Harju Elekter

Earnings Release • Oct 28, 2020

Company	AS Harju Elekter Group
Type	Company Release
Category	Other price sensitive information
Disclosure time	28 Oct 2020 08:10:00 +0200
Attachments:	- Vahear.III kv_2020-EST.pdf (http://oam.fi.ee/en/download?id=4920) - HE_Interim_Report_3Q_2020-ENG.pdf (http://oam.fi.ee/en/download?id=4922)
Currency	EUR - Euro
Title	Harju Elekter Group financial results, 1-9/2020
	Revenue, Expenses, and Profit
	Q3 and the nine-month period were still successful for Harju Elekter Group despite the prevailing global recession – the Group continued with the targeted improvement of its profitability. The measures taken helped to keep people healthy and maintain the normal level of production in all factories.
EUR'000	-------------------------------------------------------------------------------- --------------------------------------------------------------------------------	Q3 2020	Q3 2019	+/- Q/Q	9m 2020	9m 2019	+/- 9m/9m
Revenue Gross profit EBITDA Operating profit (EBIT) Profit for the period the parent company Earnings per share (EPS) (euros)	Incl. attributable to owners of	37,360 5,234 2,913 2,002 1,694 1,691 0.10	42,262 5,375 2,446 1,561 1,319 1,359 0.08	-11.6% -2.6% 19.1% 28.3% 28.4% 24.4% 24.4%	111,372 15,625 7,939 5,211 4,369 4,398 0.25	112,150 14,249 5,679 3,064 2,313 2,384 0.13	-0.7% 9.7% 39.8% 70.1% 88.9% 84.5% 84.5%
	--------------------------------------------------------------------------------

The consolidated revenue of the Group in Q3 of 2020 remained somewhat lower compared to the record volumes of the year before, while over the years still being a good result. The consolidated unaudited revenue for the reporting quarter was 37.4 (Q3 2019: 42.3) million euros and the consolidated revenue for the nine months was 111.4 (9m 2019: 112.2) million euros.

Operating expenses for the reporting quarter have decreased in all expense groups - a total of 5.2 million euros. Compared to Q3 2019, distribution costs

decreased by 24.1%, by 0.4 million to 1.2 million euros, because the coronavirus (COVID-19) is spreading around the world, most sales work was done virtually. The largest change compared to Q3 of 2019 was in cost of sales – a decrease of 4.8 million euros. Administrative expenses decreased by 3.1% to 2.2 million euros, compared to Q3 of 2019. Labour costs remained at the same level, being 6.6 million euros in year-on-year comparison.

The consolidated gross profit for the reporting quarter and for the nine months was 5,234 (Q3 2019: 5,375) and 15,625 (9m 2019: 14,249) thousand euros, respectively, and the gross margin for both periods was 14.0% (Q3 and 9m 2019: 12.7%). Consolidated operating profit (EBIT) was 2,002 (Q3 2019: 1,561) thousand euros and in the nine months 5,211 (9m 2019: 3,064) thousand euros. The operating margin increased by 1.7 percentage points to 5.4% in the reporting quarter and by 2.0 percentage points to 4.7% in nine months.

The consolidated net profit for the reporting quarter was 1,694 (Q3 2019: 1,319) thousand euros, and earnings per share were 0.10 (Q3 2019: 0.08) euros. Net profit for the nine months increased by 88.9% compared to the comparable period, reaching 4,369 (9m 2019: 2,313) thousand euros. Nine-month earnings per share were 0.25 (9m 2019: 0.13) euros.

Core Business and Markets

Harju Elekter's core business, production, accounted for 86% of the Group's consolidated revenue both in the reporting quarter and in nine months. The Group's three largest target markets are Estonia, Finland, and Sweden. Quarterly sales to the Estonian market increased by 3.0 million euros to 7.7 million euros in a year-on-year comparison and by 3.8 million euros to 17.0 million euros in a nine-month comparison. The main reason behind the sales growth was that deliveries under the framework procurement of Elektrilevi OÜ mostly remained in the third quarter.

Quarterly sales to the Finnish market decreased by 2.2 million euros to 16.5 million euros in a year-on-year comparison and it was mostly affected by the decrease in orders. The decline in orders in the last quarter also affected the 9-month result, where revenue to the Finnish market decreased by 2.1 million euros to 54.9 million euros.

Quarterly sales to the Swedish market increased by 1.2 million euros to 6.6 million euros in the year-on-year comparison. The Swedish market's revenue increased by 2.7 million euros to 17.5 million euros in a nine-month comparison, being the second largest market overall. The growth in the Swedish market was secured by an increase in the sale of substations, manufactured in Estonia, to the Swedish market as well as the general increase in orders.

Investments

In the reporting period, the Group invested a total of 4.1 (9m 2019: 4.4) million euros in non-current assets, incl. 2.1 (9m 2019: 0.7) million euros in

investment properties, 1.8 (9m 2019: 3.4) million euros in property, plant and equipment and 0.2 (9m 2019: 0.3) million euros in intangible assets.

The largest development project in Q3 was the start of the construction of the fourth stage of the expansion of the production and office building in Lithuania. Investments aimed at the expansion of the plant will enable Harju Elekter UAB to double the plant's revenues. In addition, investments were made in the construction of a production facility in the Allika Industrial Park, and plots of land were purchased.

Share

The company's shares closed at 4.44 euros on the last trading day of the reporting quarter on the Nasdaq Tallinn stock exchange. As at 30 September 2020, AS Harju Elekter has 4,831 shareholders. The number of shareholders has increased by 261 over the reporting quarter.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited

30 31
September December
2020 2019
Currents assets
Cash and cash equivalents 3,367 4,878
Trade and other receivables 26,464 22,958
Prepayments 1,048 1,166
Inventories 21,213 19,010
-------------------------------------------------------------------------------- Total current assets 52,092 48,012
-------------------------------------------------------------------------------- Non-current assets
Deferred income tax assets 513 472
Non-current financial investments 8,146 10,494
Investment properties 22,758 21,259
Property, plant, and equipment 20,330 20,402
Intangible assets 7,200 7,260
-------------------------------------------------------------------------------- Total non-current assets 58,947 59,887
-------------------------------------------------------------------------------- TOTAL ASSETS 111,039 107,899 --------------------------------------------------------------------------------

LIABILITIES AND EQUITY

-------------------------------------------------------------------------------- Liabilities
Borrowings	8,871	11,305
Prepayments from customers	3,947	2,212
Trade and other payables	19,264	16,448
Tax liabilities	2,555	2,959
Current provisions	35	34
-------------------------------------------------------------------------------- Total current liabilities	34,672	32,958
-------------------------------------------------------------------------------- Borrowings	7,901	7,901
Other non-current liabilities	95	64
-------------------------------------------------------------------------------- Total non-current liabilities	7,996	7,965
-------------------------------------------------------------------------------- TOTAL LIABILITIES	42,668	40,923
-------------------------------------------------------------------------------- Equity
Share capital	11,176	11,176
Share premium	804	804
Reserves	2,842	3,412
Retained earnings	53,693	51,699
Total equity attributable to the owners of the parent company	68,515	67,091
Non-controlling interests	-144	-115
-------------------------------------------------------------------------------- Total equity	68,371	66,976
-------------------------------------------------------------------------------- TOTAL LIABILITIES AND EQUITY	111,039	107,899
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENT OF PROFIT AND LOSS Unaudited

----------------------------------------------------------------------------- Q3 2020	Q3 2019	9m 2020	9m 2019
		111,372 -95,747 15,625 -3,639	112,150 -97,901 14,249 -4,198
		494 -150	-6,929 171 -229
		37,360 -32,126 5,234 -1,150 -2,225 167 -24	----------------------------------------------------------------------------- 42,262 -36,887 5,375 -1,516 -2,296 -7,119 39 -41 -----------------------------------------------------------------------------

Operating profit -----------------------------------------------------------------------------	2,002	1,561	5,211	3,064
Finance income Finance costs -----------------------------------------------------------------------------	8 -122	25 -77	116 -269	147 -179
Profit before tax -----------------------------------------------------------------------------	1,888	1,509	5,058	3,032
Income tax -----------------------------------------------------------------------------	-194	-190	-689	-719
Profit for the period -----------------------------------------------------------------------------	1,694	1,319	4,369	2,313
Profit attributable to: Owners of the parent company Non-controlling interests Earnings per share Basic earnings per share (EUR) Diluted earnings per share (EUR) -----------------------------------------------------------------------------	1,691 3 0.10 0.10	1,359 -40 0.08 0.08	4,398 -29 0.25 0.25	2,384 -71 0.13 0.13

Tiit Atso Chairman of the Management Board +372 674 7400