OREANDA-NEWS. Tallinna Ves Results of operations for the 1st half-year 2016.

Chairman's summary

In the first six months of 2016, the Company’s operational and financial performance was excellent. The majority of key performance indicators (KPIs) are on track, which given the colder weather in the 1st quarter and associated increase in network disruption, was very good and a testament of all the hard work done by AS Tallinna Vesi staff, during the period.


In the first half of 2016, the water quality was 99.93% compliant. Only one sample taken from customer taps, out of the 1,472 samples taken, was non-compliant. The average network leakage for the period was 16.22%, which is higher than the same period in 2015 (13.95%), but attributable to the colder ambient temperatures in the 1st quarter in 2016, resulting in a higher number of bursts within the clean water network. With the advent of warmer weather, we hope to see a corresponding reduction in network leakage.

Besides providing premium drinking water, we are also responsible for a wastewater discharge service to nearly one third of Estonia’s population (440,000). It is therefore extremely important that the wastewater treatment plant in Paljassaare works effectively and in accordance with the stipulated quality requirements, set by the Estonian Ministry of Environment. During the 1st half-year of 2016, the final effluent leaving Paljassaare was 100% compliant with the stipulated limits and no pollution incidents have occurred on the network.

We continue to make targeted capital investments, renovating or replacing assets based on previous condition surveys and performance data, to ensure the continued reliability of the infrastructure. This includes the 5+5 programme, where 5 km of water and wastewater network is replaced each year.

Delivering good operational and financial performance is only possible through the continued motivation, commitment and performance of AS Tallinna Vesi staff. We remain focused on the development and training of internal staff and ensuring appropriate succession plans are in place. An example of this, is the company’s ongoing graduate and apprentice programmes, which will also inject fresh talent into the business for the future.

Financial highlights of 2nd quarter 2016

The Group’s sales revenues during the 2nd quarter of 2016 were EUR 14.50 million, being up by 5.5% or EUR 0.75 million compared to the same period in 2015.

The gross profit in the 2nd quarter of 2016 was EUR 8.30 million, showing an increase of 3.7% or EUR 0.29 million. Increase in gross profit was related to higher water, wastewater and storm water revenues and lower chemicals costs, which was accompanied by higher revenues and profit from construction and asphalting services. Increased revenues were balanced by higher depreciation and staff costs.

The operating profit was EUR 5.84 million, showing a decrease by 6.3% or EUR 0.39 million. The operating profit was impacted by the above mentioned positive changes in gross profit, which was further more impacted by higher legal costs.

The net profit for the 2nd quarter of 2016 was EUR 0.77 million, being down by 63.8% or EUR 1.36 million. The net profit was mainly impacted by above mentioned changes in operating profit and higher financial expenses. Higher financial expenses were mostly influenced by the negative change in the fair value of swap contracts in the 2nd quarter of 2016 compared to the big positive change in the same quarter of 2015. The net profit for the 2nd quarter of 2016 and 2015 without the impact resulted from the change of the fair value of swap contracts was EUR 0.99 million and EUR 1.13 million respectively.