Today, on 6 September, AS Harju Elekter’s subsidiary AS Harju Elekter Teletehnika festively opened a fully automated sheet metal processing line in the new section of its factory. The activation of the robotised production line, supplied by Finnish company Finn-Power Oy, increases the factory’s capacity to flexibly produce both small and large batches in a single stream, exponentially increasing the factory’s productivity and bringing manufacturing within the Group to the smart factory i.e. Industry 4.0 level. The need to increase the production volume of sheet metal components was made necessary by the efficient fulfilment of the increased number of orders to the Group’s undertakings, as well as clients outside of the Group.

Within the framework of the technological upgrades, a hi-tech bending machine was also acquired from the company AMADA, along with a fully automatic mounting press for pressed accessories from the company Haeger, which was integrated with the FMS automated sheet metal processing line. In addition, a 2300 m² section of the production hall was renovated, during the course of which the subsidiary’s production space increased to nearly 9000 m². The total cost of the investments was 3 million euros.

The main activities of AS Harju Elekter Teletehnika include a range of customer-based sheet metal products and semi-manufactured articles are produced for the electrical engineering and energy sectors as well as for the telecom sector. In addition, subcontracting works are carried out and services rendered in the area of sheet metal processing and finishing. In 2017, the sales revenue of Harju Elekter Teletehnika amounted to 5.1 million euros, and the share of export in sales revenue amounted to 26%. The company employs 91 people.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a well-known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The core business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland, Sweden and Lithuania employ nearly 750 specialists, and 6 months sales revenue of the Group was 59,8 million euros. Shares of Harju Elekter are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Board/CEO
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

In Q2, many orders that were delayed in Q1 continued to be performed. Production and sales for Estonian, Finnish and Lithuanian enterprises began swiftly and sales revenue has increased in this area significantly. Primarily, sales of substations to Finland increased. H1 as well Q2 began much more modestly for Swedish companies, in the case of which the execution of the new substations contract only began at the end of Q2 and new large orders were also received at the end of the reporting quarter. In H1, preparation and development costs continued to increase in order to execute the Swedish and Finnish procurement contracts that had already been won and to integrate newly acquired businesses.

The Group’s consolidated revenue increased by 34.9% to 33.9 million euros in the reporting quarter. The consolidated sales revenue of the half-year increased by 40.4% and reached 59.8 million euros compared to the reference period. The boost in sales volumes was due to the increase in order volumes and the acquisition of new business combinations in the second half of 2017 and in January 2018.

During the reporting quarter 81.5% (Q2 2017: 89.3%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 18.5% (Q2 2017: 10.7%) of the consolidated sales revenue. In H1, the Manufacturing segment contributed 80.5% (H1 2017: 90.4%) of the consolidated sales revenue. The sales revenue of the Real Estate segment increased by 0.2 million euros to 0.6 million euros in Q2 and by 0.3 million euros to 1.2 million euros in H1, compared to the reference period. The increase in the sales revenue in the Real Estate segment compared to the previous period is related to a long-term major tenant leaving the Group’s rental space at the beginning of 2017, which reduced the sales revenue of the reference period. The new production and storage buildings completed in the Allika industrial park in autumn 2017 and rented out to AS Stera Technologies AS and the Laohotell that was taken into use at the beginning of the current year have halted the decrease in the sales revenue of the Real Estate segment and increased the rental income of this year. The sales revenue of Unallocated activities has increased by 3.4 million euros to 5.7 million euros in the quarterly comparison, and in first 6 months by 7.3 million euros up to 10.4 million euros.  Electrical installation work, which was added to the Group since second half of 2017, contributed over 90% of the segment’s sales revenue.

The sales revenue increased by 8.7 million euros in Q2 and by 17.2 million euros in half-year comparison, of which 5.9 million euros in the reporting quarter and 10.7 million euros in H1 came from the increase in sales of electrical equipment. Important part of the 27.5% growth of the electrical equipment sales came from the purchase of a Swedish subsidiaries.

In Q2 2018, the Group’s sales revenue earned outside Estonia accounted for 89.5% (Q2 2017: 80.8%) increasing by 10.0 million to 30.3 million euros and in the first half of the year for 89.4% (H1 2017: 79.4%) increasing by 19.6 million to 53.5 million euros.

The Group’s largest market is Finland. Both, in the reporting quarter and in the first half of the year, 70.0% of the Group’s products and services were sold on the Finnish market (68.3% and 67.6% respectively in 2017). In the quarterly comparison, sale to the Finnish market has grown by 6.5 million euros to 23.7 million euros and in the first 6 months by 44.6% i.e. 12.8 million euros up to 41.7 million euros. Half of the growth in the reporting quarter sales revenue came from the Finnish subsidiary Telesilta Oy, acquired in June 2017, but also large-scale contracts concluded with Finnish grid companies in the years 2016-2017 were behind the growth.

In Q2 2018, the sales to Swedish market has fourfold in quarterly comparison and increased to 3.0 million euros. In H1, sales to Sweden have increased by 3.4 million euros to 5.0 million euros, accounting for 8.3% (H1 2017: 3.7%) of the total sales revenue. The growth came from Group’s and Group’s subsidiaries purposeful work to increase market share in Sweden and combining new companies to the Group. AS Harju Elekter Elektrotehnika participation in several tenders resulted a 3-year frame agreement to deliver substations to E.ON Energidistribution AB. The deliveries of substation will start in Q3.

While comparing the quarters, sales to the Norwegian market decreased by 0.4 million euros but increased in the half-year comparison by 1.0 million euros to 3.3 million euros and stayed at 5.5% of the consolidated sales revenue. As the sale of the Group’s Lithuanian subsidiary has been directed towards other European countries, the Lithuanian market continues to decline.

Due to the low level of investment in the energy distribution sector, sales to the Estonian market in the second quarter decreased by 26.3% to 3.5 million euros and accounted for 10.5% of the consolidated sales revenue of the reporting quarter. In H1, sales to the Estonian market decreased by 27.4% i.e. 2.4 million euros to 6.4 million euros and accounted for 10.7% of the consolidated sales revenue of H1 2018.

Sales from other markets were majority earned from Austria, Denmark and the Netherlands, where 1.7 million, 0.7 million and 0.5 million euros were earned respectively.

Operating expenses increased by 38.1% i.e. 9.0 million euros in the second quarter and 44.3% i.e. 17.9 million euros in a half-year compared to the reference periods. The main reason for the upsurge in costs was the increase in the cost of sales:  by 7.8 million euros in Q2 2018 and by 15.5 million euros in H1 compared to the reference periods, exceeding the growth rate of sales revenue, while decreasing the gross profit margin by 1.0 percentage point and 1.6 percentage point respectively, compared to the reference periods. The labour costs of the reported period have increased due to the need to hire new employees to the Group because of increased production volumes as well as the wage pressure. Moreover, the number of employees in Group’s subsidiaries in Finland and Sweden has also increased, with the wage level being significantly higher than in the Group’s other enterprises. Labour costs increased by 52.0% up to 6.5 million euros in Q2 and by 52.7% up to 12.2 million euros in H1. The rate of labour costs accounted for 19.3% (Q2 2017: 17.2%) of the reporting quarter and for 20.4% (H1 2017: 18.7%) of the first 6-months period sales revenue. The Group’s distribution costs increased by 0.4 million euros to 1.4 million euros in Q2 and by 0.8 million euros to 2.6 million euros in H1. The rate of distribution costs accounted for 4.2% (Q2 2017: 4.1%) of the sales revenue in the reporting quarter and stood stable in 4.3 % in H1, compared to the reference periods.

The Group has incurred expenditures on the preparation of new procurements and completing the acquisition of new subsidiaries in 2018. Besides that, the exponential rise in the volume of specific orders has brought with it the need to hire additional specialists. The higher salary levels of the top managers of the new subsidiaries in Sweden and Finland also affected the costs. All this has increased administrative expenses by 0.9 million euros in Q2 and has grown the rate of administrative expenses to revenue to 6.5% (Q2 2017: 5.3%). In H1, administrative expenses amounted 4.1 million euros increasing by 1.6 million euros and the rate of administrative expenses to revenue was 6.9% (H1 2017: 5.9%). The growth in administrative expenses is mainly due to the increase in development costs.

In Q2 2018, an average of 713 employees worked in the Group, which was 171 people more than in the comparable period. In H1 2018, an average of 696 employees worked in the Group, which was 180 people more than in the reference period. At the end of the reporting period, there were 752 people working in the Group, which was 170 persons more than a year earlier. From the beginning of the year, the number of employees increased by 122 people, incl. 53 people in Q2. With the acquisition of SEBAB AB and Grytek AB, 45 employees were added to the Group and 7 more in Q2. In the reporting quarter, 4,906 (Q2 2017: 3,308) thousand euros and 9,281 (H1 2017: 5,925) thousand euros during the first 6 months were paid to the employees as salaries and fees. In H1, the average monthly salary per employee of the Group was 2,221 euros, an average increase of 307 euros compared to the reference period.

In the reporting quarter, the gross profit of the Group was 4,802 (Q2 2017: 3,805) thousand euros and the gross profit margin was 14.2% (Q2 2017: 15.2%). In H1, the consolidated gross profit was 8,146 (H1 2017: 6,476) thousand euros and the gross profit margin was 13.6% (H1 2017: 15.2%). The decline in profitability was caused by the raw material price as well as the significant increase in sales volume in the Swedish market, where margins are lower. According to the London stock exchange the customs tariffs change initiated by the US has brought all metal ore, except for aluminium, into decline. The price change could be reflected in Q3-4.

In Q2, the Group’s operating profit was 1,166 (Q2 2017: 1,455) thousand euros and EBITDA 1,797 (Q2 2017: 1,844) thousand euros. Return of sales for the reporting quarter was 3.4% (Q2 2017: 5.8%) and return of sales before depreciation 5.3% (Q2 2017: 7.3%). In H1, the Group’s operating profit was 1,398 (H1 2017: 2,123) thousand euros and EBITDA 2,647 (H1 2017: 2,894) thousand euros. Return of sales for the first half of the year was 2.3% (H1 2017: 5.0%) and return of sales before depreciation 4.4% (H1 2017: 6.8%). Integrating newly acquired businesses has increased distribution and development costs. Preparations for new and already won procurements continue, leading to higher development costs, and due to hiring new specialists, increase labour costs. The profitability was also affected by one-off expenses due to the move of AS Harju Elekter Teletehnika into new premises.

The profit before taxes for the reporting quarter was 1,497 (Q2 2017: 1,448) thousand euros. The calculated income tax expense of last three months was 459 (Q2 2017: 425) thousand euros. In Q2, the consolidated net profit was 1,038 (Q2 2017: 1,023) thousand euros, of which the share of the owners of the Company was 1,048 (Q2 2017: 982) thousand euros. EPS in the Q2 2018 was 0.06 euros (Q2 2017: 0.06 euros).

In H1, the profit before taxes was 1,726 (H1 2017: 26,953) thousand euros and the calculated income tax expense was 586 (H1 2017: 564) thousand euros. All in all, the consolidated net profit in H1 was 1,140 (H1 2017: 26,389) thousand euros, of which the share of the owners of the Company was 1,180 (H1 2017: 26,356) thousand euros. EPS in the H1 2018 was 0.07 euros (H1 2017: 1.49 euros). The consolidated net profit without extraordinary income of the H1 2017 (the result of one-time financial income from the sale of the PKC Group Oyj shares in amount of 24,839 thousand euros) was 1,550 thousand euros.

In H1 2018, the Group has made a total of 4.6 (H1 2017: 4.5) million euros worth of investments to fixed assets, incl. acquisitions through business combinations amounted to 1.0 (H1 2017: 0.7) million euros and the ongoing developments in Allika Industrial Park in amount of 1.0 (H1 2017: 2.9) million euros.

During H1 2018, Harju Elekter’s share in Nasdaq Tallinn increased by 3.2% from 5.00 euros up to 5.16 euros.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-6/2018

Tiit Atso
CFO
+372 674 7400

Interim report 1-6/2018

The Group’s consolidated revenue increased by 48.3% to 26.0 million euros in the reporting quarter. The increase in sales revenue was supported by the acquisition of new business combinations in the second half of 2017. Q1 2018 profitability of the Group were below the initial expectations as a result of several combined impacts. In addition to the regular seasonality, the profitability of the quarter was influenced by postponed installation of works of many clients due to the cold winter months, resulting in a large quantity of production into the warehouse. In Q1, the heating and electricity costs also increased notably; in addition, several preparations and development works were undertaken to perform the new procurement contracts of Sweden and Finland. At the same time, positive trends in the market and high volume of order book is promising, looking at the upcoming quarters.

During the reporting quarter 79.2% (Q1 2017: 91.9%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 20.8% (Q1 2017: 8.1%) of the consolidated sales volume. In August 2017, AS Stera Saue opened new production hall and warehouses in the Allika Industrial Park owned by AS Harju Elekter, which has increased sales revenue from the Real Estate Segment for the comparable period. The sales revenue of Unallocated activities has increased by 3.9 million euros to 4.8 million euros in the quarterly comparison, of which electrical installation work comprised 71.3% (Telesilta Oy acquired in June 2017).

Sales revenue increased for the comparable period for all products and services. The biggest contribution to the 8.5 million growth came from greater sales volumes of electrical equipment within 52.6% and new electrical installation works within 40.2%, added to the services of the Group in 2017. Sales of electrical equipment increased by 4.5 million euros to 19.8 million euros in comparison with the quarter.

The Group’s sales revenue earned outside Estonia accounted for 89.1% in Q1 2018 (Q1 2017: 77.4%) increasing by 9.6 million to 23.2 million euros.

The Group’s largest market is Finland. Compared to the reference period, sale to the Finnish market has grown by 54.1% or 6.3 million euros to 18.0 million euros. The main reason for the growth was the contracts concluded with Finnish grid companies at the end of the years 2016 and 2017. Telesilta Oy, acquired in June 2017, also made a significant contribution to the growth of the Finnish market. In the reporting quarter, 69.1% of the Group’s products and services (Q1 2017: 66.5%) were sold on the Finnish market.

Compared to Q1 2017, the sales revenue to Swedish market has doubled, to 2.0 million euros. The growth came from Group’s and AS Harju Elekter Elektrotehnika purposeful work to increase market share in Sweden and combining new companies to the Group. AS Harju Elekter Elektrotehnika participation in several tenders resulted a 3-year frame agreement to deliver substations to E.ON Energidistribution AB. The deliveries of substation will start in Q2.

In the reporting quarter, the Lithuanian subsidiary Rifas UAB continued to increase its order volumes from Norway. Compared to Q1 2017, deliveries to the Norwegian market increased threefold to 2.0 million euros, accounting for 8.0% of consolidated sales revenue (Q1 2017: 4.0%).

Sales from other markets were majority earned from Austria, Denmark and the Netherlands.

Due to the low level of investment in the energy distribution sector, sales to the Estonian market in the first quarter decreased by 28.8% to 2.8 million euros and accounted for 10.9% of the consolidated sales revenue of the reporting quarter.

Operating expenses increased by 52.9%, i.e. 8.9 million euros in the reporting quarter compared to the reference period. The main reason for the upsurge in costs was the increase in the cost of sales by 7.8 million euros in Q1 2018 compared to Q1 2017, exceeding the growth rate of sales revenue, while at the same time decreasing the gross profit margin by 2.3 percentage point compared to the reference period. Labour costs increased by 53.5% up to 5.6 million euros. The rate of labour costs accounted for 21.7% of the reporting quarter sales revenue, decreasing by 0.7 percentage points for the comparable period. The Group’s distribution costs increased by 45.9% and the rate of distribution costs accounted for 4.5% of the sales revenue in the reporting quarter (Q1 2017: 4.5%). Administrative expenses increased by 0.7 million euros in the reporting quarter. The Group has incurred expenditures on the preparation of new procurements and completing the acquisition of new subsidiaries in 2018. Besides that, the exponential rise in the volume of specific orders has brought with it the need to hire additional specialists. All this has grown the rate of administrative expenses to revenue to 7.4% in Q1 2018 (Q1 2017: 6.7%). The growth in administrative expenses is mainly due to the increase in development costs.

In Q1 2018, an average of 679 employees worked in the Group, which was 189 people more than in the comparable period. At the end of the reporting period, there were 699 people working in the Group, which was 182 persons more than a year earlier. Including with the acquisition of SEBAB AB and Grytek AB, 45 employees were added to the Group. In the reporting quarter, 4,375 (Q1 2017: 2,616) thousand euros were paid to the employees as salaries and fees. The growth of salary cost was due to hiring new employees related to the significant increase in production volumes and the acquisition of new Swedish subsidiaries. In the reporting quarter, the average monthly salary per employee of the Group was 2,147 euros, an average increase of 367 euros.

In the reporting quarter, the gross profit of the Group was 3,344 (Q1 2017: 2,670) thousand euros. The gross profit margin was 12.9% (Q1 2017: 15.2%). The decline in profitability was caused by wage pressure of employees due to overall economic health and in the comparison of quarters, the price of raw material, above all sheet metal, has increased, which also raised the level of cost of sales.

In the reporting quarter, the Group’s operating profit was 231 (Q1 2017: 668) thousand euros and EBITDA 849 (Q1 2017: 1,050) thousand euros. Return of sales for the reporting quarter was 0.9% (Q1 2017: 3.8%) and return of sales before depreciation 3.3% (Q1 2017: 6.0%).

The profit before taxes for the reporting quarter was 229 (Q1 2017: 25,505) thousand euros. The calculated income tax expense of three months was 127 (Q1 2017: 139) thousand euros.

In Q1, several Group companies were influenced by the lower than expected volume of orders due to seasonality, being the main cause of the decline in profitability. Preparations for new procurements continue, leading to higher development costs, and several professionals have been hired.

In the reporting quarter, the consolidated net profit was 102 (Q1 2017: 25,366) thousand euros, of which the share of the owners of the Company was 133 (Q1 2017: 25,374) thousand euros. EPS in the Q1 2018 was 0.01 euros (Q1 2017: 1.43 euros). The consolidated net profit without extraordinary income of the Q1 2017 (the result of one-time financial income from the sale of the PKC Group Oyj shares in amount of 24,839 thousand euros) was 527 thousand euros.

In Q1 2018, the Group has made a total of 2.3 (Q1 2017: 1.7) million euros worth of investments to fixed assets, incl. acquisitions through business combinations amounted to 1.0 (Q1 2017: 0.4) million euros. Investment growth is related to the ongoing developments of Allika Industrial Park as well as investments into the production.

During Q1 2018, Harju Elekter’s share in Nasdaq Tallinn increased by 24.8% from 5.00 euros up to 6.24 euros.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-3/2018

Tiit Atso
CFO
+372 674 7400

Annual general meeting of Harju Elekter shareholders will be held on Thursday, 3 May 2018, beginning at 10 a.m., at venue of Keila Kultuurikeskus (address: Keskväljak 12, Keila).

The Supervisory Board of the Joint Stock Company Harju Elekter determined the following agenda of the general meeting:

1. Approval to AS Harju Elekter annual report of the year 2017.

To approve the annual report of AS Harju Elekter of 2017, prepared by the management board and approved by the supervisory board, according to which the consolidated balance sheet total of AS Harju Elekter was 89,977 thousand euros as of 31.12.2017, while the sales revenue of the financial year was 102,402 thousand euros and net profit 29,132 thousand euros.

2. Approval to profit distribution.

To approve the profit distribution proposal of AS Harju Elekter of 2017 as presented by the management board and as approved by the supervisory board as follows:

Management board’s proposal for the distribution of profit as follows:

The dividends will be paid to the shareholders on 22 May 2018 by a transfer to the bank account of the shareholder. * The shareholders registered in the shareholders’ registry on 17 May 2018 as of the end of the business day in the accounting system, shall be entitled to dividend. The dividend payment ex-date is 16.05.2018. From that date the new owner of the shares is not entitled to dividends for the year 2017.

3. Appointment and remuneration of auditors

To appoint AS PricewaterhouseCoopers, register code 10142876 to perform the audit of AS Harju Elekter on the years 2018-2020. Consent obtained. The auditor will be remunerated according to the agreement.

4. Approval of the stock option programme

To approve the stock option program of Harju Elekter (hereinafter: Option Program) on the following basic terms and conditions:

1.   The purpose of the Option Program is to engage the key persons of enterprises belonging to the same group as Harju Elekter, incl. the members of the governing bodies, leading specialists and engineers, as shareholders of AS Harju Elekter, to motivate them to act in the name of achieving better economic outcomes for Harju Elekter, thereby ensuring the business development of AS Harju Elekter and involving additional funds in the equity of AS Harju Elekter, and therefore increasing the value of the shares of AS Harju Elekter.

2.   As part of the Option Program, AS Harju Elekter issues stock options each year in the amount of up to two per cent (2%) of the total number of the shares of AS Harju Elekter. The term of the Option Program is 3 (three) years, to which the term of realising the stock options is added.

3.   The circle of entitled persons in the Option Program is determined with a decision of the Supervisory Board of AS Harju Elekter based on the proposal of the Management Board of AS Harju Elekter.

4.   AS Harju Elekter notifies the entitled persons, referred to in Clause 3 of the Management Board decision, in writing.

5.   A person entitled to a stock option is given access to a maximum of 10,000 (ten thousand) stock options each year. Each stock option grants the right to acquire 1 (one) ordinary share of AS Harju Elekter.

6.   Persons entitled to take part in the Option Program have the right to acquire shares according to the terms and conditions specified in the option agreement concluded with them. Application of the terms and conditions of the Option Program and the procedure for the realisation of the stock option is established in the option agreement. The precise terms and conditions of the option agreement are established by the Supervisory Board of AS Harju Elekter and the agreements are concluded by the Management Board of AS Harju Elekter.

7.   Option agreements are concluded with the entitled persons in the first two weeks of June.

8.   With the aim of avoiding uncovered subscriptions, the entitled person must pay a contractual fee of ten euro cents (0.10 euros) for each stock option by the day of the conclusion of the option contract. The contractual fee is formalised as an interest-free loan to AS Harju Elekter and is accounted in the realisation of the stock options as part of the initial payment and returned if the stock options are not realised. If the entitled person has not concluded an option agreement within the time period specified in Clause 7, they shall lose the right to acquire the stock options allocated to them.

9.   The person entitled to the Stock Option has the right to realise the issued stock options within a three-year-period following the conclusion of the option agreement with them.

10.  The issue price of the shares acquired with the stock option is the average closing price as at 31 December on the NASDAQ Tallinn for the 3 (three) calendar years preceding the conclusion of the option agreement.

11.  In the case of the realisation of the stock options, the entitled person shall be obligated to pay for the shares of AS Harju Elekter in the amount of their issue price according to the option agreement concluded with them.

12.  A prerequisite for realising the stock options is that the persons entitled to the stock option have a current employment or professional relationship with a company belonging to the same group as Harju Elekter.

13.  A person entitled to the stock option does not have the right to transfer, pledge or in other way encumber or dispose of the stock options and they are not inheritable.

14.  In order to meet the conditions of the stock option in issuing new shares, they give the shareholder the right to receive dividends starting from the financial years when the shares were issued, given that the list of the persons entitled to dividends has not been established before the shares are issued.

15.  The general meeting of the shareholders of AS Harju Elekter gives the Supervisory Board of AS Harju Elekter the authorisation to issue the share options without the decision of the general meeting of the shareholders of AS Harju Elekter for each instance, given that the share options and the option agreements concluded to issue them are fully compliant with these terms and conditions.

16. In order to fulfil the terms and conditions of the Stock Option and realise the Stock Options, new shares are issued and the pre-emptive subscription rights of current shareholders is precluded based on §345 (1) of the Commercial Code.

The shareholders whose shares represent at least 1/20 of the share capital may request the inclusion of additional issues to the agenda of the general meeting, provided that the respective request has been submitted in writing no later than by 18 April 2018. The shareholders whose shares represent at least 1/20 of the share capital may submit a written draft of the resolution in respect to each item on the agenda no later than by 30 April 2018. More detailed information available on §287 of the Commercial Code (right of shareholder to information), §293 (2) (right to demand the inclusion of additional issues in the agenda) and §293’ (3) (obligation to submit simultaneously with the request on the modification of the agenda a draft of the resolution or substantiation) and §293’ (4) (right to submit a draft of the resolution in respect to each item on the agenda) about the rules and term of exercising these rights have been published on the homepage of AS Harju Elekter at www.harjuelekter.ee. The drafts of the resolutions and substantiations submitted by the shareholders will be published on the same homepage, if any are received. After the items on the agenda of the general meeting, including additional issues, have been discussed, the shareholders can ask for information from the management board about the activity of the public limited company.

The annual report of 2017, agenda and proposals to the AGM of shareholders are available for preliminary examination in the Internet, company’s home page or in Keila, 31 Paldiski Str. Questions about agenda items can be sent to the address yldkoosolek@he.ee. Questions, answers and the positions of the meeting will be published on the website.

According to § 297 (5) of the Commercial Code, the list of shareholders entitled to vote at the meeting will be fixed on 26 April 2018 as of the end of the business day in the accounting system. Registration of the participants starts on 3 May 2018 at 9 a.m.

Please submit the following documents to register the participants of the general meeting: a shareholder that is a natural person – personal identification document; a representative of a shareholder that is a natural person – personal identification document and a written letter of authorisation; a legal representative of a shareholder that is a legal person – an extract of the relevant (commercial) register in which the legal person is registered, and the personal identification document of the representative; a transactional representative of a shareholder that is a legal person is also required to submit a written authorisation issued by the legal representative of the legal person in addition to the above listed documents.

We ask the documents of a legal person registered in a foreign country to be legalised or having an apostil attached to the documents beforehand, unless specified otherwise in an international agreement. AS Harju Elekter may register a shareholder that is a legal person from a foreign country to the general meeting also in case all required information on the legal person and its representative are included in a notarised letter of authorisation issued in the foreign country and the respective letter of authorisation is accepted in Estonia. We ask you to present a passport or an ID-card as a personal identification document.

A shareholder may inform of the appointment of a representative or withdrawal of an authorisation given to a representative before the general meeting by e-mail on yldkoosolek@he.ee or by submitting the mentioned document(s) on business days from 8.30 AM to 4 PM no later than by 2 May 2018 to the secretariat of AS Harju Elekter at Paldiski Str 31 (3rd floor) in Keila.

Andres Allikmäe
Chairman of the Management Board
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

For Harju Elekter Group, Q4 and 2017 as a whole both turned out to be full of changes and extremely successful. The large volume contracts concluded at the end of 2016 and the additional sales orders brought record sales revenue and the biggest profits in history. As discussed with the Supervisory Board, the Management Board proposes to pay 4.3 million euros (0.24 euros per share) in dividends to shareholders, which amounted 100% of the reporting year net profit of regular activities.

Consolidated revenue for the reporting quarter was 28.8 (Q4 2016: 16.4) million euros, increasing by 75.6% in relation to the comparable period. The Group’s revenue for 12-month was 102.7 (2016: 61.2) million euros, increasing by 67.8% in relation to the comparable period. The main reason for the high growth was the contracts concluded at the end of 2016 and the orders for supplying of specialised pre-fabricated substations to USA in January 2017. In the third quarter, by the acquisition of Telesilta Oy an electrical installation service was added, accounting for 14.6% of the Group’s sales revenue in the reporting quarter and 7.7% in the reporting year.

During the reporting quarter 76.1% (Q4 2016: 91.2%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 23.9% (Q4 2016: 8.8%) of the consolidated sales volume. Over the year, the sales of the Manufacturing segment increased by 29.6 million euros to 85.4 million euros, of which 97.1% was from the sale of electrical equipment. The decrease in Real Estate segment sales was caused by PKC Group Oyj ceasing its production activities in Estonia and leaving from the Group’s rental premises at the beginning of 2017. The available production spaces were taken into use by AS Harju Elekter Elektrotehnika in Q4 2017. In August, AS Stera Saue opened new production hall and warehouse in the Allika Industrial Park owned by AS Harju Elekter. Rental income reflected in the Group’s revenue as well as in income of Real Estate segment from the third quarter. The inclusion since Q3 of the financial indicators of Finnish company Telesilta OY, acquired in June, brought with it a growth in the sales revenue for Unallocated activities during the accounting quarter, as well as the accounting year. Electrical installation works comprised 66.0% among Unallocated activities sales revenue during the accounting quarter and 51.8% in the 12-month period accounting and 27.3% and 35.0% from the intermediate sale of electrical products due to the acquisition of Energo Veritas OÜ.

The Group’s sales revenue earned outside Estonia accounted for 85.8% in Q4 2017 (Q4 2016: 75.4%) and 84.0% in 2017 (2016: 78.1%).

Finland continues as the largest market of the Group. In the reporting quarter, 75.6% of the Group’s products and services (Q4 2016: 62.2%) were sold on the Finnish market, growing over the year by 11.6 million euros, i.e. 113.6%. Comparing the reporting 12 months, the increase was 34.0 million euros up to 75.0 million euros, accounting for 73.0% (2016: 67.0%) of the consolidated sales revenue. The main reason for the growth was the contracts concluded with Finnish network companies at the end of 2016, whose orders began in Q1 of 2017. The acquisition of the new subsidiary Telesilta Oy also made a significant contribution to the growth of the Finnish market, increasing Group’s sales revenue by 12.9% year-on-year.

Sales to the Norwegian market doubled to 5.9 million euros a year, accounting for 5.7% of consolidated sales revenue. The main reason for the growth was the increase in the order volumes of the Lithuanian subsidiary Rifas UAB in the Norwegian market. Sales on the Swedish market increased by 0.6 million euros up to 2.7 million euros during the 12-month period.

Sales on the Estonian market grew also. In 2017, sales on the Estonian market increased by 22.7% up to 16.4 million euros, accounting for 16.0% of the consolidated sales revenue. In Q4, sales on the Estonian market increased by 1.6% up to 4.1 million euros, accounting for 14.2% of the consolidated sales revenue of the reporting quarter.

In 2017, the operating expenses have increased at the same pace with the increase in sales revenue. Operating expenses increased 72.3%, i.e. 11.5 million euros in the reporting quarter compared to the reference period and in a year-on-year comparison, by 67.6% i.e. 39.2 million euros. The main reason for the upsurge in costs was the increase in the cost of sales: quarter to quarter by 74.3% i.e 10.3 million euros and by 71.3% i.e 36.2 million euros y-o-y. The distribution costs and administrative expenses increased totally by 1.1 million euros up to 3.1 million euros in the reporting quarter and by 3.0 million euros up to 10.1 million euros during the year. Both, the rate of distribution costs and the rate of administrative expenses are in decline and accounted for 4.6% (Q4 2016: 5.0%) and 6.3% (Q4 2016: 7.1%) of the sales revenue in the reporting quarte respectively. In 12-month period, the rate of distribution costs as well as the rate of administrative expenses decreased by 1 percentage point, being 4.0% and 5.8% respectively. The exponential rise in the volume of specific orders has brought with it the need to hire additional specialists, which was accompanied by training and new job preparation costs. In the last quarter, the Group has incurred expenditures on the preparation of new procurements and the acquisition of new subsidiaries in 2018.

At the end of the reporting period, there were 630 people working in the Group, which was 150 persons more than a year earlier, including with the acquisition of Telesilta Oy and Energo Veritas OÜ, added 42 employees to the Group. In Q4 2017, an average of 620 (Q4 2017: 467) employees worked in the Group. In year-on-year comparison, an average of 567 employees worked in the Group, which was on average 112 people more than in the reference period. In the reporting quarter, 4,127 (Q4 2016: 3,167) thousand euros were paid to the employees as salaries and fees, totally 14,073 (2016: 10,597) thousand euros during the year. The growth of wages was due to hiring new employees related to the significant increase in production volumes, being still lower from the growth of sales revenue (67.8%). In connection with good economic results, performance pay for 2017 and the reserves created at the end of the year have also increased. In 2017, the average monthly salary per employee of the Group was 2,067 euros, an average increase of 76 euros. The increase in the average salary was influenced by an increase in the share of Finnish employees in the Group as Finland has a significantly higher wage level than in Estonia and Lithuania. Labour costs increased by 51.6% up to 5.6 million euros in Q4, and by 38.9% up to 18.7 million euros during the year. The rate of labour costs accounted for 18.2% of the reporting year sales revenue, decreasing by 3.8 percentage points compared to the reference period.

In the reporting quarter, the gross profit of the Group was 4,570 (Q4 2016: 2,496) thousand euros. The gross profit margin was 15.9% (Q4 2016: 15.2%). In the reporting year, the gross profit of the Group was 15,625 (2016: 10,361) thousand euros. The gross profit margin was 15.2% (2016: 16.9%).

In the reporting quarter, the Group’s operating profit was 1,404 (Q4 2016: 487) thousand euros and EBITDA 2,345 (Q4 2016: 894) thousand euros. Return of sales for the reporting quarter was 4.9% (Q4 2016: 3.0%) and return of sales before depreciation 8.1% (Q4 2016: 5.5%).

The Group’s operating profit of 2017 was 5,442 (2016: 3,181) thousand euros and EBITDA 7,587 (2016: 4,777) thousand euros. Return of sales for the reporting 12-month period was 5.3% (2016: 5.2%) and return of sales before depreciation was 7.4% (2016: 7.8%). Return of sales has decreased due to less rental income as PKC Group Oyj moved out from the Group’s rental premises in the beginning of 2017 and the increase in global commodity prices. European sheet metal producers raised their prices in the first half of the year, affecting the cost of sales of the Group. Also, the non-recurrent expenses occurred in AS Harju Elekter Elektrotehnika, resulting from moving to new production facilities, had effect on return of sales.

In the reporting quarter, the consolidated net profit was 946 (Q4 2016: 375) thousand euros, of which the share of the owners of the Company was 976 (Q4 2016: 369) thousand euros. EPS in the Q4 2017 was 0.06 euros (Q4 2016: 0.02 euros).

Overall, the consolidated net profit of the year 2017 was 29,132 (2016: 3,224) thousand euros. The share of the owners of the Company was 29,129 (2016: 3,219) thousand euros. EPS was 1.64 (2016: 0.18) euros. Large net profit was the result of one-time financial income from the sale of the PKC Group Oyj shares in amount of 24,839 thousand euros. Profit for the period without extraordinary income was 4,293 (2016: 3,224) thousand euros and EPS 0.24 (2016: 0.18) euro.

In 2017, the Group has made a total of 7.3 (2017: 4.8) million euros. Investment growth is related to the ongoing developments of Allika Industrial Park as well as investments into the production.

Cash and cash equivalents increased by 7.7 million euros to 11.0 million euros in the reporting year and decreased by 2.4 million euros to 3.3 million euros in the comparable period.

During the year 2017, Harju Elekter’s share in Nasdaq Tallinn increased by 75.4% from 2.85 euros up to 5.00 euros.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-12/2017

Tiit Atso
CFO
+372 674 7400

On 18 January 2018, AS Harju Elekter Elektrotehnika, an Estonian subsidiary of AS Harju Elekter, signed a contract with Caruna Oy, owner of the largest electrical grid in Finland, to supply low-voltage cable distribution cabinets and metering cabinets to them in the course of 2+1+1 years. According to estimates by Caruna, the expected volume of the contract is at least 5 million euros.

Harju Elekter Group already has valid contracts in place with the Caruna Group to supply pre-fabricated substations, due to which the production of substations in the Group’s factories in Estonia and Finland has grown from the annual 1000 substations to 3000 substations in a single year. In order to cover the volume of commissions without any issues, Harju Elekter Elektrotehnika’s production capacities were increased last year, directing the operations of the subsidiary to the new production halls at Keila Industrial Park.

Caruna is the largest company in Finland dedicated to the transmission of electricity. Countrywide, Caruna holds a market share of about 20 per cent of local electricity transmission and provide electricity to 650,000 private and corporate customers in South, Southwest and West Finland, as well as in the city of Joensuu, the sub-region of Koillismaa and the Satakunta region.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a well-known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The core business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland, Sweden and Lithuania employ nearly 700 specialists, and 9 months sales revenue of the Group was 74 million euros. Shares of Harju Elekter are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Board/CEO
+372 674 7400

Additional information: Jan Osa, Managing Director of AS Harju Elekter Elektrotehnika, phone +372 674 7449.

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

As of 1 January 2018, Rainer Nurkkala, the current Sales Manager, was named the Managing Director of Harju Elekter’s Finnish subsidiary Satmatic Oy, and Maire Korppi, the current Sales Manager, was named the Managing Director of Finnkumu Oy.

The long-time Managing Director of Satmatic Oy, Simo Puustelli, will continue as the Chairman of the Management Board at Harju Elekter’s Finnish subsidiaries: Satmatic Oy, Finnkumu Oy, Telesilta Oy; and the Managing Director of Harju Elekter Kiinteistöt Oy. The current long-time Managing Director of Finnkumu Oy, Matti Ollila, will continue as a Member of Finnkumu’s Management Board.

Rainer Timo Nurkkala (born 13.10.1959) is a graduate of Tampere University of Technology, with a specialty in IT (2005); and the Georgia Institute of Technology (Atlanta, USA), with a Master of Science in Management of Technology (2002). He has been employed at Satmatic Oy since 2009. Mr Nurkkala does not own Harju Elekter shares.

Maire Korpi (born 13.10.1959) is a graduate of Vaasa University of Applied, with a specialty in engineering (2005). She has been employed at Finnkumu Oy since 2004. Mrs Korpi does not own Harju Elekter shares.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a well-known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The core business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland, Sweden and Lithuania employ nearly 700 specialists, and 9 months sales revenue of the Group was 74 million euros. Shares of Harju Elekter are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Board/CEO
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

AS Harju Elekter wishes to the shareholders Happy Holiday Season and informs you that in the year 2018, the consolidated financial results of AS Harju Elekter will be published as following:

2017 4Q results                      28.02.2018
2018 1Q results                      25.04.2018
AGM                                              3.05.2018
2018 2Q results                      25.07.2018
2018 3Q results                      24.10.2018

After their release through the stock exchange information system all Harju Elekter’s announcements are also available on company’s internet homepage at http://www.harjuelekter.ee

Andres Allikmäe
Chairman of the Management Board /CEO
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

On 12 December 2017, AS Harju Elekter signed a contract to acquire all of the shares of Swedish company SEBAB AB, a provider of sales and technical solutions, and its subsidiary Grytek AB, a manufacturer of pre-fabricated technical buildings, from the company Tnåa AB. The transaction price for the two companies was 3.6 million euros (SEK 36.0 million), of which 3.0 million euros (SEK 30.1 million) will be paid on 8 January 2018, the date of entry into force of the transaction, with the delayed part of payment being payable in accordance with the agreement. The acquired companies will initially continue to use their names and trademarks, operating as 100% subsidiaries of the Group.

Harju Elekter Group has been active on the Swedish market since 2010, delivering substations and industrial automation solutions to Swedish clients. As a result of this transaction, new prospective market segments will be entered in Sweden, and the Group’s product portfolio will be expanded. Concurrently, Harju Elekter Group’s capability to offer its Swedish clients more complete technical solutions and turn-key projects as well as service support will increase.

Andres Allikmäe, Tiit Atso (CFO) and Thomas Andersson were appointed as Members of the Management Board of SEBAB AB as well as Grytek AB. Thomas Andersson will continue as a CEO of SEBAB AB and Grytek AB.

SEBAB AB, financial summary 2014-2016

Since the end of the previous financial year there are no significant changes in the SEBAB AB’s business activities. According to Stock Exchange Rules and Regulations, the company Grytek AB, which is a part of the transaction, is insignificant.

We confirm that there are no valid contracts between Group’s enterprises and the acquired companies SEBAB AB and Grytek AB, and those have no loans or any court or arbitration proceedings involving the commercial undertaking, which could significantly impact the economic activity of the company.

The financial results of SEBAB AB and Grytek AB will be included in the consolidated reports of Harju Elekter as of 1 January 2018.

SEBAB AB is a marketing and engineering company for MV/LV power and distribution solutions for the construction, infrastructure and renewable energy sector. The company is headquartered in Malmö with its sales, production, warehouse and service units. Company’s branch offices, offering technical solutions, are also located in Stockholm, Borlänge and elsewhere in Sweden. Grytek AB is a producer of technical buildings. In 2016, turnover of the companies amounted to 12.0 million euros in total.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The core business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate.

After the transaction, the following 100% subsidiaries are included to Harju Elekter Group: Harju Elekter AB, SEBAB AB and Grytek AB in Sweden, AS Harju Elekter, AS Harju Elekter Elektrotehnika, AS Harju Elekter Teletehnika and Energo Veritas OÜ (81%) in Estonia, Satmatic Oy, Finnkumu Oy, Telesilta Oy and Harju Elekter Kiinteistöt Oy in Finland as well as Rifas UAB and Automatikos Iranga UAB (67%) in Lithuania. In addition, AS Harju Elekter have financial investment in the Latvian electrical equipment sales company SIA Energokomplekss (14%) and in Estonian startup company Skeleton Technologies Group OÜ (10%).

Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 600 specialists, and the Group’s 9 months 2017 revenue amounted 74 million euros. Harju Elekter’s shares are listed on Nasdaq Tallinn.

According to the Rules and Regulations of Nasdaq Tallinn, this is not a transaction between related parties.

Andres Allikmäe
Chairman of the Management Board
+372 6747 400

Additional information: Tiit Atso, CFO and Member of the Management Board of AS Harju Elekter (+372 674 7400).

Correction: operating profit of SEK 5,288 thousand was added into the table of SEBAB AB’s financial summary for 2014.

On 12 December 2017, AS Harju Elekter signed a contract to acquire all of the shares of Swedish company SEBAB AB, a provider of sales and technical solutions, and its subsidiary Grytek AB, a manufacturer of pre-fabricated technical buildings, from the company Tnåa AB. The transaction price for the two companies was 3.6 million euros (SEK 36.0 million), of which 3.0 million euros (SEK 30.1 million) will be paid on 8 January 2018, the date of entry into force of the transaction, with the delayed part of payment being payable in accordance with the agreement. The acquired companies will initially continue to use their names and trademarks, operating as 100% subsidiaries of the Group.

Harju Elekter Group has been active on the Swedish market since 2010, delivering substations and industrial automation solutions to Swedish clients. As a result of this transaction, new prospective market segments will be entered in Sweden, and the Group’s product portfolio will be expanded. Concurrently, Harju Elekter Group’s capability to offer its Swedish clients more complete technical solutions and turn-key projects as well as service support will increase.

Andres Allikmäe, Tiit Atso (CFO) and Thomas Andersson were appointed as Members of the Management Board of SEBAB AB as well as Grytek AB. Thomas Andersson will continue as a CEO of SEBAB AB and Grytek AB.

SEBAB AB, financial summary 2014-2016

Since the end of the previous financial year there are no significant changes in the SEBAB AB’s business activities. According to Stock Exchange Rules and Regulations, the company Grytek AB, which is a part of the transaction, is insignificant.

We confirm that there are no valid contracts between Group’s enterprises and the acquired companies SEBAB AB and Grytek AB, and those have no loans or any court or arbitration proceedings involving the commercial undertaking, which could significantly impact the economic activity of the company.

The financial results of SEBAB AB and Grytek AB will be included in the consolidated reports of Harju Elekter as of 1 January 2018.

SEBAB AB is a marketing and engineering company for MV/LV power and distribution solutions for the construction, infrastructure and renewable energy sector. The company is headquartered in Malmö with its sales, production, warehouse and service units. Company’s branch offices, offering technical solutions, are also located in Stockholm, Borlänge and elsewhere in Sweden. Grytek AB is a producer of technical buildings. In 2016, turnover of the companies amounted to 12.0 million euros in total.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The core business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate.

After the transaction, the following 100% subsidiaries are included to Harju Elekter Group: Harju Elekter AB, SEBAB AB and Grytek AB in Sweden, AS Harju Elekter, AS Harju Elekter Elektrotehnika, AS Harju Elekter Teletehnika and Energo Veritas OÜ (81%) in Estonia, Satmatic Oy, Finnkumu Oy, Telesilta Oy and Harju Elekter Kiinteistöt Oy in Finland as well as Rifas UAB and Automatikos Iranga UAB (67%) in Lithuania. In addition, AS Harju Elekter have financial investment in the Latvian electrical equipment sales company SIA Energokomplekss (14%) and in Estonian startup company Skeleton Technologies Group OÜ (10%).

Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 600 specialists, and the Group’s 9 months 2017 revenue amounted 74 million euros. Harju Elekter’s shares are listed on Nasdaq Tallinn.

According to the Rules and Regulations of Nasdaq Tallinn, this is not a transaction between related parties.

Andres Allikmäe
Chairman of the Management Board
+372 6747 400

Additional information: Tiit Atso, CFO and Member of the Management Board of AS Harju Elekter (+372 674 7400).

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

AS Harju Elekter signed a Letter of Intent for the acquisition of all shares in Swedish company SEBAB AB offering sales and technical solutions. To clarify and agree on a fair price, a due diligence process will be initiated. The transaction is scheduled to be completed no later than January 1, 2018.

SEBAB AB is a marketing and engineering company for MV/LV power and distribution solutions for the construction, infrastructure and renewable energy sector. The company is headquartered in Malmö with its sales, production, warehouse and service units. Company’s branch offices, offering technical solutions, are also located in Stockholm, Borlänge and elsewhere in Sweden. The transaction also includes the acquisition of a 100% stake in the sister company, Grytek AB, producer of technical houses. In 2016, turnover of the companies amounted to 12.0 million euros in total.

Harju Elekter Group has been active on the Swedish market since 2011, delivering substations and industrial automation solutions to Swedish clients. As a result of the cooperation, new prospective market segments are being entered into in Sweden, and the Group’s product portfolio will be expanded – the capability of Harju Elekter in offering its Swedish clients more complete technical solutions and turn-key projects as well service support will increase. Successful negotiations may lead to the acquisition of the company’s shares.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The core business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 600 specialists, and the Group’s 9 months 2017 revenue amounted 74 million euros. Harju Elekter’s shares are listed on Nasdaq Tallinn.

Tiit Atso
Member of the Management Board
+372 6747 400

Additional information: Mr Endel Palla, Chairman of the Supervisory Board of AS Harju Elekter (+372 674 7400).

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

Supervisory Board of AS Harju Elekter Teletehnika decided on its meeting held on 27 October 2017 to appoint Alvar Sass the Chairman of the Management Board of the company as of 13 November 2017. Alvar Sass as a new member of the Management Board and CEO of AS Harju Elekter Teletehnika will be responsible for general administration of the company. Starting from 13 November 2017 the Management Board of AS Harju Elekter Teletehnika will continue with two members – Andre Koit and Alvar Sass.

Since 2006 Alvar Sass has been working for the metal processing company Radius Machining OÜ, from 2012 as CEO. Participation in the management bodies of business organisations: Radius Space OÜ, member of the Management Board; Vientitec OÜ, member of the Management Board. Alvar Sass owns 6,903 of Harju Elekter shares.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a well-known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The main business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 600 specialists, and 9 months sales revenue of the Group was 74 million euros. Shares of Harju Elekter are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Board/CEO
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

The first 9m-period as well as the reporting quarter were successful for the Harju Elekter Group. The large agreements and purchase orders concluded at the end of the year 2016 increased the sales revenues as well as the operating profit of the Group. The acquisition of subsidiaries Energo Veritas OÜ and Telesilta Oy in 2017 had an impact, resulting in an increase in sales volumes and economic results.

Consolidated revenue for the reporting quarter was 31.2 (Q3 2016: 15.8) million euros, increasing 97.7% in relation to the comparable period. With the Q3 acquisition of Telesilta Oy a service providing electrical installation works was added, resulting in an 11.8% increase in the Group’s sales revenue during the reporting quarter. The Group’s revenue for nine months was 73.9 (9m 2016: 44.8) million euros, increasing 65% in relation to the comparable period. The main reason for the high growth was the contracts concluded at the end of 2016.

During the reporting quarter 86.0% (Q3 2016: 91.2%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 14.0% (Q3 2016: 8.8%) of the consolidated sales volume. The sale of electrical equipment provides more than 97% of the sales volume of the Manufacturing segment. Sales revenue of Real Estate segment has decreased due to PKC Group Oyj stopped production in Estonia and moved out from the Group’s rental premises in the beginning of 2017. Released production halles took into use by AS Harju Elekter Elektrotehnika. Since Q3, financial results of Telesilta Oy, an electrical engineering company specializing in electrical contracting for the shipbuilding industry acquired in June, was added, which increased sales revenue for other Unallocated activities during the reporting quarter as well as in 9 months. In August, AS Stera Saue opened new production hall and warehouse in the Allika Industrial Park, owned by AS Harju Elekter. Rental income reflected in the Group’s revenue as well as in income of Real estate segment from beginning of the reporting quarter.

The Group’s sales revenue earned outside Estonia accounted for 88.7% in Q3 2017 (Q3 2016: 81.2%) and 83.3% in 9m 2017 (9m 2016: 79.1%).

Finland continues as the largest market of the Group. In the reporting quarter, 78.0% of the Group’s products and services (Q3 2016: 68.8%) were sold on the Finnish market, growing over the year by 13.5 million euros, i.e. 124.4%. Comparing the reporting 9-months periods, the increase was 72.7%, i.e. 22.4 million euros up to 53.2 million euros, accounting for 72.0% (9m 2016: 68.8%) of the consolidated sales revenue. The main reason for the growth were the contracts concluded with Finnish network companies at the end of 2016, whose orders already began in Q1 of 2017.

Growing the sales volume on the Swedish market is a continuous priority of the Group and AS Harju Elekter Elektrotehnika. Comparing to the same periods last year, the growth of sales to the Swedish market in the reporting quarter was 14.0%, i.e. up to 0.6 million euros and in nine months 40.7%, i.e. up to 2.2 million euros. The growth of sales to the Norwegian market in 9-months period was doubled up to 3.5 million euros, accounting for 4.7% of the consolidated sales revenue.

Operating expenses increased by 98.0% or 14.5 million euros in the third quarter and 65.7% or 27.7 million euros in 9-months compared to the reference period. The main part of operating expenses comprised the cost of sales, which grew faster than the sales revenue. Increased export has also led to a rise in distribution costs, growing by 39.6% in the reporting quarter and 26.7% in 9-months in respect to the comparable periods. Still, the rate of distribution costs dropped, accounting for 3.2% of the sales revenue of the reporting quarter (Q3 2016: 4.6%) and 3.8% in 9 months (9m 2016: 5.0%). Due to large orders and the development of new products in relation to this, new employees were hired, leading to an increase in the development costs and hence also in administrative expenses. Altogether, the rate of administrative expenses to revenue dropped and made 5.3% in the reporting quarter and 5.6% in 9-months, having decreased by 0.5 and 1.0 pp, respectively, compared to the reference periods.

In Q3 2017, an average of 618 employees worked in the Group, which was 171 people more than in the comparable period. In 9-months period, an average of 550 employees worked in the Group, which was 99 people more than in the reference period. At the end of the reporting quarter, there were 624 people working in the Group, which was 170 persons more than a year earlier. Including 42 employees, joined to the Group with purchasing of Telesilta Oy and Energo Veritas OÜ. From the beginning of the year, the number of employees increased by 144 people. In the reporting quarter, the employees were paid as salaries and fees 4,020 (Q3 2016: 2,722) thousand euros, which was 47.7% higher than in the reference period. During 9-months, the employees were paid 9,945 (9m 2016: 7,430) thousand euros, being 33.8% more than in the reference period. The growth of wages was due to hiring new employees related to the significant increase in production volumes, being lower from the growth of sales revenue (65%). The average monthly salary for an employee of the Group was 2,010 (9m 2016: 1,829) euros, having increased by 9.9%. The increase in the average wage was influenced by the increase in the share of Finnish employees in the Group as Finland has a significantly higher wage level than in Estonia and Lithuania.

In the reporting quarter, the gross profit of the Group was 4,580 (Q3 2016: 2,630) thousand euros. The gross profit margin was 14.7% (Q3 2016: 16.7%). In 9-months, the gross profit of the Group was 11,055 (9m 2016: 7,852) thousand euros. The gross profit margin was 15.0% (9m 2016: 17.5%).

The Group’s operating profit in the reporting quarter was 1,915 (Q3 2016: 1,023) thousand euros and EBITDA 2,347 (Q3 2016: 1,397) thousand euros. Return of sales for the reporting quarter was 6.1% (Q3 2016: 6.5%) and return of sales before depreciation 7.5% (Q3 2016: 8.8%).

The operating profit of the Group in the 9-months period was 4,037 (9m 2016: 2,694) thousand euros and the EBITDA was 5,241 (9m 2016: 3,883) thousand euros. Return of sales for the reporting period was 5.5% (9m 2016: 6.0%) and return of sales before depreciation was 7.1% (9m 2016: 8.7%). Return of sales has decreased due to less rental income as PKC Group Oyj moved out from the Group’s rental premises in the beginning of 2017 as well as the global price appreciation of raw materials. Also, the non-recurrent expenses occurred in AS Harju Elekter Elektrotehnika, resulting from moving to new production facilities, has effect on return of sales.

In the reporting quarter, the consolidated net profit was 1,798 (Q3 2016: 870) thousand euros, of which the share of the owners of the Company was 1 798(Q3 2016: 862) thousand euros. EPS in the Q3 2017 was 0.10 euros (Q3 2016: 0.05 euros).

Overall, the consolidated net profit of the 9m 2017 was 28,187 (9m 2016: 2,849) thousand euros. The share of the owners of the Company was 28,154 (9m 2016: 2,850) thousand euros. EPS was 1.59 (9m 2016: 0.16) euros. Large net profit was the result of Motherson Sumi Systems Limited acquiring the shares of PKC Group Oyj at the price of EUR 23.55 per share. AS Harju Elekter owned 1,094,641 shares of PKC Group Oyj. Financial income from the sale of shares was 24,839 thousand euros.

In nine months’ period, the Group has made a total of 7.2 (9m 2016: 1.4) million euros, incl. acquisitions through business combinations amounted to 1.7 million euros, worth of investments to fixed assets. Investment growth is related to the ongoing developments of Allika Industrial Park as well as investments into the production.

During the 9m period, Harju Elekter’s share in Nasdaq Tallinn increased by 57.2% from 2.85 euros up to 4.45 euros.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-9/2017

Tiit Atso
CFO
+372 674 7400

The managing director of AS Harju Elekter Teletehnika, Mr. Urmas Paisnik, CEO as well as member of the management board, will be leaving his post from 1 October 2017. The Management Board of the company will continue with one member, Mr. Andre Koit.

AS Harju Elekter and AS Harju Elekter Teletehnika are grateful for the contribution that Mr. Urmas Paisnik, as a CEO and member of the Management Board of AS Harju Elekter Teletehnika, has made to the development of the company.

Andres Allikmäe
Chairman of the Board/CEO
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

AS Harju Elekter started negotiations with the Swedish company SEBAB AB, a marketing and engineering company for MV/LV power and distribution solutions for the construction, infrastructure and renewable energy sector. The company is headquartered in Malmö with its sales, production, warehouse and service units. Company’s branch offices, offering technical solutions, are also located in Stockholm, Borlänge and elsewhere in Sweden. In 2016, the company’s turnover amounted to 12.0 million euros.

Harju Elekter Group has been active on the Swedish market since 2011, delivering substations and industrial automation solutions to Swedish clients. As a result of the cooperation, new prospective market segments are being entered into in Sweden, and the Group’s product portfolio will be expanded – the capability of Harju Elekter in offering its Swedish clients more complete technical solutions and turn-key projects as well service support will increase. Successful negotiations may lead to the acquisition of the company’s shares.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The main business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 600 specialists, and the annual sales revenue of the Group exceeds 60 million euros. Harju Elekter’s shares are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Management Board
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

The first half of the year was successful for the Harju Elekter Group. The large agreements and purchase orders concluded at the end of the year increased the sales revenues as well as the operating profit of the Group. Extraordinary revenue from the realisation of PKC Group Oyj shares resulted in a considerable increase in net profit and provided strong cash flow for prospective investments.

Consolidated revenue for the reporting quarter was 25.1 (Q2 2016: 17.2) million euros, increasing 45.9% in relation to the comparable period. The Group’s revenue for six months was 42.6 (H1 2016: 29.0) million euros, increasing 47.2% in relation to the comparable period. The main reason for the high growth were the contracts concluded at the end of 2016.

During the reporting quarter 89% (Q2 2016: 93%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 11% (Q2 2016: 7%) of the consolidated sales volume. The sale of electrical equipment provides more than 96% of the sales volume of the Manufacturing segment. In the reporting quarter the sale of electrical equipment has increased by 6.5 million euros up to 21.6 million euros and in six months’ period by 12.0 up to 37.0 million euros.

The Group’s sales revenue earned outside Estonia accounted for 80.8% in Q2 2017 (Q2 2016: 80.9%) and 79.4% in H1 2017 (H1 2016: 78.0%).

Finland continues as the largest market of the Group. In the reporting quarter, 68.3% of the Group’s products and services (Q2 2016: 71.8%) were sold on the Finnish market, growing over the year by 4.8 million euros, i.e. 38.9%. Comparing the reporting half years, the increase was 45.8%, i.e. 9.1 million euros up to 28.8 million euros, accounting for 67.6% (H1 2016: 68.2%) of the consolidated sales revenue. The main reason for the growth were the contracts concluded with Finnish network companies at the end of 2016, whose orders already began in Q1 of 2017.

The Group has also increased the sales on the Norwegian market. The growth of sales to the Norwegian market in the reporting quarter was 1.5 million euros and in H1 1.8 million euros, compared to reference periods.

Growing the sales volume on the Swedish market is a continuous priority of the Group and AS Harju Elekter Elektrotehnika. The growth of sales to the Swedish market in the reporting quarter was 0.4 million euros and in H1 0.6 million euros, compared to the same periods last year.

Also sales on the Estonian market grew by 46.6%, i.e. 1.5 million euros, to 4.8 million euros in the reporting quarter, accounting for 19.2% of the consolidated sales revenue of the reporting quarter. In H1 2017, sales on the Estonian market grew by 37.9%, i.e. 2.4 million euros, up to 8.8 million euros, accounting for 20.6% of the consolidated sales revenue.

Operating expenses increased by 48.3% or 7.7 million euros in the second quarter and 48.2% or 13.2 million euros in a half-year compared to the reference period. The main part of operating expenses comprised the cost of sales, which grew faster than the sales revenue. The main reason was the global price appreciation of raw materials, but hiring an additional workforce as well. Increased export has also led to a rise in distribution costs, growing by 30.3% in the reporting quarter and 20.6% in the half-year in respect to the comparable period. Still, the rate of distribution costs dropped, accounting for 4.1% of the sales revenue of the reporting quarter (Q2 2016: 4.6%) and 4.3% in 6 months (H1 2016: 5.2%). Due to large orders and the development of new products in relation to this, new employees were hired, leading to an increase in the development costs and hence also in administrative expenses. Altogether, the rate of administrative expenses to revenue dropped and made 5.3% in the reporting quarter and 5.9% in the half-year, having decreased by 1.1 and 1.2 pp, respectively, compared to the reference periods.

In Q2 2017, an average of 542 employees worked in the Group, which was 88 people more than in the comparable period. In H1 2017, an average of 516 employees worked in the Group, which was 62 people more than in the reference period. At the end of the reporting period, there were 585 people working in the Group, which was 112 persons more than a year earlier. From the beginning of the year, the number of employees increased by 102 people. In the reporting quarter, the employees were paid as salaries and fees 3,308 (Q2 2016: 2,781) thousand euros, which was 19.0% higher than in the reference period. The H1 2017, the employees were paid 5,925 (H1 2016: 5,155) thousand euros, being 14.9% more than in the reference period. The growth of wages was due to hiring new employees related to the significant increase in production volumes. The average monthly salary for an employee of the Group was 1,914 (H1 2016: 1,894) euros, having increased by 1.1%.

In the reporting quarter the gross profit of the Group was 3,805 (Q2 2016: 3,153) thousand euros. The gross profit margin was 15.2% (Q2 2016: 18.3%). In H1 the gross profit of the Group was 6,476 (H1 2016: 5,222) thousand euros. The gross profit margin was 15.2% (H1 2016: 18.0%).

The Group’s operating profit in the reporting quarter was 1,455 (Q2 2016: 1,281) thousand euros and EBITDA 1,844 (Q2 2016: 1,706) thousand euros. Return of sales for the reporting quarter was 5.8% (Q2 2016: 7.4%) and return of sales before depreciation 7.3% (Q2 2016: 9.9%).

The operating profit of the Group in the first half year was 2,123 (H1 2016: 1,671) thousand euros and the EBITDA was 2,894 (H1 2016: 2,486) thousand euros. Return of sales for the reporting period was 5.0% (H1 2016: 5.8%) and return of sales before depreciation was 6.8% (H1 2016: 8.6%). Return of sales has decreased due to less rental income as PKC Group Oyj moved out from the Group’s rental premises in the beginning of 2017. Also, the non-recurrent expenses occurred in AS Harju Elekter Elektrotehnika, resulting from moving to new production facilities, has effect on return of sales.

In the reporting quarter, the consolidated net profit was 1,023 (Q2 2016: 1,668) thousand euros, of which the share of the owners of the Company was 982 (Q2 2016: 1,664) thousand euros. EPS in the Q2 2017 was 0.06 euros (Q2 2016: 0.09 euros). The decrease in net profit is related to PKC Group Oyj dividends of 766 thousand euros received in Q2 2016.

Overall, the consolidated net profit of the H1 2017 was 26,389 (H1 2016: 1,979) thousand euros. The share of the owners of the Company was 26,356 (H1 2016: 1,988) thousand euros. In H1, EPS was 1,49 (H1 2016: 0.11) euros. Large net profit was the result of Motherson Sumi Systems Limited acquiring the shares of PKC Group Oyj at the price of EUR 23.55 per share. AS Harju Elekter owned 1,094,641 shares of PKC Group Oyj. Financial income from the sale of shares was 24,839 thousand euros.

In three months’ period, the Group has made a total of 4.5 (H1 2016: 0.5) million euros worth of investments to property, plant and equipment and investment properties. Investment growth is related to the ongoing developments of Allika Industrial Park.

During the 6m period, Harju Elekter’s share in Nasdaq Tallinn increased by 46.6% from 2.83 euros up to 4.15 euros.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-6/2017

Tiit Atso
CFO
+372 674 7400

On 2 June 2017, AS Harju Elekter signed a contract for the purchase of all shares in Telesilta Oy, an electrical engineering company specializing in electrical contracting for the shipbuilding industry. After the transaction, Telesilta Oy will continue to operate under its own name and brand as a wholly-owned subsidiary of the Group. The purchase will provide new knowledge and skills in manufacture and installation of the electrical and automation equipment for ships, and opens the door to the promising Finnish shipbuilding sector.

The transaction was completed on the date of signing, when monetary settlements were also made. According to the agreement and as the transaction is not significant according to the Stock Exchange Rules, the parties will not disclose the value of the transaction.

Simo Puustelli was appointed Chairman and Andres Allikmäe, Tiit Atso, Pertti Vuorinen and Kari Laulajainen were appointed as Members of the Management Board of Telesilta Oy. Kari Laulajainen will continue as a Managing Director of Telesilta Oy.

The financial indicators of Telesilta Oy will be included in consolidated reports of Harju Elekter as of 1 July 2017.

Telesilta Oy is an electrical engineering company established in 1978, located in Uusikaupunki, Finland. The company specializes in electrical contracting for the shipbuilding industry – everything from planning to installation, implementation and service. The annual sales revenue of the company was 4.5 million euros in 2016, and the company employs 30 people.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a well-known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The main business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 500 specialists, and the annual sales revenue of the Group exceeds 60 million euros. Shares of Harju Elekter are listed on Nasdaq Tallinn.

This is not a transaction between related parties according to the Rules and Regulations of Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Management Board/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

AS Harju Elekter announces that the Group has started negotiations with Telesilta Oy. The cooperation will provide new knowledge and skills in ship electrical and automation equipment manufacture and installation, and opens the door to the promising shipbuilding sector. Successful negotiations may lead to the acquisition of the company’s shares.

Telesilta Oy is an electrical engineering company established in 1978, located in Uusikaupunki, Finland. The company specializes in electrical contracting for the shipbuilding industry – everything from planning to installation, implementation and service.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The main business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 500 specialists, and the annual sales revenue of the Group exceeds 60 million euros. Harju Elekter’s shares are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Management Board
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

At its meeting on 3 May 2017, the Supervisory Board of Harju Elekter extended the authorisations of the Chairman of the Management Board, Andres Allikmäe, starting from 4 May 2017 for the next 3 years. Management Board members Tiit Atso and Aron Kuhi-Thalfeldt will continue to serve under their effective authorisations until 31 October 2019.

At the same time, the members of the Supervisory Board appointed former Chairman Endel Palla, as the Chairman of the Supervisory Board and Andres Toome as the Vice Chairman, elected from among the members by the General Meeting of Shareholders on 27 April 2017. Supervisory Board members Andres Toome and Triinu Tombak will continue as members of the Audit Committee.

Tiit Atso
Member of the Management Board
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

Today, on 27 April 2017 starting at 10 a.m., the annual general meeting of the shareholders of AS Harju Elekter was held at Keskväljak 12, Keila. The AGM was attended by 97 shareholders and their authorised representatives who represented the total of 12,980,332 votes accounting for 73.17 % of the total votes.

The agenda of the general meeting was as follows:
1. Approval to AS Harju Elekter annual report of 2016;
2. Approval to profit distribution;
3. Extension of the authorisation of Supervisory board members, electing new Supervisory board members;
4. Approval of the remuneration of the Supervisory Board

1. Approval to AS Harju Elekter annual report of the year 2016

The general meeting resolved:
To approve the annual report of AS Harju Elekter of 2016, prepared by the management board and approved by the supervisory board, according to which the consolidated balance sheet total of AS Harju Elekter was 73,968 thousand euros as of 31.12.2016, while the sales revenue of the financial year was 61,167 thousand euros and net profit 3,224 thousand euros.

The number of the votes given in favor of the resolution was 12,980,332 which accounted for 100.0 % of the voted participants.

2. Approval to profit distribution

The general meeting resolved:
To approve the profit distribution proposal of AS Harju Elekter of 2016 as presented by the management board and as approved by the supervisory board as follows:

Management board’s proposal for the distribution of profit as follows:

The dividends will be paid to the shareholders on 16 May 2017 by a transfer to the bank account of the shareholder. * The shareholders registered in the shareholders’ registry on 11 May 2017 at 23.59 shall be entitled to dividend.

The number of the votes given in favor of the resolution was 12,943,720 which accounted for 99.72 % of the voted participants.

3. Extension of the authorisation of Supervisory board members, electing new Supervisory board members

The general meeting resolved:
3.1  Extend the authorisation of Supervisory board members Endel Palla, Triinu Tombak, Andres Toome and Aare Kirsme for another five years, until 03.05.2022. Consents obtained.

The number of the votes given in favor of the resolution was 12,971,293 which accounted for 99.93 % of the voted participants.

The general meeting resolved:
3.2  Elect Arvi Hamburg as a new member of the Supervisory board starting from 04.05.2017, with authorisation valid for five years, until 03.05.2022. Consent obtained.

The number of the votes given in favor of the resolution was 12,941,562 which accounted for 99.70 % of the voted participants.

4. Approval of the remuneration of the Supervisory Board

The general meeting resolved:
To determine the remuneration of the Supervisory Board member of the company in the amount of 1000 euros per month and the remuneration of the chairman of the Supervisory Board in the amount of 1,600 euros per month. Establish remuneration of 200 euros to the supervisory board members for participating in the meeting. No remuneration is paid if the supervisory board member participates in the meeting by phone. To apply a valid bonus system of the company to the member of the supervisory board who is working in executive management.

The number of the votes given in favor of the resolution was 12,579,833 which accounted for 96.91 % of the voted participants.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

The reporting quarter was successful for the Harju Elekter Group. The large agreements and purchase orders concluded at the end of the year increased the sales revenues and operating profit, and the realisations of the takeover bids for the shareholders of PKC Group Oyj earned a one-time financial profit in the amount of 24.8 million euros.

In the accounting quarter, the Group’s consolidated revenue was 17.5 (Q1 2016: 11.8) million euros. Sales revenue of the reporting quarter increased by 49% or 5.8 million euros in relation to the comparison period. 92% of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 8% of the consolidated sales volume. The sales of electrical equipment accounted for 95% (Q1 2016: 94%) of the sales revenue of the Production segment and 88% (Q1 2016: 84%) of the sales revenue of the whole Group. The sale of electrical equipment was up by 56% or 5.5 million euros.

The Group’s sales revenue earned outside Estonia accounted for 77.4% in Q1 2017 (Q1 2016: 73.8%).

The Finnish market, which is the Group’s largest, has grown by 57% or 4.2 million euros year-on-year. In the reporting quarter, 67% of the Group’s products and services were sold on the Finnish market (Q1 2016: 63%). The main reason for the growth was the contracts concluded with Finnish network companies at the end of 2016, whose orders already began in Q1 of 2017.

The purposeful work of the Group and AS Harju Elekter Elektrotehnika continued for growing sales volume on the Swedish market, which resulted in growth of sales to the Swedish market in the reporting quarter – compared to the same period last year – by a fifth, to 1.0 million euros.

During the reporting quarter grew by 28.7% or 0.9 million euros up to 4.0 million euros of the Group’s products and services were sold on the Estonian market. It was 22.6% of the consolidated sales revenue.

Operating expenses increased 48.1% or 5.5 million euros in the reporting quarter compared to the reference period. The main reason for the upsurge in costs is rise of metal prices on the world markets, while the salaries of the manufacturing staff of the Group’s Estonian companies have also grown. The continued focus of the Group towards increasing exports has led to a rise in distribution costs, growing by 10% in the reporting quarter in respect to the comparable period. The rate of distribution costs accounted for 4.5% of the sales revenue (Q1 2016: 6.1%). Administrative expenses increased by 24.8%, i.e. 235 thousand euros in the reporting quarter. More than half of the increase was due to growth in development expenses related to new orders and thereby development of new products. The rate of administrative expenses to revenue accounted for 6.7%, having decreased by 1.4 percentage points.

In Q1 of 2017, an average of 490 employees worked in the Group, which is 37 people more than in the comparable period. As at the balance day on 31 March, there were 517 people working in the Group, which was 45 persons more than a year ago. From the beginning of the year, the number of employees increased by 37. In the reporting quarter, the employees were paid as salaries and fees 2,616 (Q1 2016: 2,374) thousand euros, which was 10.2% higher than in the reference period. The growth of wages was due to hiring new employees in connection with the significant increase in production volumes. The average monthly salary for an employee of the Group was 1,780 (Q1 2016: 1,747) euros.

In the reporting quarter the gross profit of the Group was 2,670 (Q1 2016: 2,069) thousand euros. The gross profit margin was 15.2% (Q1 2016: 17.6%).

The Group’s operating profit in the reporting quarter was 668 (Q1 2016: 390) thousand euros and EBITDA 1,050 (Q1 2016: 780) thousand euros. Return of sales for the accounting quarter was 3.8% (Q1 2016: 3.3%) and return of sales before depreciation 6.0% (Q1 2016: 6.6%).

The profit before taxes for the reporting quarter was 25,505 (2016 QI: 385) thousand euros. The calculated income tax expense of three months was 139 (2016 IQ: 74) thousand euros.

In the reporting quarter, the consolidated net profit was 25,366 (Q1 2016: 311) thousand euros, of which the share of the owners of the Company was 25,374 (Q1 2016: 324) thousand euros. EPS in the Q1 2017 was 1.43 euros (Q1 2016: 0.02 euros). Large net profit was the result of Motherson Sumi Systems Limited acquiring the shares of PKC Group Oyj at the price of EUR 23.55 per share. AS Harju Elekter owned 1,094,641 shares of PKC Group Oyj. Financial income from the sale of shares was 24,839 thousand euros.

In Q1 2017, EPS was 1.43 (Q1 2016: 0.02) euros. During the reporting quarter, Harju Elekter’s share in Nasdaq Tallinn increased by 32.5% from 2.83 euros up to 3.75 euros.

In three months’ period, the Group has made a total of 1.7 million (Q1 2016: 49 thousand) euros worth of investments to property, plant and equipment and investment properties. Investment growth is related to the ongoing developments of Allika Industrial Park.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-3/2017

Tiit Atso
CFO
+372 674 7400

AS Harju Elekter purchased an 80.5% holding in Energo Veritas OÜ, a company trading in electrical materials and equipment. The transaction was completed as at 29 March 2017, when monetary settlements were also made. According to the agreement and based on the fact that the transaction is not relevant for the purpose of the Stock Exchange Rules, the parties will not disclose the value of the transaction. After the transaction, the business operations of AS Harju Elekter Trade Group will be merged with Energo Veritas OÜ, who will continue as a subsidiary of the Group.

With the purchase of Energo Veritas OÜ and establishment of a trade unit operating as a subsidiary of the Group, the Group increases its market share in Estonia, notably expands its offered product range, and creates prerequisites for boosting the sale of the Group’s products in Estonia and the Baltic states. The company focuses primarily on project-based trading activity.

The former manager of the company, Kristo Reinhold, will continue as the head of the Group’s new subsidiary, Energo Veritas OÜ. The following persons were appointed to the Supervisory board of the company: Chairman of the Management Board of AS Harju Elekter Mr Andres Allikmäe, Member of the Management Board of AS Harju Elekter Mr Tiit Atso and Sales Director of AS Harju Elekter Elektrotehnika Mr Tiit Luman.

Energo Veritas OÜ is a company, established in 2015 and based on local capital, trading in electrical materials and equipment, offering technical advice, solution development and kitting in accordance with the client’s wishes as well as deliveries to construction sites. The company’s largest suppliers are most of the manufacturers of electrical materials or their representatives; the company also imports several products. The turnover of the company was 4.2 million euros in 2016, and the company employs 7 people.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The main business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 500 specialists, and the annual sales revenue of the Group exceeds 60 million euros. Shares of Harju Elekter are listed on Nasdaq Tallinn.

The transaction does not constitute a transaction between related parties within the meaning of NASDAQ Tallinn’s Rules and Regulations.

Andres Allikmäe
Chairman of the Management Board/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

Annual general meeting of Harju Elekter shareholders will be held on Thursday, 27 April 2017, beginning at 10 a.m., at venue of Keila Kultuurikeskus (address: Keskväljak 12, Keila).

The Supervisory Board of the Joint Stock Company Harju Elekter determined the following agenda of the general meeting:

1. Approval to AS Harju Elekter annual report of the year 2016.
To approve the annual report of AS Harju Elekter of 2016, prepared by the management board and approved by the supervisory board, according to which the consolidated balance sheet total of AS Harju Elekter was 73,968 thousand euros as of 31.12.2016, while the sales revenue of the financial year was 61,167 thousand euros and net profit 3,224 thousand euros.

2. Approval to profit distribution.
To approve the profit distribution proposal of AS Harju Elekter of 2016 as presented by the management board and as approved by the supervisory board as follows:

Management board’s proposal for the distribution of profit as follows:

The dividends will be paid to the shareholders on 16 May 2017 by a transfer to the bank account of the shareholder.
* The shareholders registered in the shareholders’ registry on 11 May 2017 at 23.59 shall be entitled to dividend.

3. Extension of the authorisation of Supervisory board members, electing new Supervisory board members
Extend the authorisation of Supervisory board members Endel Palla, Triinu Tombak, Andres Toome and Aare Kirsme for another five years, until 03.05.2022.

Elect Arvi Hamburg as a new member of the Supervisory board starting from 04.05.2017, with authorisation valid for five years, until 03.05.2022.

4. Approval of the remuneration of the Supervisory Board
To determine the remuneration of the Supervisory Board member of the company in the amount of 1000 euros per month and the remuneration of the chairman of the Supervisory Board in the amount of 1,600 euros per month. Establish remuneration of 200 euros to the supervisory board members for participating in the meeting. No remuneration is paid if the supervisory board member participates in the meeting by phone. To apply a valid bonus system of the company to the member of the supervisory board who is working in executive management.

The shareholders whose shares represent at least 1/20 of the share capital may request the inclusion of additional issues to the agenda of the general meeting, provided that the respective request has been submitted in writing no later than by 12 April 2017. The shareholders whose shares represent at least 1/20 of the share capital may submit a written draft of the resolution in respect to each item on the agenda no later than by 24 April 2017. More detailed information available on §287 of the Commercial Code (right of shareholder to information), §293 (2) (right to demand the inclusion of additional issues in the agenda) and §293’ (3) (obligation to submit simultaneously with the request on the modification of the agenda a draft of the resolution or substantiation) and §293’ (4) (right to submit a draft of the resolution in respect to each item on the agenda) about the rules and term of exercising these rights have been published on the homepage of AS Harju Elekter at www.harjuelekter.ee. The drafts of the resolutions and substantiations submitted by the shareholders will be published on the same homepage, if any are received. After the items on the agenda of the general meeting, including additional issues, have been discussed, the shareholders can ask for information from the management board about the activity of the public limited company.

The annual report of 2016, agenda and proposals to the AGM of shareholders are available for preliminary examination in the Internet, company’s home page or in Keila, 31 Paldiski Str. Since 3^rd April 2017. Questions about agenda items can be sent to the address yldkoosolek@he.ee. Questions, answers and the positions of the meeting will be published on the website.

According to § 297 (5) of the Commercial Code, the list of shareholders entitled to vote at the meeting will be fixed at 23.59 on 20 April 2017. Registration of the participants starts on 27 April 2017 at 9 a.m.

Please submit the following documents to register the participants of the general meeting: a shareholder that is a natural person – personal identification document; a representative of a shareholder that is a natural person – personal identification document and a written letter of authorisation; a legal representative of a shareholder that is a legal person – an extract of the relevant (commercial) register in which the legal person is registered, and the personal identification document of the representative; a transactional representative of a shareholder that is a legal person is also required to submit a written authorisation issued by the legal representative of the legal person in addition to the above listed documents.

We ask the documents of a legal person registered in a foreign country to be legalised or having an apostil attached to the documents beforehand, unless specified otherwise in an international agreement. AS Harju Elekter may register a shareholder that is a legal person from a foreign country to the general meeting also in case all required information on the legal person and its representative are included in a notarised letter of authorisation issued in the foreign country and the respective letter of authorisation is accepted in Estonia. We ask you to present a passport or an ID-card as a personal identification document.

A shareholder may inform of the appointment of a representative or withdrawal of an authorisation given to a representative before the general meeting by e-mail on yldkoosolek@he.ee or by submitting the mentioned document(s) on business days from 8.30 AM to 4 PM no later than by 26 April 2017 to the secretariat of AS Harju Elekter at Paldiski Str 31 (3rd floor) in Keila.

Andres Allikmäe
Chairman of the Management Board
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

The Supervisory Board of AS Harju Elekter approved the audited financial results for the year 2016. The financial results remained unchanged, compared to the preliminary disclosure on 27^th of February 2017.

Consolidated sales revenue for the reporting year reached 61.2 million euros, the consolidated operating profit as well as consolidated net profit were both 3.2 million euros.

Audited financial results for the year 2016 has been included as attachment to this announcement.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

Annual Report 2016

Year Book 2016

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

At their meeting of 16 March 2017, the Supervisory Board of AS Harju Elekter decided to accept the offer by Motherson Sumi Systems Limited for the takeover of all the shares of PKC Group Plc at the price of EUR 23.55 per share. AS Harju Elekter owns 1,094,641 shares of PKC Group Plc. If the takeover is realised, it means that AS Harju Elekter will receive 25.8 million euros on 29 March 2017.

Motherson Sumi Systems Limited and PKC Group Plc have on January 19, 2017 entered into a combination agreement under which they agree to combine the wiring harness businesses of Motherson Sumi Systems Limited and PKC Group Plc. The period of the takeover bid is from 6 February 2017 to 21 March 2017.

AS Harju Elekter has been the shareholder of PKC Group Plc since the company’s founding in 1994.

Andres Allikmäe
Managing Director/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

2016 for the Harju Elekter Group was similar to the previous financial year. Thanks to new agreements and internal transformations, sales revenue increased by 9.2% in Q4, and operating profit multiplied, creating good prospects for a successful 2017.

In 2016, the Group’s consolidated revenue was 61.2 (2015: 60.7) million euros and operating profit 3.2 (2015: 3.3) million euros. The consolidated net profit of the year was 3.22 (2015: 3.18) million euros. Consolidated revenue for the reporting quarter was 16.4 (Q4 2015: 15.0) million euros, increasing during the reporting quarter by 9.2% or 1.4 million euros in relation to the comparable period. In the reporting quarter the sale of electric equipment had increased by 1.2 million euros up to 14.2, which was the main reason for the sales growth in the reporting quarter.

During the reporting quarter 91% (Q4 2015: 91%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 9% (Q4 2015: 9%) of the consolidated sales volume. The sale of electrical equipment provides a major part (94%-95%) of the sales volume of the Manufacturing segment.

The Group’s sales revenue earned outside Estonia accounted for 78.1% in 2016 (2015: 76.6%) and in the reporting quarter 75.4% (Q4 2015: 76.8%).

Sales on the Estonian market grew by 15.4%, i.e. 0.5 million euros, to 4.0 million euros in the reporting quarter, accounting for 24.6% of the consolidated sales revenues of the reporting quarter. In 2016, the Group sold 21.9% (2015: 23.4%) of its products and services to the Estonian market. Year on year, supply to the Estonian market decreased by 0.8 million euros or 5.8%. The downturn is the result of the continued decline in investments in Estonia’s energy distribution sector.

At the same time, deliveries in the direction of Finland have grown 5.5% or 2.1 million euros in the reporting year; in the reporting quarter, however, the sales volume remained mostly on the level of the comparable period. Most of the Group’s enterprises have managed to grow their sales volumes on the Finnish market, as a result of which the share of the Finnish market in the Group’s sales revenue grew to 67% (2015: 64.1%).

In 2016, the Group continued active work in the direction of Sweden, both, in terms of sales as well as product development. Sales revenue earned from the Swedish market increased by 24.2% in Q4 and 47.3% in a year.

Due to low oil prices and a change in ownership in the main customer of our Lithuanian company, deliveries towards Norway decreased by 1 million euros or 26.1% in 12 months. The order volumes recovered somewhat in Q4, having increased by 0.5 million euros in the reporting quarter to 1.1 million euros, contributing 6.8% of the Group’s sales revenue in the last quarter.

Operating expenses decreased 6.7% or 1 million euros in the reporting quarter and 1.1% or 0.6 million euros in the 12 months compared to the reference periods. The main reason for the upsurge in costs was the increase in the cost of sales. Cost of sales increased by 1 million euros, i.e. 7.4% compared to Q4 of 2015 and in a year-on-year comparison, 0.5 million euros, i.e. 0.9%, lagging in the reporting quarter behind the 9.2% growth rate for sales revenue in the same period. In a year-on-year comparison, the cost of sales increased in an equivalent pace with sales revenue: 0.8%.

The continued focus of the Group towards increasing exports has led to a rise in distribution costs, growing by 18% in the reporting quarter and 14% during the year in respect to the comparable periods. In terms of distribution costs, labour costs have increased the most, both due to structural changes in the companies as well as due to payment of additional remuneration. The majority of the increase of distribution costs was contributed by the Group’s Finnish companies. The rate of distribution costs accounted for 5% of the sales revenue (2015: 4.4%). Administrative expenses decreased by 6.8% in the reporting quarter and 4.6% in 12m in relation to the comparison periods, and the rate of administrative expenses to revenue accounted for 6.8%, having decreased by 0.3 percentage points.

As at the balance day on 31 December, there were 480 people working in the Group, (31.12.2015: 470).  In 2016, an average of 455 employees worked in the Group, which is 17 people less than in the comparable period. In the reporting quarter, the average number of employees increased by 4, to 467. Until Q3 2016, the process of optimising production in the Group’s Estonian undertakings caused a decrease in the number of employees; however, after the conclusion of several large-scale sales contracts, the company has once again started to create new jobs. Recruitment of new employees on the labour market is complicated due to prevailing fierce competition and increasing salary pressure. To hire employees and retain the existing ones, a review of salary levels was commenced in Q4. Besides, the sound financial results of the Group’s companies in Finland in 2016 have resulted in the payment of additional remuneration and an increase in reserves, which also led to higher labour costs for the Group. In the reporting quarter, the employees were paid as salaries and fees 3,167 (Q4 2015: 2,439) thousand euros and during the year 10,597 (2015: 9,697) thousand euros. The average monthly salary for an employee of the Group was 1,940 (2016: 1,711) euros.

In the reporting quarter the gross profit of the Group was 2,496 (Q4 2014: 2,079) thousand euros. The gross profit margin was 15.2% (Q4 2015: 13.8%). In the 12-months period, the gross profit of the Group was 10,348 (2015: 10,299) thousand euros and the gross profit margin was 16.9% (Q4 2014: 17.0%). The Group’s gross profit margin was influenced by an increase in the global metal price in the last half-year.

The Group’s operating profit in the reporting quarter was 487 (Q4 2015: 79) thousand euros and EBITDA 895 (Q4 2015: 498) thousand euros. Return of sales for the accounting quarter was 3.0% (Q4 2015: 0.5%) and return of sales before depreciation 5.5% (Q4 2015: 3.3%). The Group’s operating profit in was 3,181 (2015: 3,276) thousand euros and EBITDA 4,777 (2015: 4,819) thousand euros. One of the reasons for the decline in operating profit was direct additional costs resulting from the merger of metal factories, totalling at 134,000 euros. In Q4, the merger of metal factories was completed, failures in production, caused by the moving and readjustment of machinery and equipment, have been eliminated and problems with adhering to delivery dates have been minimised. Return of sales was 5.2% (2015: 5.4%) and return of sales before depreciation was 7.8% (2015: 7.9%).

In the reporting quarter, the consolidated net profit was 375 (Q4 2015: -16) thousand euros, of which the share of the owners of the Company was 369 (Q4 2015: -8) thousand euros. EPS in the Q4 2016 was 0.02 euros and in Q4 2015 was 0.00 euros. The net margin was 2.3% (Q4 2015: -0.1%).

All in all, the consolidated net profit of the year 2016 was 3,224 (2015: 3,186) thousand euros. The share of the owners of the Company was 3,219 (2015: 3,190) thousand euros. EPS was 0.18 (2015: 0.18) euros.

In twelve months period, the Group has made a total of 4.6 (2015: 2.3) million euros worth of invest-ments to property, plant and equipment and investment properties, of which 3 million euros the Group invested to the production facilities at Allika Industrial Park.

Andres Allikmäe
Chairman of the Management Board / CEO
+372 674 7400

For more information:
Tiit Atso, CFO, +372 674 7400 or Interim report 1-12/2016

Tiit Atso
CFO
+372 674 7400

Motherson Sumi Systems Limited and PKC Group Plc have on January 19, 2017 entered into a combination agreement under which they agree to combine the wiring harness businesses of Motherson Sumi Systems Limited and PKC Group Plc. The offer price for PKC Group Plc shareholders is EUR 23.55 in cash for each share in PKC Group Plc.

AS Harju Elekter has been the shareholder of PKC Group Plc since 1994. On the balance date 31.12.2016, AS Harju Elekter owned 1,094,641 PKC Group Plc shares.

For more information: (http://www.pkcgroup.com/investors/stock-exchange-releases.html).

Andres Allikmäe
Managing Director/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

At 18 October 2016, the reduction of share capital of AS Harju Elekter on the basis adopted by resolution of the General Meeting of Shareholders held at 28 April 2016 was entered in the Commercial Register. The new amount of the registered share capital of the Company is 11,176,124.40 euros, which is divided into 17,739,880 ordinary shares without nominal value and with the calculated value of 0.63 euros per share.

The reduction of share capital in the amount of 1,241, 791.60 euros or 0.07 euros per share shall be paid to the shareholders three months after entry of the reduction of share capital in the commercial register, on 20th of January 2017.

The list of shareholders, who were entitled to receive the payment related to reduction of the share capital was closed on 12 May 2016 at 23:59.

Andres Allikmäe
Managing Director/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

On 10 January 2017, AS Harju Elekter Elektrotehnika, a subsidiary of AS Harju Elekter, received two written orders for supplying total of 86 units of specialised pre-fabricated substations to Konecranes within a two-year period. Supplies are directed to the USA. By agreement, the total value of the transaction will not be disclosed.

Over the past few months Harju Elekter Group has signed 3 large-volume agreements, as a result of which the production of substations in the Estonian and Finnish plants of the Group will increase to a significant degree. As a result of the received orders, the production of substations in the Estonian and Finnish plants of the Group will increase to a significant degree, i.e. the current annual production, which is approx. 1100 substations, could increase up to a maximum of 2500 substations with these orders.

In order to ensure smooth fulfilment of the order volumes, the production capacity of AS Harju Elekter Elektrotehnika will be increased in the first half-year and the subsidiary will transfer its operations to new production halls – being vacated by PKC Eesti – in the Keila Industrial Park.

Konecranes is the world’s leading group providing hoisting equipment and services, servicing a diverse range of customers, incl. the manufacturing and processing industry, shipyards, ports and terminals.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The main business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 500 specialists, and the annual sales revenue of the Group exceeds 60 million euros. Harju Elekter’s shares are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Management Board/CEO
+372 6747 400

Additional information: Manager of AS Harju Elekter Elektrotehnika Mr Jan Osa (+372 674 7449).

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

Subsidiary of AS Harju Elekter, AS Harju Elekter Elektrotehnika, received an order for supplying 86 units of specialised pre-fabricated substations to Konecranes within a two-year period. By agreement, the total value of the contract will be disclosing. Substation supplies are directed to the USA.

Over the past few months Harju Elekter Group has signed 3 large-volume agreements, as a result of which the production of substations in the Estonian and Finnish plants of the Group will increase to a significant degree. In order to ensure smooth fulfilment of the order volumes, the production capacity of AS Harju Elekter Elektrotehnika will be increased in the first half-year and the subsidiary will transfer its operations to new production halls – being vacated by PKC Eesti – in the Keila Industrial Park.

Konecranes is the world’s leading group providing hoisting equipment and services, servicing a diverse range of customers, incl. the manufacturing and processing industry, shipyards, ports and terminals.

After launching its activities in 1968, Harju Elekter Group has developed into a leading producer of MV/LV electrical and engineering devices in the Baltic countries and a known and respected manufacturer in Scandinavia. Harju Elekter’s main field of business is the development, manufacturing and sale of equipment necessary for the distribution and transmission of electric energy. The main business is supported by a sheet metal plant in Estonia and the development and leasing of industrial real estate. Harju Elekter Group’s plants in Estonia, Finland and Lithuania employ more than 500 specialists, and the annual sales revenue of the Group exceeds 60 million euros. Harju Elekter’s shares are listed on Nasdaq Tallinn.

Andres Allikmäe
Chairman of the Management Board/CEO
+372 6747 400

Additional information: Manager of AS Harju Elekter Elektrotehnika Mr Jan Osa (+372 674 7449).

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

AS Harju Elekter wishes to the shareholders Happy Holiday Season and informs you that in the year 2017, the consolidated financial results of AS Harju Elekter will be published as following:

2016 4Q results                      27.02.2017
2017 1Q results                      26.04.2017
AGM                                      27.04.2017
2017 2Q results                      26.07.2017
2017 3Q results                      25.10.2017

After their release through the stock exchange information system all Harju Elekter’s announcements are also available on company’s internet homepage at http://www.harjuelekter.ee

Andres Allikmäe
Chairman of the Management Board /CEO
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

Harju Elekter Group won the procurement for the supply of substations held by Finland’s largest distribution network company Caruna. According to the contract awarded for 2+1+1 years, concluded on 19 December 2016, more than 1000 pre-fabricated substations per year shall be added to the current production of the Harju Elekter Group’s electric equipment plants in Estonia and Finland for Caruna Group, bringing about a considerable increase in production. The estimated volume of the contract is 12 million euros per year.

Caruna is the largest company in Finland dedicated to the transmission of electricity. Countrywide, Caruna holds a market share of about 20 per cent of local electricity transmission and provide electricity to 650,000 private and corporate customers in South, Southwest and West Finland, as well as in the city of Joensuu, the sub-region of Koillismaa and the Satakunta region.

Harju Elekter is the leading MV/LV electrical and engineering devices producer in the Baltic countries as well as well-known and respected company in Scandinavia. Harju Elekter Group includes manufacturers of electrical equipment in Estonia, Finland and Lithuania: AS Harju Elekter Elektrotehnika (100%), Satmatic Oy (100%), Finnkumu Oy (100%) and Rifas UAB (100%), as well as the telecommunications products manufacturer AS Harju Elekter Teletehnika (100%) in Estonia and real estate holding company Harju Elekter Kiinteistöt Oy (100%). In addition, AS Harju Elekter has financial investments in the Latvian electrical equipment sales company SIA Energokomplekss (14%), Estonian ultra-capacitors developer and manufacturer Skeleton Technologies Group OÜ (10%) and in the Finnish publicly listed company PKC Group Oyj (5%).

Andres Allikmäe
Chairman of the Management Board/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

In the reporting quarter, the Group’s consolidated revenue was 15.8 (Q3 2015: 18.1) million euros. During the reporting quarter, sales revenue decreased 12.7% or 2.3 million euros in relation to the comparison period. 9 month consolidated revenue remained at the same level as the previous year and was 44.8 (9m 2015: 45.6) million euros. The consolidated net profit of the 9m 2016 was 2.85 (9m 2015: 3.20) million euros.

91.2% (Q3 2015: 92.9%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 8.8% (Q3 2015: 7.1%) of the consolidated sales volume. In the reporting quarter the sale of electrical equipment had decreased by 16.1% or 2,566 thousand euros in comparison with the comparison period and by 2.3% or 914 thousand euros in 9 month comparison, providing 85.6% of the sales revenue of the Group. In terms of other products and services, sales revenue in the reporting quarter has increased by 12.4%, being by 269,000 euros more than in the comparable period.

In 9m 2016, 79,1% (9m 2015: 76,5%) of the Group’s products and services were sold in foreign markets, outside Estonia and in the reporting quarter 81,2% (Q3 2015: 77,5%). The Finnish market, which is the Group’s largest, has grown by 7.6% or 2,185 thousand euros year-on-year. In the reporting quarter, 68.8% of the Group’s products and services were sold on the Finnish market (Q3 2015: 65.4%). Sales revenue from the Swedish market has increased by 68.3% in the third quarter and 57.8% during the year. AS Harju Elekter Elektrotehnika, which is responsible for the Sweden-oriented business activity, has been quite active in 2015 as well as in 2016 in sales as well as product development work, in order to increase the sales volumes of the group on the Swedish market.

The Group’s sales revenue from the Norwegian market have decreased by 45.6% over the 9 month period due to a change in the ownership of the main client of the Lithuanian company, as a result of which sales orders have been deferred to the following periods.

In the first 9 months of 2016, the Group sold 20.9% of its products and services to the Estonian market (2015: 23.5%). Year on year, supply to the Estonian market decreased by 1.1 million euros or 12.7%. The decline was precipitated by the continued decline in investments in the energy distribution sector in Estonia.

Operating expenses decreased 9.3% in the reporting quarter and 0.8% in the nine months compared to the reference period. Cost of sales decreased 10.1% in the reporting quarter and 1.3% in nine months compared to the reference period. Distribution costs increased by 14.7% in the reporting quarter and by 13% in 9m in relation to the comparison periods, the rate of distribution costs to revenue accounted for 5.0% (9m 2015: 4.3%). In the case of distribution costs, labour costs have increased the most, both due to structural changes in the companies as well as due to payment of additional remuneration. Administrative expenses decreased by 10.9% in the reporting quarter and 3.8% in 9m in relation to the comparison periods, and the rate of administrative expenses to revenue accounted for 6.6%, having decreased by 0.2 percentage points.

As at the end of the reporting period, the Group had 454 employees (30 September 2015: 477). Compared to the beginning of the year, the number of employees has decreased by 16. In the first 9 months of 2016, an average of 451 employees worked in the Group, which is 24 people less than in the comparable period. In the reporting quarter, the average number of employees decreased by 32, to 447. The sound financial results of the Group’s companies in Finland in 2016 have resulted in the payment of additional remuneration and an increase in reserves, which also led to higher labour costs for the Group. In the reporting quarter, the employees were paid as salaries and fees 2,722 (Q3 2015: 2,454) thousand euros and in nine months, 7,430 (9m 2015: 7,256) thousand euros. The average monthly salary for an employee of the Group was 1,829 (9m 2015: 1,696) euros.

Another 58,000 euros was added in the third quarter to the one-off expense of 71,000 euros incurred in the second quarter upon the merger of the metal factories, totalling 129,000 euros. The merger of the metal factories has reached the finishing line in the reporting period. Failures in production, caused by the moving and readjustment of machinery and equipment, had been eliminated to a large extent by the end of the third quarter. Production failures resulted in temporary standstills in production; accordingly, there have been problems in compliance with the delivery deadlines, which in turn have influenced the sales revenue for the first 9 months as well as of the reporting quarter and also the operating profit.

In nine months the gross profit of the Group was 7,852 (9m 2015: 8,220) thousand euros. The gross profit margin was 17.5% (9m 2015: 18.0%). In Q3 the gross profit margin was 16.7% (Q3 2015: 19.0%).

The operating profit of the Group in the nine months was 2,694 (9m 2015: 3,197) thousand euros and the EBITDA was 3,883 (9m 2015: 4,321) thousand euros. The operating margin of the reporting period was 6.0% (9m 2015: 7.0%) and the EBITDA margin was 8.7% (9m 2015: 9.5%).

The consolidated operating profit of the reporting quarter was 1,023 (Q3 2015: 1,788) thousand euros and the EBITDA was 1,397 (Q3 2015: 2,181) thousand euros. The operating margin of the reporting quarter was 6.5% (Q3 2015: 9.9%) and the EBITDA margin was 8.8% (Q3 2015: 12.1%).

In Q3 2016, the consolidated net profit was 870 (Q3 2015: 1,620) thousand euros, of which the share of the owners of the Company was 862 (Q3 2015: 1,627) thousand euros. EPS in the Q3 2016 was 0.05 (Q3 2015: 0.09) euros. The net margin was 5.5% (Q3 2015: 9.0%).

Overall, the consolidated net profit of the nine months 2016 was 2,849 (9m 2015: 3,203) thousand euros. The share of the owners of the Company was 2,850 (9k 2015: 3,199) thousand euros. EPS was 0.16 (9m 2015: 0.18) euros.

In nine months, the Group has made a total of 1,336 (9m 2015: 2,240) thousand euros worth of investments to property, plant and equipment and investment properties. In the 1st half of 2015, the Group invested 1,272 thousand euros to the production facilities at Allika Industrial Park. In Q3 2016 the Group invested 637,000 euros to the building of the next larger production complex at Allika Industrial Park.

Main events and post-balance events

Swiss CEAMS-CE Asset Management, along with its Baltic partners, announced the next nominees for the Corporate Excellence Award. AS Harju Elekter was recognised as the best listed company in Estonia while being the third in the overall Baltic assessment. It was recognised thanks to a significant improvement compared to the previous year, which was possible thanks to the continued expansion in Northern Europe, conservative balance sheet management as well as a stable and experienced management team. Positive recognition was awarded also to the Group’s Finnish company Oy Finnkumu, who reached high, 2nd ranking on the list of the Entrepreneurs of South Ostrobothnia.

On 14 October 2016, AS Harju Elekter bought the real estate company Kiinteistö Oy Uutvallinkulma. Following the transaction, it will bear the name of Harju Elekter Kiinteistö Oy. The contract price was 518,000 euros. To date, the acquired company has been leasing 2,470 m² of production premises to the Group’s Finnish company, Finnkulmu Oy, and in the immediate future the production premises used by Satmatic Oy at Kerava and Ulvila, totalling 5,185 m², will also be consolidated under the acquired real estate company. This activity is consistent with the policy of the Group, whereby any production premises used by companies in the Group are owned by the Group.

On 21 October 2016, in Allika Industrial Park, located on the city limits of Tallinn, the cornerstone was laid for two important buildings: the production and storage facilities of HE and the production and storage building of Stera Technologies Oy, the commercial producer of mechanical and electromechanical devices and components. Prior to that, in April 2016, a preliminary contract was concluded with Stera Technologies Oy for the construction and subsequent leasing of production facilities for the company and procurement conducted to identify a project manager, with construction company Rand and Tuulberg AS qualifying. The investment volume is 8.2 million euros, which will be covered from own funds and a bank loan. For this purpose, loan agreements in a total amount of 7 million euros, was signed with Swedbank AS. In total, 12,700 m² of floor area for various purposes will be constructed.  First stage will be ready for delivery to the tenants in the first half of 2017.

AS Harju Elekter granted a loan of 660,000 euros to Skeleton Technologies OÜ. In Q3, an additional round of funding and involvement of investors was arranged and the loan was converted into the share capital of Skeleton Technologies OÜ. The respective entry in the Commercial Register was made on 24 August 2016.

On 28 April 2016, the AGM of shareholders of AS Harju Elekter was held; it approved the 2015 annual report and distribution of profit as well as the decision to pay the shareholders a dividend of 0.05 euros per share, or a total of 887,000 euros, for 2015. In addition, the AGM decided to introduce a no par value share and approved the new version of the articles of association of AS Harju Elekter. By virtue of the decision of the AGM, the share capital of AS Harju Elekter will be reduced by 1,242,000 euros, to 11,176,124.40 euros, by means of a reduction of the book value of the shares. The reduction of share capital was entered in the Commercial Register on 18 October 2016 and disbursements to the shareholders will be made in amount of 0.07 euros per share after the three-month term, stipulated by law, has passed as of the registering of the reduction of share capital in the Commercial Register, i.e. on 20 January 2017. The list of shareholders eligible to receive dividends as well as those participating in the reduction of share capital was fixed as at 23.59 on 13 May 2016. Dividends were transferred to the shareholders’ bank accounts on 17 May 2016.

At its 5 April 2016 meeting, the Supervisory Board of AS Harju Elekter decided to merge the metal factories of the Group’s Estonian subsidiaries, consolidating the sheet metal processing resources, capability and know-how of the entire Group into AS Harju Elekter Teletehnika. The outcome of restructuring is significant economy in terms of manufacturing as well as labour costs. After the changes, AS Harju Elekter Teletehnika will focus on the manufacturing of sheet metal products and details for the electrical engineering and telecommunications sector, while also maintaining the production line for telecommunications products and fibre-optic cables. By the end of Q3, 30 September, the distribution of assets of factories as well as transfer of employees has been completed.

The annual general meeting of the shareholders of PKC Group Oyj, which gathered on 4 April 2016, decided to pay dividends in the amount of 0.70 euros per share. Dividends were transferred to the shareholders’ bank accounts on 15 April 2016. AS Harju Elekter owns 1,094,641 shares. The dividend income of 766,000 euros is reflected in the profit of Q2 2016. The 15% income tax withheld from the dividends in Finland comprised 115,000 euros. PKC Group dividends added 651,000 euros to the cash flow from investment activities in Q2.

In February, our subsidiary Satmatic Oy in Finland and Finnkulmu Oy participated in the local trade fair Sähkö-Tele-Valo-AV, in Jyväskülä, and in October in the fair Energia 2016, in Tampere. In September, AS Harju Elekter Elektrotehnika presented its product range at the SLO autumn fair, and in April AS Harju Elekter Trade Group participated in the International Building Fair Estbuild, in Tallinn.

Andres Allikmäe
Managing director/ CEO
+372 674 7400

For more information:
Tiit Atso, CFO, +372 674 7400
Interim report 1-9/2016

Due to the continued expansion and internationalisation of Harju Elekter Group and the need to develop the management structure of the Group, as well as based on the suggestions of the Corporate Governance Recommendations, the Supervisory Board of the company has, at their regular meeting held today, decided to expand the membership of the Management Board of AS Harju Elekter to three members.

Andres Allikmäe, the former manager of the public limited company, will be appointed as the Chairman of the Management Board and will continue on the basis of the current service contract and authorisations. In addition, Tiit Atso and Aron Kuhi-Thalfeldt will be appointed as members of the Management Board, with their authorisations beginning on 1 November 2016 and ending on 31 October 2019.

Tiit Atso has been working as the CFO of AS Harju Elekter since 2014 and has obtained higher education at the Faculty of Economics of the Tallinn University of Technology. Aron Kuhi-Thalfeldt has been working at AS Harju Elekter as the Head of Real Estate and Energy Services since 2003 and has obtained higher education at the Faculty of Power Engineering of the Tallinn University of Technology.

The precise areas of responsibility of the members of the Management Board will be established with the decision of the Supervisory Board and with the work regulations of the Management Board. The CVs of the members of the Management Board will be published on the website of the company.

Harju Elekter is the leading MV/LV electrical and engineering devices producer in the Baltic countries as well as well-known and respected company in Scandinavia. Harju Elekter Group includes manufacturers of electrical equipment in Estonia, Finland and Lithuania: AS Harju Elekter Elektrotehnika (100%), Satmatic Oy (100%), Finnkumu Oy (100%) and Rifas UAB (100%), as well as the telecommunications products manufacturer AS Harju Elekter Teletehnika (100%) in Estonia and recently purchased real estate holding company Harju Elekter Kiinteistöt Oy (100%). In addition, AS Harju Elekter has financial investments in the Latvian electrical equipment sales company SIA Energokomplekss (14%), Estonian ultra-capacitors developer and manufacturer Skeleton Technologies Group OÜ (10%) and in the Finnish publicly listed company PKC Group Oyj (5%).

Endel Palla
Chairman of the Supervisory Board
+372 674 7400

Prepared by
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

On 21 October, in Allika Industrial Park, located in Saku Rural Municipality on the border of Tallinn, the cornerstone was laid to two important buildings: the production and storage facilities of HE and the production and storage building of Stera Group, the commercial producer of mechanical and electromechanical devices and components. In total, 12,700 m² of floor area for various purposes will be constructed.

The construction of the buildings was commissioned by AS Harju Elekter, the planner was OÜ Architec and the project and construction manager is AS Rand ja Tuulberg. The sites will be completed and ready to be delivered to the lessees in the first half of 2017.

The volume of the investments is 8.2 million euros, which is covered with self-financing and a bank loan.

Allika Industrial Park is well connected to Tallinn Ring Road and Via Baltica, as well as the ports of Tallinn and Paldiski, and is becoming an increasingly important employer to the residents of the Õismäe and Astangu sub-districts and the rural municipalities of Harku and Saue.

Harju Elekter is the leading MV/LV electrical and engineering devices producer in the Baltic countries as well as well-known and respected company in Scandinavia. Harju Elekter Group includes manufacturers of electrical equipment in Estonia, Finland and Lithuania: AS Harju Elekter Elektrotehnika (100%), Satmatic Oy (100%), Finnkumu Oy (100%) and Rifas UAB (100%), as well as the telecommunications products manufacturer AS Harju Elekter Teletehnika (100%) in Estonia and recentely purchased real estate holding company Harju Elekter Kiinteistöt Oy (100%).

In addition, AS Harju Elekter has financial investments in the Latvian electrical equipment sales company SIA Energokomplekss (14%), Estonian ultra-capacitors developer and manufacturer Skeleton Technologies Group OÜ (10%) and in the Finnish publicly listed company PKC Group Oyj (5%).

Andres Allikmä
Managing Director/CEO
+372 674 7400

At 18 October 2016, the reduction of share capital of AS Harju Elekter on the basis adopted by resolution of the General Meeting of Shareholders held at 28 April 2016 was entered in the Commercial Register.

According to the resolutions of the General Meeting of Shareholders held on 28 April 2016 it was decided to reduce the share capital of the Company altogether by EUR 1,241,791.60 from EUR 12,417,916 to EUR 11,176,124.40. The share capital is reduced by reducing the book value of the shares from EUR 0.70 to EUR 0.63, whereas the number of the shares remains the same (i.e. 17,739, 880). The reduction of share capital in the amount of EUR 1,241, 791.60 (EUR 0.07 per share) shall be paid to the shareholders three months after entry of the reduction of share capital in the commercial register, on 20^th of January 2017.

The list of shareholders, who were entitled to receive the payment related to reduction of the book value of shares was closed on 12 May 2016 at 23:59.

Andres Allikmäe
Managing Director/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

On 14 October 2016, AS Harju Elekter signed a contract for the purchase of the real estate company Kiinteistö Oy Uutvallinkulma. Following the transaction, the acquired company will trade under the name Harju Elekter Kiinteistöt Oy. Appointments to the Management Board include Andres Allikmäe (Chairman), and Tiit Atso (CFO of AS Harju Elekter) and Aron Kuhi-Thalfeldt (Head of Real Estate Dept of AS Harju Elekter) as Members. Simo Puustelli (Managing Director of Satmatic Oy) has been appointed CEO of the company. The contract price worked out to be 518,000 euros.

To date, the acquired company has been leasing 2,470 sq m of production premises to Finnkumu Oy, the Group’s Finnish company. The plan for the immediate future is to consolidate under the acquired real estate company also the production premises used by Satmatic Oy at Kerava and Ulvila, 5,185 sq m in total. This activity is consistent with the policy of the Group, whereby any production premises used by companies in the Group are owned by the Group.

Harju Elekter is the leading MV/LV electrical and engineering devices producer in the Baltic countries as well as well-known and respected company in Scandinavia. Harju Elekter Group includes manufacturers of electrical equipment in Estonia, Finland and Lithuania: AS Harju Elekter Elektrotehnika (100%), Satmatic Oy (100%), Finnkumu Oy (100%) and Rifas UAB (100%), as well as the telecommunications products manufacturer AS Harju Elekter Teletehnika (100%) in Estonia. In addition, AS Harju Elekter has financial investments in the Latvian electrical equipment sales company SIA Energokomplekss (14%), Estonian ultra-capacitors developer and manufacturer Skeleton Technologies Group OÜ (10%) and in the Finnish publicly listed company PKC Group Oyj (5%).

Andres Allikmäe
Managing Director/CEO
+372 674 7400

Prepared by
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

The Group’s reporting quarter was successful. The consolidated sales revenue in the accounting quarter was 17.2 (H1 2015: 16.6) million euros, increased by 46% or 5.6 million euros compared to the previous quarter, and 4% or 0.6 million euros in relation to the comparison period. In H1, the consolidated sales revenue increased by 5.2% up to 29.0 (H1 2015: 27.5) million euros. The consolidated net profit of the H1 2016 was 2.0 million euros, which was 25.8% more than in the comparison period.

There has been a growth in sales revenue among almost all products and services. 93% (Q2 2015: 92%) of the reporting quarter sales revenue was earned from the Production segment, and Real Estate together with other areas of activity contributed 7% (Q2 2015: 8%) of the consolidated sales volume. The sale of electric equipment had increased by 5% or 935,000 euros in comparison with the comparison period and by 7% or 1,652 thousand euros in 6 month comparison, providing 86% of the sales revenue of the Group. The addition of the new rental premises in 2015 has increased the rental revenue by 9% of 95,000 euros in the first six months of 2016.

In H1 2016, 78% (H1 2015: 76%) of the Group’s products and services were sold in foreign markets, outside Estonia and in the reporting quarter 81% (Q2 2015: 79%). As a result, that most of the Group’s subsidiaries increased them sales to Finland, the Group’s biggest market has grown by 16% or 1,735 thousand euros over a year. 72% (H1 2015: 64%) of the Group’s products and services were sold on the Finnish market in the reporting quarter.

Sales revenues from the Estonian market continued to decrease. During the reporting quarter 19% (Q2 2015: 21%) of the Group’s products and services were sold on the Estonian market. In 6 months, the share of Estonian market has dropped by two percentage points.

Operating expenses increased 5% in the reporting quarter and 4% in the first half of the year compared to the reference periods. Cost of sales increased 4% in the reporting period. Distribution costs increased by 19% in the reporting quarter and by 12% in H1 in relation to the comparison periods, the rate of distribution costs to revenue accounted for 5.2% (H1 2015: 4.9%). Administrative expenses increased by 7% in the reporting quarter, remaining on the same level in the H1 comparison. The rate of administrative expenses to revenue accounted for 7.1%, having decreased by 0.4 percentage points.

The optimisation of production that started in the second half of 2015 in the Estonian undertakings of the Group has brought about the reduction of the number of employees. In Q2 2016 as well as in H1 2016, the average 454 people worked in the Group; there were on the average by 20 persons less in H1 and by 27 persons less in Q2 compared to the reference periods. In the reporting quarter, employee wages and salaries totalled 2,335 (Q2 2015: 2,414) thousand euros and during the first 6 months 4,709 (H1 2015: 4,802) thousand euros. The average wages per employee per month amounted to 1,730 (H1 2015: 1,688) euros.

The optimisation of production, which began in the second half of the past year and is continuing in 2016, has improved the profit of the reporting period and the profit margins when compared to the reference period.

In 1H the gross profit of the Group was 5,222 (H1 2015: 1,408) thousand euros. The gross profit margin was 18.0% (H1 2015: 17.4%). In Q2 the gross profit margin was 18.3% (Q2 2015: 18.6%).

In H1 2016, the Group’s operating profit was 1,671 (H1 2015: 1,408) thousand euros and EBITDA 1,671 (H1 2015: 1,408) thousand euros. Return of sales for the 6-months period was 5.8% (H1 2015: 5.1%) and return of sales before depreciation 8.5% (H1 2015: 7.8%).

The Group’s operating profit in the reporting quarter was 1,281 (Q2 2015: 1,380) thousand euros and EBITDA 1,705 (Q2 2015: 1,751) thousand euros. Return of sales for the accounting quarter was 7.4% (Q2 2015: 8.3%) and return of sales before depreciation 10.0% decreasing by 0.5 per cent point, compering to the same period a year before. Q2 2016 was the time, when the Group made one-off expenses in the amount of 71,000 euros upon merging the metal factories.

The consolidated net profit of the Q2 2016 was 1,668 (Q2 2015: 1,573) thousand euros, of which the share of the owners of the Company was 1,664 (Q2 2015: 1,557) thousand euros. EPS in the Q2 as well as in the reference period was 0.09 euros. The net profit margin was 9.7% (Q2 2015: 9.5%).

Overall, the consolidated net profit of the H1 2016 was 1,979 (H1 2015: 1,583) thousand euros. The share of the owners of the Company was 1,988 (H1 2015: 1,572) thousand euros. In H1, EPS was 0.11 (H1 2015: 0.09) euros.

During the 6-months period, the Group’s investments to non-current assets totalled 478 (H1 2015: 2,047) thousand euros. In H1 2015, the Group invested 1,272,000 euros in its production facilities at Allika Industrial Park. In the second half of 2016, Allika Industrial Park will see the beginning of the construction of the next major production complex, adding further 8400 m² in rental premises, and the construction of Stera Technologies Oy and Laohotell for proposed rental premises of 4100 m².

Main events and post-balance events

On 28 April 2016, the AGM of shareholders of AS Harju Elekter was held; it approved the 2015 annual report and distribution of profit as well as the decision to pay the shareholders a dividend of 0.05 euros per share, or a total of 887,000 euros, for 2015. In addition, the AGM decided to introduce a no par value share and approve the new version of the articles of association of AS Harju Elekter. By virtue of the decision of the AGM, the share capital of AS Harju Elekter will be reduced by 1 242,000 euros, to 11,176,124.40 euro, by means of a reduction of the book value of the shares. Payments of 0.07 euros per share to the shareholders will be made during the term prescribe by law. The shareholders registered in the shareholders’ registry on 12 May 2016 at 23.59 entitled to dividend as well as reduction of share capital. The dividends was paid to the shareholders on 17 May 2016 by a transfer to the bank account of the shareholder.

In April 2016, a preliminary contract was concluded with Stera Technologies Oy that produces mechanical and electromechanical equipment and parts for the construction and subsequent rental production facilities in Allika Industrial Park, which belongs to the Group. The total size of the production facilities is 8400 m2 and they will be delivered to the lessee in two stages, in July 2017 and October 2018. Allika Industrial Park conducted a procurement to identify a project manager, with Ehitusfirma Rand ja Tuulberg AS qualifying. Both the production facilities to be built for Stera Technologies OÜ and the Laohotell site have received building permits.

At its 5 April 2016 meeting, the Supervisory Board of AS Harju Elekter decided to merge the metal factories of the Group’s Estonian subsidiaries, consolidating the sheet metal processing resources, capability and know-how of the entire Group into AS Harju Elekter Teletehnika. The outcome of restructuring is economy in terms of manufacturing as well as labour costs. After the changes, AS Harju Elekter Teletehnika will focus on the manufacturing of sheet metal products and details for the electrical engineering and telecommunications sector, while also maintaining the production line for telecommunications products and fibre-optic cables. At the same time, the reorganization will enable AS Harju Elekter Elektrotehnika to focus its activities to the core business – manufacturing of electrical equipment, and make it more efficient.

The general meeting of the shareholders of PKC Group Oyj, which gathered on 4 April 2016, decided to pay dividends in the amount of 0.70 euros per share. Dividends were transferred to the shareholders’ bank accounts on 15 April 2016. AS Harju Elekter owns 1,094,641 shares. The dividend income of 766,000 euros is reflected in the profit of Q2 2016. The 15% income tax withheld from the dividends in Finland comprised 115,000 euros. The dividends of PKC Group add 651,000 euros to the cash flow from investment activities in Q2.

AS Harju Elekter decided to provide Skeleton Technologies OÜ with a loan of 660,000 euros (of which, 330,000 euros was issued in the reporting quarter and 330,000 euros after the balance sheet date). In the event of an additional round of funding, the loan will be converted into share capital in order to preserve the holding of AS Harju Elekter.

In February, our Finnish subsidiaries Satmatic Oy and Finnkumu Oy participated in the local trade fair Sähkö-Tele-Valo-AV in Jyväskylä. In the beginning of April, AS Harju Elekter Kaubandusgrupp presented its product range in Tallinn at the international building fair Estbuild.

Andres Allikmäe
Managing director/ CEO
+372 674 7400

For more information: Interim report 1-6/2016

Interim report 1-6/2016

Tiit Atso
CFO
+372 674 7422

The reporting quarter was successful for the Harju Elekter Group. Despite the fact that the economic environment was unstable, we were able to reach the goals we set for ourselves.

In the accounting quarter, the Group’s consolidated revenue was 11.8 (2015 Q1: 10.9) million euros. Sales revenue of the reporting quarter increased by 7% or 0.8 million euros in relation to the comparison period. 89% of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 11% of the consolidated sales volume. The sales of electrical equipment accounted for 94% (Q1 2015: 91%) of the sales revenue of the Production segment and 84% (Q1 2015: 81%) of the sales revenue of the whole Group.  The sale of electrical equipment was up by 11% or 935,000 euros. The increase of rent revenue was mainly due to the completion of the production building in Allika Industrial Village in June 2015, due to which rental revenues have increased 8% (38,000 euros) in Q1 2016.

The Finnish market, which is the Group’s largest, has grown by 20% or 1,235,000 euros year-on-year. In the reporting quarter, 63% of the Group’s products and services were sold on the Finnish market (Q1 2015: 56%). Most of the Group’s enterprises have managed to grow their sales volumes on the Finnish market. According to the estimates made by the Group’s management, the share of the Finnish market is set to increase even further in 2016.

Sales to the Swedish market have grown by 160% or 487,000 euros year-on-year. While the operations of the Swedish company Harju Elekter AB have been suspended, AS Harju Elekter Elektrotehnika has been working towards increasing its sales volumes on the Swedish markets.

During the reporting quarter 26% (Q1 2015: 28%) of the Group’s products and services were sold on the Estonian market.

In the reporting quarter, the operating expenses increased by 4%. The cost of sales increased by 5% up to 9,688,000 euros. In the reporting quarter, the distribution costs increased by 39,000 euros to 723,000 euros, the rate of distribution costs to revenue accounted for 6.1% (Q1 2015: 6.2%). Administrative expenses were 79,000 euros lower than the indicator for the comparable period, and the rate of administrative expenses to revenue accounted for 8.1%, having decreased by 1.3 percentage points.

The optimisation of production, which started in the second half of 2015 in the Group’s Estonian enterprises, involved staff reductions. In Q1 2016, the average 453 people worked in the Group − on the average by 14 persons less than in the reference period; employee wages and salaries totalled 2,374,000 (Q1 2015: 2,388,000) euros. The average wages per employee per month amounted 1,747 (Q1 2015: 1,705) euros. The labor costs decreased by 4.5% to 2,950,000 euros and the share of labour costs in sales revenue from 28% in Q1 2015 to 25% in the reporting quarter.

In the reporting quarter, profits as well as profit margins have improved compared to the reference period. In the first quarter the gross profit of the Group was 2,069,000 (Q1 2015: 1,698,000) euros. The gross profit margin was 17.6% (Q1 2015: 15.5%).

The Group’s operating profit of Q1 2016 was 390,000 (Q1 2015:29,000) euros and EBITDA 780,000 (Q1 2015: 388,000) euros. Return of sales for the accounting quarter was 3.3% (Q1 2015: 0.3%) and return of sales before depreciation 6.6% (Q1 2015: 3.5%).

Overall, the consolidated net profit of the Q1 2016 was 311,000 (Q1 2015: 10,000) euros, of which the share of the owners of the Company was 324,000 (Q1 2015: 16,000) euros. EPS in the Q1 was 0.02 euros.

During the 3-months period, the Group’s investments to non-current assets totalled 49,000 euros (Q1 2015: 1.04 million euros). Major investments in the Group are planned to H2 2016.

Post-balance events

At its 5 April 2016 meeting, the Supervisory Board of AS Harju Elekter decided to merge the metal factories of the Group’s Estonian subsidiaries – AS Harju Elekter Elektrotehnika and AS Harju Elekter Teletehnika, consolidating the sheet metal processing resources of the entire Group into AS Harju Elekter Teletehnika. The outcome of restructuring is significant economy in terms of manufacturing as well as labour costs. The merger of factories will be realised over the course of 2016.

The general meeting of shareholders of PKC Group Oyj, held on 4 April 2016, decided to pay dividends amounting to 0.70 euros per share. Dividends were transferred to the bank accounts of shareholders on 15 April 2016. AS Harju Elekter owns 1,094,641 of PKC Group Oyj shares. The dividend income of 766,000 euros is reflected in the profit and cash flow from investment activity for Q2 of 2016. The 15% income tax on dividends, withheld in Finland, accounted for 115,000 euros. The cash flow from investment activity (PKC Group dividends) accounted for 651,000 euros.

The Management Board of AS Harju Elekter called an annual general meeting of shareholders on 28 April 2016. The Board will propose to the AGM to pay a dividend of 0.05 (2014: 0.15) euros per share for the year 2015, totalling 877 (2014: 2,610) thousand euros. The Management Board also supports the Supervisory Board’s proposals to amend the articles of association and the reduction of share capital to 11.2 million euros, involving an additional disbursement of 0.07 euro per share to the shareholders.

In April, a preliminary contract was concluded with Stera Technologies Oy, manufacturer of mechanical and electromechanical assemblies, for the construction and subsequent rental of production facilities in Allika Industrial Park, which belongs to the Group. The total size of the production facilities is 8400 m2 and they will be delivered to the lessee in two stages, in April 2017 and October 2018.

Andres Allikmäe
Managing director/ CEO
+372 674 7400

For more information: Internal report 1-3/2016

Interim report 1-3/2016

Tiit Atso
CFO
+372 674 7422

Today, on 28 April 2016 starting at 10 a.m., the annual general meeting of the shareholders of AS Harju Elekter was held at Keskväljak 12, Keila. The AGM was attended by 81 shareholders and their authorised representatives who represented the total of 11,375,563 votes accounting for 64.12 % of the total votes.

The agenda of the general meeting was as follows:
1. Approval to AS Harju Elekter annual report of 2015;
2. Approval to profit distribution;
3. Introducing no par value shares and amendment of the articles of association;
4. Reduction of share capital

1. Approval to AS Harju Elekter annual report of the year 2015

The general meeting resolved:
To approve the annual report of AS Harju Elekter of 2015, prepared by the management board and approved by the supervisory board, according to which the consolidated balance sheet total of AS Harju Elekter was 66,579 thousand euros as of 31.12.2015, while the sales revenue of the financial year was 60,656 thousand euros and net profit 3,186 thousand euros.

The number of the votes given in favor of the resolution was 11,365,683 which accounted for 99.91 % of the voted participants.

2. Approval to profit distribution

The general meeting resolved:
To approve the profit distribution proposal of AS Harju Elekter of 2015 as presented by the management board and as approved by the supervisory board as follows:

Management board’s proposal for the distribution of profit as follows:

The dividends will be paid to the shareholders on 17 May 2016 by a transfer to the bank account of the shareholder. * The shareholders registered in the shareholders’ registry on 12 May 2016 at 23.59 shall be entitled to dividend.

The number of the votes given in favor of the resolution was 10,793,733 which accounted for 94.89 % of the voted participants.

3. Introducing no par value shares and amendment of the articles of association

The general meeting resolved:
3.1    Introduce no par value shares.
3.1.1    In connection with introducing no par value shares, amend clauses 3.1, 3.2 and 11.3 of the articles of association of AS Harju Elekter and confirm their new wording as follows:
3.1 The minimum share capital of the company is EUR 5,000,000 (five million) and the maximum share capital is EUR 20,000,000 (twenty million).
3.2 The minimum number of no par value shares is 8,000,000 and the maximum number is 32,000,000. Each share grants one vote at the general meeting of shareholders. The company only has registered shares. The company only has one class of shares and these give the same rights to the shareholders.
11.3 The shareholders shall be paid a part of the profit (dividend) in accordance with the book value of their shares.
3.1.2    As a result of introducing a no par value share, AS Harju Elekter will have 17,739,880 no par value shares, whereas each share grants the shareholder one vote at the general meeting of shareholders. As a result of adopting the resolution specified in clause 3.1, the book value of an AS Harju Elekter share will be EUR 0.70.

3.2    Adjust the articles of association of AS Harju Elekter and approve its new wording as follows:
3.2.1    Exclude from the articles of association clauses 2.1.5, 2.1.6, 2.1.10, 2.1.11, 3.4, 3.5, 5.13 and 5.14.
3.2.2    Amend clauses 4.3, 5.2, 5.11 and 11.4 of the articles of association and approve these in a new wording as follows:
4.3 The shareholders shall be notified of the annual general meeting no later than three weeks in advance thereof. A notice of the general meeting shall be published in at least one national newspaper no later than three weeks prior to the general meeting.
5.2 The supervisory board consists of 3 (three) to 5 (five) members. The general meeting elects the members of the supervisory board for a term of 5 (five) years. The members of the supervisory board elect a chairman and, if necessary, a vice chairman from among themselves.
5.11 In the absence of the chairman of the supervisory board the chairman shall be replaced by the vice chairman or a supervisory board member authorised by the chairman.
11.4 Dividends may be paid on the basis of the approved annual report. The procedure for the payment of dividends shall be set out in a resolution of the general meeting.

3.2.3    Add the following clauses to the articles of association:
4.7 The shareholders may vote on the draft resolutions prepared in respect to the items on the agenda of a meeting of shareholders using electronic means prior to the meeting or during the meeting if it is specified in the notice convening the general meeting. The procedure for electronic voting shall be determined by the management board. The notice convening the general meeting shall specify whether electronic voting is possible and the manner for examining the procedure of electronic voting established by the management board. The shareholder who voted using electronic means shall be deemed to have taken part in the meeting and the votes represented by the shareholder’s share shall be accounted as part of the quorum of the meeting unless otherwise provided by law.
5.4.9 Electing and removing the members of the bodies formed by the supervisory board and establishing the work procedure, unless otherwise provided by law.

Introduce a no par value share and approve the new version of AS Harju Elekter articles of association together with the abovementioned changes.

The number of the votes given in favor of the resolution was 10,908,009 which accounted for 95.89 % of the voted participants.

4. Reduction of share capital

The general meeting resolved:
Reduce the share capital of AS Harju Elekter after the entry into force of amendments to the Articles of Association on the following conditions:
4.1    Reduce the share capital of AS Harju Elekter by EUR 1,241,791.60, from EUR 12,417,916 to EUR 11,176,124.40;
4.2    The share capital will be reduced by decreasing the book value of the shares: as a result of reduction, the book value of AS Harju Elekter share will decrease to EUR 0.63, from EUR 0.70, the number of shares will remain the same (17,739,880) and the new amount of share capital will be EUR 11,176,124.40;
4.3    The share capital will be reduced by making monetary a payment to shareholders. Payments to the shareholders shall be made during the term prescribe by law;
4.4    The reason for reducing the share capital is the fact that AS Harju Elekter has no need at the moment or in the near future to own share capital within the registered amount;
4.5    The list of shareholders participating in the reduction of share capital shall be fixed as at 23.59 on 12 May 2016.

The number of the votes given in favor of the resolution was 11,300,441 which accounted for 99.34 % of the voted participants.

Andres Allikmäe
Managing Director/CEO
+372 674 7400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

In the notice condition no 2 of the issuance of balance carried forward after profit distribution is 25,906,764 euros and condition no 4.1 reduce the share capital of AS Harju Elekter by EUR 1,241,791.60

Follows the corrected notice:

Annual general meeting of Harju Elekter shareholders will be held on Thursday, 28 April 2016, beginning at 10 a.m., at venue of Keila Kultuurikeskus (address: Keskväljak 12, Keila).

The Supervisory Board of the Joint Stock Company Harju Elekter determined the following agenda of the general meeting:

1. Approval to AS Harju Elekter annual report of the year 2015.

To approve the annual report of AS Harju Elekter of 2015, prepared by the management board and approved by the supervisory board, according to which the consolidated balance sheet total of AS Harju Elekter was 66,579 thousand euros as of 31.12.2015, while the sales revenue of the financial year was 60,656 thousand euros and net profit 3,186 thousand euros.

2. Approval to profit distribution.

To approve the profit distribution proposal of AS Harju Elekter of 2015 as presented by the management board and as approved by the supervisory board as follows:

Management board’s proposal for the distribution of profit as follows:

The dividends will be paid to the shareholders on 17 May 2016 by a transfer to the bank account of the shareholder. * The shareholders registered in the shareholders’ registry on 12 May 2016 at 23.59 shall be entitled to dividend.

3. Introducing no par value shares and amendment of the articles of association

3.1 Introduce no par value shares.

3.1.1 In connection with introducing no par value shares, amend clauses 3.1, 3.2 and 11.3 of the articles of association of AS Harju Elekter and confirm their new wording as follows:

3.1 The minimum share capital of the company is EUR 5,000,000 (five million) and the maximum share capital is EUR 20,000,000 (twenty million).

3.2 The minimum number of no par value shares is 8,000,000 and the maximum number is 32,000,000. Each share grants one vote at the general meeting of shareholders. The company only has registered shares. The company only has one class of shares and these give the same rights to the shareholders.

11.3 The shareholders shall be paid a part of the profit (dividend) in accordance with the book value of their shares.

3.1.2 As a result of introducing a no par value share, AS Harju Elekter will have 17,739,880 no par value shares, whereas each share grants the shareholder one vote at the general meeting of shareholders. As a result of adopting the resolution specified in clause 3.1, the book value of an AS Harju Elekter share will be EUR 0.70.

3.2 Adjust the articles of association of AS Harju Elekter and approve its new wording as follows:

3.2.1 Exclude from the articles of association clauses 2.1.5, 2.1.6, 2.1.10, 2.1.11, 3.4, 3.5, 5.13 and 5.14.

3.2.2 Amend clauses 4.3, 5.2, 5.11 and 11.4 of the articles of association and approve these in a new wording as follows:

4.3 The shareholders shall be notified of the annual general meeting no later than three weeks in advance thereof. A notice of the general meeting shall be published in at least one national newspaper no later than three weeks prior to the general meeting.

5.2 The supervisory board consists of 3 (three) to 5 (five) members. The general meeting elects the members of the supervisory board for a term of 5 (five) years. The members of the supervisory board elect a chairman and, if necessary, a vice chairman from among themselves.

5.11 In the absence of the chairman of the supervisory board the chairman shall be replaced by the vice chairman or a supervisory board member authorised by the chairman.

11.4 Dividends may be paid on the basis of the approved annual report. The procedure for the payment of dividends shall be set out in a resolution of the general meeting.

3.2.3 Add the following clauses to the articles of association:

4.7 The shareholders may vote on the draft resolutions prepared in respect to the items on the agenda of a meeting of shareholders using electronic means prior to the meeting or during the meeting if it is specified in the notice convening the general meeting. The procedure for electronic voting shall be determined by the management board. The notice convening the general meeting shall specify whether electronic voting is possible and the manner for examining the procedure of electronic voting established by the management board. The shareholder who voted using electronic means shall be deemed to have taken part in the meeting and the votes represented by the shareholder’s share shall be accounted as part of the quorum of the meeting unless otherwise provided by law.

5.4.9 Electing and removing the members of the bodies formed by the supervisory board and establishing the work procedure, unless otherwise provided by law.

Introduce a no par value share and approve the new version of AS Harju Elekter articles of association together with the abovementioned changes.

4. Reduction of share capital

Reduce the share capital of AS Harju Elekter after the entry into force of amendments to the Articles of Association on the following conditions:

4.1 Reduce the share capital of AS Harju Elekter by EUR 1,241,791.60, from EUR 12,417,916 to EUR 11,176,124.40;

4.2 The share capital will be reduced by decreasing the book value of the shares: as a result of reduction, the book value of AS Harju Elekter share will decrease to EUR 0.63, from EUR 0.70, the number of shares will remain the same (17,739,880) and the new amount of share capital will be EUR 11,176,124.40;

4.3 The share capital will be reduced by making monetary a payment to shareholders. Payments to the shareholders shall be made during the term prescribe by law;

4.4 The reason for reducing the share capital is the fact that AS Harju Elekter has no need at the moment or in the near future to own share capital within the registered amount;

4.5 The list of shareholders participating in the reduction of share capital shall be fixed as at 23.59 on 12 May 2016.

The shareholders whose shares represent at least 1/20 of the share capital may request the inclusion of additional issues to the agenda of the general meeting, provided that the respective request has been submitted in writing no later than by 29 April 2015. The shareholders whose shares represent at least 1/20 of the share capital may submit a written draft of the resolution in respect to each item on the agenda no later than by 11 May 2015. More detailed information available on §287 of the Commercial Code (right of shareholder to information), §293 (2) (right to demand the inclusion of additional issues in the agenda) and §2931 (3) (obligation to submit simultaneously with the request on the modification of the agenda a draft of the resolution or substantiation) and §2931 (4) (right to submit a draft of the resolution in respect to each item on the agenda) about the rules and term of exercising these rights have been published on the homepage of AS Harju Elekter at www.harjuelekter.ee. The drafts of the resolutions and substantiations submitted by the shareholders will be published on the same homepage, if any are received. After the items on the agenda of the general meeting, including additional issues, have been discussed, the shareholders can ask for information from the management board about the activity of the public limited company.

The annual report of 2015, agenda and proposals to the AGM of shareholders are available for preliminary examination in the Internet, company’s home page or in Keila, 31 Paldiski Str. Questions about agenda items can be sent to the address yldkoosolek@he.ee. Questions, answers and the positions of the meeting will be published on the website.

According to § 297 (5) of the Commercial Code, the list of shareholders entitled to vote at the meeting will be fixed at 23.59 on 21.04.2016. Registration of the participants starts on 28 April 2016 at 9 a.m.

Please submit the following documents to register the participants of the general meeting: a shareholder that is a natural person – personal identification document; a representative of a shareholder that is a natural person – personal identification document and a written letter of authorisation; a legal representative of a shareholder that is a legal person – an extract of the relevant (commercial) register in which the legal person is registered, and the personal identification document of the representative; a transactional representative of a shareholder that is a legal person is also required to submit a written authorisation issued by the legal representative of the legal person in addition to the above listed documents.

We ask the documents of a legal person registered in a foreign country to be legalised or having an apostil attached to the documents beforehand, unless specified otherwise in an international agreement. AS Harju Elekter may register a shareholder that is a legal person from a foreign country to the general meeting also in case all required information on the legal person and its representative are included in a notarised letter of authorisation issued in the foreign country and the respective letter of authorisation is accepted in Estonia. We ask you to present a passport or an ID-card as a personal identification document.

A shareholder may inform of the appointment of a representative or withdrawal of an authorisation given to a representative before the general meeting by e-mail on yldkoosolek@he.ee or by submitting the mentioned document(s) on business days from 8.30 AM to 4 PM no later than by 27 April 2016 to the secretariat of AS Harju Elekter at Paldiski Str 31 (3rd floor) in Keila.

Andres Allikmäe
Managing Director/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

The Supervisory Board of AS Harju Elekter approved the audited financial results for the year 2015. The financial results remained unchanged, compared to the preliminary disclosure on 26th of February 2016.

Consolidated sales revenue for the reporting year reached 60.7 million euros, having increased 20% in relation to the comparable period, the consolidated operating profit increased by 47% up to 3.3 million euros and consolidated net profit was 3.2 million euros, decreasing by 67% compared to the previous period.

Audited financial results for the year 2015 as well as the yearbook have been included as attachments to this announcement.

Andres Allikmäe
Managing Director/CEO
+372 674 7400

Annual Report 2015

Year Book 2015

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

Annual general meeting of Harju Elekter shareholders will be held on Thursday, 28 April 2016, beginning at 10 a.m., at venue of Keila Kultuurikeskus (address: Keskväljak 12, Keila).

The Supervisory Board of the Joint Stock Company Harju Elekter determined the following agenda of the general meeting:

1. Approval to AS Harju Elekter annual report of the year 2015.

To approve the annual report of AS Harju Elekter of 2015, prepared by the management board and approved by the supervisory board, according to which the consolidated balance sheet total of AS Harju Elekter was 66,579 thousand euros as of 31.12.2015, while the sales revenue of the financial year was 60,656 thousand euros and net profit 3,186 thousand euros.

2. Approval to profit distribution.

To approve the profit distribution proposal of AS Harju Elekter of 2015 as presented by the management board and as approved by the supervisory board as follows:

Management board’s proposal for the distribution of profit as follows:

The dividends will be paid to the shareholders on 17 May 2016 by a transfer to the bank account of the shareholder. * The shareholders registered in the shareholders’ registry on 12 May 2016 at 23.59 shall be entitled to dividend.

3. Introducing no par value shares and amendment of the articles of association

3.1 Introduce no par value shares.

3.1.1 In connection with introducing no par value shares, amend clauses 3.1, 3.2 and 11.3 of the articles of association of AS Harju Elekter and confirm their new wording as follows:

3.1 The minimum share capital of the company is EUR 5,000,000 (five million) and the maximum share capital is EUR 20,000,000 (twenty million).

3.2 The minimum number of no par value shares is 8,000,000 and the maximum number is 32,000,000. Each share grants one vote at the general meeting of shareholders. The company only has registered shares. The company only has one class of shares and these give the same rights to the shareholders.

11.3 The shareholders shall be paid a part of the profit (dividend) in accordance with the book value of their shares.

3.1.2 As a result of introducing a no par value share, AS Harju Elekter will have 17,739,880 no par value shares, whereas each share grants the shareholder one vote at the general meeting of shareholders. As a result of adopting the resolution specified in clause 3.1, the book value of an AS Harju Elekter share will be EUR 0.70.

3.2 Adjust the articles of association of AS Harju Elekter and approve its new wording as follows:

3.2.1 Exclude from the articles of association clauses 2.1.5, 2.1.6, 2.1.10, 2.1.11, 3.4, 3.5, 5.13 and 5.14.

3.2.2 Amend clauses 4.3, 5.2, 5.11 and 11.4 of the articles of association and approve these in a new wording as follows:

4.3 The shareholders shall be notified of the annual general meeting no later than three weeks in advance thereof. A notice of the general meeting shall be published in at least one national newspaper no later than three weeks prior to the general meeting.

5.2 The supervisory board consists of 3 (three) to 5 (five) members. The general meeting elects the members of the supervisory board for a term of 5 (five) years. The members of the supervisory board elect a chairman and, if necessary, a vice chairman from among themselves.

5.11 In the absence of the chairman of the supervisory board the chairman shall be replaced by the vice chairman or a supervisory board member authorised by the chairman.

11.4 Dividends may be paid on the basis of the approved annual report. The procedure for the payment of dividends shall be set out in a resolution of the general meeting.

3.2.3 Add the following clauses to the articles of association:

4.7 The shareholders may vote on the draft resolutions prepared in respect to the items on the agenda of a meeting of shareholders using electronic means prior to the meeting or during the meeting if it is specified in the notice convening the general meeting. The procedure for electronic voting shall be determined by the management board. The notice convening the general meeting shall specify whether electronic voting is possible and the manner for examining the procedure of electronic voting established by the management board. The shareholder who voted using electronic means shall be deemed to have taken part in the meeting and the votes represented by the shareholder’s share shall be accounted as part of the quorum of the meeting unless otherwise provided by law.

5.4.9 Electing and removing the members of the bodies formed by the supervisory board and establishing the work procedure, unless otherwise provided by law.

Introduce a no par value share and approve the new version of AS Harju Elekter articles of association together with the abovementioned changes.

4. Reduction of share capital

Reduce the share capital of AS Harju Elekter after the entry into force of amendments to the Articles of Association on the following conditions:

4.1 Reduce the share capital of AS Harju Elekter by EUR 1,241,792.60, from EUR 12,417,916 to EUR 11,176,124.40;

4.2 The share capital will be reduced by decreasing the book value of the shares: as a result of reduction, the book value of AS Harju Elekter share will decrease to EUR 0.63, from EUR 0.70, the number of shares will remain the same (17,739,880) and the new amount of share capital will be EUR 11,176,124.40;

4.3 The share capital will be reduced by making monetary a payment to shareholders. Payments to the shareholders shall be made during the term prescribe by law;

4.4 The reason for reducing the share capital is the fact that AS Harju Elekter has no need at the moment or in the near future to own share capital within the registered amount;

4.5 The list of shareholders participating in the reduction of share capital shall be fixed as at 23.59 on 12 May 2016.

The shareholders whose shares represent at least 1/20 of the share capital may request the inclusion of additional issues to the agenda of the general meeting, provided that the respective request has been submitted in writing no later than by 29 April 2015. The shareholders whose shares represent at least 1/20 of the share capital may submit a written draft of the resolution in respect to each item on the agenda no later than by 11 May 2015. More detailed information available on §287 of the Commercial Code (right of shareholder to information), §293 (2) (right to demand the inclusion of additional issues in the agenda) and §2931 (3) (obligation to submit simultaneously with the request on the modification of the agenda a draft of the resolution or substantiation) and §2931 (4) (right to submit a draft of the resolution in respect to each item on the agenda) about the rules and term of exercising these rights have been published on the homepage of AS Harju Elekter at www.harjuelekter.ee. The drafts of the resolutions and substantiations submitted by the shareholders will be published on the same homepage, if any are received. After the items on the agenda of the general meeting, including additional issues, have been discussed, the shareholders can ask for information from the management board about the activity of the public limited company.

The annual report of 2015, agenda and proposals to the AGM of shareholders are available for preliminary examination in the Internet, company’s home page or in Keila, 31 Paldiski Str. Questions about agenda items can be sent to the address yldkoosolek@he.ee. Questions, answers and the positions of the meeting will be published on the website.

According to § 297 (5) of the Commercial Code, the list of shareholders entitled to vote at the meeting will be fixed at 23.59 on 21.04.2016. Registration of the participants starts on 28 April 2016 at 9 a.m.

Please submit the following documents to register the participants of the general meeting: a shareholder that is a natural person – personal identification document; a representative of a shareholder that is a natural person – personal identification document and a written letter of authorisation; a legal representative of a shareholder that is a legal person – an extract of the relevant (commercial) register in which the legal person is registered, and the personal identification document of the representative; a transactional representative of a shareholder that is a legal person is also required to submit a written authorisation issued by the legal representative of the legal person in addition to the above listed documents.

We ask the documents of a legal person registered in a foreign country to be legalised or having an apostil attached to the documents beforehand, unless specified otherwise in an international agreement. AS Harju Elekter may register a shareholder that is a legal person from a foreign country to the general meeting also in case all required information on the legal person and its representative are included in a notarised letter of authorisation issued in the foreign country and the respective letter of authorisation is accepted in Estonia. We ask you to present a passport or an ID-card as a personal identification document.

A shareholder may inform of the appointment of a representative or withdrawal of an authorisation given to a representative before the general meeting by e-mail on yldkoosolek@he.ee or by submitting the mentioned document(s) on business days from 8.30 AM to 4 PM no later than by 27 April 2016 to the secretariat of AS Harju Elekter at Paldiski Str 31 (3nd floor) in Keila.

Andres Allikmäe
Managing Director/CEO
+372 6747 400

Prepared by:
Moonika Vetevool
Corporate communication and investor relations manager
Tel: +372 671 2761

At its 5 April 2016 meeting, the Supervisory Board of AS Harju Elekter decided to merge the metal factories of the Group’s Estonian subsidiaries – AS Harju Elekter Elektrotehnika and AS Harju Elekter Teletehnika, consolidating the sheet metal processing resources, capability and knowhow of the entire Group into AS Harju Elekter Teletehnika. The merger of factories will be realised over the course of 2016.

The aim of restructuring is to focus the operations of AS Harju Elekter Teletehnika as a manufacturer of competitively priced sheet metal products, both towards the Group’s companies as well as external customers, optimise costs and achieve more efficient use of resources. The outcome of restructuring is significant economy in terms of manufacturing as well as labour costs.

In connection with restructuring, changes were also made in the management bodies of AS Harju Elekter Teletehnika. Management Board of AS Harju Elekter Teletehnika will be expanded to include two members: former manager Urmas Paisnik will continue as a Management Board member; the supervisory board appointed Andre Koit as the second Management Board member, who, due to his appointment to the Management Board, was recalled from the Supervisory Board of the subsidiary on 5 April this year.

Andre Koit was born in 1969 and graduated from the Tallinn University of Technology Department of Machinery as a mechanical engineer. Andre Koit joined the Group in 1993, and has worked as the Chief Operating Officer since 1 January 2015. Starting from 5 April 2016, the composition of the Supervisory Board of AS Harju Elekter Teletehnika will be as follows: Chairman Endel Palla and members Andres Allikmäe, Tiit Atso, Kadri Kassmann, and Jan Osa (Managing Director of AS Harju Elekter Elektrotehnika) as a new member.

After the changes, AS Harju Elekter Teletehnika will focus on the manufacturing of sheet metal products and details for the electrical engineering and telecommunications sector, while also maintaining the production line for telecommunications products and fibre-optic cables.

AS Harju Elekter Elektrotehnika will continue in its current area of activity — the development, production and distribution of electrical equipment for the energy distribution, industrial and construction sectors.

Harju Elekter is the leading MV/LV electrical and engineering devices producer in the Baltic countries as well as well-known and respected company in Scandinavia. Harju Elekter Group includes manufacturers of electrical equipment in Estonia, Finland and Lithuania: AS Harju Elekter Elektrotehnika (100%), Satmatic Oy (100%), Finnkumu Oy (100%) and Rifas UAB (100%), as well as the telecommunications products manufacturer AS Harju Elekter Teletehnika (100%) in Estonia. In addition, AS Harju Elekter has financial investments in the Latvian electrical equipment sales company SIA Energokomplekss (14%), Estonian ultra-capacitors developer and manufacturer Skeleton Technologies Group OÜ (10%) and in the Finnish publicly listed company PKC Group Oyj (5%).

Andres Allikmäe
Managing Director/CEO
+372 674 7400

Prepared by
Moonika Vetevool
Corporate communication and investor relations manager
+372 671 2761

2015 was a successful year for the Harju Elekter Group. Despite the fact that the economic environment was unstable, we were able to reach the goals we set for ourselves and earned the highest ever sales revenue and operating profit of the Group.

Consolidated sales revenue for the reporting year reached 60.7 million euros, having increased by 10.1 million euros or by 19.9% in relation to the comparable period. The Group’s operating profit in the reporting year was 3.3 million euros, having increased by 1.0 million euros or by 47.0% in relation to the comparable period. The consolidated net profit of 2015 was 3.2 (2014: 9.8) million euros. The Group’s sales revenue in the accounting quarter was 15.0 million euros, increasing by 6.1% or 0.8 million euros compared to the reference period. When comparing the results of the reporting period to the last year, the following circumstances had the greatest impact: in the financial results of 2014, the operations of Finnkumu Oy (acquired in June 2014) were only represented in the second half; also the net profit of the 12 months of 2014 included the consolidated profit of the associated company AS Draka Keila Cables in the amount of 0.8 million euros. The net profit of 2014 was impacted by the extraordinary revenues from the sales of financial investments. This includes the financial income of 1.8 million euros from the sales of the AS Draka Keila Cables minority holding and 4.6 million euros from the sales of the shares of PKC Group Oyj. Not including the extraordinary incomes from the sales of financial investments, the comparable 12-months net profit of 2014 was 3.4 million euros and of the current reporting period, 3.2 million euros.

There has been a growth in sales revenue among almost all products and services. In the reporting quarter like in the reference period, 91% and in 12-months period, 92% (2014: 91%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 9% and 8% of the consolidated sales volume, respectively. 86% (Q4 2014: 87%) of the reporting quarter revenue originated from the sale of electrical equipment. There was 12.9 million euros worth of electrical equipment sold in the reporting quarter, which was 0.5 million euros or more than 4% more than in the comparison quarter, with sales of electrical equipment growing up more than one fifth to 52.1 (2014: 42.9) million euros in the 12-months period and formed 94% of the total sales revenue of Manufacturing segment.

In Q4 2015 as well as in 12-months, 77% (2014: 70%) of the Group’s products and services were sold in foreign markets, outside Estonia. Finland is the biggest market of the Group; accordingly, the sales volumes of the Group are strongly influenced by the events taking place on this market. In 12 months, 64% (2014: 58%) of the Group’s products and services were sold on the Finnish market. The sales in Finnish market grew by 9.4 million euros during a year. During the year, 23% (2014: 30%) of the Group’s products and services were sold on the Estonian market. Year on year, supply to the Estonian market decreased by 1 million euros or 6.5%. The decline was mainly caused by decreased investments in the energy distribution sector in Estonia starting from 2014. Despite this, the Estonian companies’ sales revenue outside the Group has remained at the levels of the comparative period. Sales to the Lithuanian market have decreased from year to year and this is due a change in the Lithuanian subsidiary’s sales strategy, as a result of which the main focus is on export markets. In the reporting year, the share of foreign markets in the subsidiary’s sales revenues grew to 93% (2014: 81%). Sales to the Norwegian market in the reporting year have grown 2.3 times or by 2.2 million euros, to 3.9 million euros. In addition, the company has grown the volume of its sales to the Finnish market. The United States was added as a new market.

Operating expenses increased 7% in the reporting quarter and 19% in the 12-months period compared to the reference periods. Cost of sales increased by 8% up to 13.0 million euros in the reporting quarter and by 21% up to 50.4 million euros during 12-months period. Distribution costs stood stable as a year ago; the rate of distribution costs to revenue accounted for 4.4% (2014: 5.4%). Administrative expenses increased by 73,000 euros up to 1.2 million euros in the reporting quarter and during 12-months period by 0.3 million euros to 4.3 million euros, at the same time the rate of administrative expenses to revenue decreased and accounted for 7.2% (2014: 8.0%).

In Q4 2015, the average 463 (Q4 2014: 465) people worked in the Group and in 12-months period, the average number of employees was 472 (2014: 459). In the accounting quarter, employee wages and salaries totalled 2.4 (Q4 2014: 2.5) million euros and during 12 months 9.7 (2014: 9.2) million euros. The average wages per employee per month amounted to 1,712 (2014: 1,669) euros.

In the fourth quarter the gross profit of the Group was 2.1 (Q4 2014: 2.2) million euros. The gross profit margin was 13.8% being 1.9 per cent point lower compering to the same period a year before. The annual stock-taking assesses and adjusts the costs of receivables, assets and reserves as well as seasonality are the reasons of which the profitability in the last quarter of the year is lower than usual. In the 12-months period, the gross profit of the Group was 10.3 (2014: 9.1) million euros and the gross profit margin was 17.0%, being 0.9 percent point lower comparing to the reference period.

The Group’s operating profit in the reporting quarter was 79 (Q4 2014: 282) thousand euros and EBITDA 498 (Q4 2014: 657) thousand euros. Return of sales for the accounting quarter was 0.5% (Q4 2014: 2.0%) and return of sales before depreciation 3.3% (Q4 2014: 4.7%).

In 12-months period, EBITDA increased by 1.1 million euros to 4.8 million euros and operating profit by 1.0 million euros to 3.3 million euros. Return of sales before depreciation was 7.9% (2014: 7.4%) and return of sales 5.4% (2014: 4.4%).

In April, PKC Group Oyj paid dividends to the shareholders 0.70 euros per share. Dividend income from the shares was 766 (2014: 906) thousand euros. In total, financial investments yielded a profit of 0.8 million euros during twelve months, which was 4.8 million euros lower than in the comparable period. In Q2 2014, 200,000 shares of PKC Group Oyj were sold and the financial income from selling the shares was 4.6 million euros. AS Harju Elekter sold it’s holding in associated company AS Draka Keila Cables on 9 July 2014. The transaction earned 1.8 million euros of financial income and an additional profit of 0.8 million euros was consolidated from the company. In total, a revenue of 2.6 million euros was made by the associated company in last year.

On balance, the profit for the reporting quarter before tax was 118 (Q4 2014: 304) thousand euros. The income tax assessed for the reporting quarter was 134 (Q4 2014: 51) thousand euros. The consolidated net loss for the reporting quarter was 16,000 euros, of which the share of the Owners of the Company was 8,000 euros. During the comparative period, the net profit was 253,000 euros, of which the share of the Owners of the Company was 232,000 euros.

The consolidated net profit of the year 2015 was 3.2 (2014: 9.8) million euros, included attributed to Owners of the Company 3.2 (2014: 9.7) million euros. The net profit margin was established at 5.3% (2014: 19.3%). EPS was 0.18 (2014: 0.56) euros.

During the 12-months period, the Group’s investments to non-current assets totalled 4.9 (2014: 6.7, incl through business combinations 4.9) million euros.

Andres Allikmäe
Managing director/ CEO
+372 674 7400

For more information: Internal report 1-12/2015