MRK: 2015 3 months consolidated unaudited interim report
In the first quarter of 2015, Merko Ehitus had sales revenue of EUR 45.6 million (first 3 months of 2014: EUR 48.9 million), of which 41.8% was earned outside Estonia. We are satisfied with the growth of sales revenue from construction services in Latvia; in the 3 months of 2015 the share of Latvian revenue in the group’s revenue has increased to almost 37%. Lithuanian revenue from construction services stayed on par with the figure for the first quarter last year. The volume of new construction contracts cannot be considered satisfactory – in the first quarter, Merko Ehitus signed EUR 22.4 million in new construction contracts compared to EUR 48.6 million in the same period in 2014. Above all due to the interim period in announcement of public procurements funded by the EU and the uncertainty among private customers with regard to launching new developments, it is a great challenge for the group to maintain and grow its secured order book. The group continues to be focused on good cooperation and experience in the field of design services as well as comprehensive supply of design-build services to private customers.
The low number of new orders has led to a bidding war on the market, which is putting pressure on margins and due to which greater risks are being taken in construction contracts by both builders and customers. Merko Ehitus’s gross margin for the first quarter was 7.8% (3 months of 2014: 8.1%) and profit before taxes was EUR 0.8 million (3 months of 2014: EUR 1.1 million). Net profit margin grew to 1.8% (3 months of 2014: 1.5%) and net profit for the first quarter of 2015 was EUR 0.8 million (3 months of 2014: EUR 0.7 million).
The share of the real estate development segment increased in the first quarter of 2015 to make up 24.3% of the group’s total revenue (3 months of 2014: 21.1%). In the first quarter of this year, the group has invested EUR 10.7 million into new and ongoing development projects, and the total investment planned for 2015 into apartment development projects in the Baltic states amounts to EUR 45-50 million, depending on the performance of the Baltic apartment market, currently supported by low interest rates. In 2015, the group is prepared to launch the construction of 450-500 new apartments in the Baltic states.
In the first quarter, the group sold 62 apartments compared to 99 in the same period last year. Apartments are recognised in the quarterly sales revenue in relation to the project completion deadline and the date on which possession is transferred to home buyers. As we delivered a greater number of apartments to buyers in Latvia back in the first quarter of 2014, the comparison base is high. We can be content with the level of the pre-sale agreements signed by the end of the last quarter – demand for Merko-developed and Merko-built apartments remains strong.
OVERVIEW OF THE 3 MONTHS RESULTS
PROFITABILITY
Gross margin in 3M was 7.8% (3M 2014: 8.1%), which has decreased by 3.0% compared to the same period last year. Profit before tax in 3M 2015 was EUR 0.8 million (3M 2014: EUR 1.1 million), which is equivalent to a profit before tax margin of 1.8% (3M 2014: 2.3%). Net margin increased to 1.8% (3M 2014: 1.5%) and net profit in 3M was EUR 0.8 million (3M 2014: EUR 0.7 million), having increased by 13.9% compared to the same period last year.
REVENUE
Revenue in 3M 2015 was EUR 45.6 million (3M 2014: EUR 48.9 million), which has decreased by 6.7% compared to the same period last year. The share of revenue earned outside of Estonia has incresed in 3M 2015 to 41.8% (3M 2014: 33.4%) and the number of apartments sold in 3 months of 2015 (62 pcs, revenues of EUR 10.8 million) has decreased by 61.3% (3 months of 2014: 99 apartments, revenues of EUR 9.0 million).
CASH POSITION
At the end of the reporting period, the group had EUR 40.9 million in cash and cash equivalents and equity EUR 127.8 million (53.1% of total assets). Comparable figures as at 31 March 2014 were accordingly EUR 51.9 million and EUR 122.6 million (51.0% of total assets). As at 31 March 2015 the group had net debt of negative EUR 5.8 million (31 March 2014: negative EUR 19.8 million).
SECURED ORDER BOOK
In Q1 2015, group companies signed new contracts in the amount of EUR 22.4 million (Q1 2014: EUR 48.6 million). As at 31 March 2015, the group’s secured order book stood at EUR 167.2 million (31 March 2014: EUR 224.0 million).
DISTRIBUTION OF PROFITS AND REDUCTION OF SHARE CAPITAL
The general meeting of shareholders held on 29 April 2015 resolved to approve the profit allocation proposal for 2014 and distribute EUR 7.3 million (EUR 0.41 per share) in dividends from retained earnings. This is equivalent to a 58% dividend rate for 2014. Additionally the general meeting of shareholders decided to approve to reduce the share capital by total of EUR 4.1 million (EUR 0,23 per share) by way of reducing the book value of shares.
| 3M 2015 | 3M 2014 | Variance | 12M 2014 | ||
| Revenue | million EUR | 45.6 | 48.9 | -6.7% | 252.3 |
| Gross profit | million EUR | 3.6 | 3.9 | -9.5% | 24.7 |
| Gross profit margin | % | 7.8 | 8.1 | -3.0% | 9.8 |
| EBITDA | million EUR | 1.9 | 1.9 | +0.7% | 16.4 |
| EBITDA margin | % | 4.1 | 3.8 | +8.0% | 6.5 |
| Profit before tax | million EUR | 0.8 | 1.1 | -26.5% | 13.3 |
| PBT margin | % | 1.8 | 2.3 | -21.2% | 5.3 |
| Net profit (parent) | million EUR | 0.8 | 0.7 | +13.9% | 12.4 |
| Net profit margin | % | 1.8 | 1.5 | +22.0% | 4.9 |
| EPS | EUR | 0.05 | 0.04 | +13.9% | 0.70 |
| 31.03.2015 | 31.03.2014 | Variance | 31.12.2014 | ||
| ROE (on yearly basis) | % | 10.1 | 7.8 | +29.4% | 10.1 |
| Equity ratio | % | 53.1 | 51.0 | +4.2% | 51.0 |
| Secured order book | million EUR | 167.2 | 224.0 | -25.4% | 179.1 |
| Total assets | million EUR | 240.8 | 240.5 | +0.1% | 249.3 |
| Number of employees | people | 776 | 824 | -5.8% | 765 |
OPERATING RESULTS
Revenue and gross profit
Merko Ehitus group generated a total of EUR 45.6 million in revenue in 3 months of 2015 (3 months of 2014: EUR 48.9 million). 58.2% of the revenue was generated in Estonia, 36.8% in Latvia and 5.0% in Lithuania (3 months of 2014: 66.6% in Estonia, 28.6% in Latvia and 4.8% in Lithuania). Compared to the 3 months of 2014 the group revenue has decreased by 6.7%. Compared to the 3 months of the previous year in the 3 months of 2015 the share of Latvian revenue in the group’s revenue has increased from 28.6% to 36.8%. The main changes in the revenue structure compared to the same period last year, can be mainly attributed to increase in revenue of projects pursued in the Latvian and Lithuanian construction service and real estate development segments. At the same time there has been a reduction in sales revenue from Estonian construction service segment, which is primarily due to the end of major projects financed from EU structural funds and the reduced project volumes. This trend has been similar since the beginning of 2014.
In 3 months of 2015 the group’s gross profit from development and construction activities totalled EUR 3.6 million (3 months of 2014: EUR 3.9 million). The 3 months gross profit margin (7.8%) has decreased marginally compared to the same period last year (3 months of 2014: 8.1%). Maintaining the stability of profit margins during the 3 months of 2015 in the Estonian construction service segment has been important, despite the decline in sales volumes, that has been supported by the slight decrease in input prices, which may not necessarily continue over the whole of 2015. The scarcity of projects and the ever-tightening competition in the construction sector poses a great challenge in the maintaining of the current gross profit margin for new procurements in all segments. The number of companies participating in tenders and the risk of low pricing bids is high in all three Baltic states.
Profit before tax and net profit
In 3 months of 2015, the group’s profit before tax totalled EUR 0.8 million and net profit attributable to equity holders of the parent was EUR 0.8 million as compared to the pre-tax profit or EUR 1.1 million and net profit attributable to equity holders of the parent of EUR 0.7 million in 3 months of 2014. The 3 months of 2014 higher tax expense was affected besides the ordinary Latvian and Lithuanian income tax by the income tax expenses on the dividends received from O? Gutsaf Tallinn in the amount of EUR 0.3 million, which increased the comparison base as an extraordinary one-off item. Group’s profit before tax margin was 1.8% (3 months of 2014: 2.3%) and the net profit margin was 1.8% (3 months of 2014: 1.5%). Both the group’s net profit (EUR 0.8 million) and the net profit margin (1.8%) have increased compared to the same period last year (3 months of 2014: EUR 0.7 million and 1.5%, respectively).
Business segments
The group operates mainly in Estonian, Latvian and Lithuanian market through its subsidiaries and depending on the country provide construction services and real estate development services across the following business segments: Estonian construction service, Latvian and Lithuanian construction service and Real estate development. The group’s segment structure is alined with group’s management structure.
As of 21 April 2015, the management board of AS Merko Ehitus decided to change the segment reporting structure in the group’s financial reports and harmonise it with the group’s new internal reporting structure, which corresponds to the group’s country-based management structure and takes into account the changes in the operational volumes of business segments.
As a result of the change, instead of the previous five segments presented (general construction, civil engineering, road construction, real estate development and other segments), the group will start submitting segment reporting from the current period in the following three segments: Estonian construction service, Latvian and Lithuanian construction service and Real estate development.
As a result of the change the operating segments presented in the group’s external financial reporting structure are grouped together according to the requirements applicable to disclosure of operating segments pursuant to the conditions specified in the International Financial Reporting Standards (IFRS 8).
Estonian construction service and Latvian and Lithuanian construction service segments include all projects of the respective countries pertaining to construction services:
- General construction consists of the construction of different buildings, from commercial and office buildings, retail and entertainment centres to public sector and residential and specialised industrial buildings. Group companies provide strategic consulting and quality complete solutions as part of the general contracting service of construction according to the customer's requirements: preparation, design, construction, interior and warranty service. In the field of general construction the group operates in all three Baltic countries.
- The civil engineering p?rojects the group constructs include port, waste management and road structures (bridges, tunnels, overpasses, roads), electrical construction of up to 330 kV, various environmental protection structures, water treatment plants, both open-cut and trenchless construction of water and sewerage pipelines and other various engineering projects. Complex and unique engineering projects require specialised knowledge and a good partnership with the customer and local authorities. In this area the group operates in Estonia and Latvia.
- In the road construction division, the group carries out road construction and builds the associated infrastructure, road maintenance and maintenance repair. In the area or road construction the group operates only in Estonia.
Real estate development is based on the development of real estate in the ownership of the group, encompassing development of apartment projects, long-term investments into real estate and real estate projects executed for business purposes, and to a minor extent also real estate maintenance and lease. In this segment, similarly to before, the group recognises projects being developed in all of the different countries.
Estonian construction service
In the 3 months of 2015, the revenue of the Estonian construction service segment was EUR 17.1 million (3 months of 2014: EUR 26.2 million), having decreased by 34.7% from the same period last year. The decrease is largely due to the fact that in the first three months of 2015, the group did not have large-scale projects in progress as it did in the same period of the previous year (such as the Tondiraba Ice Arena and the V??na-J?esuu and Narva-J?esuu water supply and sewerage system renovation projects). In this segment, the group earned a gross profit of EUR 1.4 million for 3 months (3 months of 2014: EUR 1.3 million). If the revenue of the Estonian construction service segment have formed the largest proportion in the group’s revenue in the previous periods, then in the 3 months of 2015 the Estonian construction service segment revenues formed a 37.5% share.
In 3 months of 2015, the gross margin of the Estonian construction service segment was 8.2%, which increased by 63.8% compared to the 3 months of 2014. In light of the close competition on the Estonian construction services market and the drop in volumes of work for nearly all market participants, we consider this as a very good result. Due to the decrease in public procurement volumes, above all in civil engineering, we continue to closely monitor the changes in volumes of all projects in progress, in order to maintain as effective cost base as possible for the purpose of responding to additional market changes.
Latvian and Lithuanian construction service
The revenue of the Latvian and Lithuanian construction service segment amounted to EUR 17.4 million in the 3 months of 2015 (3 months of 2014: EUR 12.4 million), which is 40.7% more than in the 3 months of 2014. If the Latvian and Lithuanian construction service segment revenues of 3 months of 2014 formed 25.4% of the group’s revenue, then during 3 months of the current year the segments revenues have increased to 38.2%, forming the the largest proportion in the group’s revenue having increased by 50.8%. This proportional increase was expected, especially given the knowledge that group’s continued focus has been on increasing the revenues outside Estonia. The 3 month gross profit of the Latvian and Lithuanian construction service segment amounted to EUR 1.0 million (3 months of 2014: EUR 0.4 million) and the gross profit margin was 5.7% (3 months of 2014: 3.1%), which increased by 82.4% compared to the same period previous year.
Real estate development
A total of 62 apartments were sold in 3 months of 2015 at the total value of EUR 10.8 million (excl. VAT), compared to 99 apartments and EUR 9.0 million in 3 months of 2014. In 3 months of 2015, the group has earned EUR 0.0 million of revenue from the sale of immovable properties (3 months of 2014: EUR 1.0 million). Despite a lower number of apartments sold and the absence of the sale of immovable properties, 3 months real estate development segment revenues have increased 7.6% compared to the same period last. The growth is primarily influenced by sales of apartments in more exclusive developments where the sales price per apartment is higher than the apartments sold last year during the same period. The share of revenue from the real estate development segment also increased in the 3 months to 24.3% of the group’s total revenue (3 months of 2014: 21.1%). The overall increase in the real estate development segment volumes has been planned and occasioned by the strategic decisions made already in 2012 to increase the segment’s investments into various new real estate development projects.
The 3 month gross profit of the segment amounted to EUR 1.2 million (3 months of 2014: EUR 2.2 million) and the gross profit margin was 10.5% (3 months of 2014: 21.8%), which decreased by 48.0% compared to the same period previous year. The profitability of the apartment development projects varies by project and depends greatly on the land acquisition price and the size of the project. In addition, the gross profit obtained from sales of the immovable property makes up an important part of the 3-month comparison base of 2014.
At the end of the period, Merko Ehitus group’s inventory comprised 198 apartments where a preliminary agreement had been signed: 64 completed apartments (57 in Estonia and 7 in Latvia) and 134 apartments under construction (72 in Estonia, 49 in Latvia and 13 in Lithuania). The sale of these apartments had not yet been finalised and delivered to customers, because the development site is still under construction or the site was completed at the end of the reporting period and the sales transactions have not all been finalised yet.
As at 31 March 2015, Merko Ehitus group had a total of 361 apartments for active sale (as at 31 March 2014: 304 apartments), for which there are no pre-sale agreements and of which 34 have been completed (7 in Estonia, 23 in Latvia and 4 in Lithuania) and 327 are under construction (198 in Estonia, 76 in Latvia and 53 in Lithuania).
In 3 months of 2015, we launched the construction of a total of 103 new apartments in the Baltic States (3 months of 2014: 108 apartments) – the first stage of Tartu mnt 52 development project, the preparation works of which took place in 2014. In the 3 months of this year, the group has invested a total of EUR 10.7 million in new development projects launched in 2015 as well as projects already in progress from previous year.
We will continue to invest in residential real estate projects and depending on the apartment market developments in 2015, the group plans to launch the construction of approximately 450-500 new apartments in the Baltic States (2014: construction of 369 new apartments launched). In 2015, the group’s planned investments in both development projects initiated in the previous years and new projects to be launched in 2015 will be in the range of EUR 45-50 million (2014: EUR 46.9 million invested).
One of our objectives is to keep a moderate portfolio of land plots to ensure stable inventory of property development projects considering the market conditions. At 31 March 2015, the group's inventories included land with development potential of EUR 59.5 million (31.03.2014: EUR 39.1 million; 31.12.2014: EUR 55.2 million).
In the 3 months of 2015, the group has purchased new land plots in Estonia at an acquisition cost of EUR 5.1 million (3 months of 2014: EUR 0.0 million). Also in the first quarter, the group signed a notarised contract of sale of registered immovables, under which all of the real estate governed by an option agreement were realised for total of EUR 4,0 million. The group is searching for new land plots for real estate development purposes primarily in Estonian and Lithuania. On 23 April 2015, AS Merko Ehitus group 50% joint venture Kalaranna Arenduse O? additionally signed a contract for the acquisition of approximately 1.7 hectares of land in the Noblessner quarter, an historically prestigious industrial area with great potential, for development purpose.
Secured order book
As at 31 March 2015, the group’s secured order book (without own developments) amounted to EUR 167.2 million as compared to EUR 224.0 million as at 31 March 2014. The secured order book excludes the group's own residential development projects and construction work related to developing real estate investments.
In first quarter of 2015, EUR 22.4 million worth of new contracts were signed (without own developments) as compared to EUR 48.6 million in same period last year. The volume of contracts signed in 3 months 2014 were impacted significantly by the large-scale contract entered into in Estonia for the design and renovation of the infrastructure of Tallinn tram line No. 4. No contracts of this volume were entered into in Estonia in 3 months of 2015.
After the balance sheet date, on 2 April 2015, O? Fort Ehitus – a subsidiary of AS Merko Ehitus Eesti, part of AS Merko Ehitus group – signed a contract with Keski-Soumen Betonirakenne OY to perform the pile works at Tripla development project in Helsinki, Finland. The value of the contract is approximately EUR 3.0 million. The works are scheduled for completion in autumn 2015.
Of the contracts signed in the 3 months of 2015, private sector orders accounted for the majority proportion, which is also represented in the group’s secured order book as at the end of the reporting period, where private sector orders from projects in progress constitute approximately 3/5. Nevertheless, in the beginning of the year the company did not manage to garner as much work from private sector customers as it had envisaged. In particular, the buildings construction segment is seeing the stiffest competition, and is where competitors are making aggressive offers, incurring risks for both customers and contractors. Considering the end of the previous EU funding period and the beginning phase of the current EU funding period, one can forecast the volume of public procurements to stay at the previous years level or even a slight decline for 2015. We forecast that the volume of public procurements will start to increase at the end of 2015 or at the beginning of 2016. In this respect, it continues to be a great challenge to maintain the group’s secured order book at the level of 2014 or growing it.
Traditionally the share of Estonian construction activity has been the highest in the group's revenues. Given the weak growth outlook of the Estonian construction market, the group's goal is to increase the volume of construction orders from outside Estonia. Thus, we will continue to identify the groups competitive advantages and are closely monitoring the development and opportunities both in the Baltic States and the Nordic countries. Starting from 2014 AS Merko Ehitus Eesti has selectively and on project basis started to participate in procurements in Finland, Sweden and Norway in order to gain experience and sufficient knowledge in the qualification conditions, requirements established and risks associated in these countries. The group has set the goal of earning real sales revenue from new markets starting in 2015-2016.
Cash flows
The liquidity of the group is strong and the cash position is stable. As at 31 March 2015 the group had cash equivalents in the amount of EUR 40.9 million (31.03.2014: EUR 51.9 million). The group's cash level is lower compared to the same period last year.
The 3-month cash flow from operating activity was negative at EUR 7.9 million (3 months of 2014: positive EUR 9.0 million), cash flow from investing activity was negative at EUR 0.2 million (3 months of 2014: negative EUR 0.5 million) and the cash flow from financing activity was negative at EUR 2.6 million (3 months of 2014: negative EUR 3.2 million).
The cash flow from operating activity was mostly influenced by the operating profit EUR 1.0 million (3 months of 2014: EUR 1.3 million), by the negative change in receivables and liabilities related to construction contracts recognised under the stage of completion method EUR 4.6 million (3 months of 2014: positive change of EUR 5.3 million), by the negative change in the provisions EUR 4.2 million (3 months of 2014: negative change of EUR 2.0 million), by the positive change in trade and other receivables related to operating activities EUR 5.0 million (3 months of 2014: positive change of EUR 2.7 million), by the negative change in inventory EUR 2.3 million (3 months of 2014: negative change of EUR 1.2 million), and by the negative change in trade and other payables related to operating activities EUR 3.5 million, incl. significant negative outflow from the advances for real estate development projects (3 months of 2014: positive change of EUR 2.6 million).
The group’s cash flows from operating activities continue to have contracts (incl. both government and private sector) with long payment terms (by contract, an average of 56 days after registered delivery of the work) and there is an persistent burden on working capital, including optimal management of cash flows. This is especially true, considering the increase in Latvian construction volumes and the need for additional working capital. To support cash flows arising from operating activity, the group has been prudent in raising additional external capital, including factoring. At the same time, the debt ratio has remained at a moderate level (14.6% as at 31.03.2015; 13.4% as at 31.03.2014).
Cash flows from investment activities include negative cash flow from the acquisition of non-current asset in the amount of EUR 0.3 million (3 months of 2014: EUR 0.1 million) and the positive cash flow from the sale of non-current assets in the amount of EUR 0.1 million (3 months of 2014: EUR 0.0 million). Cash flows from investment activities in 3 months of 2014 was negatively impacted by the cash balance excluded from the group in connection with the sale of subsidiary Gustaf Tallinn O? in the amount of EUR 0.4 millio. The group mainly invested in non-current assets for the purpose of renewing its fleet of machinery in the road construction segment.
Project specific loans obtained using investment property as collateral, included in cash flows from financing, were repaid in the amount of EUR 0.1 million (3 months of 2014: negative cash flow in net amount of EUR 0.1 million), net of loans received and loans repaid in connection with development projects amounted to negative cash flow of EUR 2.1 million (3 months of 2014: positive cash flow of EUR 0.6 million) and finance lease principal repayments of EUR 0.4 million (3 months of 2014: EUR 0.2 million). The group has not used bank loans to finance all of the ongoing development projects – and this is the case particularly in Estonia, where many advance sales were agreed in the early phase of construction. Cash flows from financing activities in 3 months of 2014 was negatively impacted by the premature repayment of a working capital loan in the amount of EUR 3.5 million, instead of which the group entered into an overdraft contract with an overall limit of EUR 3.5 million
Dividends and dividend policy
The distribution of dividends to the shareholders of the company is recorded as a liability in the financial statements as of the moment when the payment of dividends is approved by the company’s shareholders.
At the meeting held on 8 April 2013, the Management Board and Supervisory Board of AS Merko Ehitus reviewed the company’s strategic development trends and approved the long-term financial objectives until 2018, under which a new objective of paying the shareholders 50-70% of the annual profit as dividends was established. The achievement of this objective is an important priority for the group.
The annual general meeting of shareholders of AS Merko Ehitus held at 29 April 2015 approved the Supervisory Boards proposal to pay the shareholders the total amount of EUR 7.3 million (EUR 0.41 per share) as dividends from net profit brought forward, which is equivalent to a 58% dividend rate and a 5.7% dividend yield for the year 2014 (using the share price as at 31 December 2014), (comparable figures in 2014 were accordingly: EUR 7.3 million (EUR 0.41 per share) as dividends, which is equivalent to a 70% dividend rate and a 5.7% dividend yield (using the share price as at 31 December 2013)).
According to the Estonian Income Tax Law §50 section 11 AS Merko Ehitus can pay dividends without any additional income tax expense and liabilities occurring due to previously received and taxed distribution of profits from subsidiaries. Taking into account the dividends already paid to the parent company by the subsidiaries, the group will incur income tax expense in connection with the disbursement of dividends of approximately EUR 0.9 million (2014: EUR 0.0 million) In Estonia in the second quarter of 2015.The dividend payment to the shareholders will take place on 26 May 2015.
Share capital reduction
The general meeting of the shareholders held on 29 April 2015 resolved to approve the Supervisory Boards proposal to reduce the share capital by EUR 4 071 000 (EUR 0.23 per share).
Pursuant to subsection §50 section 2 of the Income Tax Act in force in Estonia, income tax does not have to be paid on the portion of payments made from the equity upon reduction of the share capital or contributions, upon redemption of shares or contributions or in other cases, and on the portion of the paid liquidation distributions made by way of previous monetary contributions. About EUR 4.0 million in the said monetary contributions have been made in AS Merko Ehitus.
Based on the resolution of the general meeting of the shareholders, share capital will be reduced by EUR 4,071,000 (EUR 0.23 per share), from the amount EUR 12.0 million to EUR 7.9 million. Share capital is reduced by way of reducing the book value of the shares and as a result of the reduction the book value of one share will be reduced from EUR 0.677966 to EUR 0.447966; the number of shares will remain the same – 17,700,000 shares.
Pursuant to the articles of association of Merko Ehitus, the minimum share capital of the company is EUR 6.0 million and the maximum share capital is EUR 24.0 million. The new share capital will amount to EUR 7.9 million, which is in line with the company’s articles of association.
Considering the perspectives of the Baltic construction market in the coming years and the related need for capital by the group, the share capital would be reduced in order to improve the group’s capital structure and support return on equity. AS Merko Ehitus lacks the need to possess share capital in the existing amount and the requirements that legislation imposes on share capital will also be fulfilled in the case of the reduced share capital.
The monetary payments to the shareholders in the amount of EUR 4,071,000, related to the reduction of share capital shall be made within the period prescribed by law, i.e. latest within 3 (three) months after the registration of the reduction of share capital in the Commercial Register.
Considering the resolutions of the general meeting of the shareholders to pay EUR 7.3 million from retained earnings to shareholders as dividends (EUR 0.41 per share) and to reduce share capital by EUR 4.7 million (EUR 0.23 per share), and considering the share price as at 31 December 2014, return on the investment in 2014 was 9.0%.
Ratios
(attributable to equity holders of the parent)
| 3M 2015 | 3M 2014 | 3M 2013 | 12M 2014 | ||
| Income statement summary | |||||
| Revenue | million EUR | 45.6 | 48.9 | 47.9 | 252.3 |
| Gross profit | million EUR | 3.6 | 3.9 | 4.2 | 24.7 |
| Gross profit margin | % | 7.8 | 8.1 | 8.8 | 9.8 |
| Operating profit | million EUR | 1.0 | 1.3 | 2.3 | 14.0 |
| Operating profit margin | % | 2.2 | 2.7 | 4.8 | 5.5 |
| Profit before tax | million EUR | 0.8 | 1.1 | 2.0 | 13.3 |
| PBT margin | % | 1.8 | 2.3 | 4.1 | 5.3 |
| Net profit | million EUR | 0.7 | 0.6 | 1.8 | 12.3 |
| attributable to equity holders of the parent | million EUR | 0.8 | 0.7 | 1.8 | 12.4 |
| attributable to non-controlling interest | million EUR | (0.1) | (0.1) | 0.0 | (0.1) |
| Net profit margin | % | 1.8 | 1.5 | 3.7 | 4.9 |
| Other income statement indicators | |||||
| EBITDA | million EUR | 1.9 | 1.9 | 2.9 | 16.4 |
| EBITDA margin | % | 4.1 | 3.8 | 6.0 | 6.5 |
| General expense ratio | % | 6.5 | 6.1 | 5.5 | 4.9 |
| Labour cost ratio | % | 13.7 | 13.9 | 13.6 | 11.9 |
| Revenue per employee | thousand EUR | 62 | 61 | 57 | 319 |
| Other significant indicators | 31.03.2015 | 31.03.2014 | 31.03.2013 | 31.12.2014 | |
| Return on equity | % | 10.1 | 7.8 | 8.1 | 10.1 |
| Return on assets | % | 5.0 | 3.9 | 4.1 | 5.0 |
| Return on invested capital | % | 8.5 | 7.3 | 7.0 | 8.8 |
| Equity ratio | % | 53.1 | 51.0 | 52.9 | 51.0 |
| Debt ratio | % | 14.6 | 13.4 | 14.5 | 15.1 |
| Current ratio | times | 2.6 | 2.0 | 2.2 | 2.3 |
| Quick ratio | times | 1.1 | 1.1 | 1.2 | 1.1 |
| Accounts receivable turnover | days | 51 | 59 | 58 | 56 |
| Accounts payable turnover | days | 41 | 41 | 46 | 39 |
| Average number of employees | people | 742 | 800 | 839 | 790 |
| Secured order book | million EUR | 167.2 | 224.0 | 193.4 | 179.1 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
| Note |
2015 3 months |
2014 3 months |
2014 12 months |
|
| Revenue | 2 | 45,599 | 48,868 | 252,323 |
| Cost of goods sold | 3 | (42,038) | (44,932) | (227,591) |
| Gross profit | 3,561 | 3,936 | 24,732 | |
| Marketing expenses | (779) | (854) | (3,190) | |
| General and administrative expenses | (2,193) | (2,120) | (9,128) | |
| Other operating income | 428 | 406 | 1,901 | |
| Other operating expenses | (17) | (50) | (340) | |
| Operating profit | 1,000 | 1,318 | 13,975 | |
| Finance income/costs | (164) | (180) | (667) | |
| incl. finance income/costs from joint ventures | (44) | (34) | (130) | |
| finance income/costs from other long-term investments | - | - | 2 | |
| interest expense | (150) | (178) | (662) | |
| foreign exchange gain (loss) | 3 | (1) | (12) | |
| other financial income (expenses) | 27 | 33 | 135 | |
| Profit before tax | 836 | 1,138 | 13,308 | |
| Corporate income tax expense | (95) | (522) | (1,055) | |
| Net profit for financial year | 741 | 616 | 12,253 | |
| incl. net profit attributable to equity holders of the parent | 809 | 711 | 12,417 | |
| net profit attributable to non-controlling interest | (68) | (95) | (164) | |
| Other comprehensive income | ||||
| Currency translation differences of foreign entities | (2) | - | 4 | |
| Comprehensive income for the period | 739 | 616 | 12,257 | |
| incl. net profit attributable to equity holders of the parent | 807 | 711 | 12,421 | |
| net profit attributable to non-controlling interest | (68) | (95) | (164) | |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 4 | 0.05 | 0.04 | 0.70 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| Note | 31.03.2015 | 31.03.2014 | 31.12.2014 | |
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | 5 | 40,912 | 51,917 | 51,583 |
| Trade and other receivables | 6 | 43,587 | 58,204 | 46,382 |
| Prepaid corporate income tax | 26 | 21 | 3 | |
| Inventories | 7 | 123,222 | 88,734 | 117,638 |
| 207,747 | 198,876 | 215,606 | ||
| Non-current assets | ||||
| Long-term financial assets | 8 | 11,425 | 21,601 | 11,476 |
| Deferred income tax assets | 1,580 | 1,592 | 1,535 | |
| Investment property | 9 | 4,557 | 4,615 | 4,619 |
| Property, plant and equipment | 10 | 14,614 | 12,704 | 15,003 |
| Intangible assets | 11 | 907 | 1,139 | 1,011 |
| 33,083 | 41,651 | 33,644 | ||
| TOTAL ASSETS | 240,830 | 240,527 | 249,250 | |
| LIABILITIES | ||||
| Current liabilities | ||||
| Borrowings | 12 | 11,516 | 15,836 | 14,287 |
| Payables and prepayments | 13 | 62,932 | 77,352 | 71,122 |
| Income tax liability | 478 | 197 | 352 | |
| Short-term provisions | 14 | 4,889 | 5,152 | 6,239 |
| 79,815 | 98,537 | 92,000 | ||
| Non-current liabilities | ||||
| Long-term borrowings | 12 | 23,600 | 16,321 | 23,359 |
| Deferred income tax liability | 751 | 574 | 738 | |
| Other long-term payables | 15 | 4,442 | 1,667 | 1,671 |
| 28,793 | 18,562 | 25,768 | ||
| TOTAL LIABILITIES | 108,608 | 117,099 | 117,768 | |
| EQUITY | ||||
| Non-controlling interests | 4,388 | 854 | 4,455 | |
| Equity attributable to equity holders of the parent | ||||
| Share capital | 12,000 | 12,000 | 12,000 | |
| Statutory reserve capital | 1,200 | 1,200 | 1,200 | |
| Currency translation differences | (667) | (669) | (665) | |
| Retained earnings | 115,301 | 110,043 | 114,492 | |
| 127,834 | 122,574 | 127,027 | ||
| TOTAL EQUITY | 132,222 | 123,428 | 131,482 | |
| TOTAL LIABILITIES AND EQUITY | 240,830 | 240,527 | 249,250 |
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