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Long-term financial objectives

At the meeting held on 8 April 2013, the Management Board and the Supervisory Board of AS Merko Ehitus reviewed the company’s strategic development directions and approved long-term financial objectives until 2018.

Considering the weak growth perspective of the Baltic construction and real estate market in the coming few years, the overall low interest environment and the company’s high equity base, the strategy and the financial objectives are focussed on improving the return on invested capital and increasing the efficiency of the balance structure.

The long-term financial objectives of AS Merko Ehitus relate to the period until 2018 and are reviewed annually based on the market situation, the financial condition and strategy of the company:

  • average return on equity of the period of at least 10%
  • dividend rate: 50-70% of annual profit
  • equity ratio: at least 40%

In 2015, the group fulfilled two out of the three set long-term financial objectives. In 2015, the group’s return on equity was 8.0% (2014: 10.1%). Return on equity was below the long-term objective mainly due to the drop in the volume of construction orders on the market and a tightening competition, in a situation where the public procurements being financed from the current European Union budgetary period funding have yet to reach the market. In  2015, the group achieved the other two long-term financial goals:  the dividend rate was 90% (2015: 58%) and the equity ratio was 59.5% (2014: 51.0%).