. million EEK million EUR growth % Key figures 1-6/2008 1-6/2007 1-6/2008 1-6/2007 H12008/H12007 Sales revenue 440.1 329.9 28.1 21.1 33.4 EBITDA 34.9 30.7 2.2 2.0 13.7 EBIT 25.6 21.9 1.6 1.4 16.7 Net profit for the period 28.3 61.3 1.8 3.9 incl equity holders of the Parent 27.2 60.4 1.7 3.9 -55.0 EPS 1.62 EEK 3.60 EEK 0.10 EUR 0.23 EUR At the end of the period Total assets 680.1 744.4 43.5 47.6 Owners' equity 484.0 554.4 30.9 35.4 (Equity holders of the Parent) Average no of employees on the current period 486 425 No of employees at the end of the period 559 447 The sales revenue of the Group in the second quarter of 2008 was 236.2 million kroons (15.1 million euros), growing 32.5% and in the first six months 440.1 million kroons (28.1 million euros), growing 33.4% compared to the same period during the previous year. The fastest growth paces were in the Finnish and Estonian segments. The steady increase of orders by the Finnish machinery sector (exporters) ensured the continued growth of the Finnish subsidiary's sales volume. In total, the Finnish subsidiary sold 34.8 million kroons (2.2 million euros) more worth of products and services in 2Q2008 and a total of 65.6 million kroons (4.2 million euros) more in the six months, than the year before. Sales to clients outside the Group grew by 23.9 million kroons (1.5 million euros) and a total of 25.3 million kroons (1.6 million euros) in the six months, a growth of 2.4 and 1.7 times, respectively, in comparison with the corresponding periods of the year before. This year, several significant industrial site construction projects were won in Lithuania. Compared to the year before, also the sales revenue from the execution of projects has nearly doubled. Also grew Lithuanian subsidiary's sales to markets abroad in the first half year by 7.0 million kroons (400 thousand euros). New markets were added in Denmark and Byelorussia; supplies to Norway and Latvia have grown. During the quarter reported, sales by the Estonian segment to clients outside the Group remained at virtually the same level as the previous year, yet grew 10.8% in the six months. At the same time, sales to other geographical segments have grown significantly (four-fold). In the end, the sales volume for the Estonian segment in 2Q2008 was 120.7 million kroons (7.7 million euros) and in the first half year, as a whole, 232.0 million kroons (14.8 million euros), growing 14.5% and 24.4%, respectively. Of the markets, the domestic markets of the Group's companies prevailed, where 95.5% (92.6%) of the Group's products and services were sold. The Group has sold its products to the markets of Latvia, Sweden and Poland, as well as Byelorussia, Russia and Norway. Under the conditions of intensifying competition and a rise in payroll expenses, the expenses for products and services sold grew by more than 37%, outstripping the sales revenue growth rate by 4.8 percentage points in 2Q2008 and 4.3 percentage points in the six months Yet the average growth rate of other business operation expenses was significantly more modest, growing 12.8% to 22.9 million kroons (1.5 million euros) in 2Q2008 and only 12.0% to 41.2 million kroons (2.6 million euros) in the six months. Business expenses grew in total by more than 34%, outstripping the sales revenue growth rate by 1.8 percentage points in 2Q2008 and 1.3 percentage points in the six months. In the second quarter, the average number of employees in the Group was 502 (2Q2007:433) and in the first half of the year 486 (H12007: 425). As of 30 June 2008 there were 559, which is 112 employees more than a year ago. The growth in production volumes has brought about an increase in both the number of employees and labour expenses. Yet due to the dearth of qualified labour, the pressure from salary increases has been strong in both Estonia and Lithuania. In H1 2008 the average salary in the Group have increased by 1,400 kroons (89 euros) up to 23.0 thousand kroons (1.5 thousand euros) compared to the same period during the previous year. The costs on labour force have increased by 13.0 million kroons (0.8 million euros) in the first six months of 2008, compared to the same period of 2007. Despite the current low level in the economy, a good growth rates for business revenue were assured both in 2Q2008 and also in the first half year. The business revenue for 2Q2008 was 14.3 million kroons (0.9 million euros), 10.5% more than during comparable periods. The six-month business revenue was 25.6 million kroons (1.6 million euros), a growth of 16.7%. The business profitability for 2Q2008 turned out to be 6.0% (7.2%) and the indicator for the six months was 5.8% (6.6%). The consolidated net profit for the Group in 2Q2008 was 18.6 million kroons or 1.2 million euros (2Q2007: 52.5 million kroons or 3.4 million euros), of which the parent company's owners' share accounted for 17.4 million kroons (1.1 million euros). The net profit for the six months was 28.3 million kroons or 1.8 million euros (H1 2007: 61.3 million kroons or 3.9 million euros), of which the parent company's owners' share accounted for 27.2 million kroons or 1.7 million euros (H1 2007: 60.4 million kroons or 3.9 million euros). In the six months in 2007, an extraordinary profit of 32.8 million kroons (2.1 million euros) was made from the sale of financial investments. Hereby, the net profit for the first half year remained at the 2007 level. Net profit was impacted also by the increased income tax expense, which, due to the growth in the profitability of the Finnish operation and the payment of bigger dividends in Estonia, grew by 2.9 million kroons (0.2 million euros). Net profit per share in the H1 2008 was 1.62 kroons or 0.10 euros (H1 2007: 3.60 kroons or 0.23 euros). In first six months the Group invested 0.5 million kroons (35 thousand euros) more than compared period, totally 12.8 million kroons (0.8 million euros) in tangible and intangible fixed assets and real estate, of which buildings accounted for 7.1 million kroons (0.5 million euros) and manufacturing equipment and means of transport together for 4.7 million kroons (0.3 million euros). Andres Allikmäe Chairman of the Board +372 674 7400 For more information: Internal report 1-6/2008 of Harju Elekter and Mrs. Karin Padjus, Member of the Board (phone +372 674 7403) AS HARJU ELEKTER BALANCE SHEET, 30.06.2008 Consolidated, unaudited in thousands EEK EUR ASSETS 30.06.08 31.12.07 30.06.08 31.12.07 Cash and cash equivalents 13 098 26 257 837 1678 Trade receivables and other receivabl 98 863 84 601 6 319 5 407 Prepayments 1412 1548 90 99 Inclusive income tax 606 717 39 46 Inventories 123 255 128 639 7 877 8 222 TOTAL CURRENT ASSETS 236 628 241 045 15 123 15 406 Investments in associates 25 459 21 975 1 626 1 404 Other long-term financial investm. 172 468 215 236 11 023 13 756 Investment property 131 434 133 839 8 400 8 554 Property, plant and equipment 111 288 104 948 7 113 6 707 Intangible assets 2 813 3 269 180 209 Total non-current assets 443 462 479 267 28 342 30 630 TOTAL ASSETS 680 090 720 312 43 465 46 036 LIABILITIES AND OWNERS' EQUITY Interest-bearing loans and borrowings 23 609 27 942 1 509 1 786 Trade payables and other payables 109 391 106 495 6 992 6 806 Tax liabilities 19578 12 008 1 251 767 Inclusive income tax 1412 672 90 43 Short-term provision 630 1421 40 91 TOTAL CURRENT LIABILITIES 153 208 147 866 9 792 9 450 NON-CURRENT LIABILITIES 23 737 20 851 1 517 1 332 TOTAL LIABILITIES 176 945 168 717 11 309 10 782 Share capital 168 000 168 000 10 737 10 737 Paid-in capital over/under par 6000 6 000 384 384 Restricted reserves 167 890 207 259 10 730 13 246 Retained earnings 142 061 151 894 9 079 9 708 TOTAL OWNERS' EQUITY 483 951 533 153 30 930 34 075 Minority interests 19 194 18 442 1 226 1 179 TOTAL EQUITY 503 145 551 595 32 156 35 254 TOT.LIABILIT.AND OWNERS' EQUITY 680 090 720 312 43 465 46 036 INCOME STATEMENT, 1-6/2008 Consolidated,unaudited EEK'000 GROUP Q2 2008 Q2 2007 1-6/2008 1-6/2007 NET SALES 236 194 178 287 440 077 329 898 Cost of goods sold -198 923-144 931 -373 066 -270 840 Gross profit 37 271 33 356 67 011 59 058 Marketing expenses -10 500 -8 263 -18601 -14 930 Administrative expenses -12 407 -12 039 -22616 -21 858 Other revenue 110 250 147 345 Other expenses -217 -402 -345 -684 Operating profit 14 257 12 902 25596 21 931 Net financial incomes/expenses 10580 44 760 9967 44 447 Income from subsidiaries 3677 2 327 3484 2 814 Profit from normal operations 28 514 59 989 39047 69 192 Corporate Income tax -9939 -7 497 -10728 -7 861 Profit after taxes, incl 18 575 52 492 28319 61 331 Minority interest 17 432 52 204 27 167 60 426 Net profit for the year 1 143 288 1152 905 Basic and diluted earnings per share 1,04 3,11 1,62 3,60 €'000 GROUP Q2 2008 Q2 2007 1-6/2008 1-6/2007 NET SALES 15 096 11 395 28 126 21 084 Cost of goods sold -12 714 -9 263 -23 843 -17 309 Gross profit 2 382 2 132 4 283 3 775 Marketing expenses -671 -528 -1189 -954 Administrative expenses -793 -769 -1445 -1 397 Other revenue 7 16 9 22 Other expenses -14 -26 -22 -44 Operating profit 911 825 1636 1 402 Net financial incomes/expenses 676 2 861 637 2 841 Income from subsidiaries 235 148 222 179 Profit from normal operations 1 822 3 834 2495 4 422 Corporate Income tax -635 -479 -685 -502 Profit after taxes, incl 1 187 3 355 1810 3 920 Minority interest 1 114 3 336 1 736 3 862 Net profit for the year 73 19 74 58 Basic and diluted earnings per share 0,07 0,20 0,10 0,23 Karin Padjus Financial manager +372 674 7403