Tallinn, Estonia, 2017-08-10 07:00 CEST (GLOBE NEWSWIRE) --
COMMENTARY FROM MANAGEMENT
Merko Ehitus grew both its revenue and net profit figures for Q2 and first half-year compared to last year. Sales revenue in the second quarter was EUR 70.7 million and net profit was EUR 2.2 million; while six-month sales revenue was EUR 128.8 million and net profit was EUR 3.2 million.
In the estimation of the group’s management board, sales revenue and profit showed the expected growth compared to 2016 and it is gratifying to see that sales revenue increased on all of the group’s home markets. This year, the group has increased its secured order book, above all in Latvia, where we have launched construction on several major projects. As a result, the number of the Latvian company’s employees has grown. Competition between general contractors continues to be very close in all of the countries in which we operate. Furthermore, the availability of workforce and stability of suppliers is becoming increasingly complicated, which in the assessment of the management puts general contractors under pressure with regard to profit margins and deadlines and forces a search for solutions.
In the opinion of the group’s management, apartment sales in Q2 and first half-year have proceeded according to expectations. Compared to the same period last year, Merko Ehitus sold 50% more apartments in the first six months of this year and earned 54% more sales revenue. A contributing factor was the simultaneous completion and sales of several projects at the same time in the first half-year. The apartment market in Tallinn and Vilnius continues to be active, even though it appeared that the price ceiling has been reached, and in future, somewhat longer sales periods in some development projects can be expected. The Riga apartment market has not built up the same momentum yet. In six months, Merko has invested more than EUR 18 million into development projects launched this year and projects already in progress.
In the second quarter of 2017, the group’s companies entered into new construction contracts at a greater volume than in past years, including for the construction of the multifunctional centre Akropole and Z-Towers complex in Riga and the addition to the air traffic control centre in Tallinn. Among major projects in progress in Q2 in Estonia were the construction of T1 shopping centre, Maakri Kvartal, Öpiku office building B, and the tram line that will serve the airport. In Latvia, the biggest projects in progress were the multifunctional centre Akropole in Riga and the Ventspils music school and concert hall; in Lithuania, the Radisson Blu Hotel Lietuva, the Philip Morris plant and a hotel and residential building complex in the Rinktines Urban development project.
Assessing the outlook on the construction market, we expect that demand on the apartment market in Riga will more rapidly approach the level of the other Baltic capitals. While the growth in the apartment market in Vilnius and Tallinn is stabilizing, yet the demand for a good living environment remains strong. We would like to see more public procurements on the construction market in Lithuania. In Estonia, on the other hand, we presume that the number of accruing commercial real estate sites will stabilize and that operating volumes will grow on the infrastructure side. As a whole, the group is working to ensure that the growth in business volumes in our home markets in the first half of the year will continue in the second half.
OVERVIEW OF THE II QUARTER AND 6 MONTHS RESULTS
PROFITABILITY
Q2 2017 net profit was EUR 2,2 million (Q2 2016: EUR 1.7 million) and net profit margin 3.1% (Q2 2016: 2.9%). Q2 net profit was influenced by additional income tax expense on dividends in the amount of EUR 0.9 million (Q2 2016: EUR 0.6 million). Net profit in 6M 2017 was EUR 3,2 million (6M 2016: EUR 1.8 million), having increased by 76.2% compared to the same period last year and net profit margin increased to 2.5% (6M 2016: 1.7%). Profit before tax in 6M 2017 was EUR 4.4 million (6M 2016: EUR 2.7 million), which is equivalent to a profit before tax margin of 3.4% (6M 2016: 2.6%).
REVENUE
Q2 2017 revenue was EUR 70.7 million (Q2 2016: EUR 58.7 million) and 6M 2017 revenue was EUR 128.8 million (6M 2016: EUR 105.6 million), has increased by 22.0% compared to last year. The share of revenue earned outside Estonia in 6M 2017 was 31% (6M 2016: 30%). The number of apartments (239 units) sold in 6 months of 2017 has increased by 50.3% compared to last year and the revenue from apartment sales (EUR 26.9 million) has increased by 54.5% (6 months of 2016: 159 units, revenues of EUR 17.4 million).
CASH POSITION
At the end of the reporting period, the group had EUR 25.9 million in cash and cash equivalents and equity EUR 118.7 million (49.3% of total assets). Comparable figures as at 30 June 2016 were accordingly EUR 21.7 million and EUR 118.5 million (54.8% of total assets). As at 30 June 2017 the group had net debt of EUR 19.4 million (30 June 2016: EUR 13.3 million).
SECURED ORDER BOOK
As at 30 June 2017, the group’s secured order book had grown to EUR 387.5 million (30 June 2016: EUR 279.4 million). In 6M 2017, group companies signed new contracts in the amount of EUR 216.6 million (6M 2016: EUR 109.0 million). Q2 2017 new contracts signed in amount of EUR 158 million (Q2 2016: EUR 86.6 million).
|
6M 2017 |
6M 2016 |
Variance |
Q2 2017 |
Q2 2016 |
Variance | 12M 2016 | |||
| Revenue | million EUR | 128.8 | 105.6 | +22.0% | 70.7 | 58.7 | +20.3% | 252.0 | |
| EBITDA | million EUR | 6.0 | 4.6 | +32.4% | 4.1 | 3.4 | +22.5% | 11.2 | |
| EBITDA margin | % | 4.7 | 4.3 | 5.9 | 5.8 | 4.4 | |||
| EBIT | million EUR | 4.7 | 3.1 | +53.1% | 3.5 | 2.6 | +33.4% | 7.7 | |
| EBIT margin | % | 3.7 | 2.9 | 4.9 | 4.4 | 3.1 | |||
| Profit before tax | million EUR | 4.4 | 2.7 | +59.1% | 3.3 | 2.4 | +33.8% | 7.3 | |
| PBT margin | % | 3.4 | 2.6 | 4.6 | 4.1 | 2.9 | |||
| Net profit (parent) | million EUR | 3.2 | 1.8 | +76.2% | 2.2 | 1.7 | +27.5% | 6.1 | |
| Net profit margin | % | 2.5 | 1.7 | 3.1 | 2.9 | 2.4 | |||
| EPS | EUR | 0.18 | 0.10 | +76.2% | 0.12 | 0.09 | +27.5% | 0.35 | |
| 30.06.2017 | 30.06.2016 | Variance | 31.12.2016 | |||
| ROE (on yearly basis) | % | 6.2 | 7.7 | 5.0 | ||
| Equity ratio | % | 49.3 | 54.8 | 51.6 | ||
| Secured order book | million EUR | 387.5 | 279.4 | +38.7% | 269.6 | |
| Total assets | million EUR | 241.0 | 216.4 | +11.4% | 237.8 | |
| Number of employees | people | 803 | 826 | -2.8% | 797 | |
OPERATING RESULTS
Revenue and operating profit
Merko Ehitus group generated a total of EUR 128.8 million in revenue in 6 months of 2017 (6 months of 2016: EUR 105.6 million). Compared to 6 months of 2016 the group revenue has increased by 22%, the revenue increased in all group home markets.
In 6 months of 2017 the group’s operating profit was EUR 4.7 million (6 months of 2016: EUR 3.1 million). The 6 months operating profit margin (3.7%) has increased by 0.8 pp compared to the same period last year (6 months of 2016: 2.9%). Operating profit margin has been positively impacted by the profitability in the real estate development segment, which depends largely on the price of the land as part of the total specific project expenses and is thus different on a project basis. The group’s aim is to improve the profitability in construction service domain, but the scarcity of projects and the ever-tightening competition remain a major challenge. The number of companies participating in tenders and the risk of low pricing bids is high in all three Baltic states.
Profit before tax and net profit
In 6 months of 2017, the group’s profit before tax totalled EUR 4.4 million (6 months of 2016: EUR 2.7 million) and net profit attributable to equity holders of the parent was EUR 3.2 million (6 months of 2016: EUR 1.8 million). Group’s profit before tax margin was 3.4% (6 months of 2016: 2.6%) and the net profit margin was 2.5% (6 months of 2016: 1.7%).
In Q2 of 2017, the group’s pre-tax profit totalled EUR 3.3 million and net profit was EUR 2.2 million as compared to the pre-tax profit of EUR 2.4 million and net profit of EUR 1.7 million in Q2 of 2016.
In the second quarter of 2017, the group paid EUR 7.3 million in dividends, which incurred additional income tax expense in the amount of EUR 0.9 million. The situation in the second quarter of 2016 was alike, when the group paid EUR 9.0 million in dividends, with the exception that then the group incurred additional income tax expense on dividends in the amount of EUR 0.6 million.
Business activities
The group business reporting is divided into three business segments: Estonian construction service, other home markets construction service and real estate development.
Estonian construction service
The Estonian construction services segment consists of various services in the field of general construction, civil engineering, electricity, infrastructure and road construction, as well concrete works and construction services on project basis in Finland.
In the 6 months of 2017, the revenue of the Estonian construction service segment was EUR 60.9 million (6 months of 2016: EUR 53.1 million), having increase by 14.6% from the same period last year. The 6 months revenue includes revenue from Finnish projects in the amount of EUR 0.02 million (6 months of 2016: EUR 0.4 million). The increase in revenue in the segment is primarily influenced by the fact that several large-scale general construction projects launched in 2016 have continued to progress. The Estonian construction service segment revenues for 6 months 2017 were 47.2% of the group’s revenue, forming the largest proportion in the group’s revenue.
In this segment, the group earned a operating profit of EUR 1.7 million for 6 months (6 months of 2016: EUR 2.0 million). In 6 months of 2017, the operating profit margin of the Estonian construction service segment was 2.8%, which decreased by 0.9 pp compared to the 6 months of 2016 (3.7%). The Estonian construction services market is characterised by stiff competition. The number of civil engineering projects remains small, with general construction witnessing ever-increasing competition. The group is continually enhancing the efficiency of its internal project management processes, having reduced and relocated group resources in order to maintain an efficient cost base.
Our major projects in the second quarter in Tallinn included the construction works of Maakri Kvartal business complex, T1 shopping centre, Öpiku office building B, Pärnu mnt 22 office building, in Tapa construction works of the barracks in military campus depot and Viru Infantry Battalion technology park buildings and facilities, construction of the airport tram line infrastructure and construction work on the passenger, walkway at Vanasadama Harbour quay No 5. Additionally the construction works of Juuliku road junction and road section at Tallinn roundabout and the road maintenance works done under the service agreement with Tallinn county had a significant impact.
On 13th June 2017, AS Vooremaa Teed, 100% subsidiary of Tallinna Teed AS part of Merko Ehitus group, and Eesti Keskkonnateenused AS have entered sales and purchase agreement to dispose AS Vooremaa Teed’s road maintenance field of activity. The largest contract under disposal of the field of activity was with Estonian Road Administration signed in 2015. Under the contract AS Vooremaa Teed performed the road and maintenance works of main roads in Viljandi county in total annual value approximately 1.8 million euros and with the term till 31 December 2020. The transaction is approved by Estonian Competition Authority on 21th of June 2017 and is planned to be completed during 3rd quarter 2017.
Other home markets construction service
The other home markets construction service segment consists of general construction work in Latvia, Lithuania and Norway and provision of civil engineering and electricity services in Latvia.
The revenue of the other home markets construction service segment amounted to EUR 31.3 million in the 6 months of 2017 (6 months of 2016: EUR 23.5 million), which is 32.8% more than in the 6 months of 2016. If the other home markets construction service segment revenues of 6 months of 2016 formed 22.3% of the group’s revenue, then during 6 months of the current year the segments revenues increased to 24.3%.
Merko’s position among Latvia general contractors is currently strong and we see opportunities for growing our business volumes. In Lithuania, we are continuing our strategic plan to focus on external customers who make up the predominant part of the group’s Lithuanian secured order book. In Lithuania, we have also entered more widely the public procurement sphere in the field of general construction. In Norway, the group is mainly performing smaller-scale agreements, while actively working on building project management capability and systems to conclude larger general contracting agreements. The group’s continued focus is on increasing the revenues outside Estonia.
The 6 months operating loss of the other home market construction service segment amounted to EUR 0.7 million (6 months of 2016: operating loss EUR 0.4 million) and the operating profit margin was negative 2.2% (6 months of 2016: negative 1.7%). The operating result was affected by the realisation of the risks associated with a particular contract for construction, higher overhead costs compared to the revenue posted in the first half-year, and the pressure exerted on input prices.
In the second quarter of 2017, the main ongoing projects included in the other home markets construction service segment were in Vilnius the construction works of Narbuto 5 office building, the construction works of Kauno/Algirdo residential complex with office premises and the design and construction works of Radisson Blu Hotel Lietuva extension, in Klaipeda the reconstruction and extension construction works of Philip Morris plant. In Riga the construction works of Multifunctional Centre Akropole, construction works of Cēsu 9 apartment building. In Jurmala the construction works of Jasmīnu 10 residential complex and in Ventspils the construction works of music school and concert hall and design and in Oslo construction works of an extension of a building at Blakstad Hospital.
Real estate development
The real estate development segment includes residential real estate development and construction of joint venture projects, long-term real estate investments and commercial real estate projects in Estonia, Latvia and Lithuania. In the interests of the finest quality and maximum convenience and assurance for buyers, Merko handles all phases of development: acquisition of the real estate, planning, design of the development project, construction, sales and marketing and warranty-period customer service.
The group sold a total of 239 apartments (incl. 1 apartment in a joint venture) in 6 months of 2017 at the total value of EUR 26.9 million (excl. VAT), compared to 159 apartments and EUR 17.4 million in 6 months of 2016. In Q2 of 2017 a total of 98 apartments were sold at the total value of EUR 10.5 million (excl. VAT), (Q2 2016: 58 apartments and EUR 6.0 million). In 6 months of 2017, the group didn’t sell immovable properties (6 months of 2016: EUR 8.6 million and Q2 2016: EUR 1.1 million). The construction service revenue from projects developed by joint ventures in 6 months of 2017 was EUR 6.2 million (6 months of 2016: EUR 1.5 million).
In 6 months of 2017 real estate development segment revenues have increased by 26.8% compared to the same period last year. The growth is primarily influenced by the increase of amount of sold apartments.In the 6 months of 2017 the share of revenue from the real estate development segment formed 28.5% of the group’s total revenue (6 months of 2016: 27.4%).
The 6 months operating profit of the segment amounted to EUR 4.6 million (6 months of 2016: EUR 2.5 million) and the operating profit margin was 12.6% (6 months of 2016: 8.5%), which increased by 4.1 pp compared to the same period previous year.
At the end of the period, group’s inventory comprised 235 apartments where a preliminary agreement had been signed: 13 completed apartments (10 in Estonia, 1 in Latvia and 2 in Lithuania) and 222 apartments under construction (131 in Estonia, 40 in Latvia and 51 in Lithuania). The sale of these apartments had not yet been finalised and delivered to customers, because the development site is still under construction or the site was completed at the end of the reporting period and the sales transactions have not all been finalised yet.
As at 30 June 2017, the group had a total of 444 apartments for active sale (as at 30 June 2016: 510 apartments), for which there are no pre-sale agreements and of which 69 have been completed (47 in Estonia, 8 in Latvia and 14 in Lithuania) and 375 are under construction (164 in Estonia, 142 in Latvia and 69 in Lithuania).
In 6 months of 2017, the group launched the construction of a total of 385 new apartments in the Baltic states (6 months of 2016: 284 apartments). In the 6 months of this year, the group has invested a total of EUR 18.4 million (6 months of 2016: EUR 25.1 million) in new development projects launched in 2017 as well as projects already in progress.
The group will continue to invest in residential real estate projects and in 2017, the group plans to launch the construction of approximately 650-700 (incl. 60-160 apartments in joint ventures) new apartments in the Baltic states. In 2016, construction was started on 344 apartments. The investment level in 2017 in both development projects initiated in previously and new projects to be launched in 2017 is in the range of EUR 45 million (2016: EUR 53.6 million invested).
One of group’s objectives is to keep a moderate portfolio of land plots to ensure stable inventory of property development projects considering the market conditions. At 30 June 2017, the group's inventories included land plots with the development potential, where the construction works have not started, of EUR 67.0 million (30.06.2016: EUR 50.3 million).
In the 6 months of 2017, the group has purchased new land plot, at an acquisition cost of EUR 4.1 million, for real estate development purposes (6 months of 2016: no new land plot acquisitions). In Q1 of 2017, the group acquired an approximately 1.5-hectare development area between Rūpniecības and Pētersalas streets in the heart of Riga, allowing to build nearly 350 apartments in the upcoming years.
After the balance sheet date, on 31 July 2017, AS Merko Ehitus purchased immovable properties located on the Maarjamäe limestone cliff in the Lasnamäe district of Tallinn to support group’s long-term residential development strategy in Estonia. Considering the registered immovables in this area that were already owned by the group, there is now potential to establish a total of around 1,500 apartments. The development has a long-term perspective and will take place in multiple phases.
Secured order book
As at 30 June 2017, the group’s secured order book amounted to EUR 387.5 million as compared to EUR 279.4 million as at 30 June 2016, having increased by approximately 38,7% in the annual comparison. The secured order book excludes the group's own residential development projects and construction work related to developing real estate investments.
In 6 months of 2017, EUR 216.6 million worth of new contracts were signed (without own developments) as compared to EUR 109.0 million in same period last year. The value of new contracts signed (without own developments) in the second quarter of 2017 amounted to EUR 158.0 million, which included the multifunctional centre Akropole construction contract in the amount of EUR 100.0 million.
In the second quarter of 2017, AS Merko Ehitus 100% subsidiary SIA Merks concluded a 100-million euro contract for construction of the multifunctional Akropole centre in Riga. The main contractor, SIA Merks, has engaged UAB Mitnija as a 50:50 partner in the management of the project. The contract is fully included in the secured order book, as SIA Merks remains directly responsible to the contracting entity.
Of the contracts signed in the 6 months of 2017, private sector orders accounted for the majority proportion, which is also represented in the group’s secured order book as at the end of the reporting period, where private sector orders from projects in progress constitute approximately 82% (30.06.2016: approximately 80%).
After the balance sheet date, on 10 July 2017, the group concluded one large construction contract. AS Merko Ehitus Eesti, part of AS Merko Ehitus group, and Trading House Property OÜ entered into a contract to perform the design and construction works, which includes the extension and partial rebuilding of the existing production building of Wendre, located at Lina 31, Pärnu. The contract value is approximately EUR 6.0 million.
Traditionally the share of Estonian construction activity has been the highest in the group's revenues. Given the growth outlook of the Estonian construction market, the group's goal is to increase the volume of construction orders from outside Estonia. Thus, we will continue to identify and strengthen the groups competitive advantages and are closely monitoring the development and opportunities both in the Baltic states and Nordic countries. The group will focus to Norweigan market and continue to take part in various individual Finnish construction procurements in a selective and project-based manner in the Nordic countries.
Cash flows
As at 30 June 2017 the group had cash equivalents in the amount of EUR 25.9 million (30.06.2016: EUR 21.7 million). The group's financial position is continually strong, the group has not utilised all its credit lines of existing overdrafts and loan agreements within reporting period. As at end of the period, the group entities had concluded overdraft contracts with banks in the total amount of EUR 11.2 million, of which EUR 10.6 was unused (30.06.2016: EUR 26.3 million, unused was EUR 23.1 million). In addition to the overdraft facility, the company has a current loan facility with the limit of EUR 3.5 million (30.06.2016: EUR 3.5 million) from AS Riverito, which has not been withdrawn at the end of current and previous financial periods.
The 6-month cash flow from operating activity was positive at EUR 0.1 million (6 months of 2016: negative EUR 13.2 million), cash flow from investing activity was positive at EUR 0.2 million (6 months of 2016: EUR 0.0 million) and the cash flow from financing activity was negative at EUR 8.0 million (6 months of 2016: negative EUR 4.9 million).
To support cash flows arising from operating activity, the group has been cautious in raising additional external capital, including factoring. At the same time, the debt ratio has remained at a moderate level (18.3% as at 30.06.2017; 16.2% as at 30.06.2016; 19.3% as at 31.12.2016).
Cash flows from investing activities include negative cash flow from the acquisition of non-current asset in the amount of EUR 1.0 million (6 months of 2016: EUR 1.7 million) and the positive cash flow from the sale of non-current assets in the amount of EUR 1.1 million (6 months of 2016: EUR 0.4 million). The group mainly invested in non-current assets for the purpose of renewing its fleet of machinery in the road construction.
The largest single negative item in cash flows from financing was the dividend payment of EUR 7.3 million (6 months of 2016: EUR 9.0 million). In addition, bank loans totalling EUR 15.4 million, raised in order to acquire the registered immovables, had a major influence. At the end of 2016 EUR 12.5 million was engaged as a short-term loan from the parent company AS Riverito to purchase the Veerenni development area. The loan was refinanced at the beginning of 2017 with long-term loans from various credit institutions. In Q2 of 2017, a EUR 2.9 million bank loan was raised to finance the development area located between Rūpniecības and Pētersalas streets in Riga, Latvia, purchased in Q1.
The Q2 2017 cash flow from operating activity was negative at EUR 5.5 million (Q2 2016: negative EUR 11.6 million), cash flow from investing activity was positive at EUR 0.3 million (Q2 2016: negative EUR 0.9 million) and the cash flow from financing activity was negative at EUR 2.8 million (Q2 2016: negative EUR 0.2 million).
The quarterly cash flows from operating activities were negative primarily as a result of the need for working capital for construction projects due to the start of the construction season and to cover investments in development projects. Cash flows from operating activities was also negatively impacted by the corporate income tax paid EUR 1.0 million (Q2 2016: EUR 1.1 million).
Dividends and dividend policy
The distribution of dividends to the shareholders of the company is recorded as a liability in the financial statements as of the moment when the payment of dividends is approved by the company’s shareholders.
According to the current dividends policy the objective is paying the shareholders 50-70% of the annual profit.
The annual general meeting of shareholders of AS Merko Ehitus held at 28 April 2017 approved the Supervisory Board’s proposal to pay the shareholders the total amount of EUR 7.3 million (EUR 0.41 per share) as dividends from net profit brought forward, which is equivalent to a 119% dividend rate and a 4.5% dividend yield for the year 2016 (using the share price as at 31 December 2016). Comparable figures in 2015 were accordingly: EUR 9.0 million (EUR 0.51 per share) as dividends, which is equivalent to a 90% dividend rate and a 6.0% dividend yield (using the share price as at 31 December 2015).
According to the Estonian Income Tax Law §50 section 11 AS Merko Ehitus can pay certain portion of dividends without any additional income tax expense and liabilities occurring due to previously received and taxed distribution of profits from subsidiaries. Taking into account the dividends already paid to the parent company by the subsidiaries during 2017, the group incurred additional income tax expense in connection with the disbursement of dividends of EUR 0.9 million (Q2 2016: EUR 0.6 million) in Estonia in the second quarter of 2017.The dividend payment to the shareholders took a place on 26 May 2017.
Ratios
(attributable to equity holders of the parent)
| 6M 2017 | 6M 2016 | 6M 2015 | Q2 2017 | Q2 2016 | Q2 2015 | 12M 2016 | ||
| Income statement summary | ||||||||
| Revenue | million EUR | 128.8 | 105.6 | 116.2 | 70.7 | 58.7 | 70.6 | 252.0 |
| Gross profit | million EUR | 10.2 | 8.5 | 8.9 | 6.1 | 5.4 | 5.4 | 19.0 |
| Gross profit margin | % | 7.9 | 8.0 | 7.7 | 8.6 | 9.3 | 7.6 | 7.5 |
| Operating profit | million EUR | 4.7 | 3.1 | 4.0 | 3.5 | 2.6 | 3.0 | 7.7 |
| Operating profit margin | % | 3.7 | 2.9 | 3.4 | 4.9 | 4.4 | 4.2 | 3.1 |
| Profit before tax | million EUR | 4.4 | 2.7 | 3.6 | 3.3 | 2.4 | 2.7 | 7.3 |
| PBT margin | % | 3.4 | 2.6 | 3.1 | 4.6 | 4.1 | 3.9 | 2.9 |
| Net profit | million EUR | 3.2 | 1.8 | 2.4 | 2.2 | 1.8 | 1.6 | 6.0 |
| attributable to equity holders of the parent | million EUR | 3.2 | 1.8 | 2.4 | 2.2 | 1.7 | 1.6 | 6.1 |
| attributable to non-controlling interest | million EUR | (0.0) | (0.0) | (0.0) | 0.1 | 0.1 | 0.0 | (0.1) |
| Net profit margin | % | 2.5 | 1.7 | 2.1 | 3.1 | 2.9 | 2.3 | 2.4 |
| Other income statement indicators | ||||||||
| EBITDA | million EUR | 6.0 | 4.6 | 5.6 | 4.1 | 3.4 | 3.7 | 11.2 |
| EBITDA margin | % | 4.7 | 4.3 | 4.8 | 5.9 | 5.8 | 5.2 | 4.4 |
| General expense ratio | % | 5.1 | 6.2 | 5.0 | 4.5 | 5.7 | 4.0 | 5.3 |
| Labour cost ratio | % | 11.7 | 13.9 | 12.0 | 10.4 | 13.8 | 10.8 | 11.7 |
| Revenue per employee | thousand EUR | 169 | 138 | 154 | 93 | 77 | 93 | 325 |
| Other significant indicators | 30.06.2017 | 30.06.2016 | 30.06.2015 | 31.12.2016 | |
| Return on equity | % | 6.2 | 7.7 | 8.4 | 5.0 |
| Return on assets | % | 3.2 | 4.4 | 4.3 | 2.8 |
| Return on invested capital | % | 5.9 | 7.5 | 8.0 | 5.1 |
| Equity ratio | % | 49.3 | 54.8 | 54.3 | 51.6 |
| Debt ratio | % | 18.3 | 16.2 | 15.6 | 19.3 |
| Current ratio | times | 2.8 | 2.8 | 2.5 | 2.9 |
| Quick ratio | times | 1.2 | 1.1 | 1.0 | 1.1 |
| Accounts receivable turnover | days | 39 | 36 | 47 | 37 |
| Accounts payable turnover | days | 37 | 37 | 41 | 38 |
| Average number of employees | people | 764 | 765 | 757 | 776 |
| Secured order book | million EUR | 387.5 | 279.4 | 217.2 | 269.6 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
|
2017 6 months |
2016 6 months |
2017 II quarter |
2016 II quarter |
2016 12 months |
|
| Revenue | 128,807 | 105,563 | 70,660 | 58,743 | 251,970 |
| Cost of goods sold | (118,627) | (97,066) | (64,601) | (53,308) | (232,961) |
| Gross profit | 10,180 | 8,497 | 6,059 | 5,435 | 19,009 |
| Marketing expenses | (1,638) | (1,669) | (778) | (901) | (3,281) |
| General and administrative expenses | (4,918) | (4,868) | (2,400) | (2,451) | (10,076) |
| Other operating income | 1,226 | 1,244 | 659 | 596 | 2,466 |
| Other operating expenses | (133) | (124) | (76) | (82) | (399) |
| Operating profit | 4,717 | 3,080 | 3,464 | 2,597 | 7,719 |
| Finance income/costs | (362) | (341) | (206) | (161) | (440) |
| incl. finance income/costs from joint ventures | (2) | (46) | (30) | (29) | 163 |
| finance income/costs from other long-term investments | - | 1 | - | 1 | 2 |
| interest expense | (347) | (299) | (174) | (143) | (610) |
| foreign exchange gain (loss) | (1) | (7) | (3) | 1 | (6) |
| other financial income (expenses) | (12) | 10 | 1 | 9 | 11 |
| Profit before tax | 4,355 | 2,739 | 3,258 | 2,436 | 7,279 |
| Corporate income tax expense | (1,113) | (942) | (995) | (668) | (1,275) |
| Net profit for financial year | 3,242 | 1,797 | 2,263 | 1,768 | 6,004 |
| incl. net profit attributable to equity holders of the parent | 3,211 | 1,823 | 2,182 | 1,711 | 6,122 |
| net profit attributable to non-controlling interest | 31 | (26) | 81 | 57 | (118) |
| Other comprehensive income, which can subsequently be classified in the income statement | |||||
| Currency translation differences of foreign entities | (30) | 8 | (27) | 10 | 19 |
| Comprehensive income for the period | 3,212 | 1,805 | 2,236 | 1,778 | 6,023 |
| incl. net profit attributable to equity holders of the parent | 3,182 | 1,830 | 2,157 | 1,720 | 6,140 |
| net profit attributable to non-controlling interest | 30 | (25) | 79 | 58 | (117) |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 0.18 | 0.10 | 0.12 | 0.09 | 0.35 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| 30.06.2017 | 30.06.2016 | 31.12.2016 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 25,864 | 21,702 | 33,544 |
| Trade and other receivables | 63,775 | 46,025 | 45,566 |
| Prepaid corporate income tax | 625 | 356 | 617 |
| Inventories | 120,256 | 110,737 | 123,364 |
| 210,520 | 178,820 | 203,091 | |
| Non-current assets | |||
| Long-term financial assets | 12,881 | 17,316 | 15,805 |
| Deferred income tax assets | 1,325 | 1,424 | 1,325 |
| Investment property | 3,979 | 4,239 | 4,108 |
| Property, plant and equipment | 11,715 | 13,609 | 12,838 |
| Intangible assets | 571 | 985 | 673 |
| 30,471 | 37,573 | 34,749 | |
| TOTAL ASSETS | 240,991 | 216,393 | 237,840 |
| LIABILITIES | |||
| Current liabilities | |||
| Borrowings | 4,067 | 5,994 | 21,485 |
| Payables and prepayments | 66,079 | 52,295 | 56,259 |
| Income tax liability | 161 | 343 | 278 |
| Short-term provisions | 3,885 | 4,137 | 5,637 |
| 74,192 | 62,769 | 83,659 | |
| Non-current liabilities | |||
| Long-term borrowings | 41,158 | 28,970 | 24,516 |
| Deferred income tax liability | 1,165 | 1,025 | 1,122 |
| Other long-term payables | 2,039 | 1,434 | 2,061 |
| 44,362 | 31,429 | 27,699 | |
| TOTAL LIABILITIES | 118,554 | 94,198 | 111,358 |
| EQUITY | |||
| Non-controlling interests | 3,722 | 3,715 | 3,692 |
| Equity attributable to equity holders of the parent | |||
| Share capital | 7,929 | 7,929 | 7,929 |
| Statutory reserve capital | 793 | 793 | 793 |
| Currency translation differences | (674) | (656) | (645) |
| Retained earnings | 110,667 | 110,414 | 114,713 |
| 118,715 | 118,480 | 122,790 | |
| TOTAL EQUITY | 122,437 | 122,195 | 126,482 |
| TOTAL LIABILITIES AND EQUITY | 240,991 | 216,393 | 237,840 |
Interim report and the investor presentation are attached to the announcement and are also published on NASDAQ Tallinn and Merko’s web page (group.merko.ee).
Signe Kukin
Group CFO
AS Merko Ehitus
+372 650 1250
signe.kukin@merko.ee
AS Merko Ehitus (group.merko.ee) group consists of Estonia’s leading construction company AS Merko Ehitus Eesti, the Latvian-market-oriented SIA Merks, UAB Merko Statyba that is operating on the Lithuanian market, Peritus Entreprenør AS construction company in Norway and the real estate development business unit along with real estate holding companies. As at the end of 2016, the group employed 797 people and the company’s 2016 revenue was EUR 252 million.
