Market announcement

Title

Results of Operations - for the 1st quarter 2014

Message

MANAGEMENT REPORT

Contractual Highlights

  -- AS Tallinna Vesi tariffs continue to be on the same level based on
     temporary
injunction granted by the Court for the period of court proceedings to
     protect the Company from the unilateral breach of privatization agreement
     by Estonian Authorities.
  -- AS Tallinna Vesi would like all its shareholders to be fully aware of the
     facts that the Company was privatised
i
n 2001 with the full support and knowledge of the Estonian national
     government, with written confirmations from the Prime Minister, the
     Minister of Finance, and the Competition Authority itself regarding the key
     terms of the agreements, and utilising the expertise and guidance of the
     European Bank for Reconstruction and Development (EBRD).
  -- At the end of May 2012 the District Court ruled that AS Tallinna Vesi’s
     Services Agreement, that was part of the international privatisation, is a
     public law contract.
AS Tallinna Vesi firmly believes that the terms and conditions of the
     international privatisation contract that has been deemed a public law
     contract should not be broken simply by transferring the duties of the
     regulator from one state institution (the City of Tallinn) to a different
     state institution (the Competition Authority). A public law contract should
     enjoy the protection of the Estonian legal system, should the contract not
     be honoured, then the company will have a claim against the Estonian state.
  -- In February 2014 and March 2014 both AS Tallinna Vesi and EVEL (the
     Estonian Water Association) submitted proposals to Parliament to supplement
     the existing law to enable public law contracts signed prior to November
     2011 to be honoured. This proposal was not discussed or adopted by
     Parliament, however Parliament did state that it would like to meet with
     both AS Tallinna Vesi and the Competition Authority to further discuss the
     proposal. Due to the change in government these meetings have not yet taken
     place.
  -- The date of the next court hearing is not set. 
  -- Discussion of the complaint submitted to the EU Commission is on-going.
  -- Average real return on capital invested at privatization is still 6.2%
     since 2001.

The Company has continuously stated its belief in fully transparent regulation
and its willingness to enter into meaningful and evidence-based dialogue that
takes into account the privatization contract signed in 2001. 



Financial highlights of 1st quarter 2014

During the 1st quarter 2014 the sales have gone up compared to the same period
in 2013, increasing 4.8% to 13.31 mln euros. 

The gross profit in 1st quarter has decreased 3.5% or 0.26 mln euros, mainly
due to increased pollution tax costs.  The effluent discharged to the sea
continues to comply with all requirements, except for the concentration of zinc
and copper. Namely, under the water abstraction permit issued by the
Environmental Board at the end of December 2013, the former limit
concentrations of heavy metals in treated effluent were reduced 400 times. At
the moment the wastewater process, not only the one used in Paljassaare
wastewater treatment plant, but in general, is capable removing around 70% of
heavy metals from the wastewater. Therefore the Company is currently not
technically able to meet the limit values. New limits cause confusion and
problems across water sector in Estonia. 

Due to the decrease of the allowed concentration the Company has recognised
pollution tax on a prudent principle and hence extra pollution tax expenses of
0.80 mln euros was faced. 

The administrative expenses are up by 21.1% or 0.24 mln euros mainly by
increased legal costs related to tariff dispute. 

Without the additional pollution tax the operating profit from main operations
would have been 5.4% higher than in the 1st quarter in 2013 amounting to 6.5
mln euros. 

Financial income and expenses without the impact of the change in the fair
value of swap contracts are down by 0.04 mln euros due to the lower interest
income. 

The net profit for the 1st quarter without the increased pollution tax and swap
costs impact was 3.1% or 0.2 mln euros higher than in the comparative period
last year. 

mln €                             1 Q 2012  1 Q 2013  1 Q 2014  Change 14/13
----------------------------------------------------------------------------
Sales                                12,99     12,69     13,31          4,8%
Gross profit                          8,18      7,52      7,26         -3,5%
Gross profit margin %                62,99     59,28     54,59         -7,9%
Operating profit                      6,95      6,16      5,68         -7,7%
Operating profit - main business      6,87      6,16      5,68         -7,7%
Operating profit margin %            53,48     48,50     42,71        -11,9%
Profit before taxes                   6,31      6,21      5,06        -18,6%
Net profit                            6,31      6,21      5,06        -18,6%
Net profit margin %                  48,53     48,96     38,03        -22,3%
ROA %                                 3,18      3,01      2,42        -19,5%
Debt to total capital employed       57,03     55,94     55,81         -0,2%
ROE %                                 7,40      6,84      5,49        -19,8%
Current ratio                         5,53      5,42      4,60        -15,2%
----------------------------------------------------------------------------

Gross profit margin – Gross profit / Net sales

Operating profit margin – Operating profit / 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 / Total equity

Current ratio – Current assets / Current liabilities

Main business – water and wastewater activities, excl. connections profit and
government grants 



RESULTS OF OPERATIONS - FOR THE 1st QUARTER 2014

Profit and Loss Statement

1st quarter 2014

Sales

As the company’s tariffs are frozen at the 2010 tariff level, the changes in
the revenues from main activities ie from sales of water and wastewater
services is fully driven by consumption. 

In the 1st quarter of 2013 the Company’s total sales increased, year on year,
by 4.8% to 13.31 mln euros. 90.5% of sales comprise of sales of water and
treatment of wastewater to domestic and commercial customers within and outside
of the service area, 7.4% of sales are the  the fees received from the City of
Tallinn for operating and maintaining the storm water system and fire hydrants
and 2.1% from other works and services. 

Sales of water and wastewater services were 12.04 mln euros, a 2.7% increase
compared to the 1st quarter of 2013, resulting from the changes in sales
volumes as described below. 

Within the service area, sales to residential customers were at 6.05 mln euros,
showing a 1.9% increase year on year, as revenues from apartment blocks form
the biggest share of our residential sales, the biggest increase came also from
this client group. Sales to commercial customers increased by 1.0% to 4.65 mln
euros, mainly coming from the sales in industrial sector. Sales to customers
outside of the main service area increased by 14.3% to 1.14 mln euros in the
1st quarter of 2014. It was mostly affected by wastewater as sales of water was
stable. Over pollution fees received were 0.19 mln euros, an 8.4% increase
compared to the 1st quarter of 2013. 

                                                      Quarter 1        Variance 
                                                                         14/13  
Revenues from main operating activities           2014   2013   2012   €     %  
Private clients, incl:                           6 047  5 932  6 054  115   1,9%
Water supply service                             3 327  3 264  3 330   63   1,9%
Wastewater disposal service                      2 720  2 668  2 724   52   1,9%
Corporate clients, incl:                         4 654  4 606  4 569   48   1,0%
Water supply service                             2 580  2 509  2 464   71   2,8%
Wastewater disposal service                      2 074  2 097  2 105  -23  -1,1%
Outside service area clients, incl:              1 145  1 002  1 097  143  14,3%
Water supply service                               255    253    255    2   0,8%
Wastewater disposal service                        756    661    662   95  14,4%
Storm water disposal service                       134     88    180   46  52,3%
Over pollution fee                                 194    179    175   15   8,4%
                                                                                
Storm water treatment and disposal service and     991    726    879  265  36,5%
 fire hydrant service                                                           
Construction service and design                    130     98     64   32  32,7%
Other works and services                           146    150    155   -4  -2,7%

Outside service area sales volumes were 0.26 mln m3 or 19.2% higher than in the
1st quarter of 2013. As already mentioned before the main factor in this
increase was an increase in wastewater and storm water volumes. 

The sales from the operation and maintenance of the storm water and
fire-hydrant system in the main service area have increased by 36.5% to 0.99
mln euros in the 1st quarter of 2014 due to higher volumes compared to the same
period in 2013. According to the terms and conditions of the contract revenues
reflect actual volumes treated and costs for treating the storm water,
therefore this cost pass through has no impact on profits. 

The sales of construction activities and design services have increased by
32.7% to 0.13 mln euros in the 1st quarter of 2014 compared to 1st quarter in
2013, partly due to mild winter of 2014 allowing construction works to be
started earlier. 



Cost of Goods Sold and Gross profit

The cost of goods sold for the main operating activity was 6.04 mln euros in
the 1st quarter of 2014, showing 0.87 mln euros or 16.9% increase compared to
the equivalent period in 2013. The cost increase is mainly influenced by the
pollution tax increase in the 1st quarter of 2014. 

Cost of goods sold                      Quarter 1        Variance 14/13
                                  2014    2013    2012     €       %   
Water abstraction charges          -264    -246    -240    -18     7,3%
Chemicals                          -412    -420    -365      8    -1,9%
Electricity                        -837    -935    -932     98   -10,5%
Pollution tax                    -1 076    -216     214   -860   398,1%
Total direct production costs    -2 589  -1 817  -1 323   -772    42,5%
Staff costs                      -1 228  -1 216  -1 123    -12     1,0%
Depreciation and amortization    -1 298  -1 299  -1 282      1    -0,1%
Construction service and design     -87     -86     -50     -1     1,2%
Other costs of goods sold          -841    -751  -1 031    -90    12,0%
Other costs of goods sold total  -3 454  -3 352  -3 486   -102     3,0%
Total cost of goods sold         -6 043  -5 169  -4 809   -874    16,9%



Total direct production costs (water abstraction charges, chemicals,
electricity and pollution taxes) increased by 0.77 mln euros or 42.5% year on
year. Biggest increase came from the increase in pollution tax. Other changes
came from a combination of increase in prices and tax rates and movements in
treatment volumes that affected the costs of goods sold together with the
following additional factors: 

  -- Water abstraction charges increased only by 0.02 mln euros or 7.3% to 0.26
     mln euros in the 1st quarter of 2014, driven mainly by 5% raise in tax
     rates (worth 0.01 mln euros) and raw water volumes (worth 0.01 mln euros).
  -- Total chemical costs remained broadly flat, decreasing 1.9% to 0.41 mln
     euros. Costs change was mainly influenced by the increase in chemicals
     price, which was balanced by decrease in volumes used due to less dosage in
     sewage treated and in water treatment.
  -- Electricity costs decreased by 0.10 mln euros or 10.5% in the 1st quarter
     of 2014 compared to the 1st quarter of 2013. Lower electricity costs are
     mostly derived from the decrease in electricity price and used unit costs,
     worth 0.16 mln euros. Positive effects are reduced slightly by increased
     electricity volumes worth 0.06 mln euros.
  -- In the 1st quarter of 2014 the pollution tax expense increased by 0.86 mln
     euros or 398.1%. Main reason for this comes from the change in the allowed
     concentration of heavy metals in treated effluent which had been reduced up
     to 400 times. Currently the wastewater treatment process allows not only in
     Paljassaare but also in  Although Paljassaare wastewater treatment plant is
     removing 70-80% of zinc and copper from the wastewater, which is a modern
     wastewater treatment process capability, we are currently not technically
     able to meet the limit. Due to non-compliance with the amounts allowed the
     Company accounted for excessive pollution tax costs. The Company has
     declared and accounted for the pollution tax based on the prudent
     principles. The Company has recognised losing 0.5 coefficient and accounted
     for 100 times penalties for heavy metals concentration and associated tax.
     The Company is trying to solve the non-compliance favourably, still it is
     possible that the elevated pollution tax costs might also occur in the
     future quarters. Due to the change in the concentrations the Company
     recognised extra pollution tax expenses for 0.8 mln euros.

Other cost of goods sold (staff costs, depreciation, construction services and
other cost of goods sold) in the main operating activity increased by 0.10 mln
euros or 3.0%. Most of the increase in costs came from increased costs in
repair and maintenance carried out in the 1st quarter of 2014. Some of the
maintenance costs had been carried out earlier than last year due to the mild
winter. 

As a result of all of the above the Company’s gross profit for the 1st quarter
of 2014 was 7.26 mln euros, which is a decrease of 0.26 mln euros, or 3.5%,
compared to the gross profit of 7.52 mln euros for the 1st quarter of 2013. 



Other Operating Costs

General administration expenses increased in total 0.24 mln euros or 21.1%,
mainly because of higher consultation and legal fees. 



Other net income/expenses

Other net income decreased to a net expenses of 0.05 mln euros, compared to
0.02 mln euros net expenses in the 1st quarter of 2013. The decline in
government grants revenues has been the main contributor to Other net income
becoming solely an expense. 



Operating profit

As a result of above factors the Company’s operating profit from main services
for the 1st quarter of 2014 totalled 5.68 mln euros compared to 6.16 mln euros
in the corresponding quarter in 2013, which shows a decrease of 0.48 mln euros
or 7.7%. Total operating profit for the 1st quarter of 2014 decreased 0.48 mln
euros. Year on year the operating profit for the 1st quarter has decreased by
7.7%. Removing the impact of pollution tax the Company’s operating profit had
been 5.4% or 0.3 mln euros higher. 



Financial expenses

The company’s net financial expenses amounted to 0.62 mln euros in the 1st
quarter of 2014, which is a negative change of 0.68 mln euros compared to 0.06
mln euros financial income in the 1st quarter of 2013 The major reason for the
decline comes from difference of the change of the fair value of the swap
contracts as described below. 

The standalone swap agreements have been signed to mitigate the majority of the
long term floating interest risk, the interest swap agreements are signed for
75 mln euros and 20 mln euros are still with floating interest rate. At this
point in time the estimated fair value of the swap contracts is negative,
totalling 2.34 mln euros. Effective interest rate (incl. swap interests) in the
1st quarter of 2014 was 3.07%, amounting in the interest costs of 0.73 mln
euros, compared to the effective interest rate of 3.28% and the interest costs
of 0.78 mln euros into the 1st quarter of 2013. 

Other influences for change in financial expenses has been decrease in interest
income by 0.15 mln euros or 52.8%. 



Profit Before and After Tax

The Company’s profit before taxes for the 1st quarter of 2014 was 5.06 mln
euros, which is 1.15 mln euros lower than the profit before taxes of 6.21 mln
euros for the 1st quarter of 2013, resulting mainly from the increased
pollution tax costs and professional fees as described above and also due to
the impact of the change of the fair value of the swap contracts. The profit
before taxes for the 1st quarter without the increased pollution tax and swap
costs impact was 3.1% or 0.2 mln euros higher than in the comparative period
last year. 

As the dividends will be paid out in June 2014, there is no income tax in the
1st quarter and the Company’s profit after taxes equals to the profit before
taxes amount. 



Balance sheet

In the three months of 2014 the Company invested 1.55 mln euros into fixed
assets. As of 31 March 2014 non-current fixed assets amounted to 152.41 mln
euros and total non-current assets amounted to 153.41 mln euros. (2013: 148.91
mln euros and 155.66 mln euros respectively). 

The reduction in long-term receivables compared to year end by 2.18 mln euros
to 0.04 mln euros is mainly related to the reclassification of long term
receivable to short term. 

The increase of current assets in the amount if 6.10 mln euros is mainly
related to collection of receivables. 

Current liabilities have increased by 0.84 mln euros to 12.05 mln euros in the
three months. The movement is mainly related to increased tax liabilities in
the amount of 1.12 mln euros and balanced by the decrease in Accrued expenses
in the amount of 0.29 mln euros. 

The Company has a Total debt/Total assets level as expected of 55.8%, in range
of 55%-65%, reflecting the Company’s equity profile. This level is consistent
with the same period in 2013 when the total debt/total assets ratio was 55.9%. 

The Company’s loan balance has remained stable at 95 mln euros, of which long
term loan amounts to 93 mln euros and short term 2 million euros. The weighted
average interest margin for the total loan facility is 0.96%. 

Biggest share of the rest of the long term liabilities is deferred income from
connection fees amounting to 10.35 mln euros (2013: 8.29 mln euros). 

In the 4th quarter of 2011 the Company recorded and noted an exceptional
contingent liability, which could cause an outflow of economic benefits of up
to 36.0 mln euros. In the 3rd quarter of 2013 the Company re-evaluated the
liability, which now stands at 34.0 mln euros, as per note 13 to the accounts. 



Cash flow

As of 31 March 2013 the cash position of the Company is strong. The cash flows
of the Company has continued to be rather stable, during three months of 2014
cash balance has increased by 6.40 mln euros (2013: 8.58 mln euros). At the end
of March 2014 the cash balance of the Company stood at 38.19 mln euros, which
is 18.3% of the total assets (2013: 32.51 mln, which is 15.8% of the total
assets). 

The biggest contribution to the cash flows comes from main operations. During
the three months of 2014, the Company generated 6.97 mln euros of cash flows
from operating activities, a decrease of 1.35 mln euros compared to the
corresponding period in 2013. 

2014 operating cash flows were below 2013 cash flows due to a change in trade
receivables and also due to the lower operating profit. Underlying operating
profit still continues to be the main contributor to operating cash flows. 

The Company’s cash flows from investing activities have also been positive for
past two years. In the three months of 2014 net cash flows from investing
activities resulted in a cash inflow of 0.14 mln euros, a decrease of 0.88 mln
euros compared to an inflow of 1.02 mln euros in the three months of 2013. This
is made up as follows: 

In the three months of 2014 the investments in fixed assets had decreased 0.12
mln euros compared to 2013 amounting to 1.51 mln euros. 

The compensations received for the construction of pipelines were 1.52 mln
euros in the three months of 2014, a decrease of 0.82 mln euros compared to
same period in 2013. Most of the cash collected for pipes is related to the
sewage network extension program which was ended in 2012. The collections will
still continue till March 2015. 

In the three months of 2014, cash outflow from financing amounted to 0.71 mln
euros, which is 0.05 mln euros less than in the same period of 2013, almost
entirely due to lower interest and financing costs. 



Employees

At the end of the 1st quarter of 2014, the total number of employees was 304
compared to 309 at the end of the 1st quarter of 2013. The full time equivalent
(FTE) was respectively 291 in 2014 compared to the 295 in 2013. The management
continues to work actively for the efficiencies in processes to balance the
increase in individual salaries and cost pressure from the market with more
productive company structure. 



Dividends

Dividend allocation to the shareholders is recorded as the liability in the
financial statement of the Company at the time when the profit allocation and
dividend payment is confirmed by the annual general meeting of shareholders. 

According to the dividend policy, which is also published on Company’s website,
the Company will maintain dividends to shareholders at the same amount in real
terms, i.e. dividends will increase in line with inflation each year. 

On the annual general meeting of shareholders on 20th May 2014 the matter of
dividend pay-out will be voted on. It will be in accordance with the Company’s
dividend policy. 

Dividends will be paid out in June 2014.



Share performance

AS Tallinna Vesi is listed on NASDAQ OMX Main Baltic Market with trading code
TVEAT and ISIN EE3100026436. 

As of 31 March 2014 AS Tallinna Vesi shareholders, with a direct holding over
5%, were: 

United Utilities (Tallinn) BV  35.3%
------------------------------------
City of Tallinn                34.7%
------------------------------------

Pension funds have continued to hold the share in their portfolios during the
1st quarter of 2014, owning 2.58% of the total shares compared to 2.33% at the
end of 1st quarter 2013. 

As of 31 March 2014, the closing price of the AS Tallinna Vesi share was 12.60
euros, which is a 5.9% (2013: 13.0%) increase compared to the closing price of
11.90 euros at the beginning of the quarter. During the same period the OMX
Tallinn index decreased by -2.6% (2013: +14.2%). 

In the three months of 2014 1 255 deals with the Company’s shares were
concluded (2013: 1 457 deals) during which 263 thousand shares or 1.3%
exchanged their owners (2013: 517 thousand shares or 2.6%). 

The turnover of the transactions was 1 806 thousand euros higher than in 2013
amounting to 3 272 thousand euros. The share price has shown an increase
despite of the on-going contractual debate. 



Operational performance

Similarly to previous years, the first quarter of 2014 can be characterized by
stability Above all, it gives security to our consumers that they are provided
with a high-quality drinking water, stable water supply and service of
wastewater discharge. In addition to the quality of service, we also
concentrate on being a good partner for our customers. The feedback from our
customers has become more positive, but despite that we aim to continue making
efforts to fulfil customers’ expectations. Operational indicators for the 1st
quarter of 2014: 

Indicator                                                2013        2014 Q1    
                                                          Q1                    
--------------------------------------------------------------------------------
Drinking water                                                                  
--------------------------------------------------------------------------------
- 
Compliance of water quality at the customers tap        99.86%        100%      
--------------------------------------------------------------------------------
Water loss in the water distribution network             17%         17.73%     
--------------------------------------------------------------------------------
Average duration of water interruptions per property    3.13 h       2.29 h     
--------------------------------------------------------------------------------
Wastewater                                                                      
--------------------------------------------------------------------------------
- 
Number of sewer blockages                                251           231      
--------------------------------------------------------------------------------
Number of sewer bursts                                   125           118      
--------------------------------------------------------------------------------
Number of customer contacts regarding floodings,         420           268      
 blockages and storm water                                                      
--------------------------------------------------------------------------------
Wastewater treatment compliance with environmental       100%    100% (excl. Zn 
 standards                                                           and Cu)    
--------------------------------------------------------------------------------
Customer Service                                                                
--------------------------------------------------------------------------------
- 
Number of written complaints                              37           15       
--------------------------------------------------------------------------------
Number of customer contacts regarding water quality       29           27       
--------------------------------------------------------------------------------
Number of customer contacts regarding water pressure     113           72       
--------------------------------------------------------------------------------
Responding written customer contacts within at least 2   99.7%       99.4%      
 work days                                                                      
--------------------------------------------------------------------------------
Number of failed promises                                  3           4        
--------------------------------------------------------------------------------
Notification of unplanned water interruptions at least   96%         97.40%     
 1h before the interruption                                                     
--------------------------------------------------------------------------------



Corporate structure

At the end of the quarter, 31 March 2014, the Group consisted of 2 companies.
The subsidiary Watercom OÜ is wholly owned by AS Tallinna Vesi and consolidated
to the results of the Company. 



Corporate Governance

Supervisory Council

Supervisory Council plans and organises the management of the Company and
supervises the activities of the Management Board. According to AS Tallinna
Vesi articles of association Supervisory Council consists of 9 members who are
appointed for two years. 

Supervisory Council has formed three committees to advise Supervisory Council
on audit, remuneration and corporate government matters. 

More information about the Supervisory Council and committees can be found in
the note 12 to the financial statements as well as from the Company’s webpage: 

http://tallinnavesi.ee/en/Investor/Corporate-Governance/Supervisory-Board

http://tallinnavesi.ee/en/Investor/Corporate-Governance/Audit-Committee

http://tallinnavesi.ee/en/Investor/Corporate-Governance/Corporate-Governance-Rep
ort 



Management Board

Management Board is a governing body which represents and manages AS Tallinna
Vesi in its daily operations in accordance with the legal requirements as well
as the Articles of Association. The Management Board must act economically in
the most efficient way taking into consideration the interest of the Company
and its shareholders and ensure the sustainable development of the Company in
accordance with the set objectives and strategy. 

To ensure that the company’s interests are met in the best way possible, the
Management and Supervisory Boards shall extensively collaborate. Meetings of
Management and Supervisory Board members are held at least once a quarter. In
those meetings the Management Board informs the Supervisory Council about all
significant issues in Company’s business operations, the fulfilment of the
company’s short and long-term goals are being discussed and the risks impacting
them. For every meeting of the Management Board prepares report and submits the
report in advance with the sufficient time for the Supervisory Board to study
it. 

According to the Articles of Association the Management Board consists of 2-5
members, who are elected for 3 years. 

Starting from 20th March 2014 there are 4 members of the Management Board of AS
Tallinna Vesi: Ian Plenderleith (Chairman of the Board), Karl Heino Brookes,
Aleksandr Timofejev and Riina Käi. 

Additional information about the members of the Management Board can be found
from the Company’s website: 

http://tallinnavesi.ee/en/Investor/Corporate-Governance/Management-Board



Future actions & risks

Complaint to European Commission

In parallel, on 10th December 2010 AS Tallinna Vesi lodged a complaint to the
European Commission regarding certain measures adopted by the Estonian
authorities. The company believes these measures unilaterally alter the terms
of AS Tallinna Vesi's privatization regime, and without any objective
justification, any form of meaningful prior discussion, or willingness to
engage in dialogue. Therefore they violate EU rules on the freedom of
establishment and the free movement of capital (articles 49 and 63 TFEU). The
process is on-going. 

Disclosure of relevant papers and perspectives

The Company has published its tariff application and all relevant
correspondence with the CA on its website
(http://www.tallinnavesi.ee/?op=body&id=728) and to the Tallinn Stock Exchange
and will keep its investors informed of all future developments regarding the
further key developments regarding the processing of the tariff application. 

In opposite to the Company the CA has requested the Court procedures to be
closed. Based on misleading information submitted by the CA the Court approved
the CA’s request. ASTV has reapplied for open proceedings. 

Still, at this point in time the Company is unable to say what is going to
happen to the tariffs before Court judgments and what would be the next steps
by the European Commission. The outcome and lengths of the Court proceedings is
outside the control of the Company. 



Additional information:

Ian John Alexander Plenderleith

Chairman of the Management Board

+372 6262 201

[email protected]



STATEMENT OF COMPREHENSIVE INCOME    I quarter  I quarter  12 months
(thousand €)                            2014       2013       2013  
                                                                    
Revenue                                 13 307     12 693     53 087
Costs of goods sold                     -6 043     -5 169    -22 505
                                                                    
GROSS PROFIT                             7 264      7 524     30 582
                                                                    
Marketing expenses                        -167       -223       -690
General administration expenses         -1 365     -1 127     -5 060
Other income/ expenses (-)                 -49        -18        -75
                                                               ,    
OPERATING PROFIT                         5 683      6 156     24 757
                                                                    
Financial income                           134        846        681
Financial expenses                        -756       -788       -877
                                                                    
PROFIT BEFORE TAXES                      5 061      6 214     24 561
                                                                    
Income tax on dividends                      0          0     -4 625
                                                                    
NET PROFIT FOR THE PERIOD                5 061      6 214     19 936
COMPREHENSIVE INCOME FOR THE PERIOD      5 061      6 214     19 936
Attributable to:                                                    
Equity holders of A-shares               5 060      6 213     19 935
B-share holder                            0,60       0,60       0,60
                                                                    
Earnings per A share (in euros)           0,25       0,31       1,00
Earnings per B share (in euros)            600        600        600





STATEMENT OF FINANCIAL POSITION                                                 
(thousand €)                                  31.03.2014  31.03.2013  31.12.2013
                                                                                
ASSETS                                                                          
CURRENT ASSETS                                                                  
Cash and equivalents                              38 185      32 511      31 786
Trade receivables, accrued income and             16 853      17 748      15 010
 prepaid expenses                                                               
Inventories                                          371         362         429
TOTAL CURRENT ASSETS                              55 409      50 621      47 225
                                                                                
NON-CURRENT ASSETS                                                              
Other long-term receivables                           36       5 647       2 213
Property, plant and equipment                    152 410     148 913     152 246
Intangible assets                                    964       1 102       1 037
TOTAL NON-CURRENT ASSETS                         153 410     155 662     155 496
TOTAL ASSETS                                     208 819     206 283     202 721
                                                                                
LIABILITIES                                                                     
                                                                                
CURRENT LIABILITIES                                                             
Current portion of long-term borrowings            2 146         118       2 146
Trade and other payables                           5 545       5 272       4 761
Derivatives                                        1 793       1 949       1 816
Prepayments                                        2 566       1 994       2 490
TOTAL CURRENT LIABILITIES                         12 050       9 333      11 213
                                                                                
NON-CURRENT LIABILITIES                                                         
Deferred income from connection fees              10 345       8 285      10 143
Borrowings                                        93 584      95 692      93 618
Derivatives                                          551       2 066         507
Other payables                                        20          20          32
TOTAL NON-CURRENT LIABILITIES                    104 500     106 063     104 300
TOTAL LIABILITIES                                116 550     115 396     115 513
                                                                                
EQUITY CAPITAL                                                                  
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                                 54 257      52 875      49 196
TOTAL EQUITY CAPITAL                              92 269      90 887      87 208
TOTAL LIABILITIES AND EQUITY CAPITAL             208 819     206 283     202 721





CASH FLOW STATEMENT                                         3       3       12  
                                                         months  months   months
(thousand €)                                              2014    2013    2013  
                                                                                
CASH FLOWS FROM OPERATING ACTIVITIES                                            
Operating profit                                          5 683   6 156   24 757
Adjustment for depreciation/amortisation                  1 454   1 487    5 809
Adjustment for profit from government grants and            -35      -2     -117
 connection fees                                                                
Other non-cash adjustments                                    0     -20       11
Profit/loss(+) from sale and write off of property,           3     -20     -138
 plant and equipment, and intangible assets                                     
Change in current assets involved in operating             -813     350     -433
 activities                                                                     
Change in liabilities involved in operating activities      679     369      -92
Total cash flow from operating activities                 6 971   8 320   29 797
                                                                                
CASH FLOWS FROM INVESTING ACTIVITIES                                            
Loans granted                                                 0       0        0
                                                              0       0    3 814
Acquisition of property, plant and equipment, and        -1 511  -1 634   -9 187
 intangible assets                                                              
Proceeds from sales of property, plant and equipment      1 522   2 350    7 885
Compensations received for construction of pipelines          0      20      165
Interest received                                           127     281      693
Total cash flow from investing activities                   138   1 017    3 370
                                                                                
CASH FLOWS FROM FINANCING ACTIVITIES                                            
Interest paid and loan financing costs, incl swap          -671    -731   -3 154
 interests                                                                      
Repayment of finance lease                                  -39     -30     -136
Dividends paid                                                0       0  -17 401
Income tax on dividends                                       0       0   -4 625
Total cash flow from financing activities                  -710    -761  -25 316
                                                                                
Change in cash and bank accounts                          6 399   8 576    7 851
                                                                                
CASH AND EQUIVALENTS AT THE BEGINNING OF THE PERIOD      31 786  23 935   23 935
                                                                                
CASH AND EQUIVALENTS AT THE END OF THE PERIOD            38 185  32 511   31 786








         Ian John Alexander Plenderleith
         Chairman of the Management Board
         +372 6262 201
         [email protected]