AS Tallinna Vesi´s financial results for the 4th quarter of 2021
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
Kristi Ojakäär
CFO
Member of the Management Board
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