MANAGEMENT REPORT
Contractual Highlights
- AS Tallinna Vesi tariffs continue to be on the same level based on temporary injunction granted by the Court for the period of court proceedings to protect the Company from the unilateral breach of privatization agreement by Estonian Authorities. At the end of May 2012 the District Court ruled that AS Tallinna Vesi’s Services Agreement, that was part of the international privatisation, is a public law contract, overturning the Competition Authority’s claim that the tariff mechanism specified in the Services Agreement is allegedly a civil law agreement that the company cannot rely on in an administrative court. AS Tallinna Vesi firmly believes that the terms and conditions of the international privatisation contract that has been deemed a public law contract should not be broken simply by transferring the duties of the regulator from one state institution (the City of Tallinn) to a different state institution (the Competition Authority). A public law contract should enjoy the protection of the Estonian legal system, should the contract not honoured then the company will have a claim against the Estonian state.
- AS Tallinna Vesi would like all its shareholders to be fully aware of the facts that the Company was privatised in 2001 with the full support and knowledge of the Estonian national government, with written confirmations from the Prime Minister, the Minister of Finance, and the Competition Authority itself regarding the key terms of the agreements, and utilising the expertise and guidance of the European Bank for Reconstruction and Development (EBRD). In addition to approving the framework of the privatisation the State of Estonia directly benefited as the sovereign guarantee it had been required to provide to EBRD to secure the then municipal AS Tallinna Vesi’s loans was passed to the Strategic Investor on privatisation. As this privatisation and these loans were EBRD sponsored projects, then the state of Estonia was required to object if the project did not comply with the PWSSA (Public Water Supply and Sewerage Act), it is noteworthy that it did not, in fact it voted in favour of both the privatisation and loan re-financing.
- During the 1st quarter of 2013 initial court proceedings commenced. Currently the date of the next court hearing is not set. AS Tallinna Vesi believes in open and transparent regulation and requested open court proceedings. On the other hand, the Competition Authority believes its methodology to be a “business secret” hence it requested closed court proceedings. On 20th of March 2013 the Administrative Court rules that the court proceedings would be partially closed, meaning that there could be no public discussion of the Competition Authority’s methodology, whilst all other aspects of the hearing will be held in open proceedings, i.e all information can be made available to the public.
- Discussion of the complaint submitted to the EU Commission is on-going.
- Average real return on capital invested at privatization is still 6.2% since 2001.
The Company has continuously stated its belief in fully transparent regulation and its willingness to enter into meaningful and evidence-based dialogue that takes into account the privatization contract signed in 2001.
RESULTS OF OPERATIONS - FOR THE 3rd QUARTER 2013
Financial highlights of 3rd quarter 2013
In the 3rd quarter of 2013 the Company is continuously focused on the improvement of operational performance and customer service.
During the 3rd quarter of 2013 the Company’s total sales increased, year on year, by 0.4% to 13.12 mln euros. Sales of water and wastewater treatment were down by 0.6% to 11.67 mln euros compared to the 3rd quarter of 2012.
The operating profit from the Company’s main business activity decreased by 0.66 mln euros or 9.4% to 6.31 mln euros during the 3rd quarter of 2013 compared to the 3rd quarter of 2012, mainly due to the increase in the variable costs, which is in more detail explained below.
The Company’s profit before taxes and net profit for the 3rd quarter in 2013 was 5.80 mln euros, which is a 0.68 mln euros or 10.5% decrease compared to the relevant period in 2012.
| mln € | 3 Q 2011 | 3 Q 2012 | 3 Q 2013 |
Change 13/12 |
9 months 2011 | 9 months 2012 | 9 months 2013 |
Change 13/12 |
|
| Sales | 13,0 | 13,1 | 13,1 | 0,4% | 38,2 | 39,2 | 39,3 | 0,2% | |
| Gross profit | 7,8 | 8,2 | 7,4 | -8,8% | 23,1 | 24,2 | 22,3 | -7,9% | |
| Gross profit margin % | 59,8 | 62,4 | 56,7 | -9,1% | 60,6 | 61,7 | 56,7 | -8,1% | |
| Operating profit | 7,0 | 7,0 | 6,3 | -9,4% | 20,8 | 20,2 | 18,2 | -9,9% | |
| Operating profit - main business | 6,5 | 6,8 | 6,3 | -6,9% | 19,7 | 19,9 | 18,2 | -8,7% | |
| Operating profit margin % | 54,2 | 53,3 | 48,1 | -9,7% | 54,6 | 51,5 | 46,3 | -10,1% | |
| Profit before taxes | 4,4 | 6,5 | 5,8 | -10,5% | 18,1 | 18,4 | 18,4 | -0,2% | |
| Net profit | 4,4 | 6,5 | 5,8 | -10,5% | 13,8 | 13,9 | 13,7 | -1,4% | |
| Net profit margin % | 33,6 | 49,5 | 44,2 | -10,9% | 36,2 | 35,5 | 35,0 | -1,6% | |
| ROA % | 2,4 | 3,4 | 2,9 | -13,1% | 7,5 | 7,3 | 7,0 | -4,2% | |
| Debt to total capital employed | 61,3 | 60,2 | 58,8 | -2,3% | 61,3 | 60,2 | 58,8 | -2,3% | |
| ROE % | 6,1 | 8,5 | 7,2 | -16,1% | 19,4 | 18,3 | 17,0 | -7,5% | |
| Current ratio | 3,1 | 3,7 | 3,8 | 1,5% | 3,1 | 3,7 | 3,8 | 1,5% |
Gross profit margin – Gross profit / 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 / Total equity
Current ratio – Current assets / Current liabilities
Main business – water and wastewater activities, excl. connections profit and government grants
Profit and Loss Statement
3rd quarter 2013
Sales
In the 3rd quarter of 2013 the Company’s total sales increased, year on year, by 0.4% to 13.12 mln euros. 88.9% of sales comprise of sales of water and treatment of wastewater to domestic and commercial customers within and outside of the service area, 6.1% of sales from fees received from the City of Tallinn for operating and maintaining the storm water system and 5.0% from other works and services.
Sales of water and wastewater services were 11.67 mln euros, a 0.6% decrease compared to the 3rd quarter of 2012, resulting from the changes in sales volumes as described below.
Within the service area, sales to residential customers were at 5.77 mln euros, showing a 0.2% decrease year on year, as revenues from apartment blocks form the biggest share of our residential sales, the biggest decrease came also from this client group. Sales to commercial customers increased by 1.4% to 4.68 mln euros, mainly coming from the sales in leisure sector. Sales to customers outside of the main service area decreased by 6.4% to 1.03 mln euros in the 3rd quarter of 2013. It was mostly affected by storm water as sales of water and wastewater remained broadly flat decreasing only by 0.6% or 0.01 mln euros. Over pollution fees received were 0.19 mln euros, a 20.9% decrease compared to the 3rd quarter of 2012.
As there has not been a tariff increase compared to last year and same tariffs are applied in 2013 the sales volumes reflect the same variances in main services area as prescribed above.
Outside service area sales volumes were 0.28 mln m3 or 16.6% lower than in the 3rd quarter of 2012. As already mentioned before the main factor in this decrease was a reduction in storm water volumes influenced by low rainfall.
The sales from the operation and maintenance of the storm water and fire-hydrant system in the main service area decreased by 21.2% to 0.85 mln euros in the 3rd quarter of 2013 compared to the same period in 2012. According to the terms and conditions of the contract revenues reflect actual volumes treated and costs for treating the storm water, therefore this cost pass through has no impact on profits.
Increase of 31.2% to 0.60 mln euros in other sales is related with increased pipeline construction activities compared to 3rd quarter in 2012.
Cost of Goods Sold and Gross profit
The cost of goods sold for the main operating activity was 5.68 mln euros in the 3rd quarter of 2013, showing 0.76 mln euros or 15.4% increase compared to the equivalent period in 2012. The cost increase is highly influenced by the additional pollution tax incurred due to the incidents in the wastewater treatment plant in the 3rd quarter of 2013 resulting extra pollution tax in the amount of 0.36 mln euros.
Total variable costs increased by 0.25 mln euros or 14.4% year on year. Biggest increase comes from the increase in pollution tax. Other changes came from a combination of increase in prices and tax rates and movements in treatment volumes that affected the variable costs together with the following additional factors:
- Water abstraction charges increased only by 0.02 mln euros or 8.8% to 0.25 mln euros in the 3rd quarter of 2013, driven mainly by 5% raise in tax rates.
- Total chemical costs remained broadly flat, decreasing 0.6% to 0.46 mln euros. Costs decrease was mainly the result of a decrease in chemicals volumes used due to less sewage treated.
- Electricity costs decreased by 0.12 mln euros or 13.8% in the 3rd quarter of 2013 compared to the 3rd quarter of 2012. Lower electricity costs are mostly derived from the decrease in treatment volumes, worth 0.19 mln euros. Positive effects are reduced by increased electricity unit costs by 0.07 mln euros.
- In the 3rd quarter of 2013 the pollution tax expense increased by 0.36 mln euros or 233.1%. There was an incident in the wastewater treatment plant due to which for the short period of time not all wastewater could have been treated. As a result higher pollution tax rates were applied and the Company faced additional pollution tax and income tax expenses all in total worth 0.37 mln euros. Eliminating the effects of the incident the pollution tax would have decreased by 0.01 mln euros or 7.8%. The pollution tax decrease due to decrease in volumes was balanced by the increase due to pollutants concentration (worth 0.03 mln euros) and overall increase in tax rates by 15% (worth 0.02 mln euros).
Total fixed cost of goods sold (staff costs, depreciation and other cost of goods sold) in the main operating activity increased by 0.51 mln euros or 16.0%. 63% or 0.3 mln euros of the increase is mainly related to increased revenues from pipeline construction as mentioned above. The remaining increase is related to higher repair and maintenance carried out in the 3rd quarter of 2013.
As a result of all of the above the Company’s gross profit for the 3rd quarter of 2013 was 7.4 mln euros, which is a decrease of 0.8 mln euros, or 8.8%, compared to the gross profit of 8.2 mln euros for the 3rd quarter of 2012.
Other Operating Costs
Marketing expenses and General administration expenses stayed mostly flat during the 3rd quarter of 2013 compared to the corresponding period in 2012, decreasing in total by 4.5% or 0.06 mln euros, mainly because of slightly lower legal fees and servitude fees, balanced by overall salary increase and also changes in the management board.
Other net income/expenses
Other net income stayed flat at net expense of 0.15 mln euros, compared to 0.15 mln euros net expense in the 3rd quarter of 2012. The decline in government grants revenues were balanced by a reduction in doubtful receivable expenses.
Operating profit
As a result of above factors the Company’s operating profit from main services for the 3rd quarter of 2013 totalled 6.31 mln euros compared to 6.78 mln euros in the corresponding quarter in 2012, which shows a decrease of 0.47 mln euros or 6.9%. Total operating profit for the 3rd quarter of 2012 was 6.31 mln euros, a decrease of 0.66 mln euros. Year on year the operating profit for the 3rd quarter has decreased by 9.4%.
Financial expenses
The company’s net financial expenses amounted to 0.51 mln euros in the 3rd quarter of 2013, which is a negative change of 0.03 mln euros compared to -0.49 mln euros financial expenses in the 3rd quarter of 2012. Financial costs have been balanced by interest income in 2012 and in 2013 by the non-cash revaluation of the fair value of swap agreements. In the 3rd quarter of 2012 there was no revaluation impact on financial expenses, compared to the positive impact of 0.28 mln euros in the 3rd quarter of 2013.
The standalone swap agreements have been signed to mitigate the majority of the long term floating interest risk, the interest swap agreements are signed for 75 mln euros and 20 mln euros are still with floating interest rate. At this point in time the estimated fair value of the swap contracts is negative, totalling 2.64 mln euros.
Effective interest rate (incl. swap interests) in the 3rd quarter of 2013 was 3.21%, amounting in the interest costs of 0.78 mln euros, compared to the effective interest rate of 3.25% and the interest costs of 0.79 mln euros into the 3rd quarter of 2012.
Profit Before and After Tax
The Company’s profit before taxes for the 3rd quarter of 2013 was 5.80 mln euros, which is 0.68 mln euros lower than the profit before taxes of 6.48 mln euros for the 3rd quarter of 2012, resulting mainly from the increased costs as described above.
As the dividends were paid out in June 2013 and 2012 there is no income tax in the 3rd quarter and the Company’s profit after taxes equals to the profit before taxes amount.
Results for the nine months of 2013
During the nine months of 2013 the Company’s total sales increased, year on year, by 0.2% to 39.31 mln euros. Sales of water and wastewater treatment were 35.63 mln euros, a 0.3% increase compared to the nine months of 2012.
The movements in sales are similar to the movements in the 3rd quarter described above. There has been a slight 0.16 mln euros or 0.9% decline in the sales to residential customers and 0.31 mln euros or 2.2% of increase in the sales to the commercial clients. Industrial sector has given the most of the increase in the sales to commercial clients. The sales revenues from outside service area clients for water and wastewater services has been also been relatively stable showing an increase of 0.06 mln euros or 2.2% compared to 9 months in 2012.
Due to less rainfall, the revenues from storm water treatment in the nine months of 2013 remain 0.50 mln euros or 18.1% behind the comparative period in 2012 in the main service area. In outside service area the revenues from storm water were down 0.16 mln euros or 32.0%.
The operating profit from the Company’s main business activity decreased by 8.7% to 18.21 mln euros during the nine months of 2013 compared to the nine months of 2012. As revenues have been relatively flat, decreasing only 0.2% or 0.10 mln euros, then the main reason for a decline comes from the rise in pollution tax expenses (1.65 mln euros year on year). Increase is influenced by two factors: first the pollution tax expenses in 2012 were impacted by the reversal of provision in the amount of 0.4 mln euros made in 2011 and also due to the incidents at the wastewater treatment plant described above.
The Company’s profit before taxes for the nine months of 2013 was 18.37 mln euros, which is only a 0.2% decrease compared to the relevant period in 2012. Decrease in operating profit was mostly compensated by the change in fair value of swap contracts.
The Company’s net profit for the nine months of 2013 was 13.74 mln euros, which is 0.19 mln euros lower than the net profit of 13.94 mln euros in the equivalent period in 2012.
Balance sheet
In the nine months of 2013 the Company invested 5.86 mln euros into fixed assets. As of 30 September 2013 non-current fixed assets amounted to 151.21 mln euros and total non-current assets amounted to 156.41 mln euros. The reduction in long-term receivables compared to year end by 3.17 mln euros to 4.39 mln euros is related to the fact that in May 2013 AS Maardu Vesi repaid its loan to the Company in the amount of 3.81 mln euros.
Current assets decreased by 2.33 mln euros to 40.28 mln euros in the nine months mainly due to decreased trade receivables by 2.93 mln euros and increased cash at bank by 0.64 mln euros.
Current liabilities increased by 0.75 mln euros to 10.64 mln euros in the nine months mainly due to increased payments to suppliers in the amount of 0.20 mln euros and increased tax liabilities by 0.47 mln euros.
The Company has a Total debt/Total assets level as expected of 58.8%, in range of 55%-65%, reflecting the year end equity profile. This level is consistent with the same period in 2012 when the total debt/total assets ratio was 60.2%.
Long-term liabilities stood at 105.05 mln euros at the end of September 2013, consisting mainly of the outstanding balance of three long-term bank loans totalling 95 mln euros. The first repayment of loans or refinancing should take place at the end of 2014. The weighted average interest margin for the total loan facility is 0.96%. The rest of long term liabilities reflect mainly the accounting record of deferred income from connection fees.
In the 4th quarter of 2011 the Company recorded and noted an exceptional contingent liability, which could cause an outflow of economic benefits of up to 36.0 mln euros. In the 3rd quarter of 2013 the Company re-evaluated the liability, which now stands at 34.0 mln. euros, as per note 13 to the accounts.
Cash flow
During the nine months of 2013, the Company generated 21.59 mln euros of cash flows from operating activities, a decrease of 2.96 mln euros compared to the corresponding period in 2012. 2013 operating cash flows were below 2012 cash flows mainly due to the lower operating profit and also from a change in working capital. Underlying operating profit still continues to be the main contributor to operating cash flows.
In the nine months of 2013 net cash flows from investing activities resulted in a cash inflow of 3.49 mln euros, an increase of 2.59 mln euros compared to an inflow of 0.91 mln euros in the nine months of 2012. This is made up as follows:
In the nine months of 2013 the Company paid 6.17 mln euros for the fixed asset investments which is a decrease of 2.13 mln euros compared to the same period in 2012, when the Company spent 8.31 mln euros. The compensations received for the construction of pipelines were 5.15 mln euros in the nine months of 2013, a decrease of 3.58 mln euros compared to same period in 2012. In 2013 the Company did not give any further loans and AS Maardu Vesi repaid their loan in full in the amount of 3.8 mln euros. In 2012 the loan granted to AS Maardu Vesi amounted to 0.58 mln euros.
In the nine months of 2013, cash outflow from financing amounted to 24.44 mln euros due to interests paid, loan financing costs and dividends paid, which is 0.77 mln euros more than in the same period of 2012, almost entirely due to higher dividends.
As a result of all of the above factors, the total cash inflow in the nine months of 2013 was 0.64 mln euros compared to a cash inflow of 1.79 mln euros in 2012. Cash and cash equivalents stood at 24.58 mln euros as of 30 September 2013, which is 8.02 mln euros higher than at the corresponding period of 2012.
Employees
At the end of the 3rd quarter of 2013, the total number of employees was 305 compared to 316 at the end of the 3rd quarter of 2012. The full time equivalent (FTE) was respectively 292 in 2013 compared to the 304 in 2012. The management continues to work actively for the efficiencies in processes to balance the increase in individual salaries and cost pressure from the market with more productive company structure.
Dividends
Dividend allocation to the shareholders is recorded as the liability in the financial statement of the Company at the time when the profit allocation and hence dividend payment is confirmed by the annual general meeting of shareholders.
According to the dividend policy, which is also published on Company’s website, the Company will maintain dividends to shareholders at the same amount in real terms, i.e. dividends will increase in line with inflation each year.
On the annual general meeting of shareholders held on 21st May 2013, 87 cents dividends per share and the total dividend pay-out from the profit of 2012 net income in the amount of 17.4 mln euros was approved. It is in accordance with the Company’s dividend policy. Compared to 2012 dividends of 84 cents per share, the increase is equal to the inflation.
Dividends were paid out on 13th and 14th of June 2013.
Share performance
AS Tallinna Vesi is listed on NASDAQ OMX Main Baltic Market with trading code TVEAT and ISIN EE3100026436.
As of 30 September 2013 AS Tallinna Vesi shareholders, with a direct holding over 5%, were:
| United Utilities (Tallinn) BV | 35.3% |
| City of Tallinn | 34.7% |
Pension funds have continued to increase their portfolios during the 3rd quarter of 2013, owning 2.54% of the total shares compared to 1.57% at the end of 1st quarter 2012.
As of 30 September 2013, the closing price of the AS Tallinna Vesi share was 10.30 euros, which is a 3.0% increase compared to the closing price of 10.00 euros at the beginning of the quarter. During the same period the OMX Tallinn index increased by 2.9%. In the 3rd quarter the Company’s share price was mainly impacted by the on-going contractual debate.
Operational highlights in the nine months of 2013
|
Indicator |
2012 9 months |
2013 9 months |
| Drinking water | ||
| Compliance of water quality at the customers tap | 99.60% | 99,64% |
| Water loss in the water distribution network | 16.07% | 16.65% |
| Average duration of water interruptions per property, h | 3.49 h | 3.54 h |
| Wastewater | ||
| Number of sewer blockages | 536 | 605 |
| Number of sewer bursts | 340 | 357 |
| Wastewater treatment compliance with environmental standards | 100% | 100% |
| Customer service | ||
| Number of written contacts | 120 | 107 |
| Number of customer contacts regarding water quality | 167 | 196 |
| Number of customer contacts regarding water pressure | 544 | 578 |
| Notification of unplanned water interruptions at least 1 h before the interruption | 90.2% | 90.8% |
Complaint to European Commission
In parallel, on 10th December 2010 AS Tallinna Vesi lodged a complaint to the European Commission regarding certain measures adopted by the Estonian authorities. The company believes these measures unilaterally alter the terms of AS Tallinna Vesi's privatization regime, and without any objective justification, any form of meaningful prior discussion, or willingness to engage in dialogue. Therefore they violate EU rules on the freedom of establishment and the free movement of capital (articles 49 and 63 TFEU). The process is on-going.
Disclosure of relevant papers and perspectives
The Company has published its tariff application and all relevant correspondence with the CA on its website (http://www.tallinnavesi.ee/?op=body&id=728) and to the Tallinn Stock Exchange and will keep its investors informed of all future developments regarding the further key developments regarding the processing of the tariff application.
In opposite to the Company the CA has requested the Court procedures to be closed. Based on misleading information submitted by the CA the Court approved the CA’s request. ASTV has reapplied for open proceedings.
Still, at this point in time the Company is unable to say what is going to happen to the tariffs before Court judgments and what would be the next steps by the European Commission. The outcome and lengths of the Court proceedings is outside the control of the Company.
Corporate structure
At the end of the quarter, 30 June 2013, the Group consisted of 2 companies. The subsidiary Watercom OÜ is wholly owned by AS Tallinna Vesi and consolidated to the results of the Company.
Supervisory Council
Supervisory Council plans and organises the management of the Company and supervises the activities of the Management Board. According to AS Tallinna Vesi articles of association Supervisory Council consists of 9 members who are appointed for two years.
In the annual general meeting that was held on 21st May 2013 the independent member Valdur Laid was recalled from the Supervisory Council and new independent member Allar Jõks was appointed.
Supervisory Council has formed three committees to advise Supervisory Council on audit, remuneration and corporate government matters.
More information about the Supervisory Council and committees can be found in the note 12 to the financial statements as well as from the Company’s webpage:
http://tallinnavesi.ee/en/Investor/Corporate-Governance/Supervisory-Board
http://tallinnavesi.ee/en/Investor/Corporate-Governance/Audit-Committee
http://tallinnavesi.ee/en/Investor/Corporate-Governance/Corporate-Governance-Report
Management Board
Management Board is a governing body which represents and manages AS Tallinna Vesi in its daily operations in accordance with the legal requirements as well as the Articles of Association. The Management Board must act economically in the most efficient way taking into consideration the interest of the Company and its shareholders and ensure the sustainable development of the Company in accordance with the set objectives and strategy.
To ensure that the company’s interests are met in the best way possible, the Management and Supervisory Boards shall extensively collaborate. Meetings of Management and Supervisory Board members are held at least once a quarter. In those meetings the Management Board informs the Supervisory Council about all significant issues in Company’s business operations, the fulfilment of the company’s short and long-term goals are being discussed and the risks impacting them. For every meeting of the Management Board prepares report and submits the report in advance with the sufficient time for the Supervisory Board to study it.
According to the Articles of Association the Management Board consists of 2-5 members, who are elected for 3 years.
Starting from 1st June 2013 there are 4 members of the Management Board of AS Tallinna Vesi: Ian Plenderleith (Chairman of the Board), Ilona Nurmela, Aleksandr Timofejev and Riina Käi.
Additional information about the members of the Management Board can be found from the Company’s website:
http://tallinnavesi.ee/en/Investor/Corporate-Governance/Management-Board
Additional information:
Ian John Alexander Plenderleith
Chairman of the Management Board
+372 6262 201
| STATEMENT OF COMPREHENSIVE INCOME | III quarter | III quarter | 9 months | 9 months | 12 months |
| (thousand €) | 2013 | 2012 | 2013 | 2012 | 2012 |
| Revenue | 13 122 | 13 076 | 39 309 | 39 214 | 52 924 |
| Costs of goods sold | -5 680 | -4 920 | -17 021 | -15 011 | -20 337 |
| GROSS PROFIT | 7 442 | 8 156 | 22 288 | 24 203 | 32 587 |
| Marketing expenses | -139 | -178 | -538 | -576 | -772 |
| General administration expenses | -1 141 | -1 162 | -3 620 | -3 537 | -4 740 |
| Other income/ expenses (-) | 146 | 148 | 75 | 109 | 1 696 |
| , | |||||
| OPERATING PROFIT | 6 308 | 6 964 | 18 205 | 20 199 | 28 771 |
| Financial income | 282 | 307 | 2 519 | 1 052 | 1 591 |
| Financial expenses | -795 | -793 | -2 357 | -2 849 | -3 297 |
| PROFIT BEFORE TAXES | 5 795 | 6 478 | 18 367 | 18 402 | 27 065 |
| Income tax on dividends | 0 | 0 | -4 625 | -4 466 | -4 466 |
| NET PROFIT FOR THE PERIOD | 5 795 | 6 478 | 13 742 | 13 936 | 22 599 |
| COMPREHENSIVE INCOME FOR THE PERIOD | 5 795 | 6 478 | 13 742 | 13 936 | 22 599 |
| Attributable to: | |||||
| Equity holders of A-shares | 5 794 | 6 477 | 13 741 | 13 935 | 22 598 |
| B-share holder | 0,60 | 0,60 | 0,60 | 0,60 | 0,60 |
| Earnings per A share (in euros) | 0,29 | 0,32 | 0,69 | 0,70 | 1,13 |
| Earnings per B share (in euros) | 600 | 600 | 600 | 600 | 600 |
| STATEMENT OF FINANCIAL POSITION | |||
| (thousand €) | 30.09.2013 | 30.09.2012 | 31.12.2012 |
| ASSETS | |||
| CURRENT ASSETS | |||
| Cash and equivalents | 24 579 | 16 557 | 23 935 |
| Trade receivables, accrued income and prepaid expenses | 15 393 | 19 021 | 18 323 |
| Inventories | 311 | 296 | 356 |
| TOTAL CURRENT ASSETS | 40 283 | 35 874 | 42 614 |
| NON-CURRENT ASSETS | |||
| Other long-term receivables | 4 389 | 5 727 | 7 560 |
| Property, plant and equipment | 151 210 | 148 147 | 149 400 |
| Intangible assets | 815 | 1 336 | 1 154 |
| TOTAL NON-CURRENT ASSETS | 156 414 | 155 210 | 158 114 |
| TOTAL ASSETS | 196 697 | 191 084 | 200 728 |
| LIABILITIES | |||
| CURRENT LIABILITIES | |||
| Current portion of long-term borrowings | 150 | 51 | 115 |
| Trade and other payables | 6 071 | 5 206 | 5 482 |
| Derivatives | 1 836 | 2 066 | 2 039 |
| Prepayments | 2 579 | 2 292 | 2 252 |
| TOTAL CURRENT LIABILITIES | 10 636 | 9 615 | 9 888 |
| NON-CURRENT LIABILITIES | |||
| Deferred income from connection fees | 8 567 | 7 155 | 7 892 |
| Borrowings | 95 650 | 95 431 | 95 717 |
| Derivatives | 806 | 2 864 | 2 538 |
| Other payables | 24 | 9 | 20 |
| TOTAL NON-CURRENT LIABILITIES | 105 047 | 105 459 | 106 167 |
| TOTAL LIABILITIES | 115 683 | 115 074 | 116 055 |
| EQUITY CAPITAL | |||
| Share capital | 12 000 | 12 000 | 12 000 |
| Share premium | 24 734 | 24 734 | 24 734 |
| Statutory legal reserve | 1 278 | 1 278 | 1 278 |
| Retained earnings | 43 002 | 37 998 | 46 661 |
| TOTAL EQUITY CAPITAL | 81 014 | 76 010 | 84 673 |
| TOTAL LIABILITIES AND EQUITY CAPITAL | 196 697 | 191 084 | 200 728 |
| CASH FLOW STATEMENT | 9 months | 9 months | 12 months |
| (thousand €) | 2013 | 2012 | 2012 |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Operating profit | 18 205 | 20 199 | 28 771 |
| Adjustment for depreciation/amortisation | 4 381 | 4 328 | 5 879 |
| Adjustment for profit from government grants and connection fees | -85 | -269 | -2 043 |
| Other non-cash adjustments | -177 | 3 | -153 |
| Profit/loss(+) from sale and write off of property, plant and equipment, and intangible assets | -119 | 8 | -6 |
| Change in current assets involved in operating activities | -1 528 | -518 | -160 |
| Change in liabilities involved in operating activities | 911 | 796 | -568 |
| Total cash flow from operating activities | 21 588 | 24 547 | 31 720 |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Loans granted | 0 | -581 | -765 |
| Repayment of loan | 3 814 | 0 | 0 |
| Acquisition of property, plant and equipment, and intangible assets | -6 173 | -8 307 | -10 011 |
| Proceeds from sales of property, plant and equipment | 121 | 2 | 38 |
| Compensations received for construction of pipelines | 5 150 | 8 728 | 11 198 |
| Interest received | 582 | 1 063 | 1 585 |
| Total cash flow from investing activities | 3 494 | 905 | 2 045 |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Interest paid and loan financing costs, incl swap interests | -2 314 | -2 398 | -3 272 |
| Repayment of finance lease | -98 | 0 | -61 |
| Dividends paid | -17 401 | -16 801 | -16 801 |
| Income tax on dividends | -4 625 | -4 466 | -4 466 |
| Total cash flow from financing activities | -24 438 | -23 665 | -24 600 |
| Change in cash and bank accounts | 644 | 1 787 | 9 165 |
| CASH AND EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 23 935 | 14 770 | 14 770 |
| CASH AND EQUIVALENTS AT THE END OF THE PERIOD | 24 579 | 16 557 | 23 935 |
Ian John Alexander Plenderleith
Chairman of the Management Board
+372 6262 201
ian.plenderleith@tvesi.ee
