Slide 1: Merko Ehitus Group
MERKO EHITUS GROUP Construction, Engineering & Real Estate 28 April 2015 East Capital
Slide 2: Agenda
Agenda 1. About the Group 2. Business Activities 3. 2014 Results Tondiraba Ice Arena, Concrete 4. Market Outlook and Focus Construction of the Year 2014 2
Slide 3: Group in brief
Group in brief Construction services: Operates in Estonia (68% of revenue), • General construction Latvia (27%), Lithuania (5%) • Engineering construction • Road construction Own developed real estate projects The largest listed construction company in the Baltics 31.12.2014: Net Profit 2014: Share
Slide 4: Value Offering
Value Offering Integrated project management and general contracting service across the full life cycle of construction projects. From idea to planning to engineering design to site works to warranty: full responsibility to deliver the project. We mainly contract subcontractors, but also use own
Slide 5: Business Activities
merko BUSINESS ACTIVITIES
Slide 6: General Construction
General Construction Construction of buildings and facilities 44% of 2014 revenues, 33% of 2013 Markets: Private and public clients Noorus spa hotel in Narva-Jõesuu, 2014 6
Slide 7: Civil Engineering
Civil Engineering Infrastructure and engineering projects. Including water, environmental and electrical projects. 25% of 2014 revenues, 36% of 2013 Mainly public clients: EU funding is key Markets: Estlink 2 underground cable, 2014 7
Slide 8: Road Construction
Road Construction Road construction and long-term road maintenance contracts 12% of 2014 revenues, 19% of 2013 Mainly public clients: EU funding is key Market: Reconstruction of Ülemiste traffic junction, 2013 8
Slide 9: Real Estate Development
Real Estate Development Own development of residential apartments Merko has become the flagship of Baltics residential development 18% of 2014 revenues, 12% of 2013 Markets: Skanstes virsotnes apartment buildings, 9 several phases 2006-2013
Slide 10: 2015 Largest Projects In Progress: Estonia
2015 Largest Projects In Progress Estonia Hilton Hotel (2015): €31 mln Ülemiste City office building (2016): €17 mln Design and renovation of the infrastructure of Tallinn tram line no. 4 (2015): €26 mln, consortium Own residential development (2016): €15 mln 10
Slide 11: 2015 Largest Projects In Progress: Latvia
2015 Largest Projects In Progress Latvia Liepaja Concert Hall (2015): €28 mln Skanstes Majas apartment buildings 11 Riga State Technical School (2015): €5 mln Residential construction (2016): €1111 mln
Slide 12: 2014 Largest Projects In Progress: Lithuania
2014 Largest Projects In Progress Lithuania Vilnius Balsiai Secondary School – PPP (2011–2035) Kraziu apartment buildings (2015) Civil construction works of Nordbalt HVDC converter station Complex of multi-dwelling residential buildings in Klaipeda district (2015): €6 mln and administrative building
Slide 13: 2013 and 2014 Results
merko 2013 AND 2014 RESULTS
Slide 14: Key highlights
Key highlights Change of revenue mix and higher profitability EUR millions 2014 2013 Var 2012 Revenue 252.3 262.7 -4.0% 249.1 Gross profit 24.7 22.7 +8.8% 17.9 Gross profit margin (%) 9.8 8.6 +13.3% 7.2 EBITDA 16.4 15.1 +8.9% 11.4 Profit before tax 13.3 11.1 +19.4% 7.9 Net profit, attr. to equity ho
Slide 15: Dividend and share capital reduction proposals
Dividend and share capital reduction proposals Dividend pay-out ratio according to long-term financial objectives: 50-70% of the annual profit. Proposal to pay EUR 7.3 million as dividends (EUR 0.41 per share) in 2015. Proposal to reduce the share capital by EUR 4.1 million (EUR 0.23 per share
Slide 16: Stock Exchange overview
Stock Exchange overview Share price +35% No of % of total % of total Shareholders Variance shares 31.12.2014 31.12.2013 AS Riverito (management) 12 742 686 71,99% 71,99% - ING Luxembourg S.A. AIF Account 974 126 5,50% 5,50% - Skandinaviska Enskilda Banken S.A. 416 263 2,35% 2,72% -65 116 Firebird Re
Slide 17: Market Outlook and Focus
merko MARKET OUTLOOK AND FOCUS
Slide 18: Market outlook: construction
Market outlook: construction New tender volumes expected to decline in 2015 due to switchover to new EU budget period ? 18
Slide 19: Market outlook: real estate
Market outlook: real estate Number of transactions and price per m2 have shown growth trend 2012-2014 due to low interest rates and limited supply of new flats during first after-crisis years. Market is calming down. Increased apartment offering is likely to cause price stabilisation and the pro
Slide 20: Focus going forward
Focus going forward 2015 will be a challenging year for construction industry Long term potential solid Short-term Focus on private sector customers. More focus on design and build contracts to avoid price war. Providing bridge financing in selective cases. Active positioning in residential real
Slide 21: Contacts
Contacts Andres Trink Signe Kukin Chief Executive Officer Chief Financial Officer E-mail: andres.trink@merko.ee E-mail: signe.kukin@merko.ee AS Merko Ehitus Delta Plaza, 7th floor I Pärnu mnt. 141, 11314 Tallinn, Estonia Phone: +372 6501 250 I www.group.merko.ee 21
Slide 22: Disclaimer
Disclaimer This presentation has been prepared by AS Merko Ehitus (the Company) solely for your use and benefit for information purposes only. By accessing, downloading, reading or otherwise making available to yourself any content of the presentation, in whole or in part, you hereby agree to be b