Harju Elekter's third quarter results were better than expected. Through high-
volume deliveries to the European Union and also beyond, we achieved all-round
decent growth rates for our Estonian and Finnish businesses. In spite of
increasing payroll costs, the growth rates for sales revenue and business
revenue were able to outstrip the growth in business expenditures. A decent
log of orders will secure healthy growth for the coming period as well.
million EEK million EUR growth %
Key figures 1-9/2007 1-9/2006 1-9/2007 1-9/2006 1-9/2007
Turnover 525,2 455,0 33,6 29,1 15,5
EBITDA 55,6 44,9 3,5 2,9 23,8
Operating profit 42,1 32,7 2,7 2,1 29,0
Net profit for the period 81,5 44,2 5,2 2,8 86,6
incl equity holders
of the Parent 79,6 40,9 5,1 2,6 94,6
EPS 4,74 EEK 2,44 EEK 0,30 EUR 0,16 EUR 94,3
At the end of the period
Total assets 767,6 720,1 49,1 46,0 6,6
Owners'equity 595,6 560,6 38,1 35,8 6,2
Performance indicators
Return of sales before
depreciation 10,6% 9,9%
Return of sales 8,0% 7,2%
Net profit margin 18,3% 10,6%
Equity ratio 77,6% 77,8%
Average number of employees 437 441
The sales revenue of the Group in the third quarter of 2007 was 195.3 million
kroons (12.5 million euros), growing 22% compared to the same period in the
previous year. During the first 9 months the sales volumes increased 15.4% to
525.2 million kroons (33.6 million euros). The fastest growth pace was in the
third quarter in the Estonian segment. Compared to the third quarter of the
previous year, the sale of Estonian companies increased 47.6% to 109.5 million
kroons (7.0 million euros). The sales revenue of the Estonian segment within
nine months reached 287.4 million kroons (18.4 million euros), growing by
29.8% or 66.0 million kroons (4.2 million euros) compared to the same period
in the previous year.
The favourable condition in Finnish economy, the growth in the given economic
sector and the positive imago of the Finnish subsidiary Satmatic Oy ensured a
continuously large amount of sales orders in the Finnish sector. The sales
volume in the third quarter reached 62.1 million kroons (4.0 million euros),
which is 32.3% more than in the reference period and within the first nine
months products were sold in the total amount of 179.9 million kroons (11.5
million euros), which is 35.2 million kroons (2.3 million euros) more than in
the previous year.
Sales revenue for the Lithuanian segment in the third quarter was 23.7 million
kroons (1.5 million euros), being 15.2 million kroons (1 million euros) less
than the third quarter results in 2006 yet outstripping the comparable result
for 2005 by 70.5%. Sub-contracting was used for equipment installation, to
execute the contracts in a timely and quality manner, which had a significant
effect on the sales volumes for Rifas in 2006. This year's third quarter,
however, may be considered a success for the Lithuanian businesses. Several
important projects became reality: such as Sivacon 8PT low-voltage switch gear
commissioned by a Belarusian enterprise and, in cooperation with a Norwegian
company, equipment for ship-building in Singapore. Also, the nine-month sales
volume of 57.9 million kroons (3.7 million euros) fell one-third short of last
year's results, yet outstripped the same result for 2005 by 1.6 times.
Of the markets, the domestic markets of the Group's companies (Estonia,
Finland and Lithuania) dominated, where 83.2% (Q3 2006: 98.0%) of the Group's
products and services were sold in the third quarter and 89.1% (9M 2006:
97.3%) within nine months. As a result of the successful selling efforts of
the companies in the Estonian segment, the sales in the third quarter and
first 9 months have increased the most in Estonia and the other markets in
European Union. The most important sales growth source on the domestic market
was that 20 more unit substations in Q3 and 63 more in 9M were sold compared
to the same periods in previous year Sales to the European Union grew in the
third quarter by 25.5 million kroons (1.6 million euros) to 26.9 million
kroons (1.7 million euros) and 38.1 million kroons (2.5 million euros) in 9M,
to 44.9 million kroons (2.9 million euros). As a new market, Greece (the EU)
was added in the second quarter Concerning other markets, the growth was
influenced by selling the low voltage distribution equipment of Harju Elekter
Elektrotehnika with the cost of 5.4 million kroons (0.3 million euros) to a US
company that will supply the equipment to Russia and Lithuanian subsidiary's
successful sales to Belarus and Norway.
Business revenue in the third quarter grew 18.5% and 14.1% in nine months,
falling short, in terms of growth rate, of sales revenue (22% and 15.4%,
respectively). High-volume commissioned jobs have entailed a need for
additional labour and also for the use of overtime work. The arrival of new
staff and also an increase in payroll costs affected business expenditures the
most. Third-quarter payroll costs were 28.9 million kroons (1.8 million
euros), which is 38% more than last year, and in nine months 84.1 million
kroons (5.4 million euros) were paid in wages, a 33% increase over last year.
As of the 30 September 2007 balance sheet date, 469 (455) employees were
employed by the Group. The nine-month average number of employees at the Group
was 437 (441), included 59 (89) in Lithuania, 77 (62) in Finland and 301 (291)
in Estonia.
The operating profit for the third quarter increased 57.3% to 20.2 million
kroons (1.3 million euros) and operating profitability was 10.3% (8.0%). The
Group's operating profit within 9 months increased 29.0% to 42.1 million
kroons (2.7 million euros) compared to the same period of the previous year
and the operating profitability was 8.0%, being 0.8% higher in the previous
year.
Third-quarter net profit was 20.1 million kroons (1.3 million euros), a gain
of 76.9%, and the parent company's shareholders' share in third-quarter net
profit increased 96.9% to 19.2 million kroons (1.2 million euros). Basic
earnings per share were 1.14 kroons (0.07 euros) and 0.58 kroons (0.04 euros)
in the comparable quarter. Affected by the profit earned from the sale of PKC
shares in the first half-year (MEEK 32.6 or MEUR 2.1), nine-month consolidated
net profit came in at MEEK 81.5 or MEUR 5.2, MEEK 44.2 or MEUR 2.8 in the
period of comparison. Parent company's shareholders' share in the net profit
was 79.6 million kroons (5.1 million euros) and 40.9 million kroons (2.6
million euros) in the period of comparison. Net profit per share was 4.74
kroons (0.30 euros) and 2.44 kroons (0.16 euros) in the period of comparison.
The amount of the consolidated balance sheet as of 30 September 2007 was 767.6
million kroons (49.1 million euros), increasing by 9.9 million kroons (0.6
million euros) in the first nine months.
The Group invested a total of 37.9 million kroons (2.4 million euros) in
tangible and intangible fixed assets and real estate in the period of nine
months, 19.2 million kroons (1.2 million euros) in the period of comparison,
of which buildings accounted for 15.2 million kroons (0.97 million euros),
land for 2.8 million kroons (0.18 million euros) and manufacturing equipment
and means of transport together for 9.3 million kroons (0.6 million euros). To
execute high-volume projects, in addition to the circulating capital, the
Group has taken out short-term loans in the amount of 17.7 million kroons (1.1
million euros), 1.6 million kroons (0.1 million euros) in the period of
comparison. To finance new construction in Lithuania, the Group took out a
long-term loan in the amount of 2.2 million kroons (142 thousand euros). Long-
term loans were repaid within nine months in the amount of 7.5 million kroons
(0.5 million euros) and in the reference period in the amount of 6.7 million
kroons (0.4 million euros) and leasing payments were paid in the amount of 850
thousand kroons (54 thousand euros) and in the reference period in the amount
of 1.0 million kroons (66 thousand euros).
Andres Allikmäe
Chairman of the Board
+372 674 7400
For more information: Internal report 1-9/2007 of Harju Elekter and Mrs Karin
Padjus, Member of the Board (phone +372 674 7403).
AS HARJU ELEKTER
BALANCE SHEET, 30.09.2007
Consolidated, unaudited
Group
in thousands EEK EUR
ASSETS 30.09.0731.12.06 30.09.07 31.12.06
Cash and cash equivalents 9 374 6 712 599 429
Trade receivables and other recei 102 816 82 765 6 571 5 290
Prepayments 2 587 845 165 54
Inclusive income tax 2 2 0 0
Inventories 120 862 79 030 7 724 5 050
TOTAL CURRENT ASSETS 235 639 169 352 15 059 10 823
Investments in associates 25 935 25 187 1 658 1 610
Other long-term financial investm 263 444 344 884 16 837 22 042
Investment property 135 117 127 268 8 636 8 134
Property, plant and equipment 104 081 87 446 6 652 5 589
Intangible assets 3 416 3 595 219 230
Total non-current assets 531 993 588 380 34 002 37 605
TOTAL ASSETS 767 632 757 732 49 061 48 428
LIABILITIES AND OWNERS' EQUITY
Interest-bearing loans and borrow 30 234 20 772 1 933 1 328
Trade payables and other payables 94 978 73 496 6 070 4 697
Tax liabilities 15 992 12 268 1 022 784
Inclusive income tax 1 952 2 401 125 154
Short-term provision 1 000 100 64 6
TOTAL CURRENT LIABILITIES 142 204 106 636 9 089 6 815
NON-CURRENT LIABILITIES 29 641 26 568 1 894 1 698
Other non-current liabilities 469 469 30 30
Total non-current liabilities 30 110 27 037 1 924 1 728
TOTAL LIABILITIES 172 314 133 673 11 013 8 543
Share capital 168 000 168 000 10 737 10 737
Paid-in capital over/under par 6 000 6 000 384 384
Restricted reserves 255 466 331 552 16 327 21 190
Retained earnings 147 042 100 078 9 398 6 396
Total equity attributable to equity
holders of the Parent 576 508 605 630 36 846 38 707
Minority interests 18 810 18 429 1 202 1 178
TOT.LIABILIT.AND OWNERS' EQUITY 767 632 757 732 49 061 48 428
INCOME STATEMENT, 1-9/2007
Consolidated,unaudited
EEK'000
GROUP Q3 2007 Q3 2006 1-9/2007 1-9/2006
NET SALES 195 325 160 101 525 224 454 955
Cost of goods sold -154 539-131 386 -425 379 -374 868
Gross profit 40 786 28 715 99 845 80 087
Marketing expenses -9 053 -6 582 -23 983 -18 930
Administrative expenses -10 863 -9 236 -32 721 -28 793
Other revenue 151 61 496 650
Other expenses -809 -110 -1 493 -340
Operating profit 20 212 12 848 42 144 32 674
Net financial incomes/expenses -497 -508 43 949 16 660
Income from subsidiaries 1 220 7 4 034 2 267
Profit from normal operations 20 935 12 347 90 127 51 601
Corporate Income tax -815 -974 -8 676 -7 358
Profit after taxes, incl 20 120 11 373 81 451 44 243
Net profit for the period 19 178 9 739 79 604 40 926
Minority interest 942 1 634 1 847 3 317
Basic and diluted
earnings per share 1,14 0,58 4,74 2,44
EUR'000
GROUP Q3 2007 Q3 2006 1-9/2007 1-9/2006
NET SALES 12 484 10 232 33 568 29 077
Cost of goods sold -9 877 -8 397 -27 187 -23 959
Gross profit 2 607 1 835 6 381 5 118
Marketing expenses -579 -421 -1 533 -1 210
Administrative expenses -694 -590 -2 092 -1 840
Other revenue 10 4 32 42
Other expenses -52 -7 -95 -22
Operating profit 1 292 821 2 693 2 088
Net financial incomes/expenses -32 -32 2 809 1 065
Income from subsidiaries 78 0 258 145
Profit from normal operations 1 338 789 5 760 3 298
Corporate Income tax -52 -62 -554 -470
Profit after taxes, incl 1 286 727 5 206 2 828
Net profit for the period 1 226 623 5 088 2 616
Minority interest 60 104 118 212
Basic and diluted
earnings per share 0,07 0,04 0,30 0,16
Karin Padjus
Financial manager
+372 6747 403