AUDITED ANNUAL REPORT


Recurring revenues of the Company were 589,2 mln EEK (37.7 mln EUR) in 2006,    
a 7,1% increase compared to the previous year. Growth in the sale of water and  
wastewater services was 10,8%.                                                  

“I am very pleased that this year again, the Company has improved its           
performance: The water quality is better than ever, the wastewater treatment is 
for the first year fully compliant with EU regulation, and the Company has made 
significant improvements in its service to customers through the implementation 
of new Customer Management Software. In addition to strong operational results  
the financial performance is in line with expectations despite the challenging  
inflationary environment” explained the Chairman of the Management Board of ASTV
Roch Chéroux.                                                                   

“Growth in sales of water and treatment of wastewater, the non incurrence of one
time costs from the 2005 IPO and loan re-structuring, and refinement of the     
Company's asset base have enabled the company to deliver growth in profitability
year on year.” added Chéroux                                                    

The profit after tax of the Company in 2006 was 248 mln EEK (15.9 mln EUR).     

“Furthermore, as a result of investments into the water network and Ülemiste    
Water Treatment Plant we are fully compliant with the requirements set out in   
the European Commission Directive regarding drinking water quality. In addition 
to this, the investment in the Paljassaare wastewater treatment plant has also  
allowed compliance with EU standards for the first time and as a result Tallinn 
was removed from the Helcom hotspots list” said Chéroux.                        

Based on the results of the 2006 financial year, the Management Board and       
Supervisory Council of AS Tallinna Vesi  propose to pay out 196 mln EEK (12.5   
mln EUR) of dividends. This is subject to approval by the  Annual General       
Meeting of  Shareholders, which will be held in April 2007, and if approved will
lead to a 9.80 EEK (0.63 EUR) dividend per A-share. The B-share, which is held  
by the City of Tallinn is entitled to 10 000 EEK (639,12 EUR) dividend.         

The level of the 2007 investment programme of the Company is 346,9 million EEK  
(22.2 mln EUR) and focuses on the continued improvement in the quality of       
drinking water, environmental performance and customer service.                 

118 mln EEK (7.5 mln EUR) of the investment programme will be targeted to       
improve the quality levels of water production and wastewater treatment of the  
City.                                                                           
                                                                                
Of this, over 33 mln EEK (2.1 mln EUR) will be invested in reconstructing water 
networks in the City, which will further increasing water quality. This includes
the renovation of the drinking water network, the ongoing maintenance works on  
the Pirita Ülemiste channel will continue, and maintenance work will be         
completed on the level control devices at the Kaunissaare reservoir. The        
renovation of one of the Ulemiste Water Treatment Plant water reservoirs will   
also be completed in 2007 and the tank taken into use again. This reservoir was 
originally constructed in the 1960s.                                            
                                                                                
More than 28 mln EEK (1.8 mln EUR) will be invested in renovating sewerage      
pipelines, in total approximately 5.5 km of pipeline will be renovated in 2007. 

Reigo Marosov                                                                   
Head of Public Relations                                                        
Ph: + 372 6262 209                                                              
Reigo.marosov@tvesi.ee