HARJU ELEKTER

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANCIAL RESULTS, 2000



Turnover and export



In  2000 the net sales and revenues of the Group totalled 205.6 

million kroons (in 1999 : 158.4) and increased by 29.8% as compared 

to 1999. The  share  of  export in the consolidated turnover of 

the Group  amounted  to 50.9% (1999: 46.9%). During the financial 

year the subsidiary company AS Eltek almost  tripled its export 

volume (+19.2 million kroons) which  accounted  for 68.7% of its 

total turnover (1999: 42.2%).

Turnover by types of market (million kroons):



                                            2000      1999

                                                          

 INTERNAL                                  100.9       84.1

 EXTERNAL                                  104.8       74.3

   incl. Nordic countries                   75.2       64.9

 Denmark                                    12.6        1.6

 CEEC                                        2.5        1.6

 Baltic states                               7.2        6.1

 Ireland                                     4.4          0

         USA                                 2.8          0



Nordic countries - Finland and Sweden

 Baltic states - Latvia and Lithuania

 CEEC - Czech Republic, Slovakia and Hungary.



 

Net sales by business areas and product groups             



                                            2000      1999

 Products from core business                              

    - electrical equipment                  60.1       49.2

    - wiring harnesses for automotive and   60.4       48.3

telecommunications industry

(subcontracting)

    -cabinets/boxes for                     30.4       12.8

telecommunication installations

    - sheet metal products and work         17.6       15.9

 TOTAL CORE BUSINESS                       168.6      126.3

 Intermediary activities and other                        

services

   - commerce and intermediate sale         29.8       23.2

   - leasing of capital assets               4.5        3.9

   - other services                          2.7        5.1

TOTAL OTHER ACTIVITIES                      37.0       32.1

                                                          



The business operations of the Group are divided into two groups:

"core  business"      -   industrial production and  marketing  

of  its  own products;

"other  activities"   -  intermediate sale  of  electrical  

engineering and telecommunication products; provision of services 

that belong  to its  core business area and leasing of production 

capacities to companies that  belong to the same business sector.



Profit



The  Group's net profit for the financial year amounted to 29.2 

million kroons (+32.1%),  incl. operating income 17.0 million 

kroons (+26.9%)  and  financial income 12.1 million kroons (+39.1%).

The  growth  of  financial income was mostly due to  the  2.3  million  

kroons increase  of  the related company AS Keila Kaabel's share 

in the  consolidated profit  (1999: 2.7 mill. kroons) and the one-off 

revenue of 3.2 million kroons from the sale of AS Glamox Harju Elekter 

shares (in 1999 revenue from the sale of AS Saajos Balti shares 

was 2.6 million kroons).

If in 1999 financial expenses included  2.6 million kroons of the 

consolidated loss of related companies, in 2000 this was not the case 

thanks to the sale of Glamox HE shares.

In the year 2000 operating income grew by 46.7% (2000: 29.2 mill.kroons; 

1999: 19.9  mill.kroons). A slight decline in the operating profit 

margin was caused by  additional  costs  incurred in connection with  

the  introduction  of  new products for Scania trucks and training of 

the new labour force.



Investments and financing



Altogether  28.5 (1999: 22.2) million kroons were invested in fixed 

assets  by the  Group  in  the  year 2000. AS Eltek's  investments 

in capital  goods  and information technology totalled 8.5 

(1999: 0.9) million kroons.



Major investment projects:

- AS Eltek fully automated metal conversion unit            8.2 million kroons

- Extention of Haapsalu plant of Cable Harnesses Factory    9.6 million kroons

- Reconstruction of AS Eltek production complex             4.1 million kroons

- Plant and equipment, IT and other fixed assets            2.6 million kroons



Investments were financed mostly from own funds. The subsidiary 

company AS Eltek got a long-term loan of 7.4 million kroons from 

Merita Bank for which the parent company Harju Elekter had to 

pledge the requested number of PKC Group OY  shares

as collateral. ROI period does not exceed 7 years.



Share and shareholders



As of  31.12 .2000  AS Harju Elekter had 443 shareholders. EPS 

was 5.40 (1999: 4.09) kroons.

The  Management  Board  shall make a proposal to the general  

meeting  of  the shareholders to pay the total of 6.48 (1999: 5.4) 

million kroons in  dividends to  the  shareholders for the 

year 2000, that is 1.20 (1999: 1.00) kroons  per share.





Andres Allikmäe

CEO

+372 67 47 400





Lembit Libe

chief economist

+372 67 47 412