2021 Unaudited consolidated interim report 3 months
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MANAGEMENT’S COMMENT
In the first quarter of 2021, Merko Ehitus achieved a turnover of 60 million euros and a net profit of 3.4 million euros, up 7% and 67% respectively from the previous year. In three months, Merko sold 90 apartments and started construction of more than 560 apartments. The volume of new construction contracts and the secure order book also increased in the first quarter.
Merko Ehitus management is satisfied with the first quarter financial results. Despite the lack of new commercial real estate projects, the construction market in the Baltic republics is currently quite active. At the same time, the outlook remains unclear due to the continuing pandemic and the global rise in commodity prices.
In the first quarter, Merko sold 90 apartments in Tallinn, Tartu, Riga and Vilnius. The apartment market is relatively active in the three Baltic capitals. In the first quarter, the Merko group started construction work on six development projects totaling 567 apartments and 20 commercial premises. Most of the apartments under construction and for sale today will be completed in 2022. Merko’s biggest apartment development projects were Noblessner, Uus-Veerenni, Metsatuka, Lahekalda and Pikaliiva, in Tallinn; Gaiļezers and Viesturdārzs, in Riga; and Vilneles Skverai, in Vilnius.
In the first quarter of 2021, Merko closed new contracts worth 97 million euros, the most important of which were for the construction of the second phase of development of Noblessner and the Liivalaia district in Estonia and the construction of the park from Tondiraba. The group companies signed a contract in Latvia for the construction of the Kauguri city park and the youth center, as well as in Lithuania a production building in Kaunas and an automotive maintenance center in Vilnius. At the end of the first quarter, the secure order book increased by 45% over one year to 281 million euros.
In the first quarter, the biggest objects in Estonia were the third development phase of the Mustamäe medical campus of the North Estonia Medical Center, the Tallinn School of Music and Ballet, the renovation of the Nordic Hotel Forum and the Tallink City Hotel, and the design and construction of the infrastructure of the south-eastern land border of the Republic of Estonia. In Latvia, construction of the Orkla waffle and biscuit factory in Ādaži and reconstruction of the faculty building of Riga University of Technology are underway; in Lithuania, construction of wind farm infrastructure in Telšiai district, the Kaunas district police headquarters building and the NATO barracks were underway.
OVERVIEW OF RESULTS 3 MONTHS
PROFITABILITY
2021 3-month profit before tax was 3.7 million euros (3M 2020: 2.1 million euros), which brought the profit before tax margin to 6.2% (3M 2020: 3.7 %).
The 3-month 2021 net profit attributable to shareholders of the parent company was 3.4 million EUR (3M 2020: 2.0 million EUR) and the 3-month net profit margin was 5.6% (3M 2020: 3 , 6%).
RETURNED
The 3-month turnover in 2021 was 60.1 million euros (3M 2020: 55.9 million euros). 3-month revenue increased 7.6% compared to the same period last year. The share of income earned outside Estonia in 3 months 2021 was 36.9% (3M 2020: 53.5%).
SECURE ORDER BOOK
As of March 31, 2021, the group’s secure order book stood at € 281.2 million (March 31, 2020: € 193.0 million). In 3 months 2021, the companies of the group signed new contracts for an amount of 97.4 million euros (3M 2020: 87.2 million euros).
REAL ESTATE DEVELOPMENT
In 3 months 2021, the group sold a total of 90 apartments (including 1 in a joint venture); in 3 months 2020, the group sold 133 apartments (including 2 joint-venture apartments). The group achieved a turnover of 14.8 million euros thanks to the sale of its own apartments developed in 3 months 2021 and 18.6 million euros in 3 months 2020.
CASH POSITION
At the end of the period under review, the group had € 54.8 million in cash and cash equivalents and equity of € 156.6 million (58.1% of total assets) . The comparable figures at March 31, 2020 were respectively 37.1 million euros and 132.2 million euros (45.7% of total assets). As of March 31, 2021, the group’s net debt was -22.4 million euros (negative) (March 31, 2020: 29.8 million euros).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousands of euros
| 2021 3 months |
2020 3 months |
2020 12 months |
|
| Returned | 60 107 | 55 872 | 315,918 |
| Cost of goods sold | (53,133) | (50,398) | (272,169) |
| Gross profit | 6,974 | 5 474 | 43 749 |
| Marketing costs | (947) | (948) | (4,212) |
| General and administrative expenses | (2,715) | (2 805) | (13,412) |
| Other exploitation products | 675 | 508 | 2320 |
| Other operating expenses | (54) | (63) | (2,979) |
| Operating profit | 3 933 | 2 166 | 25,466 |
| Financial income / costs | (184) | (99) | (1,009) |
| incl. finance the income / costs of the joint venture | 7 | 90 | (144) |
| interest charges | (146) | (172) | (719) |
| foreign exchange gain (loss) | – | – | (7) |
| other financial income (expense) | (45) | (17) | (139) |
| Profit before tax | 3,749 | 2,067 | 24,457 |
| Corporate income tax expense | (429) | (138) | (1954) |
| Net profit for the year | 3,320 | 1,929 | 22,503 |
| incl. net profit attributable to shareholders of the parent company | 3 368 | 2,019 | 22,994 |
| net profit attributable to non-controlling interests | (48) | (90) | (491) |
| Other items of comprehensive income, which can then be classified in the income statement | |||
| Currency translation differences of foreign entities | 23 | (188) | (115) |
| Overall result for the period | 3,343 | 1,741 | 22,388 |
| incl. net profit attributable to shareholders of the parent company | 3 392 | 1,823 | 22 890 |
| net profit attributable to non-controlling interests | (49) | (82) | (502) |
| Earnings per share for profit attributable to shareholders of the parent company (basic and diluted, in EUR) | 0.19 | 0.11 | 1.30 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousands of euros
| 03.31.2021 | 03.31.2020 | 31.12.2020 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 54,792 | 37,056 | 47,480 |
| Customers and other debtors | 35 362 | 42 133 | 32 657 |
| Prepaid corporate income tax | 320 | 91 | 306 |
| Inventories | 126,748 | 168,833 | 126,332 |
| 217,222 | 248,113 | 206,775 | |
| Non-current assets | |||
| Joint venture investments | 2,361 | 2,588 | 2 354 |
| Other long-term loans and receivables | 20,457 | 11,991 | 17 979 |
| Deferred tax assets | 623 | – | 653 |
| Investment property | 13 897 | 14,021 | 13 922 |
| Tangible fixed assets | 14,484 | 11 699 | 14,521 |
| Intangible assets | 721 | 724 | 711 |
| 52,543 | 41,023 | 50 140 | |
| TOTAL ASSETS | 269 765 | 289,136 | 256 915 |
| LIABILITIES | |||
| Current liabilities | |||
| Loans | 13 626 | 21,496 | 13 649 |
| Debts and deposits | 63,196 | 73,488 | 55,846 |
| Income tax | 1429 | 816 | 1,202 |
| Short-term provisions | 5 366 | 6,866 | 6,347 |
| 83,617 | 102,666 | 77,044 | |
| Non-current liabilities | |||
| Long term loans | 18 767 | 45 355 | 15,409 |
| Deferred tax liability | 3,032 | 1 655 | 3,001 |
| Other long-term debts | 3,570 | 3 164 | 4,026 |
| 25,369 | 50 174 | 22,436 | |
| TOTAL RESPONSIBILITIES | 108,986 | 152,840 | 99,480 |
| EQUITY | |||
| Non-majority interests | 4,159 | 4 135 | 4,207 |
| Equity attributable to shareholders of the parent company | |||
| Share the capital | 7 929 | 7 929 | 7 929 |
| Statutory reserve capital | 793 | 793 | 793 |
| Currency conversion differences | (790) | (906) | (814) |
| Retained earnings | 148 688 | 124,345 | 145,320 |
| 156,620 | 132,161 | 153,228 | |
| TOTAL EQUITY | 160,779 | 136,296 | 157,435 |
| TOTAL LIABILITIES AND EQUITY | 269 765 | 289,136 | 256 915 |
The interim report is attached to the announcement and is also posted on the NASDAQ Tallinn and Merko webpage (group.merko.ee).
Priit Roosimägi
Head of the group’s financial unit
AS Merko Ehitus
+372 650 1250
priit.roosimagi@merko.ee
AS Merko Ehitus (group.merko.ee) includes AS Merko Ehitus Eesti in Estonia, SIA Merks in Latvia, UAB Merko Statyba in Lithuania and Peritus Entreprenør AS in Norway. In addition to providing construction services as a prime contractor, the group’s other major area of activity is apartment development. At the end of 2020, the group employed 666 people and the group’s turnover for 2020 amounted to 316 million euros.
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