Speaker #1: Webinar will be hosted by Aleksandr Timofejev, Chief Executive Officer, and Taavi Groon, Chief Financial Officer. First, Aleksandr and Taavi will introduce the highlights of the Q3 of 2026 and the presenters will also speak about Tallinna Vesi's operational and financial results of 9 months.
Speaker #1: Aleksandr will give an overview about some of the investments made in the Q3, and right after the presentation you will have the opportunity to ask questions.
Speaker #1: It is also possible to type in your questions during the presentation, but these will be answered in the end part of the webinar. To submit your questions, please use the question box on the right side of the screen.
Speaker #1: And now I will hand over to Aleksandr and Taavi.
Speaker #2: Good morning, everyone. Welcome to our presentation. The Q3 is over, and we can speak about the results. If we speak about Tallinn Water's financial results in the Q3, then they were stable and, of course, the operational results were excellent.
Speaker #2: If we speak about the sales, then in the Q3 the volume of sales was 18.3 million euros, and the net profit 3.96 million euros.
Speaker #2: Tallinn Water continues to invest into the assets as they continue this very important for us and for our customers. During the Q3, we invested 16.4 million euros.
Speaker #2: If we speak about the water quality, then in the Q3 99.4% was the water quality in the city, and if we speak about the number of samples were taken in the city, it was over 700, and only 3 samples were not according to the limits.
Speaker #2: If we speak about health and safety, then it is on a good level in the company, and during the Q3 we had no working accidents.
Speaker #2: One of our focus is to produce also green energy from the biogas we produce at the wastewater treatment plant, and in the Q3 we produced 2.8 gigawatt-hour electrical energy at the wastewater treatment plant.
Speaker #2: This volume of energy approximately equal to 70% of electrical consumption at the wastewater treatment plant. The quality of the effluent was excellent, and it was 100%.
Speaker #2: One of the main projects for the customers is related to the water meters, smart meters. We started to install 5 years ago, to our customers, and by today over 97% of our customers uses the smart meters, and by the end of the year our aim is that over 99% of our customers have smart meter at their locations.
Speaker #2: If we move on to the next slide, then it is important to speak about the investment projects and the main projects we have together with the city and our utilities.
Speaker #2: By today we reconstructed approximately 30 kilometers of pipeline during 9 months, and of course a lot of kilometers rebuilt using the no-dig trenchless method.
Speaker #2: It is important to use the trenchless method in the city as this gives us an opportunity quicker finalize the projects and the environmental impact is much smaller as well.
Speaker #2: At the moment we do some reconstruction works at Paldiski Road, Kolde Boulevard, and the Sai Street, and of course there are some reconstruction of the wastewater pipelines in Mustamäe.
Speaker #2: If we speak about our plans, then there are some huge investments ongoing on the wastewater and water treatment plants. The wastewater treatment plant we are in progress with the reconstruction of the secondary sedimentation tanks, and also the main pumping station reconstructions are almost on the final way.
Speaker #2: At the moment we do some investments into the optimization of the wastewater treatment plant process, and we believe that in December we can already gain from that.
Speaker #2: The optimization should give us an opportunity to control better dosing of the chemicals and usage of the electrical energy during the treatment process. Some big projects at the moment are in the planning phase, so during next years we would like to reconstruct the ozonation process at the water treatment plant, and of course the main idea is to improve the water treatment process by implementing the new myographic tration in the plant.
Speaker #2: If we move on to the next slide, then I would like to speak about our operational results in a little bit more details. So as I already mentioned about the water quality in the network, then this is on a very high level.
Speaker #2: This year and we believe that by the end of the year the percentage would be over 99.6%. The wastewater treatment plant is working well, if we speak about treatment process, then this is according to expectations, and we speak about the main potents as a nitrogen or phosphorus in our treatment process is very effective and we treat almost 2 times better than the legislation says.
Speaker #2: The customer satisfaction in the Q3 was a little bit lower, then was expected due to the changes in our customer system. We had some issues with the cell service, and also with billing in July.
Speaker #2: The issues were related to the change of the IT system. By today the challenges are solved, but it had an impact on our performance and of course on the feedback from the customers.
Speaker #2: By the end of the Q3 the feedback from the customers was already positive, and the marks for the self-service were quite high. The leakage rate in the Q3 was lower than last year, and it shows that the investments we do in the city are done in a proper way.
Speaker #2: The average duration of the water interruption is shorter than 2 hours, and this also shows that we plan our works in the best way, and try to do everything that the impact on the customers is minimum.
Speaker #2: And rehabilitation of the networks is ongoing on the plant level, and we believe that by the end of the year we will reconstruct over 35 kilometers of pipes in total.
Speaker #2: Now I'll give over to Taavi, who will speak in details about our financial results. Thank you.
Speaker #1: Thank you, Alexander. Let's first take a look at our water and wastewater volumes. Sales volume development is stable, yet today private customer volumes increased slightly, pretty much staying on the same level as previous year, increasing by 0.3%.
Speaker #1: Business customer volumes normally can have a little bit more volatility, but since these are still minimal, 2.9% increase compared to the same period in 2025.
Speaker #1: And outside service area increased by 5.1%. Next let's look at the development of revenues. On year-to-date basis private customer revenue in the main service areas increased by 9.4%, and at the same time business customer revenue has decreased 4.7%.
Speaker #1: This is a result of price harmonization, where private and business customer prices were harmonized by July 1st of this year. And the result of this was that private customer prices slightly increased, and business customer prices decreased, and now from 1st of July all customer segment prices are harmonized.
Speaker #1: In that same water price is applied to private and business customers. Wastewater price is applied in two pollution groups, lower pollution level and higher pollution level, and there's specified by specific pollution load measured in the wastewater.
Speaker #1: Outside service area revenues also increased 7%, primarily driven by the price adjustment. And mentioned volume changes in previous slides. Now next taking a quick look at our cost development starting with total cost of goods sold.
Speaker #1: Total cost of goods sold increased from 10.3 to 10.6 million in the Q3. Direct production cost increased by 7.6%, the primary component there are chemical expenses and pollution tax chemical expenses, are for one aspect impacted by increase in methanol.
Speaker #1: Prices. And pollution tax is a result of pollution load which is delivered through the wastewater treatment plant. In other cost items staff cost increased by 6.6%, and construction revenue construction services decreased at the same time 31%, and construction services are closely related to construction revenue which will take a quick look at on total revenues in the next slide.
Speaker #1: And now the expenses we had almost 35% increase, and here we implemented different measures to improve site security which impacted also the cost changes in Q3.
Speaker #1: Now next looking at net profit level, we have briefly covered changes in sales revenue, primarily driven by changes in water service price which increased by 4.5%, but at the same time construction revenues for the Q3 decreased by 1.3 million, and the total change in sales is around 0.8% increase compared to last year.
Speaker #1: Same Q3. And construction revenue timing is very much tied to specific project development, and decreased the and offset the increase in water revenues for the Q3.
Speaker #1: Cost of goods sold we briefly covered on previous slide, in the cost item marketing and general expenses we saw primarily changes in staff cost, but also administrative IT services that are outsourced.
Speaker #1: One significant impact on our net profit level is also derived from net financial expenses, which is directly impacted by higher base rate in interest.
Speaker #1: Higher our loans are primarily tied to 6-month EURIBOR, and the increase in base rate has a direct effect on our financial expenses as well.
Speaker #1: And at the same time of course also our investment activities and increase in our loan portfolio. And next we can right away take a quick look at our cash position and development in the third quarter.
Speaker #1: We can see that the investing activities with cash outflow of 16.4 million is primarily covered from operating cash flows, but also at the same time from financing cash flow in the extent of 4.8 million.
Speaker #1: And we maintain an optimal cash balance and apply for financing as needed. Total investments year-to-date can be seen on the next slide. Our total investments for year-to-date have reached 40.8 million, and it's comparable to the pace of previous year.
Speaker #1: And we expect annual volume of close to 60 million of investments this year. And around 80% of those investments made are also having will in the future have a direct impact on our regulated asset base which is the primary component of our profitability.
Speaker #1: Regulated asset base is reviewed during price approval process, and will the changes in investments and regulated asset base is applied after next price approval process.
Speaker #1: And finally to summarize topic that we have issued several notices in past weeks, Tallinna VESI has signed a settlement agreement with Tallinn University of Technology for a settlement in a historic water price dispute.
Speaker #1: This is a dispute where the source of is reaching back to 2011, 2019 period, and we've sought to resolve these proceedings and have signed a settlement agreement with Tallinn Technical University and also forwarder companies Olarex and 3F10 Group companies.
Speaker #1: We have made proposals to for settlement with all the claims in the courts today, but the result of those proposals will be clear in coming weeks.
Speaker #1: Thank you very much, with this I will conclude my overview for today.
Speaker #2: Yes, thank you both for the presentation, and now we will proceed with the questions. You will have now a few minutes to submit your question.
