Market announcement

Title

Financial results, 1-3/2015

Message

In Q1 2015, AS Harju Elekter was affected by normal seasonality. Finnkumu Oy was consolidated and added to the Group's results; although, compared to last year, the profit from AS Draka Keila Cables was no longer consolidated. A decline in the Estonian segment was mostly due to the non-performance of the contractual order volume by Eesti Energia.

                                              January - March Year 
                                                 2015   2014  2014 
Revenue (EUR’000)                              10,945  9,661 50,606 
Gross profit (EUR’000)                          1,698  1,701  9,081 
EBITDA (EUR’000)                                  388     441 3,741 
EBIT (EUR’000)                                     29      56 2,228 
Profit for the period (EUR’000)                    10     371 9,778 
incl attributed to Owners of the Company           16     391 9,697 

In the accounting quarter, the Group’s consolidated revenue was 10.9 million euros, which was 13.3% compared to the reference period. 90% of sales income was earned from the Production segment, and Real Estate together with other areas of activity contributed 10% of the consolidated sales volume.

There has been a growth in sales revenue among almost all products and services. More than 91% of sales revenue originated from the sale of electrical equipment, having increased 14% in the reporting quarter. 72% of the Group’s products and services were sold in foreign markets, outside Estonia (Q1 2014: 64%). Finland is the biggest market of the Group. In the reporting quarter, 56% of the Group’s products and services were sold in Finland (Q1 2014: 45%). The sales volume of Estonian segment has decreased by 11.2%.

In the reporting quarter, the operating expenses increased by 14.3%. Since the cost of sales increased at a pace that exceeded the sales revenue, the gross profit margin decreased by 2.1 percentage points in comparison to the indicator for the comparable period. Because of the Group's Estonian and Finnish subsidiaries participation in Tampere energy fair, the distribution costs increased by 33,000 euros to 684,000 euros, the rate of distribution costs to revenue accounted for 6.2% (Q1 2014: 6.7%) in the reporting quarter. Administrative expenses were 49,000 euros higher than the indicator for the comparable period, and the rate of administrative expenses to revenue accounted for 9.4%, having decreased by 0.7 percentage points.

In Q1 2015, the average 467 people worked in the Group ? on the average by 27 persons more than in the reference period. In the first quarter, employee wages and salaries totalled 2,388 (Q1 2014: 2,170) thousand euros. The average wages per employee per month amounted 1,705 (Q1 2014: 1,645) euros. The labour and salary costs increased by 9.7% up to 3.1 million euros in Q1 2015 and the rate of labour costs decreased to 28.2%, from 29.1% in Q1 2014.

In the first quarter the gross profit of the Group was 1.7 (Q1 2014: 1.7) million euros. The gross profit margin was 15.5% (Q1 2014: 17.6%). The Group’s operating profit of Q1 2015 was 29 (Q1 2014:56) thousand euros and EBITDA 388 (Q1 2014: 441) thousand euros. Return of sales for the accounting quarter was 0.3% (Q1 2014: 0.6%) and return of sales before depreciation 3.5% (Q1 2014: 4.6%). In Q1 2014, the Group consolidated from the associated company a profit of 324,000 euros. The Group sold the associated company in 2014. The consolidated profit of AS Draka Keila Cables contributed 87% of the Group’s net profit for Q1 2014.

Overall, the consolidated net profit of the Q1 2015 was 10 (Q1 2014: 371) thousand euros, of which the share of the owners of the Company was 16 (Q1 2013: 391) thousand euros.

During 3 months, the amount of the consolidated balance sheet increased by 5.3 million euros and compered to the period under review increased by 4.2 million euros up to 75.0 million euros, as of 31 March 2015.

During the 3-months period, the Group’s investments to non-current assets totalled 1.04 (Q1 2014: 0.40) million euros.

Subsequent events:
The general meeting of shareholders of PKC Group Oyj, held on 1 April 2015, decided to pay dividends amounting to 0.70 euros per share. Dividends were transferred to the bank accounts of shareholders on 14 April 2015. AS Harju Elekter owns 1,094,641 of PKC Group Oyj shares. The net dividend income of 651,000 euros is reflected in the profit and cash flow from investment activity for Q2 of 2015.

The Management Board of AS Harju Elekter sent out invitations to its shareholders on convening an annual general meeting of shareholders in the Keila Kultuurikeskus, on 14 May 2015. The Board will propose to the AGM to pay a dividend of 0.15 (2013: 0.10) euros per share for the year 2014, totalling 2.61 (2013: 1.74) million euros.

On 23 April 2015, AS Harju Elekter signed a contract for the purchase of all shares in Lithuanian subsidiary UAB Rifas. In the transaction, AS Harju Elekter acquired a holding of 37% in their subsidiary UAB Rifas, in addition to the previously acquired 63%, and in doing so became the sole owner of the company. Acquiring all of the shares of UAB Rifas was a strategic move by the Group, helping to secure their position in Lithuania and on export markets.

Andres Allikmäe
Managing director/ CEO
+372 674 7400

For more information: Internal report 1-3/2015

AS HARJU ELEKTER     
BALANCE SHEET, 31.03.2015     
Consolidated, unaudited     
      
Group     
EUR'000     
ASSETS                                                   31.03.15 31.12.14 
Cash and cash equivalents 8 292 9 984 
Available-for-sale financial assets 0 35 
Trade receivables and other receivables 6 847 6 484 
Prepayments 842 455 
Prepaid income tax 99 79 
Inventories 10 274 8 104 
TOTAL CURRENT ASSETS                     26 354 25 141 
Other long-term financial investments 22 505 19 145 
Investment property 12 364 12 109 
Property, plant and equipment 8 390 7 968 
Intangible assets 5 429 5 429 
Total non-current assets 48 688 44 651 
TOTAL ASSETS                              75 042 69 792 
LIABILITIES AND OWNERS' EQUITY              
Interest-bearing loans and borrowings 205 278 
Trade payables and other payables 8 935 6 989 
Tax liabilities   1 080 1 072 
Income tax liabilities 12 12 
Short-term provision 20 39 
TOTAL CURRENT LIABILITIES                 10 252 8 390 
NON-CURRENT LIABILITIES             1 560 1 560 
TOTAL LIABILITIES                         11 812 9 950 
Share capital                             12 180 12 180 
Share premium 240 240 
Restricted reserves                       22 754 19 393 
Retained earnings                         26 698 26 664 
TOTAL OWNERS' EQUITY                       61 872 58 477 
Non-controlling interests 1 358 1 365 
TOTAL EQUITY                       63 230 59 842 
TOT.LIABILIT.AND OWNERS' EQUITY      75 042 69 792 
      
      
INCOME STATEMENT,  1-3/2015     
Consolidated,unaudited     
      
EUR’000     
GROUP    Q1 2015    Q1 2014 
      
NET SALES 10 945 9 661 
Cost of goods sold -9 247 -7 960 
Gross profit 1 698 1 701 
Marketing expenses -684 -651 
Administrative expenses -1 025 -976 
Other revenue 54 9 
Other expenses -14 -27 
Operating profit 29 56 
Finance income 14 17 
Finance costs -7 -8 
Income from subsidiaries 0 324 
Profit from normal operations 36 389 
Corporate Income tax -26 -18 
Profit for the period, attributable to 10 371 
   owners of the Company 16 391 
   non-controlling interest -6 -20 
Basic earnings per share  (EUR) 0,00 0,02 
Diluted earnings per share  (EUR) 0,00 0,02