Market announcement

Title

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

Message

The sales revenue of AS Tallinna Vesi's sales grew to EUR15.61 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 EUR4.05 million, which is EUR1.84
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 EUR4.27 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 EUR5.98 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 EUR45.62 million,
showing  an increase of  18.4% or EUR7.08 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 EUR5.10 million. Operating
profit  grew by EUR2.66  million or 109.2% compared  to the third  quarter of last
year.  The  operating  profit  for  the  nine months of 2023 was EUR13.30 million,
showing an increase of EUR4.77 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 EUR4.05 million
in  the third  quarter of  2023, which is  EUR1.84 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 EUR1.09 million.

The  Group's profit before taxes for the nine months of 2023 was EUR11.13 million,
being 35.7% or EUR2.93 million higher than for the same period in 2022. Net profit
for  the nine months was EUR9.87 million, being 63.1% or EUR3.82 million higher than
for the equivalent period in 2022.

The  Group's net financial income and expenses have resulted in a net expense of
EUR0.89  million, compared to EUR0.78 million  lower expense in the 3(rd) 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 m(3) of clean water into the water network and treated
nearly 12.7 million m(3) 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 EUR22.84
million. Total non-current assets amounted to EUR247.45 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

 EUR million       Quarter 3                      9 months

 except      key                   Variance                       Variance
 ratios          2023  2022  2021  2023/2022    2023  2022  2021  2023/ 2022
-----------------------------------            -------------------
 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 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

                                             as of 30                 as of 31
 EUR thousand                                  September                 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

                                       Quarter           for the year ended 31
 EUR thousand                            3       9 months                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

                                                                   for the year
                                                                      ended 31
 EUR thousand                                        9 months            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 Gröön
Chief Financial Officer
AS Tallinna Vesi
(+372) 626 2200
[email protected] (mailto:[email protected])