Merko Ehitus: Audited annual report 2020

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


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.

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

in thousand euros

31.12.2020 31.12.2019
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
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
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
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