Market announcement

Title

AS Tallinna Vesi’s sales were boosted by consumption of commercial customers

Message

In the second quarter of 2022, AS Tallinna Vesi's net sales grew to EUR13 million,
the  increase in  net sales  was mainly  due to  increased consumption  of water
services among commercial customers.

AS Tallinna Vesi's sales from water services provided to commercial customers in
the  second quarter of this year was EUR4.24 million, which is about 23% more than
last  year. The consumption of water  services among commercial customers mainly
increased  in the hospitality and entertainment sector, such as hotels and spas,
restaurants, cultural institutions, and in the transport sector.

According  to Aleksandr  Timofejev, Chairman  of the  Board of AS Tallinna Vesi,
hotels  and spas were able to provide  their services to customers in the second
quarter of this year in a volume that is comparable to pre-COVID times. "Lifting
of  the COVID-19 related  restrictions at  the end  of the  first quarter  had a
strong  positive  impact  on  the  consumption  of  commercial customers - water
consumption in hotels and spas increased by more than 140% in the second quarter
compared to a year ago," Timofejev explained.

Sales  from water services  provided to private  customers in the second quarter
fell  1.2% to EUR4.99  million as  a result  of the  decline in consumption of the
largest private customer group - apartment buildings and private houses.

AS  Tallinna  Vesi's  gross  profit  for  the  second  quarter of 2022 was EUR4.42
million.  The  Company's  gross  profit  for  six  months  fell by 15% due to an
increase  in operational costs.  Rising costs of  chemicals, electricity and gas
had  the biggest  impact on  cost growth.  To minimise  this impact, the Company
seeks  to reduce  the amount  of chemicals  used in  treatment processes and, if
possible,  consumes electricity  smartly by  monitoring the electricity exchange
price and timing consumption accordingly.

The  Company's  operating  profit  for  the  second  quarter  was  EUR3.1 million.
Operating  profit fell by EUR2.12  million compared to the  second quarter of last
year.  The operating profit for the six months of 2022 was EUR6.1 million, showing
a  decrease of EUR3.77 million  compared to the previous  year, and this is due to
higher electricity costs and the retaining of the provision for potential third-
party  claims at the  level of the  third quarter of  2021. When eliminating the
impact  of  the  change  in  operating  profit  resulting from the provision for
potential  third-party claims, the Company's operating profit would have been EUR4
million  in the second quarter of  2021. Operating profit for the second quarter
of  2022 would be 22.9% or EUR0.91 million lower  compared to the same period last
year.

The  Company's  net  profit  for  the  second quarter of 2022 was EUR0.96 million,
showing  a decrease of EUR2.12 million compared  to the same period last year. The
decrease  in net  profit was  affected by  changes in  operating profit  and net
financial costs.

In  the first half  of 2022, AS Tallinna  Vesi renovated nearly 10,000 metres of
pipelines.  "The reconstruction of pipelines has  been progressing as planned in
the  first six months  and work will  continue in the  second half of the year,"
Timofejev said.

In  the second quarter, extensive reconstruction  work was started and continued
on Järvevana Road, Sõle, Kolde, Ehte and Sitsi Streets, Astangu area and Ussimäe
Road.  "On Järvevana  Road, we  are currently  renovating 900 metres  of a water
supply  pipeline, which is one of Tallinn's  largest for its diameter and number
of  consumers and  supplies water  to the  residents in  Mustamäe, Haabersti and
Kristiine city districts. Large-scale sewer system renovations are being done in
Astangu  area. Reconstruction  works are  carried out  using eco-friendly no-dig
methods that do not require digging up the roads and also cause less disturbance
to residents and the traffic," Timofejev pointed out.

In  May, AS Tallinna Vesi signed a contract with Telia Eesti AS to install smart
water  meters for all  its customers by  2026. According to Timofejev, the first
260 smart  water meters have already  been installed and a  larger number of new
meters  will  be  delivered  this  August,  after  which these will be installed
following  the regular verification program. "Smart  water meters have been long
expected  by our customers, which is why I am glad we have found the best way to
deliver  this solution  and make  monthly invoicing  process more convenient. In
addition,  by installing smart meters, we  will make our processes more digital,
we  will  be  able  to  monitor  the  water  network more efficiently and faster
identify any water leaks," he said.

In order to ensure the continuity of the service provided by the Company and the
sustainability  of its processes, AS Tallinna  Vesi continued with several large
projects  in the second  quarter, including the  renovation of the water pumping
station in Rummu Road, which ensures high-quality drinking water to Lasnamäe and
Pirita  city districts, and the  renovation of the filters  that are part of the
water  treatment process. At  the wastewater treatment  plant, work continues on
strategically  important projects  such as  renovating the  main pumping station
shaft  and the effluent outlet tower, the first of which plays an important role
in receiving the wastewater at the treatment plant and the second in discharging
treated effluent into the sea.

Over  the six months of 2022, the Company  has continued to provide reliable and
high-quality  water and wastewater services, as reflected in the very high level
of  quality indicators. In the  first half of the  year, the Company took 1,681
water  samples. The quality  of tap water  was excellent, 100% in  line with all
quality requirements. According to Timofejev, excellent quality of tap water has
been  ensured with  an effective  water treatment  process, ongoing preventative
maintenance  work on the water network and investments in water pumping stations
made  in recent years that created  a secondary chlorination facility across the
various city districts. This allows to keep the sanitary status of treated water
in  the water network and  maintain the excellent quality  of tap water with hot
weather as well.

Also, the wastewater treated at the wastewater treatment plant and discharged to
the  Baltic Sea met all  the strict requirements both  in the second quarter and
throughout the first half of 2022. "The quality of effluent directly affects the
marine  environment,  which  is  why  we  monitor  the  amounts of pollutants in
wastewater received at the treatment plant and in effluent leaving the treatment
plant.  Pollutant  parameters  that  are  significantly  lower  than  the limits
required  by  law  is  a  proof  of  the  excellent  level of treated effluent,"
Timofejev explained.

The  level of water loss in the water network remained low in the second quarter
-  14.3%, similarly to the  previous year. In  the half-year view,  the level of
water  loss is  somewhat higher  than last  year because  of the  snowy and cold
winter  that made it difficult to detect leaks and access pipelines in the first
quarter.

AS  Tallinna Vesi is the largest water utility in Estonia, providing services to
more  than 24,600 private customers and  businesses and 470,000 end consumers in
Tallinn  and its surrounding municipalities: Cities of Maardu and Saue and Harku
Municipality.  Tallinna Vesi is  listed on the  main list of  the Nasdaq Tallinn
Stock Exchange.


Main financial indicators

 EURmillion,       2nd quarter                     6 months
 except      key                   Change                          Change
 ratios          2022  2021  2020  2022/ 2021    2022  2021  2020  2022/ 2021
-------------------------------------------------------------------------------
 Sales           13.00 12.97 12.09          0.3% 25.05 24.75 25.27         1.2%

 Gross profit     4.42  5.23  4.73        -15.5%  8.80 10.41 10.79       -15.5%

 Gross profit
 margin %        33.98 40.34 39.16        -15.8% 35.12 42.07 42.70       -16.5%

 Operating
 profit before
 depreciation
 and
 amortisation     4.69  6.80  6.14        -31.0%  9.34 13.03 13.32       -28.3%

 Operating
 profit before
 depreciation
 and
 amortisation
 margin %        36.09 52.44 50.76        -31.2% 37.26 52.63 52.70       -29.2%

 Operating
 profit           3.08  5.20  4.59        -40.7%  6.09  9.86 10.26       -38.3%

 Operating
 profit - main
 business         2.83  4.96  4.32        -43.1%  5.74  9.46  9.94       -39.3%

 Operating
 profit margin % 23.70 40.09 37.99        -40.9% 24.29 39.83 40.61       -39.0%

 Profit before
 taxes            2.98  5.11  4.51        -41.8%  5.88  9.68 10.06       -39.2%

 Profit before
 taxes margin %  22.88 39.40 37.29        -41.9% 23.48 39.10 39.82       -40.0%

 Net profit       0.96  3.07  0.15        -68.9%  3.84  7.62  5.71       -49.7%

 Net profit
 margin %         7.36 23.70  1.27        -68.9% 15.31 30.80 22.59       -50.3%

 ROA %            0.38  1.21  0.06        -68.7%  1.52  3.02  2.22       -49.5%

 Debt to total
 capital
 employed %      57.09 57.20 59.63         -0.2% 57.09 57.20 59.63        -0.2%

 ROE %            0.85  2.75  0.14        -69.0%  3.46  6.96  5.27       -50.3%

 Current ratio    1.81  2.75  3.23        -34.2%  1.81  2.75  3.23       -34.2%

 Quick ratio      1.75  2.69  3.18        -34.9%  1.75  2.69  3.18       -34.9%

 Investments
 into fixed
 assets           2.85  5.57  2.52        -48.8%  5.63  7.85  6.11       -28.3%

 Payout ratio %     na 80.42 77.70                  na 80.42 77.70
-------------------------------------------------------------------------------

Gross profit margin - Gross 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
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 / 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


 STATEMENT OF
 COMPREHENSIVE INCOME   2nd quarter 2nd quarter   6 months 6 months   12 months

 EUR thousand                    2022        2021       2022     2021        2021



 Revenue                     13,002      12,968     20,054   24,752      53,294

 Cost of goods and
 services sold               -8,583      -7,737    -16,254  -14,340     -32,715
-------------------------------------------------------------------------------
 GROSS PROFIT                 4,419       5,231      8,800   10,412      20,579



 Marketing expenses            -189        -104       -388     -224        -462

 General administration
 expenses                    -1,094        -992     -2,225   -2,544      -4,438

 Other income (+)/
 expenses (-)                   -55       1,064       -102    2,215       3,099
-------------------------------------------------------------------------------
 OPERATING PROFIT             3,081       5,199      6,085    9,859      18,778



 Financial income                 1           2          3        7           8

 Financial expenses            -108         -91       -205     -187        -387

 Other financial income
 (+)/ expenses (-)
-------------------------------------------------------------------------------
 PROFIT BEFORE TAXES          2,974       5,110      5,883    9,679      18,399



 Income tax on
 dividends                   -2,017      -2,036     -2,047   -2,056      -2,234



 NET PROFIT FOR THE
 PERIOD                         957       3,074      3,836    7,623      16,165
-------------------------------------------------------------------------------
 COMPREHENSIVE INCOME
 FOR THE PERIOD                 957       3,074      3,836    7,623      16,165



 Attributable profit
 to:
-------------------------------------------------------------------------------
 Equity holders of A-
 shares                         957       3,074      3,836    7,623      16,165



 Earnings per A share
 (in euros)                    0.05        0.15       0.19     0.38        0.81


 STATEMENT OF FINANCIAL POSITION

 EUR thousand                                  30/06/2022 30/06/2021   31/12/2021



 ASSETS

 CURRENT ASSETS
-------------------------------------------------------------------------------
 Cash and cash equivalents                       23,541     37,011       36,559

 Trade receivables, accrued income and
 prepaid expenses                                 6,643      5,990        6,637

 Inventories                                        982        835          702
-------------------------------------------------------------------------------
 TOTAL CURRENT ASSETS                            31,166     43,836       43,898



 NON-CURRENT ASSETS
-------------------------------------------------------------------------------
 Property, plant and equipment                  215,830    205,295      211,546

 Intangible assets                                  637        583          729
-------------------------------------------------------------------------------
 TOTAL NON-CURRENT ASSETS                       216,467    205,878      212,275
-------------------------------------------------------------------------------
 TOTAL ASSETS                                   247,633    249,714      256,173



 LIABILITIES AND EQUITY

 CURRENT LIABILITIES
-------------------------------------------------------------------------------
 Current portion of long-term lease
 liabilities                                        662        390          421

 Current portion of long-term loans               3,630      3,630        3,630

 Trade and other payables                         9,665      9,067        7,835

 Prepayments                                      3,296      2,880        3,604
-------------------------------------------------------------------------------
 TOTAL CURRENT LIABILITIES                       17,253     15,967       15,490



 NON-CURRENT LIABILITIES
-------------------------------------------------------------------------------
 Deferred income from connection fees            38,130     35,988       37,241

 Leases                                           1,063      1,277        1,236

 Loans                                           78,540     82,154       80,336

 Provision for possible third party claims        6,018      7,221        6,018

 Deferred tax liability                             303        195          372

 Other payables                                      70         34           60
-------------------------------------------------------------------------------
 TOTAL NON-CURRENT LIABILITIES                  124,124    126,869      125,263
-------------------------------------------------------------------------------
 TOTAL LIABILITIES                              141,377    142,836      140,753



 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                               68,244     68,866       77,408
-------------------------------------------------------------------------------
 TOTAL EQUITY                                   106,256    106,878      115,420
-------------------------------------------------------------------------------
 TOTAL LIABILITIES AND EQUITY                   247,633    249,714      256,173


 CASH FLOWS STATEMENT                             6 months 6 months   12 months

 EUR thousand                                           2022     2021        2021



 CASH FLOWS FROM OPERATING ACTIVITIES
-------------------------------------------------------------------------------
 Operating profit                                    6,085    9,859      18,778

 Adjustment for depreciation/amortisation            3,250    3,168       6,520

 Adjustment for revenues from connection fees         -269     -251        -510

 Other non-cash adjustments                              0   -2,407      -3,610

 Profit/loss(+) from sale and write off of
 property, plant and equipment, and intangible
 assets                                                -12        0         -29

 Change in current assets involved in operating
 activities                                           -271      892         380

 Change in liabilities involved in operating
 activities                                           -485      126         938
-------------------------------------------------------------------------------
 TOTAL CASH FLOWS FROM OPERATING ACTIVITIES          8,298   11,387      22,467



 CASH FLOWS USED IN INVESTING ACTIVITIES
-------------------------------------------------------------------------------
 Acquisition of property, plant and equipment,
 and intangible assets                              -7,351   -5,084     -13,734

 Compensations received for construction of
 pipelines, incl connection fees                     1,215    1,351       2,892

 Proceeds from sales of property, plant and
 equipment and intangible assets                        13        0          29

 Interest received                                       3        9          11
-------------------------------------------------------------------------------
 TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES      -6,120   -3,724     -10,802



 CASH FLOWS USE D IN FINANCING ACTIVITIES
-------------------------------------------------------------------------------
 Interest paid and loan financing costs, incl
 swap interests                                       -218     -204        -460

 Lease payments                                       -230     -205        -408

 Repayment of loans                                 -1,818   -1,818      -3,636

 Dividends paid                                    -12,835  -12,841     -12,842

 Withheld income tax paid on dividends                   0        0        -158

 Income tax paid on dividends                          -95      -98      -2,116
-------------------------------------------------------------------------------
 TOTAL CASH FLOW USED IN FINANCING ACTIVITIES      -15,196  -15,166     -19,620


-------------------------------------------------------------------------------
 CHANGE IN CASH AND CASH EQUIVALENTS               -13,018   -7,503      -7,955


-------------------------------------------------------------------------------
 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF
 THE PERIOD                                         36,559   44,514      44,514


-------------------------------------------------------------------------------
 CASH AND CASH EQUIVALENTS AT THE END OF THE
 PERIOD                                             23,541   37,011      36,559


Laura Korjus
Head of Communications
AS Tallinna Vesi
(+372) 626 2271
[email protected]