0JPY Tallinna Vesi As

Tallinna Vesi’s sales revenue in the third quarter increased to €15.61 million

The sales revenue of AS Tallinna Vesi’s sales grew to €15.61 million in the third quarter, induced by the new prices for water services that were introduced in October last year due to higher production costs. Between July and September this year, the Company generated a net profit of €4.05 million, which is €1.84 million more than in the same period last year.

Sales from water service sold to commercial customers in the third quarter of this year in the main service area of Tallinna Vesi was €4.27 million, which is 1.6% less than last year. Sales from water services provided to private customers in the third quarter increased by 23.6% compared to the same period last year and totalled €5.98 million. The increase in sales in private segments is due to the adjustment of price for water services in the last quarter of the previous year.

During the nine months of 2023, the Group’s total sales were €45.62 million, showing an increase of 18.4% or €7.08 million year-on-year. Revenues from the sale of water services, both inside and outside the main service area, accounted for 91.2% of total revenues, construction services for 7.6% and other services for 1.1%.

The Company’s operating profit in the third quarter was €5.10 million. Operating profit grew by €2.66 million or 109.2% compared to the third quarter of last year. The operating profit for the nine months of 2023 was €13.30 million, showing an increase of €4.77 million compared to the previous year. According to Aleksandr Timofejev, the Chief Executive Officer of Tallinna Vesi, this is due to the adjustment of prices for water services and the stabilization of energy prices.

The recovery in operating profit was driven by sales, which reflected the increase in direct production costs. The Company’s net profit was €4.05 million in the third quarter of 2023, which is €1.84 million more than in the same period last year. The increase in net profit was impacted by changes in operating profit and net financial expenses described above, and the income tax on dividends in the amount of €1.09 million.

The Group’s profit before taxes for the nine months of 2023 was €11.13 million, being 35.7% or €2.93 million higher than for the same period in 2022. Net profit for the nine months was €9.87 million, being 63.1% or €3.82 million higher than for the equivalent period in 2022.

The Group’s net financial income and expenses have resulted in a net expense of €0.89 million, compared to €0.78 million lower expense in the 3rd quarter of 2022. The increase in financial costs was caused by higher interest costs of loans linked to Euribor.

On September 21, AS Tallinna Vesi submitted an application to the Competition Authority to change the prices for water services. The application concerns the price for water services in the main service area in Tallinn and Saue, the service area in Maardu and for other water companies. Depending on the proceedings of the Competition Authority, the new prices will take effect no earlier than from the next year. The need for the tariff application is driven by justified costs and investments to ensure continuity of vital services, to reduce the environmental impact caused by water consumption, and to safeguard the environment.

“We continue to provide reliable water and wastewater services, as demonstrated by the steadily high level of quality indicators. During the nine months of this year, the quality of tap water was excellent, meeting 99.92% of all quality requirements,” Timofejev said. In the third quarter of this year, the Company pumped nearly 6.2 million m3 of clean water into the water network and treated nearly 12.7 million m3 of wastewater.

Also, the effluent treated at the Wastewater Treatment Plant at Paljassaare has met all the requirements throughout the year. Pollutant parameters that are significantly lower than the limits required by law is the proof of the excellent level of treated effluent. In the nine months of this year, we have taken 541 tons of debris, 182 ton of grit, 1 383 tons of nitrogen and 187 tons of phosphorus out of the wastewater.

Starting from this year, Timofejev said, water pipes are also being maintained using the ice pigging technique. In nine months more than 150 km of water mains have been washed, 106 km of which have been cleaned with ice. In addition, water quality is supported by the investments in water pumping stations made in recent years, enabling additional chlorination in various parts of the city.

The level of water loss in the water network has remained low in the third quarter of the year, at 9.98%. This is significantly better than in the same period last year (13.47%).

By the end of the third quarter, the Company had installed smart meters for 27% of its customers. The Company aims to replace water meters for all customers in its service area with smart meters by the end of 2026 at the latest.

Major projects for 2023 include the reconstruction of digesters and construction of a combined heat and power plant at the Wastewater Treatment Plant, the reconstruction of filters and clarifiers at the Water Treatment Plant and the reconstruction of existing water and wastewater pipelines and the construction of new pipelines.

By the end of September this year, the Company had reconstructed more than 23 kilometres of networks. The major reconstruction works this year have been carried out on Jõe and Pronksi Street, Vana-Kalamaja Street, Rahvakooli Road, E. Vilde and Akadeemia Road, Pärna, Reinvaldi and Kuhlbarsi Street.

In the third quarter, work started on the reconstruction of the supply pipeline for the Lasnamäe booster pumping station at the intersection of Punane and Smuuli Streets. The reconstruction of wastewater pipeline in Mustamäe district using no-dig method has started off successfully with more than half of the works already being completed. Work continued on investment projects at our treatment plants, such as completing the work on the renovation of the high-speed filters and starting the renovation of clarifiers at the Water Treatment Plant.

In the first 9 months of 2023 the Group invested into fixed assets €22.84 million. Total non-current assets amounted to €247.45 million.

AS Tallinna Vesi is the largest water utility in Estonia, providing services to more than 24,900 private customers and businesses and 470,000 end consumers in Tallinn and its surrounding municipalities. Tallinna Vesi is listed on the main list of the Nasdaq Tallinn Stock Exchange. The largest shareholdings in the Company are held by the City of Tallinn (55.06%) and the energy group Utilitas (20.36%). 24.58% of the Company's shares are free floating on the Nasdaq Tallinn stock exchange.

MAIN FINANCIAL INDICATORS

€ millionexcept key ratios	Quarter 3			Variance 2023/2022	9 months			Variance 2023/ 2022
	2023	2022	2021		2023	2022	2021
Sales	15.61	13.48	13.61	15.8%	45.62	38.53	38.36	18.4%
Gross profit	6.64	3.58	5.36	85.7%	18.16	12.38	15.78	46.7%
Gross profit margin %	42.54	26.53	39.40	60.3%	39.80	32.12	41.12	23.9%
Operating profit before depreciation and amortisation	7.12	4.15	7.17	71.4%	19.23	13.49	20.20	42.6%
Operating profit before depreciation and amortisation margin %	45.57	30.80	52.67	48.0%	42.16	35.00	52.64	20.4%
Operating profit	5.10	2.44	5.50	109.2%	13.30	8.52	15.36	56.0%
Operating profit - main business	4.72	2.06	5.15	128.5%	12.44	7.81	14.61	59.3%
Operating profit margin %	32.64	18.07	40.42	80.6%	29.15	22.12	40.04	31.8%
Profit before taxes	4.20	2.32	5.41	80.7%	11.13	8.21	15.09	35.7%
Profit before taxes margin %	26.90	17.24	39.72	56.0%	24.41	21.30	39.32	14.6%
Net profit	4.05	2.22	5.34	82.9%	9.87	6.05	12.96	63.1%
Net profit margin %	25.96	16.44	39.21	57.9%	21.63	15.70	33.78	37.7%
ROA %	1.54	0.89	2.13	72.0%	3.78	2.40	2.13	57.9%
Debt to total capital employed %	57.43	56.37	55.54	1.9%	57.43	56.37	55.54	1.9%
ROE %	3.62	2.06	4.87	75.3%	8.77	5.41	55.54	62.3%
Current ratio	1.09	1.59	3.07	-31.4%	1.09	1.59	3.07	-31.4%
Quick ratio	1.03	1.52	3.01	-32.2%	1.03	1.52	3.01	-32.2%
Investments into fixed assets	12.40	2.22	8.14	457.9%	22.84	9.95	13.77	129.5%
Payout ratio %	-	78.52	80.42		-	78.52	80.42

Gross profit margin – Gross profit / Net salesOperating profit margin – Operating profit / Net salesOperating profit before depreciation and amortisation – Operating profit + depreciation and amortisationOperating profit before depreciation and amortisation margin – Operating profit before depreciation and amortisation / Net salesNet profit margin – Net profit / Net salesROA – Net profit / Average Total assets for the periodDebt to Total capital employed – Total liabilities / Total capital employedROE – Net profit / Average Total equity for the periodCurrent ratio – Current assets / Current liabilitiesQuick ratio – (Current assets – Stocks) / Current liabilitiesPayout ratio – Total Dividends per annum/ Total Net Income per annumMain business – water services related activities, excl. connections profit and government grants, construction services, doubtful receivables

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

€ thousand							as of 30 September		as of 31 December
ASSETS						Note	2023	2022	2022
CURRENT ASSETS
	Cash and cash equivalents					3	10,437	16,656	12,650
	Trade receivables, accrued income and prepaid expenses						8,897	7,840	8,989
	Inventories						1,176	1,153	1,197
TOTAL CURRENT ASSETS							20,510	25,649	22,836
NON-CURRENT ASSETS
	Property, plant, and equipment					4	246,589	222,332	229,869
	Intangible assets					5	856	632	688
TOTAL NON-CURRENT ASSETS							247,446	222,964	230,557
TOTAL ASSETS							267,956	248,613	253,393
LIABILITIES AND EQUITY
CURRENT LIABILITIES
	Current portion of long-term lease liabilities						826	675	883
	Current portion of long-term loans						3,621	3,630	3,630
	Trade and other payables						11,611	7,958	10,225
	Prepayments						2,740	3,862	3,749
TOTAL CURRENT LIABILITIES							18,798	16,125	18,487
NON-CURRENT LIABILITIES
	Deferred income from connection fees						43,817	37,996	39,150
	Leases						1,978	952	1,607
	Loans						82,737	78,550	76,708
	Provision for possible third-party claims					6	6,018	6,018	6,018
	Deferred tax liability						409	411	496
	Other payables						104	90	101
TOTAL NON-CURRENT LIABILITIES							135,063	124,017	124,080
TOTAL LIABILITIES							153,861	140,142	142,567
EQUITY
	Share capital						12,000	12,000	12,000
	Share premium						24,734	24,734	24,734
	Statutory legal reserve						1,278	1,278	1,278
	Retained earnings						76,082	70,459	72,814
TOTAL EQUITY							114,095	108,471	110,826
TOTAL LIABILITIES AND EQUITY							267,956	248,613	253,393

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

€ thousand						Quarter 3		9 months		for the year ended 31 December
				Note	2023	2022	2023		2022		2022
Revenue				7	15,614	13,479	45,619		38,534		54,558
Cost of goods and services sold				9	-8,972	-9,903	-27,462		-26,157		-37,660
GROSS PROFIT					6,642	3,576	18,157		12,377		16,898
Marketing expenses				9	-182	-147	-603		-535		-703
General administration expenses				9	-1,267	-966	-3,887		-3,192		-4,399
Other income (+)/ expenses (-)				10	-96	-27	-371		-129		-476
OPERATING PROFIT					5,096	2,436	13,296		8,521		11,320
Financial income				11	36	1	72		4		8
Financial expenses				11	-933	-113	-2,235		-319		-682
PROFIT BEFORE TAXES					4,199	2,324	11,133		8,206		10,646
Income tax				12	-146	-108	-1,267		-2,155		-2,240
NET PROFIT FOR THE PERIOD					4,053	2,216	9,866		6,051		8,406
COMPREHENSIVE INCOME FOR THE PERIOD					4,053	2,216	9,866		6,051		8,406
Attributable profit to:
Equity holders of A-shares					4,053	2,216	9,866		6,051		8,406
Earnings per A share (in euros)				13	0,20	0,11	0,49		0,30		0,42

CONSOLIDATED STATEMENT OF CASH FLOWS

€ thousand						9 months				for the year ended 31 December
			Note			2023			2022	2022
CASH FLOWS FROM OPERATING ACTIVITIES
	Operating profit					13,296			8,521	11,320
		Adjustment for depreciation/amortisation	4,5,9,10			5,935			4,965	6,817
		Adjustment for revenues from connection fees	10			-445			-406	-544
		Other non-cash adjustments	6			-131			0	0
		Profit (-)/loss (+) from sale of property, plant and equipment, and intangible assets				-22			-15	-32
	Change in current assets involved in operating activities							143	-1,619	-2,841
	Change in liabilities involved in operating activities					323			-296	309
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES						19,099			11,150	15,029
CASH FLOWS USED IN INVESTING ACTIVITIES
	Acquisition of property, plant, and equipment, and intangible assets						-20,414		-14,968	-20,701
	Compensations received for construction of pipelines, incl connection fees					2,966			1,451	1,593
	Proceeds from sale of property, plant and equipment, and intangible assets					24			17	53
	Interest received					73			3	9
TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES						-17,351			-13,497	-19,046
CASH FLOWS USED IN FINANCING ACTIVITIES
	Interest paid and loan financing costs, incl swap interests					-1,289			-271	-616
	Lease payments					-902			-351	-524
	Received loans					45,500			0	0
	Repayment of loans					-39,318			-1,818	-3,636
	Dividends paid		12			-6,515			-12,835	-12,835
	Withheld income tax paid on dividends		12			-165			-165	-165
	Income tax paid on dividends		12			-1,272			-2,116	-2,116
TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES						-3,961			-17,556	-19,892
CHANGE IN CASH AND CASH EQUIVALENTS						-2,213			-19,903	-23,909
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD			3			12,650			36,559	36,559
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD			3			10,437			16,656	12,650

Additional information:Taavi GröönChief Financial OfficerAS Tallinna Vesi(+372) 626 2200taavi.groon@tvesi.ee

Attachment

• Consolidated Interim Report for the 3rd quarter of 2023