The sales revenue of AS Tallinna Vesi's sales grew to €15.61 million in the third quarter, induced by the new prices for water services that were introduced in October last year due to higher production costs. Between July and September this year, the Company generated a net profit of €4.05 million, which is €1.84 million more than in the same period last year.
Sales from water service sold to commercial customers in the third quarter of this year in the main service area of Tallinna Vesi was €4.27 million, which is 1.6% less than last year. Sales from water services provided to private customers in the third quarter increased by 23.6% compared to the same period last year and totalled €5.98 million. The increase in sales in private segments is due to the adjustment of price for water services in the last quarter of the previous year.
During the nine months of 2023, the Group's total sales were €45.62 million, showing an increase of 18.4% or €7.08 million year-on-year. Revenues from the sale of water services, both inside and outside the main service area, accounted for 91.2% of total revenues, construction services for 7.6% and other services for 1.1%.
The Company's operating profit in the third quarter was €5.10 million. Operating profit grew by €2.66 million or 109.2% compared to the third quarter of last year. The operating profit for the nine months of 2023 was €13.30 million, showing an increase of €4.77 million compared to the previous year. According to Aleksandr Timofejev, the Chief Executive Officer of Tallinna Vesi, this is due to the adjustment of prices for water services and the stabilization of energy prices.
The recovery in operating profit was driven by sales, which reflected the increase in direct production costs. The Company's net profit was €4.05 million in the third quarter of 2023, which is €1.84 million more than in the same period last year. The increase in net profit was impacted by changes in operating profit and net financial expenses described above, and the income tax on dividends in the amount of €1.09 million.
The Group's profit before taxes for the nine months of 2023 was €11.13 million, being 35.7% or €2.93 million higher than for the same period in 2022. Net profit for the nine months was €9.87 million, being 63.1% or €3.82 million higher than for the equivalent period in 2022.
The Group's net financial income and expenses have resulted in a net expense of €0.89 million, compared to €0.78 million lower expense in the 3rd quarter of 2022. The increase in financial costs was caused by higher interest costs of loans linked to Euribor.
On September 21, AS Tallinna Vesi submitted an application to the Competition Authority to change the prices for water services. The application concerns the price for water services in the main service area in Tallinn and Saue, the service area in Maardu and for other water companies. Depending on the proceedings of the Competition Authority, the new prices will take effect no earlier than from the next year. The need for the tariff application is driven by justified costs and investments to ensure continuity of vital services, to reduce the environmental impact caused by water consumption, and to safeguard the environment.
"We continue to provide reliable water and wastewater services, as demonstrated by the steadily high level of quality indicators. During the nine months of this year, the quality of tap water was excellent, meeting 99.92% of all quality requirements," Timofejev said. In the third quarter of this year, the Company pumped nearly 6.2 million m3 of clean water into the water network and treated nearly 12.7 million m3 of wastewater.
Also, the effluent treated at the Wastewater Treatment Plant at Paljassaare has met all the requirements throughout the year. Pollutant parameters that are significantly lower than the limits required by law is the proof of the excellent level of treated effluent. In the nine months of this year, we have taken 541 tons of debris, 182 ton of grit, 1 383 tons of nitrogen and 187 tons of phosphorus out of the wastewater.
Starting from this year, Timofejev said, water pipes are also being maintained using the ice pigging technique. In nine months more than 150 km of water mains have been washed, 106 km of which have been cleaned with ice. In addition, water quality is supported by the investments in water pumping stations made in recent years, enabling additional chlorination in various parts of the city.
The level of water loss in the water network has remained low in the third quarter of the year, at 9.98%. This is significantly better than in the same period last year (13.47%).
By the end of the third quarter, the Company had installed smart meters for 27% of its customers. The Company aims to replace water meters for all customers in its service area with smart meters by the end of 2026 at the latest.
Major projects for 2023 include the reconstruction of digesters and construction of a combined heat and power plant at the Wastewater Treatment Plant, the reconstruction of filters and clarifiers at the Water Treatment Plant and the reconstruction of existing water and wastewater pipelines and the construction of new pipelines.
By the end of September this year, the Company had reconstructed more than 23 kilometres of networks. The major reconstruction works this year have been carried out on Jõe and Pronksi Street, Vana-Kalamaja Street, Rahvakooli Road, E. Vilde and Akadeemia Road, Pärna, Reinvaldi and Kuhlbarsi Street.
In the third quarter, work started on the reconstruction of the supply pipeline for the Lasnamäe booster pumping station at the intersection of Punane and Smuuli Streets. The reconstruction of wastewater pipeline in Mustamäe district using no-dig method has started off successfully with more than half of the works already being completed. Work continued on investment projects at our treatment plants, such as completing the work on the renovation of the high-speed filters and starting the renovation of clarifiers at the Water Treatment Plant.
In the first 9 months of 2023 the Group invested into fixed assets €22.84 million. Total non-current assets amounted to €247.45 million.
AS Tallinna Vesi is the largest water utility in Estonia, providing services to more than 24,900 private customers and businesses and 470,000 end consumers in Tallinn and its surrounding municipalities. Tallinna Vesi is listed on the main list of the Nasdaq Tallinn Stock Exchange. The largest shareholdings in the Company are held by the City of Tallinn (55.06%) and the energy group Utilitas (20.36%). 24.58% of the Company's shares are free floating on the Nasdaq Tallinn stock exchange.
MAIN FINANCIAL INDICATORS
| € million except key ratios | Quarter 3 | Variance 2023/2022 | 9 months | Variance 2023/ 2022 | ||||
| 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |||
| Sales | 15.61 | 13.48 | 13.61 | 15.8% | 45.62 | 38.53 | 38.36 | 18.4% |
| Gross profit | 6.64 | 3.58 | 5.36 | 85.7% | 18.16 | 12.38 | 15.78 | 46.7% |
| Gross profit margin % | 42.54 | 26.53 | 39.40 | 60.3% | 39.80 | 32.12 | 41.12 | 23.9% |
| Operating profit before depreciation and amortisation | 7.12 | 4.15 | 7.17 | 71.4% | 19.23 | 13.49 | 20.20 | 42.6% |
| Operating profit before depreciation and amortisation margin % | 45.57 | 30.80 | 52.67 | 48.0% | 42.16 | 35.00 | 52.64 | 20.4% |
| Operating profit | 5.10 | 2.44 | 5.50 | 109.2% | 13.30 | 8.52 | 15.36 | 56.0% |
| Operating profit - main business | 4.72 | 2.06 | 5.15 | 128.5% | 12.44 | 7.81 | 14.61 | 59.3% |
| Operating profit margin % | 32.64 | 18.07 | 40.42 | 80.6% | 29.15 | 22.12 | 40.04 | 31.8% |
| Profit before taxes | 4.20 | 2.32 | 5.41 | 80.7% | 11.13 | 8.21 | 15.09 | 35.7% |
| Profit before taxes margin % | 26.90 | 17.24 | 39.72 | 56.0% | 24.41 | 21.30 | 39.32 | 14.6% |
| Net profit | 4.05 | 2.22 | 5.34 | 82.9% | 9.87 | 6.05 | 12.96 | 63.1% |
| Net profit margin % | 25.96 | 16.44 | 39.21 | 57.9% | 21.63 | 15.70 | 33.78 | 37.7% |
| ROA % | 1.54 | 0.89 | 2.13 | 72.0% | 3.78 | 2.40 | 2.13 | 57.9% |
| Debt to total capital employed % | 57.43 | 56.37 | 55.54 | 1.9% | 57.43 | 56.37 | 55.54 | 1.9% |
| ROE % | 3.62 | 2.06 | 4.87 | 75.3% | 8.77 | 5.41 | 55.54 | 62.3% |
| Current ratio | 1.09 | 1.59 | 3.07 | -31.4% | 1.09 | 1.59 | 3.07 | -31.4% |
| Quick ratio | 1.03 | 1.52 | 3.01 | -32.2% | 1.03 | 1.52 | 3.01 | -32.2% |
| Investments into fixed assets | 12.40 | 2.22 | 8.14 | 457.9% | 22.84 | 9.95 | 13.77 | 129.5% |
| Payout ratio % | - | 78.52 | 80.42 | - | 78.52 | 80.42 | ||
Gross profit margin - Gross profit / Net sales
Operating profit margin - Operating profit / Net sales
Operating profit before depreciation and amortisation - Operating profit + depreciation and amortisation
Operating profit before depreciation and amortisation margin - Operating profit before depreciation and amortisation / Net sales
Net profit margin - Net profit / Net sales
ROA - Net profit / Average Total assets for the period
Debt to Total capital employed - Total liabilities / Total capital employed
ROE - Net profit / Average Total equity for the period
Current ratio - Current assets / Current liabilities
Quick ratio - (Current assets - Stocks) / Current liabilities
Payout ratio - Total Dividends per annum/ Total Net Income per annum
Main business - water services related activities, excl. connections profit and government grants, construction services, doubtful receivables
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| € thousand | as of 30 September | as of 31 December | |||||||
| ASSETS | Note | 2023 | 2022 | 2022 | |||||
| CURRENT ASSETS | |||||||||
| Cash and cash equivalents | 3 | 10,437 | 16,656 | 12,650 | |||||
| Trade receivables, accrued income and prepaid expenses | 8,897 | 7,840 | 8,989 | ||||||
| Inventories | 1,176 | 1,153 | 1,197 | ||||||
| TOTAL CURRENT ASSETS | 20,510 | 25,649 | 22,836 | ||||||
| NON-CURRENT ASSETS | |||||||||
| Property, plant, and equipment | 4 | 246,589 | 222,332 | 229,869 | |||||
| Intangible assets | 5 | 856 | 632 | 688 | |||||
| TOTAL NON-CURRENT ASSETS | 247,446 | 222,964 | 230,557 | ||||||
| TOTAL ASSETS | 267,956 | 248,613 | 253,393 | ||||||
| LIABILITIES AND EQUITY | |||||||||
| CURRENT LIABILITIES | |||||||||
| Current portion of long-term lease liabilities | 826 | 675 | 883 | ||||||
| Current portion of long-term loans | 3,621 | 3,630 | 3,630 | ||||||
| Trade and other payables | 11,611 | 7,958 | 10,225 | ||||||
| Prepayments | 2,740 | 3,862 | 3,749 | ||||||
| TOTAL CURRENT LIABILITIES | 18,798 | 16,125 | 18,487 | ||||||
| NON-CURRENT LIABILITIES | |||||||||
| Deferred income from connection fees | 43,817 | 37,996 | 39,150 | ||||||
| Leases | 1,978 | 952 | 1,607 | ||||||
| Loans | 82,737 | 78,550 | 76,708 | ||||||
| Provision for possible third-party claims | 6 | 6,018 | 6,018 | 6,018 | |||||
| Deferred tax liability | 409 | 411 | 496 | ||||||
| Other payables | 104 | 90 | 101 | ||||||
| TOTAL NON-CURRENT LIABILITIES | 135,063 | 124,017 | 124,080 | ||||||
| TOTAL LIABILITIES | 153,861 | 140,142 | 142,567 | ||||||
| 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 | 76,082 | 70,459 | 72,814 | ||||||
| TOTAL EQUITY | 114,095 | 108,471 | 110,826 | ||||||
| TOTAL LIABILITIES AND EQUITY | 267,956 | 248,613 | 253,393 | ||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| € thousand | Quarter 3 | 9 months | for the year ended 31 December | ||||||||
| Note | 2023 | 2022 | 2023 | 2022 | 2022 | ||||||
| Revenue | 7 | 15,614 | 13,479 | 45,619 | 38,534 | 54,558 | |||||
| Cost of goods and services sold | 9 | -8,972 | -9,903 | -27,462 | -26,157 | -37,660 | |||||
| GROSS PROFIT | 6,642 | 3,576 | 18,157 | 12,377 | 16,898 | ||||||
| Marketing expenses | 9 | -182 | -147 | -603 | -535 | -703 | |||||
| General administration expenses | 9 | -1,267 | -966 | -3,887 | -3,192 | -4,399 | |||||
| Other income (+)/ expenses (-) | 10 | -96 | -27 | -371 | -129 | -476 | |||||
| OPERATING PROFIT | 5,096 | 2,436 | 13,296 | 8,521 | 11,320 | ||||||
| Financial income | 11 | 36 | 1 | 72 | 4 | 8 | |||||
| Financial expenses | 11 | -933 | -113 | -2,235 | -319 | -682 | |||||
| PROFIT BEFORE TAXES | 4,199 | 2,324 | 11,133 | 8,206 | 10,646 | ||||||
| Income tax | 12 | -146 | -108 | -1,267 | -2,155 | -2,240 | |||||
| NET PROFIT FOR THE PERIOD | 4,053 | 2,216 | 9,866 | 6,051 | 8,406 | ||||||
| COMPREHENSIVE INCOME FOR THE PERIOD | 4,053 | 2,216 | 9,866 | 6,051 | 8,406 | ||||||
| Attributable profit to: | |||||||||||
| Equity holders of A-shares | 4,053 | 2,216 | 9,866 | 6,051 | 8,406 | ||||||
| Earnings per A share (in euros) | 13 | 0,20 | 0,11 | 0,49 | 0,30 | 0,42 | |||||
CONSOLIDATED STATEMENT OF CASH FLOWS
| € thousand | 9 months | for the year ended 31 December | ||||||||
| Note | 2023 | 2022 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
| Operating profit | 13,296 | 8,521 | 11,320 | |||||||
| Adjustment for depreciation/amortisation | 4,5,9,10 | 5,935 | 4,965 | 6,817 | ||||||
| Adjustment for revenues from connection fees | 10 | -445 | -406 | -544 | ||||||
| Other non-cash adjustments | 6 | -131 | 0 | 0 | ||||||
| Profit (-)/loss (+) from sale of property, plant and equipment, and intangible assets | -22 | -15 | -32 | |||||||
| Change in current assets involved in operating activities | 143 | -1,619 | -2,841 | |||||||
| Change in liabilities involved in operating activities | 323 | -296 | 309 | |||||||
| TOTAL CASH FLOWS FROM OPERATING ACTIVITIES | 19,099 | 11,150 | 15,029 | |||||||
| CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||||||
| Acquisition of property, plant, and equipment, and intangible assets | -20,414 | -14,968 | -20,701 | |||||||
| Compensations received for construction of pipelines, incl connection fees | 2,966 | 1,451 | 1,593 | |||||||
| Proceeds from sale of property, plant and equipment, and intangible assets | 24 | 17 | 53 | |||||||
| Interest received | 73 | 3 | 9 | |||||||
| TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES | -17,351 | -13,497 | -19,046 | |||||||
| CASH FLOWS USED IN FINANCING ACTIVITIES | ||||||||||
| Interest paid and loan financing costs, incl swap interests | -1,289 | -271 | -616 | |||||||
| Lease payments | -902 | -351 | -524 | |||||||
| Received loans | 45,500 | 0 | 0 | |||||||
| Repayment of loans | -39,318 | -1,818 | -3,636 | |||||||
| Dividends paid | 12 | -6,515 | -12,835 | -12,835 | ||||||
| Withheld income tax paid on dividends | 12 | -165 | -165 | -165 | ||||||
| Income tax paid on dividends | 12 | -1,272 | -2,116 | -2,116 | ||||||
| TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES | -3,961 | -17,556 | -19,892 | |||||||
| CHANGE IN CASH AND CASH EQUIVALENTS | -2,213 | -19,903 | -23,909 | |||||||
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 3 | 12,650 | 36,559 | 36,559 | ||||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 3 | 10,437 | 16,656 | 12,650 | ||||||
Additional information:
Taavi Gröön
Chief Financial Officer
AS Tallinna Vesi
(+372) 626 2200
taavi.groon@tvesi.ee
