AS Tallinna Vesi´s financial results for the 4th quarter of 2021

·9 min read

The sales revenue of the Tallinna Vesi increased by 3.1% in 2021, reaching 53.29 million. The growth in sales revenue resulted from the increase in sales of construction services. Tallinna Vesi earned €14.93 million on sales in the 4th quarter of 2021.

In 2021, revenue from the sale of water services remained at a level similar to 2020. The revenue from construction services increased over the year, as a number of large pipe and road construction projects were carried out.

The sales from water services sold to commercial customers in the main service area increased by 1.5% in the 4th quarter, reaching €3.9 million. “The main contributor to the growth of sales revenue in the 4th quarter was the increase in water consumption in Tallinn’s hospitality and entertainment businesses,” Aleksandr Timofejev, Chief Executive Officer of AS Tallinna Vesi said. The sales revenue from services sold to private customers of Tallinna Vesi was €5 million in the 4th quarter, showing a decline of 1.8% compared to the year before.

The Company’s gross profit for the 4th quarter of 2021 was €4.8 million, showing a decrease of €0.8 million over the year. “The decrease in gross profit was related to higher cost of goods and services that were 34.4% more expensive than in the comparative period of the year before,” Timofejev said. The biggest impact came from the increase in the market price for electricity and the electricity costs, increasing by 139.1% due to that. The Company’s gross profit for 2021 amounted to €20.6 million, showing a decrease of €1.6 million compared to 2020.

The Company’s operating profit for the 4th quarter of the year was €3.4 million, showing a decrease of €2.3 million compared to the same period in 2020. The operating profit for 2021 amounted to €18.8 million, being 13.8% lower than in the same period of 2020. In addition to the increased electricity costs, the decrease in commercial profit was attributed to the retaining of the provision for potential third-party claims at the third quarter end level.

The Company’s net profit for the 4th quarter of 2021 was €3.2 million, showing a decrease of €2.2 million compared to the same period of 2020. The net profit for 2021 was €16.2 million, whereas in 2020 the same figure stood at €16.7 million.

The sale of construction services provided by the subsidiary Watercom grew 110.8% or 1.4 million euros in the 4th quarter compared to the previous year. The sales from construction services for 2021 totalled 7.3 million euros, growing 40.3% or 2.1 million euros compared to the same period the year before. The growth in revenue is mainly attributable to the pipe and road construction projects won in the procurements that were carried out in 2020 and 2021.

Tallinna Vesi has increased investments in fixed assets to secure sustainable infrastructure and continuity of its service. Investments in pipes increased significantly already in 2021, when a total of nearly 16 km of water and sewage pipes were reconstructed. The volume of investments in fixed assets planned for 2022 amounts to €25 million.

Over the next years, the investments will be planned based on the public water supply and sewerage development plan for the next 12 years, to be completed in cooperation with the City of Tallinn this year, and the pipe reconstruction program prepared in cooperation with the Tallinn Technical University. “The investments made and forthcoming will help us to secure high-quality drinking water for the people of Tallinn, but also keep the natural environment around us cleaner,” Timofejev said.

To provide additional value to customers through digitalization, the Company started installing remote water meters in 2021. „With smart meters, water metering becomes more accurate and there is no longer need for reporting the water meter readings. In the future, we will be able to proactively inform customers about water leaks. Also, remote water meters will allow to notify our customers when water leaks occur in their buildings,” Timofejev described. The plan is to cover the entire service area with remote water meters by 2026.

In addition to investments in the water and sewage network, the Company has started to reduce its environmental impact, by mapping its CO2 footprint last year. To reduce that footprint, 100% of the energy used in Tallinna Vesi’s facilities and in the treatment process is now generated from renewable energy resources. A cogeneration unit shall be set up in the wastewater treatment plant in Paljassaare, to allow the use of biogas from the wastewater treatment process to generate 30% of electricity and 100% of heat energy needed to run the treatment plant.

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


Main financial indicators

€ million,
except key ratios

4th quarter

Change 2021/ 2020

12 months

Change 2021/ 2020

2021

2020

2019

2021

2020

2019

Sales

14.93

13.17

16.12

13.4%

53.29

51.72

63.42

3.0%

Gross profit

4.80

5.64

7.98

-14.7%

20.58

22.23

33.95

-7.4%

Gross profit margin %

32.17

42.78

49.49

-24.8%

38.61

42.97

53.53

-10.1%

Operating profit before depreciation and amortisation

5.10

7.41

12.72

-31.1%

25.30

28.07

38.18

-9.9%

Operating profit before depreciation and amortisation margin %

34.17

56.23

78.86

-39.2%

47.47

54.27

60.21

-12.5%

Operating profit

3.42

5.76

11.06

-40.6%

18.78

21.78

32.08

-13.8%

Operating profit - main business

2.91

5.51

10.82

-47.2%

17.52

20.88

31.19

-16.1%

Operating profit margin %

22.89

43.71

68.61

-47.6%

35.23

42.12

50.57

-16.3%

Profit before taxes

3.31

5.64

10.95

-41.3%

18.40

21.34

31.30

-13.8%

Profit before taxes margin %

22.19

42.85

67.93

-48.2%

34.52

41.27

49.36

-16.3%

Net profit

3.21

5.39

10.95

-40.5%

16.17

16.73

27.76

-3.4%

Net profit margin %

21.47

40.91

67.93

-47.5%

30.33

32.35

43.77

-6.2%

ROA %

1.26

2.12

4.21

-40.5%

6.32

6.45

10.83

-2.1%

Debt to total capital employed %

54.94

56.09

56.05

-2.1%

54.94

56.09

56.05

-2.1%

ROE %

2.82

4.92

9.95

-42.7%

14.20

14.69

25.43

-3.3%

Current ratio

2.83

3.85

5.48

42.3%

2.83

3.85

5.48

-26.5%

Quick ratio

2.79

3.80

5.44

43.2%

2.79

3.80

5.44

-26.6%

Investments into fixed assets

5.43

5.65

5.33

-3.9%

15.38

19.42

16.09

-20.8%

Payout ratio %

na

77.70

72.05

na

77.70

72.05

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


STATEMENT OF COMPREHENSIVE INCOME

4th quarter

4th quarter

12 months

12 months

€ thousand

2021

2020

2021

2020

Revenue

14,931

13,172

53,294

51,717

Cost of goods and services sold

-10,127

-7,537

-32,715

-29,491

GROSS PROFIT

4,804

5,635

20,579

22,226

Marketing expenses

-130

-113

-462

-433

General administration expenses

-1,047

-945

-4,438

-4,576

Other income (+)/ expenses (-)

-209

1,180

3,099

4,567

OPERATING PROFIT

3,418

5,757

18,778

21,784

Financial income

1

3

8

31

Financial expenses

-104

-116

-387

-473

PROFIT BEFORE TAXES

3,315

5,644

18,399

21,342

Income tax on dividends

-108

-255

-2,234

-4,610

NET PROFIT FOR THE PERIOD

3,207

5,389

16,165

16,732

COMPREHENSIVE INCOME FOR THE PERIOD

3,207

5,389

16,165

16,732

Attributable profit to:

Equity holders of A-shares

3,207

5,388

16,165

16,731

B-share holder

0.00

0.60

0.00

0.60

Earnings per A share (in euros)

0.16

0.27

0.81

0.84

Earnings per B share (in euros)

0

600

600

600


STATEMENT OF FINANCIAL POSITION

€ thousand

31/12/2021

31/12/2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

36,559

44,514

Trade receivables, accrued income and prepaid expenses

6,637

7,019

Inventories

702

701

TOTAL CURRENT ASSETS

43,898

52,234

NON-CURRENT ASSETS

Property, plant and equipment

211,546

202,802

Intangible assets

729

629

TOTAL NON-CURRENT ASSETS

212,275

203,431

TOTAL ASSETS

256,173

255,665

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Current portion of long-term lease liabilities

421

393

Current portion of long-term loans

3,630

3,630

Trade and other payables

7,835

7,085

Prepayments

3,604

2,445

TOTAL CURRENT LIABILITIES

15,490

13,553

NON-CURRENT LIABILITIES

Deferred income from connection fees

37,241

34,564

Leases

1,236

1,400

Loans

80,336

83,978

Provision for possible third party claims

6,018

9,628

Deferred tax liability

372

255

Other payables

60

32

TOTAL NON-CURRENT LIABILITIES

125,263

129,857

TOTAL LIABILITIES

140,753

143,410

EQUITY

Share capital

12,000

12,000

Share premium

24,734

24,734

Statutory legal reserve

1,278

1,278

Retained earnings

77,408

74,243

TOTAL EQUITY

115,420

112,255

TOTAL LIABILITIES AND EQUITY

256,173

255,665


CASH FLOWS STATEMENT

12 months

12 months

€ thousand

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES

Operating profit

18,778

21,784

Adjustment for depreciation/amortisation

6,520

6,283

Adjustment for revenues from connection fees

-510

-542

Other non-cash adjustments

-3,610

-4,814

Profit/loss(+) from sale and write off of property, plant and equipment, and intangible assets

-29

-14

Change in current assets involved in operating activities

380

140

Change in liabilities involved in operating activities

938

-215

TOTAL CASH FLOWS FROM OPERATING ACTIVITIES

22,467

22,622

CASH FLOWS USED IN INVESTING ACTIVITIES

Acquisition of property, plant and equipment, and intangible assets

-13,734

-15,682

Compensations received for construction of pipelines, incl connection fees

2,892

1,998

Proceeds from sales of property, plant and equipment and intangible assets

29

32

Interest received

11

35

TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES

-10,802

-13,617

CASH FLOWS USE D IN FINANCING ACTIVITIES

Interest paid and loan financing costs, incl swap interests

-460

-719

Lease payments

-408

-555

Repayment of loans

-3,636

-3,636

Dividends paid

-12,842

-19,888

Withheld income tax paid on dividends

-158

-113

Income tax paid on dividends

-2,116

-4,355

TOTAL CASH FLOW USED IN FINANCING ACTIVITIES

-19,620

-29,266

CHANGE IN CASH AND CASH EQUIVALENTS

-7,955

-20,261

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

44,514

64,775

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

36,559

44,514


Aleksandr Timofejev

CEO

Member of the Management Board

+372 62 62 200

aleksandr.timofejev@tvesi.ee


Kristi Ojakäär

CFO

Member of the Management Board

+372 62 62 200

kristi.ojakaar@tvesi.ee

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