Market announcement

Title

Resolutions of the annual general meeting

Message

Tallinn, Estonia, 2015-04-29 09:50 CEST (GLOBE NEWSWIRE) --




The general meeting of shareholders of AS Merko Ehitus was held on April 29th
2015 and the following decisions were made: 

1. Approval of the annual report of the year 2014 and overview of the financial
results and the prospective of the on-going year 

The general meeting of shareholders decided to approve the annual report of the
year 2014 and take note of the Management Board’s overview of the financial
results and prospective outlooks of the on-going year. 

Comment from the Management Board

Given the unsettled conditions, we can be quite satisfied with the results for
2014 – especially improved profitability, growth in sales in Latvia and
Lithuania and apartment sales in Estonia. Yet the volume of new construction
contracts on the Baltic market has gradually declined since 2014, particularly
in the field of civil engineering, due to the decrease in European Union funded
projects. In addition, slow economic growth and low investor confidence is
dampening private sector initiative in commercial real estate development;
often developers have a shortage of equity. This results in a longer
construction project preparation times and has a negative impact on the volume
of contracts for office, retail, production and other commercial buildings. 

The construction market’s growth prospects depend largely on how rapidly new
public procurements can be launched. We forecast a moderate rebound in this
area starting in 2016. Because of the drop in state contract volumes, our
priorities in all three Baltic states are pursuing good cooperation with
private customers, offering them high-quality, optimum construction solutions,
an efficient construction process, and the certainty that projects will be
completed on schedule. In 2015, we see growth opportunities in Lithuania, and
expect procurement volumes to stay on par in the field of electrical
construction, as these contracts depend on investments made by the transmission
system operator and distribution grid companies. 

After the last three years of fast growth, the Baltic apartment market is
showing signs of stabilisation. Demand remains high for good living
environments and high-quality residential construction, and we continue to
deliver to our customers in this regard. The apartment market is also supported
by low interest rates, relatively stable construction prices and growth in the
population’s personal savings. As a result, the residential construction
remains in our focus, and this year we plan to invest 45-50 million euros into
development projects in the Baltic states. 

The lower order volumes, the pressure of price competition on profit margins
and increased contractual risks will be reflected in the results for 2015 and
2016. As demand on the Baltic construction market will continue to be muted for
the next few years, construction companies will find cost-effectiveness and
flexibility to be increasingly important in responding to changes in the market
situation. 

2. Proposal on distribution of profits

The general meeting of shareholders decided to:

  1. approve the net profit for the year 2014 as EUR 12,416,623;
  2. pay the shareholders the total amount of EUR 7,257,000 as dividends from
     net profit brought forward, which totals to EUR 0.41 per share;
     shareholders, entered into the share register of AS Merko Ehitus on May
     22nd 2014, at 23.59, will be entitled to dividends;
     dividends will be paid to the shareholders on May 26th 2014 by transferring
     the amount concerned to shareholder’s bank account, linked to security
     account;
  3. the outstanding net profit will not be distributed.

3. Proposal on reduction of share capital

Considering the perspectives of the Baltic construction market in the coming
years and the related need for capital by Merko Ehitus 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. 

Based on the above, the general meeting of shareholders decided to:

  1. reduce the share capital of the public limited company by EUR 4,071,000
     from the current EUR 12,000,000 to EUR 7,929,000
  2. share capital will be reduced by way of reducing the book value of the
     shares by EUR 0.23 from the current EUR 0.677966 to EUR 0.447966;
     the number of shares will remain the same – 17,700,000 shares;
  3. pursuant to the articles of association of Merko Ehitus, the minimum share
     capital of the company is EUR 6,000,000 and the maximum share capital is
     EUR 24,000,000;
     after the registration of the reduction of share capital in the Commercial
     Register the new share capital will amount to EUR 7,929,000 which is in
     line with the company’s articles of association consisting of 17,700,000
     shares, each with a book value of EUR 0.447966;
  4. shareholders, entered into the share register of AS Merko Ehitus on May
     22nd 2015, at 23.59, will be entitled to the monetary payments from the
     reduction of share capital;
  5. the monetary payments to the shareholders in the amount of EUR 0.23 per
     share, 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.

4. Appointment of auditor for the financial years of 2015-2017

The general meeting of shareholders decided to appoint AS
PricewaterhouseCoopers the auditor of AS Merko Ehitus for the financial years
of 2015 through 2017 and to pay to the auditing company for auditing as per
contract to be entered into with AS PricewaterhouseCoopers. 



The 2014 annual yearbook of AS Merko Ehitus and the presentation used by the
Mangement Board at the general meeting of shareholders are enclosed to the
current announcement. 



Andres Trink
Chairman of the Management Board
AS Merko Ehitus
+372 650 1250
[email protected]



AS Merko Ehitus (group.merko.ee) consists of Estonia’s leading construction
company AS Merko Ehitus Eesti, the Latvian-market-oriented SIA Merks, UAB Merko
Statyba that is operating on the Lithuanian market and the real estate
development business unit along with real estate holding companies. As at the
end of the year 2014, the group employed 765 people and the company’s revenue
for 2014 was EUR 252.3 million.