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Published: 2023-01-27 08:11:31 CET
Tallinna Vesi
Quarterly report

AS Tallinna Vesi's financial results for the 4th quarter of 2022

Tallinna Vesi's sales increased by 2.4% in 2022, reaching €54.6 million. Growth in sales resulted from the increased consumption of water services by commercial customers. In the 4th quarter of 2022, Tallinna Vesi earned 16 million euros in sales.

In 2022, the sales from water services increased by 8.5% compared to 2021.

Sales from water services provided to commercial customers in the main service area increased by 11.6% in the 4th quarter, reaching €4.32 million. „Sales for the 4th quarter grew due to the increase in water consumption of capital’s hospitality and leisure establishments. The increase in sales was also affected by the change in the price for water services from 1 October due to the increase in electricity prices,” said Aleksandr Timofejev, Chief Executive Officer of Tallinna Vesi. Sales from water services provided to private customers increased by 20.1% in the 4th quarter compared to a year ago, reaching €6.1 million.

The Company's gross profit for the 4th quarter was €4.52 million, down by €0.28 million year-on-year. “The decrease in gross profit is linked to the cost of goods and services sold, which increased by 13.6% compared to the same period last year,” Timofejev explained. The biggest impact came from the increase in the market price of electricity, which increased by 48.2% compared to the 4th quarter of last year. The Company's results were also affected by the sharp increase in the price of chemicals. The total gross profit for 2022 was €16.9 million, compared to 2021, the gross profit decreased by €3.68 million.

The Company’s operating profit in the 4th quarter was €2.8 million, which was €0.62 million less compared to the same period last year. The operating profit for the twelve months of 2022 was €11.32 million, showing a decrease of 39.7% compared to the previous year. The decrease in operating profit was driven by both the increased electricity costs and the retaining of the provision for potential third-party claims at third-quarter levels of 2021.

The Company’s net profit was €2.36 million in the 4th quarter of 2022, which is €0.85 down from the same period in 2021. As for the twelve months of 2022, the net profit was €8.41 million, compared to €16.2 million in 2021.

Compared to the 4th quarter of the previous year, sales from construction services provided by the subsidiary Watercom decreased by 14.5% or €0.4 million. The total sales from construction services in 2022 amounted to €4.8 million, decreasing by 34.4% or €2.5 million compared to the same period of the previous year. The decrease in revenues is mainly linked to the decrease in construction volumes in 2022 due to the uncertainty in the road construction market.

To secure the sustainable infrastructure and the service continuity, Tallinna Vesi has increased investments in fixed assets. Last year, investments made in pipelines amounted to €10.3 million and a total of almost 19 km of water and sewage pipes were reconstructed. Investments will continue in 2023 to ensure the reliability of the assets.

The investment plan for the following years is prepared based on the Tallinn Public Water Supply and Sewerage Development Plan for the next 12 years, which will be completed this year in cooperation with the City of Tallinn. "Investments made today and in the future will continue to secure high quality drinking water for the people of Tallinn and help to keep the natural environment clean", Timofejev said.

Tallinna Vesi is gradually switching to remote water meters. Customers who have a smart water meter installed, will no longer have to report their monthly water meter readings. The first thousand customers already received new smart meters at the end of last year, and the installation will continue this year at an increased pace. “The main advantage of smart meters is the speed and accuracy of data transmission, as well as security and reliability. In addition to consumption data, the smart meter also communicates information about any failures and possible leakages,” explained Timofejev. By the end of 2026, all existing water meters in Tallinna Vesi's service area will be replaced with smart meters.

In addition to investments in water and wastewater networks, the Company has started to reduce its environmental impact by continuing to map its CO2 footprint. In order to reduce the footprint, 100% of the electricity used at Tallinna Vesi’s facilities and in treatment processes is now produced from renewable sources. At the end of last year, Tallinna Vesi signed a contract for the construction of a combined heat and power plant on the Wastewater Treatment Plant at Paljassaare, which will use biogas from the wastewater treatment process to reduce heating and electricity costs. Biogas produced from sewage sludge covers up to 70% of the plant’s current average annual electricity demand. The cogeneration plant will be operational by the end of this year.

The Company plans to use additional loan capital to finance investments and to continue with the dividend policy established.


KEY FINANCIAL INDICATORS

€ million,
except key ratios

4th quarterChange 2022/ 2021

12 monthsChange 2022/ 2021

202220212020202220212020
Sales16.0314.9313.177.3%54.5653.2951.722.4%
Gross profit4.524.805.64-5.9%16.9020.5822.23-17.9%
Gross profit margin %28.2132.1742.78-12.3%30.9738.6142.97-19.8%
Operating profit before depreciation and amortisation4.655.107.41-8.9%18.1425.3028.07-28.3%
Operating profit before depreciation and amortisation margin %29.0034.1756.23-15.1%33.2447.4754.27-30.0%
Operating profit2.803.425.76-18.2%11.3218.7821.78-39.7%
Operating profit - main business2.502.915.51-13.9%10.3117.5220.88-41.2%
Operating profit margin %17.4522.8943.71-23.8%20.7535.2342.12-41.1%
Profit before taxes2.443.315.64-26.3%10.6518.4021.34-42.1%
Profit before taxes margin %15.2422.1942.85-31.3%19.5234.5241.27-43.5%
Net profit2.363.215.39-26.5%8.4116.1716.73-48.0%
Net profit margin %14.7121.4740.91-31.5%15.4130.3332.35-49.2%
ROA %0.941.262.12-25.6%3.306.326.45-47.8%
Debt to total capital employed %56.2654.9456.092.4%56.2654.9456.092.4%
ROE %2.152.824.92-23.8%7.4314.2014.69-47.7%
Current ratio1.242.833.85-56.2%1.242.833.85-56.2%
Quick ratio1.172.793.80-58.1%1.172.793.80-58.1%
Investments into fixed assets9.475.435.6574.5%25.1315.3819.4263.4%
Payout ratio %-80.4277.700.0%-80.4277.700.0%

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


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

€ thousand   Quarter 4 for the year ended 31 December
    Note20222021 20222021
          
Revenue 716,02514,931 54,55853,294
Cost of goods and services sold 9-11,503-10,127 -37,660-32,715
GROSS PROFIT  4,5224,804 16,89820,579
          
Marketing expenses 9-169-130 -703-462
General administration expenses 9-1,208-1,047 -4,399-4,438
Other income (+)/ expenses (-) 10-347-209 -4763,099
OPERATING PROFIT  2,7983,418 11,32018,778
          
Financial income 1151 88
Financial expenses 11-363-104 -682-387
PROFIT BEFORE TAXES  2,4403,315 10,64618,399
          
Income tax 12-85-108 -2,240-2,234
          
NET PROFIT FOR THE PERIOD 2,3553,207 8,40616,165
COMPREHENSIVE INCOME FOR THE PERIOD2,3553,207 8,40616,165
          
Attributable profit to:       
Equity holders of        A-shares  2,3553,207 8,40616,165
          
Earnings per A share (in euros) 130,120,16 0,420,81


CONSOLIDATED STATEMENT OF CASH FLOWS

€ thousand               for the year ended 31 December
   Note 20222021
CASH FLOWS FROM OPERATING ACTIVITIES    
 Operating profit  11,32018,778
  Adjustment for depreciation/amortisation4,5,9,10 6,8176,520
  Adjustment for revenues from connection fees10 -544-510
  Other non-cash adjustments6 0-3,610
  Profit (-) / loss (+) from sale of property, plant and equipment, and intangible assets  -32-29
 Change in current assets involved in operating activities -2,841380
 Change in liabilities involved in operating activities  309938
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES 15,02922,467
       
CASH FLOWS USED IN INVESTING ACTIVITIES    
 Acquisition of property, plant, and equipment, and
intangible assets
  -20,701-13,734
 Compensations received for construction of pipelines, incl. connection fees  1,5932,892
 Proceeds from sale of property, plant and equipment, and intangible assets 5329
 Interest received  911
TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES -19,046-10,802
       
CASH FLOWS USED IN FINANCING ACTIVITIES    
 Interest paid and loan financing costs, incl. swap interests -616-460
 Lease payments  -524-408
 Repayment of loans  -3,636-3,636
 Dividends paid12 -12,835-12,842
 Withheld income tax paid on dividends12 -165-158
 Income tax paid on dividends12 -2,116-2,116
TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES -19,892-19,620
       
CHANGE IN CASH AND CASH EQUIVALENTS  -23,909-7,955
       
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD
3 36,55944,514
       
CASH AND CASH EQUIVALENTS AT THE END
OF THE PERIOD
3 12,65036,559


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

€ thousand          as of 31 December
ASSETS   Note 20222021
          
CURRENT ASSETS       
 Cash and cash equivalents  3 12,65036,559
 Trade receivables, accrued income and prepaid expenses   8,9896,637
 Inventories     1,197702
TOTAL CURRENT ASSETS    22,83643,898
          
NON-CURRENT ASSETS      
 Property, plant, and equipment  4 229,869211,546
 Intangible assets   5 688729
TOTAL NON-CURRENT ASSETS    230,557212,275
          
TOTAL ASSETS     253,393256,173
          
LIABILITIES AND EQUITY       
          
CURRENT LIABILITIES      
 Current portion of long-term lease liabilities    883421
 Current portion of long-term loans    3,6303,630
 Trade and other payables    10,2257,835
 Prepayments     3,7493,604
TOTAL CURRENT LIABILITIES    18,48715,490
          
NON-CURRENT LIABILITIES      
 Deferred income from connection fees    39,15037,241
 Leases     1,6071,236
 Loans     76,70880,336
 Provision for possible third-party claims  6 6,0186,018
 Deferred tax liability     496372
 Other payables     10160
TOTAL NON-CURRENT LIABILITIES    124,080125,263
TOTAL LIABILITIES     142,567140,753
          
EQUITY        
 Share capital     12,00012,000
 Share premium     24,73424,734
 Statutory legal reserve    1,2781,278
 Retained earnings     72,81477,408
TOTAL EQUITY      110,826115,420
          
TOTAL LIABILITIES AND EQUITY     253,393256,173


Maria Tiidus
Head of Communications
AS Tallinna Vesi
Ph: 626 2271
E-mail: maria.tiidus@tvesi.ee

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Borsiaruanne Q422 Eng.pdf