FINANCIAL RESULTS 9M 2002
Sales revenue During the accounting period the economic situation in Estonia has been relatively stable. According to the data of the Estonian Market Research Institute, in nine months of the current year the order volumes for industrial products exceeded their usual level and the output volumes sustained a growing trend. There have also been more export orders than usual.
The construction market is still experiencing a boom and the institute anticipates that the fourth quarter will be more favourable than usually. The upsurge that took off in the electrical engineering industry in the preceding years has lasted till the present day. AS Harju Elekter's domestic market is driven by building and renovation activities and the demand for products primarily used for electrical engineering purposes. The energy, infrastructure, building and wholesale companies have placed increasingly more orders on the domestic as well as on external markets.
The consolidated net sales and revenues for nine months of 2002 amounted to EEK 186.6 million (EUR 11.9 mil.). Compared with the same period last year, the Group's turnover grew by 37.6 per cent, whereas in Q3 the sales surpassed the respective indicator for the previous year by 31.5 per cent. Sales on the Estonian market accounted for 59.0 per cent of the consolidated net sales and revenues (2001 9m: 59.4%), marking a 36.6 per cent rise in comparison with the nine month period in 2001, and on the external markets EEK 76.5 million (EUR 4.9 mil.) which is 39.1 per cent more than during the same period last year.
Driven by the growing demand on the electrical engineering market, manufacturing and marketing of electrical equipment increased by 61.8 % within nine months and the acquisition of the new subsidiary added another 12.1 per cent at the expense of the turnover, totalling 80.3 per cent and representing 41.8 per cent of the sales volume (2001 9m: 31.9%).
Profit The Group's operating profit for the nine month period was EEK12.5 million or EUR 797 thousand (2001 9m: EEK 9.5 mil. or EUR 606 thou.), in comparison with the same period last year the growth has been 31.4 per cent, The operating profit for Q3 was EEK 6.0 million or EUR 382 thousand which is 1.6 times higher than in 2001. If the profit margin for the nine month period remained practically on the year 2001 level, then in the third quarter a 9.7 per cent profit margin was achieved (2001 Q3: 8.0%).
Income from financing activities was EEK 7.5 million or EUR 481 thousand (2001 9m:EEK 8.2 mil. or EUR 526 thou.). Altogether EEK 3.6 million (EUR 233 thou.) were consolidated from the related companies in the third quarter. In total, the 2.6 million kroon (EUR 166 thou.) income from financing activities that was received in Q3 of the current year surpassed the previous year's result.
The operating profit gained from the sale of fixed and current assets to a subsidiary which had been formed on the basis of Cable Harnesses Factory and the financial income earned from the sale of the subsidiary AJT Harju Elekter are reported in the consolidated income statement under Extraordinary income, totally in the amount EEK 30.6 million (EUR 2.0 mil.).
In brief, the Group's operating profit for nine months in 2002 was EEK 20.0 million (EUR 1,2 mil.) which is 12.8 per cent more against the same period last year. The operating profit earned in Q3 doubly exceeded the last year's indicator. Net profit for the period amounted to EEK 50.6 million or EUR 3.2 million (2001 9m:EEK 17.7 mil. or EUR 1.1 mil.). Net profit margin settled at 27.1 per cent (2001 9m: 13.1%). EPS was EEK 9.38 or EUR 0.60 (2001 9m: EEK 3.28 or EUR 0.21).
Investments and capital employed During the reporting period the Group invested in tangible and intangible fixed assets altogether EEK 10.5 million or EUR 673 thousand (2001 9m:EEK 5.4 mil. or EUR 346 thou.). 4.5 million kroons or 285 thousand euros were invested into plant and technology, the lion share of which amount was spent on the reconstruction of the washing systems of the powder coating unit at the Electrical Equipment Factory in order to improve quality and to significantly minimise environmental pollution. EEK 3.5 million or EUR 220 thousand were used for the renovation of buildings and facilities. EEK 0.9 million (EUR 60 thou.) were spent on the installation and upgrading of the IT systems.
During the accounting period EEK 6,6 million or EUR 420 thousand were spent to repay the principal amount of the long-term loan and the capital lease (2001 9m: EEK 6.5 mil. or EUR 414 thou.) which did not incur any income tax liability for AS Harju Elekter.
Balance sheet The consolidated balance total by the end of September 2002 was EEK 224.7 million (EUR 14.1 mil.); it had in nine months by EEK 48,2 million (EUR 3.1 mil.) and in twelve months by EEK 52.9 million (EUR 3.1 mil.). This growth is mostly attributable to the sale of AJT Harju Elekter and purchase of the subsidiary Satmatic Oy and the significant rise in the orders for the energy sector products as compared with the previous quarters and the same period last year. Changes took place also in the balance structure. Owners' equity grew in total by EEK 42.8 million (EUR 2.7 mil.) and reached the 74.8 per cent ratio to the value of assets. This is 3.6 per cent points more than a year ago and 3.8 per cent points more than it was by 31.12.2001. On the assets side the value of current assets grew the most during nine months, in total EEK 28.3 million (EUR 1.8 mil.). Together with the subsidiary Satmatic Oy the Group acquired some current assets, the total fair value of which was EEK 21.4 million (EUR 1.4 mil.), among them EEK 15.3 million (EUR 1.0 mil.)worth of stock-in-trade.
Personnel During the accounting period the average number employees in the Group was 373 (2001 9m: 682). On the balance sheet date 293 (30.09.01: 659) people were working in the Group. The number of the employees decreased considerably in connection with the sale of the subsidiary AJT Harju Elekter (418), although after the acquisition of Satmatic Oy the personnel grew by 52 employees.
Important events On the 4th of June AS Harju Elekter and PKC Group Oyj (PKC) signed a sales agreement according to which PKC acquired all shares of AJT, a 100% Harju Elekter owned subsidiary.The transaction value was EUR 2.07 million (EEK 32.4 mill.). With the disposal of AJT, the second tier subcontracting company, Harju Elekter minimised its business risks significantly,but the expertise of wiring systems and fibre-optic products manufacturing was retained in the Group.
On the 19th of September AS Harju Elekter and Siemens Osakeyhtiö signed the purchase agreement pursuant to which Harju Elekter acquired all shares of 100% Siemens owned subsidiary Satmatic Oy. The core business of Satmatic is the manufacturing and marketing of various electrical equipment, including automation and process control systems for the paper, metal and machine building industries as well as car heating units for parking lots. The acquisition of the subsidiary has widened Harju Elekter's possibilities to extend its main product range with Satmatic type-approved products, to upgrade and improve its existing products and to boost its sales in Finland and other neighbouring markets. The increase of the market share is estimated at EEK 100 million (EUR 6.4 million).
BALANCE SHEETS BALANCE SHEET,
BALANCE SHEET OF THE PARENT COMPANY,
INCOME STATEMENT OF THE PARENT COMPANY
INCOME STATEMENT OF THE PARENT COMPANY
ACQUISITION OF SUBSIDIARY FROM SIEMENS
On 19 September 2002 AS Harju Elekter and Siemens Osakeyhtiö (Finland) signed a contract by which Harju Elekter acquires all the shares of Satmatic Oy, a 100% subsidiary of Siemens. No transaction price has been disclosed.
The main business of Satmatic Oy is the manufacture and marketing of different electrical equipment, including automation and power supply control equipment for industries and car heating units for parking lots. With its advanced engineering know-how, the company is a considerable engineering and subcontracting party in Scandinavia. The factory in Ulvila near Pori employs 52 people, including 34 workers. The share capital of the company is EUR 200,000 (EEK 3.1m) and their annual turnover is EUR 7m (EEK 110m). The management board has five members and its chairman is Endel Palla. Simo Puustelli, currently Sales Director of the Automation and Drives Division of Siemens, will be the Managing Director of the company.
Long-term cooperation between Harju Elekter and Siemens Oy will guarantee the fulfilment of orders for Satmatic’s clients: Siemens Oy, Nextrom Oy, Maileffer, Onninen, etc., and the continuation of profitable operations for all parties in the future as well. The joint output capacities of the Finnish and Estonian factories allow for a fuller range of products and better prices for clients. After acquiring the subsidiary, Harju Elekter will be able to extend its main product range, electrical equipment, by Satmatic’s type-approved products and to improve the products already developed and boost their sales in Finland and other close-by markets in the Baltic countries and Russia.
Harju Elekter has another holding in Finland, 12% in PKC Group Oyj, listed on the Helsinki Stock Exchange. In Estonia, Harju Elekter has holdings in the subsidiary AS Eltek (100%) and the related companies AS Keila Kaabel (41.2%) and AS Saajos Balti (33.3%). The groups’ sales were EEK 125.2m (EUR 8m) in the first half of 2002, of which export accounted for 47.8%, and its net profit was EEK 11.3m (EUR 0.7m). Harju Elekter has been manufacturing electrical equipment and materials since 1968.
Siemens Osakeyhtiö is a technology company serving its clients in the field of information technology, production, energy and traffic equipment. The annual sales of Siemens’s Finnish companies is EUR 578 million and they employ 2154 people. The annual sales of Siemens AG is EUR 87 billion and they employ 450,000 people. Siemens operates in 190 countries.
CONSOLIDATED FINANCIAL RESULTS, H1 2002
Sales and revenues
The consolidated net sales of AS Harju Elekter for H1 2002 amounted to 125.2 MEEK (8.0 MEUR). Compared to the same period last year,the company's turnover grew by 40.8%. Sales on the domestic market accounted for 52.2% of the consolidated net sales and revenues (H1 2001: 59.4%). Export sales were 59.8 MEEK (3.8 MEUR) which is 65.8% more than for the same period last year.
The first 6 months of 2002 were successful for Electrical Equipment Factory. The factory's total turnover was 52.1 MEEK (3.3 MEUR), having increased in comparsion with the same period last year by 1.4 times, incl. 55.2% increase in the sales of electrical equipment. Sales on the domestic market grew 1.3 and on export markets 2.5 times. The share of export in total turnover was 20.7% (2001: 12.2%). The amount of purchase orders from energy, infrastructure, building and wholesale companies increased.
The turnover of Cable Harnesses Factory amounted to 38.9 MEEK (2001:24.0 MEEK or 1.5 MEUR), i.e. 62.2% growth. Beginning from the current year, the cost of materials used for the manufacturing of some products is reflected in the factory's turnover which is the main reason for the turnover increase.
The Group's six-month operating profit was 6.5 MEEK or 415 TEUR (H1 2001: 5.8 MEEK or 368 TEUR), thus the return on sales was 5.2% (H1 2001: 6.5%). The low profitability of Cable Harnesses Factory products and the shrinking share of products for the electronic and telecom industries in the overall sales had a decreasing effect on the Group's return on sales. Compared to the same period last year, the parent company's operating profit grew by 37.7%, incl. 42.4%
in Q2,return on sales improved by 0.8 percentage points,incl. 1.3 percentage points in Q2. Beginning from the second quarter, the results of Cable Harnesses Factory are not reported within the parent company's performance indicators.
Income from financing activities was 4.0 MEEK or 259 TEUR (H1 2001: 7.4 MEEK or 471 TEUR). During the accounting period no extraordinary share transfers were conducted (in H1 2001 income from sale of shares had been 2.8 MEEK or 176 TEUR) and also dividend income from PKC was smaller.
In the consolidated income statement under profit from extraordinary items 726 TEEK (46 TEUR) is reported as the part of extraordinary income due from the disposal of the subsidiary's assets, which was received in Q2.
In conclusion, the Group's net profit for the first six months of 2002 was 11.3 MEEK or 719 TEUR (H1 2001: 13.1 MEEK or 838 TEUR). Thus the net profit margin achieved was 9.0% (H1 2001: 14.8%). EPS was 2.08 EEK or 0.13 EUR (H1 2001: 2.43 EEK or 0.16 EUR).
Cash flow, investments and capital employed
Cash flow from operating activities was 14.8 million EEK or 946 thousand EUR (H1 2001: 11.7 MEEK or 748 TEUR), outflow due to investing and financing activities 18.4 million EEK or 1 174 thousand EUR (H1 2001: 11.0 MEEK or 702 TEUR).
During the accounting period the Group invested 6.7 MEEK or 431 TEUR in tangible and intangible fixed assets (H1 2001: 3.7 MEEK or 236 TEUR). Investments in plant and technology were 3.7 MEEK or 239 TEUR, the bulk of this amount was spent on the rehabilitation of the washing units of the powder-coating line with the aim to ensure better product quality and considerable reduction in environmental pollution. 2.0 MEEK or 128 TEUR was spent on the reconstruction projects of buildings and installations.
In March Harju Elekter paid 6 MEEK (383 TEUR) as a monetary contribution into the share capital of its 100% subsidiary AJT Harju Elekter to be founded on the basis of the Cable Harnesses Factory.
Long-term loan and capital lease repayments during the accounting period accounted for 4.4 MEEK or 278 TEUR (H1 2001: 4.9 MEEK or 319 TEUR).
In 2002 7.6 MEEK or 483 TEUR (2001; 6.5 MEEK or 414 TEUR) were distributed as dividends to the shareholders, with no income tax liabilities arising for Harju Elekter.
The consolidated balance sheet volume as of end of June 2002 was 191.7 MEEK (12.3 MEUR). The balance sheet volume increased by 15.1 MEEK (1.0 MEUR) during the first six months of 2002. On one hand, current receivables grew
by 8.5 MEEK (544 TEUR) and inventories 7.6 MEEK (485 TEUR),on the other hand, trade accounts payable by 14.0 MEEK (894 TEUR). The increase in inventories was caused by stock on hand procured in the 1st quarter for the manufacturing of wiring systems for the automotive and electronic industries that, in turn, lead to an increase in trade accounts payable and in prepaid sales tax to the customs. However, the 30.0% growth in total inventory was beaten by the 40.8% growth rate of the turnover.
On the basis of former Cable Harnesses Factory, AS AJT Harju Elekter (AJT), a 100% subsidiary, was formed on the 8th of March, with the share capital of 6 million kroons (383 TEUR). The company started its Independent economic activities on April 1. On the 4th of June AS Harju Elekter and PKC Group Oyj (PKC) signed a sales agreement according to which PKC acquired all shares of AJT, a 100% Harju Elekter owned subsidiary. The transaction value was 2.07 MEUR (32.4 MEEK). The closing date was July 1, 2002.
BALANCE SHEET, 30.06.2002
INCOME STATEMENT, H1 2002
INCOME STATEMENT, 2002 Q2
INCOME STATEMENT OF THE
PARENT COMPANY, H1 2002
INCOME STATEMENT OF THE PARENT
COMPANY 2002 Q2
SALE OF SHARES IN SUBSIDIARY
On 4 June 2002, a sales agreement was signed between AS Harju Elekter and PKC Group Oyj (PKC), under which PKC will acquire all the shares of AS AJT Harju Elekter (AJT), a 100% subsidiary to Harju Elekter. The price of the transaction is EUR 2.07 million (EEK 32.4 million), of which 61.4% (EUR 1.27 million) will be paid in money and the remaining in PKC shares after an approval by a meeting of the PKC shareholders. Harju Elekter will guarantee AJT the operation of the infrastructure, continue to provide management services and participate in the management bodies of PKC and AJT. The production premises will remain in the ownership of Harju Elekter and AJT will continue to rent them.
AJT as a subcontractor to PKC manufactures wiring harnesses and connection cables for the leading automotive and electronics companies in North Europe. According to PKC, the entire production process of particular product groups until finishing will be introduced to the AJT plants, to be soon accompanied by end-customer supplies. In addition to considerable cost savings, the change will result in a shorter supply chain, improved logistics and the flexibility of client service.
Harju Elekter will use the income earned from selling the AJT shares in its principal field of activity – manufacturing and marketing of electrical equipment, expanding both the product range and intensifying its activities and also contributing to the expansion of its target market share in the Baltic States and Northern Countries. Harju Elekter will continue to manufacture electrical connection cables and fibre-optic products in the Group and use them in its products. The sale of the subsidiary as a second-level subcontractor will lead to a considerable decrease in the business risks of Harju Elekter. Continuing cooperation with PKC will provide new development opportunities to both parties.
SUPPLEMENT TO THE 4.06.02 RELEASE
On 1.04.02, AS AJT Harju Elekter (AJT), a 100% subsidiary of Harju Elekter formed on the basis of its cable harnesses factory,started independent business operations. AJT’s share capital is 6 million kroons, divided into 600 000 shares with a nominal value of EEK 10 each. The company’s supervisory board has five members: chairman Endel Palla and members Lembit Kirsme, Lembit Libe, Ülo Merisalu and Karin Padjus. The management board has one member and Andres Allikmäe, chairman of the management board of Harju Elekter, acts in the capacity of the director.
Of the transaction price (EUR 2.07m), 61.4% (EUR 1.27m) is payable in money and the rest in PKC shares after approval by the general meeting of the PKC shareholders on 25.06.02. The subscription price for a share was EUR 7.29 ― the average share price for the 10 trading days preceding the transaction. The transaction will close on 1.07.02. The sales transaction of AJT cannot be treated as a transaction with related persons.
Harju Elekter and AJT have between them one valid contract ― a commercial lease on the production premises. AJT has neither any loan contracts nor any current court or arbitration proceedings.
The 2001 sales of the cable harnesses factory were EEK 48.8m (EUR 3.1m), accounting for 24.9% of the consolidated net sales of Harju Elekter. The total sales of the factory for the first four months of this year amounted to EEK 23.7m (EUR 1.51m), of which the factory yielded EEK 8.3m (EUR 0.53m) from its independent operations in April.
COMMENTARY TO FINANCIAL RESULTS, Q1 2002
Sales and revenues The consolidated net sales of AS Harju Elekter for Q1 2002 amounted to 52.2 MEEK (3.3 MEUR). Compared to the same period last year,the company's turnover grew by 17.5% and sales on the domestic market by 12.1%, thus accounting for 53.0% (Q1 2001: 55.6%) of the consolidated net sales.Export sales amounted to 24.5 MEEK (1.6 MEUR) which is 24.3% more than for the same period last year. Compared to the 1st quarter of the previous year, the sales volume of the parent company increased by 20.7%.
The sale of electrical equipment increased 1.3 times in Q1 2002 in comparison with the same period last year, incl.1.2 times on the domestic market and 2.2 times on the export markets. The share of export in total sales was 18% (Q1 2001: 11%). The increase on the domestic market was triggered by the growing number of purchase orders for the energy sector products. The increase on the foreign market is attributable primarily to the growing number of orders from Latvia and Finland.
The turnover of the Cable Harnesses Factory grew by 17.7%. Beginning from the current year the cost of material used in manufacturing of some products is reflected in the turnover which is the main reason for the turnover increase.
The order volume for fibre-optic products more than doubled in comparison with the previous quarter and accounted for 1.4 MEEK (96 TEUR) in the total sales for the telecommunications sector.
Profit The Group's operating profit was 2.8 million EEK or 178 thousand EUR(Q1 2001: 3.4 MEEK or 215 TEUR). The parent company's operating profit grew in comparison with the same period of the previous year and the profit margin improved by 0.3 points. The Group's return on sales settled at 5.3% (Q1 2001: 7.6%). The latter was caused by an extremely high return on sales of telecommunication sector in the 1st quarter of 2001 when the entire stock of the consignment warehouse was disposed of. The 9% profitability achieved in the 1st quarter of 2002 is thus quite normal.
Prompted by the need to improve customer services and to create preconditions for the entry into new markets, the number of salespeople was increased and marketing intensified in Latvia and Estonia in the second half-year of 2001 that lead to a rise in marketing expenses and laid the foundation for further sales growth on the domestic as well as foreign markets.
Financial income was 2 666 thousand EEK or 171 thousand EUR (Q1 2001: 169 TEEK or 11 TEUR). PKC Group paid dividends for the year 2001 in the 1st quarter. In 2001 the dividends were received in the 2nd quarter. Therefore the 2.1 MEEK (132 TEUR) income from dividends affected the net profit and the net profit margin for Q1 2002.
In total, the Group's net profit for the 1st quarter of 2002 was 5.5 million EEK or 348 thousand EUR (Q1 2001: 3.5 MEEK or 226 TEUR). Net profit margin settled at 10.4% (Q1 2001: 8.0%). EPS was 1.01 EEK or 0.06 EUR (Q1 2001: 0.65 EEK or 0.04 EUR).
Cash flow, investments and capital employed Cash flow from operating activities was 6.5 million EEK or 409 thousand EUR (Q1 2001: 3.6 MEEK or 231 TEUR), outflow due to investing and financing activities 5.1 million EEK or 324 thousand EUR (Q1 2001: 3.7 MEEK or 236 TEUR). During the quarter cash balance on hand and in bank increased by 1.3 MEEK or 85 TEUR whereas in Q1 2001 it had decreased by 65 TEEK or 4 TEUR.
During the accounting period the Group invested 3.1 MEEK or 199 TEUR in tangible and intangible fixed assets (Q1 2001: 1.5 MEEK or 94 TEUR). Investments in plant and technology were 1.1 MEEK or 68 TEUR,the bulk of this amount was spent on the rehabilitation of the washing units of the powder- coating line with the aim to ensure better product quality and considerable reduction in environmental pollution. 1.0 MEEK or 66 TEUR was spent on the reconstruction projects of buildings and installations.
In March Harju Elekter paid 6 MEEK (383 TEUR) as a monetary contribution into the share capital of its 100% subsidiary AJT Harju Elekter to be founded on the basis of the Cable Harnesses Factory.
Long-term loan and capital lease repayments during the accounting period accounted for 2.1 MEEK or 0.1 TEUR (Q1 2001: 2.2 MEEK or 136 TEUR).
Balance sheet The consolidated balance sheet volume as of end of March 2002 was 189.5 MEEK (12.1 MEUR).The balance sheet volume increased by 12.9 MEEK (0.8 MEUR) during the 1ST quarter of 2002. On one hand, current receivables grew by 3.5 MEEK (225 TEUR) and inventories 6.7 MEEK (426 TEUR), on the other hand, trade accounts payable by 8.9 MEEK (566 TEUR). The increase in inventories was caused by stock on hand procured in the 1st quarter for the manufacturing of wiring systems for the automotive and electronic industries as well as growing orders for electrical equipment that, in turn, lead to an increase in trade accounts payable and in prepaid sales tax to the customs.
As of the balance sheet date, owners’ equity accounted for 69% (72% in 2001).
BALANCE SHEET, 31.03.2002
INCOME STATEMENT, 2002 Q1
HARJU ELEKTER OPENED STORE IN TARTU
In order to provide better service to its south Estonian customers and to enlarge the market share, Harju Elekter opened a third store specialising in the sale of electrical supplies and equipment at 127 Tähe St, Tartu. The new store has 300 m2 of selling and storage space.
The store introduces the products of Harju Elekter and its related companies: AS Keila Kaabel, AS Glamox HE, AS Eltek, AS Saajos Balti. The store accepts orders for switchboards and other electrical equipment and spare parts made
by the Harju Elekter electrical equipment factory. The existing electrical goods stores in Keila and Tallinn have won the trust of customers with their broad range of products, competent advice and consumer-friendly prices. The store is mainly orientated towards retail and small wholesale customers.
The Harju Elekter trade group also imports Thermor water heaters and convectors and Unidare storage heaters and offers product servicing and warranty repair.
The 2001 sales of Harju Elekter group was 195,5 million kroons, of which the trade group accounted for 17,7% (14,5% in 2000).
HARJU ELEKTER RECEIVES ISO 14001 QUALITY CERTIFICATE
AS Harju Elekter and its subsidiaries introduced a management system assuring environmental protection, which was certified as conforming to the international quality standard ISO 14001:1996 by the international certification company Bureau Veritas Quality International. The certificate will be formally handed over today, on 23 April in Keila.
ISO 14001 sets out requirements for the management of environmentally safe production and technological processes. The environmental management system introduced by the Harju Elekter group ensures constant monitoring and adequate response to any environmental impacts. By this activity, the enterprise wishes to maintain a clean and healthy working and living environment.
Harju Elekter together with subsidiaries and related companies is one of the largest manufacturers of electrical equipment and materials in the Baltic states. Quality certificates were earlier granted to the electrical equipment plant of Harju Elekter (ISO 9001), to the subsidiaries AS AJT Harju Elekter (ISO 9002) and AS Eltek (ISO 9001), and to the related company AS Keila Kaabel (ISO 9001 and ISO 14001).
RESOLUTIONS OF ANNUAL GENERAL MEETING
On 12 April 2002 starting at 10 a.m., the annual general meeting of the shareholders of AS Harju Elekter was held at Keskväljak 12, Keila. The general meeting was attended by 110 shareholders and their authorised representatives who represented the total of 4,533,861 votes accounting for 83.96% of the total votes.
The agenda of the general
meeting was as follows:
1. Approval of the annual report of AS Harju Elekter of 2001
The general meeting resolved:
1.1 to approve the annual report of AS Harju Elekter of 2001, prepared by the management board and approved by the supervisory board, according to which the consolidated balance sheet total of AS Harju Elekter was 176,563,352 kroons as of 31.12.2001, incl. the balance sheet total of 159,077,642 kroons of the parent undertaking, while the net profit of the financial year was 20,741,811 kroons.
The number of the votes given in favour of the resolution was 4,510,747, which accounted for 99.49% of the registered participants.
2. Approval of the distribution of profits
The general meeting resolved:
2.1 to approve the profit distribution proposal of AS Harju Elekter of 2001 as presented by the management board and as approved by the supervisory board as follows:
The dividends will be paid out as 1.40 kroons per share according to the nominal values of the shares held by the shareholders on account of the retained profits of 1994-1999. The dividends will be paid to the shareholders within one month of this meeting by a transfer to the bank account of the shareholder.
*The list of the shareholders for the payment of dividends will be completed as of 8 a.m. of 30 April 2002.
The number of the votes given in favour of the resolution was 4,511,785, which accounted for 99.51% of the registered participants.
3. Approval of the new version of the Articles of Association
The general meeting resolved:
3.1 to introduce amendments to the Articles of Association of AS Harju Elekter and to approve the new version of the Articles of the Association.
The number of the votes given in favour of the resolution was 4,500,628, which accounted for 99.27% of the registered participants.
4. Election of the members of the supervisory board
The general meeting resolved:
4.1 in relation to the termination of the three-year election period of the members of the supervisory board, to appoint the supervisory board of AS Harju Elekter as consisting of five members for the next five years.
The number of the votes given in favour of the resolution was 4,487,701, which accounted for 98.98% of the registered participants;
4.2 to elect Endel Palla, ID code 34106190276, of Tallinn, as the Chairman of the supervisory board of AS Harju Elekter.
The number of the votes given in favour of the resolution was 4,502,440, which accounted for 99.31% of the registered participants;
4.3 to elect Ain Kabal, ID code 36206100231, of Harku rural municipality, Harjumaa, as a member of the supervisory board of AS Harju Elekter.
The number of the votes given in favour of the resolution was 4,500,364, which accounted for 99.26% of the registered participants;
4.4 to elect Lembit Kirsme, ID code 34101010222, of Tallinn, as a member of the supervisory board of AS Harju Elekter.
The number of the votes given in favour of the resolution was 4,497,604, which accounted for 99.20% of the registered participants;
4.5 to elect Madis Talgre, ID code 36004176533, of Saku rural municipality, Harjumaa, as a member of the supervisory board of AS Harju Elekter.
The number of the votes given in favour of the resolution was 4,463,227, which accounted for 98.44% of the registered participants;
4.6 to elect Triinu Tombak, ID code 47101070252, of Tallinn, as a member of the supervisory board of AS Harju Elekter.
The number of the votes given in favour of the resolution was 4,453,559, which accounted for 98.23% of the registered participants;
4.7 to determine the remuneration of the members and Chairman of the supervisory board in the former amount. The bonus system applicable in the public limited company Harju Elekter should be applied to the full-time Chairman of the supervisory board.
The number of the votes given in favour of the resolution was 4,498,538, which accounted for 99.22% of the registered participants.
5. Appointment of auditors for 2002
The general meeting resolved:
5.1 to appoint AS KPMG Estonia, entered in the list of the auditors, to perform the audit of AS Harju Elekter of 2002;
5.2 the auditor will be remunerated according to the price list of AS KPMG Estonia and adhering to the economic activities budget, approved by the supervisory board of AS Harju Elekter.
6. Share option
The general meeting resolved:
6.1 to extend the term of the share option, approved by the resolution of the general meeting of AS Harju Elekter of 27 April 2000, by two years until 30.09.2004.
SUSPENSION OF TRADE IN HARJU ELEKTER SHARES
Trade in AS Harju Elekter shares on Tallinn Stock Exchange is suspended beginning 10:00 a.m. due to Annual General Meeting of shareholders. Trade in AS Harju Elekter shares will be resumed after the resolutions of the AGM are published via the Exchange's information system.
The Exchange will release announcement on resumption of trade.
Tallinn Stock Exchange
ANNUAL GENERAL MEETING OF SHAREHOLDERS
Annual general meeting of Harju Elekter shareholders will be held on 12nd of April 2002, beginning at 10:00 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 2001.
The Management Board shall propose at the shareholders general meeting to pay dividends to the shareholders for 2001 financial year in the amount of 7.56 (2000: 6.48) million kroons or 1.40 (2000: 1.20) kroons per share. The shareholders registered in the sherholders’ registry on 30 April 2002 at 8 a.m shall be entitled to dividend.
The annual report and the Aricles of Assotiation of Harju Elekter are available for preliminary examination at the company’s secretary on the third floor of Harju Elekter office building in Keila, 31 Paldiski Road and in the Internet, company’s home page www.harjuelekter.ee.
Registration of the participants starts at 9 a.m. For the registration we ask you to take with you an identification document. A representative of shareholder is requested to take with him/her a document certifying their right of representation or a valid copy of the commercial register card.
FOUNDATION OF SUBSIDIARY
The supervisory board of the AS Harju Elekter decided, in order to improve management, specify the rights and liabilities and to better arrange accounting and analysis, decided at its annual meeting on 7 March 2002 to found a 100% subsidiary of Harju Elekter on the basis of the Cable Harnesses Factory of Harju Elekter. The business name of the new company is AS AJT Harju Elekter.
The share capital of AS AJT Harju Elekter is six million kroons, which is divided into 600,000 shares with a nominal value of 10.00 kroons each. The shares shall be paid for by monetary contributions into the bank account of the company being founded. The supervisory board of the company has five members – Endel Palla, Chairman, and the members Lembit Kirsme, Lembit Libe, Ülo Merisalu and Karin Padjus. The management board of the company has one member and Andres Allikmäe, Chairman of the management board of Harju Elekter shall act in the capacity of the Chairman. All the present employees of the Cable Harnesses Factory will transfer to the new subsidiary under the current employment contracts. On 1 January 2002, the number of the employees of the Cable Harnesses Factory was 411.
AS AJT Harju Elekter will continue to operate in its present area of activities, which is the development, manufacturing and marketing of wiring harnesses, connection cables, their parts, other electromechanical and electrotechnical components and equipment as a subcontractor for the leading automotive and electronics industries in North Europe.
Harju Elekter is one of the largest manufacturers of electric equipment and materials in the Baltic States. The consolidated turnover of the company in 2001 amounted to 195.5 million kroons, of which 40.4% was export.
COMMENTARY TO FINANCIAL RESULTS Q4 2001
Sales and Revenue
The consolidated net sales and revenues of AS Harju Elekter in the twelve months of 2001 were 195.5 million EEK (12.5 MEUR), which amounts to 95.1% of the last year level. At the same time, the volume of the sales of the parent company practically remained on the level of 2000, amounting to 99.8% of it.
Sales to the domestic market increased by 15.4% and constituted 59.6% of the consolidated net sales and revenues (2000: 49.1%).
Export accounted for 40.4% of the volume of sales (2000: 50.9%). The total volume of sales was by 24.5% smaller than under the same period in the previous year. The major decline in export markets was caused by a general decrease in demand in the world’s car and electronics industry. The production of wiring harnesses of vehicles and electronic equipment decreased by 18.5% and the production and sales of telecommunication products by 53.5%.
The twelve-month operating profit of the group was 11. MEEK, that is, 0.7 MEUR (2000: 17.0 MEEK equalling 1.1 MEUR). Both the reduction in the sales proceeds caused by export volumes and the additional expenditure related to the introduction of new products and launch of projects can be considered as the main reasons for the decrease in operating profit. In the group, the gross profit of the twelve months of 2001 was 6.0% (2000: 8.3%), while the gross profit margin remained at 19% (2001: 19.1%; 2000: 18.9%). The revenue from financial activities was 9.1 MEEK, that is,0.6 MEUR (2000: 12.1 MEEK equalling 0.8 MEUR).
In the accounting year, the financial income from the associated companies was 3.6 million kroons below that of 2000, which included the financial income of 3.1 MEEK (0.2 MEUR) earned from the sale of the shares of AS Glamox Harju Elekter.
The net profit of the group was 20.7 MEEK, that is, 1.3 MEUR in 2001 (2000: 29.2 MEEK equalling 1.9 MEUR). The net profit margin was 10.6% (2000: 14.2%). The net profit per share amounted to 3.84 EEK, that is, to 0.25 EUR (2000: 5.40 EEK equalling 0.35 EUR).
The management board decided to submit a proposal to the general meeting to pay dividends of 1.40 EEK per share for the financial year of 2001.
Investments and Capital Use
Under the accounting period, new investments in the amount of 10.1 MEEK (0.6 MEUR) were made in the tangible non-current assets in the group, in 2000, the amount was 28.3 MEEK (1.8 MEUR). The parent company invested nearly 1 MEEK (0.1 MEUR) in the construction of production premises for the manufacturing of fiberoptic connection cables and accessories in the subsidiary AS Eltek and 3.5 MEEK (0.2 MEUR) in the procurement of high-tech equipment required for production in AS Eltek. In June 2001, Harju Elekter invested 1 MEEK (0.1 MEUR) in increasing the share capital of the subsidiary.
The consolidated balance sheet total was 176.9 MEEK (11.3 MEUR) at the end of December 2001. Equity capital increased by 12.3 %, that is, +13.7 MEEK (+0.9 MEUR) during the year. As of the balance sheet date, the long-term and short-term liabilities of the group amounted to 27.2 MEEK (1.7 MEUR), of which 12.3 MEEK (0.8 MEUR) were of long-term nature. Liabilities to credit institutions have decreased by 3.8 MEEK (0.2 MEUR) during the year.
INCOME STATEMENT 2001, CONSOLIDATED, UNAUDITED
INCOME STATEMENT 2001 OF THE PARENT COMPANY, UNAUDITED
BALANCE SHEET, 31.12.2001, CONSOLIDATED, UNAUDITED
BALANCE SHEET OF THE PARENT COMPANY, UNAUDITED