Harju Elekter – 50 years of experience in offering solutions for electricity distribution! Harju Elekter Group financial results, 1-12/2015

26.02.2016 Reports

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.

October – December change January – December change
(thousand euros) 2015 2014 % 2015 2014 %
Revenue 15,030 14,166 6.1 60,656 50,606 19.9
Gross profit 2,079 2,222 -6.4 10,299 9,081 13.4
EBITDA 498 657 -24.2 4,819 3,741 28.8
EBIT 79 282 -72.0 3,276 2,228 47.0
Profit for the period

-16

253

-106.3

3,186

9,778

-67.4

incl attributed to Owners of the Company

-8

232

-103.2

3,190

9,697

-67.1

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

STATEMENT OF FINANCIAL POSITION, 31.12.2015
Consolidated, unaudited
EUR’000
ASSETS 31.12.15 31.12.14
Cash and cash equivalents 5 711 9 984
Available-for-sale financial assets 0 35
Trade receivables and other receivables 6 678 6 484
Prepayments 278 455
Prepaid income tax 28 79
Inventories 7 148 8 104
TOTAL CURRENT ASSETS 19 843 25 141
Deferred income tax asset 57 0
Other long-term financial investments 20 188 19 145
Investment property 12 980 12 109
Property, plant and equipment 8 020 7 968
Intangible assets 5 491 5 429
TOTAL NON-CURRENT ASSETS 46 736 44 651
TOTAL ASSETS 66 579 69 792
LIABILITIES AND OWNERS’ EQUITY
Interest-bearing loans and borrowings 296 278
Trade payables and other payables 5 350 6 146
Liabilities in fair value 713 843
Tax liabilities 944 1 072
Income tax liabilities 146 12
Short-term provision 14 39
TOTAL CURRENT LIABILITIES 7 463 8 390
NON-CURRENT LIABILITIES 912 1 560
TOTAL LIABILITIES 8 375 9 950
Share capital 12 418 12 180
Share premium 804 240
Restricted reserves 18 047 19 393
Retained earnings 26 817 26 664
TOTAL OWNERS’ EQUITY 58 086 58 477
Non-controlling interests 118 1 365
TOTAL EQUITY 58 204 59 842
TOT.LIABILIT.AND OWNERS’ EQUITY 66 579 69 792
STATEMENT OF PROFIT AND LOSS, 1-12/2015
Consolidated,unaudited
EUR’000 Q4 2015 Q4 2014 12m 2015 12m 2014
NET SALES 15 030 14 166 60 656 50 606
Cost of goods sold -12 951 -11 944 -50 357 -41 525
Gross profit 2 079 2 222 10 299 9 081
Marketing expenses -696 -745 -2 657 -2 720
Administrative expenses -1 249 -1 176 -4 337 -4 042
Other revenue 4 11 70 27
Other expenses -59 -30 -99 -118
Operating profit 79 282 3 276 2 228
Finance income 48 34 835 5 661
Finance costs -9 -12 -49 -38
Income from subsidiaries 0 0 0 2 602
Profit before income tax 118 304 4 062 10 453
Income tax expense -134 -51 -876 -675
Profit for the period, attributable to -16 253 3 186 9 778
   owners of the Company -8 232 3 190 9 697
   non-controlling interest -8 21 -4 81
Basic earnings per share  (EUR) 0,00 0,01 0,18 0,56
Diluted earnings per share  (EUR) 0,00 0,01 0,18 0,56

Interim report 1-12/2015

Tiit Atso
CFO
+372 674 7422

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