As Merko Ehitus Consolidated Annual Report 2020
Total Page:16
File Type:pdf, Size:1020Kb
CONSOLIDATED ANNUAL REPORT 2020 AS MERKO EHITUS CONSOLIDATED ANNUAL REPORT 2020 AS MERKO EHITUS GROUP CONSOLIDATED ANNUAL REPORT 01.01.2020 – 31.12.2020 Business name: AS Merko Ehitus Main activities: Holding companies General contracting of construction Real estate development Commercial Register No.: 11520257 Address: Järvevana tee 9G, 11314 Tallinn Postal address: Pärnu mnt 141, 11314 Tallinn Phone: +372 650 1250 Fax: +372 650 1251 E-mail: [email protected] Web site: group.merko.ee Supervisory Board: Toomas Annus, Teet Roopalu, Indrek Neivelt Management Board: Andres Trink, Tõnu Toomik Auditor: AS PricewaterhouseCoopers 2 AS MERKO EHITUS CONSOLIDATED ANNUAL REPORT 2020 TABLE OF CONTENTS MAIN FACTS ........................................................................................................................................................................................................................................... 4 STATEMENT OF THE CHAIRMAN OF THE MANAGEMENT BOARD ....................................................................................................................................... 5 MERKO GROUP ...................................................................................................................................................................................................................................... 6 MANAGEMENT REPORT ..................................................................................................................................................................................................................... 9 MANAGEMENT DECLARATION ....................................................................................................................................................................................................... 47 FINANCIAL STATEMENTS ............................................................................................................................................................................................................... 48 INDEPENDENT AUDITOR’S REPORT ............................................................................................................................................................................................. 96 PROFIT ALLOCATION PROPOSAL ................................................................................................................................................................................................. 103 OTHER NOTES TO THE ANNUAL REPORT ................................................................................................................................................................................. 104 3 AS MERKO EHITUS CONSOLIDATED ANNUAL REPORT 2020 MAIN FACTS AS MERKO EHITUS CONSISTS OF: • AS Merko Ehitus Eesti in Estonia • SIA Merks in Latvia • UAB Merko Statyba in Lithuania • Peritus Entreprenør AS in Norway The group focuses on complete construction and retail real estate development solutions. Long-term experience, a wide scope of construction services, flexibility, meeting deadlines, and above all, quality and reliability have made Merko the brand of the leading construction company and The largest listed construction apartment developer in the Baltics. In 30 years, we have built more than company in the Baltics 8,500 high-quality homes in Estonia, Latvia and Lithuania. COMPETITIVE ADVANTAGES: • Broad range of construction services and products, comprehensive solutions offered to clients • Strong quality management system • Experienced project managers and engineers • Longstanding experience on the subcontractors’ and suppliers’ market • Innovative technological approaches and construction solutions • Strong financial capability 2020 new contracts signed 2020 revenue • Inventory of residential development EUR 277 mln EUR 316 mln projects and a strong brand mln 2020 EBITDA 2020 net profit 31 December 2020 EUR 28.2 mln EUR 23.0 mln 666 employees VALUE OFFERING As a general contractor, we oversee the entire construction process and are responsible for the completion of the construction project as a whole • We offer consulting and a complete solution according to the client’s needs: preparation, design, construction, furnishing and warranty service. For best results, we combine the experience and resources of subcontractors and our skilled workers (concrete work, road construction, electrical constructions both indoor and outdoor). • We offer a full service of real estate development from the acquisition of the property and the procedure of detailed planning to the preparation of construction and the execution of construction works. We provide complete solutions designed to meet client’s needs, both in private cooperation as well as in public-private partnership. • The quality management, environmental management and occupational health and safety management of the group companies are certified according to ISO 9001, ISO 14001 and ISO 45001 standards. As an apartment developer, we manage the entire process from development to warranty service • We focus on creating large and modern living environments. • To ensure the best quality, we manage the entire development process, from the acquisition of the property, preparation of a detailed plan and organization of an architectural competition to design, construction, sale of apartments and commercial premises, and after-sales service. 4 AS MERKO EHITUS CONSOLIDATED ANNUAL REPORT 2020 STATEMENT OF THE CHAIRMAN OF THE MANAGEMENT BOARD Dear shareholders, 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. ANDRES TRINK Although many new investments in the construction market were put on hold due to the AS MERKO EHITUS pandemic, the group’s new construction contracts’ volume grew higher in 2020. A strong contract CHAIRMAN OF THE portfolio ensures us steady business volumes in a persistently difficult economic environment. MANAGEMENT BOARD 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. Best regards, Andres Trink 5 AS MERKO EHITUS CONSOLIDATED ANNUAL REPORT 2020 MERKO GROUP Purpose Business Principles We create a better living We construct buildings We operate as one environment. and infrastructure and Merko. We see We build the future. develop real estate. opportunities, act upon We operate in Estonia, them and have a long- Latvia, Lithuania and term view. Our focus is Norway. on profitable growth. I am I keep I care and take I initiate and I look for Values competent. my word. responsibility. make it happen. new ideas. STRATEGY AS Merko Ehitus subsidiaries provide construction services in the field of building and infrastructure construction and develop residential real estate in their main home markets of Estonia, Latvia, Lithuania, and Norway. We want to be the preferred partner for those who value quality, both in the performance of construction works and in the development and sale of apartments, as well as in contributing to society. As a caring and development oriented employer, we ensure that our employees are professional and motivated, each of whom contributes to the joint result of each company,