AI Terminal
Harju Elekter
Quarterly Report • Apr 26, 2023
2217_10-q_2023-04-26_ff4585d8-1a1b-4782-a943-1c0d21a446ac.pdf
Quarterly Report
Open in ViewerOpens in native device viewer
CONSOLIDATED UNAUDITED INTERIM REPORT FOR THE I QUARTER AND 3 MONTHS OF 2023
Business name: AS Harju Elekter Business registry code: 10029524 Phone: +372 67 47 400 E-mail: [email protected] Internet homepage: https://harjuelekter.com/ Reporting period: 1 January – 31 March 2023
Address: Paldiski mnt.31, 76606 Keila Auditor: AS PricewaterhouseCoopers Financial year: 1 January – 31 December 2023
TABLE OF CONTENTS
| ORGANISATION | 3 |
|---|---|
| MANAGEMENT REPORT | 5 |
| SUMMARY OF THE FIRST QUARTER AND 3 MONTH RESULTS | 5 |
| COMMENTARY FROM THE MANAGEMENT | 7 |
| SUPERVISORY, AUDIT COMMITTEE AND MANAGEMENT BOARDS | 7 |
| CHANGES IN THE STRUCTURE OF THE GROUP | 8 |
| MAIN EVENTS | 8 |
| OPERATING RESULTS | 9 |
| Revenue | 9 |
| Operating expenses | 10 |
| PERSONNEL | 11 |
| SHARES AND SHAREHOLDERS | 12 |
| INTERIM FINANCIAL STATEMENT | 13 |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | 13 |
| CONSOLIDATED STATEMENT OF PROFIT AND LOSS | 14 |
| CONSOLIDATED STATEMENT OF CASH FLOWS | 15 |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | 16 |
| NOTES TO INTERIM FINANCIAL STATEMENT | 17 |
| Lisa 1 Accounting methods and valuation principles used in the consolidated interim report | 17 |
| Note 2 Financial investments | 17 |
| Note 3 Investment properties | 18 |
| Note 4 Property, plant and equipment; intangible assets | 18 |
| Note 5 Borrowings | 18 |
| Note 6 Share capital | 19 |
| Note 7 Segment reporting | 19 |
| Note 8 Basic and diluted earnings per share | 21 |
| Note 9 Information on the statement of cash flows line items | 22 |
| Note 10 Transactions with related parties | 22 |
| THE MANAGEMENT BOARD DECLARATION FOR THE UNAUDITED FINANCIAL STATEMENTS | 24 |
AS Harju Elekter's share in its subsidiaries is 100%, unless otherwise stated in the chart.
ESTONIA AS HARJU ELEKTER
The Parent company of the Group, focused on coordination of co-operation within the Group's companies and managing industrial real estate holdings, located in Keila
AS HARJU ELEKTER ELEKTROTEHNIKA
Manufacturer of electrical equipment for energy distribution, industrial and construction sectors; also producer of customer-based sheet metal products for the electrical engineering and telecom sector, located in Keila
ENERGO VERITAS OÜ (81%)
A company trading in electrical materials
FINLAND HARJU ELEKTER OY
Manufacturer of electrical equipment for energy, industry, and infrastructure sectors, located in Ulvila, Kerava and in Kurikka
TELESILTA OY
Electrical engineering company specializing in electrical contracting for the shipbuilding industry, located in Uusikaupunki
HARJU ELEKTER KIINTEISTÖT OY
Industrial real estate holding company in Finland
LITHUANIA
HARJU ELEKTER UAB
Engineering and contract manufacturing of multidrive, MCC's and distribution systems, located in Panevežys
SWEDEN HARJU ELEKTER AB
Engineering company for MV/LV power and distribution solutions for the construction, infrastructure, and renewable energy sector; manufacturer of prefabricated technical houses located in Malmö and Västerås
HARJU ELEKTER SERVICES AB
Industrial real estate holding company in Sweden
LC Development Fastigheter 17
AB (100% subsidiary of Harju Elekter Services AB) Industrial real estate holding company in Sweden
STRATEGICAL INVESTMENTS
ESTONIA FINLAND OÜ SKELETON TECHNOLOGIES GROUP (6.1%) IGL-TECHNOLOGIES OY (10%) Developer and manufacturer of ultra-capacitors Developer of parking & e-mobility
solutions for electric car chargers
Who we are
Harju Elekter is an international industrial group with extensive experience in providing future proof solutions for electrical power distribution. Harju Elekter Group has its roots and head office in Estonia, and production plants in four countries: Estonia, Finland, Sweden and Lithuania.
What we do
Harju Elekter contributes to a sustainable society by providing futureproof electrical power distribution solutions.
We engineer, manufacture, and install electrification solutions for utilities, industries, infrastructure, public and commercial buildings.
The Harju Elekter Group operates in two main areas, which are presented as separate segments.
Production – designing, selling, manufacturing, and after-sales servicing of power distribution, switching and converting devices and automation, process control and industrial control equipment. The core business generates approximately 90% of the Group's revenue.
Real estate – developing of industrial real estate, project management, renting and the accompanying services to rental partners and to the Harju Elekter Group companies. This segment generates approximately 2% of the Group's revenue.
Other activities that are not significant enough to be reported as separate segments, and the accompanying risks and rewards of which were not materially different and clearly identifiable, are presented together as other activities. These include managing financial investments, retail and project sales of electrical goods, and electrical installation work in shipbuilding.
Risks
-
- Increase in wages and the lack of specialists Environment Emergencies
- Supply Chain Regulations and Legislation Information Technology
- - Financial risks Business ethics Corporate management
-
MANAGEMENT REPORT
SUMMARY OF THE FIRST QUARTER AND 3 MONTH RESULTS
Revenue and financial results
Harju Elekter earned revenue of 45.3 (2022 Q1: 37.3) million euros in the reporting quarter, which is 21.3% more than a year earlier.
The gross profit for the first quarter was 5,386 (2022 Q1: 2,986) thousand euros and the gross profit margin was 11.9% (2022 Q1: 8.0%). Operating profit (EBIT) was 1,309 (2022 Q1: operating loss 1,125) thousand euros. The operating margin of the reporting quarter was 2.9% (2022 Q1: -3.0%). The net profit for the reporting quarter was 749 (2022 Q1: net loss 1,294) thousand euros, of which the share of the owners of the parent company was 781 (2022 Q1: net loss 1,308) thousand euros. Net profit per share in the first quarter was 0.04 euros, a year earlier the net loss per share was -0.07 euros.
The growth of revenue and profitability of the reporting quarter have been noticeably affected by the review of management processes, increase in production efficiency, and decline in problems with the supply of materials and components. The company has made important decisions to optimise business operations, as well as to save costs. The price corrections achieved with the customers of the framework agreements also partly covered the increase in input prices caused by the crises. We will continue to improve efficiency in order to adapt to the changing economic conditions and increase profitability.
Investments
During the reporting period, the Group invested a total of 0.6 (2022 Q1: 1.5) million euros in non-current assets, incl 0.3 (2022 Q1: 1.0) million euros in investment properties, 0.2 (2022 Q1: 0.4) million euros in property, plant, and equipment and 0.1 (2022 Q1: 0.1) million euros in intangible assets. Investments were mostly made in production technology equipment, production, and process management systems.
The value of the Group's non-current financial investments totalled 23.8 (31.12.22: 23.7) million euros as of the reporting date. There were no acquisitions or sales of securities. The fair value of securities increased by 36 thousand in the reporting quarter, compared to a year earlier it decreased by 0.5 million euros.
Current assets
Current assets increased by 6.3 million to 85.3 million euros during the reporting quarter. Cash and cash equivalents decreased by 8.1, trade receivables and other receivables increased by 6.0, and inventories increased by 7.6 million euros. By the end of the reporting period, materials accounted for 77% (31.12.22: 77%) of the total inventory. The remaining part includes work in progress and finished goods.
Liabilities
At the reporting date, the Group had liabilities in total of 97.0 (31.12.22: 92.0) million euros, of which the current part accounted for 78.9%. During the reporting quarter current liabilities increased by 5,3 million euros, incl. an increase in prepayments from customers by 4.5 and trade and other payables by 7.4 million euros. At the end of the period, current and non-current borrowings were respectively – 18.3 (31.12.22: 24.4) and 20.4 (31.12.22: 20.7) million euros. Non-current loans and leases were used for real estate investments, expansion of the production building and investments in automatic production equipment.
Cash Flows
The cash flow from operating activities was -1.3 million euros in the reporting quarter, compared to -5.0 million euros a year before. The materials needed for customer projects were acquired, and with the growth of sales, the balance of receivables and liabilities also increased. In the first quarter, 0.4 (2022 Q1: 0.8) million euros were directed to investment activities, the entire amount went to purchases of non-current assets.
The cash flow from financing activities was most affected by loan and lease payments. The current and non-current loans were repaid in the amount of 1.3 million euros and the overdraft decreased by 4.8 million euros. Overall, the cash flow from financing activities in the first quarter amounted to -6.3 (2022 Q1: 5.4) million euros.
| Key indicators | Q1 | Q1 | +/- |
|---|---|---|---|
| (EUR´000) | 2023 | 2022 | |
| Revenue | 45,269 | 37,321 | 21.3% |
| Gross profit | 5,386 | 2,986 | 80.3% |
| EBITDA | 2,382 | -68 | 3601.5% |
| Operating profit/loss (-) (EBIT) | 1,309 | -1,125 | 216.3% |
| Profit/loss (-) for the period | 749 | -1,294 | 157.9% |
| Incl. attributable to owners of the parent company | 781 | -1,308 | 159.7% |
| Earnings per share (EPS) (euros) | 0.04 | -0.07 | 157.1% |
| 31.03.23 | 31.03.22 | +/- | |
| Total current assets | 85,304 | 76,760 | 11.1% |
| Total non-current assets | 91,861 | 83,751 | 9.7% |
| Total assets | 177,165 | 160,511 | 10.4% |
| Total liabilities | 96,959 | 75,246 | 28.9% |
| Ratios | Q1 | Q1 | +/- |
|---|---|---|---|
| (%) | 2023 | 2022 | |
| Distribution cost to revenue | 3.0 | 3.6 | -0.6 |
| Administrative expenses to revenue | 5.7 | 7.1 | -1.4 |
| Labour cost to revenue | 21.0 | 23.3 | -2.3 |
| Gross margin (gross profit / revenue) | 11.9 | 8.0 | 3.9 |
| EBITDA margin (EBITDA / revenue) | 5.3 | -0.2 | 5.5 |
| Operating margin (EBIT / revenue) | 2.9 | -3.0 | 5.9 |
| Net margin (profit/loss (-) for the period / revenue) | 1.7 | -3.5 | 5.2 |
| Inventory turnover (revenue / avg. inventories) | 0.3 | 0.2 | 0.1 |
| Return on equity (ROE) (profit/loss (-) for the period/ avg.equity) |
0.9 | -1.5 | 2.4 |
| 31.03.23 | 31.03.22 | +/- | |
| Equity ratio (equity / total assets) (%) | 46.3 | 53.1 | -6.8 |
| Current ratio (current assets / current liabilities) | 1.1 | 1.2 | -0.1 |
| Debt ratio (total liabilities/ total assets) | 0.5 | 0.5 | 0 |
| Quick ratio ((current assets - inventories) / current liabilities) | 0.5 | 0.7 | -0.2 |
Quarterly Changes in Revenue and EBIT mln eurot
COMMENTARY FROM THE MANAGEMENT
After a difficult 2022, when we completed the restructuring of the Group and incurred losses from several longterm contracts, we were able to make a fresh start in 2023. The implementation of a new strategic plan has continued, the Group's new management has settled in, and the financial results for the quarter illustrate the preliminary results of the work done.
We ended the first quarter of 2023 again with strong revenue growth, achieving a record revenue of 45 million euros, and a record operating profit of 1.3 million euros for the first quarter. In addition to the above, the positive result is due to successful price negotiations in framework procurements. The Finnish and Swedish network operators' understanding of how to ensure the sustainability of their suppliers has been extremely reflective, which is why we have been able to continue executing the framework agreements in a profitable way. Unfortunately, a caring attitude towards suppliers does not apply in Estonia, which is why in the future we will need to price in the risks more carefully and consider the expediency of participating in procurements of the Estonian distribution network.
The good financial results by countries are backed by the production companies in Estonia and Lithuania, to which the Group's management has allocated most of its resources in 2022. The Finnish unit has started the year with a more modest result and here we plan to thoroughly analyse the profitability of all business lines in 2023. The Group's Swedish company continues with weak financial results, where it has taken more time than planned to achieve the full capacity ("ramp-up") of the new plant – settling in the team, moving production units and transferring products have proven to be more complicated and costly. In the first half of the year, the Group's management will devote itself as much as possible to improving the situation of the Swedish production unit, organising the processes and filling the orders and promises made to customers.
With the arrival of spring, we will restart producing renewable energy from all our solar parks with a capacity of 2.73 MW, which will also contribute to the profitability of the Group. Despite the momentary joy, we acknowledge that the crises are far from over: there is still a lot of work to be done and a number of problems are yet to be solved. We can see that the changes made are taking us in the right direction and that we are becoming a modern, credible and profitable industrial group.
SUPERVISORY, AUDIT COMMITTEE AND MANAGEMENT BOARDS
The Supervisory Board of AS Harju Elekter has six members with the following membership: Triinu Tombak (financial consultant, Managing Director of TH Consulting OÜ), Andres Toome (consultant, Managing Director of OÜ Tradematic), Aare Kirsme (Member of the Supervisory Board of AS Harju KEK), Arvi Hamburg (Member of the Estonian Association of Engineers and Committee of Energy of the Academy of Sciences), Märt Luuk (Member of the Supervisory Board of AS Harju KEK) and Risto Vahimets (Ellex, Head of M&A, partner). The Chairman of the Supervisory Board is Triinu Tombak.
Management Board of AS Harju Elekter has three members as of the reporting date: Mr. Tiit Atso (Chairman of the Board), Mr. Aron Kuhi-Thalfeldt (Head of the Real Estate and Energy Division) and Mr. Priit Treial (Chief Financial Officer).
Information about the education and career of the members of the management and Supervisory Boards as well as their membership in the management bodies of companies and their shareholdings have been published on the home page of the company at http://www.harjuelekter.com//company/governing-bodies/.
CHANGES IN THE STRUCTURE OF THE GROUP
Changes in the management
AS Harju Elekter decided, by agreement between the parties, to terminate the contract with Harju Elekter AB's Managing Director Mikael Shwartz Jonsson who continued as Managing Director until 28 February 2023, after which Martin Frank took over as acting director. Martin Frank has worked as the Head of Marketing and Sales at Harju Elekter AB since 2021.
Intra-Group restructuring
The merger decisions of AS Harju Elekter Elektrotehnika (the acquiring company) and AS Harju Elekter Teletehnika (the company being acquired) were adopted on 1 December 2022 and an entry of the merger in the commercial register was made on 13 March 2023. Pursuant to the merger agreement concluded on 30 September 2022, the legal successor of AS Harju Elekter Teletehnika is AS Harju Elekter Elektrotehnika and, with the entry of the merger in the commercial register, all the assets of AS Harju Elekter Teletehnika were wholly transferred to AS Harju Elekter Elektrotehnika. Due to the merger, AS Harju Elekter Teletehnika was deleted from the commercial register 13 March 2023.
MAIN EVENTS
New customer agreements
The Harju Elekter Group's Swedish subsidiary Harju Elekter AB signed an agreement with one of Sweden's leading data centre operators, atNorth which is expanding their data centre in Sweden with the addition of several new server halls. According to the agreement Harju Elekter will deliver and install transformers and switchgear for electrical power distribution for the new server halls of the atNorth data centre during 2023. The total volume of the agreement is about 2.7 million euros.
Real estate investment
AS Harju Elekter decided to build a new production building in the Allika Industrial Park. To this end, AS Harju Elekter and Nordecon Betoon OÜ (brand name NOBE) signed a construction contract for a production and office building at Angerja tee, Hüüru. Together with the construction cost of the building,
the total real estate investment will amount to 5 million euros, and the works will be completed in December 2023.
OPERATING RESULTS
Revenue
| Revenue by business activities (EUR´000) |
Q1 2023 | Q1 2022 | +/- | % 3M 2023 |
% 3M 2022 |
|---|---|---|---|---|---|
| Electrical equipment | 40,371 | 30,752 | 31.3% | 89.2% | 82.4% |
| Retail and project-based sale of electrical products | 487 | 2,914 | -83.3% | 1.1% | 7.8% |
| Other products | 942 | 1,320 | -28.6% | 2.1% | 3.5% |
| Lease income | 809 | 811 | -0.2% | 1.8% | 2.2% |
| Electrical works | 1,625 | 957 | 69.8% | 3.6% | 2.6% |
| Other services | 1,035 | 567 | 82.5% | 2.2% | 1.5% |
| Total | 45,269 | 37,321 | 21.3% | 100.0% | 100.0% |
The Group's revenue in the reporting quarter was 45.3 million euros, which is 21% more than a year before and historically the best first quarterly result. More low-voltage switchgears and frequency converter switchboards were sold, and larger projects were realised. The revenue of electrical equipment in the reporting quarter was 40.4 million, which is 31.3% more than in the first quarter of the previous year. At the end of 2022, retail and projectbased sale of electrical products stopped in Estonia, as a result of that revenue decreased by 83.3%. The increase in orders in the shipbuilding sector in Finland and the contract won last year for the supply of a turnkey solution for electricity, automation and navigation systems to a dredging vessel increased the Group's revenue from the sale of electrical works by 69.8%.
| Revenue by segment (EUR´000) |
Q1 2023 | Q1 2022 | +/- | % 3M 2023 |
% 3M 2022 |
|---|---|---|---|---|---|
| Production | 42,609 | 32,746 | 30.1% | 94.1% | 87.7% |
| Real Estate | 1,044 | 1,011 | 3.3% | 2.3% | 2.7% |
| Other activities | 1,616 | 3,564 | -54.7% | 3.6% | 9.6% |
| Total | 45,269 | 37,321 | 21.3% | 100.0% | 100.0% |
The production segment focuses on producing equipment for the distribution of medium and low voltage electricity (different types of substations, cable distribution and power connection cabinets), various electrical power switching and conversion devices, and automation and control centres for use
by the energy, industrial, and maritime sectors, and infrastructure objects. In addition, companies in the production segment also offer a variety of design and engineering services. The revenue of the production segment increased by 30.1% in the reporting quarter, being 42.6 million euros. The majority of the growth originates from Lithuanian and Finnish production, which sold more automation equipment, low-voltage switchgears and frequency converter switchboards than in the previous period. The sale of electric vehicle chargers increased as well. In the first quarter, deliveries of low-voltage actuators and MCC systems to the Big River Steel project began. The production segment accounted for 94.1% of the consolidated revenue for the quarter.
The real estate unit of Harju Elekter Group is engaged in the development of industrial real estate, project management, leasing, and related services for both rental partners and Harju Elekter's own companies. The real estate unit manages a total of nine industrial parks in Estonia, Finland, Sweden,
and Lithuania. The revenue of the real estate segment for the reporting quarter remained at the same level, an increase of 3.3%. In the reporting quarter, the revenue from the real estate segment was 1.0 million euros, making up 2.3% of the revenue of the first quarter.
The revenue from other activities decreased by 1.9 million euros compared to the same period of the previous year, being 1.6 million euros in the first quarter. The decrease in revenue was significantly influenced by the suspension of the retail and project-based sale of electrical products in Estonia. Other activities accounted for 3.6% of the Group's revenue in the first quarter.
| Revenue by markets (EUR´000) |
Q1 2023 | Q1 2022 | +/- | % 3M 2023 |
% 3M 2022 |
|---|---|---|---|---|---|
| Estonia | 4,956 | 6,897 | -28.1% | 10.9% | 18.5% |
| Finland | 18,635 | 16,696 | 11.6% | 41.2% | 44.7% |
| Sweden | 6,470 | 5,823 | 11.1% | 14.3% | 15.6% |
| Norway | 4,015 | 4,508 | -10.9% | 8.9% | 12.1% |
| Netherlands | 3,888 | 1,545 | 151.7% | 8.6% | 4.1% |
| Other | 7,305 | 1,852 | 294.4% | 16.1% | 5.0% |
| Total | 45,269 | 37,321 | 21.3% | 100.0% | 100.0% |
The Group's largest target markets are Estonia, Finland, Sweden, and Norway, where a total of 75.3% (2022 Q1: 90.9%) of the Group's products and services were sold in the reporting quarter.
In the reporting quarter, 5.0 (2022 Q1: 6.9) million euros were earned from Estonia, making up 10.9% (2022 Q1: 18.5%) of the consolidated revenue. The revenue to the Estonian market decreased by 1.9 million euros, and this is mainly related to the termination of the retail and project-based sale of electrical
products in Estonia. The increased volume in the previous year originated mainly from the contract for hermetic distribution transformers and distribution cabinets.
In the reporting quarter, the revenue earned from the Finnish market was 11.6% more than a year before, totalling 18.6 million euros. The majority of the increase in revenue came from the sale of automation equipment and low-voltage switchgears to key customers and from the growth of orders for car heating and charging equipment and solar panel systems. In addition, the volume of electrical works in the Finnish
shipbuilding sector increased. During the reporting quarter, 41.2% (2022 Q1: 44.7%) of Harju Elekter products and services were sold to the Group's largest market.
The revenue of the Swedish market increased by 11.1% in the comparison of first quarters due to the increase in sale of substations and the growth of project business, being 6.5 million euros. Sweden accounted for 14.3% (2022 Q1: 15.6%) of the consolidated revenue of the reporting quarter.
Revenue from the Norwegian market decreased compared to the previous year, being 4.0 (2022 Q1: 4.5) million euros. The volume of revenue in the Norwegian market depends on the long-term orders of key customers, as well as the realisation of their projects. The Norwegian market accounted for 8.9% (2022
Q1: 12.1%) of the consolidated revenue of the reporting quarter.
Revenue from the other markets increased by 5.5 million euros to 7.3 million euros compared to the first quarter. Revenue from the Danish and Austrian markets decreased but increased from the United States and Germany. To the United States Steel Corporation was sent the first batch of low-voltage actuators and MCC systems designed to control 1500 actuators in their new Big River Steel plant in Arkansas. Other markets accounted for 16.1% (2022 Q1: 5.0%) of the consolidated revenue for the reporting quarter.
Operating expenses
| (EUR´000) | Q1 2023 |
Q1 2022 |
+/- | % 3M 2023 |
% 3M 2022 |
|---|---|---|---|---|---|
| Cost of sales | 39,884 | 34,335 | 16.2% | 91.0% | 89.5% |
| Distribution costs | 1,356 | 1,350 | 0.4% | 3.1% | 3.5% |
| Administrative expenses | 2,580 | 2,665 | -3.2% | 5.9% | 7.0% |
| Total operating expenses | 43,820 | 38,350 | 14.3% | 100.0% | 100.0% |
| incl. depreciation, amortization, impairment |
1,073 | 1,057 | 1.5% | 2.4% | 2.8% |
| incl. total labour cost | 9,511 | 8,711 | 9.2% | 21.7% | 22.7% |
| incl. inclusive salary cost | 7,222 | 6,535 | 10.5% | 16.5% | 17.0% |
The Group's operating expenses totalled 43.8 (2022 Q1: 38.4) million euros in the reporting quarter. Most of the increase in operating expenses was due to the 16.2 % increase in the cost of sales. At the same time, the growth of costs of sales was lower than the growth rate of revenue in the first quarter by 5.1 percentage points. The gross profit margin increased by 3.9 percentage points compared to the comparable quarter to 11.9%. The increase in gross profit margin was supported by a more efficient and high production load combined with stabilised input prices and supply chain.
Distribution costs remained at the same level, being 1.4 million euros and making up 3.1% of the Group's operating expenses and 3.0% of revenue. Administrative expenses decreased by 0.1 million euros compared to the first quarters to 2.6 million euros, making up 5.9% of the Group's operating expenses and 5.7% of the revenue of the reporting quarter. Depreciation of property, plant and equipment and intangible assets totalled 1.1 (2022 Q1: 1.1) million euros in the reporting quarter.
In a quarterly comparison, labour costs increased by 9.2%, amounting to 9.5 million euros. The ratio of labour costs to the Group's revenue was 21.0% (2022 Q1: 23.3%) in the reporting quarter. The average monthly salary per employee of the Group during the first quarter was 2,568 (2022 Q1: 2,490) euros, which was 3.1% more than in the previous period. The majority of the increase in labour costs originates from staff growth, and the growth in average wages was influenced by wage pressure from the overall economy.
PERSONNEL
One of the strategic goals of Harju Elekter Group is to become a more united group, which is why we contribute to common values. In the first quarter, the personnel, communication, and some finance people of Harju Elekter Group gathered together in Tallinn to develop a common set of values for the Group. Being guided by the same principles and values helps to shape the corporate culture by creating a sense of community and belonging among employees.
In order to better serve the customers, increase competitiveness and production efficiency, a large-scale lean management training program was launched at the end of the last year, the aim of which is to apply both new theoretical knowledge of lean philosophy as well as practical methods in the production units.
In the reporting quarter, the merger of the production company AS Harju Elekter Teletehnika with AS Harju Elekter Elektrotehnika was completed, during which approximately 100 employees moved to the new merged company.
At the end of the reporting period, the Group employed 971 people, which was 77 employees more than a year ago. In the reporting quarter, the Group employed an average of 937 people, which was on average 62 employees more than in the comparable period. The largest increases were in Lithuanian and Finnish manufacturing companies. In the reporting quarter, 7.2 (2022 Q1: 6.5) million euros were paid to employees as salaries and remuneration.
| Average numbers of employees | Numbers of employees | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Q1 2023 | Q1 2022 | 31.03.23 | 31.03.22 | +/- | % 31.03.23 | % 31.03.22 | |||
| Estonia | 356 | 390 | 377 | 402 | -25 | 38.8% | 45.0% | ||
| Finland | 196 | 159 | 197 | 159 | 38 | 20.3% | 17.8% | ||
| Lithuania | 317 | 253 | 329 | 259 | 70 | 33.9% | 29.0% | ||
| Sweden | 67 | 73 | 68 | 74 | -6 | 7.0% | 8.2% | ||
| Total | 937 | 875 | 971 | 894 | 77 | 100.0% | 100.0% |
SHARES AND SHAREHOLDERS
| Security trading history | 3M 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| Opening price (euros) | 5.01 | 7.44 | 5.24 | 4.26 | 4.12 |
| Highest price (euros) | 5.27 | 7.74 | 10.50 | 5.26 | 5.20 |
| Lowest price (euros) | 4.96 | 4.85 | 5.20 | 3.20 | 4.01 |
| Closing price (euros) | 5.00 | 5.01 | 7.44 | 5.18 | 4.21 |
| Traded shares (pcs) | 482,476 | 929,491 | 2,048,865 | 1,160,598 | 531,415 |
| Turnover (in million euros) | 2.44 | 5.60 | 15.85 | 4.99 | 2.35 |
| Capitalisation (in million euros) | 91.45 | 91.63 | 134.06 | 91.89 | 74.68 |
| Average number of the shares (pcs) | 18,289,508 | 18,134,463 | 17,855,220 | 17,739,880 | 17,739,880 |
| EPS (euros) | 0.04 | -0.31 | 0.15 | 0.31 | 0.14 |
Price of AS Harju Elekter share (in euros) on Nasdaq Tallinn Stock Exchange between 31 December 2018 – 31 March 2023 (Nasdaq Tallinn, http://www.nasdaqbaltic.com/)
Division of shareholders by size of holding and list of shareholders with more than 5% holding as of 31 March 2023:
| Holding | No of shareholders |
% of all shareholders |
% of votes held |
Shareholders | Holding (%) |
|---|---|---|---|---|---|
| > 10% | 2 | 0.0 | 40.6 | AS Harju KEK | 30.44 |
| 1,0 - 10,0% | 7 | 0.1 | 20.1 | ING Luxembourg S.A. | 10.19 |
| 0,1 - 1,0 % | 54 | 0.5 | 14.7 | Endel Palla | 7.46 |
| < 0,1% | 11,169 | 99.4 | 24.6 | Shareholders holding under 5% | 51.91 |
| Total | 11,232 | 100.0 | 100.0 | Total | 100.00 |
As of 31 March 2023, AS Harju Elekter had 11,232 shareholders. The number of shareholders increased during the reporting quarter by 648 members. The largest shareholder of AS Harju Elekter is AS Harju KEK, a company based on local capital which holds 30.44% of AS Harju Elekter's share capital. On 31 March 2023, the members of the Supervisory and Management Boards owned, in accordance with their direct and indirect ownerships, in total of 4.12% of AS Harju Elekter shares. The complete list of shareholders of AS Harju Elekter is available on the website of the Nasdaq CSD https://nasdaqcsd.com/statistics/en/shareholders.
INTERIM FINANCIAL STATEMENT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| (EUR´000) | Note | 31.03.2023 | 31.12.2022 | 31.03.2022 |
|---|---|---|---|---|
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | 1,028 | 9,152 | 286 | |
| Trade and other receivables | 37,627 | 31,612 | 35,663 | |
| Prepayments | 1,945 | 1,126 | 3,119 | |
| Inventories | 44,704 | 37,068 | 37,692 | |
| Total current assets | 85,304 | 78,958 | 76,760 | |
| Non-current assets | ||||
| Deferred income tax assets | 1,002 | 1,008 | 776 | |
| Non-current financial investments | 2 | 23,767 | 23,731 | 24,410 |
| Investment properties | 3 | 24,766 | 24,756 | 24,603 |
| Property, plant, and equipment | 4 | 35,042 | 35,740 | 26,303 |
| Intangible assets | 4 | 7,284 | 7,244 | 7,659 |
| Total non-current assets | 91,861 | 92,479 | 83,751 | |
| TOTAL ASSETS | 7 | 177,165 | 171,437 | 160,511 |
| LIABILITIES AND EQUITY | ||||
| Liabilities | ||||
| Borrowings | 5 | 18,366 | 24,385 | 21,354 |
| Prepayments from customers | 21,310 | 16,827 | 6,681 | |
| Trade and other payables | 31,888 | 24,502 | 31,063 | |
| Tax liabilities | 3,033 | 3,478 | 3,663 | |
| Current provisions | 1,950 | 2,103 | 51 | |
| Total current liabilities | 76,547 | 71,295 | 62,812 | |
| Borrowings | 5 | 20,412 | 20,732 | 12,401 |
| Other non-current liabilities | 0 | 0 | 33 | |
| Total non-current liabilities | 20,412 | 20,732 | 12,434 | |
| Total liabilities | 96,959 | 92,027 | 75,246 | |
| Equity | ||||
| Share capital | 6 | 11,523 | 11,523 | 11,352 |
| Share premium | 2,509 | 2,509 | 1,601 | |
| Reserves | 17,815 | 17,768 | 18,278 | |
| Retained earnings | 48,552 | 47,771 | 54,158 | |
| Total equity attributable to the owners of the parent | ||||
| company | 80,399 | 79,571 | 85,389 | |
| Non-controlling interests | -193 | -161 | -124 | |
| Total equity | 80,206 | 79,410 | 85,265 | |
| TOTAL LIABILITIES AND EQUITY | 177,165 | 171,437 | 160,511 |
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
| (EUR´000) | Note | 3M 2023 | 3M 2022 |
|---|---|---|---|
| Revenue Cost of sales |
7 | 45,269 -39,883 |
37,321 -34,335 |
| Gross profit | 5,386 | 2,986 | |
| Distribution costs Administrative expenses Other income Other expenses |
-1,356 -2,580 18 -159 |
-1,350 -2,665 56 -152 |
|
| Operating profit/loss (-) | 7 | 1,309 | -1,125 |
| Finance income Finance costs |
75 -549 |
39 -119 |
|
| Profit/loss (-) before tax Income tax Profit/loss (-) for the period |
9 | 835 -86 749 |
-1,205 -89 -1,294 |
| Profit /loss (-) attributable to: Owners of the parent company Non-controlling interests |
781 -32 |
-1,308 14 |
|
| Earnings per share | |||
| Basic earnings per share (euros) Diluted earnings per share (euros) |
8 8 |
0.04 0.04 |
-0.07 -0.07 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| (EUR´000) | Note | 3M 2023 | 3M 2022 |
|---|---|---|---|
| Profit/loss (-) for the period | 749 | -1,294 | |
| Other comprehensive income (loss) | |||
| Items that may be reclassified to profit or loss | |||
| Impact of exchange rate changes of a foreign subsidiaries | -41 | 20 | |
| Items that will not be reclassified to profit or loss | |||
| Gain on sales of financial assets | 2 | 0 | 151 |
| Net gain/loss (-) on revaluation of financial assets | 2 | 36 | -521 |
| Total comprehensive income (loss) for the period | -5 | -350 | |
| Other comprehensive income (loss) | 744 | -1,644 | |
| Total comprehensive income (loss) attributable to: | |||
| Owners of the Company | 776 | -1,658 | |
| Non-controlling interests | -32 | 14 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| (EUR´000) | Note | 3M 2023 | 3M 2022 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit/loss (-) for the period | 749 | -1,294 | |
| Adjustments | |||
| Depreciation and amortization, impairment | 3,4 | 1,073 | 1,057 |
| Gain on sale of property, plant and equipment | 0 | -2 | |
| Share-based payments | 10 | 52 | 63 |
| Finance income | -75 | -39 | |
| Finance costs | 549 | 119 | |
| Income tax | 9 | 86 | 89 |
| Changes | |||
| Changes in trade receivables and prepayments | -6,777 | -3,195 | |
| Changes in inventories | -7,524 | -10,255 | |
| Changes in trade payables and prepayments | 11,254 | 8,850 | |
| Corporate income tax paid | 9 | -317 | -210 |
| Interest paid | -419 | -136 | |
| Total cash flow (-outflow) from operating activities | -1,349 | -4,953 | |
| Cash flows from investing activities | |||
| Payments for investment properties | 9 | -115 | -726 |
| Payments for property, plant and equipment | 9 | -265 | -318 |
| Payments for intangible assets | -63 | -175 | |
| Acquisition of financial investments | 2 | 0 | -223 |
| Proceeds from sale of property, plant and equipment | 0 | 6 | |
| Proceeds from sale of other financial investments | 2 | 0 | 665 |
| Dividends received | 2 | 0 | |
| Received interests | 9 | 1 | |
| Total cash flow (-outflow) from investing activities | -432 | -770 | |
| Cash flows from financing activities | |||
| Change in overdraft balance | 5 | -4,839 | 5,054 |
| Proceeds from borrowings | 5 | 0 | 1,059 |
| Repayment of borrowings | 5 | -1,268 | -377 |
| Repayments of lease liabilities | 5 | -234 | -324 |
| Total cash flow (-outflow) from financing activities | -6,341 | 5,412 | |
| Total net cash flow (-outflow) | -8,122 | -311 | |
| Cash and cash equivalents at the beginning of the period | 9,152 | 574 | |
| Changes in cash and cash equivalents | -8,122 | -311 | |
| Effect of exchange rate fluctuations on cash and cash equivalents | -2 | 23 | |
| Cash and cash equivalents at the end of the period | 1,028 | 286 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| 1 January – 31 March (EUR´000) |
Share capital |
Share premium |
Reser ves |
Retained earnings |
Attributable to owners of the parent company |
Non controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|
| Balance at 1 January 2022 | 11,352 | 1,601 | 18,716 | 55,315 | 86,984 | -138 | 86,846 |
| Comprehensive income | |||||||
| Profit for the period | 0 | 0 | 0 | -1,308 | -1,308 | 14 | -1,294 |
| Other comprehensive income | 0 | 0 | -501 | 151 | -350 | 0 | -350 |
| Total comprehensive income | 0 | 0 | -501 | -1,157 | -1,658 | 14 | -1,644 |
| Transactions with owners recognized directly in equity | |||||||
| Share-based payments (Note 8,10) | 0 | 0 | 63 | 0 | 63 | 0 | 63 |
| Total transactions with owners | 0 | 0 | 63 | 0 | 63 | 0 | 63 |
| Balance at 31 March 2022 | 11,352 | 1,601 | 18,278 | 54,158 | 85,389 | -124 | 85,265 |
| Balance at 1 January 2023 | 11,523 | 2,509 | 17,768 | 47,771 | 79,571 | -161 | 79,410 |
| Comprehensive income | |||||||
| Profit for the period | 0 | 0 | 0 | 781 | 781 | -32 | 749 |
| Other comprehensive income | 0 | 0 | -5 | 0 | -5 | 0 | -5 |
| Total comprehensive income | 0 | 0 | -5 | 781 | 776 | -32 | 744 |
| Transactions with owners recognized directly in equity | |||||||
| Share-based payments (Note 8,10) | 0 | 0 | 52 | 0 | 52 | 0 | 52 |
| Total transactions with owners | 0 | 0 | 52 | 0 | 52 | 0 | 52 |
| Balance at 31 March 2023 | 11,523 | 2,509 | 17,815 | 48,552 | 80,399 | -193 | 80,206 |
NOTES TO INTERIM FINANCIAL STATEMENT
Lisa 1 Accounting methods and valuation principles used in the consolidated interim report
AS Harju Elekter is a company registered in Estonia. The interim report prepared as of 31 March 2023 comprises AS Harju Elekter (the "Parent Company") and its subsidiaries AS Harju Elekter Elektrotehnika, Energo Veritas OÜ, Harju Elekter Oy, Harju Elekter Kiinteistöt Oy, Telesilta Oy, Harju Elekter AB, Harju Elekter Services AB, Harju Elekter UAB and LC Development Fastigheter 17 AB (the "Group"). AS Harju Elekter has been listed on Tallinn Stock Exchange since 30 September 1997; 30.44% of its shares are held by AS Harju KEK.
On March 13, 2023, the merger of AS Harju Elekter Elektrotehnika and AS Harju Elekter Teletehnika was entered into the commercial register. According to the merger agreement signed on 30 September 2022, AS Harju Elekter Teletehnika is the legal successor of AS Harju Elekter Elektrotehnika, and all assets of AS Harju Elekter Teletehnika were transferred to AS Harju Elekter Elektrotehnika. The merger of subsidiaries has no effect on the numbers in the consolidated report.
The consolidated interim financial statements of AS Harju Elekter and its subsidiaries have been prepared in accordance with International Reporting Standards (IFRS) as adopted by the European Union. This consolidated interim report is prepared in accordance with the requirements for international accounting standard IAS 34 "Interim Financial Reporting" on condensed interim financial statements. The interim report is prepared on the basis of the same accounting methods as used in the annual report concerning the period ending on 31 December 2022. The interim report should be read in conjunction with the Group's annual report of 2022, which is prepared in accordance with International Financial Reporting Standards (IFRS).
According to the assessment of the Management Board, the interim report for the first quarter and 3 months of 2023 of AS Harju Elekter presents a true and fair view of the financial result of the consolidation Group guided by the going-concern assumption. This interim report has been neither audited nor reviewed by auditors and only includes the consolidated reports of the Group.
The financial statements are presented in euros, which is the Group's functional and presentation currency. The consolidated interim financial statement has been drawn up in thousands of euros and all the figures have been rounded to the nearest thousand, unless indicated otherwise.
| (EUR´000) | 31.03.2023 | 31.12.2022 | 31.03.2022 |
|---|---|---|---|
| Listed securities (fair value through other comprehensive income) | 1,468 | 1,433 | 1,943 |
| Other equity investments (fair value through other comprehensive income) |
22,287 | 22,287 | 22,458 |
| Other financial assets through profit or loss | 12 | 11 | 9 |
| Total | 23,767 | 23,731 | 24,410 |
| Changes | 3M 2023 | 12M 2022 | 3M 2022 |
| 1. Financial assets at fair value through other comprehensive income |
|||
| Carrying amount at the beginning of the period | 23,719 | 25,213 | 25,213 |
| Acquisitions | 0 | 227 | 223 |
| Sale of financial assets | 0 | -995 | -514 |
| Change in fair value through other comprehensive income | 36 | -726 | -521 |
| Carrying amount at the end of the period | 23,755 | 23,719 | 24,401 |
| 2. Financial assets at fair value through profit and loss | |||
| Carrying amount at the beginning of the period | 12 | 9 | 9 |
| Change in fair value through profit and loss | 0 | 3 | 0 |
| Carrying amount at the end of the period | 12 | 12 | 9 |
| Total carrying amount at the end of the period | 23,767 | 23,731 | 24,410 |
Note 2 Financial investments
The fair value of securities increased by 36 thousand euros during the reporting period, decreased by 0.5 thousand euros in 2022.
As of 31 March 2023, other equity investments include an investment in the shares of OÜ Skeleton Technologies Group in the amount of 21.8 (31.12.2022: 21.8) million euros and in the shares of IGL-Technologies Oy in the amount of 0.5 (31.12.2022: 0.25) million euros.
AS Harju Elekter acquired a 10% stake in OÜ Skeleton Technologies Group on 3 June 2015. The company is engaged in the development and production of supercapacitors and is gradually increasing production. The assessment of future cash flows of the OÜ Skeleton Technologies Group includes significant uncertainty. The measurement of fair value is a complex process in the absence of an active market and when this is the case, this kind of measurement involves making assumptions and decisions. In assessing the fair value of the company, the Group's management based the assessment on the issue price of the new shares used in the financing rounds, the economic indicators disclosed by OÜ Skeleton Technologies Group, the associated investment risk, and weighted the marketability of instrument. As of the reporting date, the registered holding of Harju Elekter in OÜ Skeleton Technologies Group is 6.1%.
Note 3 Investment properties
| (EUR´000) | Note | 3M 2023 | 12M 2022 | 3M2022 |
|---|---|---|---|---|
| Balance at the beginning of the period | 24,756 | 23,903 | 23,903 | |
| Additions | 7 | 278 | 1,858 | 964 |
| Depreciation | 7 | -268 | -983 | -242 |
| Reclassification from property, plant and equipment | 4 | 0 | -22 | -22 |
| At the end of the period | 24,766 | 24,756 | 24,603 |
Note 4 Property, plant and equipment; intangible assets
| (EUR´000) | Note | 3M 2023 | 12M 2022 | 3M2022 |
|---|---|---|---|---|
| 1. Property, plant and equipment | ||||
| Balance at the beginning of the period | 35,740 | 26,654 | 26,654 | |
| Additions to right-of-use assets | 0 | -443 | 0 | |
| Additions | 7 | 258 | 12,917 | 391 |
| Sales and write-off in carrying amount | 0 | -14 | -7 | |
| Depreciation | 7 | -756 | -3,114 | -755 |
| Reclassification to investment properties | 3 | 0 | 22 | 22 |
| Impact of exchange rate changes | -200 | -282 | -2 | |
| At the end of the period | 35,042 | 35,740 | 26,303 | |
| 2. Intangible assets | ||||
| Balance at the beginning of the period | 7,244 | 7,544 | 7,544 | |
| Additions | 7 | 89 | 468 | 175 |
| Amortization | 7 | -49 | -257 | -60 |
| Impairment of goodwill | 0 | -410 | 0 | |
| Impact of exchange rate changes | 0 | -101 | 0 | |
| At the end of the period | 7,284 | 7,244 | 7,659 |
Note 5 Borrowings
| (EUR´000) | 31.03.2023 | 31.12.2022 | 31.03.2022 |
|---|---|---|---|
| Current borrowings | |||
| Current bank loans | 13,896 | 18,735 | 19,206 |
| Current portion of non-current bank loans | 1,903 | 2,630 | 1,191 |
| Current portion of non-current lease liabilities | 560 | 792 | 943 |
| Other current loans | 2,007 | 2,228 | 14 |
| Total current borrowings | 18,366 | 24,385 | 21,354 |
| 31.03.2023 | 31.12.2022 | 31.03.2022 | |
|---|---|---|---|
| Non-current borrowings | |||
| Non-current bank loans | 19,429 | 19,640 | 10,146 |
| Non-current loans | 0 | 109 | 0 |
| Non-current lease liabilities | 983 | 983 | 2,255 |
| Total non-current borrowings | 20,412 | 20,732 | 12,401 |
| Total borrowings | 38,778 | 45,117 | 33,755 |
| Changes in borrowings | 3M 2023 | 12M 2022 | 3M 2022 |
| Loans and borrowings at the beginning of the period | 45,117 | 28,338 | 28,338 |
| Change in overdraft balances | -4,839 | 4,583 | 5,054 |
| Received non-current loans through acquisition of company | 0 | 109 | 0 |
| Received non-current loans | 0 | 13,402 | 1,059 |
| Repayments of non-current loans | -938 | -1,788 | -377 |
| Other received and repaid loans | -330 | 2,214 | 0 |
| New lease liabilities | 0 | 251 | 0 |
| Repayments of non-current lease liabilities | -234 | -1,328 | -324 |
| Impact of exchange rate changes | 2 | -664 | 6 |
| Loans and borrowings at the end of the period | 38,778 | 45,117 | 33,756 |
Note 6 Share capital
| 31.03.2023 | 31.12.2022 | 31.03.2022 | |
|---|---|---|---|
| Share capital (thousand euros) | 11,523 | 11,523 | 11,352 |
| Number of shares (pcs) | 18,289,508 | 18,289,508 | 18,018,555 |
| Book value of a share (euros) | 0.63 | 0.63 | 0.63 |
In 2022, AS Harju Elekter increased the share capital of the company by 170,700 euros by issuing new ordinary shares without nominal values in connection with the exercise of the employee stock option plan. A total of 270,953 ordinary shares were subscribed for at a book value of 0.63 euros per share. Following the share capital increase, the share capital of AS Harju Elekter amounted to 11,523 thousand euros divided into 18.3 million ordinary shares without a nominal value.
Note 7 Segment reporting
In the consolidated financial statements, two main segments are distinguished: Production and Real Estate. Nonsegmented areas of activity are grouped under Other activities, where each area of activity does not have a large enough share to form a separately reported segment. Following the intra-group restructuring that started in 2020, management of the majority of real estate objects has been transferred to separate property management companies. Starting from the accounting year, the Group's management monitors all real estate companies under the real estate sector, including those that manage the Group's production facilities, and which were previously included in the production segment. In the interim report reference period data was adjusted to ensure comparability.
| Production | Real estate | |||||
|---|---|---|---|---|---|---|
| (EUR´000) | 3M 2022 | reclassify -cation |
3M 2022 (corrected) |
3M 2022 | reclassify -cation |
3M 2022 (corrected) |
| Revenue from external customers | 32,746 | 0 | 32,746 | 1,011 | 0 | 1,011 |
| Inter-segment revenue | 253 | 12 | 265 | 437 | 130 | 567 |
| Segment revenue | 32,999 | 12 | 33,011 | 1,447 | 131 | 1,578 |
| Operating profit | -1,516 | -21 | -1,537 | 510 | 21 | 531 |
| Segment assets | 101,645 | -3,539 | 98,106 | 27,114 | 3,538 | 30,652 |
| Liabilities of the segment | 75,262 | -315 | 74,947 | 553 | 5,495 | 6,048 |
| Capital expenditure | 484 | -94 | 390 | 964 | 94 | 1,058 |
| Depreciation and amortization | 632 | -36 | 596 | 242 | 36 | 278 |
Production - manufacturing and sale of electricity distribution and control equipment as well associated activities. This segment includes the Group's companies AS Harju Elekter Elektrotehnika, AS Harju Elekter Teletehnika, Harju Elekter Oy, Harju Elekter UAB and Harju Elekter AB. From 01 Januay 2023, Harju Elekter Kiinteistöt Oy and Harju Elekter Services AB belong to the Real estate segment.
Real estate - real estate development, maintenance and leasing, services related to the maintenance of real estate and production capacity and intermediation of services. Real estate has been identified as a reportable segment because its result and assets are more than 10% of the total result and assets of all segments. This business line includes the parent company and, as of 01.01.2023, also Harju Elekter Kiinteistöt Oy and Harju Elekter Services AB.
Other activities - sales of the products of the Group and its related companies as well as products needed for electrical installation works; management services, project management for installation works and electrical engineering for shipbuilding. Other activities are of less importance to the Group and none of them constitutes a separate segment for reporting purposes. This segment includes the Parent Company and the Group's subsidiaries Energo Veritas OÜ and Telesilta Oy. Other activities are of less importance to the Group and none of them constitutes a separate segment for reporting purposes.
The Group assesses the performance of its operating segments on the basis of revenue and operating profit. Based on the assessment of the Parent company's Management Board, inter-segment transactions are carried out on ordinary market terms that do not differ substantially from the terms agreed in transactions conducted with third parties. Unallocated assets comprise the Parent company's other receivables, prepayments, and other financial investments. Unallocated liabilities consist of the Parent company's (in Estonia) interest-bearing loans and borrowings (exc. borrowings for Real estate), tax liabilities and accrued expenses.
| (EUR´000) | Note | Production | Real Estate |
Other activities |
Elimi nation |
Consoli dated |
|---|---|---|---|---|---|---|
| 3 months 2023 | ||||||
| Revenue from external customers | 42,609 | 1,044 | 1,616 | 0 | 45,269 | |
| Inter-segment revenue | 101 | 1,412 | 0 | -1,513 | ||
| Segment revenue | 42,710 | 2,456 | 1,616 | -1,513 | 45,269 | |
| Operating profit | 788 | 607 | -34 | -52 | 1,309 | |
| Segment assets | 97,565 | 41,207 | 37,162 | -22,281 | 153,653 | |
| Unallocated assets | 23,512 | |||||
| incl. Financial investments | 23,268 | |||||
| incl. Other receivables and prepayments | 244 | |||||
| Total assets | 177,165 | |||||
| Liabilities of the segment | 80,704 | 27,079 | 5,875 | -22,278 | 91,380 | |
| Unallocated liabilities | 5,579 | |||||
| incl. borrowings | 5,131 | |||||
| incl. accrued expenses | 246 | |||||
| incl. other | 202 | |||||
| Total liabilities | 96,959 | |||||
| Capital expenditure Depreciation and amortization |
3,4 3,4 |
236 538 |
322 400 |
67 139 |
0 -4 |
625 1,073 |
| 3 months 2022 | ||||||
| Revenue from external customers | 32,746 | 1,011 | 3,564 | 0 | 37,321 | |
| Inter-segment revenue | 265 | 567 | 89 | -921 | ||
| Segment revenue | 33,011 | 1,578 | 3,653 | -921 | 37,321 | |
| Operating profit | -1,537 | 531 | -196 | 77 | -1,125 | |
| Segment assets | 98,106 | 30,652 | 30,213 | -22,538 | 136,434 | |
| Unallocated assets | 24,077 | |||||
| incl. Financial investments | 23,918 | |||||
| incl. Other receivables and prepayments | 159 | |||||
| Total assets | 160,511 | |||||
| Liabilities of the segment | 74,947 | 6,048 | 8,651 | -22,535 | 67,111 | |
| Unallocated liabilities | 8,135 | |||||
| incl. borrowings | 7,787 | |||||
| incl. accrued expenses | 217 | |||||
| incl. other | 131 | |||||
| Total liabilities | 75,246 | |||||
| Capital expenditure | 3,4 | 390 | 1,058 | 82 | 0 | 1,530 |
| Depreciation and amortization | 3,4 | 596 | 278 | 188 | -5 | 1,057 |
Revenue by geographic regions (customer location)
| (EUR´000) | 3M 2023 | 3M 2022 |
|---|---|---|
| Estonia | 4,956 | 6,904 |
| Finland | 18,635 | 16,696 |
| Sweden | 6,470 | 5,823 |
| Norway | 4,015 | 4,508 |
| Netherlands | 3,888 | 1,538 |
| Other | 7,305 | 1,852 |
| Total revenue | 45,269 | 37,321 |
Revenue by business activities
| (EUR´000) | 3M 2023 | 3M 2022 |
|---|---|---|
| Manufacturing and sale of electrical equipment | 41,293 | 30,752 |
| Retail and project-based sale of electrical products | 456 | 2,914 |
| Other products | 88 | 1,320 |
| Lease income | 809 | 811 |
| Electrical works | 1,625 | 957 |
| Other services | 998 | 567 |
| Total revenue | 45,269 | 37,321 |
Note 8 Basic and diluted earnings per share
Basic earnings per share are calculated by dividing the net profit for the reporting period with the weighted average number of shares issued during the period. Diluted earnings per share are calculated by taking into account the shares that will be potentially issued. As at 31 March 2023, the Group had a total of 494,068 potentially issuable ordinary shares. In accordance with the resolution of the general meeting of shareholders held on 3 May 2018, the issue price of the shares acquired under share option was fixed at the average closing price of the share on the Nasdaq Tallinn Stock Exchange in the preceding three calendar years as at 31 December. The price in the 2018 round was 3.49 euros, in the 2019 round 3.98 euros and in the 2020 round 4.44 euros. From the 2018 and 2019 rounds, 549,628 shares were converted.
The resolution of the general meeting of shareholders held on 29 April 2021 approved the new 2021–2022 share option programme, under which the members of the Management Boards and key personnel of AS Harju Elekter and its subsidiaries are entitled to receive share options. The issue price of the shares to be acquired on the basis of the option is the average of the closing prices of the shares for the calendar years of 2018, 2019, and 2020 on the Nasdaq Tallinn Stock Exchange as of 31 December, i.e., 4.50 euros per share.
As to share-based compensation to which IFRS 2 requirements apply, the subscription price of shares will continue to include the cost of the services provided by employees for the share-based compensation. The value of the service was estimated by an independent expert at 0.55 euros in the 2020 round and 3.55 euros in 2021. Thus, the share subscription prices within the meaning of IFRS 2 are 4.99 euros and 8.05 euros. The potential shares will only become dilutive after their average market price for the period exceeds these values. During the period from 1 January to 31 March 2023, the average market price of the shares was 5.05 (2022 Q1: 6.89) euros.
| Unit | 3M 2023 | 3M 2022 | |
|---|---|---|---|
| Profit attributable to equity holders of the parent company | EUR '000 | 781 | -1,308 |
| Average number of shares outstanding | Pc '000 | 18,290 | 18,019 |
| Basic earnings per share | EUR | 0.04 | -0.07 |
| Adjusted number of shares during the period | Pc '000 | 18,291 | 18,080 |
| Diluted earnings per share | EUR | 0.04 | -0.07 |
Note 9 Information on the statement of cash flows line items
| (EUR´000) | Note | 3M 2023 | 3M 2022 |
|---|---|---|---|
| Corporate income tax | |||
| Income tax expense in the statement of profit or loss | -86 | -89 | |
| Decrease (+)/increase (-) in prepayment and decrease (-)/increase (+) in liability | -237 | -34 | |
| Deferred income tax expense/income | 5 | -87 | |
| Impact of exchange rate changes | 1 | 0 | |
| Corporate income tax paid | -317 | -210 | |
| Paid for investment properties | |||
| Acquisitions of investment properties | 3 | -278 | -964 |
| Liability decrease (-)/ increase (+) incurred by the acquisitions | 163 | 238 | |
| Paid for investment properties | -115 | -726 | |
| Paid for property, plant and equipment | |||
| Acquisitions of property, plant and equipment | 4 | -258 | -391 |
| Liability decrease (-)/ increase (+) incurred by the acquisitions | -6 | 73 | |
| Impact of exchange rate changes | -1 | 0 | |
| Paid for property, plant and equipment | -265 | -318 |
Note 10 Transactions with related parties
The related parties of AS Harju Elekter are Members of the Management Board and the Supervisory Board of the Group, their close associates, and companies significantly influenced or controlled by the aforementioned persons. Also AS Harju KEK which owns 30.44% of the shares of AS Harju Elekter. The Group's management comprises members of the Parent company's Supervisory and Management Boards. During the reporting period, the Group has made transactions with related parties as follows:
| (EUR´000) | 31.03.2022 | 31.12.2022 | 31.03.2022 |
|---|---|---|---|
| Balances with related parties: | |||
| - Payables for goods and services | 137 | 106 | 223 |
| - Payables to Management and Supervisory Boards | 78 | 66 | 92 |
| 3M 2023 | 12M 2022 | 3M 2022 | |
| Purchase of goods and services from related parties: | |||
| - Other services, Lease of property, plant from AS Harju KEK | 21 | 68 | 21 |
| - Other services from AS Entek | 372 | 731 | 314 |
| Sale of goods and services to related parties: | |||
| - Other services to AS Harju KEK | 2 | 2 | 2 |
| - Sale of goods and services to AS Entek | 2 | 2 | 0 |
| Remuneration of the Management and Supervisory Boards: | |||
| - Salary, bonuses, additional other remuneration (incl. severance pay) |
135 | 446 | 124 |
| - Social security tax | 45 | 147 | 41 |
The members of the Management Board receive remuneration in accordance with the contract and are also entitled to receive a severance payment: up to 8 months of the remuneration of the Member of the Management Board. Members of the Management Board have no rights related to pension. During the reporting period, no other transactions were made with members of the Group's directing bodies and the persons connected with them.
Share-based payments
In June 2019, 94 option agreements were concluded with the Group's employees and members of the Company's management bodies on subscription rights for a total of 339,100 shares, and each of the members of the Supervisory and Management Boards of the Company were issued an option for subscribing to 8,000 shares, comprising 64,000 shares in total. During the financial year, options granted in June 2019 were exercised. The subscription period for the shares was 15 July 2022. A total of 75 current and former employees of Harju Elekter participated in the share issue related to the exercise of the stock option program, subscribing for a total of 270,953 shares for 1,078,392.94 euros. A total of 26,247 shares were not subscribed.
In June 2020, an additional 66 option agreements were concluded with the Group's employees and members of the Company's management bodies on subscription rights for a total of 347,468 shares. As at the reporting date, 35,750 subscription rights have been cancelled. The members of the Supervisory and Management Boards of the Company were issued an option for subscribing to 10,000 shares, comprising 60,000 shares in total.
In June 2021, ten more option agreements were concluded with the members of the management board of the Group company on subscription rights for a total of 100,000 shares. In December of 2021, an additional twelve option agreements were entered into with the Group's employees and members of the company's management bodies, for a total of another 35,750 shares.
As at the reporting date, the total number of potential ordinary shares to be issued was 494,068 (31.03.2022: 762,968). During the reporting period, share-based payments recognized as labour costs totalled 52 (2022 Q1: 63) thousand euros, of which the share of the members of the Management and Supervisory Boards was 12 (2022 Q1: 11) thousand euros. The pricing of the option is disclosed in Note 8.
THE MANAGEMENT BOARD DECLARATION FOR THE UNAUDITED FINANCIAL STATEMENTS
The Management Board acknowledges its responsibility for the preparation, integrity and fair presentation of the consolidated interim financial statements for the first quarter and three month of 2023 as set out on pages 13 to 23 and confirms that to the best of its knowledge, information and belief that:
- the management report presents true and fair view of significant events that took place during the accounting period and their impact to financial statements; and includes the description of major risks and doubts for the Parent company and consolidated companies as a Group; and reflects significant transactions with related parties;
- the accounting principles and presentation of information used in preparing the interim financial statements are in compliance with the International Financial Reporting Standards as adopted by the European Union;
- the interim financial statements give a true and fair view of the assets, liabilities, financial position of the Group and of the results of its operations and its cash flows; and
- AS Harju Elekter and its subsidiaries are going concerns.
| Tiit Atso | Chairman of the Management Board | 25 April 2023 |
|---|---|---|
| Priit Treial | Member of the Management Board | 25 April 2023 |
| Aron Kuhi-Thalfeldt | Member of the Management Board | 25 April 2023 |