal analysis of criminal proceedings launched against AS Merko Ehitus.
A presentation was given by attorney at law Mr Leon Glikman. The summary of the presentation is published here.

There were no decisions adopted regarding the agenda item.

4. About the effects of the criminal proceedings on AS Merko Ehitus.
A presentation was given by the chairman of the supervisory board Mr Toomas Annus. According to Toomas Annus’s presentation the dragging on of the proceedings have an effect on the company’s position and its ability to compete on the market. As main factors he pointed out the guardidness of contractual partners and public officials which greatly inhibit the commencement of planned projects. First and foremost this is felt on new clients outside Estonia where Merko Ehitus’ management and company history are not as well known as in Estonia. At the same time the management of Merko Ehitus is forced to deal with the suspicisons raised and can not concentrate 100% on its day-to-day business. Annus assured the shareholders that the company is interested in the fastest resolve to the situation as is possible, but will not make amends with the effectiveness of its legal defense.

There were no decisions adopted regarding the agenda item.

5. The appraisal of damages that have been, and are continuing to be caused to shareholders by the launch of the criminal proceedings and the extent of the possible demand for compensation.

Mr Toomas Annus described to the shareholders that the implications of a possible criminal proceeding may, in the long-term perspective, disrupt the company’s ability to compete for projects on equal terms, which will sooner or later reflect on the share price. In the period between October 2006 until February 2008, the share price of Merko Ehitus has dropped approximately 7.75EUR/share, all together approximately 136.8 million EUR (2.14 billion EEK). SEB Enskilda who have analyzed the price drop have come to the conclusion that 57% or 78.0 million EUR (1.22 billion EEK) of the loss has been due to the market downturn, and 43% or approximately 58.8 million EUR (920 million EEK) are the company-specific losses resulting from the economic performance of the company and the prolonged public proceeding regarding the landswaps.   No claims against the state or any specific institution have been launched or will be, before a thorough legal analysis. All speculation regarding possible claims against the media is malice, which has no basis in Merko Ehitus’ intentions.

There were no decisions adopted regarding the agenda item.