The Supervisory Board of Merko Ehitus approved the dividend proposal and the financial objectives until 2018
The Supervisory Board of Merko Ehitus approved the 2012 annual report and the profit allocation proposal to pay the shareholders EUR 5.31 million as dividends, i.e. EUR 0.30 per share. The company’s financial objectives for 2013-2018 foresee a 10% average return on equity for the period and a higher dividend payout ratio.
In the financial year 2012, the consolidated revenue of AS Merko Ehitus was EUR 249.13 million and net profit EUR 7.63 million. The Management Board will make a proposal to the General Meeting of Shareholders to pay the shareholders EUR 5.31 million as dividends, which means EUR 0.30 per share. The balance of retained earnings after the distribution of profit will be EUR 98.93 million.
“The payment policy of dividends is reviewed every year, depending on the company’s financial standing and possibilities. If the required conditions are fulfilled and the results are favourable, we plan to increase the payout ratio of dividends from the current 20% level,” said Andres Trink, Chairman of the Management Board of Merko Ehitus. According to the company’s long-term financial objectives until 2018, the future dividend payout ratio will be 50–70% of the annual profit.
According to Andres Trink, the financial objectives established three years ago have not been fulfilled particularly in regard to return on equity and the revenue earned outside Estonia. “We have successfully adapted to the changes in the market situation in recent years, but our future objectives are strongly influenced by the weak growth perspective of the Baltic construction and real estate market,” Andres Trink added.
“We do not expect the Baltic construction market to grow in the coming two years, and the end of the current EU funding period will cause a temporary decrease in the volume of public procurements for construction services. Hopefully, the financial resources allocated to economy will remain at the same level in the new EU funding period of 2014–2020. Experience from 2012 shows that the activity of private clients in developing and launching larger projects is increasing, but the pace is still slow. At the same time, the enterprises’ profit margins are affected by surplus capacity and tight competition in the construction sector. The development has been positive in the Baltic apartment market, particularly in capital cities, and we believe that a moderate growth in transaction activity and prices will continue,” remarked Andres Trink regarding the situation in the Baltic construction market in the coming years.
Considering the market situation in the coming years, the low base interest rates and the company’s high equity base, the strategy and the financial objectives of the company are focussed on improving the return on invested capital and increasing the efficiency of the balance structure. “We have reviewed our target return on equity and we will also be aiming at gradually reducing the percentage of immovable properties in the company’s assets. We are also interested in new investment opportunities, which would strengthen our growth prospects,” Andres Trink added.
The long-term financial objectives of AS Merko Ehitus cover the period until 2018 and foresee a 10% average return on equity (ROE) for the period, an equity ratio of at least 40% and a dividend pay-out ratio of 50-70% of the annual profit. The financial objectives will be reviewed every year on the basis of the market situation, the company’s financial standing and strategy.