Market announcement

Title

Tallinna Vesi’s second-quarter sales were €15.5 million

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AS Tallinna Vesi's sales in the second quarter of this year were EUR15.5 million,
remaining at the level of the same period last year. The company's operating
profit for the second quarter was EUR4.46 million, an increase of 8%, and its net
profit was EUR2.19 million, a decrease of 5.2%, mainly due to an increase in the
interest cost on loans.

"The vital water services that Tallinna Vesi provide were at a high level
throughout the quarter - drinking water met 100% of all the requirements in
place. The quality of the treated effluent discharged to the Baltic Sea exceeded
the standards set by law in all parameters. The company's staff has been taking
care of the day-to-day operation of the service, while continuing to prepare for
the future - ensuring uninterrupted service is our common goal and requires
ongoing investment in the water and wastewater network," said Aleksandr
Timofejev, CEO of Tallinna Vesi.

He pointed out that the positive impact of the investments made so far to ensure
that consumers have access to vital water services at an affordable price can
already be seen. "We have received confirmation that we are moving in the right
direction with the investments in our business plan. We want to continue to be
the leading water company in Estonia, both in terms of quality and providing
water at an affordable price," said Timofejev. In total, Tallinna Vesi plans to
invest more than EUR60 million this year.

The company pumped 7 million m(3) of clean water into the water network and
treated nearly 12.5 million m(3) of wastewater in the second quarter of 2024.?
During the second quarter, 778 water samples were taken from the customers'
taps. According to Timofejev, clean tap water is ensured by an efficient water
treatment process and regular monitoring of the water network, as well as
ongoing preventive maintenance and timely investments.

Sales from water services sold to business customers in the second quarter of
2024 in the main service area of Tallinna Vesi were EUR4.50 million, which is
1.8% more than the year before. Sales from water services provided to private
customers in the second quarter were at the same level as a year earlier and
amounted to EUR6.18 million.?

The company's operating profit for the second quarter was EUR4.46 million.
Operating profit increased by 8% or EUR0.33 million compared to the year before.
The company's net profit was EUR2.19 million, which is EUR0.12 million less than in
the same period of the previous year. The decrease in net profit was mainly
driven by an increase in interest costs on loans.

In the second quarter of 2024, the proceedings regarding the application for a
new price for water services were finalised and the price change was approved by
the Competition Authority. The new prices in the Tallinn, Saue and Maardu areas
took effect on 1 July 2024 and will affect the company's sales starting from the
third quarter.

In addition to the ongoing need to invest in the water and wastewater network
and to reduce the environmental impact, the need for water price adjustments is
also due to increases in a number of input costs, such as electricity, chemicals
and maintenance. It also results from the obligation under the Public Water
Supply and Sewerage Act to harmonise the price for water services for private
and business customers.

More than half of the planned investment, or nearly EUR38 million, is intended for
the development and rehabilitation of pipelines. The total investment in
pipelines also includes up to EUR10 million for the construction of stormwater
pipelines financed by the City of Tallinn. Planned investments in water and
wastewater treatment plants amount up to EUR19 million. "We have set ourselves the
goal of working together with the City of Tallinn and other partners as much as
possible in planning and carrying out the pipeline works this year so as to
disrupt city life and traffic as little as possible, save the environment and
carry out the works in a cost-effective manner," Aleksandr Timofejev explained.

For more than a year now, an innovative and effective ice pigging technology has
been used to maintain the water mains. This is a technology in which an ice
slurry is made of water and table salt and pumped through the mains. By the end
of the second quarter, almost one fourth of the water network had been cleaned
using the new technology, which helps to maintain high water quality. In
addition, water quality has been supported by investments in water pumping
stations in recent years to provide secondary 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 the goals of the company's customer service is to notify customers about
water interruptions well in advance. In the second quarter, we notified our
customers at least 1 hour before unplanned water interruption took place in 98%
of cases and the average duration of a water interruption was 3 hours and 17
minutes. To reduce the inconvenience caused by water interruptions, we continue
installing additional isolation valves on the water network.

In the second quarter of 2024, the effluent discharged from the Paljassaare
Wastewater Treatment Plant met all the requirements in place. The high quality
of the treated effluent is demonstrated by pollutant levels well below the
limits set by law. During the second quarter of 2024, the company took out more
than 163 tonnes of debris, 53 tonnes of grit, 481 tonnes of nitrogen and 63
tonnes of phosphorus from the wastewater.

Over the next three years, we will be investing nearly EUR9 million to enhance the
biological treatment of wastewater by reconstructing the secondary clarifiers at
the wastewater treatment plant. Other major multi-annual projects include the
installation of mechanical screens at the headworks before the plant and the
replacement of the screens at the treatment plant, which are important
environmental projects designed to keep the Baltic Sea clean.

Timofejev also highlighted the cogeneration plant at the Paljassaare Wastewater
Treatment Plant that was accepted at the end of the second quarter from the
partner who carried out the construction. This plant will allow to use biogas to
generate a significant part of the electricity needed for the wastewater
treatment process, in addition to heat. Reconstructions are ongoing on the
digesters and aeration tanks at the wastewater treatment plant. This year we
will also start installing new, more efficient air blowers, expand our methanol
tank fleet and begin preparations for the installation of a solar power plant.

Renovations are ongoing on high-speed filters at the water treatment plant. The
designs are being prepared for upgrading the ozone production technology used in
water treatment and for the reuse of backwash water from the filters in B
building. There are also plans for the replacement of sedimentation technology
used in the clarifiers with flotation technology. The aim of these projects is
to reduce the plant's own water and energy consumption and to increase its
production capacity.

The rate of water loss in the water network remained low at 12.96% in the second
quarter of the year. This is a better result than in the same period last year
(13.62%). The low rate of water loss is ensured with the continuous on-line
monitoring of the water network and the timely implementation of the network
rehabilitation programme.

By the end of the second quarter, we had rehabilitated and constructed more than
17 kilometres of pipelines, of which over 9 kilometres were built using
environmentally friendly no-dig techniques. Tallinna Vesi is working closely
with the City of Tallinn and other partners, such as AS Utilitas Tallinn, to
plan and carry out the work so that as much work as possible can be carried out
at the same time, with as little disruption to city life and traffic as
possible.

By the end of the second quarter, we had installed over 11,500 smart water
meters, which means that more than 52% of our customers now have remote water
meters. The aim is to increase the share of customers with smart meters to 60%
in 2024, and to have all customers in our service area equipped with smart
meters by the end of 2026 at the latest.

We strive to provide our 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 second quarter of 2024, we
responded to written enquiries within 2 days in 99.7% of cases, thus maintaining
a high level.

At the beginning of the second quarter, we opened nearly 60 public water taps in
Tallinn, where residents can get free drinking water until the end of September.
In addition, we supported community events by providing tanks with fresh water.

We signed a cooperation agreement with the Estonian Paralympic Committee to
support the preparation of athletes participating in the Paris Paralympic Games
from 28 August to 8 September. We also joined the Diversity Charter and received
recognition from the Ministry of Defence for our outstanding contribution to
national defence.

For several years now, we have taken part in the employer reputation survey
conducted by Kantar Emor. As the results show, we have moved up from last year's
position, now ranking 20th in the top that was put together based on the survey
conducted among working people.

AS Tallinna Vesi is the largest water utility in Estonia, providing services to
nearly 25,000 private customers and businesses and 500,000 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

                        2(nd) quarter               6 months
 EUR million
 except key ratios      2024  2023  2022  2024/2023 2024  2023  2022  2024/2023
-------------------------------------------------------------------------------
 Sales                  15.55 15.41 13.00      0.9% 30.49 30.01 25.05      1.6%

 Gross profit            6.33  5.80  4.42      9.0% 12.39 11.52  8.80      7.6%

 Gross profit margin %  40.68 37.66 33.98      8.0% 40.63 38.38 35.12      5.9%

 Operating profit
 before depreciation
 and amortisation        6.49  6.10  4.69      6.5% 12.72 12.11  9.34      5.0%

 Operating profit
 before depreciation
 and amortisation
 margin %               41.74 39.57 36.09      5.5% 41.70 40.37 37.26      3.3%

 Operating profit        4.46  4.13  3.08      8.0%  8.58  8.20  6.09      4.7%

 Operating profit -
 main business           4.17  3.81  2.83      9.3%  8.33  7.73  5.74      7.9%

 Operating profit
 margin %               28.66 26.79 23.70      7.0% 28.15 27.33 24.29      3.0%

 Profit before taxes     3.42  3.41  2.98      0.4%  6.45  6.93  5.88     -7.0%

 Profit before taxes
 margin %               21.99 22.12 22.88     -0.6% 21.15 23.11 23.48     -8.5%

 Net profit              2.19  2.31  0.96     -5.2%  5.20  5.81  3.84    -10.5%

 Net profit margin %    14.10 15.02  7.36     -6.1% 17.07 19.37 15.31    -11.9%

 ROA %                   0.77  0.90  0.38    -14.7%  1.83  2.27  1.52    -19.0%

 Debt to total capital
 employed %             60.76 57.66 57.09      5.4% 60.76 57.66 57.09      5.4%

 ROE %                   1.89  2.06  0.85     -8.4%  4.54  5.26  3.46    -13.7%

 Current ratio           0.69  1.31  1.81    -47.3%  0.69  1.31  1.81    -47.3%

 Quick ratio             0.63  1.24  1.75    -49.2%  0.63  1.24  1.75    -49.2%

 Investments into fixed
 assets                 11.39  5.77  4.95     97.4% 18.04 10.44  7.73     72.8%

 Payout ratio %             - 79.41 78.52               - 79.41 78.52
-------------------------------------------------------------------------------

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 30 June          December
 ASSETS                                  Note 2024                       2023



 CURRENT ASSETS
------------------------------------------------------------------------------
   Cash and cash equivalents              3             3,923          14,736

   Trade receivables, accrued income
   and prepaid expenses                                 8,988           8,608

   Inventories                                          1,202           1,137
------------------------------------------------------------------------------
 TOTAL CURRENT ASSETS                                  14,113          24,481



 NON-CURRENT ASSETS
------------------------------------------------------------------------------
   Property, plant, and
   equipment                              4           269,839         256,108

   Intangible assets                      5             1,394           1,293
------------------------------------------------------------------------------
 TOTAL NON-CURRENT ASSETS                             271,233         257,401
------------------------------------------------------------------------------


 TOTAL ASSETS                                         285,346         281,882



 LIABILITIES AND EQUITY



 CURRENT LIABILITIES
------------------------------------------------------------------------------
   Current portion of long-term
   lease liabilities                                    1,011             697

   Current portion of long-term
   loans                                                3,571           3,594

   Trade and other payables                            12,275          10,886

   Prepayments                                          3,762           3,604
------------------------------------------------------------------------------
 TOTAL CURRENT LIABILITIES                             20,619          18,781



 NON-CURRENT LIABILITIES
------------------------------------------------------------------------------
   Deferred income from
   connection fees                                     47,761          44,653

   Leases                                               2,575           1,892

   Loans                                               95,963          92,835

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

   Deferred tax
   liability                                              242             505

   Other payables                                          94             128
------------------------------------------------------------------------------
 TOTAL NON-CURRENT LIABILITIES                        152,653         146,031
------------------------------------------------------------------------------
 TOTAL LIABILITIES                                    173,272         164,812



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

   Share premium                                       24,734          24,734

   Statutory legal reserve                              1,278           1,278

   Retained earnings                                   74,062          79,058
------------------------------------------------------------------------------
 TOTAL EQUITY                                         112,074         117,070
------------------------------------------------------------------------------


 TOTAL LIABILITIES AND EQUITY                         285,346         281,882

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 EUR thousand



                                                       for the 6
                                                           months
                               Note     Quarter 2   ended 30 June

                                      2024   2023    2024    2023

 Revenue                        7   15,552 15,405  30,489  30,005

 Cost of goods and services
 sold                           9   -9,225  9,603 -18,102 -18,490
------------------------------------------------------------------
 GROSS PROFIT                        6,327  5,802  12,387  11,515



 Marketing expenses             9     -241   -205    -475    -419

 General administration
 expenses                       9   -1,531 -1,317  -3,025  -2,620

 Other income (+)/ expenses
 (-)                            10     -98   -153    -303    -275
------------------------------------------------------------------
 OPERATING PROFIT                    4,457  4,127   8,584   8,201



 Financial income               11      67     26     149      36

 Financial expenses             11  -1,104   -747  -2,285  -1,302
------------------------------------------------------------------
 PROFIT BEFORE TAXES                 3,420  3,406   6,448   6,935



 Income tax                         -1,226 -1,093  -1,244  -1,121



 NET PROFIT FOR THE PERIOD           2,194  2,313   5,204   5,814
------------------------------------------------------------------
 COMPREHENSIVE INCOME FOR THE
 PERIOD                              2,194  2,313   5,204   5,814



 Attributable profit to:
------------------------------------------------------------------
 Equity holders of A-shares          2,194  2,313   5,204   5,814

 Earnings per A share (in
 euros)                         12    0.11   0.12    0.26    0.29

CONSOLIDATED STATEMENT OF CASH FLOWS

                                                   for the 6 months ended 30
 EUR thousand                                                              June

                                            Note    2024                 2023

 CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------------------------------------------------
   Operating profit                                8,584                8,200

     Adjustment for
     depreciation/amortisation              9,10   4,131                3,914

     Adjustment for revenues from
     connection fees                         10     -340                 -292

     Other non-cash adjustments                      -91                 -157

     Profit (-)/loss (+) from sale of
     property, plant and equipment, and
     intangible assets                               -55                  -22

   Change in current assets involved in operating
   activities                                       -446                  343

   Change in liabilities involved in
   operating activities                              351                 -526
------------------------------------------------------------------------------
 TOTAL CASH FLOWS FROM OPERATING ACTIVITIES       12,134               11,460



 CASH FLOWS USED IN INVESTING ACTIVITIES
------------------------------------------------------------------------------
   Acquisition of property, plant, and
   equipment,
   and intangible assets                         -13,800              -10,495

   Compensations received for construction
   of pipelines, including connection fees           952                1,724

   Proceeds from sale of property, plant and
   equipment,
   and intangible assets                              98                   24

   Interest received                                 149                   36
------------------------------------------------------------------------------
 TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES   -12,601               -8,711



 CASH FLOWS USED IN FINANCING ACTIVITIES
------------------------------------------------------------------------------
   Interest and loan financing costs paid         -2,572               -1,243

   Lease payments                                   -584                 -593

   Received loans                                  5,000               45,500

   Repayment of loans                             -1,818              -39,318

   Dividends paid                                -10,069               -6,515

   Income tax paid on dividends                     -303                 -278
------------------------------------------------------------------------------
 TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES   -10,346               -2,447


------------------------------------------------------------------------------
 CHANGE IN CASH AND CASH EQUIVALENTS             -10,813                  302


------------------------------------------------------------------------------
 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     3,923               12,952

Additional information:

Taavi Gröön
Chief Financial Officer
AS Tallinna Vesi
(+372) 626 2200
[email protected]
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