Audited annual report 2019

AS Merko Ehitus consolidated audited financial results for 2019 remain unchanged compared to the preliminary disclosure on 13 February 2020.STATEMENT OF THE CHAIRMAN OF THE MANAGEMENT BOARDDevelopments on the Baltic construction and real estate market continued as we expected in 2019. The rapid growth in construction volumes in recent years stabilized and developers have become more cautious in launching new real estate investments. Although state investments into infrastructure remained at the same level as in years past, the share of the public sector orders on the construction market has grown.The decrease in Merko Group’s construction volumes, by more than 20% compared to the record level of 2018, was also expected. The group’s sales revenue decreased year-over-year in Estonia and Latvia but remained at the same level in Lithuania and grew in Norway. Almost one-half of the group’s revenue came from outside Estonia. In 2019, a number of outstanding major projects in all three Baltic capitals were completed, but new construction orders in the same volume did not take their place in the group’s portfolio. The reason for the decrease in construction orders was both the growth of input prices in the construction sector and the group’s strategy in selecting construction sites.On the backdrop of decrease in sales revenue, we were however able to improve the group’s profitability and profit before taxes grew by 2.8% compared to a year ago. Profitability was supported by the team’s good work and everyday contribution to simplifying processes and reducing errors. Profitability was supported by the increased investments by the group into the apartment development business segment in all three Baltic states, and the greatest growth in investments last year was seen in Lithuania. In recent years, we have put the focus on larger development areas, where we can create an integrated residential environment and launch development projects stage by stage pursuant to demand. In 2019, close to 500 customers became owners of homes built by Merko. The largest projects launched or completed include, in Tallinn, Veerenni, Lahekalda, Noblessneri and Pikaliiva developments; in Riga, Viesturdārzs and Gaiļezera nami; and in Vilnius, Vilneles Slenis and Rinktines Urban.Merko’s goal is to continue to be the preferred choice for construction service clients and apartment buyers who value quality and trustworthiness. Through the buildings and infrastructure we set up, we create a modern living environment and improve people’s quality of life. To this end, we continue giving back to society, examples of which are our long-term cooperation projects in developing the network of Estonian Health Trails, cooperation with the Estonian Tennis Association and the Art Museum of Estonia as well as with various universities. We operate based on the long-term view and put value on quality and trust.In connection with the global viral pandemic, the construction and real estate market outlook for the near future has become difficult. Risks have risen sharply in the world economy as well as financial markets, due to which near term negative developments with unforeseeable magnitude cannot be ruled out. Among other, banks’ lending policy and conditions remain very important factors in market developments, but these depend also on the decisions and cooperation of companies and governmental institutions. We believe that strong capitalization and the capabilities of our team give Merko group a relative advantage in the execution of development and construction projects as well as in emerging from difficulties in the event of negative market developments.I would like to thank all of Merko Group’s employees and partners for a productive year, also our customers and home buyers who have put their trust in Merko.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
in thousand eurosCONSOLIDATED STATEMENT OF FINANCIAL POSITION
in thousand eurosAS Merko Ehitus audited annual report for 2019 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.eePriit Roosimägi
Head of Group Finance Unit
AS Merko Ehitus
+372 650 1250
priit.roosimagi@merko.eeAS 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 2019, the group employed 694 people, and the group’s revenue for 2019 was EUR 327 million.Attachment2019 Merko Ehitus annual report