Market announcement

Title

Tallinna Vesi’s first-quarter sales revenue increased to €14.94 million

Message

AS  Tallinna Vesi's sales revenue  increased by 2% in the  first quarter of this
year  compared  to  the  same  period  last  year,  reaching EUR14.94 million. The
increase in sales revenue was driven by the company's core business of providing
water  services, but this did  not compensate for the  rise in interest expenses
and the company's net profit fell to EUR3.01 million.

According  to Aleksandr  Timofejev, CEO  of Tallinna  Vesi, the company provided
high  quality water  and wastewater  services in  the first  quarter of 2024 and
continued  large-scale  reconstruction  projects.  ?During the quarter, Tallinna
Vesi  pumped  6.49 million  m(3)  of  drinking  water into the water network and
treated nearly 13.77 million m(3) of wastewater," Timofejev said.

Sales  from water services  sold to business  customers in the  first quarter of
2024 in  the main service area of Tallinna  Vesi were EUR4.28 million, which is in
line  with  the  year  before.  Sales  from  water  services provided to private
customers  increased by 2.7% in the first quarter compared to the same period of
the previous year and totalled EUR6.21 million.

Tallinna  Vesi continues to work on  investment projects to ensure continuity of
its  high quality  water services.  ?One of  the major  projects in 2024 will be
making  improvements  to  the  biological  treatment  process.  The  Paljassaare
Wastewater  Treatment Plant can operate at maximum efficiency if the mechanical,
chemical  as well as  biological treatment stages  are running efficiently. Over
the  next three years, we  will be investing up  to nearly EUR9 million to improve
the  biological treatment process. As  a result, we will  be able to remove even
more  nitrogen and phosphorus from wastewater  and ensure that the effluent that
goes back into the environment is clean," explained Timofejev.

A combined heat and power (CHP) plant is in the final stages of commissioning.
It will enable the production of electricity and heat from the biogas generated
in the digesters at the wastewater treatment plant. The heat and electricity
that will be produced from biogas in the CHP plant will cover up to 40% of
Tallinna Vesi's total energy consumption in the future.

Tallinna  Vesi's  operating  profit  for  the  first  quarter was EUR4.13 million.
Operating profit increased by 1.4% or EUR0.05 million compared to the year before.

The  company's net profit for the first quarter of 2024 was EUR3.01 million, which
is  EUR0.49 million less than in the  same period of 2023. Net profit was affected
by the increase in net financial expenses due to the change in the base interest
rate. According to Aleksandr Timofejev, maintaining profitability is challenging
as  the overall  price increase  is driving  up operating  costs and the rise in
Euribor  has increased interest costs. ?We  have submitted an application to the
Competition Authority for the implementation of the new price for water services
in  September last year and  hope to finalise the  application process soon," he
said.

During  the first quarter  of 2024, Tallinna Vesi  continued to provide reliable
water  and wastewater services, as demonstrated by the consistently high quality
indicators. The quality of tap water in the first quarter was excellent, meeting
100% of  all drinking water quality requirements. During the first quarter, 774
water  samples were taken from customers' taps. Clean tap water has been ensured
by  the efficient  water treatment  process and  regular monitoring of the water
network,  as  well  as  ongoing  preventive  maintenance and timely investments,
Timofejev said.

?In 2024, we will mainly use innovative ice pigging technology to maintain water
pipes. Using this method, we cleaned 20 km of water mains in the first quarter,"
said  Timofejev. Ice pigging that is currently unique in the Nordic countries is
a  pipe cleaning technology in which an ice  slurry made of water and table salt
is pumped through the pipeline.

The water quality is also supported by the investments in water pumping stations
made  in recent years, enabling additional  chlorination in various parts of the
city.  Additional disinfection  will ensure  that the  requirements set  for tap
water quality are met at various points across the city where chlorine levels in
the   water  are  normally  very  low,  especially  in  summer  when  the  water
temperatures in the network get high.

One  of Tallinn Vesi's aims is to notify its customers about water interruptions
well  in  advance.  In  the  first  quarter  of  2024, the  company notified its
customers  at least 1 hour before unplanned water interruption took place in all
cases.  The average duration of a water interruption in the first quarter was 2
hours  and 44 minutes,  37 minutes less  than in  the same  period last year. To
reduce  the inconvenience caused by water interruptions, Tallinna Vesi continues
installing additional isolation valves on the water network.

In  the  first  quarter  of  2024, the  effluent from the Paljassaare Wastewater
Treatment  Plant  met  all  the  requirements.  The  high quality of the treated
effluent  is demonstrated by pollutant levels well  below the limits set by law.
?During  the first quarter  of 2024, we removed  more than 155 tonnes of debris,
58 tonnes  of grit, 480 tonnes of nitrogen  and 64 tonnes of phosphorus from the
wastewater," said Timofejev.

Investment  projects  at  the  treatment  plants  continued.  These included the
renovation  of the  high-speed filters  at the  Ülemiste Water  Treatment Plant,
renovation  of the  clarifiers at  the Ülemiste  Water Treatment Plant which was
completed,  and the replacement of the gear of water weir at the Kaunissaare dam
which  is in the final stages.  Preparations are ongoing for several large-scale
projects  in  the  coming  years.  One  of  these  involves  upgrading the ozone
production  technology used in water treatment, which is currently at the design
stage.  Another project involves  the reuse of  backwash water from the filters,
which is also being designed. The third project involves converting the floating
bed  clarifiers  into  flotators.  These  projects  are  designed  to reduce the
treatment  plant's own need for water and  energy and to increase its production
capacity.

At  the wastewater  treatment plant,  the reconstruction  works on the digesters
will  continue, with the emptying  of the digester to  be reconstructed in 2024
being  started at  the end  of the  first quarter.  The commissioning  and final
acceptance  of the  cogeneration plant  is also  in the  final stages. New major
projects at the treatment plant this year include launching a three-year project
to  reconstruct the secondary  clarifiers, installing mechanical  screens at the
headworks  and replacing the screens in the  screen house at the plant. Tallinna
Vesi  will  also  start  installing  new,  more  efficient air blowers in 2024,
increase its methanol tank fleet and start preparations for a solar power plant.

The  rate of water loss in the water network remained low at 16.55% in the first
quarter  of the year. This is a better  result than in the same period last year
(16.67%).  Low  rates  of  water  loss  are  ensured  by  the  continuous online
monitoring  of  the  water  network  and  timely  implementation  of the network
rehabilitation programme.

?By  the end of  the first quarter  of 2024, we had  reconstructed and installed
more than 5 kilometres of pipelines, of which over 4 kilometres were built using
environmentally  friendly no-dig methods," said Aleksandr Timofejev. The largest
pipeline  reconstructions  are  carried  out  on  L. Koidula Street, the railway
crossing  on  Tondi  Street,  Siili  Street,  Masina  Street,  and Härmatise and
Räitsaka  Street.  In  addition,  work  is  underway  on the pipeline to booster
pumping station supplying water to Mustamäe, to increase the reliability of that
pipeline.

By the end of the first quarter of 2024, Tallinna Vesi had installed smart water
meters  for 46.5% of its customers. The main advantages of a smart meter include
the  speed and accuracy of data transmission, but also security and reliability.
In  addition to consumption data, the  smart meters also communicate information
about  any failures  and water  losses. This  allows the  company to monitor its
water  network more effectively  and detect leaks,  which in turn  helps to save
clean  water and the resources it takes to  treat the water. 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. ?Smart meters have proven to be an effective tool
in  detecting leaks - thanks to smart meters, we have detected a number of leaks
in  the  customer's  piping  and  prevented  more  extensive  losses  from water
emergencies," Alexander Timofejev pointed out.

He  also added that Tallinna Vesi strives to provide its customers and consumers
with  a  reliable  service,  part  of  which  is  the  availability of important
information about the service and the speed at which the enquiries are answered.
In  the first quarter of 2024, the company responded to written enquiries within
2 days  in 99.4% of cases, a significant  improvement compared to a year before.
?We will continue to focus on our speed of response," Timofejev assured, adding:
?We  consider as complaints any enquiries  received from customers that indicate
dissatisfaction  with the  company's activities  or the  quality of the services
provided.  The aim of  this is to  gain a better  understanding of the causes of
customer  dissatisfaction and  to prevent  complaints more  effectively." In the
first  quarter of 2024, the company received a total of 210 customer complaints,
which  is significantly less compared to the 348 complaints received in the same
period a year ago.

In the first quarter, Tallinna Vesi highlighted the importance of clean drinking
water  as part  of the  International Water  Day, signed a cooperation agreement
with the Estonian Paralympic Committee, and introduced opportunities for working
in  the water sector by  attending the Student Fair,  the Engineering Career Day
and the Key to the Future Career Fair.

On  21 September 2023, Tallinna Vesi submitted an application to the Competition
Authority to change the prices for water services. This application concerns the
price  for water services in  the main service area  in Tallinn and Saue, in the
service  area in Maardu and  for other water companies.  The processing of price
application  is ongoing and the  new prices will apply  once the application has
been  approved by the Competition Authority. The need to adjust the water tariff
is  driven  by  the  increase  in  justified  costs  and by the crucial need for
investment  to keep the vital service  running, reduce environmental impacts and
maintain a clean environment.

Tallinna  Vesi aims to continue investing to increase the future-proofing of its
infrastructure  and to ensure the continuity of the vital service at prices that
consumers  can afford. The total amount of  planned investments in 2024 is up to
EUR62 million, of which more than half, or nearly EUR38 million, is intended for the
development  and reconstruction  of networks.  Planned investments  in water and
wastewater treatment plants amount up to EUR19 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  freely floating on the Nasdaq
Tallinn Stock Exchange.

MAIN FINANCIAL INDICATORS

                                          Quarter 1
 EUR million
 except key ratios                         2024  2023  2022 Variance 2024/ 2023
-------------------------------------------------------------------------------
 Sales                                    14.94 14.60 12.05                2.3%

 Gross profit                              6.06  5.71  4.38                6.1%

 Gross profit margin %                    40.57 39.13 36.36                3.7%

 Operating profit before depreciation and
 amortisation                              6.23  6.02  4.64                3.4%

 Operating profit before depreciation and
 amortisation margin %                    41.67 41.22 38.53                1.1%

 Operating profit                          4.13  4.07  3.00                1.4%

 Operating profit - main business          4.17  3.91  2.92                6.5%

 Operating profit margin %                27.63 27.89 24.92               -0.9%

 Profit before taxes                       3.03  3.53  2.91              -14.1%

 Profit before taxes margin %             20.27 24.16 24.13              -16.1%

 Net profit                                3.01  3.50  2.88              -13.9%

 Net profit margin %                      20.16 23.97 23.88              -15.9%

 ROA %                                     1.06  1.38  2.09              -23.0%

 Debt to total capital employed %         58.11 55.19 54.17                5.3%

 ROE %                                     2.54  3.11  4.70              -18.3%

 Current ratio                             1.44  1.46  3.20               -1.4%

 Quick ratio                               1.37  1.38  3.13               -0.7%

 Investments into fixed assets             6.65  4.67  2.78               42.4%

 Payout ratio %                              na    na    na
-------------------------------------------------------------------------------

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

 EUR thousand

                                                                    as of 31
                                              as of 31 March         December
 ASSETS                                  Note 2024                       2023



 CURRENT ASSETS
------------------------------------------------------------------------------
   Cash and cash equivalents              3            14,494          14,736

   Trade receivables, accrued income
   and prepaid expenses                                 9,112           8,608

   Inventories                                          1,120           1,137
------------------------------------------------------------------------------
 TOTAL CURRENT ASSETS                                  24,726          24,481



 NON-CURRENT ASSETS
------------------------------------------------------------------------------
   Property, plant, and
   equipment                              4           260,550         256,108

   Intangible assets                      5             1,355           1,293
------------------------------------------------------------------------------
 TOTAL NON-CURRENT ASSETS                             261,905         257,401
------------------------------------------------------------------------------


 TOTAL ASSETS                                         286,631         281,882



 LIABILITIES AND EQUITY



 CURRENT LIABILITIES
------------------------------------------------------------------------------
   Current portion of long-term
   lease liabilities                                    1,004             697

   Current portion of long-term
   loans                                                3,600           3,594

   Trade and other payables                             9,579          10,886

   Prepayments                                          3,039           3,604
------------------------------------------------------------------------------
 TOTAL CURRENT LIABILITIES                             17,222          18,781



 NON-CURRENT LIABILITIES
------------------------------------------------------------------------------
   Deferred income from
   connection fees                                     47,530          44,653

   Leases                                               2,310           1,892

   Loans                                               92,852          92,835

   Provision for possible third-
   party claims                           6             6,018           6,018

   Deferred tax
   liability                                              523             505

   Other payables                                          96             128
------------------------------------------------------------------------------
 TOTAL NON-CURRENT LIABILITIES                        149,329         146,031
------------------------------------------------------------------------------
 TOTAL LIABILITIES                                    166,551         164,812



 EQUITY
-------------------------------------------------------------------------------
   Share capital                                       12,000          12,000

   Share premium                                       24,734          24,734

   Statutory legal reserve                              1,278           1,278

   Retained earnings                                   82,068          79,058
------------------------------------------------------------------------------
 TOTAL EQUITY                                         120,080         117,070
------------------------------------------------------------------------------


 TOTAL LIABILITIES AND EQUITY                         286,631         281,882


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 EUR thousand                                for the 3 months ended 31 March

                               Note   2024                             2023



 Revenue                        7   14,937                           14,599

 Cost of goods and services
 sold                           9   -8,877                           -8,887
----------------------------------------------------------------------------
 GROSS PROFIT                        6,060                            5,712



 Marketing expenses             9     -235                             -215

 General administration
 expenses                       9   -1,494                           -1,303

 Other income (+)/ expenses
 (-)                            10    -203                             -122
----------------------------------------------------------------------------
 OPERATING PROFIT                    4,128                            4,072



 Financial income               11      82                               10

 Financial expenses             11  -1,182                             -555
----------------------------------------------------------------------------
 PROFIT BEFORE TAXES                 3,028                            3,527



 Income tax                            -18                              -28



 NET PROFIT FOR THE PERIOD           3,010                            3,499
----------------------------------------------------------------------------
 COMPREHENSIVE INCOME FOR THE
 PERIOD                              3,010                            3,499



 Attributable profit to:
----------------------------------------------------------------------------
 Equity holders of A-shares          3,010                            3,499

 Earnings per A share (in
 euros)                         12    0.15                             0.17


CONSOLIDATED STATEMENT OF CASH FLOWS

                                                       for the 3 months ended
 EUR thousand                                                          31 March

                                             Note   2024                 2023

 CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------------------------------------------------
   Operating profit                                4,128                4,072

     Adjustment for
     depreciation/amortisation               9,10  2,097                1,945

     Adjustment for revenues from connection
     fees                                     10    -168                 -145

     Other non-cash adjustments                       22                    0

     Profit (-)/loss (+) from sale of
     property, plant and equipment, and
     intangible assets                               -41                    0

   Change in current assets involved in operating
   activities                                       -487                1,191

   Change in liabilities involved in
   operating activities                              105               -1,357
------------------------------------------------------------------------------
 TOTAL CASH FLOWS FROM OPERATING ACTIVITIES        5,656                5,706



 CASH FLOWS USED IN INVESTING ACTIVITIES
------------------------------------------------------------------------------
   Acquisition of property, plant, and
   equipment,
   and intangible assets                          -6,176               -5 304

   Compensations received for construction
   of pipelines, incl connection fees                377                  288

   Proceeds from sale of property, plant and
   equipment,
   and intangible assets                              66                    0

   Interest received                                  82                   10
------------------------------------------------------------------------------
 TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES    -5,651               -5,006



 CASH FLOWS USED IN FINANCING ACTIVITIES
------------------------------------------------------------------------------
   Interest and loan financing costs paid            -34                 -258

   Lease payments                                   -213                 -203
------------------------------------------------------------------------------
 TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES      -247                 -461


------------------------------------------------------------------------------
 CHANGE IN CASH AND CASH EQUIVALENTS                -242                  239


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


------------------------------------------------------------------------------
 CASH AND CASH EQUIVALENTS AT THE END
 OF THE PERIOD                                3   14,494               12,889



Additional information:

Taavi Gröön
Chief Financial Officer
AS Tallinna Vesi
(+372) 626 2200
[email protected]
(https://www.globenewswire.com/Tracker?data=VSjbI1bi0FAqCLWeEMqRVT4jIyjKidEVckpI
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