2023 6 months and II quarter consolidated unaudited interim report
03 Agosto 2023 - 12:00AM
2023 6 months and II quarter consolidated unaudited interim report
COMMENTARY FROM MANAGEMENT
Q2 2023 revenue for Merko Ehitus was EUR 142
million and the H1 figure was EUR 217 million. Net profit in Q2 was
EUR 13.6 million and net profit for the last six months was EUR
19.4 million. Merko delivered 512 apartments to new homeowners and
15 commercial units to businesses in H1.
According to the management of Merko Ehitus, the
profit for the first half of the year was strong, as expected,
since a number of apartment developments were completed, and
pre-sold apartments were delivered to home-buyers. At the same
time, the backstock of pre-sold apartments is nearing exhaustion
and the market situation today is very different compared to 2020
and 2021. The pace of new apartment sales has dropped
significantly, due to which also the launch of new developments by
Merko group and on the Baltic market as a whole has slowed greatly.
This in turn will mean fewer developments reaching completion and
fewer apartments sold in the coming years. On the positive side,
the situation on the apartment market has stabilized in the first
half of the year, adjustment to the changes in the economic
environment continues and market is seeing slightly more relaxed
sentiment. Although there are currently fewer apartment buyers
purchasing as an investment, new home purchase transactions are
still being closed. However, a rapid change in demand is not seen
in the near future and the launch of new projects is viewed
cautiously. In the first half of the year, the group invested a
total of EUR 56.5 million into developments in progress and new
immovables.
In the first six months of 2023, the group
companies entered into new construction contracts worth EUR 255
million, which was 32% more than in the comparison period, and the
balance of secured order-book grew by approximately 29% as compared
to the last year to EUR 418 million. In the sense of construction
volumes, the group’s secured order-book will to a certain extent
counterbalance the impacts of the apartment market decline in the
next few years. At the same time, the operating environment in the
construction sector remains unstable. Risk management is extremely
important, as much as is possible given the high inflation and high
interest rates, new regulations and administrative practices as
well as the geopolitical situation.
In the first six months of the year, Merko
delivered 512 apartments to new homeowners and 15 commercial units
to businesses. As of the end of Q2, the group companies had 978
apartments on their balance sheets. Of apartments under
construction, approximately 40% were covered by preliminary sale
contracts. The largest apartment developments were Uus-Veerenni,
Noblessner and Lahekalda in Tallinn, Erminurme in Tartu,
Viesturdarzs, Mežpilseta and Magnolijas in Riga and Vilneles
Skverai in Vilnius. In Q2 of 2023, the largest sites
under construction in Estonia were the Rae and Pelgulinna state
gymnasiums, Hampton by Hilton and Hyatt hotel buildings, Arter
Quarter and the infrastructure along the south-eastern border of
the Republic of Estonia, Defence Forces buildings on Tapa base, a
tram line between Old City Harbour and Rail Baltica Ülemiste
passenger terminal and the first phase of Ülemiste terminal as well
the renovation of Vana-Kalamaja Street. Projects in progress in
Latvia were the GUSTAVS business centre and Elemental Business
Centre office buildings. In Lithuania, wind farm infrastructure
works and a substation in Kelmė region, and various buildings and
infrastructure for NATO training centres.
OVERVIEW OF THE II QUARTER AND 6 MONTHS
RESULTS
PROFITABILITY2023 6 months’
pre-tax profit was EUR 20.2 million and Q2 2023 was EUR 14.1
million (6M 2022: EUR 8.4 million and Q2 2022 was EUR 4.9 million),
which brought the pre-tax profit margin to 9.3% (6M 2022: 5.4%).Net
profit attributable to shareholders for 6 months 2023 was EUR 19.4
million (6M 2022: EUR 7.2 million) and for Q2 2023 net profit
attributable to shareholders was EUR 13.6 million (Q2 2022: EUR 4.2
million). 6 months net profit margin was 8.9% (6M 2022: 4.6%).
REVENUE Q2 2023 revenue was EUR
141.6 million (Q2 2022: EUR 87.8 million) and 6 months’ revenue was
EUR 217.3 million (6M 2022: EUR 156.2 million). 6 months’ revenue
increased by 39.1% compared to same period last year. The share of
revenue earned outside Estonia in 6 months 2023 was 30.6% (6M 2022:
53.8%).
SECURED ORDER BOOKAs of 30 June
2023, the group’s secured order book was EUR 418.2 million (30 June
2022: EUR 322.9 million). In 6 months 2023, group companies signed
contracts in the amount of EUR 254.8 million (6M 2022: EUR 193.3
million). In Q2 2023, new contracts were signed in the amount of
EUR 84.4 million (Q2 2022: EUR 22.1 million).
REAL ESTATE DEVELOPMENTIn 6
months 2023, the group sold a total of 512 apartments; in 6 months
2022, the group sold 214 apartments. The group earned a revenue of
EUR 80.5 million from sale of own developed apartments in 6 months
2023 and EUR 27.1 million in 6 months 2022. In Q2 of 2023 a total
of 367 apartments were sold, compared to 88 apartments in Q2 2022,
and earned a revenue of EUR 61.2 million from sale of own developed
apartments (Q2 2022: EUR 11.6 million).
CASH POSITIONAt the end of the
reporting period, the group had EUR 9.8 million in cash and cash
equivalents, and equity of EUR 186.0 million (51.3% of total
assets). Comparable figures as of 30 June 2022 were EUR 16.8
million and EUR 156.7 million (41.5% of total assets),
respectively. As of 30 June 2023, the group’s net debt was EUR 68.0
million (30 June 2022: EUR 73.2 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOMEunauditedin thousand euros
|
20236 months |
20226 months |
2023 II quarter |
2022 II quarter |
202212 months |
Revenue |
217,347 |
156,198 |
141,596 |
87,772 |
409,633 |
Cost of
goods sold |
(191,528) |
(138,917) |
(125,752) |
(78,363) |
(355,975) |
Gross
profit |
25,819 |
17,281 |
15,844 |
9,409 |
53,658 |
|
|
|
|
|
|
Marketing
expenses |
(2,095) |
(2,169) |
(1,018) |
(1,054) |
(4,077) |
General
and administrative expenses |
(8,261) |
(7,522) |
(4,296) |
(3,799) |
(15,860) |
Other
operating income |
2,778 |
1,422 |
1,961 |
736 |
3,144 |
Other
operating expenses |
(147) |
(455) |
(85) |
(394) |
(1,834) |
Operating profit |
18,094 |
8,557 |
12,406 |
4,898 |
35,031 |
|
|
|
|
|
|
Finance
income/costs |
2,126 |
(193) |
1,735 |
(33) |
2,067 |
incl. finance income/costs from joint ventures |
3,819 |
328 |
2,539 |
330 |
3,516 |
interest expense |
(1,337) |
(374) |
(682) |
(212) |
(1,180) |
foreign exchange gain (loss) |
(290) |
(67) |
(80) |
(119) |
(138) |
other financial income (expenses) |
(66) |
(80) |
(42) |
(32) |
(131) |
|
|
|
|
|
|
Profit before tax |
20,220 |
8,364 |
14,141 |
4,865 |
37,098 |
|
|
|
|
|
|
Corporate
income tax expense |
(929) |
(1,176) |
(637) |
(755) |
(2,995) |
|
|
|
|
|
|
Net profit for financial year |
19,291 |
7,188 |
13,504 |
4,110 |
34,103 |
incl. net profit attributable to equity holders of the parent |
19,450 |
7,202 |
13,570 |
4,196 |
34,640 |
net profit attributable to non-controlling interest |
(159) |
(14) |
(66) |
(86) |
(537) |
|
|
|
|
|
|
Other comprehensive income, which can subsequently be
classified in the income statement |
|
|
|
|
|
Currency
translation differences of foreign entities |
72 |
(12) |
19 |
(28) |
30 |
Comprehensive income for the period |
19,363 |
7,176 |
13,523 |
4,082 |
34,133 |
incl. net profit attributable to equity holders of the parent |
19,490 |
7,189 |
13,580 |
4,169 |
34,648 |
net profit attributable to non-controlling interest |
(127) |
(13) |
(57) |
(87) |
(515) |
Earnings
per share for profit attributable to equity holders of the parent
(basic and diluted, in EUR) |
1.10 |
0.41 |
0.77 |
0.24 |
1.96 |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITIONunauditedin thousand euros
|
30.06.2023 |
30.06.2022 |
31.12.2022 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash
and cash equivalents |
9,795 |
16,773 |
17,665 |
Trade
and other receivables |
68,627 |
68,317 |
77,959 |
Prepaid
corporate income tax |
146 |
36 |
38 |
Inventories |
216,142 |
228,240 |
225,661 |
|
294,710 |
313,366 |
321,323 |
Non-current assets |
|
|
|
Investments in joint ventures |
15,514 |
9,707 |
12,895 |
Other
shares and securities |
80 |
- |
- |
Other
long-term loans and receivables |
21,457 |
23,616 |
22,982 |
Deferred income tax assets |
1,044 |
1,115 |
693 |
Investment property |
11,435 |
11,536 |
11,485 |
Property, plant and equipment |
17,640 |
17,347 |
17,452 |
Intangible assets |
582 |
635 |
582 |
|
67,752 |
63,956 |
66,089 |
|
|
|
|
TOTAL ASSETS |
362,462 |
377,322 |
387,412 |
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Borrowings |
39,783 |
48,854 |
49,687 |
Payables and prepayments |
83,889 |
117,702 |
96,248 |
Income
tax liability |
1,419 |
2,275 |
1,241 |
Short-term provisions |
9,805 |
6,879 |
9,820 |
|
134,896 |
175,710 |
156,996 |
Non-current liabilities |
|
|
|
Long-term borrowings |
37,965 |
41,153 |
42,236 |
Deferred income tax liability |
1,774 |
1,649 |
2,355 |
Other
long-term payables |
2,472 |
2,322 |
2,133 |
|
42,211 |
45,124 |
46,724 |
|
|
|
|
TOTAL LIABILITIES |
177,107 |
220,834 |
203,720 |
|
|
|
|
EQUITY |
|
|
|
Non-controlling interests |
(622) |
(240) |
(495) |
Equity attributable to equity holders of the
parent |
|
|
|
Share
capital |
7,929 |
7,929 |
7,929 |
Statutory reserve capital |
793 |
793 |
793 |
Currency translation differences |
(743) |
(804) |
(783) |
Retained earnings |
177,998 |
148,810 |
176,248 |
|
185,977 |
156,728 |
184,187 |
TOTAL EQUITY |
185,355 |
156,488 |
183,692 |
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
362,462 |
377,322 |
387,412 |
Interim report is attached to the announcement
and is also published on NASDAQ Tallinn and Merko’s web page
(group.merko.ee).
Urmas SomelarHead of FinanceAS Merko Ehitus+372
650 1250urmas.somelar@merko.ee
AS Merko Ehitus (group.merko.ee) group
companies develop real estate and construct buildings and
infrastructure. We create a better living environment and build the
future. We operate in Estonia, Latvia, Lithuania and Norway. As at
the end of 2022, the group employed 661 people, and the group’s
revenue for 2022 was EUR 410 million.
- Merko_Ehitus_2023_6M_interim_report
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