Börsiteade

Pealkiri

Results of operations for the 3rd quarter 2008 (EEK)

Teade

MANAGEMENT REPORT                                                               
RESULTS OF OPERATIONS - FOR THE 3rd QUARTER 2008                                


Overview                                                                        

In the 1st nine months of 2008 the Company's total sales increased, year on     
year, by 21.8% to 670.4 mln EEK. Total water and sewerage services sale volumes 
increased in the 1st nine months of 2008 by 0.5% compared to the same nine      
months of 2007, respective sales increased by 10.4%. Within the service area    
sales to residential customers increased by 9.0% year on year, sales to         
commercial customers increased by 8.3% year on year, and sales to customers     
outside of the service area increased by 52.6% year on year, reaching 2.7 mln m3
or 19.5 mln EEK. The Company's profit before taxes was 269.3 mln EEK, which is a
7.2% increase compared to the same nine months of 2007. Eliminating the one-off 
nitrogen provision release in the 1st quarter of 2007, profit before tax in the 
1st nine months of 2008 increased by 13.2%. The Company invested 201.0 mln EEK, 
of which 174.2 mln EEK was invested in network extension and rehabilitation.    


--------------------------------------------------------------------------------
| mln EEK             |  3 Q  |  3 Q   | Change | 9 months |9 months | Change  |
|                     | 2008  |  2007  |        |   2008   |   2007  |         |
--------------------------------------------------------------------------------
| Sales               | 225,3 |  168,7 |  33,6% |    670,4 |   550,4 |   21,8% |
--------------------------------------------------------------------------------
| Main operating      | 174,0 |  157,1 |  10,7% |    537,2 |   482,6 |   11,3% |
| activities          |       |        |        |          |         |         |
--------------------------------------------------------------------------------
| Other operating     |  51,3 |   11,5 | 344,5% |    133,2 |    67,8 |   96,5% |
| activities          |       |        |        |          |         |         |
--------------------------------------------------------------------------------
| Gross profit        | 115,1 |  104,8 |   9,9% |    352,2 |   334,3 |    5,3% |
--------------------------------------------------------------------------------
| Gross profit margin |  51,1 |   62,1 | -17,7% |     52,5 |    60,7 |  -13,5% |
| %                   |       |        |        |          |         |         |
--------------------------------------------------------------------------------
| Operating profit    |  99,4 |   88,5 |  12,4% |    301,4 |   284,0 |    6,1% |
--------------------------------------------------------------------------------
| Operating profit    |  44,1 |   52,4 | -15,8% |     45,0 |    51,6 |  -12,9% |
| margin %            |       |        |        |          |         |         |
--------------------------------------------------------------------------------
| Profit before taxes |  89,2 |   76,7 |  16,3% |    269,3 |   251,2 |    7,2% |
--------------------------------------------------------------------------------
| Profit before taxes |  39,6 |   45,5 | -12,9% |     40,2 |    45,6 |  -12,0% |
| margin %            |       |        |        |          |         |         |
--------------------------------------------------------------------------------
| Net profit          |  88,4 |   76,7 |  15,3% |    203,1 |   195,9 |    3,7% |
--------------------------------------------------------------------------------
| ROA %               |   3,6 |    3,1 |  15,3% |      8,3 |     8,0 |    3,7% |
--------------------------------------------------------------------------------
| Debt to total       | 53,1% |  52,9% |   0,3% |    53,1% |   52,9% |    0,3% |
| capital employed    |       |        |        |          |         |         |
--------------------------------------------------------------------------------

Gross profit margin - Gross profit / Net sales                                  
Operating profit margin - Operating profit / Net sales                          
Profit before taxes margin - Profit before taxes / Net sales                    
ROA - Net profit /Total Assets                                                  
Debt to Total capital employed - Total Liabilities / Total capital employed     


Profit and Loss Statement                                                       

3rd quarter 2008                                                                

Sales                                                                           

In the 3rd quarter of 2008 the Company's total sales increased, year on year, by
33.6% to 225.3 mln EEK. Sales from the Company's main operating activities were 
174.0 mln EEK. Sales in the main operating activity principally comprise of     
sales of water and treatment of wastewater to domestic and commercial customers 
within and outside of the service area, and fees received from the City of      
Tallinn for operating and maintaining the storm water system.                   

Sales of water and wastewater services were 159.4 mln EEK, a 10.2% increase     
compared to the 3rd quarter of 2007, resulting from the 11.7% increase in       
tariffs from 1 January 2008 for the Company's residential and commercial        
customers combined with the factors described below.                            

Included within this amount were the following increases by sector: within the  
service area sales to residential customers increased by 8.2% to 83.8 mln EEK.  
Sales to commercial customers increased by 8.5% to 65.0 mln EEK. Sales to       
customers outside of the service area - primarily bulk volumes of wastewater    
treatment services provided to the surrounding municipalities - increased by    
62.3% reaching 1.04 mln m3 or 7.3 mln EEK. Over pollution fees received were 3.2
mln EEK, 20.5% increase compared to the 3rd quarter of 2007.                    

In the 3rd quarter of 2008, the volumes sold to residential customers dropped   
3.1% or 224 thousand m3. We believe that this is mainly related to the fact that
people are moving to the surrounding areas of Tallinn.                          

The volumes sold to commercial customers inside the service area decreased by   
2.9% compared to the relevant period in 2007 due to several factors combined.   
Part of the reduction in sales volumes in Tallinn is due to companies moving to 
the surrounding municipalities, supplemented by companies implementing different
efficiency measures or reducing their production.                               
                                                                                
The real estate market stays relatively unchanged from last year. Although      
slightly lower than in 2007, the number of new apartments and business buildings
being constructed this year in Tallinn remains high. A large share of new       
buildings still remain vacant as commercial customers as well as people in need 
of space are moving to surrounding areas due to more affordable real estate     
prices.                                                                         

This trend is also reflected in the Company's sales to surrounding areas, which 
has increased by 62.3% in the 3rd quarter of 2008 compared to the same period   
last year. This reflects the success of the Company's strategy to re-capture    
customers leaving Tallinn. The Company is actively looking for the further      
expansion opportunities into the neighboring municipalities.                    

The sales from the operation and maintenance of the storm water and fire-hydrant
system increased by 10.7% to 11.4 mln EEK in the 3rd quarter of 2008 compared to
the same period in 2007. This is in accordance with the terms and conditions of 
the contract whereby the storm water and fire hydrant costs are invoiced based  
on actual costs and volumes treated. This is contractually agreed up to 2020.   

Sales revenues from other operating activities, mainly connections and storm    
water construction, totaled 51.3 mln EEK which is 39.8 mln EEK more than in the 
3rd quarter of 2007. Before 2008 a considerable amount of works and revenues    
were confirmed and recorded in the first quarter. According to the new contract 
concluded with the City of Tallinn on 30th November 2007, the revenue flow is   
more even throughout the year. Starting from March 2008 the revenue in this line
is mainly calculated using the Tallinn domestic water sales volumes and fixed   
development rate per cubic meter, supplemented by the fee payable for the storm 
water constructions. This revenue line goes in pairs with the Cost of goods sold
from other operating activities, where the respective costs of the constructions
are recorded.                                                                   


Cost of Goods Sold and Gross Margin                                             

The cost of goods sold for the main operating activity was 64.4 mln EEK in the  
3rd quarter of 2008, an increase of 9.2 mln EEK or 16.6% from the equivalent    
period in 2007.                                                                 

In the 3rd quarter of 2008 the Company did not record any non-compliant         
wastewater samples and as a result of this achieved the beneficial 0.5          
coefficient for pollution tax. The pollution tax payable for the 3rd quarter of 
2008 was 2.0 mln EEK compared to 1.7 mln EEK in 3rd quarter of 2007. This       
increase in pollution tax is due to the combination of the beneficial           
coefficient and increase in tax rates year on year by 20%, supplemented by      
volume and pollution impact. Despite the fact that the pollution level of the   
incoming sewerage does vary and the company does not have full control over     
storm water outlets regarding the pollution, we are working hard to use the     
optimum level of chemicals to achieve the 0.5 coefficient in the fourth quarter 
of 2008.                                                                        

The chemical costs were 6.6 mln EEK, this represents an 19.9% increase compared 
to the corresponding period in 2007. This result is the combination of volumes  
treated, chemicals dosed and the price inflation.                               

Electricity costs increased by 1.2 mln EEK or 18.0% in the 3rd quarter of 2008  
compared to the 3rd quarter of 2007 due to higher electricity prices combined   
with volumes treated.                                                           

Salary expenses increased in the 3rd quarter of 2008, year on year, by 2.9 mln  
EEK or 27.3% due to a number of factors. Firstly, increased headcount from the  
new services launched. Secondly, a highly competitive labour market has led to  
significant salary inflation. Finally in the 1st quarter of 2008 the Company    
restructured and combined departments which resulted in transferring cost from  
one line to an other. Eliminating these structural changes would give us 19.0%  
increase in salaries. This is in line with the increase in average salaries in  
the Estonian market.                                                            

Depreciation charges increased in the 3rd quarter of 2008 by 2.3 mln EEK or     
13.1% year on year due to new sludge treatment building commissioned in the end 
of 2007. Also in the beginning of 2008 the depreciation rates were revised to   
correspond with the useful life of assets.                                      

Other cost of goods sold in the main operating activity increased by 1.2 mln    
EEK, or 11.6% year on year. This was due to higher costs on a number of support 
service contracts, such as transport, security services, maintenance cost,      
reflecting the significant increase in labour and services costs in Tallinn. But
on the other hand it reflects Company's achievements to reduce costs by         
optimizing operations.                                                          

The cost pressure sets the challenge to the management to identify the further  
efficiency opportunities through review of processes, procedures and            
procurements.                                                                   

As a result of all of the above the Company's gross profit for the 3rd quarter  
of 2008 was 115.1 mln EEK, which is an increase of 10.3 mln EEK, or 9.9%,       
compared to the gross profit of 104.8 mln EEK for the 3rd quarter of 2007.      

Operating Costs and Operating Margin                                            

Marketing expenses decreased by 0.4 mln EEK to 2.8 mln EEK during the 3rd       
quarter of 2008 compared to the corresponding period in 2007. This is partly the
result of the structural changes, balanced by the increase in depreciation      
charges.                                                                        

General administration expenses decreased by 0.2 mln EEK to 11.9 mln EEK in the 
3rd quarter of 2008 year on year, mainly as a consequence of structural changes.

Included within all the above cost categories are staff costs. These totaled    
18.7 mln EEK in the 3rd quarter of 2008, which is a 3.1 mln EEK or 19.6%        
increase compared to the same period in 2007. As mentioned earlier this was     
mainly due to the wide revision of salaries at the beginning of 2008.           

Other net income/expenses totaled an expense of 1.0 mln EEK in the 3rd quarter  
of 2008 compared to an expense of 1.1 mln EEK in the 3rd quarter of 2007.       

As a result of all of the above the Company's operating profit for the 3rd      
quarter of 2008 was 99.4 mln EEK, an increase of 10.9 mln EEK compared to an    
operating profit of 88.5 mln EEK achieved in the 3rd quarter of 2007. Compared  
to the operating profit in the 3rd quarter of 2007, the operating profit has    
increased 12.4%.                                                                

Financial expenses                                                              

Net Financial expenses were 10.2 mln EEK in the 3rd quarter of 2008, which is a 
decrease of 1.5 mln EEK or 12.9% compared to the 3rd quarter of 2007. The       
Company's interest costs have increased by 7.6% compared to the 3rd quarter of  
2007. This is due to the increase in the 6 month Euribor rate. The increase in  
interest expenses is partially offset by an increase in financial income earned 
during the 3rd quarter of 2008, as a result of a more favourable cash position  
and increasing interest rates. Also favorable interest SWAP position had a      
positive effect of 1.6 mln EEK in the 3rd quarter of 2008.                      

Profit Before Tax                                                               

The Company's profit before taxes for the 3rd quarter of 2008 was 89.2 mln EEK, 
which is 12.5 mln EEK higher than the profit before taxes of 76.7 mln EEK for   
the 3rd quarter of 2007.                                                        


Results for the 1st nine months of 2008                                         

During the 1st nine months of 2008 the Company's total sales increased, year on 
year, by 21.8% to 670.4 mln EEK.  Sales from the Company's main operating       
activities were 537.2 mln EEK. Sales of water and wastewater treatment were     
494.4 mln EEK, a 10.4% increase compared to the 1st nine months of 2007.        

The Company's profit before taxes for the 1st nine months of 2008 was 269.3 mln 
EEK, which is 18.1 mln EEK higher than the profit before taxes of 251.2 mln EEK 
in the relevant period in 2007. The results for the 1st nine months of 2007 were
impacted by the fact that the Ministry of Environment gave final approval to the
success of the nitrogen project, which resulted in the release of a provision   
worth 13.3 mln EEK for environmental taxes. Looking at the underlying profit    
before taxes for the 1st nine months of 2007, it shows a 31.4 mln EEK or 13.2%  
increase in 2008 for the same period.                                           


Balance sheet                                                                   

During the 1st nine months of 2008 the Company invested 201.0 mln EEK into fixed
assets. Non-current assets were 2,199 mln EEK at 30 September 2008. Current     
assets decreased by 38.9 mln EEK to 334.7 mln EEK in the nine months of the     
year, customer receivables decreased by 72.0 mln EEK. During the 1st nine months
of 2008 cash at bank increased by 32.7 mln EEK.                                 

Current liabilities increased by 61.0 mln EEK to 260.3 mln EEK in the nine      
months of the year. This was mainly due to increases in Current portion of      
long-term borrowings by 41.5 mln EEK, as result of the reclassification of the  
loan based on repayment schedule.                                               

The company continues to maintain its leverage level within its target range    
above 50% with total liabilities to total capital employed of 53.1% as of 30    
September 2008. Long-term liabilities stood at 1,084.8 mln EEK at the end of    
September 2008, consisting almost entirely of the outstanding balance on the two
long-term bank loans.                                                           


Cash flow                                                                       

During the 1st nine months of 2008, the Company generated 323.0 mln EEK of cash 
flows from operating activities, an increase of 52.8 mln EEK compared to the    
corresponding period in 2007. Underlying operating profit continues to be the   
main driver for growth, supplemented by debt collection in nine months of 2008. 

In the nine months of 2008 net cash inflows from investing activities were 24.8 
mln EEK, which is 123.4 mln EEK more than in 2007. This was mainly due to some  
large construction revenue invoices that were due and paid in the 1st quarter   
2008, offset by increased investment payments. In the 1st nine months the       
company invested 201.0 mln EEK - 174.2 mln EEK on networks (including 119.4 mln 
EEK on extension and developments), 11.9 mln EEK at Paljassaare wastewater      
treatment plant and sludge treatment, 6.0 mln EEK on water quality (Ülemiste    
water treatment plant and raw water) and 8.9 mln EEK for other investments (IT, 
capital maintenance, meters, etc).                                              

The cash outflows from financing activities were 315.2 mln EEK during the 1st   
nine months of 2008 compared to cash outflow of 251.8 mln EEK during the same   
nine months of 2007, representing the payouts of the dividend and the income tax
on dividends of respective years.                                               

As a result of all of the above factors, the total cash inflow in the nine      
months of 2008 was 32.7 mln EEK compared to a cash outflow of 80.2 mln EEK in   
the nine months of 2007. Cash and cash equivalents stood at 211.1 mln EEK as at 
30 September 2008.                                                              


Employees                                                                       

At the end of the 3rd quarter of 2008, the number of employees was 323, compared
to 316 at the end of the 3rd quarter of 2007.                                   


Dividends and share performance                                                 

Based on the results of the 2007 financial year, the company paid 249,010,000   
EEK of dividends. Of this 10,000 EEK was paid to the owner of the B-share       
and 249,000,000 EEK, i.e. 12.45 EEK per share to the owners of the A-shares.    
The dividends were paid out on 13 June 2008, based on the list of shareholders, 
which was fixed on 30 May 2008.                                                 

As of 30 September 2008 AS Tallinna Vesi shareholders, with a direct holding    
over 5%, were:                                                                  

--------------------------------------------------------------------------------
| United Utilities (Tallinn) BV                         | 35.3%                |
--------------------------------------------------------------------------------
| City of Tallinn	                                | 34.7%                |
--------------------------------------------------------------------------------
| Nordea Bank Finland Plc clients account trading       | 12.24%               |
--------------------------------------------------------------------------------
| Credit Suisse Securities (Europe) Ltd Prime Brokerage | 5.76%                |
| A/C Prime Brokerage Clients                           |                      |
--------------------------------------------------------------------------------

At the end of the quarter, 30 September 2008, the closing price of the AS       
Tallinna Vesi share was 161.32 EEK (10.31 EUR), which is a 12.7% decrease       
compared to the closing price of 184.79 EEK (11.81 EUR) at the beginning of     
quarter,  this is still outperforming the market as the OMX Tallinn index       
dropped by 19.3% during the quarter.                                            




Operational highlights in the nine months of 2008                               

- The company implemented the development component in the 1st quarter of 2008 
according to the Services Agreement Amendment, which was signed with the City of
Tallinn on 30 November 2007. The Services Agreement is extended until 2020 and  
the k-coefficient is also fixed until 2020 - 2% in years 2009 to 2010 and 0% in 
years 2011 to 2020. No extra capital expenditures (in addition to maintenance   
capex and extensions program agreed in the contract) can be imposed on the      
company until 2020. According to the agreement the network extension            
constructions must be completed by March 2011. To compensate the Company for the
construction and financing costs, a specific development component is included  
into the Tallinn domestic water tariff starting from 1 March 2008 to the end of 
2017, and the City of Tallinn will compensate 4.4 mln EEK every month for the   
storm water constructions until the end of 2011. The development component shall
be compensated to the customers with direct payment to the company by the City  
of Tallinn. The component is bigger during the construction period (9.00 kroons 
per m3 until 31 December 2011 and 6.10 kroons per m3 in years 2012 to 2017).    
- The Company submitted the application for the tariff increase from 1st
January 
2009 in the 3rd quarter. The City Government approved the 12.8% tariff increase 
for water and wastewater services on 1 October 2008. The tariff increase is     
applicable from 1st January 2009 and consists of 11.4% of CPI increase, 2% of   
k-coefficient and -0.6% of change of law. The 12.8% tariff increase is          
applicable in the main service area and is similar outside the main service     
area, depending still on individual contracts with the municipalities.          
- The usage of the web based self service has increased by more than 2 times 
compared to 2007, around 9% of invoices were issued via web.                    
- We are pleased to report the compliance with all requirements of the Levels
of 
Services established by the contract with City of Tallinn.                      
- In the 3rd quarter we met again all the norms for the pollutants in the waste 
water and as result of this the payable pollution tax decreased by 50% compared 
to the regular rate, giving 1.9 mln EEK positive impact to the P&L and cash     
flows of the company.                                                           
- We are pleased to report that on 5th August the company concluded an
operating 
agreement with Maardu City and Maardu Vesi. When the operating contract comes   
into force from 1st January 2009, AS Tallinna Vesi shall help AS Maardu Vesi to 
finance the self-financing part required within the European Union Assistance   
Project during the period 2009-2012 with approximately 20 mln EEK annually. The 
financing commitment of AS Tallinna Vesi is up to a total of 80 mln EEK over the
period. The company shall get the investment back through the capital component 
to be included in the tariff within 20 years.  On the basis of the cooperation  
of the companies and the subsidies of the European Union the problems regarding 
the water quality in Maardu shall be solved in the forthcoming years and in a   
longer perspective Maardu shall be supplied with drinking water from Ülemiste   
Water Treatment Plant.  Administrating the infrastructure of AS Maardu Vesi     
enables AS Tallinna Vesi to increase its customer portfolio and to grow         
turnover. In addition to the required self-financing AS Tallinna Vesi shall     
provide the customers of AS Maardu Vesi with a modern service of operating the  
assets with a good-quality customer service. There area about 20 000 residents  
living in the operating area of AS Maardu Vesi. The operating contract has been 
planned for the duration of 30 years. Tallinna Vesi shall start to operate the  
assets and provide full service at the latest from 1 January 2009 after the     
preparation period during which the assets are taken over. AS Maardu Vesi shall 
still remain the owner of all assets.                                           


Additional information:                                                         
Siiri Lahe                                                                      
Chief Financial Officer                                                         
+372 6262 262                                                                   
siiri.lahe@tvesi.ee                                                             


--------------------------------------------------------------------------------
| INCOME STATEMENT                     |  9 months  |  9 months   | 12 months  |
--------------------------------------------------------------------------------
| (thousand EEK)                       |    2008    |    2007     |    2007    |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| Sales from main operating activities |    537 206 |     482 623 |    648 335 |
--------------------------------------------------------------------------------
| Revenues from other operating        |    133 193 |      67 798 |    172 437 |
| activities                           |            |             |            |
--------------------------------------------------------------------------------
| Net sales                            |    670 399 |     550 421 |    820 772 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| Costs of goods sold (main operating  |   -198 768 |    -157 207 |   -216 677 |
| activities)                          |            |             |            |
--------------------------------------------------------------------------------
| Costs of goods sold (other operating |   -119 440 |     -58 867 |   -158 187 |
| activities)                          |            |             |            |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| GROSS PROFIT                         |    352 191 |     334 347 |    445 908 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| Marketing expenses                   |     -9 231 |      -9 709 |    -13 547 |
--------------------------------------------------------------------------------
| General administration expenses      |    -40 597 |     -41 571 |    -56 849 |
--------------------------------------------------------------------------------
| Other income/ expenses (-)           |     -1 012 |         908 |      1 850 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| OPERATING PROFIT                     |    301 351 |     283 975 |    377 362 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| Financial income / expenses (-)      |    -32 030 |     -32 811 |    -44 237 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| PROFIT BEFORE TAXES                  |    269 321 |     251 164 |    333 125 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| Income tax on dividends              |    -66 193 |     -55 285 |    -55 285 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| NET PROFIT FOR THE PERIOD            |    203 128 |     195 879 |    277 840 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| Attributable to:                     |            |             |            |
--------------------------------------------------------------------------------
| Equity holders of A-shares           |    203 118 |     195 869 |    277 830 |
--------------------------------------------------------------------------------
| B-share holder                       |         10 |          10 |         10 |
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|                                      |            |             |            |
--------------------------------------------------------------------------------
| Earnings per share in kroons         |      10,16 |        9,79 |      13,89 |
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--------------------------------------------------------------------------------
| BALANCE SHEET                        |            |             |            |
--------------------------------------------------------------------------------
| (thousand EEK)                       | 30.09.2008 |  30.09.2007 | 31.12.2007 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| ASSETS                               |            |             |            |
--------------------------------------------------------------------------------
| CURRENT ASSETS                       |            |             |            |
--------------------------------------------------------------------------------
| Cash at bank and in hand             |    211 080 |     169 252 |    178 420 |
--------------------------------------------------------------------------------
| Commercial paper                     |            |             |          0 |
--------------------------------------------------------------------------------
| Customer receivables                 |    113 193 |      81 618 |    185 223 |
--------------------------------------------------------------------------------
| Accrued income and prepaid expenses  |      5 533 |       5 581 |      5 179 |
--------------------------------------------------------------------------------
| Inventories                          |      3 800 |       3 015 |      3 645 |
--------------------------------------------------------------------------------
| Assets for sale                      |      1 104 |       1 680 |      1 120 |
--------------------------------------------------------------------------------
| TOTAL CURRENT ASSETS                 |    334 710 |     261 146 |    373 587 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS                   |            |             |            |
--------------------------------------------------------------------------------
| Tangible assets                      |  2 004 682 |   1 919 273 |  1 992 978 |
--------------------------------------------------------------------------------
| Intangible assets                    |     42 145 |      48 266 |     49 137 |
--------------------------------------------------------------------------------
| Unfinished assets - non connections  |     61 567 |      90 495 |     48 034 |
--------------------------------------------------------------------------------
| Unfinished pipelines - new           |     88 561 |     124 873 |     90 057 |
| connections                          |            |             |            |
--------------------------------------------------------------------------------
| Prepayments for fixed assets         |      1 854 |       3 099 |      5 399 |
--------------------------------------------------------------------------------
| TOTAL NON-CURRENT ASSETS             |  2 198 809 |   2 186 006 |  2 185 605 |
--------------------------------------------------------------------------------
| TOTAL ASSETS                         |  2 533 519 |   2 447 152 |  2 559 192 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| LIABILITIES                          |            |             |            |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| CURRENT LIABILITIES                  |            |             |            |
--------------------------------------------------------------------------------
| Current portion of long-term         |     82 942 |           0 |     41 486 |
| borrowings                           |            |             |            |
--------------------------------------------------------------------------------
| Trade and other payables, incl.      |    101 796 |      65 478 |     86 966 |
| dividends                            |            |             |            |
--------------------------------------------------------------------------------
| Taxes payable                        |     17 981 |      14 143 |     26 486 |
--------------------------------------------------------------------------------
| Short-term provisions                |      2 487 |       2 231 |      2 231 |
--------------------------------------------------------------------------------
| Deferred income                      |     55 060 |      46 070 |     42 099 |
--------------------------------------------------------------------------------
| TOTAL CURRENT LIABILITIES            |    260 266 |     127 922 |    199 268 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| NON-CURRENT LIABILITIES              |            |             |            |
--------------------------------------------------------------------------------
| Bank loans                           |  1 084 694 |   1 166 758 |  1 125 491 |
--------------------------------------------------------------------------------
| Other payables                       |        121 |         113 |        113 |
--------------------------------------------------------------------------------
| TOTAL NON-CURRENT LIABILITIES        |  1 084 815 |   1 166 871 |  1 125 604 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES                    |  1 345 081 |   1 294 793 |  1 324 872 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| EQUITY CAPITAL                       |            |             |            |
--------------------------------------------------------------------------------
| Share capital                        |    200 001 |     200 001 |    200 001 |
--------------------------------------------------------------------------------
| Share premium                        |    387 000 |     387 000 |    387 000 |
--------------------------------------------------------------------------------
| Statutory legal reserve              |     20 000 |      20 000 |     20 000 |
--------------------------------------------------------------------------------
| Accumulated profit                   |    378 309 |     349 479 |    349 479 |
--------------------------------------------------------------------------------
| Net profit for the period            |    203 128 |     195 879 |    277 840 |
--------------------------------------------------------------------------------
| TOTAL EQUITY CAPITAL                 |  1 188 438 |   1 152 359 |  1 234 320 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY CAPITAL |  2 533 519 |   2 447 152 |  2 559 192 |
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
| CASH FLOW STATEMENT                  |   9 months |    9 months |  12 months |
--------------------------------------------------------------------------------
| (thousand EEK)                       |       2008 |        2007 |       2007 |
--------------------------------------------------------------------------------
|                                      |            |             |            |
--------------------------------------------------------------------------------
| CASH FLOWS FROM OPERATING ACTIVITIES |            |             |            |
--------------------------------------------------------------------------------
| Operating profit                     |    301 351 |     283 975 |    377 362 |
--------------------------------------------------------------------------------
| Adjustment for depreciation          |     66 571 |      59 284 |     79 241 |
--------------------------------------------------------------------------------
| Adjustment for income and expenses   |    -13 753 |      -8 931 |    -14 250 |
| from constructions                   |            |             |            |
--------------------------------------------------------------------------------
| Other financial income and expenses  |       -262 |        -247 |     -1 585 |
--------------------------------------------------------------------------------
| Profit from sale of fixed assets     |       -132 |          12 |     -2 422 |
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| Expensed fixed assets                |          0 |           0 |        476 |
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| Capitalization of operating expenses |    -17 634 |     -14 406 |    -19 764 |
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| Movement in current assets involved  |     15 826 |      -5 619 |    -32 062 |
| in operating activities              |            |             |            |
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| Movement in liabilities involved in  |       -665 |     -17 999 |       -327 |
| operating activities                 |            |             |            |
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| Interest paid                        |    -28 275 |     -25 849 |    -52 986 |
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| Total cash flow from operating       |    323 027 |     270 220 |    333 683 |
| activities                           |            |             |            |
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|                                      |            |             |            |
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| CASH FLOWS FROM INVESTING ACTIVITIES |            |             |            |
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| Acquisition of fixed assets (incl    |   -190 141 |    -180 561 |   -265 951 |
| pipelines construction)              |            |             |            |
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| Proceeds from pipelines financed by  |    202 361 |      74 671 |    101 840 |
| construction income                  |            |             |            |
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| Proceeds from sale of and            |        145 |          17 |        390 |
| prepayments received for fixed       |            |             |            |
| assets                               |            |             |            |
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| Proceeds from sale of assets and     |          0 |         233 |        242 |
| real estate investments              |            |             |            |
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| Interest received                    |     12 471 |       7 027 |     10 571 |
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| Total cash flow from investing       |     24 836 |     -98 613 |   -152 908 |
| activities                           |            |             |            |
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|                                      |            |             |            |
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| CASH FLOWS FROM FINANCING ACTIVITIES |            |             |            |
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| Finance lease payments               |          0 |        -473 |       -473 |
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| Dividends paid                       |   -249 010 |    -196 010 |   -196 010 |
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| Income tax on dividends              |    -66 193 |     -55 285 |    -55 285 |
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| Total cash flow from financing       |   -315 203 |    -251 768 |   -251 768 |
| activities                           |            |             |            |
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|                                      |            |             |            |
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| Change in cash and bank accounts     |     32 660 |     -80 161 |    -70 993 |
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|                                      |            |             |            |
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| CASH AND EQUIVALENTS AT THE          |    178 420 |     249 413 |    249 413 |
| BEGINNING OF THE PERIOD              |            |             |            |
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|                                      |            |             |            |
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| CASH AND EQUIVALENTS AT THE END OF   |    211 080 |     169 252 |    178 420 |
| THE PERIOD                           |            |             |            |
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