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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 2016, the group fulfilled two out of the three set long-term financial objectives. In 2016, the group’s return on equity was 5.0% (2015: 8.0%). Due to the declining volume of orders on the general contractors market and the prevalent ultracompetitive situation – at a time when the contracts for projects funded in the EU’s current financial framework have not yet reached the market – our return on equity fell short of the long-term target. In  2016, the group achieved the other two long-term financial goals:  the dividend rate was 119% (2015: 90%) and the equity ratio was 51.6% (2015: 59.5%).