Tallinna Vesi's fourth quarter sales were €15.52 million

AS Tallinna Vesi's sales in the fourth quarter of 2023 were €15.52 million, affected by the overall economic environment and a decrease in revenue from construction services. At the same time, the company's revenue from its core business of providing water services continued to grow.

Compared to the fourth quarter of 2022, the sales were €0.51 million lower.

Sales from water service sold to commercial customers in the fourth quarter of 2023 in the company’s main service area were €4.64 million, which is 7.5% more than the year before. Sales from water services provided to private customers increased by 2.4% in the fourth quarter compared to the same period of the previous year and totalled €6.19 million.

The company's operating profit for the fourth quarter was €4.05 million. Compared to the fourth quarter of the previous year, the operating profit increased by €1.25 million. The operating profit for 2023 was €17.35 million, an increase of €6.03 million compared to the previous year. This has been driven mainly by an increase in water consumption and a stabilisation of energy prices.

According to Aleksandr Timofejev, CEO of Tallinna Vesi, the commissioning of the new cogeneration plant has already had a positive impact on operating costs, although this is only a test period. "Using biogas to produce heat and electricity at the CHP plant will allow us to cover up to 15% of our total energy needs with in-house produced energy in the future, reducing operating costs and increasing the sustainability of our operations," said Timofejev. Supported by new investments, the company is moving towards a more sustainable operating model and a reduction of its environmental impact, he added.

The company’s net profit for the fourth quarter of 2023 was €2.98 million, which is €0.62 million more than in the same period last year. The group’s profit before taxes for the twelve months was €14.21 million, being 33.4% or €3.56 million higher than for the same period a year before. The net profit for the twelve months was €12.84 million, being 52.8% or €4.44 million higher than in 2022.

The group's net financial expenses were €0.98 million in the fourth quarter, which is €0.62 million higher than in the same period last year. The increase in financial expenses was due to increased cost of interest on loans linked to Euribor.

Throughout the year, the quality of tap water was excellent, meeting 99.87% of all quality requirements. The corresponding result for the fourth quarter was 99.7%. „We work every day to ensure that our customers and consumers receive tap water of the very highest quality. At the beginning of 2023, we introduced an innovative ice pigging technology for cleaning water pipes and cleaned more than 141 km of water network in one year," Timofejev said. According to the customer survey carried out for Tallinna Vesi in November, 89% of consumers drink tap water, which shows that they are highly satisfied with the quality of the water.

In the fourth quarter of 2023, Tallinna Vesi continued to introduce to the public the principles of water operations as a vital service and to raise awareness of the important aspects of maintaining a clean living environment by being present at the sustainability festival Impact Day and opening the doors of its water treatment plant to the public during the architecture weekend Open House Tallinn.

During the twelve months of 2023, wastewater treated at the Wastewater Treatment Plant at Paljassaare met all the established requirements. The good quality of the treated effluent is demonstrated by pollutant levels well below the legal limits. In 2023, we took more than 800 tons of debris, 200 tons of grit, 1800 tons of nitrogen and 240 tons of phosphorus out of the wastewater.

The rate of water loss in the water network remained low at 11.35% in the fourth quarter. This is significantly better than in the same period last year (15.34%). For the twelve months of 2023, the rate of water loss was 12.93%, compared to 16.02% of the year before. The low level of water losses is ensured by the continuous online monitoring of the water network and the network rehabilitation programme implemented as planned.

By the end of the fourth quarter of 2023, Tallinna Vesi had reconstructed more than 27 kilometres of networks, 46% of which using no-dig methods. The largest reconstruction works in 2023 were carried out on Jõe and Pronksi Street, Vana-Kalamaja Street, E. Vilde and Akadeemia Road, Kuklase and Vaablase Street, Pärna, Reinvaldi and Kuhlbarsi Street, Tehnika, Magasini and Punane Street, and on Smuuli Road.

The major projects carried out at the treatment plants in 2023 included the reconstruction of digesters and the installation of the cogeneration plant at the Wastewater Treatment Plant and the reconstruction of filters and clarifiers at the Water Treatment Plant. The first phase of the reconstruction of digesters has been successfully completed with one of the two digesters being reconstructed and most of the technological components replaced. Work will continue in 2024.

By the end of the fourth quarter of 2023, Tallinna Vesi had installed smart meters for 40.6% 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.

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. The new prices will apply once the Competition Authority has approved the application. The adjustments to the water tariffs are prompted by the increase in justified costs and by the crucial investments that are needed to ensure the continued operation of the vital service, to reduce environmental impact and to safeguard a clean environment.

In the twelve months of 2023, the group invested €35 million in fixed assets. The total value of fixed assets amounts to €256,10 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

€ million except key ratios	Quarter 4			Variance 2023/ 2022	12 months			Variance 2023/ 2022
€ million except key ratios	2023	2022	2021	Variance 2023/ 2022	2023	2022	2021	Variance 2023/ 2022
Sales	15.52	16.03	14.93	-3.1%	61.14	54.56	53.29	12.1%
Gross profit	5.91	4.52	4.80	30.7%	24.07	16.90	20.58	42.4%
Gross profit margin %	38.07	28.21	32.17	35.0%	39.36	30.97	38.61	27.1%
Operating profit before depreciation and amortisation	6.17	4.65	5.10	32.8%	25.40	18.14	25.30	40.1%
Operating profit before depreciation and amortisation margin %	39.78	29.00	34.17	37.1%	41.55	33.24	47.47	25.0%
Operating profit	4.05	2.80	3.42	44.9%	17.35	11.32	18.78	53.3%
Operating profit - main business	3.55	2.50	2.91	41.7%	15.99	10.31	17.52	55.1%
Operating profit margin %	26.12	17.45	22.89	49.6%	28.38	20.75	35.23	36.8%
Profit before taxes	3.07	2.44	3.31	26.0%	14.21	10.65	18.40	33.4%
Profit before taxes margin %	19.79	15.22	22.19	30.0%	23.23	19.51	34.52	19.1%
Net profit	2.98	2.36	3.21	26.4%	12.84	8.41	16.17	52.8%
Net profit margin %	19.18	14.70	21.47	30.5%	21.01	15.41	30.33	36.3%
ROA %	1.08	0.94	1.26	15.4%	4.80	3.30	6.45	45.5%
Debt to total capital employed %	58.47	56.26	54.94	3.9%	58.47	56.26	54.94	3.9%
ROE %	2.58	2.15	2.82	19.9%	11.27	7.43	14.69	51.7%
Current ratio	1.30	1.24	2.83	4.8%	1.30	1.24	2.83	4.8%
Quick ratio	1.24	1.17	2.79	6.0%	1.24	1.17	2.79	6.0%
Investments into fixed assets	12.09	15.18	1.61	-20.4%	34.93	25.13	15.38	39.0%
Payout ratio %	-	78.52	80.42		-	78.52	80.42

Gross profit margin – Gross profit / Net sales
Operating profit margin – Operating profit / Net sales
Operating profit before depreciation and amortisation – Operating profit + depreciation and amortisation
Operating profit before depreciation and amortisation margin – Operating profit before depreciation and amortisation / Net sales
Net profit margin – Net profit / Net sales
ROA – Net profit / Average Total assets for the period
Debt to Total capital employed – Total liabilities / Total capital employed
ROE – Net profit / Average Total equity for the period
Current ratio – Current assets / Current liabilities
Quick ratio – (Current assets – Stocks) / Current liabilities
Payout ratio – Total Dividends per annum/ Total Net Income per annum
Main business – water services related activities, excl. connections profit and government grants, construction services, doubtful receivables

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

€ thousand			as of 31 December
ASSETS		Note	2023	2022

CURRENT ASSETS
	Cash and cash equivalents	3	14,736	12,650
	Trade receivables, accrued income and prepaid expenses		8,608	8,989
	Inventories		1,137	1,197
TOTAL CURRENT ASSETS			24,481	22,836

NON-CURRENT ASSETS
	Property, plant, and equipment	4	256,108	229,869
	Intangible assets	5	1,293	688
TOTAL NON-CURRENT ASSETS			257,401	230,557

TOTAL ASSETS			281,882	253,393

LIABILITIES AND EQUITY

CURRENT LIABILITIES
	Current portion of long-term lease liabilities		697	883
	Current portion of long-term loans		3,594	3,630
	Trade and other payables		10,886	10,225
	Prepayments		3,604	3,749
TOTAL CURRENT LIABILITIES			18,781	18,487

NON-CURRENT LIABILITIES
	Deferred income from connection fees		44,653	39,150
	Leases		1,892	1,607
	Loans		92,835	76,708
	Provision for possible third-party claims	6	6,018	6,018
	Deferred tax liability		505	496
	Other payables		128	101
TOTAL NON-CURRENT LIABILITIES			146,031	124,080
TOTAL LIABILITIES			164,812	142,567

EQUITY
	Share capital		12,000	12,000
	Share premium		24,734	24,734
	Statutory legal reserve		1,278	1,278
	Retained earnings		79,058	72,814
TOTAL EQUITY			117,070	110,826

TOTAL LIABILITIES AND EQUITY			281,882	253,393

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

€ thousand			Quarter 4		for the year ended 31 December
	Note	2023	2022	2023		2022

Revenue	7	15,522	16,025	61,141		54,558
Cost of goods and services sold	9	-9,612	-11,503	-37,074		-37,660
GROSS PROFIT		5,910	4,522	24,067		16,898

Marketing expenses	9	-216	-169	-818		-703
General administration expenses	9	-1,391	-1,208	-5,278		-4,399
Other income (+)/ expenses (-)	10	-250	-347	-621		-476
OPERATING PROFIT		4,053	2,798	17,350		11,320

Financial income	11	46	5	119		8
Financial expenses	11	-1,028	-363	-3,263		-682
PROFIT BEFORE TAXES		3,071	2,440	14,206		10,646

Income tax	12	-95	-85	-1,362		-2,240

NET PROFIT FOR THE PERIOD		2,976	2,355	12,844		8,406
COMPREHENSIVE INCOME FOR THE PERIOD		2,976	2,355	12,844		8,406

Attributable profit to:
Equity holders of A-shares		2,976	2,355	12,844		8,406
Earnings per A share (in euros)	13	0.15	0.12	0.64		0.42

CONSOLIDATED STATEMENT OF CASH FLOWS

€ thousand						for the year ended 31 December
			Note	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
	Operating profit			17,350			11,320
		Adjustment for depreciation/amortisation	4,5,9,10	8,055			6,817
		Adjustment for revenues from connection fees	10	-604			-544
		Other non-cash adjustments	6	-16			0
		Profit (-)/loss (+) from sale of property, plant and equipment, and intangible assets		-34			-32
	Change in current assets involved in operating activities				430		-2,841
	Change in liabilities involved in operating activities			-667			309
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES				24,514			15,029

CASH FLOWS USED IN INVESTING ACTIVITIES
	Acquisition of property, plant, and equipment, and intangible assets			-28,885			-20,701
	Compensations received for construction of pipelines, incl. connection fees			2,535			1,593
	Proceeds from sale of property, plant and equipment, and intangible assets			37			53
	Interest received			119			9
TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES				-26,194			-19,046

CASH FLOWS USED IN FINANCING ACTIVITIES
	Interest paid and loan financing costs, incl. swap interests			-3,413			-616
	Lease payments			-1,233			-524
	Received loans			57,500			0
	Repayment of loans			-41,136			-3,636
	Dividends paid		12	-6,515			-12,835
	Withheld income tax paid on dividends		12	-85			-165
	Income tax paid on dividends		12	-1,352			-2,116
TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES				3,766			-19,892

CHANGE IN CASH AND CASH EQUIVALENTS				2,086			-23,909

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD			3	12,650			36,559

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD			3	14,736			12,650