AS Tallinna Vesi's sales in the fourth quarter of 2023 were €15.52 million, affected by the overall economic environment and a decrease in revenue from construction services. At the same time, the company's revenue from its core business of providing water services continued to grow.
Compared to the fourth quarter of 2022, the sales were €0.51 million lower.
Sales from water service sold to commercial customers in the fourth quarter of 2023 in the company's main service area were €4.64 million, which is 7.5% more than the year before. Sales from water services provided to private customers increased by 2.4% in the fourth quarter compared to the same period of the previous year and totalled €6.19 million.
The company's operating profit for the fourth quarter was €4.05 million. Compared to the fourth quarter of the previous year, the operating profit increased by €1.25 million. The operating profit for 2023 was €17.35 million, an increase of €6.03 million compared to the previous year. This has been driven mainly by an increase in water consumption and a stabilisation of energy prices.
According to Aleksandr Timofejev, CEO of Tallinna Vesi, the commissioning of the new cogeneration plant has already had a positive impact on operating costs, although this is only a test period. "Using biogas to produce heat and electricity at the CHP plant will allow us to cover up to 15% of our total energy needs with in-house produced energy in the future, reducing operating costs and increasing the sustainability of our operations," said Timofejev. Supported by new investments, the company is moving towards a more sustainable operating model and a reduction of its environmental impact, he added.
The company's net profit for the fourth quarter of 2023 was €2.98 million, which is €0.62 million more than in the same period last year. The group's profit before taxes for the twelve months was €14.21 million, being 33.4% or €3.56 million higher than for the same period a year before. The net profit for the twelve months was €12.84 million, being 52.8% or €4.44 million higher than in 2022.
The group's net financial expenses were €0.98 million in the fourth quarter, which is €0.62 million higher than in the same period last year. The increase in financial expenses was due to increased cost of interest on loans linked to Euribor.
Throughout the year, the quality of tap water was excellent, meeting 99.87% of all quality requirements. The corresponding result for the fourth quarter was 99.7%. "We work every day to ensure that our customers and consumers receive tap water of the very highest quality. At the beginning of 2023, we introduced an innovative ice pigging technology for cleaning water pipes and cleaned more than 141 km of water network in one year," Timofejev said. According to the customer survey carried out for Tallinna Vesi in November, 89% of consumers drink tap water, which shows that they are highly satisfied with the quality of the water.
In the fourth quarter of 2023, Tallinna Vesi continued to introduce to the public the principles of water operations as a vital service and to raise awareness of the important aspects of maintaining a clean living environment by being present at the sustainability festival Impact Day and opening the doors of its water treatment plant to the public during the architecture weekend Open House Tallinn.
During the twelve months of 2023, wastewater treated at the Wastewater Treatment Plant at Paljassaare met all the established requirements. The good quality of the treated effluent is demonstrated by pollutant levels well below the legal limits. In 2023, we took more than 800 tons of debris, 200 tons of grit, 1800 tons of nitrogen and 240 tons of phosphorus out of the wastewater.
The rate of water loss in the water network remained low at 11.35% in the fourth quarter. This is significantly better than in the same period last year (15.34%). For the twelve months of 2023, the rate of water loss was 12.93%, compared to 16.02% of the year before. The low level of water losses is ensured by the continuous online monitoring of the water network and the network rehabilitation programme implemented as planned.
By the end of the fourth quarter of 2023, Tallinna Vesi had reconstructed more than 27 kilometres of networks, 46% of which using no-dig methods. The largest reconstruction works in 2023 were carried out on Jõe and Pronksi Street, Vana-Kalamaja Street, E. Vilde and Akadeemia Road, Kuklase and Vaablase Street, Pärna, Reinvaldi and Kuhlbarsi Street, Tehnika, Magasini and Punane Street, and on Smuuli Road.
The major projects carried out at the treatment plants in 2023 included the reconstruction of digesters and the installation of the cogeneration plant at the Wastewater Treatment Plant and the reconstruction of filters and clarifiers at the Water Treatment Plant. The first phase of the reconstruction of digesters has been successfully completed with one of the two digesters being reconstructed and most of the technological components replaced. Work will continue in 2024.
By the end of the fourth quarter of 2023, Tallinna Vesi had installed smart meters for 40.6% 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.
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. The new prices will apply once the Competition Authority has approved the application. The adjustments to the water tariffs are prompted by the increase in justified costs and by the crucial investments that are needed to ensure the continued operation of the vital service, to reduce environmental impact and to safeguard a clean environment.
In the twelve months of 2023, the group invested €35 million in fixed assets. The total value of fixed assets amounts to €256,10 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 4 | Variance 2023/ 2022 | 12 months | Variance 2023/ 2022 | ||||
| 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |||
| Sales | 15.52 | 16.03 | 14.93 | -3.1% | 61.14 | 54.56 | 53.29 | 12.1% |
| Gross profit | 5.91 | 4.52 | 4.80 | 30.7% | 24.07 | 16.90 | 20.58 | 42.4% |
| Gross profit margin % | 38.07 | 28.21 | 32.17 | 35.0% | 39.36 | 30.97 | 38.61 | 27.1% |
| Operating profit before depreciation and amortisation | 6.17 | 4.65 | 5.10 | 32.8% | 25.40 | 18.14 | 25.30 | 40.1% |
| Operating profit before depreciation and amortisation margin % | 39.78 | 29.00 | 34.17 | 37.1% | 41.55 | 33.24 | 47.47 | 25.0% |
| Operating profit | 4.05 | 2.80 | 3.42 | 44.9% | 17.35 | 11.32 | 18.78 | 53.3% |
| Operating profit - main business | 3.55 | 2.50 | 2.91 | 41.7% | 15.99 | 10.31 | 17.52 | 55.1% |
| Operating profit margin % | 26.12 | 17.45 | 22.89 | 49.6% | 28.38 | 20.75 | 35.23 | 36.8% |
| Profit before taxes | 3.07 | 2.44 | 3.31 | 26.0% | 14.21 | 10.65 | 18.40 | 33.4% |
| Profit before taxes margin % | 19.79 | 15.22 | 22.19 | 30.0% | 23.23 | 19.51 | 34.52 | 19.1% |
| Net profit | 2.98 | 2.36 | 3.21 | 26.4% | 12.84 | 8.41 | 16.17 | 52.8% |
| Net profit margin % | 19.18 | 14.70 | 21.47 | 30.5% | 21.01 | 15.41 | 30.33 | 36.3% |
| ROA % | 1.08 | 0.94 | 1.26 | 15.4% | 4.80 | 3.30 | 6.45 | 45.5% |
| Debt to total capital employed % | 58.47 | 56.26 | 54.94 | 3.9% | 58.47 | 56.26 | 54.94 | 3.9% |
| ROE % | 2.58 | 2.15 | 2.82 | 19.9% | 11.27 | 7.43 | 14.69 | 51.7% |
| Current ratio | 1.30 | 1.24 | 2.83 | 4.8% | 1.30 | 1.24 | 2.83 | 4.8% |
| Quick ratio | 1.24 | 1.17 | 2.79 | 6.0% | 1.24 | 1.17 | 2.79 | 6.0% |
| Investments into fixed assets | 12.09 | 15.18 | 1.61 | -20.4% | 34.93 | 25.13 | 15.38 | 39.0% |
| 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 31 December | ||||||||
| ASSETS | Note | 2023 | 2022 | ||||||
| CURRENT ASSETS | |||||||||
| Cash and cash equivalents | 3 | 14,736 | 12,650 | ||||||
| Trade receivables, accrued income and prepaid expenses | 8,608 | 8,989 | |||||||
| Inventories | 1,137 | 1,197 | |||||||
| TOTAL CURRENT ASSETS | 24,481 | 22,836 | |||||||
| NON-CURRENT ASSETS | |||||||||
| Property, plant, and equipment | 4 | 256,108 | 229,869 | ||||||
| Intangible assets | 5 | 1,293 | 688 | ||||||
| TOTAL NON-CURRENT ASSETS | 257,401 | 230,557 | |||||||
| TOTAL ASSETS | 281,882 | 253,393 | |||||||
| LIABILITIES AND EQUITY | |||||||||
| CURRENT LIABILITIES | |||||||||
| Current portion of long-term lease liabilities | 697 | 883 | |||||||
| Current portion of long-term loans | 3,594 | 3,630 | |||||||
| Trade and other payables | 10,886 | 10,225 | |||||||
| Prepayments | 3,604 | 3,749 | |||||||
| TOTAL CURRENT LIABILITIES | 18,781 | 18,487 | |||||||
| NON-CURRENT LIABILITIES | |||||||||
| Deferred income from connection fees | 44,653 | 39,150 | |||||||
| Leases | 1,892 | 1,607 | |||||||
| Loans | 92,835 | 76,708 | |||||||
| Provision for possible third-party claims | 6 | 6,018 | 6,018 | ||||||
| Deferred tax liability | 505 | 496 | |||||||
| Other payables | 128 | 101 | |||||||
| TOTAL NON-CURRENT LIABILITIES | 146,031 | 124,080 | |||||||
| TOTAL LIABILITIES | 164,812 | 142,567 | |||||||
| EQUITY | |||||||||
| Share capital | 12,000 | 12,000 | |||||||
| Share premium | 24,734 | 24,734 | |||||||
| Statutory legal reserve | 1,278 | 1,278 | |||||||
| Retained earnings | 79,058 | 72,814 | |||||||
| TOTAL EQUITY | 117,070 | 110,826 | |||||||
| TOTAL LIABILITIES AND EQUITY | 281,882 | 253,393 | |||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| € thousand | Quarter 4 | for the year ended 31 December | ||||||||
| Note | 2023 | 2022 | 2023 | 2022 | ||||||
| Revenue | 7 | 15,522 | 16,025 | 61,141 | 54,558 | |||||
| Cost of goods and services sold | 9 | -9,612 | -11,503 | -37,074 | -37,660 | |||||
| GROSS PROFIT | 5,910 | 4,522 | 24,067 | 16,898 | ||||||
| Marketing expenses | 9 | -216 | -169 | -818 | -703 | |||||
| General administration expenses | 9 | -1,391 | -1,208 | -5,278 | -4,399 | |||||
| Other income (+)/ expenses (-) | 10 | -250 | -347 | -621 | -476 | |||||
| OPERATING PROFIT | 4,053 | 2,798 | 17,350 | 11,320 | ||||||
| Financial income | 11 | 46 | 5 | 119 | 8 | |||||
| Financial expenses | 11 | -1,028 | -363 | -3,263 | -682 | |||||
| PROFIT BEFORE TAXES | 3,071 | 2,440 | 14,206 | 10,646 | ||||||
| Income tax | 12 | -95 | -85 | -1,362 | -2,240 | |||||
| NET PROFIT FOR THE PERIOD | 2,976 | 2,355 | 12,844 | 8,406 | ||||||
| COMPREHENSIVE INCOME FOR THE PERIOD | 2,976 | 2,355 | 12,844 | 8,406 | ||||||
| Attributable profit to: | ||||||||||
| Equity holders of A-shares | 2,976 | 2,355 | 12,844 | 8,406 | ||||||
| Earnings per A share (in euros) | 13 | 0.15 | 0.12 | 0.64 | 0.42 | |||||
CONSOLIDATED STATEMENT OF CASH FLOWS
| € thousand | for the year ended 31 December | ||||||||||
| Note | 2023 | 2022 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Operating profit | 17,350 | 11,320 | |||||||||
| Adjustment for depreciation/amortisation | 4,5,9,10 | 8,055 | 6,817 | ||||||||
| Adjustment for revenues from connection fees | 10 | -604 | -544 | ||||||||
| Other non-cash adjustments | 6 | -16 | 0 | ||||||||
| Profit (-)/loss (+) from sale of property, plant and equipment, and intangible assets | -34 | -32 | |||||||||
| Change in current assets involved in operating activities | 430 | -2,841 | |||||||||
| Change in liabilities involved in operating activities | -667 | 309 | |||||||||
| TOTAL CASH FLOWS FROM OPERATING ACTIVITIES | 24,514 | 15,029 | |||||||||
| CASH FLOWS USED IN INVESTING ACTIVITIES | |||||||||||
| Acquisition of property, plant, and equipment, and intangible assets | -28,885 | -20,701 | |||||||||
| Compensations received for construction of pipelines, incl. connection fees | 2,535 | 1,593 | |||||||||
| Proceeds from sale of property, plant and equipment, and intangible assets | 37 | 53 | |||||||||
| Interest received | 119 | 9 | |||||||||
| TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES | -26,194 | -19,046 | |||||||||
| CASH FLOWS USED IN FINANCING ACTIVITIES | |||||||||||
| Interest paid and loan financing costs, incl. swap interests | -3,413 | -616 | |||||||||
| Lease payments | -1,233 | -524 | |||||||||
| Received loans | 57,500 | 0 | |||||||||
| Repayment of loans | -41,136 | -3,636 | |||||||||
| Dividends paid | 12 | -6,515 | -12,835 | ||||||||
| Withheld income tax paid on dividends | 12 | -85 | -165 | ||||||||
| Income tax paid on dividends | 12 | -1,352 | -2,116 | ||||||||
| TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES | 3,766 | -19,892 | |||||||||
| CHANGE IN CASH AND CASH EQUIVALENTS | 2,086 | -23,909 | |||||||||
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 3 | 12,650 | 36,559 | ||||||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 3 | 14,736 | 12,650 | ||||||||
Additional information:
Taavi Gröön
Chief Financial Officer
AS Tallinna Vesi
(+372) 626 2200
taavi.groon@tvesi.ee
