HARJU ELEKTER

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANICAL RESULTS, 09/2000



Sales and revenue



AS Harju Elekter 9m 2000 consolidated net sales totaled EEK 146.1 mln, 

which is 35% more than in 9m 1999 (EEK 108.2 mln). The parent 

company's turnover was EEK 118.8 mln (9m 1999: EEK 94.4 mln), 

providing 26% annual growth. 



AS Harju Elekter and its affiliated companies deal mainly in Euro-zone 

currencies, thus the substantially strengthened USD has not had a major 

impact on the company's business activities. 



No changes occurred in the activity fields of the companies in Harju 

Elekter group. 



Total exports volume was EEK 76.2 mln, which is 45% more than in 9m 

1999 (EEK 52.4 mln). Exports accounted for 52% of total sales (48% in 9m 

1999).

Among the new markets, Harju Elekter increased sales to Denmark from EEK 0.6 

mln in 9m 1999 to EEK 14.2 mln, due to substantial increase in export of UPS-

equipment cases by subsidiary AS Eltek to APC Denmark A/S under the 

respective co-operation agreement (effective as of February 2000).



Production of cable harnesses for Scania trucks is rapidly growing, ensuring 

the necessary level to achieve the targets set for year 2000. The company has 

mostly covered the additional costs related with substantial turnover growth 

and launch of new product in Harju Elekter cable harnesses factory and 

leading Nordic electrical equipment provider PKC Group. 





Profit



In Q2 the turnover profit margin was lower due to launch of new investments, 

development of new products and employee recruitment costs. In Q3 the company 

overcame difficulties and profit margin grew. 

In Q3 the group's gross profit stood at EEK 7.1 mln, which is 81% more than 

during the same period last year. In 9 months the gross profit grew by an 

annual 39% (35% y-o-y growth in turnover).



In Q3 the company's consolidated profit from normal operations was EEK 8.3 

mln (in 9m 1999: EEK 4 mln). The almost doubled profit figure was mainly due 

to excellent results posted by subsidiaries and affiliated companies in Q3. 

Subsidiary Eltek and affiliated companies earned more than 5 times higher 

than during the same period in 1999 (EEK 1.5 mln and EEK 1.7 mln, 

respectively).



Consolidated profit from normal operations stood at EEK 22.4 mln, providing 

38% annual growth (9m 1999: EEK 16.2 mln).



Financial income account includes extraordinary income from sale of 

AS Glamox Harju Elekter shares this year (EEK 3.2 mln) and sale of AS 

Saajos Balti shares last year (EEK 2.6 mln).



AS Harju Elekter earnings per share were EEK 4.14 (9m 1999: EEK 2.63)







Investments and use of capital



In 9m the group made EEK 26.3 mln of new investments to increase 

output capacity, incl. EEK 11.6 mln for reconstruction of buildings, 

EEK 3.5 mln for acquisition of estate in Keila (cable harnesses 

factory's production facilities and land), and EEK 8.2 mln for 

acquisition of fully automated metal processing center for subsidiary 

Eltek. Investments in production facilities and real estate in Q3 were 

made in accordance with the approved plans. The objects will be taken 

into use in Q4 2000.



In accordance with the 27.04.2000 decision of shareholders general meeting, 

the company's Supervisory Board launched on 18.08.2000 the share options 

issue to its employees. The share options issue was oversubscribed by more 

than 2.7 times (547,200 subscribed share options), showing the employees' 

confidence in the company's development and increase of the price of its 

shares. Altogether 94 employees participated in share option program; the 

company made the respective agreements with all of them in accordance with 

the rules. The expiration date for the 200,000 issued share options is 

30.09.2002.



In 9m the group balance sheet size grew by EEK 28.4 mln and tangible 

fixed assets by EEK 21.3 mln. The group owners equity volume accounted 

for 63% of total balance sheet (61% at 30.09.1999). 





Andres Allikmäe

Management Board chairman

+372 67 47 400





Lembit Libe

Chief Economist

+372 67 47 412