AS Tallinna Vesi's sales in the second quarter of this year were €15.5 million, remaining at the level of the same period last year. The company's operating profit for the second quarter was €4.46 million, an increase of 8%, and its net profit was €2.19 million, a decrease of 5.2%, mainly due to an increase in the interest cost on loans.
"The vital water services that Tallinna Vesi provide were at a high level throughout the quarter - drinking water met 100% of all the requirements in place. The quality of the treated effluent discharged to the Baltic Sea exceeded the standards set by law in all parameters. The company's staff has been taking care of the day-to-day operation of the service, while continuing to prepare for the future - ensuring uninterrupted service is our common goal and requires ongoing investment in the water and wastewater network," said Aleksandr Timofejev, CEO of Tallinna Vesi.
He pointed out that the positive impact of the investments made so far to ensure that consumers have access to vital water services at an affordable price can already be seen. "We have received confirmation that we are moving in the right direction with the investments in our business plan. We want to continue to be the leading water company in Estonia, both in terms of quality and providing water at an affordable price," said Timofejev. In total, Tallinna Vesi plans to invest more than €60 million this year.
The company pumped 7 million m3 of clean water into the water network and treated nearly 12.5 million m3 of wastewater in the second quarter of 2024.? During the second quarter, 778 water samples were taken from the customers' taps. According to Timofejev, clean tap water is ensured by an efficient water treatment process and regular monitoring of the water network, as well as ongoing preventive maintenance and timely investments.
Sales from water services sold to business customers in the second quarter of 2024 in the main service area of Tallinna Vesi were €4.50 million, which is 1.8% more than the year before. Sales from water services provided to private customers in the second quarter were at the same level as a year earlier and amounted to €6.18 million.?
The company's operating profit for the second quarter was €4.46 million. Operating profit increased by 8% or €0.33 million compared to the year before. The company's net profit was €2.19 million, which is €0.12 million less than in the same period of the previous year. The decrease in net profit was mainly driven by an increase in interest costs on loans.
In the second quarter of 2024, the proceedings regarding the application for a new price for water services were finalised and the price change was approved by the Competition Authority. The new prices in the Tallinn, Saue and Maardu areas took effect on 1 July 2024 and will affect the company's sales starting from the third quarter.
In addition to the ongoing need to invest in the water and wastewater network and to reduce the environmental impact, the need for water price adjustments is also due to increases in a number of input costs, such as electricity, chemicals and maintenance. It also results from the obligation under the Public Water Supply and Sewerage Act to harmonise the price for water services for private and business customers.
More than half of the planned investment, or nearly €38 million, is intended for the development and rehabilitation of pipelines. The total investment in pipelines also includes up to €10 million for the construction of stormwater pipelines financed by the City of Tallinn. Planned investments in water and wastewater treatment plants amount up to €19 million. "We have set ourselves the goal of working together with the City of Tallinn and other partners as much as possible in planning and carrying out the pipeline works this year so as to disrupt city life and traffic as little as possible, save the environment and carry out the works in a cost-effective manner," Aleksandr Timofejev explained.
For more than a year now, an innovative and effective ice pigging technology has been used to maintain the water mains. This is a technology in which an ice slurry is made of water and table salt and pumped through the mains. By the end of the second quarter, almost one fourth of the water network had been cleaned using the new technology, which helps to maintain high water quality. In addition, water quality has been supported by investments in water pumping stations in recent years to provide secondary chlorination in various parts of the city. Additional disinfection will ensure that the requirements set for tap water quality are met at various points across the city where chlorine levels in the water are normally very low, especially in summer when the water temperatures in the network get high.
One of the goals of the company's customer service is to notify customers about water interruptions well in advance. In the second quarter, we notified our customers at least 1 hour before unplanned water interruption took place in 98% of cases and the average duration of a water interruption was 3 hours and 17 minutes. To reduce the inconvenience caused by water interruptions, we continue installing additional isolation valves on the water network.
In the second quarter of 2024, the effluent discharged from the Paljassaare Wastewater Treatment Plant met all the requirements in place. The high quality of the treated effluent is demonstrated by pollutant levels well below the limits set by law. During the second quarter of 2024, the company took out more than 163 tonnes of debris, 53 tonnes of grit, 481 tonnes of nitrogen and 63 tonnes of phosphorus from the wastewater.
Over the next three years, we will be investing nearly €9 million to enhance the biological treatment of wastewater by reconstructing the secondary clarifiers at the wastewater treatment plant. Other major multi-annual projects include the installation of mechanical screens at the headworks before the plant and the replacement of the screens at the treatment plant, which are important environmental projects designed to keep the Baltic Sea clean.
Timofejev also highlighted the cogeneration plant at the Paljassaare Wastewater Treatment Plant that was accepted at the end of the second quarter from the partner who carried out the construction. This plant will allow to use biogas to generate a significant part of the electricity needed for the wastewater treatment process, in addition to heat. Reconstructions are ongoing on the digesters and aeration tanks at the wastewater treatment plant. This year we will also start installing new, more efficient air blowers, expand our methanol tank fleet and begin preparations for the installation of a solar power plant.
Renovations are ongoing on high-speed filters at the water treatment plant. The designs are being prepared for upgrading the ozone production technology used in water treatment and for the reuse of backwash water from the filters in B building. There are also plans for the replacement of sedimentation technology used in the clarifiers with flotation technology. The aim of these projects is to reduce the plant's own water and energy consumption and to increase its production capacity.
The rate of water loss in the water network remained low at 12.96% in the second quarter of the year. This is a better result than in the same period last year (13.62%). The low rate of water loss is ensured with the continuous on-line monitoring of the water network and the timely implementation of the network rehabilitation programme.
By the end of the second quarter, we had rehabilitated and constructed more than 17 kilometres of pipelines, of which over 9 kilometres were built using environmentally friendly no-dig techniques. Tallinna Vesi is working closely with the City of Tallinn and other partners, such as AS Utilitas Tallinn, to plan and carry out the work so that as much work as possible can be carried out at the same time, with as little disruption to city life and traffic as possible.
By the end of the second quarter, we had installed over 11,500 smart water meters, which means that more than 52% of our customers now have remote water meters. The aim is to increase the share of customers with smart meters to 60% in 2024, and to have all customers in our service area equipped with smart meters by the end of 2026 at the latest.
We strive to provide our customers and consumers with a reliable service, part of which is the availability of important information about the service and the speed at which the enquiries are answered. In the second quarter of 2024, we responded to written enquiries within 2 days in 99.7% of cases, thus maintaining a high level.
At the beginning of the second quarter, we opened nearly 60 public water taps in Tallinn, where residents can get free drinking water until the end of September. In addition, we supported community events by providing tanks with fresh water.
We signed a cooperation agreement with the Estonian Paralympic Committee to support the preparation of athletes participating in the Paris Paralympic Games from 28 August to 8 September. We also joined the Diversity Charter and received recognition from the Ministry of Defence for our outstanding contribution to national defence.
For several years now, we have taken part in the employer reputation survey conducted by Kantar Emor. As the results show, we have moved up from last year's position, now ranking 20th in the top that was put together based on the survey conducted among working people.
AS Tallinna Vesi is the largest water utility in Estonia, providing services to nearly 25,000 private customers and businesses and 500,000 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 freely floating on the Nasdaq Tallinn Stock Exchange.
MAIN FINANCIAL INDICATORS
| € million except key ratios | 2nd quarter | 2024/2023 | 6 months | 2024/2023 | ||||
| 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | |||
| Sales | 15.55 | 15.41 | 13.00 | 0.9% | 30.49 | 30.01 | 25.05 | 1.6% |
| Gross profit | 6.33 | 5.80 | 4.42 | 9.0% | 12.39 | 11.52 | 8.80 | 7.6% |
| Gross profit margin % | 40.68 | 37.66 | 33.98 | 8.0% | 40.63 | 38.38 | 35.12 | 5.9% |
| Operating profit before depreciation and amortisation | 6.49 | 6.10 | 4.69 | 6.5% | 12.72 | 12.11 | 9.34 | 5.0% |
| Operating profit before depreciation and amortisation margin % | 41.74 | 39.57 | 36.09 | 5.5% | 41.70 | 40.37 | 37.26 | 3.3% |
| Operating profit | 4.46 | 4.13 | 3.08 | 8.0% | 8.58 | 8.20 | 6.09 | 4.7% |
| Operating profit - main business | 4.17 | 3.81 | 2.83 | 9.3% | 8.33 | 7.73 | 5.74 | 7.9% |
| Operating profit margin % | 28.66 | 26.79 | 23.70 | 7.0% | 28.15 | 27.33 | 24.29 | 3.0% |
| Profit before taxes | 3.42 | 3.41 | 2.98 | 0.4% | 6.45 | 6.93 | 5.88 | -7.0% |
| Profit before taxes margin % | 21.99 | 22.12 | 22.88 | -0.6% | 21.15 | 23.11 | 23.48 | -8.5% |
| Net profit | 2.19 | 2.31 | 0.96 | -5.2% | 5.20 | 5.81 | 3.84 | -10.5% |
| Net profit margin % | 14.10 | 15.02 | 7.36 | -6.1% | 17.07 | 19.37 | 15.31 | -11.9% |
| ROA % | 0.77 | 0.90 | 0.38 | -14.7% | 1.83 | 2.27 | 1.52 | -19.0% |
| Debt to total capital employed % | 60.76 | 57.66 | 57.09 | 5.4% | 60.76 | 57.66 | 57.09 | 5.4% |
| ROE % | 1.89 | 2.06 | 0.85 | -8.4% | 4.54 | 5.26 | 3.46 | -13.7% |
| Current ratio | 0.69 | 1.31 | 1.81 | -47.3% | 0.69 | 1.31 | 1.81 | -47.3% |
| Quick ratio | 0.63 | 1.24 | 1.75 | -49.2% | 0.63 | 1.24 | 1.75 | -49.2% |
| Investments into fixed assets | 11.39 | 5.77 | 4.95 | 97.4% | 18.04 | 10.44 | 7.73 | 72.8% |
| Payout ratio % | - | 79.41 | 78.52 | - | 79.41 | 78.52 | ||
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 | |||||||||
| ASSETS | Note | as of 30 June 2024 | as of 31 December 2023 | ||||||
| CURRENT ASSETS | |||||||||
| Cash and cash equivalents | 3 | 3,923 | 14,736 | ||||||
| Trade receivables, accrued income and prepaid expenses | 8,988 | 8,608 | |||||||
| Inventories | 1,202 | 1,137 | |||||||
| TOTAL CURRENT ASSETS | 14,113 | 24,481 | |||||||
| NON-CURRENT ASSETS | |||||||||
| Property, plant, and equipment | 4 | 269,839 | 256,108 | ||||||
| Intangible assets | 5 | 1,394 | 1,293 | ||||||
| TOTAL NON-CURRENT ASSETS | 271,233 | 257,401 | |||||||
| TOTAL ASSETS | 285,346 | 281,882 | |||||||
| LIABILITIES AND EQUITY | |||||||||
| CURRENT LIABILITIES | |||||||||
| Current portion of long-term lease liabilities | 1,011 | 697 | |||||||
| Current portion of long-term loans | 3,571 | 3,594 | |||||||
| Trade and other payables | 12,275 | 10,886 | |||||||
| Prepayments | 3,762 | 3,604 | |||||||
| TOTAL CURRENT LIABILITIES | 20,619 | 18,781 | |||||||
| NON-CURRENT LIABILITIES | |||||||||
| Deferred income from connection fees | 47,761 | 44,653 | |||||||
| Leases | 2,575 | 1,892 | |||||||
| Loans | 95,963 | 92,835 | |||||||
| Provision for possible third-party claims | 6 | 6,018 | 6,018 | ||||||
| Deferred tax liability | 242 | 505 | |||||||
| Other payables | 94 | 128 | |||||||
| TOTAL NON-CURRENT LIABILITIES | 152,653 | 146,031 | |||||||
| TOTAL LIABILITIES | 173,272 | 164,812 | |||||||
| EQUITY | |||||||||
| Share capital | 12,000 | 12,000 | |||||||
| Share premium | 24,734 | 24,734 | |||||||
| Statutory legal reserve | 1,278 | 1,278 | |||||||
| Retained earnings | 74,062 | 79,058 | |||||||
| TOTAL EQUITY | 112,074 | 117,070 | |||||||
| TOTAL LIABILITIES AND EQUITY | 285,346 | 281,882 | |||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| € thousand | ||||||||||||
| Note | Quarter 2 | for the 6 months ended 30 June | ||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenue | 7 | 15,552 | 15,405 | 30,489 | 30,005 | |||||||
| Cost of goods and services sold | 9 | -9,225 | 9,603 | -18,102 | -18,490 | |||||||
| GROSS PROFIT | 6,327 | 5,802 | 12,387 | 11,515 | ||||||||
| Marketing expenses | 9 | -241 | -205 | -475 | -419 | |||||||
| General administration expenses | 9 | -1,531 | -1,317 | -3,025 | -2,620 | |||||||
| Other income (+)/ expenses (-) | 10 | -98 | -153 | -303 | -275 | |||||||
| OPERATING PROFIT | 4,457 | 4,127 | 8,584 | 8,201 | ||||||||
| Financial income | 11 | 67 | 26 | 149 | 36 | |||||||
| Financial expenses | 11 | -1,104 | -747 | -2,285 | -1,302 | |||||||
| PROFIT BEFORE TAXES | 3,420 | 3,406 | 6,448 | 6,935 | ||||||||
| Income tax | -1,226 | -1,093 | -1,244 | -1,121 | ||||||||
| NET PROFIT FOR THE PERIOD | 2,194 | 2,313 | 5,204 | 5,814 | ||||||||
| COMPREHENSIVE INCOME FOR THE PERIOD | 2,194 | 2,313 | 5,204 | 5,814 | ||||||||
| Attributable profit to: | ||||||||||||
| Equity holders of A-shares | 2,194 | 2,313 | 5,204 | 5,814 | ||||||||
| Earnings per A share (in euros) | 12 | 0.11 | 0.12 | 0.26 | 0.29 | |||||||
CONSOLIDATED STATEMENT OF CASH FLOWS
| € thousand | for the 6 months ended 30 June | |||||||||
| Note | 2024 | 2023 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
| Operating profit | 8,584 | 8,200 | ||||||||
| Adjustment for depreciation/amortisation | 9,10 | 4,131 | 3,914 | |||||||
| Adjustment for revenues from connection fees | 10 | -340 | -292 | |||||||
| Other non-cash adjustments | -91 | -157 | ||||||||
| Profit (-)/loss (+) from sale of property, plant and equipment, and intangible assets | -55 | -22 | ||||||||
| Change in current assets involved in operating activities | -446 | 343 | ||||||||
| Change in liabilities involved in operating activities | 351 | -526 | ||||||||
| TOTAL CASH FLOWS FROM OPERATING ACTIVITIES | 12,134 | 11,460 | ||||||||
| CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||||||
| Acquisition of property, plant, and equipment, and intangible assets | -13,800 | -10,495 | ||||||||
| Compensations received for construction of pipelines, including connection fees | 952 | 1,724 | ||||||||
| Proceeds from sale of property, plant and equipment, and intangible assets | 98 | 24 | ||||||||
| Interest received | 149 | 36 | ||||||||
| TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES | -12,601 | -8,711 | ||||||||
| CASH FLOWS USED IN FINANCING ACTIVITIES | ||||||||||
| Interest and loan financing costs paid | -2,572 | -1,243 | ||||||||
| Lease payments | -584 | -593 | ||||||||
| Received loans | 5,000 | 45,500 | ||||||||
| Repayment of loans | -1,818 | -39,318 | ||||||||
| Dividends paid | -10,069 | -6,515 | ||||||||
| Income tax paid on dividends | -303 | -278 | ||||||||
| TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES | -10,346 | -2,447 | ||||||||
| CHANGE IN CASH AND CASH EQUIVALENTS | -10,813 | 302 | ||||||||
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 3 | 14,736 | 12,650 | |||||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 3 | 3,923 | 12,952 | |||||||
Additional information:
Taavi Gröön
Chief Financial Officer
AS Tallinna Vesi
(+372) 626 2200
taavi.groon@tvesi.ee
