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Audited annual report 2020

Merko Ehitus AS
·5-min read

AS Merko Ehitus consolidated audited financial results for 2020 remain unchanged compared to the preliminary disclosure on 11 February 2021.

STATEMENT OF THE CHAIRMAN OF THE MANAGEMENT BOARD

2020 was a successful year for Merko – we managed to reach our financial goals and finished the financial year with the best result we have seen in recent years, despite COVID-19 restrictions. Our earlier strategic decision to focus more on apartment development has borne fruit – we sold a total of 900 new homes in the three Baltic states combined. This is more than ever and it is the result of our team’s efforts over several years as well as our customers’ continued trust in Merko. Our goal is to keep this trust going forward as we continue to invest in creating new homes and a better living environment.

Although many new investments in the construction market were put on hold due to the pandemic, the group’s new construction contracts’ volume grew higher in 2020. A strong contract portfolio ensures us steady business volumes in a persistently difficult economic environment. However, risks in construction have increased further: the pandemic has increased uncertainty as to economic development, possible disruptions in supply chains, unexpected price changes and availability of manpower. In such circumstances we aim to keep the company’s financial status strong and be prepared to make quick decisions.

The COVID-19 crisis brought into spotlight the need to maintain the health of one’s employees and business partners as well as to ensure a safe working environment, but also a safe apartment purchase process. In the early weeks of the pandemic we quickly developed a corona prevention action plan that was implemented in our group companies and we are proud to state that other construction companies also followed suit.

In 2020 Merko celebrated 30 years in the business. Today, we are an international company that does half of its business outside Estonia. Over decades we have built a multitude of modern and lasting buildings as well as life quality improving civil engineering objects in Estonia, Latvia and Lithuania, and for the past five years also in Norway. We focus on a long-term outlook, lasting solutions, and quality. We uphold the same values when contributing to society. We are a supporter of Estonian art, we collaborate with universities, and through developing the health trails network we help to acknowledge the importance of regular exercise. The world is changing rapidly and so we build with the future in mind. Digital solutions, changing consumer behaviour, increasingly more environmental-friendly way of thinking and a new professional generation will help us succeed also in the decades to come.

I would like to thank all of Merko’s employees and business partners for a productive year as well as our clients and home buyers who have put their faith in Merko. I would also like to extend my gratitude to all the shareholders who believe in Merko’s future.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
in thousand euros

2020

2019

Revenue

315,918

326,779

Cost of goods sold

(272,169)

(291,958)

Gross profit

43,749

34,821

Marketing expenses

(4,212)

(4,260)

General and administrative expenses

(13,412)

(12,988)

Other operating income

2,320

2,983

Other operating expenses

(2,979)

(1,318)

Operating profit

25,466

19,238

Finance income

1

3

Finance costs

(866)

(684)

Profit (loss) from joint ventures

(144)

1,766

Profit before tax

24,457

20,323

Corporate income tax expense

(1,954)

(3,833)

Net profit for financial year

22,503

16,490

incl. net profit attributable to equity holders of the parent

22,994

16,270

net profit attributable to non-controlling interest

(491)

220

Other comprehensive income (loss), which can subsequently be classified in the income statement

Currency translation differences of foreign entities

(115)

13

Comprehensive income for the period

22,388

16,503

incl. attributable to equity holders of the parent

22,890

16,281

attributable to non-controlling interest

(502)

222

Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR)

1.30

0.92

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
in thousand euros

31.12.2020

31.12.2019

ASSETS

Current assets

Cash and cash equivalents

47,480

24,749

Trade and other receivables

32,657

50,413

Prepaid corporate income tax

306

104

Inventories

126,332

166,226

206,775

241,492

Non-current assets

Investments in joint ventures

2,354

2,498

Other long-term loans and receivables

17,979

11,094

Deferred income tax assets

653

-

Investment property

13,922

14,047

Property, plant and equipment

14,521

11,919

Intangible assets

711

777

50,140

40,335

TOTAL ASSETS

256,915

281,827

LIABILITIES

Current liabilities

Borrowings

13,649

20,725

Payables and prepayments

55,846

69,585

Income tax liability

1,202

812

Short-term provisions

6,347

7,976

77,044

99,098

Non-current liabilities

Long-term borrowings

15,409

43,001

Deferred income tax liability

3,001

1,682

Other long-term payables

4,026

3,491

22,436

48,174

TOTAL LIABILITIES

99,480

147,272

EQUITY

Non-controlling interests

4,207

4,217

Equity attributable to equity holders of the parent

Share capital

7,929

7,929

Statutory reserve capital

793

793

Currency translation differences

(814)

(710)

Retained earnings

145,320

122,326

153,228

130,338

TOTAL EQUITY

157,435

134,555

TOTAL LIABILITIES AND EQUITY

256,915

281,827

AS Merko Ehitus audited annual report for 2020 is attached to the announcement and is also published on NASDAQ Tallinn and Merko’s web page (group.merko.ee).

Andres Trink
Chairman of Management Board
AS Merko Ehitus
+372 650 1250
andres.trink@merko.ee

Priit Roosimägi
Head of Group Finance Unit
AS Merko Ehitus
+372 650 1250
priit.roosimagi@merko.ee

AS Merko Ehitus (group.merko.ee) group consists of AS Merko Ehitus Eesti in Estonia, SIA Merks in Latvia, UAB Merko Statyba in Lithuania and Peritus Entreprenør AS in Norway. Besides providing construction service as a main contractor, the group’s other major area of activity is apartment development. As at the end of 2020, the group employed 666 people, and the group’s revenue for 2020 was EUR 316 million.

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