The operating results of Harju Elekter in the fourth quarter and for the entire year 2007 were better than planned. With successful sales work and execution of large projects in the European Union and elsewhere, we achieved good results in Estonian and Finnish companies. The growth of sales revenue correlated with the growth of business expenses, which enabled us to achieve sound profitability. million EEK million EUR growth % Key figures 1-12/2007 1-12/2006 1-12/2007 1-12/2006 2006/2007 Turnover 732.0 622.1 46.8 39.8 17.7 EBITDA 69.6 61.7 4.4 3.9 12.8 Operating profit 51.5 45.2 3.3 2.9 14.0 Net profit for the period 85.9 52.0 5.5 3.3 65.1 incl equity holders of the Parent 84.5 47.3 5.4 3.0 78.6 EPS 5.03 EEK 2.81 EEK 0.32 EUR 0.18 EUR 94.3 At the end of the period Total assets 720.3 757.7 46.0 48.4 Owners'equity 533.2 605.6 34.1 38.7 Performance indicators 2007 2006 EBITDA 9.5% 9.9% EBIT 7.0% 7.3% Net profit margin 11.7% 8.4% Equity ratio 73.9% 79.9% Average number of employees 442 439 No of employees on 31.12.2007 486 427 The sales revenue of the Group in the fourth quarter was 206.8 million kroons (13.2 million euros), growing 23.7% compared to the same period in the previous year. During the year the sales volumes increased 17.7% to 732.0 million kroons (46.8 million euros). The fastest growth pace was in the fourth quarter in the Estonian segment. Compared to the fourth quarter of the previous year, the sale of Estonian companies increased 35.8% to 120.9 million kroons (7.7 million euros). The majority - 19.1 million kroons (1.2 million euros) - from 31.9 million kroons (2.0 million euros) of the growth in the Q4 turnover of the Estonian segment was achieved in foreign markets. In the twelve months were products sold in the total amount of 408.3 million kroons (26.1 million euros), which is 97.9 million kroons (6.2 million euros) more than 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 fourth quarter reached 66.8 million kroons (4.3 million euros), which is 25.0% more than in the reference period and within the year 2007 products were sold in the total amount of 246.7 million kroons (15.8 million euros), which is 48.6 million kroons (3.1 million euros) more than in the previous year. Sales revenue for the Lithuanian segment in the fourth quarter was 19.1 million kroons (1.2 million euros), being 5.6 million kroons (0.4 million euros) less than the fourth quarter results in 2006. The year 2006 was an extraordinary year for the Lithuanian subsidiary: right off in the first quarter of the year, two high-volume contracts for services were concluded for the manufacturing and installation of electrical equipment. 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. The year 2007, however, may be considered a success for the Lithuanian businesses. Several important projects became reality to the Belarusian and Norwegian companies. All in all the twelve-month sales volume of 77.0 million kroons (4.9 million euros) fell one-third short of 2006 results, yet outstripped the same result for 2005 by 19.0%. Of the markets dominated mainly Estonia and Finland, where 80% of the Group's products and services were sold both in the years 2007 and 2006. As a new markets, Greece (the EU), Russia, Belarus and Norway were added during the year. In the fourth quarter, business expenses increased by 28.3% and in the 12 months by 17.9%, exceeding the growth of the return on sales by 4.6 and 0.2 percentage points, respectively. Due to the addition of new employees and the increase in wages, the fastest growth rates were in the field of labour costs. Of the 43.6 million kroons (2.8 million euros) increase in business expenses during the fourth quarter, 37% was accounted for by the increase in labour costs and as much as 40% of the 103.1 million kroons (6.7 million euros) in business expenses in the 12 month period. As of the 31 December 2007 balance sheet date, 486 (427) employees were employed by the Group. In 2007 the average number of employees at the Group was 61(87) in Lithuania, 78 (63) in Finland and 304 (289) in Estonia. The total profit of the Group in the fourth quarter was 36.8 million kroons (2.4 million euros), growing 15.7% compared to the previous year. Due to the decisions and assessments of the management board and the results of the annual inventories, business expenses were higher than usual in the fourth quarter, which is why the profits and profit margins of the fourth quarter were lower than the indicators of the comparable period. As a total of the twelve months, the growth rate of total profit was 22.1%, amounting to 136.7 million kroons (8.7 million euros), exceeding the growth of return on sales by 4.4 percentage points. The Group's operating profit within 12 months increased 14.0% to 51.5 million kroons (3.3 million euros) compared to the same period of the previous year. The operating profitability was stable in the 7% level. In fourth quarter the Group consolidated from related companies a loss of 4.0 million kroons (300 000 euros), which was 3.5 million kroons (218 000 euros) more than in the comparable period. During the year, 73,000 kroons (5,000 euros) of profit was consolidated from related companies and 1.7 million kroons (1.0 million euros) in the previous financial year. Total net profit of the Group in 2007 was MEEK 85.9 or MEUR 5.5, MEEK 52.0 or MEUR 3.3 in the period of comparison. Parent company's shareholders' share in the net profit was 84.5 million kroons (5.4 million euros) and 47.3 million kroons (3.0 million euros) in the period of comparison. EPS was 5.03 kroons (0.32 euros) and 2.81 kroons (0.18 euros) in the period of comparison. The Group invested a total of 43.2 million kroons (2.7 million euros) in tangible and intangible fixed assets and real estate in 2007, 34.1 million kroons (2.2 million euros) in the period of comparison. Andres Allikmäe Chairman of the Board +372 674 7400 For more information: Internal report 1-12/2007 of Harju Elekter and Mrs Karin Padjus, Member of the Board (phone +372 674 7403). -------------------------------------------------------------------------------- | AS HARJU ELEKTER | | | | | -------------------------------------------------------------------------------- | BALANCE SHEET, 31.12.07 | | | | | -------------------------------------------------------------------------------- | Consolidated, unaudited | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group | | | | | -------------------------------------------------------------------------------- | in thousands | EEK | | EUR | | -------------------------------------------------------------------------------- | ASSETS | 31.12.07 | 31.12.06 | 31.12.07 | 31.12.06 | | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 26 223 | 6 712 | 1 676 | 429 | -------------------------------------------------------------------------------- | Trade receivables and other | 84 603 | 82 765 | 5 407 | 5 290 | | receivables | | | | | -------------------------------------------------------------------------------- | Prepayments | 1 548 | 845 | 99 | 54 | -------------------------------------------------------------------------------- | Inclusive income tax | 717 | 2 | 46 | 0 | -------------------------------------------------------------------------------- | Inventories | 128 639 | 79 030 | 8 222 | 5 050 | -------------------------------------------------------------------------------- | TOTAL CURRENT ASSETS | 241 013 | 169 352 | 15 404 | 10 823 | | | | | | | -------------------------------------------------------------------------------- | Investments in associates | 21 975 | 25 187 | 1 404 | 1 610 | -------------------------------------------------------------------------------- | Other long-term financial | 215 236 | 344 884 | 13 756 | 22 042 | | investments | | | | | -------------------------------------------------------------------------------- | Investment property | 133 839 | 127 268 | 8 554 | 8 134 | -------------------------------------------------------------------------------- | Property, plant and equipment | 104 987 | 87 446 | 6 710 | 5 589 | -------------------------------------------------------------------------------- | Intangible assets | 3 269 | 3 595 | 209 | 230 | -------------------------------------------------------------------------------- | Total non-current assets | 479 306 | 588 380 | 30 633 | 37 605 | -------------------------------------------------------------------------------- | TOTAL ASSETS | 720 319 | 757 732 | 46 037 | 48 428 | | | | | | | -------------------------------------------------------------------------------- | LIABILITIES AND OWNERS' EQUITY | | | | -------------------------------------------------------------------------------- | Interest-bearing loans and | 28 012 | 20 772 | 1 790 | 1 328 | | borrowings | | | | | -------------------------------------------------------------------------------- | Trade payables and other | 106 497 | 73 496 | 6 806 | 4 697 | | payables | | | | | -------------------------------------------------------------------------------- | Tax liabilities | 12 008 | 12 268 | 768 | 784 | -------------------------------------------------------------------------------- | Inclusive income tax | 672 | 2 401 | 43 | 154 | -------------------------------------------------------------------------------- | Short-term provision | 1 421 | 100 | 91 | 6 | -------------------------------------------------------------------------------- | TOTAL CURRENT LIABILITIES | 147 938 | 106 636 | 9 455 | 6 815 | | | | | | | -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES | 20 313 | 26 568 | 1 298 | 1 698 | | | | | | | -------------------------------------------------------------------------------- | Other non-current liabilities | 469 | 469 | 30 | 30 | -------------------------------------------------------------------------------- | Total non-current liabilities | 20 782 | 27 037 | 1 328 | 1 728 | -------------------------------------------------------------------------------- | TOTAL LIABILITIES | 168 720 | 133 673 | 10 783 | 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 | 207 259 | 331 552 | 13 246 | 21 190 | | | | | | | -------------------------------------------------------------------------------- | Retained earnings | 151 898 | 100 078 | 9 708 | 6 396 | | | | | | | -------------------------------------------------------------------------------- | TOTAL OWNERS' EQUITY | 533 157 | 605 630 | 34 075 | 38 707 | | | | | | | -------------------------------------------------------------------------------- | Minority interests | 18 442 | 18 429 | 1 179 | 1 178 | -------------------------------------------------------------------------------- | TOT.LIABILIT.AND OWNERS' EQUITY | 720 319 | 757 732 | 46 037 | 48 428 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INCOME STATEMENT, 1-12/2007 | | | | | -------------------------------------------------------------------------------- | Consolidated,unaudited | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EEK'000 | | | | | -------------------------------------------------------------------------------- | GROUP | Q4 2007 | Q4 2006 | 1-12/200 | 1-12/200 | | | | | 7 | 6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET SALES | 206 761 | 167 132 | 731 985 | 622 087 | -------------------------------------------------------------------------------- | Cost of goods sold | -169 941 | -135 284 | -595 320 | -510 152 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross profit | 36 820 | 31 848 | 136 665 | 111 935 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Marketing expenses | -12 860 | -8 226 | -36 843 | -27 156 | -------------------------------------------------------------------------------- | Administrative expenses | -15 002 | -10 696 | -47 723 | -39 490 | -------------------------------------------------------------------------------- | Other revenue | 410 | 16 | 588 | 667 | -------------------------------------------------------------------------------- | Other expenses | 0 | -442 | -1175 | -782 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | 9 368 | 12 500 | 51 512 | 45 174 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net financial incomes/expenses | -830 | -1 319 | 43 119 | 15 341 | -------------------------------------------------------------------------------- | Income from subsidiaries | -3 961 | -544 | 73 | 1 723 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit from normal operations | 4 577 | 10 637 | 94 704 | 62 238 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Corporate Income tax | -89 | -2 837 | -8 765 | -10 195 | -------------------------------------------------------------------------------- | Profit after taxes, incl | 4 488 | 7 800 | 85 939 | 52 043 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net profit for the period | 4 857 | 6 362 | 84 460 | 47 289 | -------------------------------------------------------------------------------- | Minority interest | -369 | 1 438 | 1 479 | 4 754 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic and diluted | | | | | -------------------------------------------------------------------------------- | earnings per share | 0,29 | 0,38 | 5,03 | 2,81 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR'000 | | | | | -------------------------------------------------------------------------------- | GROUP | Q4 2007 | Q4 2006 | 1-12/200 | 1-12/200 | | | | | 7 | 6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET SALES | 13 214 | 10 682 | 46 782 | 39 759 | -------------------------------------------------------------------------------- | Cost of goods sold | -10 861 | -8 647 | -38 048 | -32 605 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross profit | 2 353 | 2 035 | 8 734 | 7 154 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Marketing expenses | -822 | -525 | -2 355 | -1 736 | -------------------------------------------------------------------------------- | Administrative expenses | -959 | -684 | -3 050 | -2 524 | -------------------------------------------------------------------------------- | Other revenue | 27 | 1 | 38 | 43 | -------------------------------------------------------------------------------- | Other expenses | 0 | -28 | -75 | -50 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | 599 | 799 | 3 292 | 2 887 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net financial incomes/expenses | -53 | -84 | 2756 | 980 | -------------------------------------------------------------------------------- | Income from subsidiaries | -253 | -35 | 5 | 111 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit from normal operations | 293 | 680 | 6 053 | 3 978 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Corporate Income tax | -6 | -181 | -560 | -652 | -------------------------------------------------------------------------------- | Profit after taxes, incl | 287 | 499 | 5 493 | 3 326 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net profit for the period | 311 | 407 | 5 398 | 3 022 | -------------------------------------------------------------------------------- | Minority interest | -24 | 92 | 95 | 304 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic and diluted | | | | | -------------------------------------------------------------------------------- | earnings per share | 0,02 | 0,04 | 0,32 | 0,18 | -------------------------------------------------------------------------------- Karin Padjus Financial manager 67 47 403