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.
|
Change |
January-December |
Change |
October – December |
|||
| (thousand euros) |
% |
2017 |
2016 |
% |
2017 |
2016 |
| Sales revenue |
67.8 |
102,668 |
61,167 |
75.6 |
28,818 |
16,408 |
| Gross profit |
50.8 |
15,625 |
10,361 |
83.1 |
4,570 |
2,496 |
| EBITDA |
58.8 |
7,587 |
4,777 |
62.3 |
2,345 |
894 |
| EBIT |
71.1 |
5,442 |
3,181 |
88.3 |
1,404 |
487 |
| Profit for the period |
803.6 |
29,132 |
3,224 |
52.3 |
946 |
375 |
| incl attributed to Owners of the Company |
804.9 |
29,129 |
3,219 |
64.5 |
976 |
369 |
| Profit for the period without extraordinary income |
33.2 |
4,293 |
3,224 |
|
|
|
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
| AS HARJU ELEKTER | ||||
| CONSOLIDATED BALANCE SHEET,31.12.2017 | ||||
| Unaudited | ||||
| EUR’000 | ||||
| ASSETS | 31.12.17 | 31.12.16 | ||
| Cash and cash equivalents | 10 992 | 3 278 | ||
| Available-for-sale financial assets | 9 935 | 0 | ||
| Trade receivables and other receivables | 13 575 | 8 480 | ||
| Prepayments | 1 118 | 771 | ||
| Prepaid income tax | 56 | 24 | ||
| Inventories | 13 037 | 9 712 | ||
| TOTAL CURRENT ASSETS | 48 713 | 22 265 | ||
| Deferred income tax asset | 56 | 37 | ||
| Other long-term financial investments | 4 684 | 21 990 | ||
| Investment property | 17 881 | 13 273 | ||
| Property, plant and equipment | 11 983 | 10 972 | ||
| Intangible assets | 6 660 | 5 431 | ||
| TOTAL NON-CURRENT ASSETS | 41 264 | 51 703 | ||
| TOTAL ASSETS | 89 977 | 73 968 | ||
| LIABILITIES AND OWNERS’ EQUITY | ||||
| Interest-bearing loans and borrowings | 625 | 804 | ||
| Advances from customers | 1 088 | 9 140 | ||
| Trade payables and other payables | 12 802 | 1 242 | ||
| Payables to shareholders | 0 | 1 075 | ||
| Tax liabilities | 2 106 | 133 | ||
| Income tax liabilities | 270 | 15 | ||
| Short-term provision | 245 | 12 409 | ||
| TOTAL CURRENT LIABILITIES | 17 136 | 1 167 | ||
| NON-CURRENT LIABILITIES | 2 910 | 13 576 | ||
| TOTAL LIABILITIES | 20 046 | 12 418 | ||
| Share capital | 11 176 | -1 242 | ||
| Share premium | 804 | 804 | ||
| Restricted reserves | 2 844 | 19 214 | ||
| Retained earnings | 55 048 | 29 113 | ||
| TOTAL OWNERS’ EQUITY | 69 872 | 60 307 | ||
| Non-controlling interests | 59 | 85 | ||
| TOTAL EQUITY | 69 931 | 60 392 | ||
| TOTAL LIABILITIES AND OWNERS’ EQUITY | 89 977 | 73 968 | ||
| CONSOLIDATED INCOME STATEMENT, 1-12/2017 | ||||
| Unaudited | ||||
| EUR’000 | Q4 2017 | Q4 2016 | 2017 | 2016 |
| Revenue | 28 818 | 16 408 | 102 668 | 61 167 |
| Cost of goods sold | -24 248 | -13 912 | -87 043 | -50 806 |
| Gross profit | 4 570 | 2 496 | 15 625 | 10 361 |
| Distribution costs | -1 325 | -818 | -4 132 | -3 034 |
| Administrative expenses | -1 820 | -1 165 | -5 981 | -4 138 |
| Other income | 10 | 10 | 50 | 76 |
| Other expenses | -31 | -36 | -120 | -84 |
| Operating profit | 1 404 | 487 | 5 442 | 3 181 |
| Finance income | 20 | 6 | 24 869 | 775 |
| Finance costs | -190 | -7 | -96 | -24 |
| Profit from normal operations | 1 234 | 486 | 30 215 | 3 932 |
| Corporate income tax | -288 | -111 | -1 083 | -708 |
| Profit for the period, attributable to | 946 | 375 | 29 132 | 3 224 |
| owners of the Company | 976 | 369 | 29 129 | 3 219 |
| non-controlling interests | -30 | 6 | 3 | 5 |
| Basic earnings per share (EUR) | 0,06 | 0,02 | 1,64 | 0,18 |
| Diluted earnings per share (EUR) | 0,06 | 0,02 | 1,64 | 0,18 |
Tiit Atso
CFO
+372 674 7400
